Elite Realty Development Pty Ltd v Sadek

Absent defendant

1. At the hearing, the defendants raised a concern that it may be inappropriate for the Court to proceed with the hearing against Mr Bilal Dennaoui (the Second Defendant in the Afyouni Proceedings), in circumstances where he has not taken an active part in these proceedings and may have been unaware of the hearing dates.
2. On 11 June 2020, Mr Dennaoui was served with the sealed Statement of Claim at his place of employment. He did not enter an appearance as governed by Uniform Civil Procedure Rules 2005 (NSW) r 6.9 (UCPR) or file a defence (UCPR r 14.3). Pursuant to UCPR r 6.1, he would have been unable to take any step in the proceedings (including any appearance in court) without the leave of the court. He was not an "active party" in the proceedings: UCPR r 1.2.
3. Since Mr Dennaoui did not file a Defence, he is "in default": UCPR r 16.2(1)(a). In addition, by his failure to file a defence traversing the allegations of fact in the Statement of Claim, each of those allegations of fact is taken to be admitted as against him: UCPR r 14.26(1)(a).
4. On 28 July 2020, the plaintiffs filed a Notice of Motion for Default Judgment for Unliquidated Damages against Mr Dennaoui, pursuant to UCPR r 16.7. For unknown reasons, the Motion was not considered by the Court and no default judgment was entered. However, the plaintiffs did not approach the Court seeking information about the motion, nor did they press for it to be heard.
5. At no time since the proceedings commenced has Mr Dennaoui appeared himself or been represented by a legal practitioner. On the first day of the hearing, the matter was called outside the Court and no appearance was made for Mr Dennaoui.
6. UCPR r 29.7 sets out the procedure to be followed if a party is absent. It relevantly provides: 29.7 Procedure to be followed if party is absent (1) This rule applies when a trial is called on. (2) If any party is absent, the court - (a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or (b) may adjourn the trial.
7. Therefore, it is first necessary to decide whether it is appropriate to proceed to judgment against Mr Dennaoui in his absence, or adjourn, where no explanation was provided for his absence.
8. It has been held that in order for the Court to proceed with a hearing pursuant to r 29.7(2), a party must be "absent" within the meaning of r 29.7, which will not be found unless that party has knowledge or notice of the date of the trial: see eg NSW Trustee and Guardian as executor of the Will of Michael Robert Walsh (Dec'd) v Gregory (2012) 18 BPR 35,153; [2012] NSWSC 681 at [18]-[22]. In reaching that conclusion, Hallen AsJ (as his Honour then was) relied upon a passage by Rich J in Cameron v Cole (1944) 68 CLR 571 at 589: It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside, and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside. ... In such a case that has been no valid trial at all.
9. While I certainly accept that natural justice must be observed, with great respect to Hallen J, I do not agree that UCPR r 29.7 requires a plaintiff to notify a defendant of the date of the trial in order for the defendant to be "absent" and the hearing to proceed.
10. The factual situation in Cameron v Cole was quite different. The issue being considered by Rich J at 589 was whether a sequestration order was valid, or whether it was a nullity and without jurisdiction, in circumstances where: 1. the debtor, Mr Cameron, had been served with the relevant sequestration order; 2. the allocated hearing was adjourned at Mr Cameron's request, with a direction that the Registrar of the Court notify both parties about the new hearing date once allocated; 3. a date was fixed by the Court, but notice was not provided to Mr Cameron; and 4. on the adjourned hearing date, a sequestration order was made against Mr Cameron in his absence.
11. In that case, Latham CJ also stated at 584: In the present case the sequestration order … was made without any notice to the appellant of the adjourned date of hearing. Was notice "a condition of jurisdiction"? … In my opinion it was. The failure to give notice … made the order a nullity. [In] Craig v Kanssen… it was held by the Court of Appeal that failure to serve process where service of process is required renders null and void… an order made against the party who should have been served… See also Williams J at 604.
12. The High Court evidently considered that the Court's own order to notify the parties of the hearing date had not been complied with by the Registrar, and that was the basis for determining that there was an issue of fairness with the Bankruptcy Court proceeding ex parte on that adjourned hearing date.
13. In my opinion, UCPR r 29.7 does not require service by a plaintiff on the defendant of notice of the hearing dates. UCPR Part 10 provides for service of documents. Importantly, r 10.20(2) provides that "[e]xcept as otherwise provided by these rules (a) any originating process … in proceedings in the Supreme Court … must be personally served". There is unchallenged evidence in this case, which I accept, that the originating process was served on Mr Dennaoui.
14. Rule 10.1 provides as an imperative that "[u]nless the court orders otherwise, a party that files a document must as soon as practicable serve copies of the document on each active party". However, Mr Dennaoui was not an "active party", as he at no time ever filed an appearance or a defence.
15. The only other documents that must be served personally are irrelevant here: 1. Notices of motion must be served on non-active parties: UCPR r 18.5. 2. A sealed copy of a judgment must be served on the person against whom the orders are sought: UCPR r 42.8.
16. However, there is no rule that requires a party to serve on another party (whether active or not) a notice of the Court's listing dates. Here, there was no Court order requiring the plaintiffs (or the registry) to notify Mr Dennaoui of the hearing dates.
17. Where the Court chooses to proceed rather than adjourning, that does not foreclose an absent party from being heard once and for all. UCPR r 36.16(2)(b) allows the Court to set aside or vary a judgment or order after it has been entered if it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order.
18. Therefore, I do not consider that there is any impediment to the Court proceeding against Mr Dennaoui, who was absent on the allocated hearing dates. Instead, I consider the effect of UCPR r 29.7 is to provide power to the Court to either adjourn or proceed where a party is absent at the hearing. As no evidence was received providing a good reason for the absence of Mr Dennaoui in circumstances where the proceedings have been on foot since 2020, there is no justification for an adjournment, which would also be contrary to the overriding purpose of civil litigation in ss 56 - 60 of the Civil Procedure Act 2005 (NSW). That there is a right to an opportunity to be heard does not equate to a right to frustrate the hearing of proceedings by not attending them: Matta v Matta [2015] NSWSC 963 at [7] (Black J); In the matter of Central Management (NSW) Pty Ltd (in liquidation) [2017] NSWSC 1258 at [2] (Black J). In my opinion, there is no basis, nor utility, in adjourning the proceedings against Mr Dennaoui in the absence of any reasons for him not having filed an appearance or a defence or appearing at the hearing. There is no basis for assuming that he would have appeared at any adjourned hearing.
19. Accordingly, I am prepared to proceed to determine the case against Mr Dennaoui, despite his absence. If Mr Afyouni proves his case for damages for assault, he is entitled to relief: Re Anton Fabrications (NSW) Pty Ltd - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186 at [11] (Ward J). In circumstances where I am determining the whole case, there is no need for the notice of motion for default judgment to be separately determined.

Maroubra Joint Venture

1. In 2016, Mr Sadek and Mr Afyouni were close friends. Mr Afyouni called Mr Sadek his "brother". Their families went on holidays together and Mr Afyouni's children called Mr Sadek "uncle" and let him into their home without question.
2. In early 2016, Mr Afyouni and Mr Sadek agreed to carry out a property development together (Maroubra JV). The terms and termination of the agreement are key issues in dispute.
3. The terms of the joint venture were never recorded in writing and Mr Afyouni and Mr Sadek's respective versions of the conversations about formation and termination are different. The parties did sign a "Memorandum of Understanding" (MOU) on 30 December 2016, which merely recorded their respective financial contributions to the purchase of the joint venture property at Maroubra, with a statement that those contributions were to be treated as "a long term liability to be settled at the end of the job". There was no reference to interest. However, it was common ground that in terms of the Maroubra JV they agreed: 1. the parties would share the profits 50/50; and 2. the parties would be entitled to receipt of the cost of the materials they contributed to the project: Mr Afyouni for air-conditioning and Mr Sadek for dry trades.
4. While there were also disagreements about whether Mr Sadek was entitled to be paid for his materials and work along the way or only at the end, that does not matter since the project has been finished and Mr Sadek retained all proceeds of the sale of the Maroubra units.
5. At the beginning, the joint venture went well.
6. On 13 April 2016, with the assistance of an accountant, Robert Saade, Mr Afyouni and Mr Sadek created Elite Realty Development Pty Ltd (Elite) as the builder. Mr Afyouni and Mr Sadek were the only directors. Afyouni Holdings Pty Ltd, a company related to Mr Afyouni, held 50% of the shares in Elite, and Sadek & Co Pty Ltd, a company related to Mr Sadek, held the other 50% of the shares. There is no dispute that these companies are the alter egos of the individual men.
7. By July 2016, Mr Afyouni and Mr Sadek had identified a property in Maroubra, with a pre-existing development approval for 9 units, as a suitable development site (the Maroubra Property). They incorporated Maroubra Road Development Pty Ltd (MRD) to own the development site. Both Mr Afyouni and Mr Sadek were directors of MRD, and each held 50 shares through their own corporate entities.
8. On 13 July 2016, MRD purchased the Maroubra Property for $3.2 million. It raised finance using the principals' businesses and a property of Mr Afyouni as security. As recorded in the MOU, Mr Afyouni contributed approximately $170,000 towards the purchase and Mr Sadek contributed approximately $1,140,000. At the beginning, both men were alternative signatories on the bank accounts of Elite and MRD.
9. MRD, as owner, contracted with Elite, as builder, to carry out the construction work. A September 2017 Development Application Notice of Determination forecast the total costs of the development to be $7.558 million. Prior to construction commencing in late 2017, all units were sold off the plan, except unit 9. Those sales settled in late January 2019 for a total sum of $8,613,272.56. In 2017, a real estate agent valued the then unfinished unit 9 at $1,275,000. Unit 9 is currently owned by MRD, which is now completely owned by Mr Sadek.

Falling out and Kanebridge/KPI53

1. In May 2018, the parties fell out. The impetus to this falling out was a dispute over how to settle claims the parties' companies had against KPI53 Pty Ltd (KPI53).
2. Both Messers Afyouni and Sadek had provided their individual building services to Kanebridge Constructions NSW Pty Ltd (Kanebridge). KPI53 was a subsidiary of Kanebridge.
3. By November 2016, Kanebridge still owed Mr Afyouni's company (Conditionex) about $200,000. Kanebridge owed Mr Sadek's company (Render and Paint) about $1,300,000.
4. In March 2017, an agreement was signed whereby, in consideration for Mr Afyouni and Mr Sadek's companies releasing Kanebridge from the amounts owing, another Kanebridge subsidiary, KPI37, entered into a joint venture with Elite to develop a property at Avoca Beach (Avoca Beach JV Agreement).
5. Under the Avoca Beach JV Agreement, 50% of KPI53's interest in the land at Avoca (Avoca Property) was to be transferred to Elite. Elite was thereafter to partner with KPI37 to develop the property, on the basis that KPI37 would provide all capital contributions towards the construction up to $1,350,000, and thereafter Elite would contribute on a 50-50 basis. In effect, Messers Afyouni and Sadek were agreeing to purchase an interest in the project land for Elite by forgiving the debts owed to their companies. However, Elite would be responsible for contributing towards the development costs going forward.
6. In November 2017, Messers Afyouni and Sadek became aware that construction activity was proceeding at the Avoca Property without Elite's knowledge or involvement. Further, 50% of the Avoca Property had not been transferred to Elite as agreed. In an email dated 9 November 2017, Elite's lawyer Jason Cameron wrote to the directors of Kanebridge in the following terms: We note that we have lodged a caveat on the land on before [sic] of Elite Realty Development Pty Ltd in this regard. We further understand that development activities have been going on at the site, but without any notice of involvement with Elite. The joint venture agreement provided for monthly meetings and a process of decision making that involved all parties. Can you please advise your intentions in this regard.
7. In an email dated 30 April 2018, Mr Cameron complained to Kanebridge about KPI53's alleged breaches of the joint venture agreement. Mr Cameron also wrote: Further following another unsuccessful attempt yet again to organise a meeting to discuss the project our client was informed that you have sold the property to another entity. This came as a surprise to our client as there has been no discussion whatsoever between the parties in this regard. When our client indicated that this was a breach of the joint venture agreement, our client received a cryptic text message back which said included [sic] a suggestion that "the deal was never done". Your conduct constitutes a repudiation of the contract between the parties.
8. Elite's case is that Mr Sadek breached his director's duties to it in entering into a 2019 deed with the Kanebridge companies, whereby his company, Render and Paint, was compensated for the previous debts (March 2019 Deed). This is considered further below.

Escalation of dispute in May 2018

1. Tensions between the parties escalated particularly from May 2018.
2. On 3 May 2018, KPI53's former directors, Mr Simon Loulach, Mr George Najjar and Mr Marwan Rahme, met with Messers Afyouni and Sadek over a meal to discuss the Avoca Beach JV Agreement. Mr Afyouni recorded his recollection of the meeting in an email, noting: 1. KPI53 had sold the land or entered into some agreement with a third-party entity named "Arlan" because it did not have sufficient finance ("mortgage problem… not having funds to pay [the] mortgage"). 2. Mr Afyouni's belief he could set aside any transfer of land to a third party because of the existence of the Avoca Beach JV Agreement. 3. KPI53 wanting to do a "deal" by paying the amounts which had been owing to Mr Afyouni and Mr Sadek's companies, prior to entry into the Avoca Beach JV Agreement, with an allowance for interest - part in cash, and part in kind in the form of interests in units under development. 4. Mr Afyouni told them that he wanted "my legal share [of the project] with its profit" and insisted that he keep his "25% share in the project" and Mr Sadek instead wanted $750,000 for his share and to walk away from the Avoca Beach JV Agreement.
3. I was not taken to any documentary evidence to demonstrate that Elite could have performed its obligations under the Avoca JV Agreement, and what, if any, profit would have been realised. Further, it appears that KPI37 was not able to continue with the project as it did not have the finance and had in fact sold the land. If that is correct, then it would not have been possible for Elite to force the continuation of the joint venture and instead would have been left to pursue legal redress instead.
4. On 7 May 2018, Mr Sadek emailed Jason Cameron, Elite's lawyer, asking him to "finish Elite between us", and copied in Mr Afyouni.
5. That same day, Mr Cameron wrote in reply: If this is an agreed position, we could propose that a withdrawal of caveat form and deed of settlement be exchanged simultaneously with the receipt of a bank cheque. That way, both sides get what is promised.
6. Shortly after, Mr Afyouni wrote back: Jason, this is not agreed by me, it was omar initiative. I am taking them to court.
7. On 8 May 2018, Mr Sadek emailed Mr Afyouni and Mr Cameron to suggest either: 1. they accept the KPI53 cash/property offer: "Ok let's finish this, everyone gets his money and back to normal"; or 2. Mr Afyouni pay out the debt owed by KPI53 to Mr Sadek's company and Mr Afyouni could sue the Kanebridge entities: "I have about 90% of that deal and I'm in need for those money now if Hazem can pay me those money now and take the deal and fight the way he wants, more than welcome".
8. On 8 May 2018, Mr Afyouni also changed access to the Elite bank account (but not the MRD account), so that money could only be withdrawn if both men signed. Before that time, Mr Sadek, with the consent of Mr Afyouni, had been responsible for the construction of the Maroubra development, including engaging contractors and paying them. Up until about April 2018, Mr Afyouni had been taking care of the book-keeping with the assistance of Vicky Trassieh, who worked out of Mr Afyouni's factory. However, after Ms Trassieh left, Mr Sadek took over the book-keeping and the payment of invoices with the assistance of Fatima Berry, who worked out of Mr Sadek's business premises.
9. In cross-examination, Mr Afyouni said that he took the step to "block" the Elite accounts to protect his interests because he was now in a "fighting situation" concerning the dispute with KPI53 and needed to protect his assets. He denied he took this step to improve his negotiating position vis-à-vis Mr Sadek, but did say his intention was to "secure my interest" and that "I was putting pressure on him so … we can resolve it" and to hold up the Maroubra project.
10. The practical effect of Mr Afyouni's actions was that Mr Sadek could not use the blocked account without consulting Mr Afyouni. There is no evidence that Mr Sadek ever sought Mr Afyouni's consent to make any payment, nor informed him that payments were due to particular persons.
11. On 9 May 2018, Mr Afyouni made a "without prejudice" offer to Mr Sadek, with documents to be sent to his accountant, Mr Simon Khattar: … [who can do] the figures for Elite in Maroubra and one of us finishes it. Omar will be compensated with interest for his surplus of money. Part of the offer was also that they would make a counteroffer to KPI53.
12. Mr Afyouni accepted that, when he made that offer to Mr Sadek, he was not intimidated. However, his evidence was he "was scared of talking to [Mr Sadek]" because Mr Sadek is "very aggressive", or "I was not scared, I was avoiding him". I do not accept that Mr Afyouni was particularly scared of Mr Sadek at this stage, but it was an agreed fact that Mr Sadek used "aggressive language from time to time".
13. On 10 May 2018, Mr Sadek visited Mr Afyouni's home because Mr Afyouni was not answering Mr Sadek's calls, but Mr Afyouni was not there.
14. On 15 May 2018, Mr Sadek sent an email to accountant, Mr Khattar, and copied in Mr Afyouni and Mr Sadek's lawyer, setting out his point of view, including: In regards to Avoca Elite Kanbridge [sic] Deal, Render and Paint/Omar has $1,350mil in there and Hazem/Conditionex has 200k and after the meeting last night with Kanbridge with the offer we received of the full payment of the lot and your client refused and Kanbridge took the offer back and put it back to sleep. The JV will stay there and no deal/offer at this time. In regards to Maroubra Elite your client invested 200k and used one of his properties as the security for 400k and since that date Omar has been funding Maroubra Project, paying the loans, fees and everyday on site doing the construction when Hazem wasn't doing anything or paying anything. At some stage we were trying to get the construction loan for the project the bank asked us for the tax portal for the two of us, Omar had ot go and pay Hazem Afyouni/Conditionex tax bill of 250k to obtain the loan plus paid 450k from Render and paint to Conditionex as a loan. Now Hazem/Conditionex owns [sic] Omar 700k since 15/05/2016 exactly two years to date. … In the recent couple of days your client has stopped the Elite bank account and has caused inconvenience to our trades and labourers waiting on funds which has impacted the whole project. We are expecting a reply within 48 hours to inform us on the offer you are expecting also we need the bank account working back to normal because we have people waiting for their money.
15. Mr Afyouni understood from the final paragraph of this email that Mr Sadek was suggesting that the block on the bank account was causing problems with the site, but did not accept it in fact was, because he considered that contractors often wait for a few months to be paid and, in his words, "I know how it works".
16. Mr Afyouni agreed that Mr Sadek's email was not threatening, but he said the offer was "illogical" or "unfair", but his meaning was not explored.
17. On 15 May 2018, Mr Sadek also sent Mr Afyouni a text message: You are a very bad person and that's why you lost everything and should lose the rest of it When you couldn't get anything from Kanebridge you came after my kids money? I helped you way more than what you deserve No explanation was given for "my kids money", but I consider it is likely to refer to the Maroubra Property, into which Mr Sadek had invested over $1 million in cash. Mr Sadek did use the joint venture bank accounts "as his own" in transferring money between them and his other companies' accounts.
18. On 16 May 2018, Mr Sadek sent Mr Afyouni a text message: Answer you fucking dog Mr Afyouni accepted that he was not speaking to Mr Sadek at the time and that these text messages were not threatening his life, but were "intimidating".
19. Mr Sadek did not concede that the language indicated he was aggressive and angry. He said: [B]ut when someone's blocked the - your bank account to stop your project - $11 million project and all your life saving and your wife's savings for weeks and weeks and weeks and not answering the phone calls, okay, of course it's going to get you to a point where you're going to say things.
20. On 17 May 2018, Mr Khattar outlined Mr Afyouni's position to Mr Sadek: … we hereby propose the following offer for Hazem to walk away from the project at Maroubra: 1. Upon completion of the Maroubra project, Unit 9/315 Maroubra Road Maroubra is to be transferred to Hazem at no cost. 2. Hazem to receive his cash contribution (estimated to be approx. $300,000) back from the Maroubra project. 3. Hazem to receive his unit 1/12 Cape Three Point Avoca as security for Maroubra project back free of any mortgages. Please note if the above offer is agreed to, Hazem will release the funds to complete the project and will have no further involvement in the project. This will only be done once you exchange contracts for Unit 9/315 Maroubra Road Maroubra to Hazem Afyouni and once you provide a written agreement to refund Hazem back his cash contributions to the project as well as his secured unit clear of any mortgages. Please also note that the above offer is based on the information provided by you without verification and should the offer be rejected, then a thorough investigation would be carried out in relation to the costing of the project. This would lead to further delays and costs to the project. The above offer is for Maroubra venture only and any monies lent to Hazem and his companies by Omar can be dealt with when the Avoca issue is resolved. We await your response to the above offer.
21. Mr Afyouni accepted that he had not been threatened or intimidated by Mr Sadek at this stage even though, in his words, the "negative energy was building up" and he and Mr Sadek were clearly in a dispute.
22. While Mr Afyouni was making relinquishment of his involvement in the bank account conditional upon Mr Sadek accepting his offer, it is not clear whether he would have agreed to pay invoices that were due if he had been asked, which he was not.
23. Mr Sadek said he found Mr Afyouni's offer "outrageous".

Gun Attack

1. On 20 May 2018 at about 7.45pm, Mr Bilal Dennaoui, the Second Defendant in the Afyouni Proceedings, intimidated Mr Afyouni with a firearm, and demanded money. While Mr Dennaoui has not appeared in these proceedings, the parties do not dispute that the Gun Attack occurred. As detailed further below, Mr Afyouni described it as involving a struggle with arms, the pointing of a handgun at him and a verbal demand that Mr Afyouni pay Mr Dennaoui $50,000 or "unlock the bank account", so that Mr Sadek could pay Mr Dennaoui.
2. On 23 May 2018, Mr Dennaoui was arrested and charged with using an offensive weapon with intent to commit an indictable offence, namely intimidation of Mr Afyouni, and not having approved safe storage for firearms in his possession in accordance with requirements under the Firearms Act 1996 (NSW). It appears charge negotiations took place. On 25 October 2019, Mr Dennaoui was arraigned and pleaded guilty. He was sentenced to a term of imprisonment of 2 years 9 months. Mr Dennaoui served about three months in prison on remand and then a 33-month good behaviour bond. In his letter to the sentencing judge dated 12 December 2019, he wrote, inter alia, "I thought that if I scared Hazem he will turn around and pay what he owes me. I was never going to harm him. I accept what I did would have terrified him and I am extremely sorry for what I have done."
3. Mr Afyouni has sought damages from Mr Dennaoui for the tort of assault. He also sought damages from Mr Sadek on the basis that he procured the Gun Attack or Mr Dennaoui was Mr Sadek's agent. The plaintiffs submitted there was no difference between procurement and express agency. The law in relation to each is set out further below.
4. When asked whether he had a clear recollection of the Gun Attack, Mr Afyouni replied "to a certain extent". In fact, Mr Afyouni gave various accounts of the incident in his "000" call just after the event, his police statement and then to various other people (including psychologists) and in his affidavits.
5. In the "000" call he said, inter alia: they never shoot us but they threaten us, they hit, they hit my friend, my old man… there is some dispute over some work somewhere… Because there is some dispute between me and their friend at work, we have a development together and there is some dispute over the, the property… I know him yeah, this guys [sic] he works … a labourer of my partner… Because I froze the bank accounts
6. Mr Afyouni also gave a statement to the police that same day: Bilal stopped about 1 metre away from me and pulled a silver pistol out of his pocket and racked the gun. He had it pointed on an angle towards the ground and made a show of racking it … Bilal then came closer to me and pointed the gun at my stomach area and we had the following conversation: I said: "Bilal what are you doing here?" Bilal said: "Why you not paying me my money?" I said: "What money?" Bilal said: "You and Omar owe me fifty thousand, you blocked the account" I said: "Bilal move this away, Bilal move the gun away, don't do this" Bilal said: "Just pay me my money" I said: "Ok, ok, I'll pay you tomorrow Bilal, just keep this away" Bilal said: "Make sure you pay me tomorrow, otherwise I'll be back here tomorrow. You know me". … [Other man punched Mr Afyouni's friend in the face]. I am not sure if Bilal is owed money from the business as I do not oversee the construction stie. Omar would be able to determine if Bilal was owed money. … As a result of this incident I am fearful for my safety and the safety of my family. I am worried that Bilal may come back tomorrow.
7. Mr Afyouni's evidence was that he gave the statement because Constable Harding asked him to before he fled the country. Mr Afyouni said he did not want to put Mr Sadek on the police statement because he said that the police officer told him that if he mentioned Mr Sadek then he could be put in prison. He later indicated that he "could have had Omar arrested many times". When asked why he did not seek protection from the police from Mr Sadek his evidence was that he believed that if he left the country that would protect his family because he would not be around. The police records do include references to Mr Sadek being a "P/N" (person of note) and after the attack the police advised Mr Afyouni not to take calls from either Mr Dennaoui or Mr Sadek and to sleep somewhere other than his home. Mr Afyouni did not leave the country around that time.
8. Mr Afyouni's evidence in cross-examination was slightly different to his 000 call and police statement. When pressed, he said he precisely remembered Mr Dennaoui saying: 1. "Open the account so Omar can pay me"; 2. "You have to open the account otherwise I will come back tomorrow"; and 3. "I'll give you until Thursday, no no I come back tomorrow". This evidence was consistent with his affidavit in these proceedings and his 2019 affidavit in support of his (unsuccessful) AVO application against Mr Sadek. It also bears some resemblance to an intercepted telephone call Mr Afyouni had with Mr Dennaoui at the police's request on 22 May 2018.
9. I consider that Mr Afyouni was an honest, but not always impressive witness. He appeared to be fixated with the Gun Attack and what he perceived to be ongoing threats from Mr Sadek and the litigation. Mr Afyouni stated that the most significant event is the Gun Attack, which has "changed his life" - "that was the big one".
10. That may well be because he continues to suffer some psychological effects of that attack, even though the evidence of the psychiatrists giving evidence, Dr Robertson and Dr Parmegiani, was over a year old and was not very precise. Associate Professor Dr Michael Robertson, Psychiatrist, gave evidence that "events associated with threatened or actual harm to self are much greater in causing psychopathological states than other stressors… It is possible a person can develop an adjustment disorder because of financial threats or uncertainty or disputes with employers or co-workers".
11. Mr Afyouni rambled at times when giving evidence. He also laughed from time to time when giving evidence, which he described as a "sorrow laugh" and "not a happy laugh". Psychologist Dr Julian Parmegiani gave evidence that such a reaction was an odd, but human mannerism in some people who have experienced trauma.
12. Mr Afyouni would not accept that his police statement was wrong, even though he accepted that there was a clear difference in the exact language used in his various versions of the attack. I consider a fair reading of his statement was that Mr Dennaoui was communicating that he had not been paid because the account was blocked and that Mr Afyouni was to resolve the situation by unblocking the accounts and paying, rather than being a demand that Mr Afyouni pay Mr Dennaoui directly from another source of funds.
13. The defendants emphasised the fact that Mr Afyouni's affidavit did not contain the word "open", but rather "unblock" the account and that Mr Afyouni could not explain that inconsistency, other than saying that the meaning is the same. English is not Mr Afyouni's first language and I do not consider anything turns on the difference between the use of "open" and "unblock".
14. The defendants also tried to discredit Mr Afyouni by pointing out other inconsistencies in the different versions of his account, which I do not consider are particularly relevant, as they do not deal with real differences of substance; it was not suggested that the Gun Attack was not a scary event and Mr Afyouni conceded that there were differences in form because he was "under a big shock" and he was "shivering when I was talking to her [the 000 operator]". Some examples of inconsistences were: 1. On the "000" call he said there were 2 men who had attacked him with 2 guns, but in fact it was just one gun, which he accepted in cross-examination. 2. On the call he said they hit his friend with the "butt", but in fact his friend was punched. I do not consider these inconsistencies indicate that Mr Afyouni was an untruthful witness. I also accept he would have been in shock at the time of the incident and when calling 000 and giving the police statement. I consider the substance of what he said to be consistent across his various accounts.

Was Mr Sadek involved in the Gun Attack?

1. Mr Afyouni accepted that even if Mr Dennaoui had said that he wanted the bank account opened, that did not necessarily mean that Mr Sadek had told Mr Dennaoui to attack Mr Afyouni. However, he was convinced that Mr Sadek had sent Mr Dennaoui to threaten him. In his words, Mr Dennaoui "was a tool".
2. As detailed below, while Mr Sadek admitted that he told Mr Dennaoui to go and speak with Mr Afyouni so he could be paid, he denied having told Mr Dennaoui to make any threat or use a gun. He did not accept that any other pleaded conduct amounted to an assault or could be considered conduct amounting to duress.
3. I do not consider Mr Sadek was a credible witness. He appeared to be making up his answers as he went, and at times took an incredibly long time to answer simple questions. Mr Sadek denied many matters, where documentary evidence was all the other way. While I am conscious of the need to carefully assess evidence of all witnesses on each matter (see eg Saravinovksa v Saravinovski (No 6) [2016] NSWSC 964 at [468] (Kunc J)), I do not accept Mr Sadek's evidence on the issue of the Gun Attack.
4. Mr Sadek's affidavit evidence was he told Mr Dennaoui: [Hazem] has blocked the bank account. We are having an argument about a different deal and he will not let me use the bank account until it is over. … Me and Hazem did a deal with these guys who owed us money on invoices. They said they would give us a share of a project in Avoca but now they have sold it to someone else. We have been trying to sort it out. We can't agree and we are going to go our separate ways. He's got his accountant emailing me trying to work out how much money he should get. He has blocked this account to put pressure on me. …
5. Mr Sadek's evidence was that Mr Dennaoui then said, "I'll go and speak with him" and Mr Sadek responded, "Please do. Tell him to release all the money". Mr Sadek asserted that "I did not ask Bilal to do this [the Gun Attack]". However, in cross-examination, Mr Sadek did not emphatically deny he told Mr Dennaoui to intimidate him; instead he said: Q. When you say, "Go talk to him," you knew, if he approached Mr Afyouni, it wasn't just going to be to speak words. It was to intimidate him, to heavy him, to force him to pay; correct? A. Not really.
6. I consider that Mr Sadek asked Mr Dennaoui to go and intimidate Mr Afyouni for the following reasons.

Denial of relationship

1. Mr Sadek denied he was close to Mr Dennaoui and tried to suggest that Mr Dennaoui was instead very close to Mr Afyouni. Mr Sadek said in cross-examination that he knew Mr Dennaoui from him working with Mr Afyouni. However, the Telstra telephone records in evidence demonstrated that Mr Sadek and Mr Dennaoui were frequently in contact by phone calls and text messages. When presented with those records, Mr Sadek changed his position and said the contact was just to do with work, but then admitted they were "close". It would seem the only reason for Mr Sadek's original denial was to attempt to distance himself from Mr Dennaoui.

No money owing

1. Mr Sadek asserted in his affidavit that Mr Dennaoui (or his company, Advanced Trades Pty Ltd) was owed $70,000 by Elite or MRD at the time of the Gun Attack. I do not accept that Mr Dennaoui was owed any money for the following reasons.
2. Before the trial, the plaintiffs had sought from Mr Sadek documents demonstrating that Mr Dennaoui was in fact owed money at the time of the Gun Attack and nothing had been produced. During the hearing, 4 invoices, said to have been issued by Advanced Trades to Elite, were produced in answer to a call. Those invoices are suspicious for the following reasons.
3. First, Mr Dennaoui had never been a director, nor shareholder, of Advanced Trades Pty Ltd. Therefore, he was not 'owed' any money, and, at most, the company was owed money. There was no evidence from Elite's records of any work having been carried out by the company other than the fact of a payment of $760 in January 2018 for setting up fencing on a single day.
4. Secondly, no one from Advanced Trades gave evidence as to the existence of any debt. There were no references in any of the Maroubra financial records to a debt being owed to Advanced Trades, or that debt having been paid off later by Mr Sadek, despite his assertion that he had later paid all the contractors.
5. Thirdly, those invoices have odd features: 1. The invoice numbers are not all dated and are numbered 1, 2 and 3, and the fourth one unnumbered, but out of date order. 2. They do not include reference to "Bilal Dennaoui", but rather "Bill" and "Ahmed". The phone number next to "Bill" on those invoices was not that of Mr Dennaoui. 3. The solicitor for the plaintiffs' evidence was that the metadata appeared to demonstrate that the invoices were created on either 20 December 2018 or 14 October 2019, suggesting they did not exist in May 2018. A submission was made that one could speculate that they were re-issued in 2019, however, it might equally be said that there would have been no reason to re-issue them in 2019 as the project was finished, and they would not have been needed by Mr Sadek. In any event, no explanation was given for the failure to produce the invoices earlier in compliance with the notice to produce.
6. Fourthly, Mr Sadek's evidence about the size of the alleged debt changed without explanation. The invoices amount to a sum of about $64,984, which is close to the $70,000 referred to in his affidavit. However, only about $40,000 of the invoice sums are referable to the time between the project commencing and May 2018. In cross-examination, Mr Sadek's evidence was that $35,000 was owed rather than $70,000. In a telephone call recorded by the police on 22 May 2018, Mr Dennaoui asserted that $50,000 was owing, which is consistent with Mr Afyouni's recollection of the demand made during the Gun Attack. I do not accept that Mr Sadek would not have known the amount truly owing, if it was, when he was the person engaging the trades and paying them.
7. Fifthly, at the relevant time, there was money available to Mr Sadek to pay Mr Dennaoui, had he been owed money: 1. On 2 May 2018, Mr Sadek had transferred $50,000 to himself. 2. Mr Sadek continued to have access to MRD's bank account, which had $68,000 in it as of 8 May 2018. Although Mr Sadek initially denied having access to the MRD account and claimed that both the Elite and MRD accounts were blocked by Mr Afyouni, he subsequently accepted that, on 15 May 2018, he "took it" and had withdrawn $65,000 from the MRD account and paid that sum into his own account from the Elite account. 3. His evidence was that he often paid money from his company, Render and Paint, and then later reimbursed that company. He had invested over $1 million cash into the development.
8. There was no evidence that money was owing to any particular contractors other than Mr Dennaoui and Mr Sayed Jan (who only sought $720). This is despite Mr Sadek saying he had "[p]aid the concrete build, paid the steel bill, pay a lot of bills… There's all the invoices. There's all documents, all statement, they're all contactors, you know, I can fill up this room with 100 different factors [sic - contractors] can prove what I'm saying now". Further, when, on 29 May 2018, Mr Sadek recovered control of the Elite bank accounts, he did not move large amounts of money to pay contractors, which tells against any having demanded payment that could not be made at 20 May 2018. Even in relation to Mr Dennaoui, despite the plethora of text messages between him and Mr Sadek, there are none about money owing or of Mr Dennaoui threatening Mr Sadek to pay outstanding invoices.
9. I do not accept that the invoices are accurate reflections of any sums owed by Elite or MRD to Advanced Trades as at May 2018. Neither do I accept that Mr Dennaoui had verbally threatened Mr Sadek for not paying money owed.

Payment of Mr Dennaoui's legal fees

1. Mr Sadek attended Mr Dennaoui's bail hearing without providing an explanation why he did so, particularly where his original evidence was that they were not "close".
2. Mr Sadek's sworn evidence was that he caused Elite to pay $10,500 towards Mr Dennaoui's legal fees. However, in fact, in December 2019 and January 2020, well after the Maroubra development was complete and it would be expected that all contractors had been paid, Mr Sadek's company Big Homes paid $45,000 for Mr Dennaoui's legal fees in circumstances where Big Homes did not owe Mr Dennaoui any money. Mr Sadek's explanation was that he was paying the legal fees because Mr Afyouni had promised to do so, which I do not find credible, particularly where Mr Sadek's own affidavit evidence was that he told Mr Afyouni, "I need to cover Bilal's legal fees".
3. Mr Sadek said that he paid the legal fees instead of the money owing for work. However, in Mr Dennaoui's letter to the sentencing judge in December 2019, he stated: "The $50,000 debt is outstanding and I don't believe I will ever recover that money." It is not possible that Mr Dennaoui and Mr Sadek were both truthful on this issue, but both could be lying.

Denial of communicating with Mr Dennaoui on day of attack

1. Mr Sadek denied he spoke to Mr Dennaoui on the day of the Gun Attack. However, the telephone records clearly demonstrate that the two men communicated and in fact met on that day before the Gun Attack, as Mr Sadek finally conceded in cross-examination.
2. The relevant chain of text messages between the men that day was: 7.10am Sadek: Need to see you today. It's so urgent. 9.27am Dennaoui: Done I'll c Yu soon 11.56am Sadek: Still coming? Dennaoui: Yes I'm in Greenacre Yu need anything before I come Sadek: No thanks Waiting for you Dennaoui: Won't be long Sadek: [thumbs up emoji] Leaving soon Need to get the kids some stuff Dennaoui: Driving now wallah 10 Come out 4.29pm Sadek: Please don't forget me tonight Dennaoui: All good working on something now Our best player is gone Sadek: What's the other options? 7.04pm Dennaoui: Hey bro just checking for the contract of sale … I came to ur house ur wife answered said you not home Sadek: I'm working on it Dennaoui: Yu told me to come get it … I'm going home I'll c Yu in the morning bro
3. Mr Sadek's explanation for these text messages was unconvincing. His explanation for the "urgency" of seeing Mr Dennaoui at 7.10am on a Sunday was that it concerned work and the fact that Mr Dennaoui was "behind on work". Mr Sadek accepted that Mr Dennaoui had come to see him, but again said it was about work. Mr Sadek's explanation of why he asked Mr Dennaoui to "not forget" him that evening was that Mr Dennaoui was having a barbecue with his workers and Mr Dennaoui should not forget to tell Mr Sadek how many people are coming to the barbecue. The "best player" was said to be a good worker who was unavailable and "other options" only concerned other workers available to help finish work on the site.
4. In Mr Sadek's words: If someone's going to get someone to go after someone for a gun, he's not going to go and put it in writing and say, look, oh, look, my best brother is going to kill that guy tomorrow, and yeah. No, no, no.
5. It is difficult to understand the message about the "contract of sale": Mr Sadek said he was separately negotiating with Mr Dennaoui to sell a property and Mr Sadek was working on that document, even though he had lawyers preparing it.
6. If Mr Dennaoui was having a barbecue with his workers, it seems unlikely that Mr Dennaoui would have been at Mr Sadek's home at 7pm asking about a "contract for sale". While Mr Dennaoui's message said that he was going home, he did not, as he went to Breakfast Point and attacked Mr Afyouni. The telephone records also demonstrated that Mr Dennaoui was back in Mr Sadek's suburb by 8.36pm following the Gun Attack.
7. I do not consider it credible that Mr Dennaoui would be prepared to visit Mr Sadek and discuss work throughout Sunday and into the evening and "urgently" make arrangements to ensure that there would be workers on site the next day, if he was owed so much money that he was prepared to verbally threaten Mr Sadek and to attack Mr Afyouni. Mr Sadek could not credibly explain this.
8. Further, I note that Mr Sadek's suggestion that their meetings on 20 May 2018 were about work for the next week was inconsistent with what Mr Dennaoui told a psychologist, Dr de Santa Brigda, who prepared a report to assist him in sentencing, where he asserted he had other jobs to do: Mr. Dennaoui stated that the first invoice was unpaid and then the second invoice was unpaid. He reported that Omar and Hazem Afyouni then had a disagreement and he started to become extremely concerned about non-payment of the invoice. He reported that initially he used his own funds to pay staff, but his funds then ran out. He reported that there were other jobs which were due to start, but he did not have the funds to buy the materials for the work.

Inconsistent evidence of knowledge of attack

1. Mr Sadek said he did not find out about the Gun Attack until "way after" and that he could not speak to Mr Dennaoui because he was "locked up". He also said: "He only called me and told me from custody". However, his affidavit evidence was that he found out about the attack from Mr Dennaoui's family after he had been arrested. Also inconsistent with this is Mr Sadek's evidence of his conversation with Mr Afyouni on the evening of 22 May 2018, when Mr Sadek claims he said, "I need to cover Bilal's legal fees", when, at that point in time, Mr Dennaoui had not yet been arrested. I consider this a further example of Mr Sadek inventing his evidence to suit himself.
2. I consider that Mr Dennaoui either met with Mr Sadek or called him shortly after the Gun Attack. It is likely that they discussed it the next day also. For example, Mr Sadek called but did not get through to Mr Dennaoui the day after the Gun Attack on 21 May 2018 at 7.27am and their text messages indicate that they also met that evening.
3. Further, the recorded telephone call between Mr Dennaoui and Mr Afyouni on 22 May 2018 had Mr Dennaoui ending the call stating, "I'm gunna go see [Sadek] now". The telephone records also show that the men spoke at 6.20pm on 22 May 2018.
4. I do not accept that Mr Sadek did not speak to Mr Dennaoui about the Gun Attack shortly after the Gun Attack, and I consider Mr Sadek's various inconsistent answers were an attempt to avoid admitting his involvement.

Denial of provision of home address

1. Mr Sadek denied he had provided Mr Dennaoui with Mr Afyouni's home address. His affidavit evidence was, "I never gave anyone Hazem's home address", and "I did not tell Bilal where Hazem lived". I consider that evidence false, at least because: 1. He sent text messages to Mr Sayed Jan with Mr Afyouni's home and business addresses and phone number, and Mr Jan was only owed $720. 2. In circumstances where Mr Sadek's affidavit evidence was he told Mr Dennaoui, "Hazem is the one holding up payment, go speak with him about your money" or "Hazem controls the money, speak with him about your money", I consider Mr Sadek also provided Mr Dennaoui with Mr Afyouni's home address so he could "speak with him".

Aggression to others

1. The plaintiffs rely on other evidence said to demonstrate that Mr Sadek was aggressive and threatening, to support the submission that it can be more easily found that Mr Sadek was responsible for the Gun Attack.
2. On 26 June 2018, Mr Afyouni withdrew $200,000 from the Elite bank account, which he considered was his first payment of the settlement sum of $700,000 (discussed further below).
3. Two of Mr Afyouni's employees, Mr Stuart O'Reilly and Mr Mohammed Ali gave evidence that, in June 2018, at a time when Mr Dennaoui was in jail on remand, Mr Sadek said to them: To Mr O'Reilly: Your boss is a dog. He is a coward. I try call him, he won't answer I want my work done and you guys get the fuck off my job. Who does your boss think he is taking money from our account and he doesn't think I will notice. I have sent one guy to jail and have no problem sending another. Watch when all this is sorted, Hazem will flee to Lebanon because he knows I will kill him for what he has done. He has made big mistake fucking with me. To Mr Ali: Hazem thinks he can mess with me. I will show him. He thinks he can steal money from me and I won't notice. If I can send one person to jail, I can send another one no problem. Just wait til this finishes, he will have to leave the country.
4. Both Messers O'Reilly and Ali were cross-examined about their evidence, but I accept they were honest and credible witnesses and I accept their accounts. It is likely that Mr Sadek was angry because Mr Afyouni had taken money without regard to him. However, his reference to sending someone to jail and Mr Afyouni needing to flee the country is consistent with Mr Dennaoui being in jail and threats being made to Mr Afyouni when he "crossed" Mr Sadek.
5. I also note that, in cross-examination, Mr Sadek volunteered that Mr Ali and Mr O'Reilly's evidence was incorrect because "they know, if [Afyouni] goes to Lebanon - Lebanon will be easier if I want to get at him". His subsequent qualification, "That's if - if that - I'm that type of person", appeared to me to be an afterthought and it is quite telling that he even suggested his ability to "get at" Mr Afyouni like that.
6. Mr Ali was also cross examined in relation to certain recordings of telephone calls he had with Mr Sadek, Ms Fatima Berry and Mr Afyouni taken on his phone. Mr Ali gave evidence that, in 2018, he had a practice of using an application on his phone to record telephone conversations and would decide whether to record a particular conversation upon receiving a call.
7. Senior counsel for Mr Sadek objected to the admission of the recordings on the basis that they were, firstly, in breach of s 7(1)(b) of the Surveillance Devices Act 2007 (NSW) (SD Act) and, if the recordings fell into an exception under s 7(3), they should be excluded, unless I allowed them under the general discretion under s 138 of the Evidence Act 1995 (NSW). During the hearing, I decided all recordings (except the first) were admissible either because of the exceptions in the SD Act or pursuant to the discretion under s 138. Nothing turns upon that determination because I consider the recordings of insufficient relevance to place any weight on them in the circumstances of the case as a whole.
8. On 8 August 2018, two unknown men came to Mr Afyouni's factory, and Mr Afyouni believed they were sent by Mr Sadek, reasoning that he had "never had a problem before" and "it looked awkward … wrong" and "suspicious", because one had his head down, not looking at the factory security camera, and it made Mr Afyouni's employees feel uncomfortable or "scared". It is not obvious from the CCTV footage photos whether the men were there on business. Mr Afyouni also gave evidence that they did not return in relation to business or at all and that the men were people he had never done business with nor been introduced to. It is not possible to determine if these men were sent by Mr Sadek to intimidate Mr Afyouni. Further, in October 2018, bullet casings were found outside Mr Afyouni's factory. Mr Afyouni also gave evidence that in January 2019, "two men approached" him in Cabarita. I do not consider it possible to conclude that Mr Sadek was responsible for these other incidents. Indeed, Mr Afyouni accepted that under cross-examination. Q. You have nothing to tie that to Omar, correct? A. Yes, I mean I'm just saying, I mean, okay. Just saying. I don't know if I 35 have mentioned it to the police. Q. So am I right that after the incidents that you've described, particularly the cartridges in October 2018, there was nothing that happened, no threat or harassment after that date, that you could tie to Omar, is that right? A. Yes.
9. I do not put weight on this evidence of aggression to others as demonstrating Mr Sadek was more likely to have been involved in the Gun Attack. However, I do consider the evidence provides a basis for Mr Afyouni's belief that Mr Sadek was continuing to intimidate him.

Statements by Mr Dennaoui about Mr Sadek

1. On 22 May 2018, the police asked Mr Afyouni to call Mr Dennaoui so they could record the call. As Mr Dennaoui did not know the call was being recorded by the police, I consider that Mr Dennaoui had no reason to lie to Mr Afyouni. That telephone call indicated that: 1. Mr Dennaoui had spoken to Mr Sadek about his confrontation with Mr Afyouni on 21 May 2018 and told Mr Sadek that Mr Afyouni had said "everything's gunna be sorted". I accept this evidence means that Mr Sadek was untruthful in his evidence about when he spoke to Mr Dennaoui after the Gun Attack. 2. Mr Dennaoui's concern was not solely to secure money allegedly owed to him, but rather to see that Mr Sadek and Mr Afyouni reached an agreement to resolve their dispute, about which he knew all the details.
2. Part of the transcript of the call is as follows. It must however be remembered that the transcript does not record the tone of the call or the speed of the conversation, which would obviously be relevant to a complete assessment of the likely impact of the call on Mr Afyouni: [Dennaoui] …consider, I have to do what I have to do, I need my money. … [Dennaoui] You know me and I know you, I know your office, I know your house, I know your kids' school. I know everything, why are you gunna make my life hard for me when, when we know so much about each other?. … [Dennaoui] Listen to me carefully (Fuck Omar, and fuck) the calculations, and fuck everyone. I do the job. I have a family I need to feed. You're not talking about $1000.00, $2,000.00, $3,000.00. Omar was tellin' me, I can't pay you. I've already had to put too much into the business this and that (Omar told me everything). (And why you) …just take your three, you can take 300 grand today, and walk away with everything, do you know what I mean… [Afyouni} OK. All I'm asking for is to do the calculation with Omar and pay everyone off, that's all I'm saying. … [Dennaoui] I'll tell you…. Straight away. I went to Omar yesterday. Omar, after I spoke to you, I went straight to Omar the next day, yesterday. I sent to Omar, I go. Look, and I spoke to him, everything's gunna be sorted today, 'cause that's what you told me. You told me you're gunna sort everything out for me yesterday. [Afyouni] (SIGHING) [Dennaoui] Nothing got sorted. … … [Dennaoui] …Omar gave you an offer… you haven't knocked it back yet [Afyouni] I, I did knock it back, all, it's all knocked back, it's all not accepted, every, nothing of it is true, none of it. … [Dennaoui] …from what I know, Omar didn't come up with the numbers out of the blue, I'll tell youse what… … [Dennaoui] … I know, if you try it or not. There's 700,000 …the personal money… Yeah, so you owe Omar per, per, that's what I just said… … [Dennaoui] Brother, I'm not an idiot, I'm not an idiot, I'm not gunna come down… and do what I have to do when I don't know nothing. I know everything. So, in Avoca, in Avoca there's 300,000 of yours. ,,, [Dennaoui] OK. I'm gunna call Omar and then I'll send you a message … Call me back… let me call Omar, I'm gunna sort this out… [Dennaoui] Because I've got till Thursday, Hazem. I don't, I'm tellin youse, both… [Afyouni] (my dear) [Dennaoui] … things will be, things are gunna happen… [Afyouni] (My dear) listen, listen… [Dennaoui] …Thursday … [Afyouni] … there is one thing you can do to solve this situation, is to work out with Simon, give him all the documentation he needs… and let us sort out the payment, and I'm happy to sign off every cheque that there is, and that's it. [Dennaoui] …OK, you know, you know Omar… … [Dennaoui] …you know, you know to me… [Dennaoui] ---who, who's Omar to me, who's Omar to me? [Afyouni] I don't want to, I don't want to know anything, all I know is --- [Dennaoui] Who's Omar to me? [Afyouni] ---that Simon, let Simon work things out with you. [Dennaoui] All right, who's Omar to me, Hazem, who's Omar to me? [Afyouni] He's, he's your brother {what} [Dennaoui] He's my brother. [Afyouni] {True} [Dennaoui] No-one's gunna no one is gunna {deprive anyone of what he is entitled to} anyone, not, he's not gunna deprive you of what you are entitled to and you are not gunna deprive him of what he is entitled to. [Afyouni] {Now you got} in between, you are in between to solve the situation [Dennaoui] No, no I'm not solving nothing. [Afyouni] {Now you are becoming a} mediator [Dennaoui] ----I'm just saying---- [Afyouni] {You have become a} mediator? [Dennaoui] No, no, I'm not. I'm just telling you how it is. I'm not making nothing. I'm not saying nothing. I'm saying, at the end of the day) {No one is going to deprive anyone of what he is entitled to} [Dennaoui] If there is trouble} brother, bring 'em, bring everyone that you know, bring 'em to me. Bring anyone, you want to call boys, you want to call people, bring 'em , I'm waiting for 'em . I work for anyone. [Afyouni] What kind of a talk is this? [Dennaoui] No-one is gunna {no one is going to deprive} anyone {of what he is entitled to}, that's the bottom line. I'll speak to youse both?? Hazem, I'm gunna be going to your office a lot. Trust me when I tell you - - - [Afyouni] {Alright} [Dennaoui] - - - I'm gunna find….I'm gunna be bumping into youse. … [Dennaoui] Youse don't want this. {Yea} …. [Afyouni] If I have a problem…. … [Afyouni] ---with Omar, why should I bump into you? [Dennaoui] You, but listen to what I'm telling you, you've got a problem with Omar, who's got a problem with the whole world now, because of your problem with Omar. both of youse are, both of youse are men. if I have a problem - - - [Afyouni] {Dear} all I'm saying is, let him see the accountant - - - [Dennaoui] I know, but the thing is, you're not understanding, it's not getting sorted till everything gets sorted, the whole situation, it's not Alek(?), Alek(?) is not just the problem now, there's Avoca that's the problem, there's a 650 grand a year, Omar personally, that's a problem.
3. I consider that this call further demonstrates that Mr Dennaoui had been sent by Mr Sadek to threaten Mr Afyouni on 20 May 2018, and was continuing with language that Mr Afyouni could reasonably understand as threats designed to encourage the termination of the Maroubra JV, and that Mr Dennaoui was indicating that it had to happen quickly: "everythings gotta be sorted by Thursday", which was 24 May 2018.

Was Mr Sadek motivated by a need for funds?

1. The plaintiffs submitted that another reason why Mr Sadek sent Mr Dennaoui to threaten Mr Afyouni to unlock the bank accounts urgently was because Mr Sadek wanted to use the joint venture bank funds to purchase a different property at Matraville for his own benefit.
2. Mr Sadek had purchased a property at Matraville that was settling on 18 May 2018. Mr Sadek did not have sufficient loan funds to finalise the purchase, and, in the end, Mr Sadek had to seek a short-term high interest loan for about $400,000. It was suggested that, had the bank accounts not been blocked, Mr Sadek would have used the joint venture funds for that purchase. While this may have been a motivation, I do not consider it has been demonstrated that Mr Sadek was going to use the joint venture bank accounts for this purpose as alleged, for example, because the blocked bank account did not contain $400,000.
3. In relation to Matraville, the plaintiffs also alleged that it was intended as "the next joint venture development". This is considered below.

Joint Tortfeasor

1. Mr Afyouni has sought damages against Mr Sadek and Mr Dennaoui, including aggravated and/or exemplary damages, for personal injury caused to him "at the agency or instigation of the First Defendant".
2. A main issue is whether Mr Sadek is liable in tort for the Gun Attack, during which it was not in dispute that Mr Dennaoui produced and subsequently cocked a handgun. An unknown individual accompanying Mr Dennaoui also punched Mr Afyouni's friend in the face. Nothing is made of the presence of the unknown individual. Senior counsel for Elite submitted that there was an assault and a battery during the Gun Attack.

Battery

1. The tort of battery requires a direct, intentional act which causes contact with another person's body without consent: Binsaris v Northern Territory (2020) 270 CLR 549 at 566 (Gageler J). During the Gun Attack, Mr Afyouni told the police in his statement dated 20 May 2018 that he and Mr Dennaoui held each other's forearms: During the conversation Bilal and I had been holding each other's forearms. I was trying to prevent the gun from pointing at me. Bilal was trying to stop me from gripping his hand and moving it down.
2. It is not entirely clear on the evidence whether Mr Afyouni first initiated contact by holding Mr Dennaoui's forearms. However, nothing turns on that point.
3. Senior counsel for Mr Sadek accepted that the struggle amounted to a battery. In my view, the existence of the battery, in addition to the assault, has an effect on the damages that may be payable. Plainly, it is the combined effect of the assault and battery during the Gun Attack that has resulted in the psychological damage of which Mr Afyouni complains.

Assault

1. The tort of assault requires a direct and intentional threat by the defendant that places the plaintiff in reasonable apprehension of an imminent contact with his person, either by the defendant or by some person or thing within the defendant's control: Barker, Cane, Lunney and Trindade, The Law of Torts in Australia (5th ed, 2012, Oxford University Press) at 44-54. Mr Afyouni must also establish that Mr Dennaoui, as a matter of causation, caused Mr Afyouni's injury and that such injury is not too remote.
2. To establish factual causation, the Court can use the "but for" test as a guide: March v Stramare (1991) 171 CLR 506 at 508 (Mason CJ with whom Deane, Toohey and Gaudron JJ agreed). Doubt has been expressed in relation to the place of "common-sense" in the causation analysis: Tapp v Australian Bushmen's Campdraft and Rodeo Association Ltd [2022] HCA 11 at [101] and the authorities collected therein (Gordon, Edelman and Gleeson JJ). No submissions were made to suggest that Mr Dennaoui's assault did not cause Mr Afyouni's injury, or that the harm to Mr Afyouni was too remote. I am satisfied that the Gun Attack caused damage to Mr Afyouni and that damage was not too remote so as to be compensable.
3. It was not submitted that Mr Sadek was liable for the tort of assault in relation to text messages he sent to Mr Afyouni, though I note that words alone can amount to an assault: Barton v Armstrong (1969) 2 NSWLR 451; [1976] AC 104. The imminency of the written threats is a question of degree: R P Balkin and J L R Davis, Law of Torts (4th ed, 2009, LexisNexis Butterworths) at 45 [3.21] citing Zanker v Vartzokas (1988) 34 A Crim R 11 at 16 (Taylor J).
4. The tort of assault is actionable per se, but Mr Afyouni can also sue for damage if he has suffered it, as discussed further below.

Joint tortfeasor

1. Apart from denying Mr Sadek's responsibility in Mr Dennaoui's attack, the defendants submitted that the plaintiffs must be held to their specific pleading, which required the "instigation or encouragement" of specifically the Gun Attack (as pleaded) and it was not open to the plaintiffs to run any case based on common design or agency.
2. The defendants accepted that the plaintiffs had pleaded that: 1. the various conduct including the Gun Attack "constituted threats… to inflict harmful or offensive contact upon Mr Afyouni"; and 2. the conduct was "at the instigation or encouragement" of Mr Sadek; and 3. Mr Sadek had the intention that the conduct "would create in the mind of Mr Afyouni an apprehension that harmful or offensive contact would be carried out against him". However, the defendants' submission was that the material facts making up the common design or agency should have been pleaded and they were not. For example, it was complained that there was no exposition of what the common design was or the type of agency and the scope of that agency.
3. I do not accept that more was required in the pleading for the defendants to understand the case brought against them. The pleading provides that Mr Sadek instigated or encouraged Mr Dennaoui to carry out acts that constituted threats to inflict harmful or offensive contact on Mr Afyouni. I consider that those factual elements are sufficient for the application of legal concepts of at least: 1. procuring a tort of assault; and 2. joint tortfeasors with a common design. I consider the principles below, noting that the defendants did not cite any authority or develop any submissions on the law.
4. Whether Mr Sadek is liable for Mr Dennaoui's tort leads into what has been described as "one of the last great unexplored areas of private law": Joachim Dietrich and Pauline Ridge, Accessories in Private Law (1st ed, 2015, Cambridge University Press) at xxi; see generally Henry Cooper, "Liability for Assisting Torts" (2017) 41(2) Melbourne University Law Review 571.
5. Halsbury's Laws of Australia defines "joint tortfeasors" as follows: Joint tortfeasors are two or more persons who together are held jointly and severally liable for the same tort. Joint liability arises because their acts have combined to produce the one damage, and those acts were intended, or in law were taken as intended, to be one act or design: (1) vicarious liability; (2) the liability of a principal for the tort of the agent; (3) the joint breach of an obligation; and (4) a tort being committed by persons taking 'concerted action to a common end'. Each of the tortfeasors is liable for the entire loss and satisfaction of the loss by one joint tortfeasor discharges the liability of the others. Similarly, Professor Paul Davies, in his book Accessory Liability (2015, Hart), wrote at 184: It is clear that accessory liability can attach to so-called 'intentional torts'. If a defendant deliberately persuades another to beat up the claimant, imposing accessory liability upon the defendant is uncontroversial.
6. According to Dietrich and Ridge (at 11), accessorial liability has the following features: 1. A primary wrong committed by the principal wrongdoer, which here was the Gun Attack (assault); 2. Some involvement by the accessory in the principal wrongdoer's commission of the wrong (Conduct element), which Mr Afyouni submitted can be inferred, and is considered further below; and 3. Such involvement is accompanied by a requisite mental state, which is generally knowledge by the accessory of the principal wrongdoer's conduct or intended conduct that constitutes the wrong (Mental element).

Conduct Element

1. Mr Sadek will be considered a joint tortfeasor with Mr Dennaoui if: 1. he "procured" Mr Dennaoui to commit the tort; or 2. Mr Dennaoui carried out the tort pursuant to a "common design" with Mr Sadek.
2. Although procurement and common design are taxonomically separate categories, the cases often conflate the two. As McCombe J has noted, "the precise ambit [of common design] is … far from clear": Mutua v Foreign and Commonwealth Office [2012] EWHC 2678 at [91].

Common Design

1. The leading case on common design is The Koursk [1924] P 140, in which the English Court of Appeal considered the joint tortfeasor principles where an innocent ship (The "Itria") was damaged by two wrongdoing vessels ("Clan Chisholm" and The "Koursk"). The owners of The Itria sued the owners of the other vessels alleging separate and independent acts of negligence against each of them. The question was whether judgment recovered against the Clan Chisholm barred a further action by the owners of The Itria against the owners of The Koursk. This depended on whether the owners of The Koursk and Clan Chisholm were joint or several tortfeasors.
2. Bankes LJ held (at 151-152) (emphasis added): … in order to constitute a joint tort there must be some connection between the act of the one alleged tortfeasor and that of the other. It would be unwise to define the necessary amount of connection. Each case must depend on its own circumstances. The learned authors of Clerk and Lindsell on Torts, 7th ed., p. 59 say this: "Persons are said to be joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a common design" … Later they say "[But mere similarity of design on the part of independent actors, causing independent damage, is not enough;] there must be concerted actions towards a common end." See also Scrutton LJ at 155.
3. Lord Toulson JSC restated the principles in Fish & Fish Ltd v Sea Shepherd UK [2015] AC 1229 at 1248 (Fish & Fish) at 1238-1239 [21]: To establish accessory liability in tort it is not enough to show that D did acts which facilitated P's commission of the tort. D will be jointly liable with P if they combined to do or secure the doing of acts which constituted a tort. This requires proof of two elements. D must have acted in a way which furthered the commission of the tort by P; and D must have done so in pursuance of a common design to do or secure the doing of the acts which constituted the tort. I do not consider it necessary or desirable to gloss the principle further.
4. Lord Neuberger observed at 1248 [55]: It seems to me that, in order for the defendant to be liable to the claimant in such circumstances, three conditions must be satisfied. First, the defendant must have assisted the commission of an act by the primary tortfeasor; secondly, the assistance must have been pursuant to a common design on the part of the defendant and the primary tortfeasor that the act be committed; and, thirdly, the act must constitute a tort as against the claimant.
5. The "common design" formulation of joint tortfeasors has been adopted in Australia. In Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 (Thompson), a defamation case, the majority considered and applied The Koursk. At 580-581, Brennan CJ, Dawson and Toohey JJ observed (Gummow J agreeing at 600; Gaudron J agreeing with Gummow J at 591): [F]or there to be joint tortfeasors "there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage". Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort. Torts of all kinds may be joint …
6. John Dixon J stated in a summary judgment application in a defamation case, Defteros v Google Inc (2017) 54 VR 592 at 604-605 (emphasis added): A tort may be imputed to several persons or entities as joint tortfeasors where there is evidence of concerted action, that is, 'concerted action to a common end', and not mere parallel activity or 'a coincidence of separate acts by which their conjoined effect cause[d] damage'. The critical element is that those participating in the commission of the tort acted in furtherance of a common design. Broadly speaking, this means a conspiracy with all participants acting in furtherance of the wrong, although it is not necessary that they should realise they are committing a tort. All persons acting in pursuance of a common end, being so identified with each other, are responsible for the entire consequences of their concerted action.
7. Balkin and Davis (4th ed, 2009) suggest that there must be "some form of agreement, express or implied, to undertake the activity complained of": at 816 [29.25]. The authors cite in support XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 and Louis Vuitton Malletier SA v Toea Pty Ltd (2006) 156 FCR 158 (Louis Vuitton) at 192-193. The UK position is also that common design can involve an implied agreement: see eg Unilever PLC v Gillette (UK) Ltd [1989] RPC 583 at 609 (Mustill LJ); Fish & Fish at 1249 (Lord Neuberger).

Application

1. The defendants submitted that common design could not be found here because: 1. there was no evidence of an agreement between Mr Sadek and Mr Dennaoui that Mr Dennaoui should threaten Mr Afyouni; and 2. there was no common purpose, because Mr Sadek's purpose was unblocking the accounts and settling the joint venture, whereas Mr Dennaoui's purpose was to be paid money he claimed he was owed.
2. Furthermore, it was said that Mr Sadek denied in cross-examination that he had sent Mr Dennaoui to "heavy" Mr Afyouni: Q. You know what "to heavy" someone means? When someone's "heavying"? A. To "heavy" someone? Q. Yeah. "To heavy." In other words, to physically intimidate. To force. To heavy someone. A. Yeah. Q. You knew that that was going to happen on 20 May? A. No. I did not. Q. You sent him there to speak to him about money on the understanding that he was not just going to speak to him, but he was going to heavy him? A. Never said-- Q. Correct? A. I never said. Q. Just deny it if you don't accept it. A. Yeah. I never said. Yeah. I've never said - like, I've sent someone. All I said was, "You can go talk to him."
3. I do not accept the defendants' submissions. It is not surprising that there is no evidence of express agreement, as Mr Sadek denied any agreement and Mr Dennaoui did not give evidence. However, an agreement can be inferred. The evidence of Mr Sadek and Mr Dennaoui's phone conversations and text messages allow an inference that they had conversations in which an agreement was reached. Further, I do not accept Mr Sadek's evidence on this issue. I find that Mr Sadek and Mr Dennaoui acted together in concert to achieve the common end of threatening Mr Afyouni in such a way as to pressure him to relinquish his involvement in and control of the bank accounts and the Maroubra JV to Mr Sadek.
4. I accept that Mr Dennaoui's demand for payment was a "smokescreen" to distance Mr Sadek from the Gun Attack, because I have found that Mr Dennaoui was not owed any money.

Mental Element

1. There is no clear statement of the mental element requirement in Australia. It was not addressed in Thompson, because in that case it was clear the joint tortfeasors knew of the other's involvement in the tort.
2. A question here is whether it was necessary for Mr Sadek to know that Mr Dennaoui would use violence or a gun rather than just requesting Mr Afyouni to open the accounts.
3. The plaintiffs submitted that such knowledge is not necessary, relying on Fish & Fish as authority for the proposition that it would "be sufficient for this purpose that the acts were done in pursuit of a campaign" and that campaign was approved by Mr Sadek with the knowledge "that the campaign involved a preparedness, if need be, to use violent intervention" (at [27] per Lord Toulson JSC). Those statements by Lord Toulson are obiter and would suggest that Mr Sadek must anticipate "violent intervention".
4. I do not consider it necessary to decide the precise nature of the mental element in this case, because I am satisfied that Mr Sadek knew that Mr Dennaoui was going to "heavy" Mr Afyouni and intended that Mr Dennaoui do so. It is sufficient that Mr Sadek and Mr Afyouni "combined to secure the doing of acts which in the event prove to be tortious": Fish & Fish at 1239 [24] (Lord Toulson). That common design could not have been carried out without committing a tort: Fish & Fish at 1249-1250 [60] (Lord Neuberger). See also Schumann v Abbott and Davis (1961) SASR 149, where Reed J found the defendant was a joint tortfeasor when he was willing to attend premises with others with a common purpose, but as "little more than an onlooker" and "even though as to some of the incidents he may not have anticipated that they would happen".
5. It need not be proved that Mr Sadek knew that Mr Dennaoui was going to use a gun, however, on balance I consider that Mr Sadek did have that knowledge. Mr Sadek's evidence was that Mr Dennaoui had threatened him previously and he knew that Mr Dennaoui owned "firearms". I do not accept Mr Sadek's evidence that he only found out about the use of the gun "way after". I am satisfied the common design here was expressed, like in Schumann, with general objects, namely, to "heavy" or intimidate Mr Afyouni and those objects encompassed the assault that took place during the Gun Attack.

Procurement

1. In case I am wrong in finding a common design, a joint tortfeasor relationship can also be established by the principles of procurement: 1. The primary wrongdoer has been "induced or incited or persuaded" by the joint tortfeasor to commit the tort: CBS Songs Ltd v Amstrad Consumer Electronics PLC [1988] AC 1013 (CBS Songs) at 1058 (Lord Templeman). The plaintiffs submitted Mr Sadek induced or persuaded Mr Dennaoui to "go to" Mr Afyouni and "heavy him". The plaintiffs' submissions seemed to understand the concepts of inducement, incitement or persuasion as a freestanding and new category of accessory liability, however, these concepts are factual means of procurement: see eg, Fish & Fish at [19] (Lord Toulson JSC). 2. At a general level, the inducement, incitement or persuasion must be by a defendant to an individual infringer and must identifiably procure a particular infringement in order to make the defendant liable as a joint infringer: CBS Songs at 1058 (Lord Templeman). Davies notes (at 207) that Lord Templeman's reasons suggest that "sometimes, what the defendant must know need not be quite so specific. For example, it may be sufficient that the defendant knows the type of primary tort committed".
2. If it were necessary to decide, I would have found that Mr Sadek procured Mr Dennaoui's Gun Attack for the same reasons as common design.

Agency

1. The plaintiffs submitted, in the alternative, that Mr Sadek is liable for Mr Dennaoui's actions on the basis that Mr Dennaoui was his agent for the purpose of going to Mr Afyouni and pressing him to "unblock the accounts", and Mr Dennaoui's conduct in assaulting Mr Afyouni was within the scope of that agency.
2. Agency is a recognised category of joint tortfeasors: Koursk at 155 (Scrutton LJ); Thompson at 580 (Brennan CJ, Dawson and Toohey JJ). Criminal acts coming within the scope of an agent's actual or ostensible can generate civil liability for the principal. Collins MR in Hamlyn v John Houston & Co [1903] 1 KB 81 at 85 observed: A principal may be liable for the fraud or other illegal act committed by his agent within the general scope of the authority given to him … [I]t matters not … that it was directly contrary to the instructions of his principal, or even that it may have been an offence against society itself. Hamlyn has been adopted in Australia: see eg, National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251 at [8] (Gibbs CJ). See also G E Dal Pont, Law of Agency (3rd ed, 2013, Lawbook Co) at [22.46].
3. When pressed during the hearing, senior counsel for the plaintiffs eschewed any suggestion of ostensible authority or implied agency (which had been raised in written submissions) and clarified that the allegation was an express agency relationship between Mr Dennaoui and Mr Sadek, in which Mr Dennaoui had express authority to threaten Mr Afyouni: [Mr Dennaoui is] the actual agent. [Mr Sadek is] actually sending him there for that purpose. … We say it's an express agency in the sense that if you say to someone, go there and do this, is an agent.
4. There was no submission that the agency arose by operation of law, implied authority or ratification, for instance, by Mr Sadek paying Mr Dennaoui's legal defence costs when he was subsequently prosecuted for the Gun Attack.
5. I note for completeness that I accept the defendants' argument that the plaintiffs did not develop submissions about the precise scope of authority and whether Mr Dennaoui's use of a gun was within that scope. However, arguably the scope of authority was co-extensive with the "common design" or Mr Sadek procuring Mr Dennaoui's actions.
6. As I have concluded that Mr Sadek was a joint tortfeasor by common design, it is not necessary to consider agency in detail.

Conclusion

1. On balance, I am satisfied that, on 20 May 2018, Mr Sadek asked Mr Dennaoui to go that evening with a colleague and physically threaten Mr Afyouni to unblock the bank accounts.
2. As demonstrated from the police intercepted call, Mr Dennaoui had a lot of accurate information about the dispute between Mr Sadek and Mr Dennaoui and told Mr Afyouni to resolve his differences with Mr Sadek. As I am not persuaded that Mr Dennaoui (or Advanced Trades) was owed any money at the time, the logical reason why Mr Dennaoui threatened Mr Afyouni to open the bank account was to assist Mr Sadek, who he called his "brother".

Damages for tort

1. By way of compensatory damages, Mr Afyouni sought: 1. past and future economic loss; 2. general damages; and 3. aggravated damages.
2. Mr Afyouni did not claim for: 1. past and future out of pocket expenses including for treatment, or for Griffiths v Kerkemeyer (1977) 139 CLR 161 style past gratuitous domestic assistance, which had been provided by his mother and former wife; or 2. special damages, which would be awarded "in respect of monetary loss actually suffered and expenditure actually incurred": Paff v Speed (1961) 105 CLR 549 at 558 (Fullagar J).
3. The parties agreed that damages for non-pecuniary loss must be assessed at common law, because s 3B(1)(a) excludes the operation of the Civil Liability Act 2005 (NSW) in respect of acts intended to cause injury, and assault with a firearm causing an apprehension of physical violence is such an act causing injury: see eg State of New South Wales v Ibbett (2006) 65 NSWLR 168; Croucher v Cachia [2016] NSWCA 132 at [33] (Leeming JA, with whom Ward JA and Beazley P agreed).
4. The general aim of an award of damages in tort is the compensatory principle, that is, insofar as money can do, to put the injured party in the same position as they would have been if the tort had not been committed: Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 (Lord Blackburn); approved in Registrar of Titles (WA) v Spencer (1909) 9 CLR 641 at 645 (Griffith CJ); see also Harriton v Stephens (2004) 59 NSWLR 694 at 699 (Spigelman CJ).
5. In the case of personal injury suffered by a plaintiff as a result of assault, compensatory damages are awarded according to the normal principles of assessment for personal injury.
6. Where an intentional wrong is made out, there is also the possibility of an increased award going beyond mere compensation for the injury in the form of aggravated damages or exemplary damages: Lamb v Cotogno (1987) 164 CLR 1.
7. Compensatory damages must be assessed before aggravated or excessive damages are assessed: White v Johnston (2015) 87 NSWLR 779; [2015] NSWCA 18 at [146] (Leeming JA, with whom Barrett and Emmett JJA agreed).

Compensatory damages

1. In relation to the assessment of compensatory damages for personal injury, Halsbury's Laws of Australia explains (citations omitted): Since courts strive to give full compensation for economic loss, the conventional heads of damage for economic loss are separately assessed, and, subject to statutory provisions to the contrary, the total amount awarded for economic loss is the sum of the separate parts, no matter how large the overall award turns out to be. However, damages for economic loss must be assessed in such a way as to avoid any double counting attributable to an overlap between the individual heads of damage. … By contrast, non-economic loss of its nature has no equivalent in money. Therefore the courts strive for fair, rather than full or perfect, compensation in the case of such losses. The heads of non-economic loss are assessed as a global sum rather than separately, with the exception of loss of expectation of life which attracts a conventional sum. Aggravated damages may be awarded where the conduct of the defendant is insulting or humiliating. Aggravated damages are compensatory in nature and are directed at a restoration or appeasement of the plaintiff's dignity.

General damages

1. Mr Afyouni claimed damages for non-pecuniary loss, including pain, suffering, and loss of amenity.
2. In cases of assault, general damages will be awarded to compensate the plaintiff for distress and mental upset, in respect of which any physical injury to the plaintiff may be taken into account, irrespective of whether any claim for personal injury is made: New South Wales v Riley (2003) 57 NSWLR 496 at [116]-[117] (Hodgson JA).
3. With regard to the nature of general damages, Fullagar J noted in Paff v Speed [1961] HCA 14; 105 CLR 549 at 559: General damages … are, of their very nature, incapable of mathematical calculation, and (although the expression is apt to be misleading) commonly very much at large. They are at large in the sense that a jury has, in serious cases, a wide discretion in assessing them. Also general damages may be assessed not with reference to any limited period, but with reference to an indefinite future. Damages may be awarded for pain and suffering, and such damages are assessable for past, present and future pain and suffering. But here calculation is obviously impossible, and damages for pain and suffering should clearly be regarded as general and not special damages. In fact, the question of general damages is generally, I think, put to a jury under three heads - (1) economic loss, (2) loss of amenities or enjoyment of life, and (3) pain and suffering.
4. McGregor on Damages (2020, 21st ed, Sweet & Maxwell) at 40-262 describes loss of amenity thus: This head of damage concentrates on the curtailment of the claimant's enjoyment of life not by the positive unpleasantness of pain and suffering but, in a more negative way, by their inability to pursue the activities they pursued beforehand.
5. Mr Afyouni's injuries in relation to the assault were particularised as follows: 1. Post-Traumatic Stress Disorder 2. Anxiety and Depression 3. Alcohol use disorder 4. Substantial deterioration of the marital and family relationship. 5. Past and ongoing need for treatment by a psychologist. 6. Past treatment by a psychiatrist. 7. Loss of emotional and mental wellbeing. 8. Reliance on others for daily living. 9. Major Depressive Disorder. 10. Hypervigilance. 11. Impaired cognition. 12. Sleep disturbance. 13. Total alteration to pre-injury lifestyle. 14. Inability to pursue pre-injury career.
6. Mr Afyouni gave evidence at trial that he lives in continuing fear for his life and his family's safety, caused by Mr Sadek's threats, including his instigation and encouragement of Mr Dennaoui's Gun Attack, and Mr Sadek's public and violent threats to "kill" and "ruin and destroy" him. His affidavit evidence was that he has been unable to maintain a regular lifestyle since the Gun Attack: he has become anti-social and wears sunglasses when he goes out so that he is not recognisable, he avoids eye contact, he has nightmares, he avoids certain suburbs where Mr Sadek and Mr Dennaoui frequent, and he does not spend prolonged amounts of time at his home. He was not challenged on this evidence.
7. Mr Afyouni has had regular sessions between November 2019 and August 2021 with a treating psychologist, Ms Ellan Daniele, who diagnosed Mr Afyouni with Post-Traumatic Stress Disorder on 13 November 2019 and Major Depressive Disorder on 19 December 2019. Ms Daniele's clinical notes include, for example, that Mr Afyouni informed her that he "used to go fish, go to coffee" but "cut it all off".
8. Mr Afyouni also relied on medical evidence from two specialist medical practitioners.
9. On 25 June 2019, Associate Professor Dr Michael Robertson, Psychiatrist, reported: Mr Afyouni is a 55-year-old man, who presents with ongoing features of an adjustment disorder with anxiety and depressed mood. There are some crosscutting features of PTSD. Mr Afyouni has faced a situation where he was threatened with actual harm by an aggrieved business partner and one of his proxies who, in one particularly egregious incident, threatened Mr Afyouni with a firearm. Mr Afyouni's travails are ongoing and his injuries cannot be considered to have stabilised. There were no concurrent causes to explain the onset of his psychiatric symptoms.
10. On 27 October 2020, Dr Julian Parmegiani, Psychiatrist, reported: Mr Hazem Afyouni is a 57-year-old man who was threatened with a firearm in May 2018. He was subjected to verbal threats and intimidation on repeated occasions in the past two years. Mr Afyouni developed the characteristic symptoms of a chronic Posttraumatic Stress Disorder. He re-experienced the incident through repetitive nightmares and intrusive daytime recollections. Reminders exacerbated his anxiety. He became hypervigilant, and he continued to fear for his safety. He slept poorly, his appetite decreased, and he lost 13kg in weight. Mr Afyouni found it difficult to work, because of his fear of being attacked. He worked from home, but his poor concentration continued to undermine his occupational performance. Mr Afyouni avoided friends, and he did not undertake recreational activities. Mr Afyouni' s account of events suggested that he was still at risk of real harm. This perpetuated his psychiatric symptoms. He self-medicated with alcohol, to reduce his anxiety. His harmful drinking perpetuated his psychiatric symptoms, and caused physical problems. His drinking constituted another secondary psychiatric disorder, namely an Alcohol Use Disorder. While not directly relevant, Dr Parmegiani assessed Mr Afyouni's injuries as equivalent to a whole person psychiatric impairment rating of 17%.
11. The defendants challenged Mr Afyouni's claims on the basis that his evidence was very limited and there was no evidence as to his condition after August 2021. They also argued that the experts' opinions were based upon assumptions which were not reliable, because some of the history that Mr Afyouni had provided to the experts was not consistent with other evidence, for example, about whether Mr Sadek continued to threaten Mr Afyouni and his drinking habits. I nevertheless consider that Mr Afyouni has suffered as a result of the Gun Attack, with ongoing effect.
12. No submissions were made as to the appropriate quantification of an award of general damages for this claim, however, a list of comparable cases was provided by the parties at my request after the hearing, including: In Murdock v Betham [2018] NSWDC 192, general damages of $225,000 were awarded for an unlawful imprisonment and assault and battery of a wife, including threats to kill, where she reasonably feared for her life and suffered significant physical injuries and post-traumatic stress disorder. There was a lasting and scaring effect of an assault by her husband and "trusted protector". In Brook v Kempton [2017] VSC 661, $165,000 was awarded to a man who was assaulted by three men which resulted in facial and cranial fractures, brain damage and other injuries. The unprovoked assault caused transient physiological injuries and "very mild' acquired brain injury, together with post-traumatic stress disorder. In Farjudi v Cheng [2015] NSWDC 297, $100,000 was awarded to a plaintiff who was struck in the face by a much younger and stronger defendant at the Paramatta Leagues Club while gambling. The evidence disclosed post-traumatic stress disorder and transient physical injuries caused by the assault; the main symptoms were lethargy and lack of motivation, sleep deprivation. The plaintiff was described as living a "life with little pleasure or joy" as a result of the assault. In Graves v West (No 2) [2015] NSWSC 306, $75,000 was awarded to a man who was punched in the face during a rugby union game, and suffered serious injuries to his face, mouth and jaw and never played rugby again. It was the psychological injury caused by assault that led him to suffer from PTSD and panic attacks. In McMillen v Brambles Security Services Limited [2001] QSC 271, $80,000 was awarded to a plaintiff who was employed as a permanent casual security officer by the defendant. Whilst carrying out his duties as escort in relation to a consignment of money at the Commonwealth Bank, he was taken hostage by two armed men and used by them in carrying out a robbery at the bank. This resulted in chronic post-traumatic stress disorder and chronic major depression, which is likely to continue, despite ongoing treatment, indefinitely. In MacDougal v Mitchell [2015] NSWCA 389, the trial judge awarded $55,000 to a plaintiff after an assault in a bar, where he lost consciousness, sustained amnesia and significant dental injuries, which required the removal of his two front teeth under general anaesthesia and also caused "psychological issues". The Court of Appeal accepted that "the relevant range of general damages was between $50,000 and $100,000" (at [24]). In Affleck v Kennedy [2010] QDC 332, $35,000 was awarded to a 20-year-old man who was assaulted by a number of persons. He suffered non-permanent physiological injuries (fractured nose, eye socket, cheek bone) and psychological symptoms which "[did] not fulfil the criteria for post-traumatic stress disorder" consequent upon assault (at [26]-[27]). In James v James (No 3) [2020] NSWDC 797, a woman was awarded damages for various instances of violent assaults by her husband. In one instance, $15,000 was awarded for an occasion of verbal abuse and battery by her husband. Then $140,000 was awarded for an "ice rage" assault by her husband that was "shocking, deeply offensive to her, deeply affecting her self-worth and her dignity", and induced post-traumatic stress disorder. Aggravated damages of $40,000 were also awarded.
13. Mr Afyouni has suffered psychiatric injuries but no physical injuries. McMillen v Brambles Security Services Ltd [2001] QSC 271 was the only authority provided by the parties that concerned general damages for only psychiatric injuries. There the Court found that the plaintiff suffered "chronic post traumatic stress disorder and chronic major depression which is likely to continue, despite ongoing treatment, indefinitely", after he was held hostage by two armed men whilst working as a casual security guard at a bank (at [1]-[2]). A further consequence of those injuries meant that Mr McMillen "lives a reclusive life without friends or family and with the expectation of so living for the rest of his life" (at [103]).
14. That judgment provides a useful comparison, but does not bind me to any particular conclusion. For the following reasons, I consider the relevant features of Mr Afyouni's situation are less severe than Mr McMillen's.
15. First, there is some doubt whether Mr Afyouni's condition is "chronic". Although Dr Parmegiani diagnosed Mr Afyouni's condition as chronic, his treating psychologist did not diagnose "chronic" post-traumatic stress disorder and major depressive disorder. Dr Robertson did not comment on whether Mr Afyouni's post-traumatic stress disorder is "chronic", rather he only stated that Mr Afyouni has "described experiencing chronic anxiety with excessive worry and preoccupation about the situation".
16. Secondly, it is not clear whether Mr Afyouni's condition is likely to continue indefinitely despite treatment. His clinical notes suggest that he ceased treatment in June 2021. Dr Parmegiani's evidence was that "Mr Afyouni's psychiatric symptoms are likely to continue as long as he feels at risk". Dr Robertson's evidence was that Mr Afyouni's condition "depends on the resolution of the legal and criminal matters afoot and Mr Afyouni's ability to salvage whatever financial stake" and that Mr Afyouni is "little capable of working more than 10-15 hours per week". The doctors do not demonstrate an irretrievable and indefinite poor prognosis, and there is a suggestion that Mr Afyouni can work at least some hours, and his evidence was that he was still working "to a certain extent" for Conditionex. Also, there is no evidence of what a reduction in Mr Afyouni's working hours means for his earning capacity.
17. Thirdly, I do not consider that there is no reasonable prospect that Mr Afyouni's symptoms will change for the better, particularly as this judgment may offer some certainty and closure for him and his dispute with Mr Sadek. Mr Afyouni accepted that Mr Sadek had not "done anything towards" him since the end of 2018: Q. It's the position, isn't it, that Omar has not done anything towards you in terms of harassment, intimidation or threats, at least since the end of 2018; correct? A. Yes.
18. Further, he said: Q. --you lived in fear, is that right? A. Until today I feel in fear. … Q. You continue to live in fear until today; is that your evidence? A. Yes, thank you. Mr Afyouni was not pressed on whether his response that he has continued to "live in fear until today" (emphasis added) should be understood as indicating that he no longer lived in fear because the hearing had started, or that he was simply continuing to live in fear into the present day and beyond. I consider the former meaning is at least open as a possibility.
19. Mr Afyouni also said that his purpose in the AVO proceedings was to obtain some kind of recognition that he was "assaulted and harassed generally". Equally, he stated that he wanted this Court to say what Mr Sadek had done: Q. What you wanted, Mr Afyouni, was as you say to the Court, recognition that you were being assaulted and harassed generally rather than assaulted and harassed by Omar, is that right? A. No, I do refer it to Omar. I do refer it to Omar. And I want it to be recognised that Omar did it and this is what I want also from this Court hopefully that he will be notified and recognised as he is the one who assaulted me personally.
20. Fourthly, Mr Afyouni retains his closest family support network and still resides with his two sons.
21. Doing the best that I can with the evidence and limited submissions made on the subject, and taking all the above matters into account, I allow $55,000 by way of general damages, for which Mr Sadek and Mr Dennaoui are jointly liable.

Past and future economic loss

1. Mr Afyouni claimed past economic loss of $1,000,000, or a net total after tax of $700,000, plus interest. Mr Afyouni also claimed damages for loss of future earning capacity of $1,500,000, or a net total after tax of $1,050,000, on the basis that his condition has stabilised and his psychiatric impairment is permanent.
2. In Kallouf v Middis [2008] NSWCA 61 at [46]-[61], McColl JA and Hall J set out the relevant principles for the assessment of income loss. Relevantly, McColl JA observed at [48]: It is necessary to identify both what capacity has been lost and what economic consequences will probably flow from that loss. Only then will it be possible to assess what sum will put the plaintiff in the same position he or she would have been in if injury had not been sustained. What a worker earned in the past may provide very useful guidance about what would have been earned if that worker had not been injured.
3. While no submissions were made, I am cognisant of the line of authority in cases like State of New South Wales v Moss (2000) 54 NSWLR 536. As Heydon JA observed at 559 [87] (citations omitted): … where earning capacity has unquestionably been reduced but its extent is difficult to assess, even though no precise evidence of relevant earning rates is tendered, it is not open to the court to abandon the task and the want of evidence does not necessarily result in non-recovery of damages … The task of the trier of fact is to form a discretionary judgment by reference to not wholly determinate criteria within fairly wide parameters. Though the trier of fact in arriving at the discretionary judgment must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility.
4. While there was some evidence of Mr Afyouni's reduced capacity to work by way of expert evidence (considered further below), I am not satisfied that Mr Afyouni has proved any economic loss as a result of the Gun Attack. The defendants submitted, and I accept, that the evidence of Mr Afyouni's earnings between 2015 and 2021 do not demonstrate a diminution of personal income generally. The evidence also shows that Mr Afyouni's company, Conditionex, which continues to trade, suffered significant losses prior to 2018, made a profit in 2019, and only small losses thereafter. I do not find this to be consistent with a finding of economic loss for Mr Afyouni personally.
5. The primary difficulty with the plaintiffs' case here is not whether or not the loss was felt by Mr Afyouni personally, but the lack of evidence, including estimates, as to the extent of that loss. Senior counsel for Elite accepted that any pecuniary loss felt by Mr Afyouni would have to "feed back into what he would expect to get". There was nothing in evidence concerning what Mr Afyouni expected to earn from Conditionex prior to the Gun Attack.
6. Senior counsel for Mr Sadek stressed that there is no claim by Conditionex for economic losses for an employee's loss of services. Even if Conditionex had made a claim for loss of services, there was no evidence of the market value of the services. An action for loss of services would not extend to loss of profits. As French CJ, Gummow, Hayne, Crennan and Bell JJ observed in Barclay v Penberthy (2012) 246 CLR 258: Particular difficulties may arise where the plaintiff is a "one‑man company", controlled by the injured party. The better view is that, even here, the measure of damages does not include a loss of profits suffered by the company. This is so unless the plaintiff satisfies the court that the loss is attributable to the loss of services and no other likely cause has been identified.
7. While senior counsel for Elite suggested that "one would assume Conditionex is in fact Afyouni, because it's his company", there was no evidence that Conditionex was a "one-man company", nor was there evidence about Conditionex's employees and the structure of the business.
8. However, to the extent that Mr Afyouni has suffered a reduced working capacity notwithstanding his evidence that he is still working for Conditionex "to a certain extent", there is still no evidence about the economic consequences of this reduction on his drawings from the business or earning capacity, nor has it been shown that the reduced capacity required Mr Afyouni to, for instance, expend additional sums in hiring staff or delegating responsibilities. I also note the clinical notes suggest that Mr Afyouni told his treating psychologist he "was meant to be retiring soon".
9. For these reasons, I do not consider it appropriate to award any damages for past or future economic loss.

Aggravated and exemplary damages

1. Mr Afyouni also claimed aggravated and exemplary damages, although no submissions were made as to the appropriate quantification.
2. Gleeson JA (with whom Bathurst CJ and Macfarlan JA agreed) summarised the principles in relation to aggravated and exemplary damages in New South Wales v Abed [2014] NSWCA 419 at [230] - [234]: [230] The principles upon which aggravated and exemplary damages are awarded are well established and were not in issue on the appeal. The principles were summarised by Sackville AJA (Macfarlan and Whealy JJA agreeing) in New South Wales v Zreika [2012] NSWCA 37 at [60]-[64]. It is necessary to keep in mind the conceptual distinction between the compensatory nature of aggravated damages and the punitive and deterrent nature of exemplary damages. The assessment of aggravated damages is made from the point of view of the plaintiff, whereas in the case of exemplary damages the focus is on the conduct of the defendant. [231] Aggravated damages are compensatory in nature, being awarded for injury to the plaintiff's feelings caused by insult, humiliation and the like: Lamb v Cotogno [1987] HCA 47; 164 CLR 1 at 8. Aggravated damages are given to compensate the plaintiff when the harm done to him or her by a wrongful act was aggravated by the manner in which the act was done: Uren v John Fairfax [1966] HCA 40; 117 CLR 118 at 149 (Windeyer J). [232] Exemplary damages go beyond compensation and are awarded as a punishment to the guilty, to deter similar conduct in the future, and to reflect "detestation" for the action: Lamb v Cotogno at 8. Generally speaking, what is required for an award is "conscious wrongdoing in contumelious disregard of another's rights": Gray v Motor Accidents Commission [1998] HC 70; 196 CLR 1 at [14] (Gray v MAC). [233] In New South v Riley [2003] NSWCA 208; 57 NSWLR 496 Hodgson JA (Sheller JA and Nicholas J agreeing) expressed the view (at [138]) that the description in Gray v MAC does not fully cover the field. His Honour said that "Conduct may be high handed, outrageous, and show contempt for the rights of others, even if it is not malicious or even conscious wrongdoing". However, Hodgson JA also observed that, ordinarily, conduct attracting exemplary damages will be of this general nature, and the conduct must be such that an award of compensatory damages does not sufficiently express the Court's disapproval or, in cases where the defendant stood to gain more than the plaintiff lost, demonstrate that the wrongful conduct should not be to the advantage of the wrongdoer. [234] In New South Wales v Radford [2010] NSWCA 276; 79 NSWLR 327, Sackville AJA (Beazley and Macfarlan JJA agreeing) summarised the effect of the authorities as follows: [97] These authorities demonstrate that the various categories of damages that may be awarded for trespass to the person, including assault and false imprisonment, are not self-contained. There is a close relationship between an award of ordinary compensatory damages or injury to the plaintiff's feelings and an award of aggravated damages. It is necessary to assess compensatory damages, including aggravated damages, before determining whether exemplary damages should be awarded and, if so, the quantum of any such award.
3. As McGregor notes (at 42-002): Aggravated damages come into the picture where the injury to the claimant's feelings is increased by the flagrancy, malevolence and the particularly unacceptable nature of the assaulting defendant's behaviour. The focus is from the point of view of the plaintiff, rather than on the conduct of the defendant: State of New South Wales v Ibbett (2005) 65 NSWLR 168 at [83] (Spigelman CJ).

Quantum of aggravated damages

1. Mr Afyouni's claim for aggravated damages was on the basis that: 1. the conduct engaged in by Mr Sadek and Mr Dennaoui involved the threat of illegal force or violence against Mr Afyouni; 2. the conduct involved the use of a firearm; and 3. the conduct was engaged in to force a resolution of the dispute between Mr Sadek and Mr Afyouni to the financial advantage of Mr Sadek and/or Mr Dennaoui.
2. As I am satisfied that Mr Sadek and Mr Afyouni acted jointly, I do not consider the circumstances here warrant separate awards against the tortfeasors: De Reus v Gray (2003) 9 VR 432 at 454 (Winneke P with whom Ormiston and Charles JJA agreed).
3. Doing the best that I can with the evidence and limited submissions made on the subject, I award Mr Afyouni $5,000 in aggravated damages. The assault on Mr Afyouni by way of being accosted in a public place in the presence of his friend was a cruel and unnecessary act by Mr Dennaoui, especially having regard to the fact that Mr Dennaoui and Mr Sadek were friends of Mr Afyouni. His humiliation and the injury to his feelings, and the manner in which it was done, including the use of a firearm by men who were once his close friends, and the subsequent behaviour of Mr Sadek at Mr Dennaoui's bail hearing (discussed further below), are all relevant factors which caused Mr Afyouni to suffer increased distress.

Quantum of exemplary damages

1. Exemplary awards must be approached moderately. Gibbs CJ in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 stressed the need to be wary of the imposition of a greater penalty than would be incurred if the conduct were criminal (at 463); see also Rookes v Barnard [1964] AC 1129 at 1227-1228 (Lord Devlin). Accordingly, any criminal penalties imposed in consequence of proceedings stemming from the same wrongful act must be fully taken into account: Watts v Leitch [1973] Tas SR 16; Archer v Brown [1985] QB 401; [1984] 3 WLR 350; Gray v Motor Accident Commission (SA) (1998) 196 CLR 1.
2. The personal financial circumstances of the defendant are also relevant to the quantum of aggravated or exemplary damages (XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 at 461 (Gibbs CJ), 472 (Brennan J)), as is the likelihood of the defendant engaging in the conduct again (White v Johnston (2015) 87 NSWLR 779; [2015] NSWCA 18 at [146] (Leeming JA, with whom Barrett JA and Emmett JA agreed)).
3. In Whitbread v Rail Corporation New South Wales [2011] NSWCA 130, McColl JA noted at [65], "[i]f exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting". However, in that case no exemplary damages were awarded because the conduct was not in contumelious disregard of the plaintiff's rights: there was a sudden loss of control, which plainly occurred in the context of the aggressive and offensive remarks.
4. The defendants submitted that, while it is not easy to identify factually similar cases (or classes of cases), reference could be had to a study: Felicity Maher, "An Empirical Study of Exemplary Damages in Australia" (2020) 43(2) Melbourne University Law Review 694. Maher evaluated 186 cases between 2000 and 2016 heard at first instance and on appeal in Commonwealth, state and territory courts, where exemplary damages were awarded. This empirical study shows, on a jurisdiction-by-jurisdiction basis, that the amount of mean and median exemplary damages in New South Wales is $82,021.06 and $27,511.75, respectively.
5. Maher's study further categorises the cases by "cause of action category". Under the category of "interference with the person" (eg assault and false imprisonment and seemingly not including 'abuse of power' based claims such as police abuse or malicious prosecution), the mean and median exemplary damages amounted to $51,875.21 and $20,650.10, respectively.
6. Larger awards have been made in cases of 'abuse of power' claims, where such damages are most frequently awarded against police. One case involving police was State of New South Wales v Ibbett (2006) 65 NSWLR 168, where a police officer pointed a loaded gun towards an elderly woman in her own premises. Spigelman CJ concluded that "this was one of the rare cases in which an award of exemplary damages was appropriate" (at [28]). The defendant policeman had demonstrated "contumelious disregard" of the plaintiff's lawful rights over her own property and the conduct was not only intentional but intended to cause the apprehension of "immediate personal violence which would occur if Mrs Ibbett did not do as he, screaming loudly, demanded" (at [32]). Exemplary damages of $25,000 were awarded with respect to the assault in that case.
7. The plaintiffs submitted that exemplary damages ought to be awarded on the basis that it is morally reprehensible for persons to use threats of violence against other persons in order to obtain financial advantage. Again, no submissions were made as to the quantum of those damages.

Mr Sadek

1. Mr Sadek's conduct was not impulsive or spontaneous, but carefully planned and carried into execution over a period of at least a few days: cf Dean v Phung [2012] NSWCA 223 (Dean) at [80]-[81] (Basten JA, with whom Beazley JA agreed). Further, the burden of an award of exemplary damages would be borne by Mr Sadek personally: cf Dean at [81].
2. Mr Sadek's conduct in procuring the assault of Mr Afyouni amounts to "conscious wrongdoing in contumelious disregard" of Mr Afyouni's rights and is deserving of the condemnation of the Court. Mr Sadek enlisted another person to threaten Mr Afyouni on his behalf. Like in Ibbett, the conduct was intended to cause the apprehension of personal violence which would occur if Mr Afyouni did not do as Mr Sadek, through Mr Dennaoui, demanded. To the extent, if any, that such conduct has been to Mr Sadek's advantage (and that is suggested by the plaintiffs and dealt with below), it is important the Court show that such conduct cannot advantage Mr Sadek: New South Wales v Riley (2003) 57 NSWLR 496 at 530 (Hodgson JA).
3. Mr Sadek has not faced criminal punishment in relation to his conduct. Mr Sadek's own evidence was that he is a man of means.
4. Taking into account all of the above, I award exemplary damages of $20,000 in favour of Mr Afyouni. I consider this amount sufficient to serve the objectives of punishment and deterrence, and to manifest the Court's disapproval of Mr Sadek's conduct.

Mr Dennaoui

1. Punishing twice for what is substantially the same act offends against basic principles of justice: R v Hoar (1981) 148 CLR 32 at 38 (Gibbs CJ, Mason, Aickin and Brennan JJ). Therefore, where the purpose of exemplary damages has been fulfilled by criminal punishment, the award of exemplary damages is unjust punishment.
2. In Gray v Motor Accident Commission (SA) (1998) 196 CLR 1, the High Court noted that the factor which weighed most heavily in considering whether to award exemplary damages was that the tortfeasor had been sentenced to a substantial term of imprisonment for the same actions giving rise to the claim in tort. Gleeson CJ, McHugh, Gummow and Hayne JJ observed at [46]: …if criminal charges, alleging the same conduct as is alleged in a civil proceeding, have been brought and proved, it would be a most unusual case in which it was open to a civil court to conclude that the outcome of those criminal proceedings did not take sufficient account of the need to punish the offender and deter others from like conduct.
3. Mr Dennaoui pleaded guilty to the charges relating to the Gun Attack and was sentenced and in prison on remand for almost 4 months and then received a 33-month good behaviour bond.
4. I consider that the punitive and deterrent purpose of any award of exemplary damages has already been fulfilled by the criminal punishment of Mr Dennaoui. Therefore, I find that Mr Dennaoui is not liable to Mr Afyouni for exemplary damages.

Duress

1. On 25 May 2018, Mr Afyouni and Mr Sadek agreed to terminate the Maroubra JV (Termination Agreement).
2. The plaintiffs allege the 2018 Termination Agreement was tainted with duress to the person and ought to be declared voidable. Mr Afyouni submitted he could then seek an account of the Maroubra JV and decide whether he wanted to rescind the contract. Mr Sadek denied there was an actionable duress, or asserted that Mr Afyouni affirmed the Termination Agreement and lost any right to rescind. He further submitted that, if the contract is voidable, Mr Afyouni must elect to avoid the contract (without the account) or have an account without avoiding the contract.
3. The plaintiffs submitted that a course of conduct comprising two distinct events amounted to duress, namely, (1) the Gun Attack and (2) what was described as the "staring in court incident", in which, during Mr Dennaoui's bail hearing, Mr Sadek stared at Mr Afyouni and looked more angry than Mr Afyouni had ever seen him, and advanced towards Mr Afyouni, which made Mr Afyouni leave the court.
4. The defendants submitted only the Gun Attack is relevant because the "staring in court incident" does not involve a threat in the sense of a "declaration or intent to inflict harm". Other conduct, such as bullet casings being left in Mr Afyouni's workplace and a visit by two men to Mr Afyouni's workplace, was not pressed as the basis for duress.

Legal principles

1. Mr Afyouni has the onus of proving illegitimate pressure was brought to bear when he entered into the Termination Agreement, and if satisfied, then Mr Sadek must prove that that pressure had no causative effect on Mr Afyouni: Barton v Armstrong [1976] AC 104 at 120 (Lord Cross).
2. An agreement will be voidable if illegitimate, or not legally justifiable, pressure was applied to a person by someone who intends to compel the person to enter into the agreement: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46 (McHugh JA) (Crescendo Management). As McHugh JA commented in Crescendo Management at 45 in the context of economic duress: … there are two elements in the realm of duress: (a) pressure amounting to compulsion of the will of the victim and (b) the illegitimacy of the pressure exerted. 'There must be pressure', said Lord Scarman 'the practical effect of which is compulsion or the absence of choice'.
3. It is not necessary for the will of the victim to be overborne; it is a matter of 'the will being deflected, not destroyed'. McHugh JA continued: A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate?
4. Duress need not be the only reason a person enters into a transaction. For example, in Barton v Armstrong [1976] AC 104, the Privy Council by majority, approved Jacobs JA's dissenting decision that the deed was voidable because it was executed under duress in the form of threats to kill and that it was sufficient that the duress was a reason for executing the deed, even if it might have been executed although no threat had been made.
5. The plaintiff must meet an objective test: was it reasonable for the person alleging duress to believe that the person engaging in the wrongful conduct would take the action foreshadowed? (Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298, 302-3 (Priestley JA, with whom Clarke and Handley JJA agreed)). In this case, that question can be formulated as whether it was reasonable for Mr Afyouni to believe that Mr Dennaoui would harm him, whether by shooting or otherwise.

Application

1. By early May 2018, Mr Sadek wanted to terminate the Maroubra JV. Prior to the Gun Attack, Mr Afyouni was engaging in negotiations to that end as set out above at [46]-[66]. Therefore, the issue is whether there was any relevant pressure brought to bear upon Mr Afyouni to agree to the particular Termination Agreement at the particular time it was agreed.
2. The pressure by Mr Dennaoui and Mr Sadek involved the threat of unlawful and criminal action (namely the assault during the Gun Attack) and it is well established that violence to the person or threats of violence amount to illegitimate pressure: Barton v Armstrong [1976] AC 104. Professor Nelson Enonchong has described a threat of physical violence as the "most serious and obvious form of pressure. Both elements of duress will usually amount to compulsion of the will": N Enonchong, Duress, Undue Influence and Unconscionable Dealing (3rd ed, 2019, Sweet & Maxwell) at 62 [5-002]; see also Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 363 at [84] (Rares J).
3. The relevant duress arose prior to or during Mr Afyouni's entry into the Termination Agreement. Events after entry are not relevant. By 25 May 2018, Mr Sadek and Mr Afyouni had orally agreed to end their legal relationship on terms consistent with the Termination Agreement drafted by Mr Cameron (Elite's solicitor) and dated 6 June 2018, even though it was not signed.
4. It does not matter that the Gun Attack was not carried out by Mr Sadek personally, because I am satisfied that Mr Dennaoui was not acting independently, but rather was a joint tortfeasor and Mr Sadek knew Mr Dennaoui was going to "heavy" Mr Afyouni: Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565 at 593 (Perry J), citing Smith v William Charlick Ltd (1924) 34 CLR 38 at 56 (Isaacs J); Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [60] (McColl JA); Barton v Armstrong [1973] 2 NSWLR 598 at 613 (Jacobs JA).
5. A protest at the time of the duress is not necessary. While such a protest may afford some evidence that the agreement was not voluntary, there is "no magic in a protest; for a protest may accompany a voluntary payment or be absent from one compelled": Mason v New South Wales (1959) 102 CLR 108 at 128 (Windeyer J). A protest can also be inferred from conduct: Maskell v Horner [1915] 3 KB 106 at 119-120 (Lord Reading CJ).
6. On 21 May 2018, the day after the Gun Attack, Mr Sadek emailed Mr Khattar, which Mr Afyouni saw around that time: Hi Simon Thanks for your time over the phone today. As agreed over the phone today with the figures and numbers of a 2 Million dollar profit for Maroubra project which will leave us with 1 million dollars each. As agreed and per Hazems request earlier, I will be getting the surplus on the money I put into the company which is 1.5 million and as per your suggestion of 10% for 2 years total of 300k Hazem Afyouni will be left with 850K minus 700K he has to pay back to Render & Paint plus 2 years interest for the 700K will put him in minus for his 50% share of Maroubra. My offer I will be writing off the minus of the Maroubra Project he has to pay back and ill give him 300K for Avoca to let go of Elite and Maroubra Company. Again I am doing this because people/trade/suppliers/labourers are all waiting and coming to my house asking me for money when Hazem is in hiding. I will need an answer before the end of closing business today.
7. Mr Afyouni did not agree to that proposal. The defendants suggested that this refusal to agree demonstrated that Mr Afyouni did not consider Mr Sadek was responsible for the Gun Attack and he was not intimidated by Mr Sadek. But Mr Afyouni's evidence was that around this time he felt that he "had to submit".
8. The police telephone recording on 22 May 2018 includes Mr Dennaoui stating the following: All youse got to do is unlock the accounts, Hazem. I'm telling you we, we're not, like muckin' around any more … we got to do it … I don't care for what happened between you and Omar. There is some money owing to me. … When do you want to do it, when do you want to do it, yeah, I'll grab Omar by his fuckin' neck, I'll grab youse both by your necks. The settlement agreement was also discussed - "you can take 300 grand today, and walk away with everything" and Mr Afyouni had to comply "by Thursday".
9. Later that day Mr Afyouni met Mr Sadek at Circular Quay. Mr Afyouni said, and I accept, that Mr Sadek made an offer in exchange for him opening the bank account: Omar: Listen open up the bank account as it was before and you can have full access with Simon your accountant to the transaction, and when the project finishes you will get 50% of the profit and you pay me the $700,000 that I lent Conditionex at the end of the project. … Hazem: Why $700,000.00 it should be only $650,000.00 Omar: Do it for me and give me $700,000.00 … Omar: Try and get a good deal from Avoca project and take all the extras, all I want is my initial money I put in that project. Hazem: I will wait for his [Marwan] call but I won't call him. If I call, he may think I am desperate this is not a good strategy. Omar: Don't worry he will call you he is desperate to solve it.
10. Mr Sadek's evidence was instead that Mr Afyouni apologised for blocking the account and that they would go back to a 50-50 arrangement for Maroubra and finish the project. I do not accept Mr Sadek's evidence in circumstances where the email he wrote on 23 May 2018 to Mr Cameron, Mr Khattar and Mr Afyouni with the heading "Omar and Hazem agreements" was not to that effect, but was closer to the conversation Mr Afyouni deposed to: Hi Gents, Finally I got to sit down last night, Hazem and I and sort out the dispute for the partnership. The following are outcomes from last nights meeting so please have a read to it and send back your comments ASAP. Let's do this once and for all. AVOCA/KANEBRIDGE JV 1. The JV will stay the same as the 50/50 between Omar and Hazem will remain the same. 2. Omar will still have $1,338,00 [sic] and Hazem with $200k. 3. Hazem will be in charge of the negotiations with Kanbridge and has the authority to take any decisions without returning back to Omar, as long Omar will get back a minimum of $1,338,000. MAROUBRA/ELITE 1. The partnership will stay the same 50/50 and the profit will be split in half at the end of the project. 2. Omar will take the money they have invested in the project and the profit will be split 50/50. Hazem will pay back the $700k loan on that day from his share of the profit. 3. Hazem will go back to the bank today and give Omar the authority to access the money on his own the same way it has been for the last 6 months. 4. Hazem has the right any day of the year to look and question the account, quotes, invoices, payments and have an internet banking access if he would like one. 5. Omar will charge the company $6000 + GST a week starting from 1/1/2018 for 1 - His wages, labourers on-site, office needs including Fatima's wages and site every needs. 6. Omar will take $500k from the next withdrawal/construction claim and will be adjusted from the attached spreadsheet.
11. Mr Afyouni's affidavit evidence was that, on 23 May 2018, Mr Sadek called him and said: If you want the deal to go through then go to Liverpool court tomorrow and tell the police Bilal [Dennaoui] is not a threat, help him to be bailed out.
12. In fact, before that email was sent on 23 May 2018, Mr Afyouni had already emailed the bank to change the account settings to allow Mr Sadek to use the bank account again. Mr Afyouni's evidence was: You not submit immediately, you hold on, you run away. It was extremely confusing situation. ... I was afraid ... I was panicking.
13. On 24 May 2018, Mr Afyouni attended Mr Dennaoui's bail hearing When bail was not granted, Mr Afyouni's evidence was that: I saw Omar became extremely angry and upset after Court. Omar continued to stare at me and began to walk towards me and I quickly retreated to my motorcycle to leave. I had never seen Omar so angry.
14. Mr Afyouni's evidence is that, on 25 May 2018, he had a conversation with Mr Sadek and they reached a different oral agreement. By that stage, Mr Dennaoui was in prison on remand. The conversation was as follows: Afyouni: Omar I just want to let you know I tried my best to stop the police, but they won't listen I cannot do anything. Sadek: It was all your fault, just because you wouldn't answer your phone in the last week all of this wouldn't have happened. It is all your fault. Afyouni: How is it my fault when I am giving you access and trusting your work fully? Sadek: Look at you, you have blocked my money in the Avoca and Maroubra project. Afyouni: Go back and see I did make the deal happen to secure your money and my money in this project, why should I walk out of it without any profit, they fucked up when they sold the project to someone else without asking us and now that I am not needed anymore, I feel you want me to walk out of it all without nothing. Sadek: Now your problem is the family of Bilal, they are not digesting what is happening to their son Bilal, and trust me, try not to come to the site after today, the boys out there Nawyinlak [meaning "be prepared for what is coming to you"]… Afyouni: Is this a threat? Sadek: You put yourself in this situation and are to blame. Afyouni: If this is the case how will I be able to follow the work and control the payments, it will be just too complicated to control with my accountant, so let us just settle it now once and for all and let me walk out of this hassle, let me have a lumpsum and walk away. Sadek: I will consider the project making the profit of $2.1 million and you will get $1,050,000.00 without doing anything just keep away. Afyouni: This job is meant to make $2.5 million profit, remember. Sadek: No, not with all the interest we paid, and God knows how much I will have to pay to Bilal's lawyer now, and all because of you, it is always your fault, you caused it all by not answering your phone. Afyouni: So how much will I get then. Sadek: You have put in $170,000.00. Afyouni: No, the minimum I invested was roughly $300,000.00. Sadek: Ok, $1,050,000.00 plus $300,000.00 minus the... Afyouni: Hold on what about the air conditioning and mechanical ventilation system that cost me minimum of $50,000.00? Sadek: Ok, $1,050,000.00 plus $300,000.00 plus $50,000.00 equals to $1.4 million minus the $700,000.00 Conditionex owes me, you will get $700,000.00. Afyouni: I just want to finish it I am too tired of it all let me get $750,000.00. Sadek: No, only $700,000.00 and this is all that you are getting, and you say I am trying to make you walk out with nothing? Afyouni: This is not what I was expecting but after everything happening to me, I cannot handle it all anymore, I accept to keep my family safe. Sadek: Go on with your life and I should pay you between $200,000.00 and $300,000.00 in the second drawdown not this one coming because it is not much, and I want to get you out very soon so I will pay you the balance even before the project comes to an end just to get you out. Afyouni: What about the balance? Sadek: It will be paid prior to settlement of the Maroubra Project, you have to stay and wait. Afyouni: But I really don't want to have anything to do with you anymore. Leave me alone and pay me now. Sadek: There's no money in the Project now, and I still need your Avoca property to secure the construction loan. After the completion, you will make the balance from Avoca. You do not have a choice. Afyouni: Okay.
15. Mr Afyouni's evidence was that he accepted this proposal as he "could not continue to deal with the threats, attacks and harassment Omar was organising against" him.
16. Mr Sadek's evidence about this conversation was not as detailed but it did include: 1. Mr Sadek reminding Mr Afyouni that he owed $700,000; and 2. Mr Sadek offering $700,000 as a payout to Mr Afyouni with a first payment of $200,000 or $300,000 "as soon as possible having regard to cash flow" and the rest of the $700,000 at the completion of the project.
17. On 28 May 2018, Mr Afyouni emailed Elite's solicitor, Mr Cameron, and Mr Sadek, this time not on letterhead: Jason I have agreed with omar that I will walk out of the Maroubra development and leave it all to omar by settling it with sum of 700,000$ to be paid in the coming two draws from the bank. Pls draft an agreement and advise of the procedures to secure both parties. Thx
18. In contrast to his offer before the Gun Attack, Mr Afyouni was no longer seeking advantages such as having Mr Khattar check the figures, nor was he seeking ownership of unit 9. On 6 June 2018, Mr Cameron responded to that email: Dear Omar and Hazem I am informed by Hazem that the both of you have come to a mutual agreement to resolve the Maroubra project. Please find attached draft deed for your review in this regard. Let me know any changes. As to Avoca, this can be done in a separate agreement or can be put in this agreement. Its better to keep the agreements separate, but they can be exchanged simultaneously if you like…
19. In the 6 June deed that was drafted by Mr Cameron, Mr Sadek was to pay Mr Afyouni $700,000 in return for relinquishing his directorship and interest in the Maroubra development. There was no inclusion in the agreement about the Avoca Beach JV. There was no reference to the debt of about $700,000.

Defendants' onus to prove no operative duress

1. The defendants bore the onus of proving that the duress was not a reason why Mr Afyouni entered the Termination Agreement. Various arguments were raised and are dealt with below.

Effect of the pressure

1. The person alleging duress must establish that the illegitimate pressure was directed at procuring the affected person's contractual assent: Malcolm Anthony Braam v BBC Hardware Ltd [2020] VSCA 164 at [83] (Tate and Osborn JJA). Mr Dennaoui's language during the Gun Attack concerned Mr Afyouni paying him and unblocking the account. There was no specific reference to Mr Afyouni entering into a termination agreement with Mr Sadek.
2. Further, Mr Dennaoui made further comments to Mr Afyouni during the recorded conversation on 22 May 2018 as set out above. Those comments concerned Mr Afyouni and Mr Sadek resolving their differences.
3. As Jacobs JA noted in Barton v Armstrong (1973) 2 NSWLR 598 at 612: …the threats must be related to their business dealings… it is not necessary … to find that the threats at each stage were directly related to negotiations for the agreement which eventually transpired. They all seem to me… to have been intended to cause Barton to weaken in his opposition to Armstrong in connection with the business affairs. …It seems to me that Barton must have believed that Armstrong's threats and actions against him were associated with the whole of their business relationship including the proposed agreement.
4. I am satisfied Mr Dennaoui was not acting independently of Mr Sadek (as detailed above) and that is how Mr Afyouni also perceived the circumstances. Accordingly, the fact that the precise words said by Mr Dennaoui during the Gun Attack and telephone call a few days later did not specify the Termination Agreement does not matter.

Time elapsed between threat and Termination Agreement

1. There is no principle of law that requires the illegitimate pressure in duress to be contemporaneous with the deflection or direction of the will. There are cases where the pressure occurs over an extended period and the actual response is not immediate: see eg Maskell v Horner [1915] 3 KB 106 (market owner threatened to seize a stallholder's goods unless he paid tolls; the stallholder sought legal advice and then subsequently paid tolls under protest on every occasion tolls were requested).
2. In Antonio v Antonio [2010] EWHC 1199 (QB), a wife succumbed to a long campaign of threats of violence and intimidation by her husband and transferred to him half the shares in her company and entered into a shareholders agreement with him. Before entering into the agreement, in 2005, the husband and wife had entered into negotiations on the terms in which the wife would sell shares in her company to the husband. They had meetings in relation to the transfer in February, May and early September 2006. They entered into an agreement for transfer on 29 September 2006. An assault and battery occurred on 30 September 2008 which led to a prosecution that was subsequently discontinued. The threats primarily revolved around the husband's suspicion that the wife was cheating on him with a particular man (Mr Leonidou) which formed in late 2003. The threats which commenced from 2004 included: insisting that the wife give him 50% of the shares in her company or he would tell customers of the wife's adultery (2005); threatening the life of the wife's daughter or Mr Leonidou if the wife did not transfer the shares (early 2006); sending a third-party Mr Mariou (who was a known Cypriot killer and international assassin - described in the judgment as the husband's "minder" or "enforcer") to the wife's home and workplace on a regular basis (3 or 4 times) every week and demanding she effect the transfer of shares (2006). Mrs Antonio's evidence during the hearing was that she had participated in earlier meetings concerning the share transfer "to play for time and avoid the dispute escalating" but without agreeing to Mr Antonio's demands but, by September 2006, the threats to Mr Leonidou and intimidation of herself caused her to give in and agree to transfer 50% of her shares to put an end to the matter. Phillips J considered one factor favouring duress was the lack of any economic benefit obtained by the wife: "If ordinary economic or personal motives had governed, there would have been no good reason for the transaction".
3. The circumstances here bear some similarities to Antonio. The contracting parties had a close personal relationship and were also business partners. The alleged duress included duress to the person arising out of criminal conduct (which was by a third party) and continued pressure through the recorded conversation. That conduct led the victim to enter into several commercial arrangements and perhaps increased the victim's willingness to contract and finalise terms. Similarly, there are no clear economic and personal motives which would have otherwise favoured an immediate settlement on 25 May 2018 between Mr Afyouni and Mr Sadek on the terms agreed.
4. However, a key difference between this case and Antonio is how long it took for the victim to commence proceedings. Mrs Antonio commenced proceedings 1 month after entry into the contracts she was seeking to vitiate. I consider this below in the context of the discussion of affirmation.

Lack of complaint

1. There was little evidence that Mr Afyouni told others that Mr Sadek was responsible for the Gun Attack. His evidence was that he told his children, Bassem and Karim, shortly after the attack. Their evidence was that their father told him that "Apparently, Omar sent someone", but they could not recall clearly when that was said. Bassem considered it was the day after the Gun Attack, but could not be sure. Karim considered that he may have mistaken the timing of when his father told him about Mr Sadek. While an attempt was made to discredit their affidavit evidence because it was in almost identical terms with each other, I do not accept that their evidence was untruthful. However, their evidence was not particularly persuasive because it was so vague.
2. Mr Afyouni also stated in cross-examination that he had told Mr Cameron that Mr Sadek had organised the Gun Attack. No affidavit of Mr Cameron had been served prior to the hearing. During the hearing, and after Mr Afyouni had given evidence, the plaintiffs made an application to call Mr Cameron pursuant to a subpoena to give evidence without a sworn affidavit or signed statement and without any evidence of the reason for the delay. The application was said to have been made to bolster Mr Afyouni's credit, following the suggestion he had not told Mr Cameron about the Gun Attack. Mr Sadek's counsel submitted that there was prejudice to the late provision of the unsigned statement as forensic decisions had been made about cross-examination of Mr Afyouni.
3. I refused the application. I consider it would have been plain to Mr Afyouni's lawyers that there was a real issue about 'recent complaint' of believing Mr Sadek was responsible for the Gun Attack. Further, Mr Cameron's draft unsigned statement did not in fact provide any timeframe at which Mr Afyouni apparently told him that "I believe Omar is behind this".
4. Mr Afyouni stated that he had told Mr Khattar about the attack and that Mr Sadek was responsible for it, but could not remember how many times he had discussed it with him or when he discussed it with him. Mr Khattar did not give evidence and I am not persuaded Mr Afyouni told Mr Khattar.
5. However, as noted above, it is not essential for the purpose of establishing duress that Mr Afyouni had complained to any person about the duress, save as how that may impact on the issue of affirmation, detailed below.

"Good deal"

1. Senior counsel for Elite sought to emphasise Mr Afyouni's negotiation stance and tenor before and after the Gun Attack, described as a "change in approach - change in attitude on the part of Mr Afyouni, a very forthright view of his position as opposed to where it settled, and conversely, Mr Sadek's approach". Senior counsel contrasted what was described as a "highball offer" on 8 May 2018 with what happened after the Gun Attack.
2. Senior counsel for Mr Sadek submitted that the tenor of Mr Sadek and Mr Afyouni's conversation did not change, rather, "[t]his sort of reasoned response … is the sort of response that you might anticipate seeing from people who are trying to resolve their differences by a commercial route" and: We know that ultimately the agreement is that he pays him 700, so it's not as if - so the gun attack is I want you to capitulate, you must capitulate. The next day he offers him 300. Four days later he offers him 700. That, in my submission, does not look like somebody who is attempting to use a gun attack to make the other person capitulate, and on the causation side it doesn't look like somebody who is being browbeaten into capitulating to the first demand that he gets from Mr Sadek. Indeed, after the agreement on 21 May, we know that there was the agreement on 25 May which was more generous towards him, but there was also what happened on 22 May …
3. I do not accept the defendants' submission that it can be concluded that the duress had no causal effect on Mr Afyouni, because the terms of the Termination Agreement were "favourable" to Mr Afyouni, and that this demonstrated that Mr Afyouni remained able to negotiate with free will.
4. I consider it is difficult to assess whether the Termination Agreement was a better "deal" than either not terminating the Maroubra JV or some other deal that might have been struck. The duress need only be one reason why a contract is agreed. I consider it difficult to conclude that there was an obvious change in negotiating "stance", but that is not necessary in determining whether there was duress or not.

Conclusion on duress

1. I am satisfied Mr Dennaoui and Mr Sadek's pressure was a reason Mr Afyouni subsequently entered into the Termination Agreement: Crescendo Management at 46 (McHugh JA, with whom Samuels and Mahoney JJA agreed). I further consider the aggression Mr Sadek showed at the bail hearing impacted Mr Afyouni's decision to agree to the Termination Agreement on 25 May.
2. I accept that Mr Afyouni felt he had to "submit" and agree to the terms of the Termination Agreement and that he would not otherwise have done so on those terms at that time.

Affirmation

1. Affirmation of an agreement obtained under duress is a bar to the remedy of rescission. The defendants have the onus of establishing that Mr Afyouni affirmed the Termination Agreement: Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1283.
2. Affirmation can only occur when the duress has ceased to have effect. It may occur where the person the subject of the duress acts under the voidable contract "with full knowledge of the circumstances after escaping from the duress and taking no steps to set aside the transaction", providing the conduct is unequivocal: Hawker Pacific v Helicopter Charter (1991) 22 NSWLR 298 at 304-305 (Priestley JA, with whom Clarke JA agreed).
3. Delay in complaint after the duress has ceased can amount to affirmation. For example, Mocatta J found in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The "Atlantic Baron") [1979] QB 705 at 721: …since there was no danger at this time in registering a protest, the final payments were made without any qualification and were followed by a delay… before the owners put forward their claim, the correct inference to draw, taking an objective view of the facts, is that the action and inaction of the owners can only be regarded as an affirmation.
4. To determine whether there was affirmation by Mr Afyouni, it is necessary to continue the chronology of events after the Termination Agreement.
5. On about 26 June 2018, Mr Afyouni withdrew $200,000 from Elite's bank account, without regard to Mr Sadek, on the basis that it was the first instalment of the settlement sum. Mr Sadek did not demand the repayment of the money, even though his evidence was that he was annoyed because he wanted to use the money to pay contractors. It was around this time that Mr Sadek made the comments about threatening Mr Afyouni to Mr Afyouni's staff (as set out above). Mr Sadek also told the KPI53 directors to only deal with him and not Mr Afyouni concerning the Avoca Joint Venture dispute, because he wanted to pursue them for money rather than leaving it to Mr Afyouni.
6. On 23 October 2018, Mr Sadek emailed real estate agents and copied in Mr Afyouni providing an update about the "end of the project" and noting that he had just left a meeting with Mr Afyouni at the accountant's office.
7. On 10 December 2018, Mr Afyouni sent Mr Sadek a copy of the lapsing notice that KPI53 had caused to be issued in relation to a caveat that Elite had placed over the Avoca Joint Venture Property.
8. On that same day, Mr Afyouni asked Jason Cameron, Elite's solicitor, to challenge the lapsing notice. Mr Cameron asked Mr Sadek if he agreed with that course of action and indicated that he would need instructions from both Mr Sadek and Mr Afyouni. Mr Sadek responded that he had no issue with that: I know you might be upset with the last email I sent to them asking [KPI directors] to talk to me only But back then we started myself and Hazem having a dispute on making a decision on this. I have no issues for you to act for Elite on this if Hazem accepting… Please note the other side been talking to myself and Hazem on making a deal with them to settle this And been talking to us separately, so far it's still just talk and offers nothing solid but they so desperate to do a deal now But that might another trick and buying more time
9. Around this time, Mr Afyouni and Mr Sadek exchanged text messages about the caveat issue and the dispute with KPI53. There were no threats in the messages.
10. On about 12 December 2018, Mr Afyouni caused Elite to commence proceedings to extend the caveat with Mr Sadek's knowledge and consent.
11. By 18 December 2018, arrangements were being made for the settlement of the sale of the Maroubra units.
12. On 22 January 2019, Mr Afyouni sent an email to Mr Sadek and the solicitor on the Maroubra unit conveyances: Jon As per our previous conversation, after the bank takes his overdrafts we will be transferring $500k to my personal account with number ending 2599 and the rest goes to Omar as he will allocate to you. I will come over to sign the required documents if necessary.
13. Mr Sadek immediately responded: Jon Don't agree All money after settlements to stay with the bank until Hazem and myself come to an agreement or a court order
14. On 28 February 2019, Mr Afyouni attended Mr Sadek's accountant's office and signed documents resigning as a director of MRD and transferring his company's shareholding in MRD. Mr Afyouni's affidavit evidence was that he signed the documents "out of fear for my family's safety". However, at no time did he provide any details of any alleged threats at the time. On the same day or the next day, Mr Sadek paid Mr Afyouni $500,000.
15. On 4 March 2019, solicitors for Mr Sadek sent Mr Afyouni a letter of demand seeking repayment of an alleged debt of $720,000 plus 15% interest, amounting to $1,098,407.73. Mr Afyouni appears to have immediately engaged his current lawyers seeking further clarification of the alleged debt and further documentation concerning the Maroubra JV accounts and all correspondence with KPI53.
16. On 23 March 2019, Mr Sadek entered into an agreement with KPI53, whereby KPI53 agreed to provide Mr Sadek with two units and Mr Sadek agreed to forgive any liability for earlier debts owed to his companies (March 2019 Deed). This is considered further below.
17. On 10 April 2019, Mr Afyouni withdrew $269,000 from MRD's bank account. Mr Sadek obtained an injunction requiring Mr Afyouni to pay that money into Court, pending a determination of who was entitled to it.
18. On or about 12 April 2019, Mr Afyouni became aware of the March 2019 Deed. On that same day, solicitors for KPI53 wrote alleging that the Avoca Joint Venture was mutually terminated because neither party had performed and "Omar Sadek [had informed KPI53] that Elite could not fulfil its obligations under the JV and the JV was at an end". The letter also noted that the debt owed to Mr Sadek's company of $1,300,000 had been settled. Further it noted that Mr Afyouni's company's original claim for $200,000 was subject to an offsetting claim of $290,000 for defective and incomplete work, and also that Mr Afyouni's company was in external administration.
19. On the same day, Mr Afyouni exchanged text messages with one of the KPI53 directors, who said: I don't want to fight. We talk face to face. Be rational and calm and clear headed and everything with work out. Trust me. … I just want to finish castlehill/Avoca and keep everyone happy. … You're fucking up arlan now with caveat… I have a plan to finish everything and keep everyone happy.
20. On 23 April 2019, Mr Afyouni caused Elite to consent to orders that Elite's caveat over the Avoca Joint Venture Property be removed on the undertaking of KPI53 to the Court that "it will pay into Court the net proceeds, up to an amount of $3,000,000 received by [KPI53] from the sale of any subdivided lots". KPI53 did not comply with that undertaking and was wound up. Any prospect of obtaining a remedy for the alleged breach of the Avoca Joint Venture from KPI53 was lost.
21. On 16 May 2019, MRD filed a summons seeking repayment of the $269,000 taken by Mr Afyouni. On 29 May 2019 a statement of claim was filed by MRD.
22. On 30 May 2019, Mr Afyouni went to the police and requested a "PVO is taken out for his protection" against Mr Sadek. He told them that his solicitor was encouraging him to "reneg on the settlement" because of duress. The police documentation recorded: The VIC [victim] advised police that he did not report the above incidents [all the complaints Mr Afyouni has made against Mr Sadek including the Gun Attack, incident at the bail hearing, unknown persons coming to his factory] when they occurred [all before August 2018] because he was intimidated by the POI [person of interest/Sadek]. He believes the POI's actions are in part because of the fact that the VIC reported the firearm incident to police in the first place and he didn't want to anger him further for fear of the consequences. In addition, the VIC hoped that by agreeing the POI could have the majority share of the business funds, the POI would cease his threats. The VIC is concerned that now he is going back on the settlement, the threats will resume. .. The POI is currently in Dubai, expected to return in mid June. The civil matter is next before the court at that time.
23. On 6 June 2019, Mr Afyouni went to Ashfield Police Station to give a statement to support that application.
24. On 25 June 2019, Mr Afyouni filed a defence to MRD's claim and a cross-claim pleading duress in relation to the Termination Agreement. That cross-claim was struck out by Kunc J on 4 October 2019.
25. On 27 June 2019, Mr Afyouni completed an application for apprehended personal violence order. Under the heading, "Is there any existing commercial relationship between you and the defendant?", Mr Afyouni answered, "No". In cross-examination he stated: Q. Now it's right, isn't it, that prior to May of 2018, there was a commercial relationship between you, namely your involvement in the Maroubra joint venture, correct? A. Yes. Q. The reason why there was no longer a commercial relationship between you, was because you had reached a settlement on 25 May 2018, correct? A. Yes.
26. On 23 July 2019, Mr Afyouni swore an affidavit in the AVO proceedings against Mr Sadek, in which he included the allegations of threats in 2018 and also included reference to the March 2019 demand for repayment of the debt and said: At this time I realised that the dispute and threats from [Mr Sadek] were not going to end. In cross-examination, Mr Afyouni also stated that even though by 2019 Mr Sadek was not doing anything to actually threaten anyone "he had done enough" and there was "underlying" fear and he "fear[ed] for my family's safety".
27. On 8 November 2019, Ward CJ in Eq ordered that the most recent iteration of Mr Afyouni's cross-claim against MRD be struck out and gave judgment for MRD for the money Mr Afyouni had taken: [2019] NSWSC 1639.
28. On 11 March 2020, the AVO proceedings were heard. The magistrate did not make an order for an AVO because she did not consider that Mr Afyouni "in fact fears acts of violence, intimidation and harassment" from Mr Sadek at the time of the hearing, even though she accepted Mr Afyouni's evidence of the historical "vicious nature of the threats, threats of physical violence to himself and his mother, threats of people being sent around, words such as 'I will destroy you'". In determining that there was no current fear, the magistrate referred to Mr Afyouni's failure to take action for 13 months after the threats and interim meetings between the two men.

Conclusion on affirmation

1. I consider that any effect of duress had ceased by October 2018, which is the latest date that Mr Afyouni alleges Mr Sadek took any inappropriate threatening action. After that point in time, Mr Afyouni appears to have dealt with Mr Sadek as needed in relation to Elite and MRD, including meeting with Mr Sadek and the accountant. Otherwise, Mr Sadek's evidence was that, after he had paid Mr Afyouni the $500,000, he had no further dealings with Mr Afyouni, and Mr Afyouni did not deny that.
2. I do not accept that Mr Sadek's claim for the debt in March 2019 was a perpetuation of "threats", rather than a claim through legal channels. The demand was sent by lawyers and Mr Afyouni engaged lawyers to deal with the litigation. In fact, Mr Afyouni had engaged lawyers from December 2018 to deal with the KPI53 litigation, which appeared to be his focus. Even before the Gun Attack, he was adamant that he wanted to force KPI53 to adhere to the Avoca Joint Venture and he wanted 25%, and his conduct from December 2018 was consistent with that.
3. I consider that from October 2018 Mr Afyouni could have complained about the Termination Agreement, but instead affirmed it in the following ways: 1. He actively sought payment of the final $500,000 payment promised in the Termination Agreement, writing to the conveyancing solicitor, and copying in Mr Sadek. He accepted that payment on settlement of the Maroubra units without complaint. 2. He signed the documents to relinquish his interest in MRD at an accountant's office without complaint. I do not accept that he did so because he feared for his family's safety. There is no evidence of any threat being made to his family at any time by Mr Sadek.
4. There is no evidence of complaint until May 2019, despite Mr Afyouni having been involved with lawyers concerning KPI53 since December 2018 and his legal issues with Mr Sadek since he took the $269,000 in March 2019, and despite his experience with police in relation to Mr Dennaoui. I consider it likely that Mr Afyouni commenced complaining in May 2019 because of Mr Sadek's legal action for the return of the $269,000.
5. On balance I consider that the defendants have not discharged their onus of proving that the duress was not a cause of Mr Afyouni's decision to enter into Termination Agreement. However, I consider Mr Afyouni affirmed the Termination Agreement and therefore rescission is not available to him.
6. If I am wrong and Mr Afyouni did not affirm the Termination Agreement, then it would be necessary for him to elect whether to rescind and seek an account.
7. In case I am wrong, I make the following findings about the terms of the Maroubra JV that were in dispute: 1. In relation to interest, Mr Sadek's evidence was that, after the Maroubra JV was formed, Mr Sadek was forced to contribute more than 50% because Mr Afyouni could not afford to contribute 50%. Mr Sadek's evidence was that Mr Afyouni offered him 15% interest on his cash investment. Mr Afyouni's evidence was that he did "not recall" offering that interest. Mr Afyouni did offer Mr Sadek an unspecified amount of interest on his "surplus of money" in a settlement offer on 9 May 2018. On 21 May 2018, Mr Sadek emailed Mr Khattar and referred to "your suggestion of 10%" interest on the invested money. I consider that interest was discussed and agreed by the parties, and it is appropriate to adopt 10% being the amount Mr Sadek appeared to have accepted with the accountant. 2. In relation to the work carried out by the parties themselves, I consider that they intended to contribute their work "at cost", and "cost" included wages paid to employees and other expenses, but no profit component.

Elite's claim of Mr Sadek's breach of directors' and fiduciary duties

1. As set out above, the dispute with Kanebridge and KP153 led to the parties falling out and the May 2018 Termination Agreement between Mr Afyouni and Mr Sadek. On 27 March 2019, Mr Sadek resigned as a director of Elite.
2. Elite made very minimal submissions on its claim that Mr Sadek, in his personal capacity and as a director of his company, Render and Paint, breached his director's duties owed to Elite in two ways: 1. By entering into an agreement in July of 2017 to terminate the Avoca Beach JV Agreement (Avoca Beach Termination Agreement), and 2. By entering into the March 2019 Deed with KPI53 and other related entities and thereby obtaining a benefit for himself rather than Elite.
3. The principles are well-settled. Directors owe fiduciary duties to the company under the Corporations Act 2001 (Cth) and at general law. Where a breach of those duties is established, profits may be disgorged or equitable compensation ordered: Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Warman International Ltd v Dwyer (1995) 182 CLR 544.
4. Elite's argument was that Mr Sadek's entry into the Avoca Beach Termination Agreement constituted a breach of his duties under the general law owed to Elite to act in good faith, not to act for his own benefit and to avoid a conflict between his duty to Elite and his personal interests. As Elite put it: The scope of Mr Sadek's Good Faith Duty extended to not causing Elite to terminate existing agreements that it was party to in circumstances where to terminate the agreement would not be in Elite's best interests.
5. Elite also submitted that Mr Sadek's conduct amounted to a breach of statutory directors' duties under the Corporations Act 2001 (Cth) including the duty to exercise care and diligence (s 180), to discharge his duties in good faith and in the best interests of Elite and for a proper purpose (s 181) to not improperly use his position to gain an advantage for himself or cause detriment to Elite (s 182).
6. According to Elite, Mr Sadek's entry into the Avoca Beach Termination Agreement caused Elite to lose certain rights against KPI53 and related entities or discharged KPI53 from performing its obligations to Elite. Those rights included Elite's contractual right to have 50% of the Avoca Beach Property transferred to it.
7. Elite sought compensation under the Corporations Act 2001 (Cth) s 1317H for loss particularised as, among other things, the value of 50% of the Avoca Beach Property and wasted costs in performing the Avoca Beach JV.
8. The only parties to the March 2019 Deed were KPI53 and related Kanebridge entities and Mr Sadek and his company Render and Paint. Elite was not a party. The recitals of the March 2019 Deed included: A. Sadek is the sole director and shareholder of Render and Paint. B. Sadek is a director and shareholder of Elite Realty Developments Pty Ltd (Elite). The other director and shareholder of Elite Realty is Hazem Afyouni. C. Hazem Afyouni is also a sole director and shareholder of a company known as Conditionex Pty Ltd (Conditionex). D. In or about March 2017, Kanebridge and its related entity KCN were indebted to Render and Paint for the sum of approximately one million and three hundred thousand dollars ($1,300,000) and Conditionex for the sum of approximately two hundred thousand dollar ($200,000) for air-conditioning works provided by Conditionex for the benefit of Kanebridge. E. In or about March 2017, Elite and KPl53 Pty Ltd ('KPl53') entered into a joint venture agreement (the JV). The JV was with respect to a development of land known as 14-16 Cape Three Points Road, Avoca Beach NSW. Elite and KPl53 were to redevelopment the land by erecting units over the land and contribute to the JV in equal shares. F. The Parties acknowledge that the purpose of the JV was to offset the sum of $1,300,000 owed by Kanebridge to Render and Paint and to offset the sum of $200,000 owed by Kanebridge to Conditionex. G. The Parties acknowledge that the whole intention of the JV was ONLY to offset the debt owed to Render and Paint and Conditionex by Kanebridge. H. Sadek contends that in July 2017 Sadek in his capacity as director of Elite informed KPl53 that Elite could not fulfil its financial obligations under the JV and that notwithstanding that Elite could not fulfil its obligations under the JV Kanebridge would still be indebted to Render and Paint for the sum of $1,300,000 and to Conditionex for the sum of $200,000. This is accepted by Kanebridge and KPl53. I. KPl53 contends that as at July 2017 the JV had broken down and was terminated. J. Sadek and Render and Paint acknowledge and agree the JV was terminated in or about July 2017. K. Sadek further contends that in August 2017 Sadek, Render and Paint and Elite were aware that the Joint Venture Agreement was terminated and that the shareholders of KPl53 would be selling their share in KPl53. L. Notwithstanding Elite, Sadek and Render and Paint's failure to perform under the JV, Sadek and Render and Paint demand in December 2017 that Kanebridge and/or KPl53 pay Render and Paint the sum of $1,300,000 as originally owed to Render and Paint prior to the JV. M. Kanebridge and KPl53 disputes it owes Render and Paint the sum of $1,300,000 as alleged and Kanebridge and/or KPl53 alleges that it has a significant damages claim against Sadek and Render and Paint for Elite's failure to perform under the JV. N. In or about December 2017 Kanebridge, Hezlett and Render and Paint agreed that Kanebridge would offset any monies owed to Render and Paint, subject to agreeing on an amount, against any purchase price of units sold by Hezlett to Render and Paint or its nominee. O. On or about 8 December 2018, Render and Paint received the sum of four hundred thousand $400,000 from Kanebridge as a part payment of the debt owed by Kanebridge to Render and Paint. P. Render and Paint alleges that Kanebridge is still indebted to Render and Paint for the sum of approximately $900,000. Q. The debt is disputed by Kanebridge and KPI53. R. Sadek, Render and Paint, KPl53, Kanebridge, KCN and Hezlett have agreed to resolve the dispute on the terms set out in this Deed. S. Elite and Conditionex are not a party to this Deed. KPl53 and Kanebridge are still in dispute with Conditionex and Elite.
9. The March 2019 Deed recorded that in settling the dispute between the parties, Mr Sadek's company or its nominee was to receive from another Kanebridge entity, KPI Hezlett Pty Ltd, 2 units with a market value of $500,000 each. At some time in 2019 those units were placed into the name of Sadek Co Pty Ltd.
10. Elite's submissions in relation to the March 2019 Deed were broadly similar to its submissions in relation to the Avoca Beach Termination Agreement. Elite suggested that Mr Sadek had asserted in the March 2019 Deed that the Avoca Beach JV had been terminated in July 2017, relying on the recitals, for example H, I, J and K. In doing so, it was said that Mr Sadek had unilaterally repudiated the Avoca Beach JV and that had the effect of taking an opportunity away from Elite which was not in the interests of Elite. Therefore, it was submitted, Mr Sadek was in breach of his directors' duties.

Avoca Beach Termination Agreement

1. Elite's pleaded case in relation to a breach of a directors' and fiduciary duties is premised on there being a termination at law as a result of Mr Sadek's conduct, as was accepted by senior counsel for Elite during the hearing. Elite never asserted that the Avoca JV was terminated, nor that the recital in the March 2019 Deed was binding on it. It was KPI that asserted in the proceedings against it, until it was removed because of its liquidation, that the Avoca JV was terminated by agreement in July 2017. However, that was never finally determined.
2. I am not satisfied that Mr Sadek breached any directors' and concurrent fiduciary duties in relation to the so-called Avoca Beach Termination Agreement. The facts do not allow the conclusion that there has been any termination by Mr Sadek of the Avoca Beach JV. Instead, following the purported termination in July 2017, Mr Sadek acted in a manner consistent with the continuation of the Avoca Beach JV, for example, in the negotiations throughout 2018. As noted above, on 15 May 2018 Mr Sadek emailed Mr Khattar with inter alia "The [Avoca Beach] JV will stay there and no deal/offer at this time". Further, on 10 December 2018 in an email to Elite's lawyer, Jason Cameron, Mr Sadek indicated that he considered Elite still had an interest in the Avoca Joint Venture Property by virtue of its caveat: I have to be clear and honest with you. As you know I don't trust those people (and the last few months gave me a big lesson in trusting people) So we have to be on top of them, as they ready to play more games and the time on their side. Plus those monies mine and Hazem been with them for years and still nothing, and back to square one And they sitting on it and it's not hurting at all But in saying that we still have the JV and the caveat in our hand. (emphasis added)
3. Although there is a recital included in the March 2019 Deed to the effect that the Avoca JV was terminated in July 2017 (Recital J), there are no operative terms to that effect, remembering that Elite and Mr Afyouni were not parties to the Deed. On its own, I am not satisfied that Recital J establishes there had been any "termination" caused by Mr Sadek.
4. Further, arguably Mr Sadek achieved a positive result for Mr Afyouni, because he obtained an acknowledgement that Mr Afyouni's company was still owed a debt of $200,000 and further, he did not bargain away any rights that Elite might retain.
5. Mr Afyouni did in fact subsequently seek to pursue KPI53 for Elite's interests. As noted above, Mr Afyouni engaged lawyers to resist the removal of Elite's caveat. It was only removed by Court order on an undertaking that KPI53 pay $3,000,000 into Court out of the sale proceeds of the Avoca Property. It was only because KP153 failed to make that payment and entered into administration that Elite could not continue a case against KPI53. Therefore, there has been no determination as to whether KPI53 breached the joint venture or whether Elite had repudiated that Avoca Joint Venture.
6. Elite asserted that Mr Sadek "breached his duties to act in the best interests of Elite and not to allow his personal interests to conflict with his duties to Elite by entering [the March 2019 Deed] and thereby asserting that Elite was unable to perform its obligations under the Avoca Beach JV". However, as noted above Mr Sadek did not act consistently with such an "assertion". Further, Mr Sadek did not "deal" with any of Elite's rights in the March 2019 Deed. Elite was not a party to the Deed and Elite's rights were expressly preserved. Therefore, it is difficult to see how Mr Sadek's "personal interests" conflicted with Elite's interests where he did not deal with Elite's rights at all.
7. By virtue of Mr Sadek's role as a company director of Elite, it is uncontroversial that he owed fiduciary duties to Elite: Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96 (Mason J). However, I am not satisfied that a reasonable person looking at the relevant facts would think there was a real and sensible possibility of conflict between Mr Sadek's duty to Elite and his personal interests, or his duty to his own company Render and Paint: Boardman v Phipps [1967] 2 AC 46 at 124 (Lord Upjohn, dissenting). I am not satisfied there is a real or substantial possibility of a conflict: Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at 199 (McHugh, Gummow, Hayne and Callinan JJ).
8. Equally, I am not persuaded that Mr Sadek has breached his general law duty to act bona fide for the benefit of Elite as a whole. It is not entirely clear from the parties' submissions how Mr Sadek's conduct was not in good faith and not in the interests of the company: Hutton v West Cork Railway Co (1883) 23 Ch D 654 at 671 (Bowen LJ); Re Smith and Fawcett Ltd [1942] Ch 304 at 306 (Lord Greene MR). Mr Sadek's conduct demonstrated that he addressed his mind to Elite's needs where the March 2019 Deed indicated that Elite was not a party to the deed. Whether that appreciation was imprecise or possibly erroneous is another question - it suffices for bona fides: Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co NL (1968) 121 CLR 483 at 499-500 (Barwick CJ, McTiernan and Kitto JJ). I am not satisfied that Elite has discharged its onus of establishing that Mr Sadek's conduct was a breach of the general law duty to act bona fide for the benefit of Elite as a whole.
9. It is also necessary to briefly note the applicable statutory duties. I say briefly because breaches of the statutory duties were not developed by counsel at the hearing or in written submissions. As the statutory provisions have a different scope to the general law rules, it follows that the absence of any breach at general law does not necessarily allow a finding that there was no breach of statutory duty. The statutory duties co-exist alongside the general law duties: Corporations Act 2001 (Cth) s 185; Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd [2011] FCA 1154 at [147] (Tracey J) (appeal allowed in part but on other grounds). I am not satisfied that Mr Sadek has exercised his powers and discharged his duties contrary to good faith in the best interests of the corporation or for a purpose other than a proper purpose under Corporations Act 2001 (Cth) s 181(1)(a)-(b). Further, I cannot accept the submission that Mr Sadek improperly used his position to gain an advantage for himself or anyone else, or to cause detriment to Elite under s 182(1). Although the advantage or detriment might be sought but not actually achieved, I am not satisfied that Mr Sadek acted improperly here: Chew v R (1992) 173 CLR 626 at 633 (Mason CJ, Brennan, Gaudron and McHugh JJ).
10. It was also suggested that Mr Sadek breached his statutory duty to exercise care, skill and diligence. I do not make such a finding. There was no suggestion Mr Sadek's conduct fell short of the degree of care and diligence a reasonable person would have exercised as a director of Elite in Elite's circumstances: Corporations Act 2001 (Cth) s 180(1)(a).
11. In any event, as I have concluded there was no termination by Elite, I do not need to consider whether Mr Sadek's conduct falling short of effecting a termination nonetheless breached directors' and fiduciary duties when the matter was not developed in submissions. Further, the only relief sought by Elite was orders for equitable compensation or compensation pursuant to s 1317H Corporations Act for loss shown to have been suffered as a result of a breach of directors' duties. In circumstances, where it has not been demonstrated that Mr Sadek caused Elite to lose any of its rights in entering the March 2019 Deed and Elite's rights were expressly preserved, I do not consider Elite is entitled to a remedy.

Was Matraville development a joint venture asset?

1. In about February 2018, Mr Sadek told Mr Afyouni that he wanted to purchase a property at Matraville to develop. Mr Afyouni alleged that the parties agreed that the Matraville development would be carried out using joint venture monies and as part of the joint venture. Mr Sadek denied that it was ever discussed as a joint venture project, and instead Mr Sadek wanted it as his own project. Mr Sadek set up a company Big Homes Sydney Pty Ltd, of which he was the sole director and shareholder, and the company purchased the land at Matraville for $2,025,000. Mr Sadek denied Mr Afyouni's allegation that he promised to add Mr Afyouni as a director/shareholder or that he wanted to do another joint venture with Mr Afyouni.
2. The plaintiffs claimed that Mr Sadek used joint venture funds to purchase Matraville and it follows that Mr Sadek breached his duties owed to Mr Afyouni and Afyouni Holdings as joint venturers, citing United Dominions Corporation v Brian Pty Ltd (1984) 157 CLR 1 at 11 (Mason, Brennan and Deane JJ).
3. I do not accept that Matraville was ever discussed as a joint venture project or intended as such. There is no contemporaneous email or text message or document between the parties or from the accountant or lawyer that supports that contention, which would be expected, as the parties appeared to communicate often through those means. At the time Mr Sadek exchanged contracts on the property in February 2018, there were no documents demonstrating that Mr Afyouni was involved in any loan being obtained to purchase and/or develop that property. Further, I accept that, by February 2018, Mr Sadek had concerns about Mr Afyouni's ability to contribute financially to the Maroubra project, and I consider it more likely that Mr Sadek was not prepared to start developing another property with Mr Afyouni before the Maroubra project had been completed. I am satisfied that the evidence only goes as far as to demonstrate that Mr Sadek spoke to Mr Afyouni about the fact that he was looking at the Matraville site. Mr Sadek was asked in cross-examination whether he wanted Mr Afyouni to have any part in Big Homes and Matraville. His reply was unambiguous: No way; after what happens, no way.
4. Because of that conclusion it is not necessary to consider in detail the plaintiffs' submissions based on alleged "unauthorised" use of joint venture monies. Briefly: 1. The plaintiffs' main submission was that Mr Sadek arranged for financing for the Matraville property to the sum of $1.6 million from the National Australia Bank and because there was a shortfall of about $420,000 after the loan, Mr Sadek used funds from the joint venture to purchase the Matraville property to meet the purchase price. I do not consider this was made out factually, as Mr Sadek in fact obtained the shortfall funds from short-term lenders, and it appears that he and his companies had sufficient ability to raise the necessary money. 2. The plaintiffs also alleged that, between February 2018 and March 2019, a net amount of $2,349,115 was transferred from MRD and Elite to Big Homes where it was then applied for use by Big Homes in acquiring and developing the Matraville property and that this was "unauthorised" and therefore in breach of fiduciary duties. However, it was not explained how, even if there had been such a fiduciary relationship, Mr Sadek fell foul of the no profit and no conflict principles such that Big Homes would hold Matraville on a trust of any kind. Further, there was no evidence about the unauthorised use or transfer of funds between accounts. While I accept that Mr Sadek moved money between the various company bank accounts, I was not taken to evidence that demonstrated that there was a misuse of that money, as opposed to the money being used to pay legitimate expenses related to the Maroubra project, including reimbursing Mr Sadek for his cash contributions. After the joint venture was terminated in May/June 2018 there was no longer any 'joint venture money' to speak of.

Was Condell Park purchased with joint venture funds?

1. Mr Afyouni also claimed that Mr Sadek used joint venture funds to purchase property in Condell Park. On 27 August 2020, Big Homes provided $970,000 to meet the purchase price of a property at Condell Park which was transferred into Mr Sadek's name.
2. Mr Afyouni submitted that Mr Sadek held the Condell Park property on constructive trust for the joint venture parties. Alternatively, Mr Afyouni sought an account based on the present value of the Condell Park property to do equity between the parties and be charged upon the Condell Park property. In the further alternative, it was said that the use of the Big Homes' funds was for Mr Sadek's benefit and Mr Sadek breached his fiduciary duties under the Maroubra JV and was knowingly assisted by Big Homes. Finally, it was alleged that Mr Sadek engaged in unconscionable conduct under s 20 of the Australian Consumer Law.
3. These matters were not developed in submissions. In any event, it was not demonstrated that the money used to purchase Condell Park was in fact joint venture money, rather than money, to which Mr Sadek and his corporate entities were entitled either by way of reimbursement or because those funds were the profit component of the Maroubra development in circumstances where the Maroubra JV had been terminated in May 2018.

Orders

1. I make the following orders: 1. In the KPI Proceedings (2018/383933): 1. The proceedings are dismissed. 2. The plaintiffs to pay the defendants' costs as agreed or assessed. 1. In the Afyouni Proceedings (2020/114103): 1. Judgment for the second plaintiff against the first and second defendant in the sum of $60,000. 2. Judgment for the second plaintiff against the first defendant in the sum of $20,000. 3. The Statement of Claim is otherwise dismissed. 4. Defendants to pay the plaintiffs' costs as agreed or assessed.

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: 30 September 2022