Engadine Medical Imaging Services Pty Ltd as trustee for the Engadine Unit Trust v Mena Ibrahim

Supreme Court of NSW|2024-05-16|Before: McGrath J

INTRODUCTION

These proceedings are brought by the plaintiffs, Engadine Medical Imaging Services Pty Ltd (EMIS) as trustee for the Engadine Unit Trust, Dr Ali Kyatt and Advanced Imaging Pty Ltd as trustee for the Kyatt Family Trust, against various defendants being: 1. Mena Ibrahim (First Defendant); 2. Engadine Medical Imaging Pty Ltd (Second Defendant); 3. Nabeel Chaudhry (Third Defendant); 4. Warilla Diagnostic Imaging Pty Ltd as trustee for Warilla Diagnostic Image Trust trading as Focus Radiology (Fourth Defendant); 5. Focus Radiology Dapto Pty Ltd (Fifth Defendant); 6. Focus Radiology Warrawong Pty Ltd (Sixth Defendant); 7. Dapto Imaging Pty Ltd as trustee for the Dapto Medical Imaging Unit Trust (Seventh Defendant); and 8. Warrawong Imaging Pty Ltd as trustee for the Warrawong Medical Imaging Unit Trust (Eighth Defendant).

EVIDENCE

At the hearing, EMIS, Dr Kyatt and Advanced Imaging relied on evidence from Dr Kyatt and Ameer Al-Khigani, a business associate of Dr Kyatt.
Neither Mr Ibrahim nor Mr Chaudhry read any affidavits, gave evidence or called any witnesses in the proceedings. On this basis the plaintiffs ask that I draw a Jones v Dunkel inference in respect of their failure to give evidence as well as their failure to call Dannielle Coles as a witness in their respective cases. I have addressed the issue of the Jones v Dunkel inferences in more detail below.
Mr M Pesman SC appeared with Mr M Klooster for EMIS, Dr Kyatt and Advanced Imaging, instructed by New South Lawyers. Mr M Condon SC appeared with Mr M Collins for Mr Ibrahim, instructed by Bridges Lawyers. Mr G Sirtes SC appeared with Mr F Di Lizia for Mr Chaudhry, instructed by Madison Marcus.

Dr Kyatt's evidence

At the hearing, Dr Kyatt was cross-examined by Mr Condon SC and Mr Sirtes SC on multiple issues.
The approach of a trial judge to the assessment of the credibility and reliability of a witness who gives evidence in a trial has a number of aspects which are relevant to these proceedings. The salient principles are as follows: 1. In circumstances where events have taken place long ago, the orthodox and sensible approach for a trial judge to take in assessing the credibility and reliability of the evidence of a witness about those events is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence: Effem Foods Pty Limited v Lake Cumbeline Pty Limited [1999] HCA 15; (1999) 161 ALR 599, Gleeson CJ, Gaudron, Kirby and Hayne JJ at [15]-[16]. 2. Scientific research has cast doubt on the ability of a trial judge to tell truth from falsehood accurately based on the appearance of witnesses such that trial judges should limit their reliance on the appearances of witnesses and reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, Gleeson CJ, Gummow and Kirby JJ at [30]-[31]. 3. There are multiple problems with a trial judge making demeanour findings, ranging from systematic error or bias, memory malfunctions, and the possibility that witnesses may be dishonest about only parts of their evidence, that a truthful witness may give accurate or inaccurate testimony and that a dishonest witness may appear to be truthful. A trial judge should keep in mind the guidance provided in Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 by Ipp JA (with whom Mason P and Tobias JA agreed) who said at [27]: These problems and doubts about demeanour findings explain why trial judges are expected to weigh their impressions as to demeanour carefully against the probabilities and to examine whether the disputed evidence is consistent with the incontrovertible facts, facts that are not in dispute and other relevant evidence in the case. Of course, demeanour may trump the probabilities, but it should be apparent from the judge's reasons that the probabilities and consistency with other relevant evidence have properly been taken into account. 1. A trial judge should exercise restraint when forming a view about the credibility of a witness based on demeanour in giving evidence because it is a stressful and unfamiliar experience for most people, and particular care must be exercised in making demeanour findings where a witness is from a different cultural and ethnic background to that with which the trial judge is familiar: Goodrich, Ipp JA at [21]. As observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") (1924) 20 Ll L Rep 140, by Atkin LJ at 152 (cited in Fox v Percy at [30]): … an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour. 1. The assessment of the credibility of a witness is a larger concept than demeanour and the latter is not to be overemphasised: White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277, Bell P (as the Chief Justice then was) at [106] citing Goodrich at [16]-[27] (White JA agreeing generally at [155]-[156]); Admiral International Pty Ltd v Insurance Australia Ltd [2022] NSWCA 277, Bell CJ (Ward P and Macfarlan JA agreeing) at [102]-[103], citing White and Goodrich. 2. It is important to bear in mind that the ordinary human experience of a witness makes their memory of conversations fallible, as eloquently stated in the following oft-cited passage in Watson v Foxman (1995) 49 NSWLR 315, by McLelland CJ in Eq at 319 (recently approved in Touma v Highfields Australia Pty Ltd [2024] NSWCA 160, Basten AJA at [18] White and Adamson JJA agreeing): … human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
As will be apparent from the factual findings I have set out below, I formed an adverse view of the credibility and reliability of the evidence given by Dr Kyatt. In doing so, I recognised that Dr Kyatt is from Jordan and English is not his first language, which is apparent from the staccato and ungrammatical way he expressed himself in multiple emails and throughout his cross-examination. I did not make any of my findings about Dr Kyatt's credibility and reliability based on his demeanour in the witness box alone. Dr Kyatt's own counsel stated that he "struggled in cross-examination … plainly very aggrieved by what he perceives … to be the misconduct of Mr Ibrahim and Mr Chaudhry". In the main, I have set aside the way in which Dr Kyatt conducted himself and given him the benefit of doubt in relation to the obvious infelicities in his expression when I assessed his evidence.
The views that I formed of Dr Kyatt's evidence are primarily based on the probabilities and the objective factual surrounding material, which mainly comprise the documents in evidence. Repeatedly, Dr Kyatt evaded answering direct questions and refused to concede obvious propositions arising from contemporaneous documents. He gave answers which were internally inconsistent and objectively improbable. On critical matters relevant to the claims he propounded I have not accepted his evidence.
I have made these findings even though I have not been required to assess the credibility and reliability of Dr Kyatt's evidence against the evidence of any other witness. Dr Kyatt's evidence was in itself unsatisfactory on multiple occasions.
The evidence on which I have made credit findings against Dr Kyatt is set out below.

Jones v Dunkel inference against the defendants

The rule in Jones v Dunkel (1959) 101 CLR 298, being the principle articulated by Kitto J at 308, Menzies J at 312 and Windeyer J at 320-321, has been distilled, summarised, expanded and explained in a number of authorities in the High Court of Australia and the Court of Appeal of this court, principally including Payne v Parker [1976] 1 NSWLR 191, Glass JA at 201; Manly Council v Byrne [2004] NSWCA 123, Campbell J (Beazley JA and Pearlman AJA agreeing) at [44]-[61]; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11, Heydon, Crennan and Bell JJ at [63]; Ling v Pang [2023] NSWCA 112, Kirk JA (Leeming and Mitchelmore JJA agreeing) at [20]-[28]; SSABR Pty Ltd v AMA Group Limited [2024] NSWCA 175, Stern JA (Ward P and Price AJA agreeing) at [158]-[161]. These authorities support the following legal principles: 1. The rule in Jones v Dunkel is a principle of judicial reasoning which addresses the drawing of inferences of fact. 2. The unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party's case. 3. The failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn. 4. The drawing of a Jones v Dunkel inference requires the court to be satisfied that, first, it is expected or natural for the party in question to have called the person; second, the person's evidence would have elucidated a particular matter; and third, the absence of the person is unexplained. 5. The rule in Jones v Dunkel only applies once all the evidence in the case is in. 6. Whether some inference should be drawn, what inference, and with what significance, are all matters that depend upon the particular case. 7. In some cases no inference will be drawn merely because corroborative or cumulative witnesses are not called. 8. The rule in Jones v Dunkel cannot be used to draw a positive inference if the evidence does not otherwise admit of a rationally drawn inference. 9. The rule in Jones v Dunkel does not permit a court to infer that the uncalled evidence would have been positively damaging to a party's case. 10. The rule in Jones v Dunkel does not supply missing gaps in the evidence.
In the present case, Mr Chaudhry and Mr Ibrahim are parties in the proceedings who were not called to give evidence, in circumstances where it would be expected that they would each do so in their own cause and where their respective absences are unexplained. As a result, I will apply the rule in Jones v Dunkel in accordance with the principles stated above in relation to their failure to give evidence to draw the particular inferences that I have identified below.
In respect of the defendants' failure to call as a witness or put on evidence given by Ms Coles, a business operations manager employed by one or more of the radiology practices owned by Messrs Ibrahim and/or Mr Chaudhry at different times and whose involvement in relevant events is disclosed in the following section of the judgment, I will also apply the rule in Jones v Dunkel. My reasons for doing so, and the inferences I am accordingly prepared to draw, are set out below.

Mr Chaudhry, Mr Ibrahim and Dr Kyatt: initial relationships and discussions

In around mid 2011, Dr Kyatt (a radiologist) and Mr Chaudhry (a sonographer) first met. At this time, Dr Kyatt was living in Griffith, New South Wales, and working for I-MED Radiology. Mr Chaudhry introduced Dr Kyatt to Mr Chaudhry's business partner, Shahid Iqbal. Mr Chaudhry mentioned to Dr Kyatt that they were considering opening a radiology practice in Griffith and asked if Dr Kyatt would like to join them. Dr Kyatt declined to be involved.
On 21 September 2011, Mr Chaudhry sent an email to Dr Kyatt reiterating that they were seriously considering establishing a radiology practice in Griffith, and potentially expanding into the surrounding rural areas, and said that they were happy to offer Dr Kyatt the same wage as he was currently getting plus 10% of the profits with no need for Dr Kyatt to make any financial input. To Dr Kyatt's knowledge, that proposed business venture involving Messrs Chaudhry and Iqbal did not go ahead.
In or around 2015, Mr Chaudhry called Dr Kyatt and requested his assistance with performing certain medical procedures, including nerve root injections, performing biopsies under ultrasound guidance and joint injections, at a practice that Mr Chaudhry operated, jointly with a neurologist, in Kingswood, New South Wales (Kingswood Practice). Dr Kyatt subsequently performed work as a contractor at the Kingswood Practice on several occasions on weekends.
On 11 May 2015, Mr Chaudhry sent an email to Dr Kyatt in which he said he would like to offer Dr Kyatt a proposal to come and work at the Kingswood Practice, that they were able to match what Dr Kyatt was on in Griffith and that they could even give him equity in the businesses. Mr Chaudhry asked Dr Kyatt to let him know if he was interested and said that they could meet up and discuss further.
In about November 2015, Dr Kyatt was approached by Mr Chaudhry and Mr Ibrahim, who offered him employment at their three radiology practices in the Sutherland Shire and Illawarra areas, in the suburbs of Engadine, Warilla and Woonona. In an email dated 8 November 2015 to Dr Kyatt, Mr Chaudhry said that with Dr Kyatt working with Mr Chaudhry and Mr Ibrahim, they could grow and expand in the future. In the letter dated 8 November 2015 on the letterhead of Woonona Medical Imaging which was attached to that email, Mr Chaudhry formally offered Dr Kyatt employment as a radiologist working at each of the Engadine Practice, the Warilla Practice and the Woonona Practice at a daily rate of $3,800 inclusive of GST. The term of the employment was expressed to be "until Dr Ali Kyatt needs to leave for overseas". The letter also included the following statement under the sub-heading "Equity Partnership": If everything progresses well and if you don't end up leaving overseas, we are also happy to discuss an equity partnership in all 3 practices.
In early 2016, Dr Kyatt relocated from Griffith to Sydney and began working for Mr Chaudhry and Mr Ibrahim at the Engadine Practice, the Warilla Practice and the Woonona Practice as a contractor radiologist paid by session. Also around this time, Dr Kyatt, Mr Chaudhry and Mr Ibrahim entered into discussions and negotiations, which took place in person, to enter into business together. Messrs Chaudhry and Ibrahim proposed that Dr Kyatt would purchase shares in one or more of the Engadine Practice, the Warilla Practice and the Woonona Practice. Those discussions continued to around mid-2016 but did not result in any agreement being reached.

The Engadine Practice and the Engadine Premises

In 2009, the Engadine Practice was established by Mr Ibrahim and was conducted by Advanced Medical Imaging Pty Ltd (AMIS, which later changed its name to Advanced Medical Fitouts Pty Ltd), of which Mr Ibrahim was the sole director and shareholder. As a result, Mr Ibrahim was managing the Engadine Practice from that time until the events of February 2018 which are outlined below.
In around April 2016, Dr Kyatt was provided with access to the financial books and records of the Engadine Practice for the 2013, 2014 and 2015 financial years.
On 23 June 2016, EMIS was incorporated, with Dr Kyatt as its sole director and secretary and Advanced Imaging as its sole shareholder. Dr Kyatt is the sole director of Advanced Imaging and Dr Kyatt and his wife are the equal shareholders of Advanced Imaging.
On 1 February 2017, the Lease of premises at Suite 3/24-28 Station St, Engadine (Engadine Premises) was entered into between Peter and Robyn Thompson (as lessors) and Pulse Medical Imaging Engadine Services Pty Ltd (as lessee). Pulse Medical was a company controlled by Messrs Ibrahim and Chaudhry. The Lease was signed by Messrs Ibrahim and Chaudhry on behalf of Pulse Medical.
The Lease had a commencement date of 1 February 2017 and a termination date of 31 January 2022. The Lease included an option to renew for a further five-year term, which had to be exercised within a period of three months before the expiry of the Lease, namely by 31 October 2021. I infer that as signatories to the Lease, each of Messrs Ibrahim and Chaudhry knew that the option had to be exercised under the Lease by 31 October 2021 and that the Lease expired on 31 January 2022.
In October 2017, negotiations resumed concerning the potential acquisition by Dr Kyatt of an interest in the radiology practices owned and operated by Messrs Chaudhry and Ibrahim, the Engadine Practice in particular. Dr Kyatt offered to buy a 51% interest in the Engadine Practice and considered it was important for him to have a majority interest in that business and that he would handle the day-to-day management of it.
On 30 October 2017 at 11:52pm, Mr Chaudhry sent an email to Rizwan Inayat (an accountant for Dr Kyatt who attended a meeting on 28 October 2017 between Dr Kyatt, Mr Chaudhry and Mr Ibrahim), copied to Dr Kyatt, Mr Ibrahim and Imran Khan (the solicitor for Messrs Chaudhry and Ibrahim). Mr Chaudhry's email forwarded (and expressed approval in answer to) an email sent earlier that evening at 6:46pm by Mr Inayat, which stated that Dr Kyatt, Mr Chaudhry and Mr Ibrahim contemplated having a shareholders agreement with the following main points: 1. Dr Kyatt would be in full control of the day-to-day management of the business of the Engadine Practice and make all decisions from a management and strategic point of view with respect to it. 2. Dr Kyatt would not receive any "management fees" in relation to managing the business. 3. Dr Kyatt, when called upon to provide his services as a radiologist, would charge based on what a normal radiologist charges. 4. Mr Chaudhry would work in the Engadine Practice and earn a salary based on his then existing rate. 5. In the event that Mr Chaudhry and/or Mr Ibrahim decided to sell their shares in the Engadine Practice, Dr Kyatt would have the first right to purchase those shares, and if Dr Kyatt determined not to exercise that option, Mr Chaudhry and Mr Ibrahim would be entitled to sell their shares to any passive investor. 6. In the event that Dr Kyatt decided to sell his shares in the Engadine Practice, both Mr Chaudhry and Mr Ibrahim would have the first right to purchase those shares, and if Mr Chaudhry and Mr Ibrahim determined not to exercise that option, Dr Kyatt would be entitled to sell his shares to anyone. 7. Shares in the Engadine Practice would be sold at market value based on market valuation undertaken by an independent valuer. 8. The person selling their shares would be responsible for paying the valuer and any legal fees associated with the sale of their shares. 9. Dr Kyatt would be the sole director of the new company through which the Engadine Practice would run. 10. Messrs Chaudhry and Ibrahim would have full access to the new company's financial records and accounts.
This corporate structure did not proceed and no shareholders agreement was ever entered into between Dr Kyatt, Mr Chaudhry and Mr Ibrahim. Dr Kyatt confirmed this in cross-examination (T135-136). Several of the themes concerning Dr Kyatt having full control of the Engadine Practice which were raised in this email did, however, find their way into the structure which was ultimately adopted by Dr Kyatt, Mr Chaudhry and Mr Ibrahim. I will now turn to that structure.
Dr Kyatt gave evidence in cross-examination (T63 and T70) that Mr Inayat commenced to be his personal accountant in 2017 and has remained his personal accountant since then.

Engadine Imaging Trust

In about early February 2018, after lengthy negotiations, Dr Kyatt had a meeting with Mr Chaudhry and Mr Ibrahim in which Dr Kyatt said he was prepared to pay $319,000 for a majority stake in the Engadine Practice, saying that he would like a 51% interest in it and ultimate control of the company. Each of Mr Chaudhry and Mr Ibrahim agreed.
On 1 February 2018, the Engadine Imaging Trust (a unit trust) was created, pursuant to a deed (Engadine Trust Deed) executed between Advanced Imaging as trustee for the Kyatt Family Trust, Chaudhry Radiology Services Pty Ltd as trustee for the Nabeel Chaudhry Family Trust, MI No. 2 Family Pty Ltd as trustee for the MI No. 2 Family Trust (an entity associated with Mr Ibrahim) and EMIS.
The Engadine Trust Deed, which provided that EMIS would be trustee of the Engadine Imaging Trust, was executed by Dr Kyatt, Mr Chaudhry and Mr Ibrahim, on behalf of their respective unit holders of a total of 100 units in the Engadine Imaging Trust, as follows: 1. Dr Kyatt as director of Advanced Imaging, which would hold 51 units as trustee for the Kyatt Family Trust; 2. Mr Chaudhry as director of Chaudhry Radiology Services, which would hold 19 units as trustee for the Nabeel Chaudhry Family Trust; and 3. Mr Ibrahim as director of MI No. 2, which would hold 30 units as trustee for the MI No. 2 Family Trust.
The Engadine Trust Deed was also executed by Dr Kyatt on behalf of EMIS as its director and secretary.
Under the Engadine Trust Deed, EMIS had the power to institute, set up and administer the Engadine Practice, being the radiology practice known as Engadine Imaging (cl 21.1(a)). The "business" was defined in the Engadine Trust Deed as the radiology practice situated at the Engadine Premises or such other location as agreed by EMIS (cl 1.1(b)).
The Engadine Trust Deed also provides that there is no relationship of principal and agent between EMIS and the unit holders, no relationship of partners as between EMIS and the unit holders and no relationship of partners as between the unit holders amongst themselves (cl 19.1). In addition, the Engadine Trust Deed provides that no unit holder is under any obligation to personally indemnify EMIS or any creditor of EMIS in the event of there being any deficiency of the assets of the Engadine Imaging Trust as compared to its liabilities (cl 19.2).
Clause 13.2 of the Engadine Trust Deed provides that unit holders may inspect the financial statements and books of account in relation to the Engadine Imaging Trust.
The Engadine Trust Deed expressly provides that control and management of the Engadine Practice is the responsibility of the majority unit holder, Advanced Imaging, and contains particular provisions which establish the special position of Advanced Imaging in control of the Engadine Practice.
The relevant terms of the Engadine Trust Deed are bespoke in this regard, providing particular rights in favour of Advanced Imaging (which were not given to the entities controlled by Messrs Chaudhry and Ibrahim) as follows: 1. There is a prohibition of the transfer of any units by a unit holder other than by first right of refusal to the remaining unit holders on terms to be agreed and, if agreement cannot be reached, there is the right to sell to any party of their choosing except for Chaudhry Radiology Services or MI No. 2 who may only sell to a passive investor not involved in the operation or running of the business (cll 8.1, 8.2 and 8.3). This meant that Advanced Imaging could sell to a unit holder involved in the operation or running of the business. 2. The unit holders are presently entitled to the income of the Engadine Imaging Trust in proportion to their units, and while ever Advanced Imaging remains a unit holder, the timing and payment of any income distribution during a particular financial year is entirely at Advanced Imaging's decision (cl 10.3(a)). 3. Advanced Imaging as the 51% unit holder may unilaterally require an auditor to be appointed to examine the accounts of the Engadine Imaging Trust, ascertain the correctness of any financial statement of the Engadine Imaging Trust or make inquiry into the financial affairs of the Engadine Imaging Trust (cl 13.3(a)). 4. Advanced Imaging as the 51% unit holder has the right to approve the remuneration for EMIS's services (cl 17.2). 5. While ever Advanced Imaging is a unit holder, it has the right to nominate a representative who shall have total control of the day-to-day management of the business and make all decisions of a management, administrative and strategic nature in regard to the business, without any monetary restrictions, but without any additional recompense (cl 17.5(a)). 6. If Advanced Imaging is no longer a unit holder, EMIS can exercise discretions or powers by majority resolution of its board (cl 17.5(b)(i)). 7. EMIS must convene a meeting of unit holders if required to do so by Advanced Imaging as the holder of 51% of the units (cl 18.1(b)). 8. A poll may be demanded by Advanced Imaging as a holder of not less than 51% of the units entitled to vote at meetings of the unit holders (cl 18.5).
Dr Kyatt agreed in cross-examination that he acquired 51% of the units because he wanted to have control of the business of the Engadine Imaging Trust and the Engadine Practice and that he was intent on managing it (T136-137).
On 12 February 2018, Dr Kyatt paid $319,218.91 to Mr Ibrahim to acquire a 51% controlling interest in the Engadine Practice on behalf of Advanced Imaging. Given that this was an arms-length transaction, this placed the value of the Engadine Practice as at 12 February 2018 at $625,919.43.
At that time, through Dr Kyatt's position as the sole director of each of Advanced Imaging and EMIS, Advanced Imaging's sole shareholding in EMIS, Advanced Imaging's 51% unit holding in the Engadine Imaging Trust and its rights under the Engadine Trust Deed, Dr Kyatt took over the total control of the day-to-day management of the Engadine Practice and assumed the capacity to make all decisions in relation to it.
Upon taking over the total control of the day-to-day management of the Engadine Practice in February 2018, Dr Kyatt made numerous changes to the Engadine Practice in an attempt to make it profitable, including: 1. deciding to acquire radiology machines under a hire-purchase arrangement, including a new CT scanner and two ultrasound machines; 2. undertaking the reporting and procedures for patients himself; 3. improving the services provided to the patients and building good relationships with the patients and the doctor referrers in the area; 4. acquiring a server and efficient software for images and for generating reports; and 5. building a team of staff around him.
By contrast, in February 2018, Mr Ibrahim went from being the sole director, manager and shareholder of AMIS (the company previously operating the Engadine Practice) to being a director of a minority unit holder of the Engadine Imaging Trust which beneficially owned the Engadine Practice. From February 2018, Mr Ibrahim had no power to manage the Engadine Practice as Advanced Imaging alone, acting through Dr Kyatt, had total control of the day-to-day management of, and decision-making in relation to, the Engadine Practice. Mr Ibrahim was a director of MI No. 2, which held 30% of the units in the Engadine Imaging Trust as trustee for the MI No. 2 Family Trust.

Transfer of the Engadine Premises and assignment of the Lease to EMIS

On 22 February 2018, Mr Inayat sent an email to All Star Property Group, the managing agent for the lessor of the Engadine Premises, introducing himself and stating that he acted as the accountant for EMIS and was responsible for all the payments. In the email, Mr Inayat asked that all correspondence be sent to his email address and also provided his mobile number.
On 23 February 2018, Nicole Hartnett of All Star Property Group replied by email to Mr Inayat stating that she had updated their system to include him as the main contact in relation to the Lease.
In February 2018, the Engadine Premises were transferred from Peter and Robyn Thompson to new owners, Don and Helen Zafiropoulos, who bought the Engadine Premises subject to the Lease.
In May 2018, Pulse Medical assigned the Lease of the Engadine Premises to EMIS.
At all relevant times, the Engadine Practice traded from the Engadine Premises.

Establishing the Dapto Practice

In September 2018, Dr Kyatt, Messrs Ibrahim and Chaudhry and Dr Haider Jasim (a general practitioner) had discussions about establishing a radiology practice in Dapto. Those exchanges took place at least in part via WhatsApp messaging and email. Among the matters discussed was the presence of an existing radiology practice in Dapto.
In late September 2018, Dr Kyatt, Messrs Ibrahim and Chaudhry, and Dr Jasim exchanged WhatsApp messages in the course of which: 1. Mr Chaudhry suggested that they should directly approach the staff at the existing radiology practice in Dapto and offer them contracts, saying '[t]his way we will close them down"; 2. Mr Ibrahim agreed, stating "[w]e have to close them down and the only way to do that is through their staff"; 3. Dr Jasim agreed, saying "[y]es it should be done ASAP currently they are struggling with staff to keep the unit going!! I am watching them carefully and closely, we should close them off soon"; and 4. Dr Kyatt indicated that he had obtained advice from someone called "Terry" (who is referred to only by his first name), who advised him to advertise roles at the Dapto Practice and "not to approach the staff directly".
On 25 September 2018, Mr Chaudhry sent an email to Dr Kyatt, Mr Ibrahim and Dr Jasim, attached to which was a spreadsheet setting out the prospective pay rates and total expense of hiring six members of staff from the existing practice in Dapto. In the body of the email, Mr Chaudhry stated: … I have attached the expense that will occur by taking the dapto staff. I believe by taking the staff, it will cripple Dapto and they will not be able to operate.
One of the members of the staff in the existing practice in Dapto listed on the spreadsheet was "Danielle Coles" (her correct first name is "Dannielle").

2019 financial position of EMIS

On 6 February 2019, Mr Inayat sent an email to Dr Kyatt, Mr Ibrahim and Mr Chaudhry in which he said there was a fair bit of money in Engadine and he was proposing that $50,000 be taken out as profit share. Mr Inayat said that he would transfer the $50,000 according to the percentage of units held by each unitholder and asked for them to confirm their bank account details.
On 19 April 2019, Mr Inayat sent an email to Dr Kyatt, Mr Ibrahim and Mr Chaudhry in which he said there was quite a fair bit of money sitting in the Engadine account so they had decided to take a $150,000 profit share. Mr Inayat said that because Dr Kyatt had 51% of the shares he would take $76,500 as profit share. Mr Inayat said that each of Mr Ibrahim and Mr Chaudhry should take out their share based on the percentage of shares they had in the business.
The financial statements for EMIS for the year ending 30 June 2019 show that the total income was $1,505,173.49 and total expenses were $1,561,054.14 (including a consulting fee of $136,363.64), making the net loss of $55,880.65. Those financial statements also demonstrate that there was a total equity deficiency of $61,119.40. Dr Kyatt saw these financial statements at the end of that financial year (T85).
The plaintiffs submit that despite the recording of a net loss, the financial statements for the year ending 30 June 2019 reveal that the Engadine Practice was profitable because the unit holders took out their profit share in the form of the consulting fee of $136,363.64 which, when added back to the net loss of $55,880.65, reveals a net profit of $80,482.99. They also say that Dr Kyatt's 51% share of the consultancy fee was $69,545.46.

Dr Kyatt's relocation to Jordan and changes to the Engadine Practice

In mid-2019, some time prior to July 2019, Dr Kyatt informed Mr Chaudhry that he was relocating overseas. Although the evidence shows that Dr Kyatt had mentioned a proposed relocation overseas during discussions in November 2015 with Messrs Ibrahim and Chaudhry about an earlier business negotiation, Dr Kyatt did not tell Mr Ibrahim or Mr Chaudhry of his intention to leave for Jordan any earlier than mid-2019 and it came as a surprise to them (T137-138).
On 24 July 2019, Dr Kyatt, Dr Jasim, Mr Chaudhry, Mr Ibrahim and Roz Rhoden (the Business Development Manager of Southern Imaging Group) held a meeting at the Novotel at which a number of issues were discussed. The minutes of the meeting were taken by Ms Roden and then emailed by her to all of the other participants on 5 August 2019.
In the minutes of the meeting, Mr Ibrahim is recorded as discussing with Dr Kyatt: … if the Engadine rooms need to expand and there is a shop for lease 3 doors down from the current site. This will allow for future growth as they are outgrowing the current site.
Below this entry, the minutes record "Dr Kyatt considering".
The minutes of the meeting also state: Discussion: who will be in control when Dr Kyatt goes away No response or decision made. Dr Kyatt would like to put forward Dr Jasim as a director (for internal communication and management only)
The minutes also contain a record of discussion about issues concerning the Dapto Practice and the Warrawong Practice, such as whether an MRI machine and a 3D mammogram machine should be purchased for the Dapto Practice, the anticipated arrival of a bone density machine that had been ordered, whether a female radiologist should be offered shares in the various practices, whether Dr Kyatt and Dr Jasim wished to buy into the practices at Woonona and Warilla and various staffing issues such as the hiring of a marketer and an operational manager.
On 26 September 2019, Mr Chaudhry was appointed as a second director and secretary of EMIS. Dr Kyatt remained a director and secretary of EMIS.
In October 2019, Dr Kyatt moved from Sydney to Jordan for family reasons. Dr Kyatt had access to the Engadine Practice bank account and could monitor the financial performance of the Engadine Practice to the extent it was disclosed in the bank account statements. Dr Kyatt also communicated frequently with Mr Inayat as his own accountant and the accountant for EMIS. Over the following month, Dr Kyatt continued to provide reporting services remotely to the Engadine Practice.
In cross-examination (T58-62), Dr Kyatt stated that after he moved to Jordan, he provided radiology services remotely to independent radiology practices located in Australia, being IDXT (since October 2019) and I-MED (since April 2021). Dr Kyatt's best estimate is that since late 2019 he has worked for IDXT and continues to do so. Dr Kyatt's best estimate is that he has worked for IDXT for between six and eight hours per day for five or six days each week. Also in cross-examination (T69), Dr Kyatt said that he did not provide any services to any medical practitioners or sonographers in Jordan.
After Dr Kyatt relocated to Jordan in October 2019, Mr Chaudhry took over management of the Engadine Practice and assumed primary responsibility for the Engadine Practice's day-to-day operations. This included Mr Chaudhry having unrestricted access to the books and records of the Engadine Practice.
On 28 October 2019, Mr Chaudhry sent an email to Dr Kyatt reporting that the Engadine Practice, as well as the Lakemba Practice and the Dapto Practice, had been doing well since Dr Kyatt had gone and the revenues at all sites were good with no real drop.
On 17 November 2019, Dr Kyatt sent a WhatsApp message to Mr Chaudhry informing him that he would cease to do any further reporting at all for the practices, including the Engadine Practice, saying: Sorry I need to stop my telereporting because I found it doesn't worth the effort. Doing these cases the way I am doing them is a mission, demanding time and effort and taking precious family time. At the end of the day I found what I get in a month I can make in a couple of days doing locum and there are so many positions in Australia instead of sitting 3-4 hours every day doing these cases.
On the same day, Mr Chaudhry responded "no problems".
Dr Kyatt was cross-examined about the messages he sent to Mr Chaudhry informing him that he was stopping work for all of the practices (T131-134). In light of the views that I have formed about the credibility of Dr Kyatt as a witness, I consider that he stopped doing work for the Engadine Practice and the other practices because he considered that he would be paid more money doing work for IDXT, not because he thought that he would be endangering lives if he continued to do that work (as he claimed in cross-examination). The primary reason he gave to Mr Chaudhry in his message was one relating to money, not any other cause concerning patient care which would have been very simple and powerful for him to say if it was the true reason.

Pay rise approved for Dannielle Coles

On 7 February 2020, Dannielle Coles sent an email to Mr Chaudhry requesting a pay rise due to her job role and working hours increasing.
On 11 February 2020, Mr Chaudhry sent an email to Dr Kyatt, Mr Ibrahim and Ms Rhoden, forwarding Ms Coles' email of 7 February 2020 and expressing his approval to give Ms Coles a pay rise, stating "she is a massive asset to the company".
On 14 February 2020, Ms Rhoden (signing off as Business Development Manager, Southern Imaging Group) responded by email to Mr Chaudhry, copied to Dr Kyatt and Mr Ibrahim, agreeing to the proposed pay rise for Ms Coles.

Mr Ibrahim's access to the books and records of the Engadine Practice

On 12 March 2020, Mr Ibrahim sent an email to Mr Inayat, the accountant for EMIS, requesting access to the Xero (accounting software) account for the Engadine Practice. Mr Inayat subsequently sent Mr Ibrahim a Xero invitation.
From this time, Mr Ibrahim had unrestricted access to the books and records of the Engadine Practice.

2020 financial position of EMIS

On 1 March 2020, Mr Inayat sent an email to Dr Kyatt, Mr Chaudhry and Mr Ibrahim saying that he had had a chat with Dr Kyatt on the weekend and since there was $150,000 sitting in Engadine they thought it would be a good idea to take some money out as a profit share. Mr Inayat said that they were thinking of taking out $100,000, Dr Kyatt would take out $51,000 and the remainder could be taken out by each of Mr Chaudhry and Mr Ibrahim based on their percentages.
On 12 March 2020, Mr Inayat sent an email to Dr Kyatt, Mr Chaudhry and Mr Ibrahim saying that the money that Dr Kyatt had withdrawn would be classified as a consulting fee for radiology work and expensed in the accounts for EMIS and that the profit share to be taken out by each of Mr Ibrahim and Mr Chaudhry would also get classified as a consulting fee in the books of EMIS.
The financial statements for EMIS for the year ending 30 June 2020 show that the total income was $1,407,461.30 and total expenses were $1,429,435.88 (including a consulting fee of $240,909.09), making the net loss of $21,974.58. Those financial statements also demonstrate that there was a total equity deficiency of $83,093.98. Dr Kyatt saw these financial statements at the end of that financial year (T85).
The plaintiffs submit that despite the recording of a net loss, the financial statements for the year ending 30 June 2020 demonstrate that the Engadine Practice was profitable because the unit holders took out their profit share in the form of the consulting fee of $240,909.00 which, when added back to the net loss of $21,974.58, reveals a net profit of $218,934.42. They also say that Dr Kyatt's 51% share of the consultancy fee was $122,863.59.

Rent deferral at the Engadine Practice during the COVID-19 pandemic

On 22 June 2020 and 5 August 2020, Mr Inayat sent emails to Messrs Ibrahim and Chaudhry and Dr Kyatt concerning the proposed deferral and/or waiver of rental payments for the Engadine Premises from the lessor during the COVID-19 pandemic, with the lessor chasing the rent for the Engadine Premises and offering a 10% waiver of the rent for two months and Mr Inayat planning to go back with a 20% waiver for 6 months starting in April 2020. On 5 August 2020, each of Messrs Chaudhry and Ibrahim sent an email to Mr Inayat asking him to negotiate the waiver.
I infer from this exchange that each of Messrs Chaudhry and Ibrahim were involved in a decision concerning the rent paid by EMIS for the Engadine Premises under the Lease.

Dr Kyatt's employment at I-MED

On 14 April 2021, Dr Kyatt and Mr Chaudhry had the following exchange over WhatsApp: Dr Kyatt: Salam nabeel Sorry I just started a new job for imed and currently very busy. Mr Chaudhry: Salam Ali, no problems
In cross-examination (T60-62), Dr Kyatt said that he commenced providing remote radiology services to I-MED in April 2021, which he estimated he did for about one year, involving him working three to four hours a day, maybe two to three shifts a week. Dr Kyatt said that I-MED is the largest radiology practice in Australia and the cases he reported on came from all over Australia, other than Sydney and Wollongong.

Distribution of funds from the Engadine Practice

On 28 January 2021, Mr Ibrahim sent an email to Dr Kyatt and Mr Chaudhry, copied to Mr Inayat, stating: Regarding Engadine, I believe we should begin to distribute shareholders funds weekly. I propose that we take out $300,000.00 this week, then distribute $3,000 every Friday (divided according to each shareholder's portion). Please let me know your thoughts.
There is no evidence of what, if any, action was taken in response to this suggestion by Mr Ibrahim. In any event, the distribution of the income of the Engadine Imaging Trust was entirely the decision of Advanced Imaging under cl 10.3(a) of the Engadine Trust Deed and not something over which Mr Ibrahim had any control.

Termination of employment of staff member at the Engadine Practice

On 2 May 2021, Mr Ibrahim sent an email with an attached letter to Jong Min Son, an employee of the Engadine Practice, copied to Mr Chaudhry. That letter, on the letterhead of Pulse Medical Imaging, concerned the termination of Jong Min Son's employment with the Engadine Practice.
Under the heading 'Termination of Your Employment', the text of the letter relevantly stated: Dear Mr Jong Min Son, I am writing to you concerning the termination of your employment with Engadine Medical Imaging. Your employment is being terminated due to serious misconduct due to the following two incidents: [The letter then set out factual matters concerning a patient receiving the wrong procedure and Jong Min Son going home early] The incidents as mentioned above constitute a serious and imminent risk to the health and safety of our patients, in addition to risking the reputation and viability of the business. Your termination is effective immediately as of today's date … … Yours sincerely Mena Ibrahim
I infer that Mr Ibrahim had to investigate and establish what had taken place before sending the notice of termination. There is no evidence that Mr Ibrahim consulted with either Dr Kyatt or Mr Chaudhry before taking the step of terminating the employment of Jong Min Son, although I infer from the copying in of Mr Chaudhry to the email that the termination did not come as a surprise to him.
There is evidence that on 2 September 2022 the original recipient of the email, Jong Min Son, forwarded to Dr Kyatt the email of 2 May 2021.

2021 financial position of EMIS

The financial statements for EMIS for the year ending 30 June 2021 show that the total income was $1,591,392.57 and total expenses were $1,559,148.99 (including a consulting fee of $450,000), making the net profit of $32,243.58. Those financial statements also demonstrate that there was a total equity deficiency of $50,850.40. Dr Kyatt saw these financial statements at the end of that financial year (T85).
The plaintiffs submit that despite the recording of the small net profit, the financial statements for the year ending 30 June 2021 demonstrate that the Engadine Practice was more profitable that it appears because the unit holders took out their profit share in the form of the consulting fee of $450,000.00 which, when added back to the net profit of $32,243.58, shows a greater net profit of $482,243.58. They also say that Dr Kyatt's 51% share of the consultancy fee was $229,500.00.

Attempts to renew the Lease

On 17 August 2021 at 1:39pm, Mr Chaudhry sent an email to Paula Milsted, the Property Administrator of All Star Property Group, asking for an update on the time remaining for the Lease in respect of the Engadine Premises.
On 17 August 2021 at 2:00pm, Ms Milsted sent an email to Mr Chaudhry in reply, stating that the Lease was due to expire on 31 January 2022.
On 17 August 2021 at 9:35pm, Mr Chaudhry forwarded Ms Milsted's response to Mr Ibrahim, asking Mr Ibrahim what he wanted Mr Chaudhry to reply with.
On 18 August 2021 at 12:01pm, Mr Ibrahim emailed Mr Chaudhry with a draft response to Ms Milsted in the following form: Hi Paula, Please advise the landlord that I would like to enter into a 5+4+4+4 year lease from 31 January 2022. I will pay the landlord's legal fees for preparing the new lease. Thank you.
On 18 August 2021 at 12:10pm, Mr Chaudhry sent an email to Ms Milsted in the precise form of the draft suggested by Mr Ibrahim.
On 18 August 2021 at 12:42pm, Ms Milsted replied to Mr Chaudhry, stating that she would pass on his correspondence to the lessors and would be in touch with the suggested terms in the future.
On 8 September 2021, Ms Milsted sent an email to one of the lessors of the Engadine Premises, Don Zafiropoulos, in the following form: Lease to Engadine Medical Imaging Services Pty Ltd Premises: Suite 3, 24 Station Street, Engadine NSW Lease Expiry: 31.01.2021 We refer you to the above tenant who has advised they would like to renew their lease for a term of five years with 3 x 4 year options. We have reviewed the rent and [propose] the following Lease commencement 1 February 2022 Term Five (5) years Option 3 x 4 year options Commencement Rent $63,621.96 per annum PLUS GST / $5,301.83 per month PLUS GST Rent Reviews Annually at anniversary via CPI/4% greater of Market Review at Option 100% as per existing lease - Council Outgoings - Water Rates - Tax's - Strata levis /fees Security Deposit $15,248.97 - held by yourself A top amount of $2,247.06 will be required Lease Preparation Cost Payable by the lessee as charged by the appointed solicitor.

If you are in agreement to the above, you may simply reply back to this email, we will then advise the tenant of the [proposed] new rent and request your solicitor prepare the necessary lease agreement. If how however [sic] you wish to discuss please do not hesitate to contact our office. Could you please confirm your solicitors details.

On 13 October 2021, Abbey Freeman (the Leasing Administrator of All Star Property Group) sent an email to Mr Inayat noting that the Lease for the Engadine Premises was due to expire on 31 January 2022 and asking whether he intended to renew the Lease or continue to occupy the Engadine Premises and if so, what length of lease he was interested in securing with the lessors. Ms Freeman concluded by asking Mr Inayat to provide a prompt reply, as if he did not wish to renew they would need to market the Engadine Premises to secure a replacement tenant for the lessors.
On 14 October 2021 at 8:18am, Mr Inayat forwarded Ms Freeman's email of 13 October 2021 to Mr Chaudhry, Mr Ibrahim and Dr Kyatt, saying: Guys Please refer below lease renewal for Engadine
On 14 October 2021 at 8:20am, Mr Inayat sent an email responding to Ms Freeman, stating that his firm acted as the accountants, he had passed on her email to the client, and that he would ensure that they would get back to her as soon as possible.
Also on 14 October 2021 at 8:20am, Mr Inayat sent an email to Dr Kyatt asking if he wanted to discuss the Lease renewal further and suggesting that Dr Kyatt speak with Mr Chaudhry to discuss the terms of renewal. On the same day at 5:36pm, Dr Kyatt sent an email in reply to Mr Inayat stating: Yes, Rizwan for me certainly. Just see what others' ideas.
On 31 October 2021, the period within which the option to renew the Lease of the Engadine Premises could be exercised expired.
On 25 November 2021 at 3:27pm, Mr Chaudhry sent an email to Mr Inayat, in reply to Mr Inayat's email of 14 October 2021 at 8:18pm forwarding Ms Freeman's email of 13 October 2021. In that email, Mr Chaudhry said: Salam Bro, Did you send an email to renew the lease? Lets [sic] do a 4 x 4 x 4 x 4 year lease.
On 25 November 2021 at 3:46pm, Mr Inayat then sent the following email to Ms Freeman, copied to Mr Chaudhry: Abbey Hope you are well. We would like to renew the lease ca [sic] we renew as follows: 4 x 4 x 4 x 4 lease.
I infer that Mr Inayat sent this email after speaking to Mr Chaudhry and receiving instructions to take steps to renew the Lease.
Dr Kyatt said in evidence that from this email, he understood that Messrs Chaudhry and Ibrahim had agreed to the renewal of the Lease and that it would be renewed. But the email, on its face, was not sent or copied to Dr Kyatt, and he did not give evidence that he spoke to Mr Inayat about the issue so the correctness of his evidence may be doubted.
I infer from this email that at that time, Mr Chaudhry would have believed that the Lease would be renewed, having directed Mr Inayat to inform the agent of that request and having seen that Mr Inayat had done as he instructed.
On 31 January 2022, the Lease expired in accordance with its terms and EMIS became a month-to-month tenant of the Engadine Premises.
On 23 February 2022 at 7:05pm, Mr Ibrahim sent an email to Mr Chaudhry, being an email that Mr Ibrahim proposed to send to All Star Property Group concerning the Lease. That email, addressed to Ms Freeman, was in the following terms: Dear Abbey, As you are aware, our lease with [the lessors] for [the Engadine Premises] expired on 31/01/2022. I had a meeting with [Mr Zafiropoulos] in 2017 just before he purchased the premises … and I am sure he will have no issue continuing our relationship and entering into a brand new lease with the following: 1. 5x5x5x5 years; 2. Same terms as in 2017; 3. Entity will be LOGAN MEDICAL IMAGING PTY LTD. Please have the new lease and all correspondence sent to our Solicitor Jabran Chaudhry [...] as Rizwan Inayat is no longer the account [sic] for the company. Thank you.
The reference to "our lease" and "our relationship" in the draft email can only be to the Lease then held by EMIS (which had become month-to-month) and the relationship between EMIS and one of the lessors, Mr Zafiropoulos.
On 23 February 2022 at 7:24pm, Mr Chaudhry replied to Mr Ibrahim via email, saying "[p]erfect" and directing him to also copy the email to the email address used by Ms Milsted.
On 25 February 2022 at 12.00pm, Mr Ibrahim sent an email to Ms Freeman and Ms Milsted in substantially the same form as his proposed draft of 23 February 2022, with the final line reading 'Rizwan Inayat is no longer the account [sic] for the company as such do not send him any correspondence.' This email was copied to Mr Chaudhry and Jabran Chaudhry and attached the original Lease agreement as a pdf document. Tellingly, it was not copied to Dr Kyatt.
The evidence before me is that the new lessee proposed by Mr Ibrahim, Logan Medical Imaging Pty Ltd, is an entity of which Messrs Ibrahim and Chaudhry are the directors and equal shareholders. There is no evidence that Mr Inayat had ceased to be the accountant for EMIS at this time. In fact, the contemporaneous documents during 2022 suggest that Mr Inayat remained the accountant for EMIS. I find that the statement in the email that Mr Inayat had ceased to be the accountant was false and that the statement that Mr Inayat should not be sent any correspondence by All Star Property Group was said to ensure that it did not come to Mr Inayat's notice that an attempt was being made to renew the Lease for the Engadine Premises in the name of Logan Medical Imaging.
On 28 February 2022 at 12:32pm, Ms Milsted sent an email to Mr Zafiropoulos as lessor of the Engadine Premises informing him that the tenant of the Engadine Premises, Mr Ibrahim, had contacted the agents regarding the Lease and had indicated that he wished to 'scrap' what had previously been done and have a new lease put in place. In her email, Ms Milsted noted that Mr Ibrahim had requested the following changes: Requested Changes Entity Logan Medical Imaging Pty Ltd ABN 30 622 606 848 Term Five (5) Years Option 3 x Five (5) years Mena Ibrahim Guarantor 22 Burlington Street MONTEREY NSW 2217 Jabran Chaudry Adiuvo Legal Tenants Solicitors Details Level 8, 65 York Street, SYDNEY NSW 2000 Email: jabran@adiuvolegal.com.au PH: (02) 9159 9047

I infer from the matters contained in Ms Milsted's email of 12:32pm that between 12:00pm and 12:32pm, Mr Ibrahim spoke to Ms Milsted to provide her with additional details about the proposed terms of the new lease.
On 28 February 2022 at 4:40pm, the lawyers for the lessors of the Engadine Premises, GA Lawyers, sent an email to Ms Milsted confirming that Mr Zafiropoulos had instructed them to prepare the new lease document and asking her to confirm what the rent was prior to 1 February 2022 and what the rent increased to on 1 February.
On 14 March 2022, GA Lawyers sent Ms Milsted a draft of the new lease with a commencing date of 1 February 2022, a terminating date of 31 January 2026 and 3 x 4 year option periods, which named Logan Medical Imaging as the lessee, Mr Ibrahim as the guarantor, and provided for Messrs Ibrahim and Chaudhry as the directors of Logan Medical Imaging to sign on the execution page.
For reasons not disclosed by the evidence, this proposed leasing transaction did not proceed.

Incorporation of Engadine Medical Imaging

On 21 March 2022, Engadine Medical Imaging (the second defendant in these proceedings) was incorporated, with Mr Ibrahim as its sole director, secretary and shareholder. The difference between the full names of Engadine Medical Imaging and EMIS (Engadine Medical Imaging Services) is that the latter includes the word "Services" and the former does not.

Focus Radiology rebranding

In around May 2022, steps were commenced to rebrand and bring the Woonona Practice, the Warrawong Practice, the Warilla Practice, the Dapto Practice and the Engadine Practice, all previously part of Southern Imaging Group (SIG) and/or Pulse Medical Imaging, under the umbrella business name of 'Focus Radiology Group'. The evidence indicates that the rebranding process was embarked upon by Mr Chaudhry, unbeknownst to Dr Kyatt, and substantially with the assistance of Ms Coles who was working for the businesses using SIG and/or Pulse Medical Imaging as their trading names.
Ms Coles is a former staff member at the previous Dapto radiology practice, who appears to have commenced employment either with the Dapto Practice upon its establishment jointly by Mr Ibrahim, Mr Chaudhry, Dr Kyatt and Dr Jasim, or with one or more associated entities controlled by Mr Chaudhry and/or Mr Ibrahim and forming part of SIG. Before the change to Focus Radiology, her email address was dcoles@sig.health and her email sign off was: Dannielle Coles Southern Imaging Group Pulse Medical Imaging
On 30 May 2022, Ms Coles sent an email to Chris Germon, a consultant at Crowd IT, copied to Mr Chaudhry, in which she requested that the following, among other items, be actioned by the end of July 2022: 1. new email accounts created for each of the Woonona Practice, the Warrawong Practice, the Warilla Practice, the Dapto Practice and the Engadine Practice, in the form '[suburb name]@focusrad.com.au'; 2. new staff email accounts created for herself and Mr Chaudhry; 3. new website URL (www.focusrad.com.au) to be confirmed and created; and 4. the telephone introduction and out-of-hours messages for each of the practices to be amended to refer to Focus Radiology.
Throughout June 2022 and into July 2022, Ms Coles had further email correspondence in connection with the rebranding process with Mr Germon of Crowd IT to find out how it was progressing, as well as with professional design and printing services engaged to design and/or supply, inter alia, Focus Radiology letterheads, appointment cards, business cards, referrals, marketing folders, film bags, and signage, including a Focus Radiology logo sign above the entrance to the Engadine Premises and a Focus Radiology logo lightbox to be hung from the awning outside the Engadine Premises. Mr Chaudhry was copied in to most of this correspondence.
On 15 June 2022, Mr Chaudhry registered the business name 'Focus Radiology'. Also on this date, Mr Chaudhry incorporated Focus Radiology Warrawong and Focus Radiology Dapto, with Mr Chaudhry as the sole director, secretary and shareholder of both companies.
An ASIC search of the business name 'Focus Radiology' reveals that: 1. Focus Radiology is related to the Trustee for the Warrawong Diagnostic Imaging Trust, an entity of which Mr Chaudhry is named as associate; and 2. Focus Radiology's principal place of business is listed as an address in Haywards Bay NSW 2530, a property which Mr Chaudhry and his wife Mehreen Nabeel Chaudhry own as joint tenants.
On 17 June 2022, the Dapto Practice was sold by Dapto Imaging Pty Ltd as trustee for the Dapto Medical Imaging Unit Trust to Focus Radiology Dapto Pty Ltd as trustee for the Focus Radiology Dapto Trust for $1 and the assumption of specified liabilities. Mr Ibrahim signed the contract on behalf of Dapto Imaging Pty Ltd and Mr Chaudhry signed on behalf of Focus Radiology Dapto Pty Ltd.
On 20 June 2022, the Warrawong Practice was sold by Warrawong Imaging Pty Ltd as trustee for the Warrawong Imaging Unit Trust to Focus Radiology Warrawong Pty Ltd as trustee for the Focus Radiology Warrawong Trust for $1 and the assumption of specified liabilities. Mr Ibrahim signed the contract on behalf of Dapto Imaging Pty Ltd and Mr Chaudhry signed on behalf of Focus Radiology Warrawong Pty Ltd. (It appears that the vendor name is incorrectly listed as 'Dapto Imaging Pty Ltd' on the execution page of this contract).
On 4 July 2022, Ms Coles and Mr Chaudhry exchanged emails about the proposed referral form for Focus Radiology, which included the details of the Engadine Practice at the address of the Engadine Premises with a map of its location.
On 9 July 2022, Ms Coles sent an email to Mr Germon seeking an update on the rebranding process and stipulating a deadline of 8 August 2022.
On 11 July 2022, Mia Coles, Focus Radiology's Marketing Liaison Officer, sent an email to a number of physiotherapy, dental, podiatry and massage practices to announce the launch of Focus Radiology, relevantly stating: This is a follow-up email to request a meeting with the Doctors and staff at your Clinic. To introduce Focus Radiology (previously Southern Imaging Group and Pulse Medical Imaging), We would like to provide lunch for your doctors to introduce our new Clinical lead and Radiologist Dr Naushad Ahamed (Nash) who will be joining us full time from mid August, in our practices located in Engadine, Dapto, Warilla, Warrawong and Woonona. …

New Lease of Engadine Premises and Dr Kyatt's responses

On or about 7 July 2022, Engadine Medical Imaging entered into a lease for the Engadine Premises (New Lease). The circumstances in which that transaction occurred are not disclosed by the evidence. The New Lease itself is not in evidence.
On 12 July 2022 at 8:00pm, Mr Ibrahim sent a letter by email to Dr Kyatt and Mr Chaudhry. The letter was addressed to EMIS and stated the following (emphasis in original): I write to you in relation to Engadine Medical Imaging Services Pty Ltd's (herein referred to as Engadine Services) occupation at the premises of Suite 3, 24 Station Street, Engadine (the Premises). I advise as follows: 1. Engadine Medical Imaging Services Pty Ltd (Engadine Services) occupied the Premises pursuant to a Lease between Peter Anthony Thompson and Robyn Lesley Thompson and Pulse Medical Imaging Engadine Services Pty Ltd for a period of five (5) years commencing 1 February 2017 and expiring 31 January 2022 (as subsequently varied and transferred). 2. Engadine Services has occupied the Premises on a monthly overholding basis since the expiry of the Lease. 3. The managing agent, namely Paula Milsted of All Star Property Group, has written to each of you giving notice of the expiry of the Lease, seeking for you to exercise your option and renew the lease for an additional of five (5) year period. 4. You have failed, neglected and/or refused to renew the Lease and/or enter into negotiations in respect of the continued tenure at the Premises. 5. Engadine Medical Imaging Pty Ltd has been incorporated on 22 March 2022 to which I am sole Director and Secretary and has now entered into a Lease in respect of the Premises for a period of five (5) years, with further options. You are hereby on notice that Engadine Services is required to vacate the Premises, relocate its business and its business assets to alternate premises within thirty (30) days from the date of this letter, namely by not later than 5.00pm, Wednesday 10 August 2022. We require Engadine Services to take with it any of its plant and equipment, fixtures and fittings located within the Premises and leave the Premises in a clean and tidy condition. Any plant and equipment or property remaining at the Premises after the deadline specified above, will be considered abandoned and will be dealt with accordingly. The fit out at the Premises is the property of the Landlord and accordingly, is required to remain. No further payments of rent or outgoings are to be made and the Landlord has been directed to return any further payments purported to be made under the former monthly tenancy. As a further and separate point, your failure, neglect or refusal to enter into discussions with the agent in relation to the renewed or continued tenure at the Premises constitutes, without limitation, a fundamental breach of your obligations as director of Engadine Services, having failed to act in the best interest of shareholders.
The letter was signed by Mr Ibrahim in his capacity as director of Engadine Medical Imaging.
On 12 July 2022 at 8:59pm, Mr Chaudhry replied by email to Mr Ibrahim, copying in Dr Kyatt, stating: I can't believe that you went behind my back and got the lease! I've worked really hard at Engadine and this is what you have done. I will be seeking legal advice!
On 12 July 2022 at 9:06pm, Mr Chaudhry sent an email to Mr Inayat and Dr Kyatt, forwarding Mr Ibrahim's email and attached letter of that day and saying: Rizwan, Mena has taken the Lease at Engadine!! I thought the lease was renewed? What are our options? We need to seek legal advise [sic] urgently!!
The fact that Mr Chaudhry was consulting with Mr Inayat in relation to the lease of the Engadine Premises in July 2022 (whether or not this consultation was sincere, or a disingenuous performance intended for Dr Kyatt) indicates that Mr Inayat continued to serve as the accountant for EMIS and the Engadine Practice, contrary to what had been communicated by Mr Ibrahim to All Star Property Group in Mr Ibrahim's email of 25 February 2022 (referred to above). Mr Chaudhry had been copied to that email and had also been sent the email in draft form before it was sent to All Star Property Group.
In light of the February 2022 correspondence with All Star Property Group and the Focus Radiology rebranding project which was occurring at this time, I was invited by the plaintiffs to infer that the emails sent by Mr Chaudhry on 12 July 2022 were "theatre" for the benefit of Dr Kyatt and intended to conceal Mr Chaudhry's true involvement in steps taken by Mr Ibrahim to procure the New Lease of the Engadine Premises on behalf of Engadine Medical Imaging. The available inference I draw is that Mr Chaudhry knew that Mr Ibrahim was taking steps to obtain the New Lease in the name of Engadine Medical Imaging because the Focus Radiology rebranding process was being coordinated by Mr Chaudhry and included the Engadine Practice located at the Engadine Premises. However, there is no conclusive evidence that Mr Chaudhry was directly or actively involved in obtaining the New Lease and I cannot use a Jones v Dunkel inference to fill gaps in the evidence.
Dr Kyatt was cross-examined at length about the significance to him of receiving Mr Ibrahim's letter of 12 July 2022 (T98-99) as follows: Q. … You understood, in at least July 2022, can I suggest, that this letter had been written by a company called Engadine Medical Imaging. Do you see that? A. Yes. Q. You understood, at least from July 2022, that that company was associated with Mr Ibrahim, is that right? A. Yes. Q. Not to put too fine a point on it, by this letter, Mr Ibrahim's company was demanding that the Engadine practice leave the property at Station Street, correct? A. Yes. Q. You must have appreciated, in July 2022, that Mr Ibrahim was associated with a company involved in the medical imaging business? A. Yes. Q. That you got that, can I suggest, from the Engadine Medical Imaging name, which we see at the top of page 1079? A. Yes. Q. That you must have understood that business was going to be competitive with the Engadine practice? A. It's in the same premises, I cannot have called competitive. Q. That's my point. On your understanding, in July 2022, it wanted to take over the premises at Station Street, Engadine, correct? A. Yes. Q. You must have understood, in July 2022, that it was doing so to run a competing business, correct? A. No. Q. Is that a serious answer? A. He wants to take the business, not competing business. Q. I see. You knew that, can I suggest to you, it was obvious in July 2022, that this company called Engadine Medical Imaging would be wanting to take over a business and run it in the place of the existing Engadine practice, correct? A. Yes. Q. Take over the premises and run the business in competition with the existing practice, correct? A. There won't be competition. Q. In none of your letters in July 2022 onwards, did you ever suggest through your lawyers that Mr Ibrahim was not allowed to run a competing business, did you? A. There was no question of competing business. Q. The focus of your concern from July 2022 onwards was to get back into the premises, correct? A. Correct. Q. Can I suggest to you, you never asked your lawyers to say to Mr Ibrahim that he wasn't entitled to engage in competitive business because he knew that he was allowed to? A. Can you repeat that question? Q. Of course. Can I suggest to you, in the second half of 2022, you never asked your lawyers to complain about Mr Ibrahim conducting a competing business because you knew that Mr Ibrahim was allowed to do so? A. I wasn't under this idea or thought that he is allowed to. The way it was going, the negotiation, I had an impression he's going to give me the premises back early on …
In my assessment of this evidence, from the time at which Dr Kyatt received Mr Ibrahim's letter of 12 July 2022 at 8:00pm, Dr Kyatt was well aware that Mr Ibrahim wanted to take the business of the Engadine Practice and run a business in place of it. Dr Kyatt's refusal to concede that this would or would not be a competing business relative to the Engadine Practice is of no importance. Dr Kyatt knew that from this time the Engadine Practice was at risk, due to the looming prospect of a practice that Mr Ibrahim wished to establish in place of it.
On 13 July 2022 at 10:49pm, Dr Kyatt sent an email to Ms Milsted of All Star Property Group in which he introduced himself as the majority shareholder and one of the directors of EMIS at the Engadine Premises. Dr Kyatt said he had received a letter from one of his partners (being Mr Ibrahim's letter of 12 July 2022, which Dr Kyatt attached to his email) "claiming leasing" of the Engadine Premises and warning EMIS to vacate the Engadine Premises within 30 days. Dr Kyatt said that the letter had caused a huge shock and disturbance to everyone and the business and that he was currently seeking legal advice and action. Dr Kyatt said (grammatical errors left in place): I do like to confirm that we never have any intention to stop renting or leave the premises. I personally never received a letter of warning of expiration of the lease. I checked with my accountant and he confirmed that he asked for renewal of the lease but never heard back from you. I was overseas and currently in Sydney for a short time. Do you have a time to meet and discuss and resolve any issues. Please advise.
On 14 July 2022 between 8:45am and 11:16am, several emails were exchanged between Dr Kyatt and Ms Milsted in which: 1. Dr Kyatt drew Ms Milsted's attention to Mr Inayat's previous email of 25 November 2021 to Ms Freeman of All Star Property Group requesting a renewal of the Lease on EMIS's behalf on terms, being a '4 x 4 x 4 x 4 year lease', and forwarded that email to her. 2. Dr Kyatt said that he would like to have a meeting to discuss everything and resolve any issues before he took legal actions. 3. Ms Milsted noted that Mr Ibrahim had indicated, via the email of 25 February 2022, that Mr Inayat was no longer the accountant for EMIS and that all correspondence should be sent to Jabran Chaudhry. 4. Ms Milsted observed that there appeared to be internal conflicts within the business and suggested that Dr Kyatt discuss the matter with Mr Ibrahim directly. 5. Dr Kyatt told Ms Milsted that Mr Inayat was still the accountant for EMIS and asked when Mr Ibrahim had signed the New Lease.
Around this time, Dr Kyatt retained solicitors, New South Lawyers, to assist him in seeking to recover the Lease on behalf of EMIS.
On 19 July 2022, New South Lawyers sent a letter to Mr Ibrahim responding to Mr Ibrahim's letter of 12 July 2022. In that letter, New South Lawyers: 1. confirmed that they acted for Dr Kyatt, a director of EMIS; 2. requested that Mr Ibrahim provide further details, information, and documentation in support of various claims made by him in his letter dated 12 July 2022 to Mr Chaudhry and Dr Kyatt; 3. requested that Mr Ibrahim provide copies of communications between himself and All Star Property Group concerning the Lease and the New Lease; and 4. noted that Dr Kyatt reserved his rights, including to apply to this court for injunctive relief to prevent the eviction of EMIS from the Engadine Premises.
On 21 July 2022, the lawyers for Mr Ibrahim, Bridges Lawyers, sent a letter to New South Lawyers replying to their letter of 19 July 2022. Bridges Lawyers confirmed that they acted for Mr Ibrahim and Engadine Medical Imaging and sought clarification as to whether New South Lawyers acted on behalf of Dr Kyatt personally or EMIS.
On 1 August 2022, Mr Ibrahim sent an email to Ms Milsted asking her to send the bond back to EMIS and provide EMIS with a notice to vacate the Engadine Premises, asking her to ensure that it was done that evening or the following day, and to send him a copy or blind copy him in.
On 4 August 2022, New South Lawyers wrote to All Star Property Group confirming that they acted for EMIS; asserting that the New Lease of the Engadine Premises had been negotiated and entered into by the lessors and Mr Ibrahim for Engadine Medical Imaging without the consent or knowledge of EMIS and in circumstances where EMIS had previously sought to exercise the option to renew the Lease; and asking that they be furnished with copies of all communications between Mr Ibrahim and All Star Property Group regarding the Lease and entry into the New Lease. New South Lawyers also noted that EMIS would not capitulate to Mr Ibrahim's request that they vacate the Engadine Premises by 10 August 2022, and referred to the potential need (should Mr Ibrahim and Engadine Medical Imaging fail to preserve the status quo pending resolution of the dispute) to join the lessors to any application commenced in this court seeking urgent injunctive relief to resist the eviction of EMIS from the Engadine Premises.
Between August and November 2022, New South Lawyers, Bridges Lawyers and GA Lawyers (the lawyers for the lessors) exchanged further written correspondence about the matter (described in more detail below).

Further developments in the Focus Radiology Group rebranding process

On 29 July 2022, Ms Coles sent an email to various Pulse Medical Imaging personnel, copied to Mr Chaudhry, stating that they would be rolling out new software for the practices which needed all contracts to be uploaded and asked that anyone with a contract email a copy to her. Taylah Bampton, an employee of EMIS, was among the recipients of this email.
On 9 August 2022, a meeting was held and attended by staff existing and prospective of the radiology practices forming part of the Focus Radiology Group (Focus staff). The minutes of that meeting, circulated by Ms Coles and copied to Mr Chaudhry, record the following agenda item: 10. Focus Radiology · Start using your focus email from the 15th of August. · Answer the phones as Focus Radiology. · Our app will stay the same. · [Ms Coles] will make an email sign off with the new logo. · Uniforms to be worn from the 15th of August. …
On 11 August 2022 at 11:04am, Ms Coles sent an email to Focus staff, copied to Mr Chaudhry, directing them to start sending out a template email notifying referrers that 'Focus Radiology (located at Dapto, Warrawong, Woonona, Warilla, Engadine) (formerly Pulse Medical Imaging and Southern Imaging Group)' had upgraded its imaging and reporting systems. Ms Coles said that the Focus URL had to start being used from that day.
On 11 August at 11:51am, an email was sent to Ms Coles by a Focus staff member, Eva Guyer, attaching screenshots of a fax and email in the form of a template advertisement intended for distribution to service providers, advising them as follows (emphasis in original): … [T]he following practices are merging to become Focus Radiology: - Warilla Medical Imaging - Woonona Medical Imaging - Engadine Medical Imaging - Southern Imaging Group Dapto - Southern Imaging Group Warrawong The new email for these sites are the site location name followed by @focusradiology.com.au…
On 14 August 2022, Ms Coles sent an email to Focus staff, copied to Mr Chaudhry, informing them that all email correspondence from Ms Coles going forward would be to their '@focusrad.com.au' emails only and suggesting that they turn on forwarding from their Pulse emails to their Focus emails.
On 15 August 2022, Ms Coles sent an email to Focus staff, copied to Mr Chaudhry, with the subject line 'Referrals / Film Bags / Appointment Cards', informing them that new referrals, film bags and appointment cards were going to be delivered to the clinics in the coming week. She also said (emphasis in original): Engadine - hold off for now using them - continue to use Engadine Medical Imaging stuff until further notice. All other sites - we can continue to use the appnt cards and referrals until they run out for referrers like Lakeside MP etc to get rid of stock. Please dispose of all film bags with Ali Kyatts name on them - do not use these. … Please note that now all the Referrals / Film Bags / Appointment Cards are no longer site specific. They can be used and ordered across all sites.
The referral forms attached to this email indicated the practice locations for Focus Radiology, which included the Engadine Premises.
On 16 August 2022, a Focus staff member, Erin Furlong (efurlong@focusrad.com.au), sent an email to Crowd IT, copied to Ms Coles, requesting that email forwarding be set up as follows: Dapto@pulsemedicalimaging.com.au -> dapto@focusrad.com.au Warilla@pulsemedicalimaging.com.au -> warilla@focusrad.com.au Woonona@pulsemedicalimaging.com.au -> woonona@focusrad.com.au Engadine@pulsemedicalimaging.com.au -> engadine@focusrad.com.au Warrawong@pulsemedicalimaging.com.au -> warrawong@focusrad.com.au info@pulsemedicalimaging.com.au -> Send to all site emails if possible
On 22 August 2022, digital mock-ups of Focus Radiology Group-branded imaging request forms were sent by email to Ms Coles and other Focus staff. These proofs identify Southern Imaging Group Dapto as the client. These forms also indicated the practice locations for Focus Radiology, which included the Engadine Premises.
On 22 August 2022, a promotional Instagram post by the Focus Radiology Group account (using the handle '@focus_radiology') was published. That post read: Our team at Focus Radiology would like to introduce ourselves. You may be familiar with our previous names: Southern Imaging Group, Woonona Medical Imaging, Engadine Medical Imaging, Engadine Medical Imaging and Warilla Medical Imaging. We've combined to become Focus Radiology. With our new doctor, Dr Naushad Ahamad, we offer the same great service with several additional procedures now available. Get in touch to find out more about what we do!

Mr Ibrahim's communications with All Star Property Group about the Lease

On 30 August 2022 at 1:42pm, Mr Ibrahim sent an email to Bradley Garland, the 'Licensee in Charge' of All Star Property Group, copied to Ms Milsted, with the subject line 'Urgent meeting request - Suite 3, 24 Station Street, ENGADINE NSW, 2233', asking if the two of them could meet to "discuss frankly what the landlord wants".
On 30 August 2022 at 1:47pm, Mr Garland replied by email to Mr Ibrahim, saying "the landlord has a lease, so they are satisfied with the situation" and indicating that Mr Ibrahim should be more specific about his reasons for wanting to meet.
On 30 August 2022 at 3:08pm, Mr Ibrahim sent an email to Mr Garland stating that he was happy that the lessors were satisfied, detailing his history of operating radiology practices out of the Engadine Premises over the past 16 years, and observing that Dr Kyatt had relocated to Jordan and seemed to have "lost interest in his Australian [business] commitments". Mr Ibrahim concluded by issuing Mr Garland with the following ultimatum: If you would like me to remain your tenant for decades to come, I need you to simplify everything and just issue the old tenant a 30-day vacate notice. This is the simplest and easiest way to prevent possible legal conflicts and waste everyone's time. To facilitate this, I am happy for you to invoice me any costs relating to issuing this notice or any expenses you have incurred to date (including yourself and your staff's valuable time). If you prefer [Dr Kyatt], I am happy to walk away with my team and start a new practice up the road.
On 30 August 2022 at 3:29pm, Mr Garland responded by email to Mr Ibrahim, stating that the lessors were not in any position of conflict and had a legally executed and enforceable lease, Mr Ibrahim's "internal matters in relation to directorship/shareholdings of companies and any fiduciary obligations past or present are a matter for you and your business associates", and that he (Mr Garland) was available to meet with Mr Ibrahim next week if he wished to discuss the matter further. Mr Garland concluded: But please keep in mind we will be enforcing the lease as executed.
On 31 August 2022 at 8:21am, Mr Ibrahim sent an email to Mr Garland in which he denied that the situation had anything to do with "alleged fiduciary obligations"; emphasised that his concern was Dr Kyatt's attempts to recover the Lease of the Engadine Premises (stating "[i]f I evict [Dr Kyatt], he will sue [the lessors] and myself for Relief against forfeiture and try to have the new lease transferred to him"); again urged Mr Garland to issue EMIS with a 30-day vacate notice and to officially terminate any prior month-to-month lease; and again stated that if Dr Kyatt was the preferred tenant, he was content to "walk away and start a new practice up the road with my team".
On 31 August 2022 at 8:51am, Mr Garland responded by email to Mr Ibrahim as follows: Hi Mena, I think you have a fundamental misunderstanding of how leases work, the previous tenant did not exercise the option the lease expired. A new lease was put in place, the current tenant took the property on in its current state. If the current tenant chooses to vacate, they will be held to the terms and conditions of the lease and will be pursued for costs and rent. In relation to [Dr Kyatt], frankly, I don't care. He is not the current tenant so what he does or doesn't do has no impact on the current situation from the landlord's perspective as they have a valid lease. If he chooses to seek remedy via the courts this is his prerogative. It sounds like to me you have an internal business conflict and frankly, this is between yourself and your business associates. This will be my last correspondence on this matter I suggest you seek advice in relation to your position. I am available next week if you wish to meet in person, but the position has been made clear.
On 2 and 5 September 2022, Mr Ibrahim and Mr Garland exchanged emails about them meeting on 6 September 2022. There is no evidence of whether this meeting occurred and, if it did, what took place at the meeting.
On 15 September 2022, Mr Ibrahim emailed Mr Garland asking him to let Mr Ibrahim know urgently who the lessors of the Engadine Premises had chosen as tenant and indicating that the lessor at alternative premises at 1-3 Station Street, Engadine (Focus Engadine Premises) "is very happy for my team and me to be there, and there is room also to have an MRI machine there".

Dispute between Dr Kyatt and Mr Ibrahim regarding the New Lease

Following on from their correspondence in July 2022 (referred to above), throughout August and September 2022, New South Lawyers for Dr Kyatt and EMIS and Bridges Lawyers for Mr Ibrahim exchanged emails and letters about allegations concerning the New Lease, an alleged JVA and alleged fiduciary obligations said to be owed by Mr Ibrahim.
On 4 August 2022, New South Lawyers sent a letter by email to Bridges Lawyers referring to EMIS occupying the Engadine Premises pursuant to the Lease and the negotiation of the New Lease by Mr Ibrahim, which, they alleged, had been done without the consent or knowledge of EMIS. New South Lawyers stated: Our clients assert that Mr Ibrahim had, and continues to have, a fiduciary obligation to [EMIS] to act in the interests of joint venture partners in the business operating as [EMIS] (in which Mr Ibrahim has an interest), and any discussions Mr Ibrahim had with the landlord and/or their agent in respect of the Lease and the New Lease should have been as agent of [EMIS] to ensure the continued tenure of [EMIS] at the [Engadine] Premises, and not in his personal capacity as a director and shareholder of Engadine [Medical] Imaging, in which there is a clear conflict.
New South Lawyers concluded by inviting discussions to resolve the dispute, failing which they had instructions to apply to this court for urgent ex parte injunctive relief to prevent the eviction of EMIS from the Engadine Premises.
On 5 August 2022, Bridges Lawyers responded in a letter sent by email to New South Lawyers which relevantly stated (emphasis in original): 1. We are instructed there is no formal or informal joint venture between our clients and your clients, which relates to the business conducted at the [Engadine] Premises (the Business). In the event that your clients dispute this, please provide us with particulars that evidence your clients' position, including copies of any relevant documents. 2. Our clients' involvement in the Business is limited to that of a shareholder of [EMIS]… We are instructed that there is a shareholders agreement, but that the shareholders agreement does not give rise to any joint venture or other arrangements. 3. In relation to our clients' involvement in the Business, we are instructed that Mr Ibrahim is not and never has been a director of [EMIS]. Further, our clients have no control over the day to day conduct of the Business, and Mr Ibrahim has not attended the Business for a significant number of years for any reason. 4. Please articulate the basis on which you state at paragraph 6 of Your 4 August 2022 Letter that Mr Ibrahim owes a fiduciary obligation to [EMIS] in the circumstances.
Bridges Lawyers concluded by stating that their clients agreed without admissions and without prejudice to preserve the status quo for the continuing occupation of the Engadine Premises by EMIS until the earlier of 72 hours after notice was given by or on behalf of their client that resolution of the dispute was not possible, or resolution of the dispute.
On 18 August 2022, Bridges Lawyers sent a letter by email to New South Lawyers which, amongst other things, stated: We are instructed that the managing agent of the [Engadine] Premises, Bradley Garland of All Star Property Group (Mr Garland), has informed Mr Ibrahim that New South Lawyers has advised All Star Property Group that the subject of the dispute between our clients concerning the exclusive occupation of the [Engadine] Premises is a partnership dispute. There is no partnership arrangement between our clients and your clients.
On 23 August 2022, New South Lawyers sent a lengthy letter by email to Bridges Lawyers responding to their letter of 18 August 2022. The letter covered numerous matters, including Mr Ibrahim's interest in the Engadine Practice, allegations that Mr Ibrahim was an officer of EMIS owing fiduciary obligations to EMIS and the Engadine Practice and that he breached those obligations by negotiating the New Lease and seeking to evict EMIS from the Engadine Premises. In the letter, New South Lawyers also alleged that Dr Kyatt, Mr Ibrahim and others were joint venture partners although there were no formal joint venture or partnership agreements.
On 1 September 2022, Bridges Lawyers responded in a letter sent by email to New South Lawyers asking them to identify the terms of the alleged JVA, including when it was entered into and the precise parties to the alleged agreement. In response to the allegation that Mr Ibrahim was an officer of EMIS, Bridges Lawyers stated that Mr Ibrahim was not a formally appointed director of EMIS, and that he had no involvement or control of the day-to-day conduct of the Engadine Practice.
On 21 September 2022, GA Lawyers (on behalf of the lessors of the Engadine Premises) wrote to New South Lawyers via email, referring to the New Lease, indicating that the lessors did not wish to involve themselves further in any internal dispute between Engadine Medical Imaging and EMIS and stating that they were instructed that the lessors were agreeable to assigning the New Lease to EMIS.
Throughout all of these communications, EMIS remained in occupation of the Engadine Premises.

Distribution of profits from Engadine Practice

On 5 September 2022, a distribution of profits from the Engadine Practice occurred. At 4:04pm that day, Mr Inayat sent an email to Mr Chaudhry with the subject line 'Engadine Distribute', noting that each of Dr Kyatt, Mr Chaudhry and Mr Ibrahim should receive $61,200, $25,080 and $39,600 respectively into their business accounts. At 7:15pm that day, Mr Chaudhry emailed Dr Kyatt and Mr Ibrahim to confirm that the distribution had been made and that Dr Kyatt's amount had been transferred to his UAE bank account.
This email indicated that Mr Inayat was acting as the accountant of the Engadine Practice, which is again contrary to what had been stated in Mr Ibrahim's email of 25 February 2022 to All Star Property Group (referred to above).

Lease of the Focus Engadine Premises

In late September and early October 2022, communications took place between Mr Ibrahim and Anthony Bouteris of Raine and Horne Commercial regarding the Focus Engadine Premises.
On 27 September 2022, Mr Ibrahim attended the Focus Engadine Premises and met with Mr Bouteris, who later sent an email to Mr Ibrahim with an attached brochure, survey and building plans of the entire site and building.
On 29 September 2022, Mr Ibrahim sent an email to Mr Bouteris stating proposed terms for a lease of the Focus Engadine Premises, asking Mr Bouteris to let him know urgently if the lessor would like to process it and noting that he had "approval at another location up the road that I can only delay for a day or two".
On 30 September 2022, Mr Bouteris sent an email to Mr Ibrahim saying that he had passed Mr Ibrahim's email on to the owner and was waiting for him to come back. Mr Bouteris said he would get back to Mr Ibrahim straight away.
On 5 October 2022, Mr Bouteris sent an email to Mr Ibrahim setting out the final agreed terms of a lease of the Focus Engadine Premises (Focus Engadine Lease), as previously discussed by the two of them over the phone. Those agreed terms included: 1. $86,000 per year + Outgoings + GST; (Copy of Outgoings to be provided shortly) 2. 5-year first term, with three 5-year options after that; 3. Four months rent-free; 4. 3% yearly increases; 5. Three months bond with a personal guarantee; 6. The landlord will ensure that there are at least 120 amps of power; …
On 7 October 2022 at 10:09am, Mr Ibrahim sent an email to Mr Bouteris indicating his readiness to enter into the Focus Engadine Lease, confirming that the lessee would be Engadine Medical Imaging, noting his own details for the purposes of the personal guarantee and stating that for the purposes of the transaction his solicitors would be Madison Marcus.
On 7 October 2022 at 10:15am, Mr Bouteris replied by email to Mr Ibrahim to say that he would do the memorandum of lease that day.
On 10 October 2022, Mr Ibrahim paid the deposit in respect of the Focus Engadine Lease. On 11 October 2022, Raine and Horne Commercial sent an email to Mr Ibrahim confirming receipt of his deposit in their trust account.
As stated below, the Focus Engadine Lease was executed on 22 November 2022.

Continuation of Focus Radiology rebranding process

On 13 September 2022, an employee of EMIS, Ms Bampton, sent an email to a specialist medical practice in Miranda, Sports Medicine Institute, using a Focus Radiology email address and a sign off of (emphasis in original): Kind Regards, Taylah Bampton Focus Radiology/ Engadine Medical Imaging
Also on 13 September 2022, Focus Radiology's Marketing Liaison Officer, Erin Furlong, sent an email to various medical practices, which relevantly stated: This is a follow up email to request a meeting with the Doctors and staff at your Clinic. To introduce Focus Radiology (previously Southern Imaging Group and Pulse Medical Imaging), we would like to provide lunch to your doctors introduce a new Clinical lead and Radiologist Dr Naushad Ahamed (Nash) who has joined us full time, in our practices located in Engadine, Dapto, Warilla, Warrawong and Woonona.
On 30 September 2022, an email exchange took place between Focus staff members (Ms Furlong and Ms Coles) concerning a proposed email communication to local medical practices with a brochure advertising the availability of PRP injection procedures at Focus Radiology's Dapto and Woonona clinics. The brochure is not in evidence. Ms Coles was asked by Ms Furlong whether the email when sent to medical practices in the Engadine area should be identified as Focus Radiology, and Ms Coles replied: Hey hun, thats fine Maybe do Engadine area down to the Woonona area (helensburgh etc) Theres nothing about Engadine on there so essentially they wont know lol
I was invited by the plaintiffs to find that this was an effort made to conceal the Focus Radiology rebranding from EMIS. I do not make that finding. The brochure is not in evidence and the email only refers to a service being offered at the Dapto and Woonona clinics. It is therefore an advertisement of the Focus Radiology business at those clinics.
On 26 October 2022, Focus Radiology made a Facebook post with graphics introducing Focus Radiology in Engadine, Woonona, Dapto, Warrawong and Warilla, stating: Hello all, we'd like to introduce ourselves as Focus Radiology, previously Southern Imaging Group and Pulse Medical Imaging. Our sites are located at Engadine, Woonona, Dapto, Warrawong and Warilla. For more information check out our website www.focusrad.com.au
On 7 November 2022, Ms Coles sent an email to Ms Bampton, Ms Furlong and Karen Davison of Focus Radiology asking whether any referral pads had been dropped off for the Engadine Practice. That day by email in response, Ms Davison said that they no longer had any of the EMIS referral pads left, just the Focus Radiology ones.

Negotiations regarding the New Lease and Deed of Settlement and Release

On 3 November 2022, Bridges Lawyers sent a letter to New South Lawyers marked "Without Prejudice Save as to Costs", advancing a settlement offer including the following proposed terms: 1. Engadine Medical Imaging would consent to the assignment of the New Lease to Dr Kyatt or his nominee, subject to a return of the bond and all rent paid by Engadine Medical Imaging to date and there being no further liability of Engadine Medical Imaging in relation to the Engadine Premises; 2. EMIS would pay $700,000 (plus GST) to MI No. 2 as consideration for MI No. 2's 30 units in the Engadine Imaging Trust and the assignment of the New Lease; 3. EMIS and Dr Kyatt would release and discharge Engadine Medical Imaging and Mr Ibrahim from any claims and/or loss which EMIS or Dr Kyatt had, have had or in the future may have, arising from or in any way in connection with the New Lease; 4. the settlement offer was made on the basis that the value of the business and equipment of EMIS was substantial; and 5. there was no binding and enforceable agreement entered between the parties until the exchange of agreed documents.
In cross-examination (T71-72), Dr Kyatt said that he read this letter carefully upon receiving it and that he had the benefit of legal advice about the interpretation of it from his lawyer, Dragan Gasic of New South Lawyers. Dr Kyatt said that the legal advice was provided in communications he had with New South Lawyers, including by telephone. Dr Kyatt said that from November 2022 to July 2023 in general he followed and agreed with the advice provided by Mr Gasic (T72-73).
Dr Kyatt also said in cross-examination that in late 2022 and early 2023 he also took and followed advice from Toufic Bazouni of New South Lawyers (T80).
In further cross-examination, Dr Kyatt initially denied that at the time the offer in the 3 November 2022 letter was made, he understood that the $700,000 figure represented consideration for both the transfer or redemption of Mr Ibrahim's units in the Engadine Imaging Trust and the assignment of the New Lease (T71 and T73), but maintained that he had read the letter containing the offer carefully (T72 and T73-74). When Dr Kyatt was later questioned about his understanding of this offer in the context of a counter offer made by Dr Kyatt through a letter of 21 November 2022 from New South Lawyers to Bridges Lawyers (dealt with in more detail below), Dr Kyatt conceded that Mr Ibrahim was offering the two components in the offer of 3 November 2022 (T82-83).
Based on this, I consider it is damaging to Dr Kyatt's credit that his initial evidence about his understanding of the offer cannot be accepted as any careful reading of it shows that the $700,000 payment was plainly proposed for the transfer of Mr Ibrahim's units in the Engadine Imaging Trust in addition to the assignment of the New Lease. Further, when confronted in later questioning, Dr Kyatt readily conceded what he should have conceded in the initial questioning but did not. It was suggested to Dr Kyatt that his earlier evidence on this matter was false but he claimed that his later evidence was merely clarifying his earlier evidence. In my assessment, Dr Kyatt's earlier evidence was incorrect and unreliable. I do not need to go so far as to find that it was deliberately so.
In cross-examination, Dr Kyatt said that he had access to the bank statements for the Engadine Practice and also agreed that around this time (late 2022), he arrived at his own assessment of the profitability of the Engadine Practice on the basis of those financial records, from which he developed a general impression that the business was in good health (T74-75). Dr Kyatt agreed that he communicated frequently with his accountant, Mr Inayat, in 2022 but denied that he had a conversation with him in late 2022 about the value or profitability of the Engadine Practice (T74-76).
On 10 November 2022 at 2:01am, Dragan Gasic of New South Lawyers sent an email to Dr Kyatt, referring to Bridges Lawyers' settlement offer of 3 November 2022, stating: We are considering our recommendations going forward taking into account costs and outcomes. It appears Mr Ibrahim is forcing you to make a decision to take the next step - either you make a counteroffer to his offer dated 3 November 2022, or you commence proceedings seeking specific performance of the agreement reach [sic] to assign the lease to your company, which will involve high costs both in legal fees and court fees. In the interim, do you have any financial documents that may indicate the value of the business (eg profit & loss statements) so that you may consider proposing a counteroffer to Mr Ibrahim that is supported by evidence?
When asked in cross-examination whether he proceeded to provide Mr Gasic with the financial information on the value of the Engadine Practice's business sought, Dr Kyatt indicated that he most likely had, and that it would have been in documentary form (T76) and sourced from Mr Inayat in the form of up-to-date information about the Engadine Practice's financial performance (T76-77). Throughout this line of questioning, however, Dr Kyatt maintained that his own assessment of the value of the Engadine Practice's business at this time was based on his prior appraisal of the company's bank statements from time to time and the figure arrived at by Mr Ibrahim and set out in the offer of 3 November 2022. Dr Kyatt resisted the suggestion that he knew that Mr Ibrahim's initial offer in the 3 November 2022 letter was unsupported by any evidence about the value of the business (T78-79).
It does not reflect well on Dr Kyatt's credit that his affidavits in the proceedings did not reveal that he was communicating with Mr Inayat to form his own assessment of the value of the Engadine Practice at this time (T77-78). Nor does it reflect well on Dr Kyatt's credit that he resisted the suggestion that the amount of $700,000 contained in the 3 November 2022 letter was unsupported by any evidence (when it obviously was not) and was simply a negotiating position adopted by Mr Ibrahim (which it obviously was) (T78-80). Mr Gasic was clearly looking to Dr Kyatt to provide him with information to support the valuation of the business in any counter offer as no such information had informed or been provided to support Mr Ibrahim's offer.
On 10 November 2022 at 4:31pm, Dr Kyatt responded to Mr Gasic via email, saying: This is a hijacker asking for ransom or or [sic] otherwise kick us out. The law can't be soft with it. We can't just stand to receive hits from Mena. I feel our response was slow and weak. First I need to know why the landlord realestate lawyer didn't act on instructions given by Mena and us, to end in Mena changing his mind? Is there something arranged between them? What they are doing is illegal. I want you to communicate this clearly and aggressively with the landlord lawyer.
I have dealt with the cross-examination of Dr Kyatt about this email in the course of my consideration of the cross-examination of Dr Kyatt about his email of 21 December 2022 at 5:03pm set out below.
On 11 November 2022 at 8:30am, Mr Gasic of New South Lawyers sent an email to Dr Kyatt stating: A considered response is far more valuable than one prepared in a rush, particularly where the other side has proposed a resolution which was accepted by both parties then changed with conditions that were not agreed and which are unsupported by evidence. This current situation raises a number of legal issues which you will need to consider very carefully.
In the email, Mr Gasic then outlined two issues, being, firstly, that EMIS did not exercise its right to exercise the option within the time prescribed by the Lease of which Mr Ibrahim took advantage and turned into an opportunity to take over the Lease and, secondly, seeking specific performance of an agreement to assign the New Lease which Mr Ibrahim withdrew from by his letter dated 3 November 2022. Mr Gasic recommended that advice be obtained from a barrister on the legal merits and obstacles of these issues. Mr Gasic recorded his understanding that Dr Kyatt was "costs sensitive" and also outlined the estimated costs of the three options of obtaining a barrister's advice, drafting a letter to Bridges Lawyers with a counter offer (subject to Mr Ibrahim furnishing New South Lawyers with EMIS's financial records) or drafting a letter to Bridges Lawyers demanding that Mr Ibrahim proceed with the agreement to assign the New Lease, failing which Dr Kyatt would commence legal proceedings.
On 11 November 2022 at 4:18pm, Dr Kyatt sent an email to Mr Gasic saying that he would go with option 3, being to draft a letter to Mr Ibrahim and the lessors' lawyers "to correct their mess and reassign the lease within a specific time frame", noting "[i]f they dont, we will go to proceed to court without further notice". In cross-examination, Dr Kyatt denied that he selected this option because it was the cheapest of those which were contained in Mr Gasic's email of 11 November 2022 at 8:30am (T91-93).
On 21 November 2022, GA Lawyers for the lessors of the Engadine Premises sent an email to New South Lawyers and Bridges Lawyers asking for an urgent update as to whether the internal dispute between their respective clients had been resolved. GA Lawyers also confirmed that the party in occupation of the Engadine Premises was required to continue to make payment of all rent and outgoings due and payable and asked for confirmation as to which entity was to remain the lessee of the Engadine Premises.
On 21 November 2022, New South Lawyers wrote to Bridges Lawyers, responding to their settlement offer of 3 November 2022 (defined in New South Lawyers' letter of 21 November 2022 as the "Letter"). In their letter, New South Lawyers set out the chronology of the dealings between the parties in seeking to resolve the dispute and asserted that Mr Ibrahim's settlement offer of 3 November 2022 was contrary to the position that had already been established and agreed between them by that time. In the letter of 21 November 2022, an earlier letter of 15 September 2022 from Bridges Lawyers to GA Lawyers is defined as the "Offer", an email of 21 September 2022 from GA Lawyers to the parties is defined as the "Acceptance" and an email of 28 September 2022 from New South Lawyers to the parties is defined as the "Agreement".
In their letter of 21 November 2022, New South Lawyers asserted (emphasis in original): 10. On 3 November 2022, your office sent the Letter. 11. Contrary to the Offer, the Acceptance and our clients Agreement, your Clients now seek $700,000 from our clients to be paid simultaneously upon entry into a deed of settlement and release and assignment of the Lease (Settlement Offer). 12. What is extraordinary about the Settlement Offer is that [Mr Ibrahim and Engadine Medical Imaging] make it: (a) in circumstances where [Mr Ibrahim and Engadine Medical Imaging], in breach of their fiduciary duties, believed that they could take advantage of the fact asserted by [Mr Ibrahim and Engadine Medical Imaging] that as [EMIS] did not exercise the option to renew the Lease within the time stipulated by the Lease, [Mr Ibrahim and Engadine Medical Imaging] now seek to evict [EMIS] from the [Engadine] Premises unless it is paid $700,000.00; (b) where the Offer was made by [Mr Ibrahim and Engadine Medical Imaging] and accepted unconditionally by both the Lessors and our clients; and (c) asserting that the value of the business and equipment of [EMIS] is "substantial" without providing: (i) any valuation evidence supporting the "substantial" value of the business and equipment; and (ii) any legal basis for the transfer or redemption of [MI No. 2's] 30 Units in Engadine Imaging Trust in manner requested.
New South Lawyers' letter of 21 November 2022 then contained the following counteroffer, open for acceptance until 5:00pm on 25 November 2022: 13. In the interests of resolving this matter expeditiously and without the need for our clients to incur further unnecessary costs, we invite [Mr Ibrahim and Engadine Medical Imaging] to either: (a) buy out [Dr Kyatt's] 51 Units in the Engadine Imaging Trust on [Mr Ibrahim and Engadine Medical Imaging's] valuation in the amount of $1,190,000.00, to be paid on same terms as the Settlement Offer … : OR (b) reconsider their position and do the right thing and proceed with the Offer with the Lessors Acceptance of the assignment of the [New Lease] to our client …
In cross-examination, Dr Kyatt agreed that he gave instructions to Mr Bazouni to send this letter and approved its contents before it was sent (T80-81). Dr Kyatt conceded that he knew that the counter offer in the letter of 21 November 2021 contained two components, which is the offer in paragraph 13(a) read with paragraph 11, being the buyout of Dr Kyatt's units and an assignment of the New Lease. These were the same two components which Dr Kyatt ultimately conceded in cross-examination had been contained in the letter of 3 November 2022, which evidence and my assessment of it are dealt with above.
In further cross-examination, Dr Kyatt also answered that he agreed with the comment in paragraph 12(c) of New South Lawyers' 21 November 2022 letter that Mr Ibrahim's assertion of the value of the business of the Engadine Practice contained in the letter of 3 November 2022 was unsupported by any valuation evidence (T83-84). Yet that evidence is directly contrary to the answers Dr Kyatt gave when he was cross-examined about the very same aspect of the 3 November 2022 letter as set out above (T78-79). This was further unsatisfactory evidence from Dr Kyatt which is damaging to his credibility as a witness.
On 22 November 2022, New South Lawyers sent an email to GA Lawyers, copied to Bridges Lawyers and All Star Property Group, in response to GA Lawyers' email of 21 November 2022, stating that the dispute between the parties remained unresolved and confirming that EMIS would continue to pay rent in accordance with the terms of the Lease.
On 24 November 2022, GA Lawyers sent an email in response to New South Lawyers, copied to Bridges Lawyers and All Star Property Group, setting out the basis on which the lessors of the Engadine Premises would be willing to consent to an assignment of the New Lease from Engadine Medical Imaging to EMIS to enable EMIS to remain in occupation of the Engadine Premises.
On 28 November 2022, Bridges Lawyers sent a letter by email to New South Lawyers responding to New South Lawyers' letter of 21 November 2022 denying the existence of a binding settlement agreement and denying that Mr Ibrahim owed and had breached any fiduciary obligations because he was not a director of EMIS, did not have any involvement or control of the day to day conduct of the business of EMIS and was not a party to any joint venture agreement. Bridges Lawyers also made a Further Counteroffer involving the assignment of the New Lease but excluding the redemption or sale of any units in the Engadine Imaging Trust. The Further Counteroffer was expressed to be open for acceptance until 5pm on 5 December 2022 and was put in these terms: Settlement Offer 8. Nonetheless, we are instructed on a "without admissions" basis to propose the following offer in full and final settlement of the dispute between our respective clients concerning their respective rights to [the New Lease] and to occupy the [Engadine] Premises… : (a) Engadine Medical [Imaging] will consent to an assignment of [the New] Lease of the [Engadine] Premises to [EMIS] on the following terms: (1) Dr Ali Kyatt or his nominee assumes all responsibilities as a guarantor under the [New] Lease; (2) [EMIS] is to reimburse Engadine Medical [Imaging] in the sum of AU$10,000.00 plus GST (Reimbursement) in respect of efforts taken and fees incurred by our clients in procuring the [New] Lease; (3) [EMIS and Dr Kyatt] release and discharge [Engadine Medical Imaging and Mr Ibrahim] from any claims and/or loss which [EMIS and Dr Kyatt] have, have had, or in the future may have, arising from or in any way in connection with the [New] Lease; (4) Upon receipt of the Reimbursement, [Engadine Medical Imaging and Mr Ibrahim] release and discharge [EMIS and Dr Kyatt] from any claims and/or loss which [Engadine Medical Imaging and Mr Ibrahim] have, have had, or in the future may have, arising from or in any way in connection with the [New] Lease; and (5) No binding and enforceable agreement shall be deemed to have been entered into by the parties, until such time as agreed documents reflecting the settlement have been exchanged by the parties.
On 28 November 2022 at 5:45am, Mr Gasic forwarded the letter of that day from Bridges Lawyers to Dr Kyatt, stating that they would review and revert to him with a recommended response shortly.
On 28 November 2022 at 1:35pm, Bridges Lawyers sent an email to GA Lawyers and New South Lawyers responding to GA Lawyers' email of 24 November 2022 to the parties, stating that: 1. As per the terms of their letter of 15 September 2022, no binding agreement would be in place between Engadine Medical Imaging and EMIS until the assignment of the New Lease had occurred on terms acceptable to Engadine Medical Imaging. 2. Engadine Medical Imaging remained in without prejudice discussions with EMIS. 3. Engadine Medical Imaging was not currently occupying the Engadine Premises nor had it been able to occupy the Engadine Premises since entering into the New Lease on 7 July 2022 as the tenant under the Lease, EMIS, has been in continuous occupation of the Engadine Premises. 4. The lessors were receiving some rent and other payments under the Lease from EMIS whilst also receiving payment from Engadine Medical Imaging under the New Lease. 5. Engadine Medical Imaging demanded that the lessors reimburse Engadine Medical Imaging for rent and any outgoings paid to date under the New Lease.
In his affidavit sworn 31 January 2024, Dr Kyatt said: It was my understanding that no loss would be suffered by me or the Engadine Practice by agreeing to the release sought. I gained this understanding from the terms of the letter sent by Bridges Lawyers dated 28 November 2022.
Dr Kyatt was pressed at length on the truthfulness of this evidence in cross-examination by reference to Bridges Lawyers' letter of 28 November 2022 and Bridges Lawyers' email of 28 November 2022 (T110-115). Neither of those communications support an understanding of the sort to which Dr Kyatt deposed. The passage of the questions and answers Dr Kyatt gave in cross-examination on this issue reinforced my impression of Dr Kyatt as an unsatisfactory witness. Dr Kyatt was unable to identify the parts of either of these communications which gave his claimed understanding.
In effect, Dr Kyatt sought to distance himself from the sworn evidence contained in his affidavit of 31 January 2024 and instead tried to say that his understanding came from the legal advice that he received at that time. The manner in which Dr Kyatt answered these questions was very unimpressive, highlighted in the following excerpt (T111-114): Q. Let me understand it. You say in the last sentence of seven you gained this understanding from the terms of a letter sent by a Bridges lawyer dated 28 November 2022; are you saying that that's wrong to the extent that your understanding came from something said to you by your lawyer? A. I must have discussed these letters with my lawyer. I cannot decide myself on these letters. Q. Dr Kyatt, you say to his Honour in an affidavit you've sworn the truth of that you gained this understanding from a letter; are you saying you gained it from the letter, or you gained it from something the lawyer said to you, what's the position? A. From the lawyer. Q. And who is the lawyer? A. NSL. Q. Which person of NSL gave you this advice? A. I don't remember exactly who that person related to that letter. Q. And can you recall what that person said to you? A. No. Q. And do you recall when that person said it to you? A. I made the belief then, it was solid belief, and it discussed at that time when I came to the affidavit I'm - I'm prepared to say that what I said in the affidavit. Q. Why did you prefer to say that which you say in the affidavit to telling his Honour about the lawyer? Why did you prefer to do that? A. Can you repeat the question again? Q. You said, as I understood it, you preferred to tell in the affidavit - I'm sorry - that you were prepared to tell in the affidavit that you gained the understanding from the letters instead of from the lawyer, I'm asking you why were you prepared to do that? A. I - probably, I didn't distinguish between the differences now we're talking about. HIS HONOUR Q. Could I ask you this, please - A. Yeah? Q. - Dr Kyatt - A. Yes, your Honour? Q. - is the second sentence, "I gained this understanding from the terms of the letter sent by Bridges lawyers, dated 28 November 2022"; do you see that statement? A. Yes. Q. Is that a correct statement? A. I gained this understanding from the terms - it's correct, yes. CONDON Q. And you also gained the understanding from the lawyer; is that right? A. (No verbal reply) Q. Yes or no? A. I put it to you in this way, then you can't - you interrupt me. If you go to the doctor, and I talked in a terms you don't understand, you ask about it and that's what I did. Then, I've developed that belief and convey it here. Q. So if you go to the letter of 28 November, which is over at page 1159, and by all means, read that to yourself, and in fairness to you, I've reminded you there's an email which begins at 1157, dated the same day. I want to ask you to read those documents and identify to his Honour any passage thereof which conveyed to you the understanding about no loss would be suffered by you or by the Engadine practice by agreeing to the relief sought. Just take your time and identify on those pages. A. 1159? Q. Whereabouts? A. Page 1159? Q. Yes? A. And that's all? HIS HONOUR: No, the letter starts at 1159, and to be very fair to you, you have been directed to the email that starts at 1157 - WITNESS: Yes. HIS HONOUR: - and the letter at 1159, and you are to read to yourself - WITNESS: Yes. HIS HONOUR: - not just page 1159, but the whole of that letter that starts on that page. WITNESS: Okay. Yes. CONDON Q. Nowhere in either the letter of 28 November or the email of 28 November from Bridges is there any statement to the effect that no loss would be suffered by you, or the Engadine practice, by agreeing to the releases, is there? A. There is an understanding and there is a letter. Q. It's certainly not the letter of 28 November, is it? A. My interpretation of the letter is different from your interpretation of the letter. Q. Just humour me. Where do I find in the letter where you say you gained this understanding? A. Here I am have a partner who is giving me the lease back. He thought he some - done something wrong, and we don't establish a partnership again. There is no loss with partners. Q. Your understanding, your evidence to his Honour, is that the fact that the lease was to come back of itself indicated that no loss would be suffered. Is that what you're saying to his Honour? A. Yes. Q. You accept that there's no express statement in the 28 November 2022 email to that effect, or the letter? A. In this letter, no. Q. You agree with me. We don't see it expressly stated? A. If you - if you get it out of context, it doesn't show anything, but if you put it in the whole picture, it doesn't mean at all to me. Q. Can you recall any other occasion, via letter or an email, or do you have a statement where you gained that understanding, and at any time before you signed the deed of release in February 2023? A. Can you repeat it again to me, please? Q. Apart from what you've just said to his Honour, did you gain this alleged understanding which appears in paragraph 7 from any other letter, email or communication that you can remember? A. If I look the same conclusion as I told you now. Is that what you're asking? Q. I'm asking, in paragraph 7 you say you had this understanding. A. Yes. Q. Can his Honour take it that there is no other email, letter or other form of communication that you can remember which allowed you to form an understanding before you signed the deed of release? A. I cannot answer you unless I've got all of these, so it's. Q. But nothing springs to mind. Is that right? A. No.
The fact is, Dr Kyatt did not gain the understanding he claimed on oath to have formed from Bridges Lawyers' letter of 28 November 2022 and I reject his evidence to the contrary.
On 30 November 2022, Dr Kyatt sent an email to Mr Gasic stating: So they want reimbursement of $10k plus gst as cost and effort in preparing the lease. I call it ransom. I agree to give them the money, just secure the deal and reassign the lease ASAP.
Dr Kyatt was cross-examined about his reference in this email to what was being requested of him as "ransom" (T96). I have dealt with this cross-examination at my consideration of the cross-examination of Dr Kyatt about his email of 21 December 2022 at 5:03pm set out below.
On 1 December 2022 at 6:25am, Mr Gasic sent an email to Dr Kyatt containing his review of the Further Counteroffer and his recommendation that Dr Kyatt accept the Further Counteroffer. Importantly, Mr Gasic said: It is important to note the release sought by Mena at item 3 of the [Further Counteroffer] (that you release Mena and [Engadine Medical Imaging] from any and all claims arising from the Lease and vice versa) does not extend to releasing Mena from any claims you make arising out of the partnership.
In cross-examination (T95-96), Dr Kyatt agreed that in November or December 2022, Mr Gasic gave him some advice or spoke to him orally about the release that Mr Ibrahim was then offering, Dr Kyatt carefully considered Mr Gasic's advice about it and he paid particular attention to the release because it was something Dr Kyatt regarded as important.
On 1 December 2022 at 3:04pm, Dr Kyatt sent an email to Mr Gasic in reply, instructing him to accept the Further Counteroffer.
On 2 December 2022, New South Lawyers sent a letter by email to Bridges Lawyers responding to the Further Counteroffer, confirming that they were instructed to agree to all terms of the Further Counteroffer (subject to the provision of tax invoices supporting the Reimbursement request for $10,000 plus GST) and requesting that Bridges Lawyers furnish a draft deed of settlement and release at their earliest convenience.
On 19 December 2022, Bridges Lawyers sent an email to New South Lawyers which was marked "Without Prejudice, Save as to Costs" and attached a draft Deed of Settlement and Release between Engadine Medical Imaging, Mr Ibrahim, EMIS and Dr Kyatt. The draft Deed included the following provisions: Recitals … G. [EMIS] has made the Allegations. Mr Ibrahim denies the Allegations. H. Mr Ibrahim is a director of Ml No.2. Mr Ibrahim's interest in [EMIS] is limited to his interest in the unit holdings of Ml No.2 in Engadine Imaging Trust of which [EMIS] is the trustee. … 1.1 Definitions Allegations means the allegations by [EMIS] that Mr Ibrahim: (a) is a director or officer of [EMIS]; (b) is a party to partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt; and (c) procured the Lease, inter alia, in breach of his duties owed to [EMIS]. … Claims includes all actions, suits, causes of action, arbitrations, debts, liabilities, dues, costs, claims, Loss, demands, directions, orders, verdicts and judgments either at or in equity or arising under a statute made against the person concerned however it arises and whether it is past, present or future, fixed or unascertained, actual or contingent. … Dispute means the disagreement between the Parties in relation to or in connection with the Lease and occupation of the Premises, and the Allegations. … Lessee means Engadine Medical Imaging Pty Ltd … … Loss means any damage, loss, cost, liability or expense of any kind and however arising (including as a result of any Claim) including penalties, fines and interest and including any that are prospective or contingent and the amount of which for the time being are not ascertained or ascertainable. … Parties means the Lessee, Mr Ibrahim, [EMIS] and Dr Kyatt. … 5.2 [EMIS'] and Dr Kyatt's Release of the Lessee and Mr Ibrahim Upon entry into this Deed, [EMIS] and Dr Kyatt hereby release and discharge the Lessee and Mr Ibrahim, the Lessee's directors, servants and agents from any Claims and/or Loss which [EMIS] and Dr Kyatt have, have had, or in the future may have, arising from or in any way in connection with the Dispute, whether in equity, at law or otherwise, known or unknown, or in any capacity that exists either at law or in equity. 5.3 Bar to further claims by the Parties The releases in this clause may be pleaded by a Party who has the benefit of the release as a complete bar to any further action, proceedings and/or Claims. 5.4 Continuation of Parties' Relationship (a) The Parties acknowledge and agree that the releases in clause 5 of this Deed are only with respect to the Dispute and do not prejudice the Parties' rights with respect to any and all other obligations, dealings or agreements between them. (b) For the avoidance of any doubt, the Parties acknowledge and agree that: (i) Mr Ibrahim's involvement with [EMIS] is limited to his interest in MI No. 2's unit holdings in Engadine Imaging Trust; and (ii) Mr Ibrahim is not a party to any partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt.
On 20 December 2022 at 4:00am, Mr Gasic sent an email to Dr Kyatt to which he attached his recommended amended draft Deed to propose to Bridges Lawyers for Dr Kyatt's review. Mr Gasic stated: You will note Bridges have sought that you sign away any rights to claims you may have against Mena arising from the past, present and future conduct. The comments made next to the text are for Bridges. The changes we have proposed are consistent with what Mena offered on 28/11/2022 …, which limited the releases to the dispute arising from the Lease only. Please review and let us have your thoughts.…
In cross-examination (T96), Dr Kyatt said that he did not read the whole of the amended draft Deed but did read the important parts of it to satisfy himself, and that he trusted his lawyers and followed their advice.
On 20 December 2022 at 5:33pm, Dr Kyatt sent an email responding to Mr Gasic, relevantly stating (all grammatical errors left in place): it look like they want to restructure the whole thing and that will limit my rights in the future. Who knows what they plan next, it look like they are preparing for something else as they failed with this attempt. I want the deed to be short and very limited to this matter. You can tell them that Mena fired one of my employees last year who involved worker compensation and win the claim against Mena who paid him from Engadine services. How now he says he has nothing to do with Engadine only having shares. I have all the documents of that claim, but I don't want to expand the dispute further, I just kept it for the court if he doesn't want to resolve the issue. … Please call me … I am available after 4pm Sydney time.
Under cross-examination (T97-98), Dr Kyatt said that by this time (late November 2022) he suspected that Mr Ibrahim might want to do something on his own in terms of business but denied that he knew in late 2022 that Mr Ibrahim might want to set up his own business and said he did not know anything of what Mr Ibrahim was doing at that stage. Dr Kyatt said (T98): Q. His Honour, just before the luncheon break, asked you this question, "It looked like they were preparing for something else", taking you back to what appeared in the letter. His Honour asked you, "What did it look like?", and the answer was to this effect, as you understand it, your answer, "His lawyers spilled over beyond what we were discussing. It went back to the partnership. I was worried". I suggest to you that what you were worried about at this point of time was the possibility that Mr Ibrahim would set up in competition with the Engadine practice? A. Not at all.
Dr Kyatt was then pressed on this evidence by reference to Mr Ibrahim's letter of 12 July 2022, sent by email at 8:00pm, regarding the New Lease (T98-99). I have set out above my conclusions on the cross-examination of Dr Kyatt about the letter of 12 July 2022.
In my view, the statement made by Dr Kyatt in his email of 20 December 2022 at 5:33pm to Mr Gasic that "[w]ho knows what they plan next, it look like they are preparing for something else as they failed with this attempt" directly reflected Dr Kyatt's state of mind that although he did not know the detail of what Mr Ibrahim was planning he thought it would be another "attempt" to take the business of the Engadine Practice from EMIS.
It is also abundantly clear from the email of 20 December 2022 at 5:33pm that Dr Kyatt regarded EMIS as "his", with Dr Kyatt saying that Mr Ibrahim "fired one of my employees" (emphasis added). Further, the email also betrays Dr Kyatt's view that he wanted to hold back documents he regarded as supporting a potential claim against Mr Ibrahim related to the firing of the employee so he could keep them "for the court if he doesn't want to resolve the issue".
On 21 December 2022 at 4:14pm, Dr Kyatt sent an email to Mr Gasic asking him if had time to talk.
On 21 December 2022 at 4:18pm, Mr Gasic sent an email to Dr Kyatt stating that they were preparing an email to Dr Kyatt with their recommended amendments to the draft Deed. Mr Gasic asked that Dr Kyatt give him a few hours, saying it would be best if they chatted after Dr Kyatt had considered the email and the proposed amended draft Deed.
On 21 December 2022 at 5:03pm, Dr Kyatt sent an email to Mr Gasic saying (all spelling and grammatical errors left in place): [F]rom my reading and understanding, I have the following notes: 1. Why Mena, the thief, claims reimbursement of $10,000 and the landlord, who failed me, claims legal cost and they put a condition on me not to claim my legal cost? I ask you to reconsider adding my legal cost to take it from Engadine services. Especially I don't have anything to do with this without them starting all this mess. 2. I don't like to sign anything on this deed not related to reassignment of the lease, specifically anything to redifine Mena obligations towards Engadine services. Instead, I do like to put a condition on Mena to act in the best interest on Engadine services from now on.
Dr Kyatt agreed in cross-examination (T100) that in all likelihood he spoke to Mr Gasic over the phone after he sent this email.
In cross-examination (T93-96), Dr Kyatt agreed that he was referring to Mr Ibrahim as a "hijacker asking for a ransom" in his email of 10 November 2022 at 4:31pm, that he considered that Mr Ibrahim was seeking "ransom" in his email of 30 November 2022, and called Mr Ibrahim a "thief" in his email of 21 December 2022 at 5:03pm, but endeavoured to characterise each of these references as "reactive response[s]" or "frustration". Under challenge that Dr Kyatt simply had no trust in anything Mr Ibrahim said to him in November 2022, whether by himself or through his lawyers, and did not want any more business dealings with him, Dr Kyatt's evidence that he is a very patient person and 100% prepared to keep doing business in partnership with Mr Ibrahim is not believable in my assessment. Nor do I believe Dr Kyatt's following further evidence in cross-examination (T104) about the reference to Mr Ibrahim as "the thief" in the email of 21 December 2022 at 5:03pm: Q. Can I suggest to you, Dr Kyatt, that you wouldn't have said to your lawyers that Mena was a thief unless you believed that? A. It's a response to he is asking money that he is not entitled to. Not the whole person. I didn't judge the whole person; it's just related to that incident. Q. I see. All I'm suggesting to you is by this point in time you weren't trusting anything that Mr Ibrahim was saying to you - A. I don't agree. Q. - because you thought he was a thief? A. No, I don't agree with you. Q. Why did you think you should volunteer those words in this email; do you have any recollection? A. It is my protest on the amount being asked, I have been asked. Q. There was a protest because you believed that he was a thief; didn't you? A. No.
I consider that by this time Dr Kyatt truly believed that he could not trust anything that Mr Ibrahim or his lawyers said to him and he considered Mr Ibrahim to be a "thief" as a person, not just limited to these incidents.
Dr Kyatt also gave evidence in cross-examination that by this time he thought that Mr Ibrahim could not do business with Dr Kyatt and would not reciprocate in their business relationship (T96).
Dr Kyatt's credibility as a witness was also further damaged by the cross-examination of him (T105) about his statement in the email of 21 December 2022 at 5:03pm, "I do like to put a condition on Mena to act in the best interest of Engadine services from now on". I do not believe the answers he gave in the following passage (T104-105): Q. Can I suggest to you that at that point of time, 21 December 2022, you understood that there was no obligation on Mena's part to act in the best interest of Engadine services? A. No, I just want to confirm those obligations. Q. If that's the position, why do you say from now on? A. Because there was changes before that. They ask for changes. Q. You - A. His lawyer ask for changes. Q. You were saying to Mr Gasic, can I suggest to you, that what you were saying is into the future you wanted to put some obligation on Mena to act in the best interests of Engadine; didn't you? A. Yes. Q. And you understood in December 2022 at that point that there was no obligation on Mena to act in the best interests of Engadine practice? A. It was not my belief. Q. Can I suggest to you that's why you put to your lawyer that this should occur - to use your words "from now on"? A. From now on because his lawyers denied these obligations. Q. What I want to suggest to you is that you deliberately not accepting what appears in that the true meaning of his words on page 39 was "You know it doesn't help your case before his Honour"? A. No, that's wrong, I'm telling the truth.
Dr Kyatt understood that the statement in the email did not assist his case in these proceedings, which at the time of the cross-examination included allegations of breaches of fiduciary duties against Mr Ibrahim based on the alleged JVA, so he sought to limit the perceived damage of the words he had used in the email. Such an approach is not in accord with a witness of truth to this court.
On 21 December 2022 at 10:02pm, Mr Gasic sent an email to Dr Kyatt to which he attached the draft Deed with recommended changes for Dr Kyatt's review. Mr Gasic specifically noted that they had narrowed the definitions of Claim, Loss and Dispute in the draft Deed to apply to claims, losses and disputes that arise directly from the circumstances surrounding entry into the New Lease by Mr Ibrahim and his company as the lessee. Mr Gasic stated: You have previously informed us that your personal funding of the resolution of this dispute is a commercial decision you were prepared to make given your concerns that Nabeel, as the other Company director, may block or interfere with your efforts to negotiate the re-assignment of the Lease back on behalf of the Company. You have also informed us that you suspect that Nabeel is closely aligned with Mena and it may be that Nabeel and Mena's interests in the Company are aligned against yours. You fear Nabeel and Mena are working in concert together to push you out of the business. …
Dr Kyatt was cross-examined at length about these paragraphs in Mr Gasic's email (T105-108). He said that Mr Gasic correctly recorded what Dr Kyatt had informed him as appears in the email but Dr Kyatt refused to accept that at this time, at least in late 2022, he believed that Mr Chaudhry and Mr Ibrahim were working against him and the interests of EMIS and their interests were aligned against Dr Kyatt's interests. Dr Kyatt said that he had a suspicion (which he assessed as a 20% chance or less), not a belief (which he assessed as a 90% chance or more) that their interests were aligned against his, and it remained that way until February 2023 when he says that Mr Chaudhry refused to sign the guarantee for the lease of the Engadine Premises.
Whatever Dr Kyatt's own claimed internal assessment of the probabilities representing a belief versus a suspicion, Dr Kyatt ultimately accepted that he knew that Mr Ibrahim and Mr Chaudhry might do things to hurt EMIS (T107.14-16).
Amongst Mr Gasic's comments on the formalities of the draft Deed in the email of 21 December 2022 at 10:02pm was the following: 3. We do not recommend you request a provision in the Deed that Mena acts in the best interest of the Company. This is an issue that should be addressed with Mena after the Company has secured the Lease. Consider proposing a Shareholder Agreement/Joint Venture Agreement be entered into to avoid any further Disputes or otherwise propose a buyout of Mena's Unitholding.
In cross-examination (T108-109), Dr Kyatt refused to concede that this passage of the email gave him an understanding that his lawyers were suggesting that Mr Ibrahim was under no obligation to act in the best interests of EMIS until there had been some form of document. I accept Dr Kyatt's evidence about this point because I do not read Mr Gasic's email to necessarily mean that his lawyers had such an understanding.
Mr Gasic concluded with his recommendation that Dr Kyatt instruct New South Lawyers to propose the draft Deed to Bridges Lawyers as amended and continue discussions.
In cross-examination (T105), Dr Kyatt said that he had carefully considered Mr Gasic's advice about the terms of the proposed release.
Among the marked changes proposed in the amended draft Deed (marked up in blue text) were the following: Claims includes all actions, suits, causes of action, arbitrations, debts, liabilities, dues, costs, claims, Loss, demands, directions, orders, verdicts and judgments either at or in equity or arising under a statute made against the person concerned arising from or in connection with the Lease however it arises and whether it is past, present or future., fixed or unascertained, actual or contingent. … Dispute means the disagreement between the Parties in relation to or in connection with the Lease and occupation of the Premises., and the Allegations. … Loss means any damage, loss, cost, liability or expenses of any kind and however arising (including as a result of any Claim) arising from or in connection with the Lease. including penalties, fines and interest and including any that are prospective or contingent and the amount of which for the time being are not ascertained or ascertainable. … 5.2 [EMIS'] and Dr Kyatt's Release of the Lessee and Mr Ibrahim Upon entry into this Deed, [EMIS] and Dr Kyatt hereby release and discharge the Lessee and Mr Ibrahim, the Lessee's directors, servants and agents from any Claims and/or Loss which [EMIS] and Dr Kyatt have, have had, or in the future may have, arising from or in any way in connection with the Dispute., whether in equity, at law or otherwise, known or unknown, or in any capacity that exists either at law or in equity. … 5.4 Continuation of Parties' Relationship (a) The Parties acknowledge and agree that the releases in clause 5 of this Deed are only with respect to the Dispute and do not prejudice the Parties' rights with respect to any and all other obligations, dealings or agreements between them. (b) For the avoidance of any doubt, the Parties acknowledge and agree that: (i) Mr Ibrahim's involvement with [EMIS] is limited to his interest in MI No. 2's unit holdings in Engadine Imaging Trust; and (ii) Mr Ibrahim is not a party to any partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt.
In cross-examination (T101-102), Dr Kyatt could not specifically recall whether he had a conversation with Mr Gasic about the amended draft Deed after receiving it. In reading the amended draft Deed, Dr Kyatt understood that the text additions and crossings out in blue had been made by New South Lawyers (T102).
Dr Kyatt agreed in cross-examination (T103) that the lack of any amendment to recital H of the amended draft Deed means that he was content for it to be sent unamended to Bridges Lawyers, that he agreed with it and that leaving recital H unamended was a conscious decision on his part. Recital H read: Mr Ibrahim is a director of Ml No.2. Mr Ibrahim's interest in [EMIS] is limited to his interest in the unit holdings of Ml No.2 in Engadine Imaging Trust of which [EMIS] is the trustee.
In further cross-examination (T103), although Dr Kyatt could not confirm that he read the amended draft Deed carefully before it was sent to Bridges Lawyers, he agreed that his practice would have been to read it carefully before it was sent to Bridges Lawyers.
On 22 December 2022 at 11:06am, Mr Gasic sent an email to Dr Kyatt referring to a telephone discussion between them the previous day where they took Dr Kyatt through the draft Deed as amended and explained to Dr Kyatt the operation and effects of each of the provisions of the draft Deed. In the email Mr Gasic confirmed a number of points on which he had received instructions from Dr Kyatt and attached the final version of the draft Deed with minor amendments concerning the narrowing of the scope of the definitions of Claim, Dispute and Loss following the discussion with Dr Kyatt. Mr Gasic concluded by asking Dr Kyatt to confirm his instructions to send the amended draft Deed to Bridges Lawyers later that day.
On 22 December 2022, New South Lawyers emailed Bridges Lawyers attaching Dr Kyatt's proposed amendments to the draft Deed (in the form set out above).
There were comments in the margin of the amended draft Deed to make clear the basis of the suggested changes, which were said to limit the form of claims which were to be released to adhere to the terms of the Further Counteroffer so as not to extend beyond the dispute about the New Lease.

2022 financial position of EMIS

The profit and loss statement for EMIS for the year ending 31 December 2022 shows that the total income was $1,876,014.72 and total expenses were $1,766,170.54 (including a consulting fee of $188,487.27), making the net profit of $114,588.23.
There is no balance sheet for EMIS for the year ending 31 December 2022 so the equity position is unknown.

Dr Kyatt's unsatisfactory evidence about the financial position of EMIS

Another aspect of Dr Kyatt's evidence which I reject is his attempt in cross-examination to suggest that he did not understand the financial statements of EMIS that were prepared each year and which he agreed he saw (T85). His evidence on this topic is not credible.
The evidence Dr Kyatt gave in cross-examination about this subject was as follows (T86-91): Q. In November 2022 can his Honour take it then that the last financial statement you had seen, at least in draft form, is that which begins at 560 through to 569? A. Yes. Q. Again, I wish to be clear about it, because I may not have been entirely clear. I'm directing your attention to November 2022, and you agree, do you not, that the last financial statement you recall seeing is that which is in front of us at page 560 and onwards. Correct? A. Yes. Q. You would have picked up, had you known that, that the company, and the trust, I should say, had made only a very small profit of $32,000 odd, 563. A. Yes, that's what he presented to me. Q. You would have picked up, if you look at 565 that the total equity was negative $50,000. Correct? A. Now I'm looking at it, yes. Q. Can I suggest to you that in November 2022 you must have had these figures in the back of your mind. A. Not really, no. Q. You certainly had no other financial statements other than this one. Correct? A. I have the bank account to rely on. Q. Can I suggest to you that if you have regard to these figures from 560 to 569, you must have understood in November 2022 that the Engadine Trust was worth nowhere in the order of the figure that you or Mr Ibrahim were talking about in that year. A. I don't understand these figures presented by the accountant. Q. Are you seriously suggesting to his Honour that you have some problem in understanding the profit and loss on the balance sheet found between 560 and 565? Are you seriously suggesting that? A. Yes. Q. Of course, by this stage you had invested in a number of practices. Correct? A. Correct. Q. You had, as we've seen before morning tea, considered investing in a number of businesses unrelated to medicine. For example, childcare facilities? A. Yes. Q. And property investment. Correct? A. Yes. Yes. Q. And investment in some businesses. Correct? A. Correct. Q. You must had in the course of your work, or investments or potential investments, occasion to read balance sheets and financial statements of the kind we have in front of us. A. I don't have that time. Q. You don't have? A. Time to - to read all of these papers presented to me. I rely on people to help me do these investments. Q. Can I suggest to you by 2022 you knew how to read what appears in the balance sheet and the profit and loss we have in front of us, for example? A. Not really. Q. What's so hard about it? A. Because I rely on other people to help me. Q. My question is what's so hard about it? A. I haven't tried to read them before. Q. Let me understand that answer. HIS HONOUR Q. I just need to clarify. A. Yes, your Honour. Q. You said you hadn't tried to understand it before. Are you saying before now? Is this the first time you've looked at a set of accounts, is it? A. Your Honour, I look at them. He send it to me to get my approval on them, but I don't go through them. I don't go through them. CONDON Q. You were, on the evidence you have put before his Honour, the person who was in charge of the Engadine practice until October 2019. Correct? A. Engadine? February 18. Q. Can I suggest to you that as a person interested financially in the Engadine practice, you certainly wanted to read the documents of the kind we have in front of us at 560 to 569 in the 2021 year and the earlier years, didn't you? A. Can you repeat the question again, sorry. Q. I'll ask a different question. Can I suggest to you that at the end of each financial year you received a financial statement of the kind we have in front of us. A. Correct. Q. You read it, didn't you? A. No. Q. Can I suggest to you, you read it because you wanted to understand how the company or the trust was performing. A. No, that - that's not my way to understand how the business is going. I have different way to - sorry to interrupt you. Q. I want to suggest to you that the best way, you knew at least a way to understand how the business was performing, that is, the Engadine practice, was to read the documents in front of you. A. No. Q. I want to suggest to you that when you did read it you were able to understand how much income and how much the expenses were in a particular financial year. You were able to understand that, weren't you? A. Can you repeat the question again? Q. You were about to understand, can I suggest to you, reading these documents - A. Yes. Q. - how much the income was and how much the expenses were? A. I was not interested in that, so I didn't read them. Q. If you weren't interested in this material, what material did you look at? A. I was - I was on the ground. I'm a professional. I have a lot of things more important than this at completely different numbers. I'm looking - I'm looking at - I'm looking at patients' wellbeing, life, bleeding. Patients are going to die. Patients need to go to emergency straightaway, so I - I did a business when I rely on other people to help me with. If I don't have people I rely on them, I don't go into business. Q. Even if you relied upon other people such as the accountant, do you not know at the end of 30 June 2021 that the Engadine practice had made only a small profit of $30,000? A. (No verbal reply) Q. Of approximately $30,000? A. (No verbal reply) Q. Did you not know that? A. I could see it at that time in good health - in good shape. Q. Did you not know some time after the end of the 2021 financial year that the Engadine practice had made but a small profit of about $32,000; did you not know that? A. I didn't know that. Q. And did you not know, according to the balance sheet, the liabilities exceeded the assets? A. I didn't know that. Q. And do you say that on your oath to his Honour for each of the financial years in 30 June 2018 through to 30 June 2021, which are the years covered by these financial statements? A. Can you repeat that question again, sorry? Q. Are you saying you didn't know at any time between financial year 2018 and financial year 2021, which are the years covered by these financial statements, you didn't know whether the practice, the Engadine practice, had made a profit or a loss? A. No, I know it was good business. Q. Did you know that it had been trading did you know at any time that according to these sorts of documents, it had been trading at a loss? A. No. Q. And did you know at any time that the liabilities of the trust exceeded its assets? A. No. Q. And are you saying to his Honour that not once did you cast your eyes over these documents which exist from 534 to 569, not once did you look at these documents? A. I don't know which one I start with. I do not want pretend I understand them. Q. Don't pretend to understand, I'm asking you, you're saying to his Honour, not once between FY 2018 and FY 21 did you ever cast your eyes over the documents that appear from pages 534 through to 569? A. No. Q. You're agreeing with me? A. I didn't look at them, if I understand your question. Q. And you say to his Honour you never looked at them even though you agree that your accountant either had them or gave them to you; is that right? A. Yes. Q. I want to suggest to you, you're simply making up this evidence? A. Again, your question? Q. I want to suggest to you that you're simply making up this evidence about not looking at the financial figures? A. I'm not sure if I understand your question. Q. I'll be plainer. You know that you are deliberately giving false evidence to his Honour about your lack of knowledge about these financial statements? A. No, you are wrong. Q. Did you have these in your possession, by the way? These financial statements? A. I don't save them. I receive them on the email, I don't save them. Q. So your evidence is you get rid of them after you receive them; is that right? A. I don't get rid of them - Q. Right - A. - he send me to get my signature on them, and I send them back to him. Q. But you certainly know when you came to swear your affidavit in April 2023, you certainly knew of their existence because you annexed them to that affidavit, don't you? A. Yes, certainly, yes.
The effect of this evidence is that Dr Kyatt said he was sent the financial statements by Mr Inayat for his approval which he signified by signing them but did not read them or understand the financial position of EMIS as set out in them because he was too busy doing his work as a radiologist to have time to do so. Dr Kyatt says that he took his information about the financial performance of the Engadine Practice from the bank account statements and that he relied on others to help him with his investments. I reject the central assertions in this evidence.
The evidence demonstrates that Dr Kyatt was an experienced business person whose personal accountant, Mr Inayat, sent him investment opportunities, such as child care centres, radiology practices and properties, for his consideration on a regular basis. It also shows that it was Dr Kyatt who insisted on having a 51% unitholding and management control of the Engadine Imaging Trust at the time it was established in February 2018. The central claim in Dr Kyatt's evidence that he was not interested in the quantum of the income or expenses of the Engadine Practice and that he took all he needed to know about the financial state of the business from the balances in the bank account is simply not credible. Further, the fact that it was Dr Kyatt who attached the financial statements of EMIS to his April 2023 affidavit to rely on them in these proceedings without drawing attention to the fact that he claimed to have never read or understood them is also not to his advantage, to say the least.

Establishment of Focus Radiology Engadine

In tandem with the events concerning the draft Deed, the business of Focus Radiology Engadine was being established at the Focus Engadine Premises.
On 22 November 2022, the Focus Engadine Lease was executed.
On 22 November 2022 at 3:55pm, Ms Coles sent an email to Ms Bampton (an employee of EMIS) attaching a written formal warning letter - significantly, on Focus Radiology letterhead - regarding her conduct in the workplace, citing instances of Ms Bampton arriving late, going home early and not checking referrals.
Also on 22 November 2022, Chris Germon of Crowd IT and Mr Ibrahim corresponded via email about a quote that had been provided by telecommunications company TPG Telecom for the price of installing internet at the Focus Engadine Premises.
From late November 2022 through to late February 2023, various steps were taken to get the radiology business of Focus Radiology Engadine up and running, many of them involving Ms Coles. Over this period, the following took place: 1. At the request of Ms Coles by email on 28 November 2022, Mr Ibrahim provided Ms Coles with the following details for the new practice via email on 6 December 2022: 1. Entity name: Engadine Medical Imaging Pty Ltd, trading as Focus Radiology Engadine; 2. ABN, ACN, BSB and bank account number; and 3. Address of the Engadine site, being the Focus Engadine Premises. 1. On 6 December 2022, Ms Coles liaised by email with Mr Germon of Crowd IT, who arranged for the allocation of a phone number and a fax number to Focus Radiology Engadine. 2. On 14 December 2022, Ms Coles contacted professional printers by email to request mock-ups of Focus Radiology-branded referral forms, appointment cards and letterheads for Focus Radiology Engadine only (removing all references to other sites), which were created and sent to her for proofing by emails on 21 December 2022 and 2 and 8 February 2023. In her email of 14 December 2022, Ms Coles instructed the professional printers as follows: Can you please make sure that no drafts, emails or invoices are sent to [Mr Chaudhry] or the [Engadine Practice]. To liaise with me directly through this email [dcolesengadine@gmail.com] or via phone ... The plaintiffs invited me to infer that the purpose of requesting that nothing be sent to Mr Chaudhry or the Engadine Premises was to ensure that there was no paper trail revealing any involvement of Mr Chaudhry in these activities. In the absence of evidence from Ms Coles, I draw that inference. 1. On 19 December 2022, a request on Focus Radiology letterhead was sent to Wollongong Hospital by Focus Radiology Warrawong (albeit signed, "Kind Regards, Focus Radiology Warilla") asking for any medical reports for a patient. At the bottom of the form the locations of the Focus Radiology practices were listed as Dapto, Engadine, Warilla, Warrawong and Woonona. 2. On 31 January 2023, Mr Ibrahim ceased to be the administrator of the EMIS account with Officeworks and it was changed to Lindley Gomez with the email address "engadine@focusrad.com.au". 3. On 13 February 2023, Ms Coles registered Focus Radiology Engadine for diagnostic imaging accreditation. 4. On 14 and 23 February 2023, Ms Coles sent emails in which she instructed the professional printers to deliver the promotional material that had been ordered to her in Dapto. The plaintiffs said that I should find that this arrangement was made to conceal the efforts made to establish the competing business from EMIS. In the absence of evidence from Ms Coles, I make that inference. 5. On 18 February 2023, Crowd IT issued a Partnership Proposal to Mr Chaudhry, which outlined the terms in accordance with which Crowd IT would provide IT equipment, software and support services to Focus Radiology at each of its Engadine (for which the listed address was the Focus Engadine Premises), Woonona, Dapto and Warilla locations. 6. On 22 February 2023, Ms Furlong sent an email to Ms Coles attaching draft referral and imaging request forms for Focus Radiology Engadine which identified the Focus Engadine Premises as the practice location. 7. On 26 February 2023, Mr Chaudhry signed the Partnership Proposal with Crowd IT on behalf of Focus Radiology as the customer.
With few exceptions, the email address used by Ms Coles in the course of the correspondence described above was her gmail address, rather than her Focus Radiology email address. Given that Ms Coles did not give evidence, I infer that this was done to ensure that Ms Coles was not seen to be doing this work for Focus Radiology and not seen to be associated with Mr Chaudhry.

Inferences about Focus Radiology rebranding and knowledge of Dr Kyatt

The plaintiffs submit that I should find that the rebranding of the various practices to Focus Radiology was discussed and agreed by Mr Ibrahim and Mr Chaudhry prior to 11 August 2022 and that Mr Ibrahim took active steps to take the business of EMIS and to set up the competing business on and from July 2022 to the knowledge of Mr Chaudhry. For the reasons set out below, I am prepared to draw those inferences.
Mr Ibrahim was in control of Engadine Medical Imaging setting up the Focus Radiology practice at the Focus Engadine Premises. Mr Chaudhry was in control of least Focus Radiology Dapto and Focus Radiology Warrawong. Ms Coles was employed by one of the Focus Radiology businesses, although it is not clear exactly which one. The rebranding was a fundamental matter to each of those businesses. The rebranding was a lengthy and coordinated exercise, spanning many months. There is evidence of the personal involvement of Mr Ibrahim and Mr Chaudhry in the rebranding at different times. Neither of them has given any evidence.
Ms Coles, who was clearly instrumental to the overall rebranding project, must have been working at the direction of Mr Ibrahim in relation to the Focus Radiology Engadine rebranding and at the direction of Mr Chaudhry in relation to the Focus Radiology Dapto and Warrawong rebranding. Ms Coles has not given evidence.
In light of the fact that Ms Coles was working at the direction of Mr Ibrahim and Mr Chaudhry at various times and employed by one or more of the entities that became part of the Focus Radiology Group, I consider that either of Mr Ibrahim or Mr Chaudhry would be expected to call Ms Coles as a witness to give evidence in their respective cases and that their failure to do so is unexplained.
The combination of all of these matters makes available an inference that the uncalled evidence of each of Mr Ibrahim, Mr Chaudhry and Ms Coles would not have assisted the respective cases of Mr Ibrahim and Mr Chaudhry. The unexplained failure to call evidence from each of Mr Ibrahim, Mr Chaudhry and Ms Coles also enables me to draw, with greater confidence, an inference unfavourable to each of Mr Ibrahim and Mr Chaudhry, since those witnesses, had they been called, clearly would have been in a position to cast light on whether that (unfavourable) inference should be drawn.
To be clear, the unexplained failure to call evidence from Mr Ibrahim and Ms Coles affects the inferences that can be drawn in the case against Mr Ibrahim and the unexplained failure to call evidence from Mr Chaudhry and Ms Coles affects the inferences that can be drawn in the case against Mr Chaudhry.
I also find that there is no evidence that Dr Kyatt knew or consented to the rebranding of the Engadine Practice to Focus Radiology Engadine. However, as I have already found above, I consider that from the time of the letter of 12 July 2022 at 8:00pm from Mr Ibrahim to Dr Kyatt and Mr Chaudhry, Dr Kyatt was well aware that Mr Ibrahim wanted to take the business of the Engadine Practice and install a business in place of it and Dr Kyatt knew that from this time the Engadine Practice was, accordingly, at risk.

Finalising the Deed of Settlement and Release and Deed of Assignment

On 15 February 2023, Bridges Lawyers emailed New South Lawyers, copying in GA Lawyers, with a further (third) version of the draft Deed which reinstated the previous form of the clauses that had been amended by New South Lawyers on the last occasion, stating: While the recitals in the deed of settlement and release outline the allegations made by [Dr Kyatt], [Mr Ibrahim] requires that a clear release in respect of the lease and these allegations be acknowledged in the deed. We note that there is no loss to [Dr Kyatt] to include this release.
The email also attached comments on a draft of the Deed of Assignment (draft Assignment Deed) to assign the New Lease to EMIS.
On 16 February 2023 at 7:05am, Mr Gasic forwarded to Dr Kyatt the Bridges Lawyers' email of 15 February 2023 and its attachments, saying that he would review the documents and make a recommendation during the course of that day.
On 16 February 2023 at 9:37am, New South Lawyers sent a reply email to Bridges Lawyers, copied to GA Lawyers, stating that they were obtaining instructions.
On 16 February 2023 at 10:44am, Bridges Lawyers replied by email to New South Lawyers, copied to GA Lawyers, saying: Could all parties please take note that our client has instructed us that he requires settlement by Thursday next week. This is due to a number of urgent commercial matters including that our client is being pressured by the managing agent of the property in relation to payment of rent for the premises.
On 16 February 2023 at 4:28pm, Mr Gasic sent an email to Dr Kyatt forwarding him the email of 15 February 2023 from Bridges Lawyers which attached the amended draft Deed and the draft Assignment Deed. Mr Gasic noted as follows: We will be required to provide you with advice on the effects of the changes on any future claim you may have against Mena arising out of the allegations by [EMIS] that Mr Ibrahim: (a) is a director or officer of [EMIS]; (b) is a party to a partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt; and (c) procured the Lease, inter alia, in breach of his duties owed to [EMIS].
In the email, Mr Gasic also outlined the estimated costs for performing further work on the matter for Dr Kyatt.
In cross-examination (T115), Dr Kyatt agreed that when he read this email and the email of 15 February 2023 from Bridges Lawyers with the attachments he understood that Mr Ibrahim was suggesting that the releases be substantially widened in his favour, Mr Ibrahim wanted to change the proposed deed in a way that favoured him and Dr Kyatt saw that Mr Ibrahim was doing this to benefit himself. Dr Kyatt denied that he thought Mr Ibrahim was doing this in order to assist himself in running a competing business through Engadine Medical Imaging. I do not accept this evidence in light of the finding that I have made that from July 2022 Dr Kyatt was aware that Mr Ibrahim wanted to take the business of the Engadine Practice and install a business in place of it.
On 16 February 2023 at 7:00pm, Dr Kyatt sent an email to Mr Gasic in which he asked to be told the final cost for the further work, and indicated: I become sick of this issue, it kept dragging on and on and on and I feel I lose more than I gain in the whole process. It's just a lease, don't negotiate. Give them our position and proposal of change to my best interest and if they don't take it we go to the court.
On 21 February 2023 at 3:59am, Mr Gasic sent an email to Dr Kyatt in which he provided advice on the amended draft Deed and the amended draft Assignment Deed. Wherever they appeared in the amended draft Deed, Mr Gasic highlighted the references to "and the Allegations" which had been added on Mr Ibrahim's behalf to the end of each of the definitions of Claims, Dispute and Loss and in cl 5.2 of the amended draft Deed. Mr Gasic gave these comments about those provisions (all grammatical errors left in place): You and [EMIS] are releasing Mena and his company from any legal claims arising from the above Allegations. We understand that Mena has fired a staff member. As Mena now asserts he is not a director or office of [EMIS], [EMIS] may have a claim against Mena for any costs incurred by [EMIS] as a consequence of the termination of the employment of the relevant staff member. Loss will need to be provable by [EMIS] if making such a claim against Mena and further instructions are required before merits of any such a claim can be assessed. Your instructions are that Mena has taken money from an account held in the name of [EMIS]. As Mena now says he never was acting as an officer or director of [EMIS], the company may have a claim against Mena to recover the money from Mena as he has (based on your instructions) improperly and without authority taken the money properly belonging to [EMIS]. This claim does not arise out of the Lease or Dispute or the Allegations. Further instructions are needed before the merits of any such claim can be assessed.
Mr Gasic concluded his comments on the amendments to the draft Deed by saying that New South Lawyers did not see any issues arising from them and recommending that Dr Kyatt instruct them to write to Bridges Lawyers to say that they had no issue with them.
In cross-examination (T116), Dr Kyatt agreed that he understood when he got that email that Mr Gasic was recommending that the changes be accepted because he thought it was to Dr Kyatt's advantage and that he accepted this advice.
During the course of further cross-examination about this email (T117-118), Dr Kyatt was questioned about the last paragraph of it set out above. Despite the first sentence of that paragraph clearly recording that Dr Kyatt had instructed Mr Gasic that Mr Ibrahim had taken money from an account held in the name of EMIS, Dr Kyatt sought to distance himself from that suggestion in a wholly unconvincing way. The following passage of the cross-examination shows Dr Kyatt seeking to give contradictory and evasive answers to what were straight-forward questions of him: Q. You understood that what Mr Gasic was saying was because the deed said that Mr Ibrahim was never acting as an officer or director of EMIS, it might be easier for you to bring a claim against him for taking money belonging to EMIS; that's what you were saying, wasn't it? A. Yeah, I don't recall that, because wasn't important to me, that section. HIS HONOUR Q. Could I ask you, Dr Kyatt - A. Yes. Q. - does the top of page 48 reflect instructions that you gave to Mr Gasic? A. I don't think so, your Honour. The - sorry. CONDON Q. If you go to 47, you see Mr Gasic refers to Mena firing a staff member; that's certainly something you told Mr Gasic about, didn't you? A. Yes. Q. Right, and you see in an earlier email that you had written to him about that issue? A. Correct. Q. Can I suggest that you have no doubt that you told Mr Gasic before this email was sent - A. Correct. Q. Just let me finish the question and - A. Sorry. Q. - you shouldn't encourage me, Dr Kyatt. Before this, when you got this email, I suggest to you, you knew that you had told Mr Gasic that you believed Mena had stolen money from EMIS? A. That's wrong. Q. That's wrong, is it? A. The statement you said is wrong. Q. Right. A. I didn't say he's stolen money from EMIS. Q. Did you ever - your instructions were that he had improperly and without authority taken money - property belonging to EMIS? A. That's also wrong. Q. That was wrong? Did you ever tell Mr Gasic that he was wrong? A. No. Q. You don't recall seeing an email about that or - A. Regarding this particular email, are you asking me? Q. Yes? A. It wasn't important; I just ignored what his comments. Q. So I want to suggest to you that Mr Gasic said what he did because you told him that? A. I told him what I told him, not what you are thinking I told him. Q. Well, let me be plainer. I want to suggest to you that you had told Mr Gasic before he wrote this email to you that you believe that Mena had improperly and without authority taken money, property belonging to EMIS; you told him that, didn't you? A. No.
On 21 February 2023 at 4:25pm (this time may be an overseas time zone), Dr Kyatt sent an email to Mr Gasic thanking him for his email and saying: So the red highlights "and the allegations" are removed from the contract?
On 21 February 2023 at 8:28am, Mr Gasic replied by email to Dr Kyatt saying that the red highlights were the amendments proposed by Mr Ibrahim and Engadine Medical Imaging and were to be included. Mr Gasic said that they did not see any issue arising from the request for these inclusions.
In cross-examination (T115-116), Dr Kyatt agreed that he understood that Mr Gasic was advising that these amendments should be approved.
On 21 February 2023 at 4:37pm, Dr Kyatt responded by email to Mr Gasic saying, "[t]hen that's fine".
On 22 February 2023 at 10:22am, New South Lawyers sent an email to Bridges Lawyers saying that they were still in the process of obtaining instructions and would revert as soon as they received them.

Removal of Mr Chaudhry as a director of EMIS

On 22 February 2023 at 3:00pm, Dr Kyatt called a meeting of the shareholders of Advanced Imaging, the sole shareholder of EMIS, and passed a resolution removing Mr Chaudhry as a director and secretary of EMIS. This left Dr Kyatt as the only director of EMIS. In cross-examination (T127-128), Dr Kyatt agreed that this was done without Mr Chaudhry's knowledge or awareness as Dr Kyatt was in Jordan at that time and did not telephone Mr Chaudhry to give him notice of his proposed removal.
In cross-examination (T72-73), Dr Kyatt conceded that he neglected to send Mr Chaudhry an email notifying him of his removal as a director of EMIS, which he identified as the only occasion between November 2022 and about July 2023 on which he failed to act on the advice he received from New South Lawyers.
Dr Kyatt had received an email on 24 February 2023 from Mr Gasic with the draft form of an email to send to Mr Chaudhry informing him of his removal, which he did not send (T126-127).
There is no evidence that before the Deed of Settlement and Deed of Assignment (referred to below) were executed Mr Chaudhry was asked to sign them on behalf of EMIS. Dr Kyatt admits that he did not ask Mr Chaudhry to do so and Mr Inayat was not called as a witness to say that he had done so (T128).
In cross-examination (T129-130), Dr Kyatt was challenged about his failure to tell Mr Chaudhry that he was removing him as a director of EMIS even though it was a simple matter for Dr Kyatt to telephone or email Mr Chaudhry to inform him. In my assessment and having regard to Dr Kyatt's credibility, Dr Kyatt deliberately did not tell Mr Chaudhry that he was removing him as a director of EMIS, despite his denial and his evidence that he simply forgot to do so. To my mind, it was too significant a matter to have simply been forgotten.

Deed of Settlement and Deed of Assignment executed

On 22 February 2023 at 3:00pm, Dr Kyatt also passed a resolution as the sole director of EMIS to approve the terms of the Deed of Settlement and Release and the Deed of Assignment of the New Lease and authorise Dr Kyatt to sign each of them on behalf of EMIS.
On 23 February 2023, the Deed of Settlement was executed between Engadine Medical Imaging, Mr Ibrahim, EMIS and Dr Kyatt, in a form that included the release in cl 5.2 that Bridges Lawyers had sought to retain. Relevant terms of the Deed of Settlement as executed are as follows: Recitals … G. [EMIS] has made the Allegations. Mr Ibrahim denies the Allegations. H. Mr Ibrahim is a director of Ml No.2. Mr Ibrahim's interest in [EMIS] is limited to his interest in the unit holdings of Ml No.2 in Engadine Imaging Trust of which [EMIS] is the trustee. … 1.1 Definitions In this Deed the following defined terms shall have the following meaning: Allegations means the allegations by [EMIS] that Mr Ibrahim: (a) is a director or officer of [EMIS]; (b) is a party to partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt; and (c) procured the Lease, inter alia, in breach of his duties owed to [EMIS]. … Claims includes all actions, suits, causes of action, arbitrations, debts, liabilities, dues, costs, claims, Loss, demands, directions, orders, verdicts and judgments arising from or in connection with the Lease and the Allegations whether it is past, present or future. … Dispute means the disagreement between the Parties in relation to or in connection with the Lease and occupation of the Premises, and the Allegations. … Lessee means Engadine Medical Imaging Pty Ltd… … Loss means any damage, loss, cost, liability or expenses of any kind and however arising (including as a result of any Claim arising from or in connection with the Lease and the Allegations. … Parties means the Lessee, Mr Ibrahim, [EMIS] and Dr Kyatt. … 5. Release 5.1 The Lessee and Mr Ibrahim Release of [EMIS] and Dr Kyatt Upon receipt of the Reimbursement and Settlement Sum in accordance with this Deed the Lessee and Mr Ibrahim releases and discharges [EMIS] and Dr Kyatt, [EMIS'] directors, servants and agents from any Claims and/or Loss which the Lessee has, has had, or in the future may have, arising from or in any way in connection with the Dispute. 5.2 [EMIS'] and Dr Kyatt's Release of the Lessee and Mr Ibrahim Upon entry into this Deed, [EMIS] and Dr Kyatt hereby release and discharge the Lessee and Mr Ibrahim, the Lessee's directors, servants and agents from any Claims and/or Loss which [EMIS] and Dr Kyatt have, have had, or in the future may have, arising from or in any way in connection with the Dispute and the Allegations. 5.3 Bar to further claims by the Parties The releases in this clause may be pleaded by a Party who has the benefit of the release as a complete bar to any further action, proceedings and/or Claims. 5.4 Continuation of Parties' Relationship (a) The Parties acknowledge and agree that the releases in clause 5 of this Deed are only with respect to the Dispute and do not prejudice the Parties' rights with respect to any and all other obligations, dealings or agreements between them. (b) For the avoidance of any doubt, the Parties acknowledge and agree that: (i) Mr Ibrahim's involvement with [EMIS] is limited to his interest in MI No. 2's unit holdings in Engadine Imaging Trust; and (ii) Mr Ibrahim is not a party to any partnership and/or joint venture agreement involving [EMIS] and Dr Kyatt. … 9. Warranties and representations The Parties warrant and represent that: (a) they understand the legal significance and effect of signing this Deed and have had the opportunity to obtain independent legal advice in respect of this Deed; (b) they enter into this Deed voluntarily and they not been induced to execute this Deed by any improper pressure, coercion, duress or undue influence; (c) they have had adequate opportunity to negotiate the terms of this Deed and to obtain competent legal and other professional advice concerning the matters raised in this Deed and the terms and effect of this Deed; and (d) the terms of this Deed are binding upon them according to its terms. … 13. Entire understanding 13.1 Entire agreement This Deed: (a) is the entire agreement and understanding between the Parties on everything connected with the subject matter of this Deed; and (b) supersedes any prior agreement or understanding on anything connected with that subject matter. 13.2 No reliance The Parties acknowledge that no reliance has been placed on any prior agreement, understanding or representation.
It is abundantly clear that, throughout the negotiations of the Deed of Settlement and its execution, Dr Kyatt and EMIS were represented by solicitors, New South Lawyers, who provided advice, specific comments and proposed amendments to various clauses in the draft Deed of Settlement to Dr Kyatt and EMIS, including in relation to the matters the subject of the release in cl 5.2 and whether or not the "Allegations" as defined should form part of it.
In cross-examination (T118-120), Dr Kyatt suggested that he did not understand the references in recital H and cl 5.4(b) of the Deed of Settlement to be asserting that Mr Ibrahim had never been an officer or a director of EMIS, claimed that those were the conditions implied by Mr Ibrahim's lawyer not Dr Kyatt and then said that he had been forced to agree to them and he had no option other than to agree to them. The relevant passage of the cross-examination proceeded in the following way: Q. I'm sorry. You understood that what the Bridges deed was doing was asserting that Mena had never been an officer or a director of EMIS? A. This was not my understanding. Q. Your understanding, can I suggest to you, when you entered into this deed, was that the parties were agreeing that Mena's interest in EMIS was limited to his interest in the unitholding of his unitholder company in the trust? A. These are the conditions implied by Mena's lawyer, not me. Q. These were what you were agreeing to; weren't they? A. I forced to be agreed on them. Q. You were forced; is that right? A. Yes. Q. Who forced you? A. The condition I was in, I was put in. I have no other options to save this partnership, only to go through this. Q. So Mena forced you to do this; did he? A. His lawyer. Q. I see. That's a serious allegation you're making against a lawyer; isn't it? Isn't it? A. Probably I said it in a wrong way, forced me, because you put that word in my mouth. Q. No, I think you said force. What do you mean by force or do you adhere to that evidence? A. And the same answer, I said I have no other option. I said I have no other option. Q. What I want to suggest to you is that you had an option which was to reject the changes, but what in truth happened was you acted upon the advice of the lawyers whose - are currently acting for you in this case; that's the position, isn't it? A. Can you repeat it again, sorry? Q. Can I suggest to you that what happened in February 2023 was that you willingly acted upon the advice of your lawyers, being the same lawyers who are currently acting for you in this Court case; didn't you? A. These are comments, not advice. Q. Do you want to answer my question, sir? A. Yes. Q. Shall I ask the question again? A. Yes, please. Q. In February 2023 I'm suggesting to you that you willingly entered into this deed, acting upon and agreeing with the advice of the very lawyers who are 2 metres away from me; do you agree with that proposition? A. Sir, I thought I don't understand you. Which letter you refer to? We out of this letter or we are still in this letter? Q. You know we're talking about the deed that was entered into in February 2023? A. Yes. Q. You know that; don't you? A. Yes. Q. And you know I'm talking about the letter Mr Gasic - A. Yes. Q. - emailed you on 16 May? A. Yes. Q. We've been talking about that for the last 15 minutes; haven't we? A. Yes. Yes. Q. And you know that's what I'm talking about? A. Yes. Q. And what I'm suggesting to you is that you signed that deed because you agreed with the advice Mr Gasic gave you and you were prepared to act in accordance with that advice? A. Yes. Q. And it is simply wrong for you to have ever suggested to his Honour that you were forced to sign it? A. If you - if we - probably - Q. It was wrong, wasn't it? A. I - I used the wrong word. I apologise for that. Q. You did have a choice, because you simply could've accepted, or rejected I should say, the amendments proffered by Bridges; I want to suggest that evidence was wrong? A. I could have refused it, yes. Q. Now, if we go to this deed, sorry, forgive me. You understood from this deed that Bridges, or Mr Ibrahim through Bridges, was saying he was not an officer or director of EMIS; you understood that when you signed it, didn't you? A. Yes.
Ultimately, Dr Kyatt accepted that he could have refused to enter into the Deed of Settlement containing the provisions which had been requested by Bridges Lawyers on behalf of Mr Ibrahim and he conceded that he had not been forced or had no other option but to sign it. This cross-examination is illustrative of Dr Kyatt's evasive approach to being questioned about multiple topics and then finally accepting the obvious, which is damaging to his credit and reliability as a witness.
Dr Kyatt conceded that in February 2023 there was nothing to stop Mr Ibrahim and Engadine Medical Imaging from acting in a way that might hurt the best interests of EMIS (T120-121).
In light of the numerous credibility findings I have already made against Dr Kyatt, I do not believe the evidence that he gave in cross-examination (T121) denying the propositions that in February 2023 he believed that Mr Ibrahim was a thief, a hijacker and a robber. I consider that in February 2023 Dr Kyatt regarded Mr Ibrahim as all of those things.
In further cross-examination (T121-123), Dr Kyatt agreed that he had carefully read the releases in cl 5 of the Deed of Settlement, he understood that he was releasing Mr Ibrahim and Engadine Medical Imaging in the terms set out in that document, he read cl 5.4 carefully and he knew that he had to agree to cl 5.4 to get the deal done to get the Lease back.
Dr Kyatt was then questioned about the "entire understanding" provisions in cl 13 of the Deed of Settlement and what he had relied upon in entering into the Deed of Settlement. The cross-examination flowed as follows (T123-124): Q. Go to clause 13, entire understanding. Just read that to yourself, 13.1 and 13.2. A. Yes. Q. You understood in clause 13.2 that you were acknowledging that no reliance had been placed on any prior agreement, understanding or representation. Do you see those words? A. Yes. Q. You read that clause carefully in February 2023, didn't you? A. I don't think so. Q. It was explained to you, wasn't it? A. I don't recall. Q. You've seen three drafts of this document, or two previous drafts, hadn't you? A. I don't recall. Q. You saw two iterations of it in 2022, and this third version in 2023, didn't you? A. If it's something I signed, I - I - I've seen it. Q. You read it carefully, didn't you? A. No. Q. You must have read some part of it carefully? A. The way I deal with my lawyers, we make the deal. They send me the papers, I sign them. Without going through them. Q. So you rely upon your lawyer's advice without reading the documents. Is that what you're saying to his Honour? A. Correct. Q. Did you read this document at all? A. I don't recall. Q. I want to suggest to you you read at least the important parts of the document, Dr Kyatt. A. I have a lot of trust in my lawyers. If they say these are the agreement, which you can sign then send them back to us, that's what I do usually. Q. Is the position you take to his Honour that if the lawyers recommended acceptance, you just did what the lawyers said. Is that right? A. Correct. HIS HONOUR Q. You're saying the whole of your reliance in entering into this document was placed on your lawyers? A. Yes, your Honour.
This last question and answer is of great significance to the factual basis to the misleading or deceptive conduct claim which Dr Kyatt has made against Mr Ibrahim, which I have dealt with below.
On 23 February 2023, the Deed of Assignment was also executed by Don and Helen Zafiropoulos as the lessors of the Engadine Premises, Engadine Medical Imaging as the assignor of the New Lease, Mr Ibrahim as the guarantor of Engadine Medical Imaging, EMIS as the assignee of the New Lease and Dr Kyatt and Advanced Imaging as the guarantor of EMIS. The effect of the Deed of Assignment was to assign the New Lease of the Engadine Premises from Engadine Medical Imaging to EMIS.
On 23 February 2023 at 5:03pm, Mr Gasic sent an email to Bridges Lawyers and GA Lawyers attaching the Deed of Settlement and Deed of Assignment, each executed by Dr Kyatt and EMIS, as well as the ASIC record for EMIS evidencing Dr Kyatt as the sole director.
On 27 February 2023, Bridges Lawyers sent an email to New South Lawyers and GA Lawyers attaching the Deed of Settlement and Deed of Assignment, each executed by Mr Ibrahim and Engadine Medical Imaging by way of exchange.

Mr Chaudhry resigns from EMIS

On 17 March 2023, Mr Chaudhry formally signed his written resignation as a director, manager and sonographer of EMIS with effect that day.
On 17 March 2023, Madison Marcus (the solicitors for Mr Chaudhry) wrote to Dr Kyatt adverting to the measures taken by Dr Kyatt to remove Mr Chaudhry as a director of EMIS on 23 February 2023, and stating that: … 10. We note that a person can only be removed as a director by resignation or by a resolution being passed for that person to be removed as a director. 11. We further note that: (a) Mr Chaudhry was not made aware of and did not consent to [these measures], nor did he execute any documentation with respect to his removal as director or secretary of EMIS; (b) Mr Chaudhry did not consent to his removal as a director and secretary; (c) No resolution was passed pursuant to the Corporations Act 2001 (Cth) to remove Mr Chaudhry as a director. 12. As such, the purported removal of Mr Chaudhry as director and secretary of EMIS was unlawful and fraudulent. Services to [EMIS] 13. From approximately his appointment as director of EMIS on 26 September 2019 to present, Mr Chaudhry acted as Manager of [EMIS] and was responsible for managing the day-to-day operations of [EMIS].
The letter attached the formal signed written notice of Mr Chaudhry's resignation as a director, manager and sonographer of EMIS.
On 18 March 2023, the letter of 17 March 2023 from Madison Marcus to Dr Kyatt was emailed to him.

Continuous operations of EMIS to March 2023

In cross-examination (T125), Dr Kyatt agreed that from the time that the New Lease was entered into by an interest concerned with Mr Ibrahim in July 2022 and throughout all of the negotiations in the background that led to the execution of the Deed of Settlement, EMIS continued to occupy the Engadine Premises, conduct the Engadine Practice in the same way and pay rent month-to-month, such that it was "business as usual" in the Engadine Practice. Dr Kyatt also agreed that in March 2023, about a month after Dr Kyatt took steps to remove Mr Chaudhry as a director, things came to a standstill at the Engadine Practice when employees left and the Engadine Practice stopped functioning (T125-126).

Focus Radiology Engadine practice commences

On 23 March 2023 at 4:13am, Mark McCudden, the Group Financial Controller of Vision Radiology, sent an email to Mr Ibrahim and Mr Chaudhry (amongst others) seeking their advice on the transfer of employees from the Engadine Practice to the Focus Engadine Practice.
On 23 March 2023 at 7:38am, Mr Ibrahim replied to Mr McCudden, copying in Ms Coles and Mr Chaudhry, saying: All the employees have applied for new positions on Seek. If we choose to hire them at the new practice, they must resign from existing company and they will then be completely paid out. The new practice is a new, unconnected entity. Old entitlements cannot be rolled over to the new company, but as with any employer, I will have the discretion to add bonus sick days later on.
On 23 March 2023, Mr Ibrahim wrote to Ms Bampton, a receptionist at the Engadine Practice, to offer her employment as a receptionist at Focus Radiology Engadine.
On 26 March 2023, five employees of EMIS at the Engadine Practice (Karen Davison, Jiawei Mei, Matthew Dyball, Taylah Bampton and Amy Marzol) each tendered their resignation via email to Mr Inayat.
On 26 March 2023, another employee of EMIS, Lindley Gomez, tendered her written resignation to Dr Kyatt.
Around this same time, EMIS employees (Karen Davison, Taylah Bampton, Matthew Dyball and Amy Marzol) accepted positions working for Focus Radiology Engadine.
On 27 March 2023, Ms Coles sent an email to Mr Chaudhry containing an announcement to doctors, practice managers and administration teams, introducing Focus Radiology Engadine as a new radiology clinic open in Engadine (at the Focus Engadine Premises) and attaching a list of services offered by the practice.
On or around 27 March 2023, after conducting some online searches, Dr Kyatt became aware that Mr Ibrahim was operating a new radiology practice (Focus Radiology Engadine) out of the Focus Engadine Premises (less than 100 metres from the Engadine Premises).
On 26 March 2023, Dr Kyatt telephoned an associate of his, Ameer Al-Khigani, from Jordan and offered to employ him as managing director of EMIS. Mr Al-Khigani accepted that offer and it was agreed that he would commence in the role on 28 March 2023. At this time, Dr Kyatt told Mr Al-Khigani that the Engadine Practice staff appeared to be working for a competing radiology practice in Engadine and instructed Mr Al-Khigani to attend the Engadine Premises and investigate.
On 29 March 2023, at Dr Kyatt's instruction, Mr Al-Khigani attended first the Engadine Premises and then the Focus Engadine Premises in person, at which time he observed that the Engadine Practice appeared to be closed but Focus Engadine Radiology was open and operating.
On 30 March 2023, Mr Al-Khigani again visited both the Engadine Premises and the Focus Engadine Premises. On that occasion, Mr Al-Khigani approached and had a conversation with a man who was standing in front of the Engadine Premises distributing flyers, and who introduced himself to Mr Al-Khigani as Louis. Mr Al-Khigani said that in the course of that conversation: 1. Louis represented that the Engadine Practice had relocated to the Focus Engadine Premises; 2. Louis handed Mr Al-Khigani a flyer; and 3. Louis informed Mr Al-Khigani that the business owner of the radiology practice at the Focus Engadine Premises was 'Mena'.
The flyer was in fact a Focus Radiology-branded imaging request form which listed the Focus Engadine Premises under the sub-heading, 'practice location'.
On 5 April 2023, the business name Focus Radiology Engadine was registered with ASIC, with the principal place of business the Focus Engadine Premises and the holder Engadine Medical Imaging.
On 6 April 2023, Mr Al-Khigani was appointed as a director and secretary of EMIS.

ISSUE 1: THE CLAIMS AGAINST MR IBRAHIM

There are three claims against Mr Ibrahim: 1. Mr Ibrahim breached duties owed by him to EMIS under the Corporations Act as an officer of EMIS. 2. Mr Ibrahim breached duties owed to EMIS in relation to its confidential information. 3. Mr Ibrahim breached the ACL by his misleading or deceptive conduct in making representations (including by silence) during the negotiations of the Deed of Settlement in relation to the Engadine Practice and the establishment of the Focus Radiology Engadine practice.
I will deal with each in turn.

Was Mr Ibrahim an officer of EMIS?

Mr Ibrahim was never a director of EMIS. His interest in EMIS was as a director of MI No. 2, which held 30 units in the Engadine Imaging Trust as trustee for the MI No. 2 Family Trust.
The plaintiffs claim that Mr Ibrahim was an officer of EMIS for the purposes of s 9AD(1)(b)(i), (ii) and (iii) of the Corporations Act which relevantly provide: 9AD Meaning of officer (1) An officer of a corporation … is: (a) … (b) a person: (i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or (ii) who has the capacity to affect significantly the corporation's financial standing; or (iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation); or …
The relevant authorities on the application of these provisions of s 9AD were conveniently collected in Global Risk Alliance Group Services Pty Ltd v Harmer [2024] NSWSC 79 by Nixon J who said at [495]-[500]: [495] In Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465; [2012] HCA 18 at [23]-[27], French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ made a number of observations regarding the definition of "officer" in s 9, and in particular, subparagraph (b)(i) of that definition, including that: (1) each of the three classes of persons described in paragraph (b) of the definition of "officer" is evidently different from (and a wider class than) the persons identified in the other paragraphs of the definition. Persons identified in the other paragraphs all hold a named office in or in relation to the company, whereas those identified in paragraph (b) do not. Those identified in paragraph (b) are identified by what they do (subparagraph (i)), what capacity they have (subparagraph (ii)) or what influence on the directors they have had and continue to have (subparagraph (iii)) (at [25]); (2) there being these differences between paragraph (b) of the definition and the other paragraphs (especially paragraph (a)), it is not to be supposed that persons falling within subparagraph (b)(i) must be in substantially the same position as directors (at [25]); (3) the inquiry required by subparagraph (b)(i) of the definition must be directed to what role the person in question plays in the corporation. It is not an inquiry that is confined to the role that the person played in relation to the particular issue in respect of which it is alleged that there was a breach of duty (at [23]); (4) subparagraph (b)(i) distinguishes between making decisions of a particular character and participating in making those decisions. The notion of "participation" directs attention to the role that a person has in the ultimate act of making a decision, even if that final act is undertaken by some other person or persons. The notion of participation in making decisions presents a question of fact and degree in which the significance to be given to the role played by the person in question must be assessed (at [26]); and (5) participation in any decision of a corporation does not make a person an "officer". Rather, the decisions in which the person participates must have the significance for the business of the corporation that the statute prescribes (that is, "decisions that affect the whole, or a substantial part, of the business of the corporation"). Whether a person participates in making decisions of a particular character requires examination of what contribution that person makes to the making of a decision (at [27]). So, on the facts of Shafron, a senior executive who shaped and developed a proposal through its successive variants for the directors, presented successive proposals to them, and promoted their adoption, was held (at [31]) to have "participated" in the decision to accept that proposal. [496] As for subparagraph (b)(ii) of the definition of "officer", the Full Court in Grimaldi v Chameleon Mining (No 2) at [73] observed that: the subpara (b)(ii) requirement that a person has the capacity to affect significantly the corporation's financial standing refers to the character properly to be attributed to that person's capacity in the circumstances. It may arise from the extent of that person's participation in investment decisions or financial commitments made, from the dimensions of a decision or decisions, from the nature of that person's participation in the control and direction of the affairs of the corporation, etc: cf Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253 at [74] (ASIC v Adler). The question again is one of fact. [497] In the passage of Australian Securities and Investments Commission v Adler and Ors (2002) 168 FLR 253; [2002] NSWSC 171 which was cited by the Full Court in Grimaldi, Santow J held (at [74]) that Mr Adler was an officer of HIHC within subparagraph (b)(ii) of the definition because "his involvement in matters pertaining to investment [of the corporation's funds] … gave that capacity" to affect significantly the corporation's financial standing, and "more broadly because of his participation in the control and direction of the affairs of the Group". In Australian Securities and Investments Commission v King (2020) 270 CLR 1; [2020] HCA 4 at [53]-[59], Kiefel CJ, Gageler and Keane JJ referred with evident approval to these paragraphs of Grimaldi v Chameleon Mining and ASIC v Adler. Their Honours concluded at [58] that: The reasons in Grimaldi, when read as a whole, recognise that para (b) of the definition of 'officer' expands the coverage of the duties of officers of a corporation to include individuals who would not be officers of a corporation within the ordinary meaning of the term. Grimaldi is distinctly not supportive of the view that, as a matter of law, a person who satisfies either of the requirements of para (b)(i) or para (b)(ii) of the definition does so only if that person is acting in a recognised office within the corporation. [498] Having regard to the language of the definition of "officer", their Honours held (at [24]) that: While para (a) of the definition captures individuals who hold a named office in a corporation for which the Act prescribes certain duties and functions, para (b) captures those who do not hold such an office. Paragraph (b) defines 'officer' by reference to the facts of the relationship between an individual and a corporation in relation to the affairs of the corporation. The contrasting language is a powerful textual indication that Parliament did not intend to confine the class of persons described in para (b), including sub-para (ii), by an unexpressed requirement that the relationship between an individual and a corporation be identified by reference to a recognised position with rights and duties attaching to it. [499] In ASIC v King at [88], Nettle and Gordon JJ commented that: Paragraph (b) is thus 'essentially functional in character, its concern being with the stipulated quality of a person's actions or capacity and their effects'. Sub-paragraphs (i) and (ii) are 'concerned with identifying persons who are involved in management of the corporation' - that is, people 'involved in policy making and decisions that affect the whole or a substantial part of the business of the corporation'. And, of course, a person may, by their conduct, satisfy more than one of the categories of officer in para (b)(i)-(iii). [500] Their Honours continued (at [91]-[92]) that: determination of whether a person falls under para (b)(ii) of the definition of 'officer of a corporation' requires consideration of the role the person played in the management of the corporation. The inquiry is not limited to any particular issue or act which the person was involved in, and which is said to constitute a breach of duty. The text of para (b)(ii) is directed to those who have the capacity to affect significantly a corporation's financial standing: not just any capacity will suffice. Determining whether a person has such a capacity depends on identifying their role in relation to the corporation, what they did or did not do (whether on a particular occasion or over time) and the relationship between their actions or inaction and the financial standing of the corporation. The quality of a person's capacity or actions, and the effects of that capacity or those actions on the management of a corporation, are not necessarily uniform across corporations or corporate groups, or even uniform within a single corporation or group. The size of a corporation, the corporate structure, the management structure, and the identity and nature of the persons involved are likely to affect who is an officer of a corporation at any point in time. Circumstances may change over time, sometimes dramatically.
In the FASOC, the various subparagraphs of [17] plead that whilst Mr Ibrahim managed and controlled the Engadine Practice, his duties and responsibilities included: 1. procuring and purchasing medical and other equipment ([17.1]); 2. contact with doctors, nurses and other individuals in the medical industry who provided medical imaging services ([17.2]); 3. contact with patients ([17.3]); 4. determination of pricing ([17.4]); 5. procuring, hiring and firing employees and contractors ([17.5]); 6. generating new and repeat business with existing and new patients ([17.6]); 7. generating new and repeat business with doctors, nurses and other individuals in the medical industry who provided medical imaging services ([17.7]); 8. procuring medical equipment and supplies ([17.8]); 9. analysing sales and profitability ([17.9]); 10. running, managing and operating the Engadine Practice ([17.11]); 11. access and control of all financial records and bank accounts used by the Engadine Practice ([17.14]); and 12. managing all payments, payroll and financial aspects of the Engadine Practice ([17.17]).
In [18] of the FASOC, the plaintiffs plead that "[i]n the premises, [Mr Ibrahim] was an officer of EMIS within the meaning of section 9 of the [Corporations Act]".
In [17] of Mr Ibrahim's defence, he admits that he controlled and managed the Engadine Practice from about mid-2009 until about February 2018 and admits that his duties and responsibilities while controlling and managing the Engadine Practice included procuring medical equipment and supplies, analysing sales and profitability and accessing financial records and bank accounts of the Engadine Practice, but does not admit that he was responsible for running, managing and operating the Engadine Practice and otherwise denies the allegations in [17] of the FASOC. In [18] of Mr Ibrahim's defence, he denies [18] of the FASOC.
In their respective closing submissions, the plaintiffs set out a catalogue of the contended facts which they assert provide the basis for a finding that Mr Ibrahim was an officer of EMIS and Mr Ibrahim provided his response to each of those contended facts. These contended facts, Mr Ibrahim's responses to them and my findings are as follows: 1. The plaintiffs contend that Mr Ibrahim was involved in discussions and decisions about acquiring expensive medical equipment for the Dapto Practice. Reliance is placed on the Novotel meeting of 24 July 2019 between Dr Kyatt, Dr Jasim, Mr Chaudhry, Mr Ibrahim and Ms Rhoden, the minutes for which state that there was discussion about purchasing an MRI machine and a 3D mammogram machine, and the pending installation of a bone density machine for the Dapto Practice and Mr Ibrahim was involved in these discussions. Mr Ibrahim responds that the minutes make no reference to equipment for the Engadine Practice and only references equipment for the Dapto Practice. Mr Ibrahim also says that the meeting occurred significantly prior to the relevant period for the consideration of Mr Ibrahim as an officer of EMIS in any event. In my opinion, Mr Ibrahim's submissions are correct. The minutes of a meeting in 2019 provide no basis for any finding of the involvement of Mr Ibrahim in discussions or decisions about acquiring medical equipment for the Engadine Practice. Only the Dapto Practice is mentioned in this regard. I reject this contended fact as providing any support for a finding that Mr Ibrahim was an officer of EMIS. 1. The plaintiffs contend that Mr Ibrahim was involved in decisions about acquiring new employees and the terms to be offered. Reliance is placed on the following emails: 1. email dated 14 July 2020 at 10:55pm from Mr Chaudhry to Dr Kyatt, Mr Ibrahim and Dr Jasim concerning the employment of an extra radiographer for the Wollongong sites and whether she should be offered a full-time position; 2. email dated 20 July 2020 at 2:59pm from Mr Chaudhry to Dr Kyatt, copied to Mr Ibrahim and Dr Jasim, regarding an existing radiologist working at Warilla, Warrawong and Dapto who had taken a part-time position at a hospital and still wanted to work 2 to 3 days with them; and 3. email dated 19 August 2019 at 11:45pm from Mr Chaudhry to Dr Kyatt concerning the employment of a radiologist at Engadine and Lakemba and the terms to be offered. Mr Ibrahim responds that only the first two of the three emails were sent to Mr Ibrahim and neither of those refers to the Engadine Practice, only to Wollongong, Warilla and Dapto. The third email, sent about a year earlier than the others, does refer to the Engadine Practice but passed between Dr Kyatt and Mr Chaudhry, not Mr Ibrahim. In my opinion, Mr Ibrahim's submissions are correct. None of the emails provide any support for the contention that Mr Ibrahim was actively involved in decisions about acquiring new employees and the terms to be offered. 1. The plaintiffs contend that Mr Ibrahim was involved in decisions about whether to bring in new partners and the terms to be offered. Reliance is placed on the following emails and Whatsapp message: 1. email dated 21 July 2020 at 11:23pm from Mr Chaudhry to Dr Kyatt, Dr Jasim and Mr Ibrahim concerning a potential radiologist candidate for working at the Wollongong sites; 2. emails dated 22 July 2020 at 7:27pm and 11:06pm between Dr Kyatt and Mr Chaudhry, copied to Dr Jasim and Mr Ibrahim, in relation to other potential radiologist candidates; and 3. undated Whatsapp message from Dr Kyatt to Mr Chaudhry, Dr Jasim and Mr Ibrahim concerning discussions with potential radiologists and candidates for partnership in the practices. Mr Ibrahim responds that there are no references to the Engadine Practice in any of this correspondence, which refers only to the Wollongong sites, and the Whatsapp message is undated and the emails were exchanged in July 2020, significantly prior to the relevant period for the consideration of Mr Ibrahim as an officer of EMIS. In my opinion, Mr Ibrahim's submissions are correct. Neither the emails nor the Whatsapp message provide any support for the contention that Mr Ibrahim was involved in decisions about whether to bring in new partners and the terms to be offered. 1. The plaintiffs contend that Mr Ibrahim was involved in terminating an employee of EMIS. They rely on the email dated 2 May 2021 which Mr Ibrahim sent with an attached termination letter to Jong Min Son, an employee of the Engadine Practice, copied to Mr Chaudhry, which I have referred to above. Mr Ibrahim responds that the email and termination notice are dated 2 May 2021 - again, significantly prior to the relevant period for the consideration of Mr Ibrahim as an officer of EMIS. This is so, Mr Ibrahim says, notwithstanding the date of 2 September 2022 that appears, being the date on which Mr Ibrahim's email and attachment to Mr Son was forwarded to Dr Kyatt (more than five months before the Deed of Settlement was executed). Mr Ibrahim emphasised the temporal element aspect of this as relevant to my assessment of whether Mr Ibrahim could properly be said to be an officer of EMIS, by dint of participating in or making some decision(s) about the corporation's business, at some (discrete) point in time (T182). In my opinion, the termination of an employee of EMIS is a significant matter. I have inferred that Mr Ibrahim investigated and established what had taken place before sending the notice of termination. I also found that there is no evidence that Mr Ibrahim consulted with either Dr Kyatt or Mr Chaudhry before undertaking the termination, although Mr Chaudhry probably knew about it. However, I do not think that this evidence of a single instance in 2021 of Mr Ibrahim acting to terminate an employee of EMIS brings Mr Ibrahim within any of the disjunctive parts of the s 9AD(1)(i), (ii) or (iii) as interpreted in Shafron. There is no evidentiary or principled basis on which I could make a finding that this one termination event demonstrates that Mr Ibrahim made or participated in the making of a decision which affects the whole or a substantial part of the business of EMIS, or that Mr Ibrahim had the capacity to affect significantly EMIS' financial standing, or that Mr Ibrahim was a person in accordance with whose instructions or wishes the directors of EMIS were accustomed to act. In my assessment, none of those components of the definition of officer were proved by the plaintiffs by reference to this contended fact. 1. The plaintiffs contend that Mr Ibrahim resolved litigation commenced by a previous employee of EMIS against EMIS. They rely on the terms of settlement between Jong Min Son and EMIS, which was signed by Jong Min Son on 25 June 2021. Mr Ibrahim responds that the terms of settlement, in the form admitted into evidence, are not signed by anyone on behalf of EMIS, nor is there any reference to Mr Ibrahim in them. I accept Mr Ibrahim's submissions. The terms of settlement do not disclose any involvement by Mr Ibrahim, for instance in negotiating or agreeing to them, and cannot form any basis for the finding of fact sought. 1. The plaintiffs contend that Mr Ibrahim was involved in discussions and decisions about expanding the Engadine Practice. They rely on the Novotel meeting of 24 July 2019 between Dr Kyatt, Dr Jasim, Mr Chaudhry, Mr Ibrahim and Ms Rhoden, the minutes for which state that "[Mr Ibrahim] discussed with Dr Kyatt if the Engadine rooms need to expand and there is a shop for lease 3 doors down from the current site. This will allow for future growth as they are outgrowing the current site. Dr Kyatt considering". Mr Ibrahim responds that the meeting is significantly prior to the relevant period for the consideration of Mr Ibrahim as an officer of EMIS and the last portion of the minutes suggest that the decision would be made by Dr Kyatt. I agree with Mr Ibrahim for a number of reasons. First, this meeting was held in July 2019, more than three years prior to the period relevant to my consideration of whether Mr Ibrahim was an officer of EMIS. Secondly, in circumstances where Dr Kyatt had control of the business of EMIS under the Engadine Trust Deed through his control of Advanced Imaging and stated in cross-examination that he was intent on exercising that control, whatever involvement Mr Ibrahim had in the discussion about expanding the Engadine Practice must be seen in that light. Thirdly, the minutes make it clear in this instance that in relation to this matter Dr Kyatt was the decision-maker, not Mr Ibrahim. Finally, there is no evidence from which I could make a finding that this discussion demonstrates that Mr Ibrahim made or participated in the making of a decision which affects the whole or a substantial part of the business of EMIS, or that Mr Ibrahim had the capacity to affect significantly EMIS' financial standing, or that Mr Ibrahim was a person in accordance with whose instructions or wishes the directors of EMIS were accustomed to act. 1. The plaintiffs contend that Mr Ibrahim was involved in renegotiating the Lease on behalf of EMIS, but they do so without reference to any evidence. Mr Ibrahim responds that there is no evidence on which to base this finding. I agree with Mr Ibrahim. The plaintiffs do not refer to any evidence on which I could find that he was involved in renegotiating the Lease. 1. The plaintiffs contend that there is objective evidence that Mr Ibrahim was involved in decision making with respect to when to take profits out of EMIS. They rely on the email dated 28 January 2021 which Mr Ibrahim sent to Dr Kyatt and Mr Chaudhry, copied to Mr Inayat, expressing his belief that they should begin to distribute shareholders' funds weekly, proposing that they take out $300,000 that week then distribute $3,000 every Friday divided according to each shareholder's portion and asking them to let him know their thoughts. Mr Ibrahim responds that this email constitutes a request and in accordance with cl 10.3(a) of the Engadine Trust Deed, which governs the distribution of income, that matter was entirely in the decision of Advanced Imaging. I agree with Mr Ibrahim. The email cannot form the basis for any finding that Mr Ibrahim was involved in decision making with respect to when to take profits out of EMIS. The email does not demonstrate an involvement in decision making about that issue and the decision was one for Dr Kyatt under the Engadine Trust Deed through his control of Advanced Imaging. 1. The plaintiffs contend that the conduct between August 2021 and February 2022 in relation to the Lease, a significant asset of EMIS, with the knowledge and approval of Mr Chaudhry, entailed the holding out of Mr Ibrahim as a person entitled to make significant decisions on behalf of EMIS. I reject this submission. While the evidence shows that on 18 August 2021 at 12:01pm, Mr Ibrahim emailed Mr Chaudhry with a draft response to Ms Milsted of All Star Property Group regarding the proposed renewal of the Lease, that was the only active involvement of Mr Ibrahim in that process. Such an isolated event more than one year in advance of the relevant period for the consideration of Mr Ibrahim as an officer of EMIS does not provide any sound evidentiary basis for making that finding in accordance with the elements of s 9AD of the Corporations Act.
In closing submissions, Mr Ibrahim referred to the pleaded allegations in [17] of the FASOC, submitting that none of them were made out other than asserting that Mr Ibrahim had access to the financial records used in the Engadine Practice. Mr Ibrahim said that he was entitled to obtain that information in his capacity as a director of MI No. 2 as trustee for the MI No. 2 Family Trust which was a unitholder in the Engadine Imaging Trust under cl 13.2 of the Engadine Trust Deed, and having such access could not bring him within the scope of the definition of officer in s 9AD of the Corporations Act.
I agree with this submission. Having access to financial documents of the Engadine Imaging Trust in his capacity as a director of one of the unit holders in that trust does not satisfy any of the disjunctive parts of the definition of officer in s 9AD of the Corporations Act.
I also agree with the closing submissions made by Mr Ibrahim that in the case made by the plaintiffs that Mr Ibrahim was an officer of EMIS they have simply failed to deal with the operation of the provisions of the Engadine Trust Deed that make the control and management of the Engadine Practice the responsibility of the majority unit holder, Advanced Imaging. This is particularly the case in relation to cl 17.5(a), which states that while ever Advanced Imaging is a unit holder, it has the right to nominate a representative who has total control of the day-to-day management of the business and make all decisions of a management, administrative and strategic nature in regard to the business of the Engadine Practice, without any money restrictions. There is no pleading to the effect that Advanced Imaging gave any authority to anyone to make decisions or so act in circumstances where it had "complete control" of the Engadine Practice.
Accordingly, I find that the allegation that Mr Ibrahim was an officer of EMIS at any relevant time is not established. As a result, it is not necessary for me to deal with the claim that Mr Ibrahim had breached any obligations owed to EMIS as an officer of EMIS and no relief can be obtained against Mr Ibrahim in relation to that claim.

Misleading or deceptive conduct claim against Mr Ibrahim

Given my finding that the claim against Mr Ibrahim that he breached obligations as an officer of EMIS should fail, it is not strictly necessary for me to deal with the plaintiffs' claim that he engaged in misleading or deceptive conduct which caused Dr Kyatt and EMIS to enter into the Deed of Settlement. That is because Mr Ibrahim does not need to rely on the releases in cl 5.2 of the Deed of Settlement in his defence of the claim that he was an officer of EMIS. In case I am wrong in my conclusion that Mr Ibrahim was not an officer of EMIS, I have dealt with the misleading or deceptive conduct claim against him below.

The pleaded case

In essence, the plaintiffs plead in the FASOC at [31]-[33] that during the "Negotiation Period" from early July 2022 to 23 February 2023, Dr Kyatt, Mr Chaudhry and Mr Ibrahim entered into negotiations to have the New Lease assigned from Engadine Medical Imaging to EMIS, and that at this time Mr Ibrahim made each of the following representations: 1. The Engadine Practice was being run and operated in the usual manner. 2. Mr Ibrahim would continue to operate the Engadine Practice in the usual course after the New Lease had been assigned to EMIS. 3. Mr Ibrahim was not taking any steps to establish a Competing Business. 4. There was no Competing Business. 5. There would be no Competing Business. 6. The value of EMIS and the Engadine Practice and the medical equipment forming part of the Engadine Practice was and would remain substantial. 7. There will be no loss to EMIS by EMIS and Dr Kyatt consenting to the release as defined in the Deed of Settlement.
The Competing Business is defined in [5.4] of the FASOC to be the radiology practice trading as Focus Radiology Engadine located at and trading from 1-3 Station Street, Engadine (which is defined in this judgment as the Focus Engadine Premises).
In the FASOC at [34]-[37], the plaintiffs plead that these seven representations were express, partly in writing and partly through conduct with: 1. the written part contained in a letter dated 3 November 2022, an email dated 15 February 2023 at 1:56pm from Bridges Lawyers to New South Lawyers and reports and other documents issued by the Engadine Practice which contain the Engadine Premises address and the Focus Radiology logo; and 2. the conduct including the authorisation or approval of these documents, the request on 15 February 2023 for a wider release in the draft Deed and Mr Ibrahim's silence in failing to disclose two matters, being: 1. retaining and using for the benefit of himself and others and other than for the benefit of EMIS, particular confidential information or alternatively assisting Mr Chaudhry to do this ([25.10], [26.10] and [29.6] of the FASOC); and 2. establishing the Competing Business and using the confidential information and property for [his] benefit to the exclusion of EMIS and other than for the benefit of EMIS or alternatively assisting Mr Chaudhry to do this ([25.12], [26.12] and [29.8] of the FASOC).

Statutory provisions

Section 131(1) of the Competition and Consumer Act 2010 (Cth) (CCA) provides: Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations.
Schedule 2 to the CCA contains the Australian Consumer Law (ACL).
Section 18 of the ACL is within Chapter 2 of the ACL. Section 18(1) of the ACL provides: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 4 of the ACL concerns misleading representations with respect to future matters and provides: (1) If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of this Schedule, to be misleading. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) To avoid doubt, subsection (2) does not: (a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or (b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation. (4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.

Authorities

In Lin v Zheng [2023] NSWCA 174, Payne JA (with whom Bell CJ and White JA agreed) at [31]-[36] helpfully summarised the principles for determining whether conduct is misleading or deceptive or likely to mislead or deceive, particularly in relation to representations of a future matter, stating: [31] Conduct is misleading or deceptive or likely to mislead or deceive if it has a tendency to lead a person into error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [39] (French CJ, Crennan, Bell and Keane JJ). It is not necessary for a plaintiff to establish that a person engaging in misleading or deceptive conduct intended to mislead or deceive. The relevant question is whether, viewed objectively, the relevant conduct was misleading or deceptive or likely to mislead or deceive: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44 at 197 per Gibbs CJ, 216 per Brennan J. [32] Conduct is likely to mislead or deceive if there is a real and not remote chance or possibility that a person is likely to be misled or deceived, and this is so even though the possibility of that occurring is less than 50 per cent: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [112] per McHugh J. [33] In Butcher at [109] (followed by a majority of the High Court in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [102]) McHugh J said: [109] The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 [of the then Trade Practices Act] has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. [citations omitted] [34] Section 4 of the Competition and Consumer Act 2010 (Cth) sch 2 - Australian Consumer Law (ACL) derives from s 51A of the predecessor to the ACL, the Trade Practices Act 1974 (Cth). Section 4 applies where a representation is made and that representation is with respect to a "future matter". As such, it places an evidential burden on the person who made the relevant representation to adduce evidence that there were reasonable grounds for making it. The term "future matter" is not defined in the ACL. Whether a statement related to a future matter depends upon the words used and the context in which they were used: Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58; (2004) 62 IPR 184 at [99]-[102]; Australian Competition and Consumer Commission v Woolworths Group Ltd (2020) 281 FCR 108; [2020] FCAFC 162. A representation will only be with respect to a future matter if it is in the nature of a promise, forecast, prediction or other like statement about something that will only transpire in the future. [35] A statement of what the representor believes a future position will be may be a representation with respect to a future matter even if it implies a representation as to the representor's state of mind, depending on the words used and the context: Digi-Tech at [99]; Sykes v Reserve Bank of Australia (1998) 88 FCR 511; [1998] FCA 1405. [36] There will not be reasonable grounds for making a representation if, at the time of making it, the representor did not have facts sufficient to induce, in the mind of a reasonable person, a basis for making the representation: Australian Competition and Consumer Commission v Dateline Imports Pty Ltd (2015) 161 FCR 513; [2015] FCAFC 114 at [100]. The fact that a representor may believe in a particular state of affairs does not necessarily mean that there are reasonable grounds for that belief: Cummings v Lewis (1993) 41 FCR 559; [1993] FCA 190. Reasonable grounds for making a representation about a person's intention in relation to a future matter involve both an intention to perform the representation and an ability to perform it: Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200; see also HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 at [13], referring with approval to Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 238-239 and 240-241 per Ormiston J.

Silence

The particular role of silence or non-disclosure in a claim for misleading or deceptive conduct has been considered at length in the authorities dating back to s 52 of the Trade Practices Act 1974 (Cth), the predecessor provision to s 18(1) of the ACL.
In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31, French CJ and Kiefel J at [16]-[23] outlined the following relevant principles in a case of silence as the basis for alleged misleading or deceptive conduct (footnotes omitted): [16] The circumstances in which silence or non-disclosure of information can be misleading or deceptive are various. The understanding of the place of silence or non-disclosure in the characterisation of conduct as misleading or deceptive was affected, in early decisions on s 52, by the view that the section was concerned with misrepresentations that would have been actionable under the general law. That view was linked to the proposition, expressed in Taco Co of Australia Inc v Taco Bell Pty Ltd, that conduct could not be misleading or deceptive for the purposes of s 52 unless it conveyed a misrepresentation. It was also linked to the proposition that at general law "mere silence, with regard to a material fact, which there is no legal obligation to divulge, will not avoid a contract, although it operate as an injury to the party from whom it is concealed". In the early development of the law about misleading or deceptive conduct, there were rather cautiously expressed views about the role of silence, albeit the importance of the statutory words was acknowledged. [17] The 1992 decision of the Full Court of the Federal Court in Demagogue Pty Ltd v Ramensky represented what has been described accurately as "an emphatic acknowledgement … of the unique nature of the statutory prohibition". The Full Court upheld the decision of the primary judge that a vendor of land had created a clear but erroneous impression in the purchasers that there was nothing unusual concerning access to the land and, in particular, had been silent as to the necessity of a grant of a licence by a statutory authority to enable such access. [18] Gummow J, who wrote the leading judgment and with whom Black CJ and Cooper J agreed, said: it should be no inhibition to giving effect to what, on its proper construction, is provided for in the legislation, that the result may be to achieve consequences and administer remedies which differ from those otherwise obtaining under the general law. Silence, as Black CJ said in his concurring judgment, was to be assessed as a circumstance like any other: the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. Gummow J referred to the limitation that "unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist". [19] The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations. An example in the former category is non-disclosure of material facts in a prospectus. [20] In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52. [21] To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute. In that connection, Robson AJA in the Court of Appeal spoke of s 52 as making parties "strictly responsible to ensure they did not mislead or deceive their customer or trading partners". Such language, while no doubt intended to distinguish the necessary elements of misleading or deceptive conduct from those of torts such as deceit, negligence and passing off, may take on a life of its own. It may lead to the imposition of a requirement to volunteer information which travels beyond the statutory duty "to act in a way which does not mislead or deceive". Cicero, in his famous essay On Duties, seems to have contemplated such a standard when he wrote: Holding things back does not always amount to concealment; but it does when you want people, for your own profit, to be kept in the dark about something which you know and would be useful for them to know. It would no doubt be regarded as an unrealistic expectation, inconsistent with the protection of that "superior smartness in dealing" of which Barton J wrote in W Scott, Fell & Co Ltd v Lloyd, that people who hold things back for their own profit are to be regarded as engaging in misleading or deceptive conduct. As Burchett J observed in Poseidon Ltd v Adelaide Petroleum NL, s 52 does not strike at the traditional secretiveness and obliquity of the bargaining process. But his Honour went on to remark that the bargaining process is not to be seen as a licence to deceive, and gave the example of a bargainer who had no intention of contracting on the terms discussed and whose silence was to achieve some undisclosed and ulterior purpose harmful to a competitor. [22] However, as a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. Yet that appears to have been, in practical effect, the character of the obligation said to have rested upon Miller in this case. [23] Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to precontractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct. When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete.
More than 20 years prior to the decision in Miller, in Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, Gleeson CJ (with whom Samuels AP and Meagher JA agreed) at 475 made the following important observations regarding silence in arms' length negotiations: Where parties are dealing at arms' length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not of itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That would occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information.
As Bell P (as the Chief Justice then was, with whom Bathurst CJ and Payne JA agreed) said in Wormald v Maradaca Pty Ltd [2020] NSWCA 289 at [112], Lam remains an important authority in this context and has been regularly followed and applied.
In Wormald, Bell P at [111] summarised and reiterated the application of the principles from Miller and at [113]-[115] also collected a number of reinforcing principles relevant to a case of silence during negotiations, saying: [113] Of similar effect to Gleeson CJ's observations in Lam are those of Macfarlan JA, with whom Beazley ACJ and Payne JA agreed, in Jewelsnloo Pty Ltd v Sengos [2016] NSWCA 309 at [86] … : …the normal competitive basis upon which arm's length commercial parties deal with each other is not abrogated by statutory prohibitions on misleading and deceptive conduct. Such parties are not obliged to volunteer information to the others with whom they are dealing simply because they realise, or should realise, that it is of importance to the commercial interests of the others. There has to be something more that renders their silence misleading or deceptive. [114] More recently, in Nadinic v Cheryl Drinkwater as trustee for the Cheryl Drinkwater Trust [2020] NSWCA 2, Barrett AJA, with whom Meagher and Leeming JJA agreed, observed at [40] that: Silence is itself a fact that must be assessed like any other and, unless the circumstances as a whole are such as to give rise to a reasonable expectation of disclosure of some relevant fact known to exist but not communicated, there is no basis on which silence of itself can warrant an inference of a representation that the fact does not exist. [115] As to commercial context, the sage observations of McDougall J in Watpac Constructions (NSW) Pty Limited v Charter Hall Funds Management Limited [2017] NSWSC 865 at [173] are also of relevance: Where parties are … of equal bargaining power and equally well resourced and advised, the careless disregard by one of its own interests is an unlikely starting point to trigger the operation, adversely to the other, of s 18 [of the ACL] when those parties are in dispute. Of course, where the misleading or deceptive conduct relied upon is based on some active conduct or positive misrepresentation, totally different considerations may apply.

Causation and remedies

The entitlement to claim damages arising from a contravention of s 18 of the ACL is contained in s 236 which relevantly states: (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.
A compensation order is also available to those persons who have suffered or are likely to suffer loss or damage because of conduct of another person in contravention of s 18 of the ACL, s 237 of the ACL relevantly stating: (1) A court may: (a) on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because another person has engaged in conduct in contravention of a provision of Chapter 2, 3 or 4; or (b) … make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct. Note: The orders that the court may make include all or any of the orders set out in section 243. (2) The order must be an order that the court considers will: (a) compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or (b) prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured persons. (3) An application under subsection (1) may be made at any time before the end of 6 years from the day on which the cause of action accrued that relates to the conduct referred to in that subsection.
The kinds of orders that may be made pursuant to s 237 of the ACL include those contained in s 243 of the ACL, such as a declaration that the whole or any part of a contract is void, an order varying a contract and an order refusing to enforce any or all of the provisions of a contract.
There must be a causal connection between the misleading or deceptive conduct and the loss or damage which is claimed in ss 236 and 237 of the ACL as both provisions require that the loss or damage be suffered "because of the conduct". This language replaced the previous expression "by conduct of". The causal connection is essentially a question of fact, to be determined by reference to common sense and experience and one into which policy considerations and value judgments necessarily enter: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12, Mason CJ (with whom Toohey and Gaudron JJ agreed) at 515; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55, Mason CJ, Dawson, Gaudron and McHugh JJ at 525.
In Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, French CJ at [25]-[29] considered the question of characterisation of conduct which is directed at particular individuals, saying (footnotes omitted): [25] Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error. It may be undertaken by reference to the public or a relevant section of the public. In cases of misleading or deceptive conduct analogous to passing off and involving reputational issues, the relevant section of the public may be defined, according to the nature of the conduct, by geographical distribution, age or some other common attribute or interest. On the other hand, characterisation may be undertaken in the context of commercial negotiations between individuals. In either case it involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective. [26] This Court has drawn a practical distinction between the approach to characterisation of conduct as misleading or deceptive when the public is involved, on the one hand, and where the conduct occurs in dealings between individuals on the other. In the former case, the sufficiency of the connection between the conduct and the misleading or deception of prospective purchasers "is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals". Where the conduct is directed to members of a class in a general sense, then the characterisation inquiry is to be made with respect to a hypothetical individual "isolate[d] by some criterion" as a "representative member of that class". In the case of an individual it is not necessary that he or she be reconstructed into a hypothetical, "ordinary" person. Characterisation may proceed by reference to the circumstances and context of the questioned conduct. The state of knowledge of the person to whom the conduct is directed may be relevant, at least in so far as it relates to the content and circumstances of the conduct. [27] In Butcher v Lachlan Elder Realty Pty Ltd the approach to characterisation of conduct directed to identified individuals was set out in the joint judgment of the majority as follows: The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known. Although this passage begins by referring to the need to establish a causal link between the impugned conduct and the claimed loss, it is clear that thereafter their Honours were addressing the task of characterisation. [28] Determination of the causation of loss or damage may require account to be taken of subjective factors relating to a particular person's reaction to conduct found to be misleading or deceptive or likely to mislead or deceive. A misstatement of fact may be misleading or deceptive in the sense that it would have a tendency to lead anyone into error. However, it may be disbelieved by its addressee. In that event the misstatement would not ordinarily be causative of any loss or damage flowing from the subsequent conduct of the addressee. [29] A person accused of engaging in misleading or deceptive conduct may claim that its effects were negated by a contemporaneous disclaimer by that person, or a subsequent disclaimer of reliance by the person allegedly affected by the conduct. The contemporaneous disclaimer by the person engaging in the impugned conduct is likely to go to the characterisation of the conduct. A subsequent declaration of non-reliance by a person said to have been affected by the conduct is more likely to be relevant to the question of causation.
The issues of reliance and the effect of a contractual disclaimer in a claim of misleading or deceptive conduct were considered in Osborne v Iris Diversified Property Pty Limited [2014] NSWSC 1488, by Pembroke J, who said at [25]-[31]: [25] … Reliance is a question of fact that must be assessed by looking at the events, statements and context at the time of the transaction. As French CJ said in Campbell v Back Office Investments Pty Ltd [2009] HCA 25 at [31]: Where the impugned conduct comprises allegedly misleading pre-contractual representations, a contractual disclaimer of reliance will ordinarily be considered in relation to the question of causation. For if a person expressly declares in a contractual document that he or she did not rely upon pre-contractual representations, that declaration may, according to the circumstances, be evidence of non-reliance and of the want of a causal link between the impugned conduct and the loss or damage flowing from entry into the contract. (emphasis added) [26] There is a long history of sobering judicial statements to this effect. In Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 at 613, Wilcox J pointed out that the fact that a claimant states, in an agreement into which he claims to have been induced to enter by misleading conduct, that he was not so induced, may bear upon the question whether he should be believed in asserting that the misleading conduct was an inducement. [27] In Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (digest) 46-048, the Full Federal Court reversed the finding of reliance by the primary judge having regard to the clear written disclaimer of reliance by the claimant. In the process, Morling and Wilcox JJ observed that 'It will ordinarily be the position that the critical step for a representee is the entry by him or her into a legal commitment ...'. [28] In Poulet Frais Pty Ltd v Silver Fox Company Pty Ltd [2005] FCAFC 131, the Full Federal Court held at [102] It is sufficient to say that the authorities recognise that reliance is a question of fact and that the existence of an exclusion or qualification clause is relevant to a determination of the question whether an applicant has established reliance. [29] And in Culligan v ACO Pty Ltd [2009] NSWCA 290 at [89], the Court of Appeal held that the 'relevant principles as to the significance of contractual disclaimers are well established', citing Campbell v Backoffice Investments, Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd and Poulet Frais v Silver Fox. [30] What is implicit in all of these decisions is that, at the gritty ground level of fact-finding and credit assessment, a court may well be justified in any given case in concluding as a matter of probability that a subsequent assertion of reliance cannot sensibly survive a prior contemporaneous written acknowledgement of non-reliance. [31] For my part, I do not think that it is desirable, or even correct, to say that a claimant's disclaimer or formal acknowledgement of non-reliance will only have the effect of relieving a party from the consequences of his misleading conduct 'in rare cases': pace Burchett J in Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 at 51,590. The administration of justice will not be well served if courts are reluctant to give effect in an appropriate case to the clear words of a formal disclaimer or acknowledgement by a claimant. Persons who make allegations of misleading conduct, and contend that they relied on the allegedly misleading conduct, should not lightly be permitted to ignore the clear words of their own solemn disclaimer of reliance.

Consideration

In my opinion, the plaintiffs' claim that Mr Ibrahim engaged in misleading or deceptive conduct must fail for multiple reasons.
First, I am not satisfied that any of the alleged representations were made by Mr Ibrahim to Dr Kyatt during the Negotiation Period from early July 2022 to 23 February 2023. I have set out my consideration of each of them in turn below: 1. The Engadine Practice was being run and operated in the usual manner. The evidence demonstrates that Mr Ibrahim was not running and operating the Engadine Practice after 12 February 2018, at which time he sold a 51% controlling interest in the Engadine Practice to Advanced Imaging. As a result, through Advanced Imaging's 51% unit holding in the Engadine Imaging Trust and the terms of the Engadine Trust Deed, Dr Kyatt took over the total control of the day-to-day management of the Engadine Practice. When Dr Kyatt left for Jordan in October 2019, Mr Chaudhry took over management of the Engadine Practice and assumed primary responsibility for the Engadine Practice's day-to-day operations. Mr Ibrahim was neither a director nor, as I have found, an officer of EMIS at any relevant time. Further, on 12 July 2022 at 8:00pm, Mr Ibrahim sent a letter by email to Dr Kyatt and Mr Chaudhry which, amongst other things, required EMIS to vacate the Engadine Premises. In this context, I find it inherently implausible that Mr Ibrahim made any "business as usual" representation as alleged during the Negotiation Period. In any event, if such a representation had been made by Mr Ibrahim, as I have stated above, Dr Kyatt agreed in cross-examination that from the time that the New Lease was entered into in July 2022 and throughout all of the negotiations in the background which led to the execution of the Deed of Settlement, EMIS continued to occupy the Engadine Premises, conduct the Engadine Practice in the same way and pay rent month-to-month, such that it was, in fact, "business as usual" in the Engadine Practice. This factual matter brings an end to any alleged reliance by Dr Kyatt on the asserted representation. 1. Mr Ibrahim would continue to operate the Engadine Practice in the usual course after the New Lease had been assigned to EMIS. I reject this alleged representation for the same reasons I have stated above in respect of the first alleged representation. The evidence establishes that Dr Kyatt had the right to total control of the Engadine Practice under the Engadine Trust Deed and in October 2019, Mr Chaudhry took over management of and responsibility for the Engadine Practice. Dr Kyatt removed Mr Chaudhry as a director of EMIS on 22 February 2023, the day before the Deed of Settlement was executed. In my assessment of the facts, Mr Ibrahim did not operate the Engadine Practice and there is no basis for him making the representation to Dr Kyatt that the latter alleged he did. Even if he did, at the time that Dr Kyatt executed the Deed of Settlement he was well aware that Mr Ibrahim would not be operating the Engadine Practice in the usual course. In any event, on 20 December 2022 at 5:33pm, Dr Kyatt sent an email to Mr Gasic, part of which said, "How now he says he has nothing to do with Engadine only having shares". That is a statement directly inconsistent with what Mr Ibrahim is alleged to have said, being that he would continue to operate the Engadine Practice in the usual course. 1. Mr Ibrahim was not taking any steps to establish a Competing Business. 2. There was no Competing Business. 3. There would be no Competing Business. I will consider each of the third, fourth and fifth alleged representations together. There is no evidence that any of these representations were made by Mr Ibrahim. Further, any suggested reliance on such alleged representations is defeated by Dr Kyatt's own evidence in the contemporaneous documents and the answers he gave in cross-examination. As I have found, from the time of Mr Ibrahim's letter of 12 July 2022, sent by email at 8:00pm, Dr Kyatt was well aware that Mr Ibrahim wanted to take the business of the Engadine Practice and run a business in place of it. I have also found that Dr Kyatt's refusal to concede that this would or would not be a competing business next to the Engadine Practice is of no importance. I further found that Dr Kyatt knew that from this time the Engadine Practice was existentially threatened by a practice that Mr Ibrahim wished to establish in place of it. Dr Kyatt also regarded Mr Ibrahim as a thief (email of 21 December 2022 at 5:03pm), a hijacker (email of 10 November 2022 at 4:31pm) and a robber. I have already found that in February 2023 Dr Kyatt regarded Mr Ibrahim as all of those things. I have also found, noting that in cross-examination Dr Kyatt conceded that in February 2023 there was nothing to stop Mr Ibrahim and Engadine Medical Imaging from acting in a way that might hurt the best interests of EMIS, Dr Kyatt truly believed that he could not trust anything that Mr Ibrahim or his lawyers said and by that time he thought that Mr Ibrahim could not do business with Dr Kyatt and would not reciprocate in their business relationship. As I have also found, the statement made by Dr Kyatt in his email of 20 December 2022 at 5:33pm - "[w]ho knows what they plan next, it look like they are preparing for something else as they failed with this attempt" - directly reflected Dr Kyatt's state of mind that although he did not know the detail of what Mr Ibrahim was planning he thought it would be another "attempt" to take the business of the Engadine Practice from EMIS. In the context of these multiple statements and my findings about Dr Kyatt's state of mind, I consider that Dr Kyatt did not rely on these alleged representations about a Competing Business. 1. The value of EMIS and the Engadine Practice and the medical equipment forming part of the Engadine Practice was and would remain substantial. The sixth alleged representation appears to be derived from the letter dated 3 November 2022 from Bridges Lawyers to New South Lawyers in which an offer was made on behalf of Mr Ibrahim to accept a payment of $700,000 (plus GST) to MI No. 2 as consideration for MI No. 2's 30 units in the Engadine Imaging Trust and the assignment of the New Lease. But in the letter of 21 November 2022 from New South Lawyers to Bridges Lawyers responding to this offer, the complaint was made that it was extraordinary that the offer had been made without any valuation evidence supporting the "substantial" value of the business and equipment. In cross-examination Dr Kyatt agreed that he gave instructions to Mr Bazouni to send this letter and approved its contents before it was sent. In my assessment, the response demonstrates that there was no reliance by Dr Kyatt on the value which had been assigned to EMIS and the Engadine Practice in the offer. The fact that Dr Kyatt held total control of EMIS and the Engadine Practice in accordance with the terms of the Engadine Trust Deed also make it inherently unlikely that Dr Kyatt would have relied on the amount of the offer in the letter of 3 November 2022. 1. There will be no loss to EMIS by EMIS and Dr Kyatt consenting to the Release as defined in the Deed of Settlement. The seventh alleged representation is said to arise from the email of 15 February 2023 from Bridges Lawyers to New South Lawyers to which was attached a further (third) version of the draft Deed which reinstated the previous form of the clauses that had been amended by New South Lawyers, and contained the statement that "there is no loss to your client to include this release". This statement was made in the context of the back-and-forth negotiations which were being conducted by Mr Ibrahim and Dr Kyatt through their respective lawyers about what they each would agree in the final form of the Deed of Settlement. As I have found, by November 2022 onwards Dr Kyatt truly believed that he could not trust anything that Mr Ibrahim or his lawyers said to him and he considered Mr Ibrahim to be a "thief" as a person. Dr Kyatt had his own lawyers advising him on his position. There is no evidence that Dr Kyatt in fact relied on this statement and I do not consider that he did so.
On the subject of Dr Kyatt's reliance on the alleged conduct of Mr Ibrahim, I consider that Dr Kyatt had two further insurmountable obstacles in making that case.
First, Dr Kyatt gave evidence in cross-examination that the whole of his reliance in entering into the Deed of Settlement was placed on his lawyers. If that was indeed the case, it follows that Dr Kyatt did not rely on anything said to him by Mr Ibrahim or Mr Ibrahim's lawyers.
Secondly, adopting the considerations raised in Osborne and the authorities referred to in it, in my opinion Dr Kyatt's agreement to cl 13.2 of the Deed of Settlement (which states that "The Parties acknowledge that no reliance has been placed on any prior agreement, understanding or representation") lends further support to the conclusion that Dr Kyatt did not rely on any alleged representation made by Mr Ibrahim. I consider that I should give effect to this solemn disclaimer of reliance in the present case.
I also wish to address in general terms the matters that Dr Kyatt alleges Mr Ibrahim failed to disclose to him or remained silent about during the negotiation of the Deed of Settlement. Applying the principles set out in Miller and Wormald, I consider that it was not misleading or deceptive for Mr Ibrahim to stay silent about the detail of the plans he had for establishing a new radiology practice in Engadine in competition with the Engadine Practice. As I have found, Mr Ibrahim was not a director or an officer of EMIS. He did not owe any fiduciary or other duties to Dr Kyatt. Mr Ibrahim and Dr Kyatt were in a competitive position of equal bargaining power and were equally well resourced and advised by their respective lawyers. The circumstances were not such as to give rise to any reasonable expectation that Mr Ibrahim would reveal the plans that he had to Dr Kyatt. Mr Ibrahim was free to act in his own best interests, as was Dr Kyatt. Dr Kyatt had demonstrated that he was not a stranger to acting in his own best interests by effectively abandoning the Engadine Practice in October 2019 to move with his family to Jordan and then refusing to do any remote work for the Engadine Practice, instead choosing to do work for IDXT (from October 2019) and I-MED (from April 2021) for which he evidently was paid more money.
As a result, I do not consider that any silence by Mr Ibrahim concerning his involvement in the establishment of Focus Radiology Engadine was actionable by the plaintiffs as an instance of misleading or deceptive conduct.
I reject the claims of misleading or deceptive conduct against Mr Ibrahim, and I will not make any order for relief - including an order refusing to enforce any part of the Deed of Settlement - in favour of the plaintiffs under ss 236, 237 or 243 of the ACL. This means that the Deed of Settlement applies in accordance with its terms, including the release of Mr Ibrahim in cl 5.2, which amongst other things released Mr Ibrahim from any claims or loss in connection with any allegation that Mr Ibrahim was an officer of EMIS.

Confidential information claim against Mr Ibrahim

The plaintiffs allege in the FASOC at [19] that during the course of Mr Ibrahim managing and controlling the Engadine Practice and/or EMIS, he had access to confidential information including: 1. All communications with patients and doctors. 2. All communications with radiology equipment providers. 3. Each patient's and doctor's level of engagement with the Engadine Practice. 4. The activity of each business operating and comprising the Engadine Practice. 5. Information regarding pricing and costings. 6. Profit and loss information. 7. Referring doctors' names, addresses and contact information. 8. Patient names, addresses, and contact information. 9. The server system used by the Engadine Practice. 10. Engadine Practice turnover, total services provided and profitability data. 11. Sales activities, issues, opportunities, and strategies of the Engadine Practice. 12. Employee details of the Engadine Practice. 13. Cost and results of print advertising, online advertising, website, offers and promotions for the Engadine Practice. 14. Marketing and stationary resources used for the Engadine Practice. 15. Financial records and bank accounts used by the Engadine Practice.
Collectively these categories of information are defined in [19] of the FASOC as the "Confidential Information", which it is alleged in [20] of the FASOC was imparted to Mr Ibrahim in circumstances where he was aware that it had the nature of confidentiality.
The plaintiffs then plead in [21.1] of the FASOC that Mr Ibrahim owed a duty not to misuse the Confidential Information of EMIS and he had a duty in equity to that effect (which is defined as the "Duty of Confidentiality"). The conduct of Mr Ibrahim alleged in [25] of the FASOC to be in breach of the Duty of Confidentiality is that in the period commencing early 2019 and continuing, Mr Ibrahim without the knowledge, consent or authorisation of Dr Kyatt and/or EMIS: 1. Failed to exercise the option under the Lease on behalf of EMIS and permitted the Lease to expire in order for Engadine Medical Imaging to then obtain the New Lease of the Engadine Premises to the exclusion of EMIS, or alternatively assisting Mr Chaudhry to do this ([25.7]). 2. Induced or attempted to induce employees or contractors of EMIS, including those with whom he had regular dealings during his management of the Engadine Practice, or alternatively assisting Mr Chaudhry to do this ([25.8]). 3. Retained and used for the benefit of himself and others and other than for the benefit of EMIS the Confidential Information or alternatively assisted Mr Chaudhry to do this ([25.10]). 4. Canvassed, solicited and accepted approaches from customers of the Engadine Practice or alternatively assisted Mr Chaudhry to do this ([25.11]). 5. Established the Competing Business and used the Confidential Information and property for its benefit to the exclusion of EMIS and other than for the benefit of EMIS, or alternatively assisted Mr Chaudhry to do this ([25.12]).
Setting aside the alleged breaches in (1), (2) and (4) above which are not pleaded as having any connection to the use of Confidential Information, the particulars on which the plaintiffs rely to establish the breaches in (3) and (5) are those contained in [26.10] and [26.12] of the FASOC: 1. The particulars to [26.10] of the FASOC simply refer to the affidavit of Dr Kyatt sworn 24 April 2023 and the affidavit of Ameer Al-Khigani affirmed 24 April 2023 without any references, noting that further particulars may be provided after the processes of discovery, subpoenas, notices to produce and the exchange of witness evidence. 2. The particulars to [26.12] of the FASOC state: 1. The Plaintiffs refer to and repeat paragraphs 26.7 to 26.11 above. 2. Incorporating Engadine Medical Imaging on 21 March 2022. 3. Registering Engadine Medical Imaging for GST on 2 April 2022. 4. Conducting the Competing Business from the Engadine Premises at the cost of EMIS on and from April 2022, or alternatively assisted Mr Chaudhry to do this. 5. By no later than about 22 November 2022 causing Engadine Medical Imaging to procure a lease of the Focus Engadine Premises, or alternatively assisting Mr Chaudhry to do this. 6. On and from late 2022 designing, constructing and completing a new bespoke fit out of the Focus Engadine Premises for the Competing Business, or alternatively assisted Mr Chaudhry to do this. 7. By no later than 13 February 2023 causing the Focus Engadine Premises to appear as part of Focus Radiology on its website. 8. By no later than 5 April 2023 causing Engadine Medical Imaging to obtain the business name "Focus Radiology Engadine", or alternatively assisted Mr Chaudhry to do this. 9. Taking all records forming part of the Engadine Practice from the Engadine Premises and using them in the Competing Business, or alternatively assisted Mr Chaudhry to do this. 10. In March 2023 engaging person/s to stand outside the Engadine Premises and informing people that the Engadine Practice had moved to the Focus Engadine Premises, or alternatively assisted Mr Chaudhry to do this. 11. Affidavit of Ali Kyatt, sworn 24 April 2023. 12. Affidavit of Ameer Al-Khigani, affirmed 24 April 2023. 13. Further particulars may be provided after the processes of discovery, subpoenas, notices to produce and the exchange of witness evidence.
Aside from Mr Ibrahim's admissions that Engadine Medical Imaging entered into the New Lease and that Mr Ibrahim established the Competing Business, the allegations forming the breach of confidential information claim are either denied or not admitted by Mr Ibrahim ([19]-[26] of Mr Ibrahim's defence).
The written closing submissions of the plaintiffs with respect to this claim are faintly put. Apart from simply recording the pleading they say: So far as the financial information is concerned, there is no direct evidence of its use, such use may, however, be readily inferred from the fact that the competing business was established … because Mr Ibrahim knew its likely financial performance as a function of his knowledge of the financial performance of EMIS.
No oral closing submissions were made by the plaintiffs on this claim.
In my opinion, the claim for breach of confidential information is fatally flawed for numerous reasons.
First, the alleged Duty of Confidentiality is not pleaded to be owed by Mr Ibrahim to any particular person. The equitable duty of confidence is not owed at large; rather, it is owed to certain persons having imparted information in circumstances importing an obligation of confidence: Megarry J in Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47.
Secondly, the plaintiffs have failed to identify what precise information Mr Ibrahim is said to have (mis)used, having only done so in global terms. The need for the specific identification of the alleged confidential information in an action for breach of confidentiality has been repeatedly emphasised by the courts. In Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013)85 NSWLR 196; [2013] NSWCA 2, Barrett JA (with whom Meagher and Ward JJA agreed) at [159] said: The need for specificity in the identification of the information said to be confidential in respect of which relief is sought comes from the fact that the court must make an assessment of the quality of that information, that is, whether it is in truth of a confidential nature. An aspect of that inquiry may turn on whether the whole or some part has become the subject of general disclosure or notoriety. Precise delineation of the subject matter is accordingly essential. The task of a plaintiff, in this respect, is, in the words of Gummow J in Smith Kline & French Laboratories (Aust) Ltd v Dept of Community Services and Health (1990) 95 ALR 87 at 102, "to identify with specificity, and not merely in global terms, that which is said to be the information in question".
Thirdly, no consideration has been given in the claim to the fact that on 12 March 2020, Mr Ibrahim was given access to the financial information of EMIS in accordance with the right contained in cl 13.2 of the Engadine Trust Deed which provides that unit holders may inspect the financial statements and books of account in relation to the Engadine Imaging Trust.
Finally, the plaintiffs have failed to demonstrate how Mr Ibrahim is said to have used the Confidential Information and how such a use has caused loss to the plaintiffs or gain to Mr Ibrahim.
For these reasons, I reject the claim for breach of confidentiality by Mr Ibrahim.

Breaches of Corporations Act and fiduciary duties by Mr Chaudhry

Pleaded case

In the FASOC at [29], the plaintiffs plead that Mr Chaudhry has acted in breach of the duties in ss 180, 181, 182 and 183 of the Corporations Act and the following fiduciary duties: 1. to avoid and not pursue any situation or transaction in which there was or might be a conflict of interest with the duties owed to EMIS and/or Dr Kyatt's interests; 2. not to obtain any benefit, advantage or profit from the relationship with the Engadine Practice and/or EMIS, or from any opportunity or knowledge gained from it, for himself or another; and 3. to account to EMIS and/or Dr Kyatt for any benefit or gain obtained by him in breach of the duties in (1) and (2) above.
The plaintiffs plead in [29] of the FASOC that these breaches occurred in the period commencing early 2019 to date and involved Mr Chaudhry, without the knowledge, consent or authorisation of Dr Kyatt and/or EMIS, doing each of the following: 1. Failing to exercise the option under the Lease on behalf of EMIS and permitting the Lease to expire in order for Engadine Medical Imaging to then obtain the New Lease to the exclusion of EMIS, or alternatively assisting Mr Ibrahim to do this ([29.3]). 2. Inducing or attempting to induce employees or contractors of EMIS, including those with whom he had regular dealings during his management of the Engadine Practice, or alternatively assisting Mr Ibrahim to do this ([29.4]). 3. Retaining and using for the benefit of himself and others and other than for the benefit of EMIS, the Confidential Information, or alternatively assisting Mr Ibrahim to do this ([29.6]). 4. Canvassing, soliciting and accepting approaches from customers of the Engadine Practice, or alternatively assisting Mr Ibrahim to do this ([29.7]). 5. Establishing the Competing Business and using the Confidential Information and property for its benefit to the exclusion of EMIS and other than for the benefit of EMIS, or alternatively assisting Mr Ibrahim to do this ([29.8]). 6. Refusing and/or neglecting to sign documents to enable the New Lease to be assigned from Engadine Medical Imaging to EMIS ([29.9]).
In each case, there is no specificity in the FASOC as to which particular duty Mr Chaudhry is alleged to have breached by the relevant conduct.
In [30] of the FASOC, the plaintiffs provide a series of particulars to each of the allegations in [29]. In relation to the allegations in [29.3], [29.6], [29.7] and [29.9] the particulars that are provided at [30.3], [30.6], [30.7] and [30.9] respectively are the affidavit of Dr Kyatt sworn 24 April 2023, in two instances ([30.6] and [30.7]) in addition the affidavit of Ameer Al-Khigani affirmed 24 April 2023, and in each case "[f]urther particulars may be provided after the processes of discovery, subpoenas, notices to produce and the exchange of witness evidence".
The FASOC at [30.4] provides particulars to the allegations at [29.4], which concerns the inducing or attempted inducing of employees or contractors of EMIS. The particulars name each of those employees or contractors as Taylah Bampton, Jiawei Kevin Mei, Karen Davison, Amy Marzol and Matthew Dyball and then refers to the affidavit of Dr Kyatt sworn 24 April 2023, once again noting "[f]urther particulars may be provided after the processes of discovery, subpoenas, notices to produce and the exchange of witness evidence".
The FASOC at [30.8] provides particulars to the allegations at [29.8] in relation to the establishment of the Competing Business and the use of Confidential Information. Those particulars are: (a) The Plaintiffs refer to and repeat paragraphs 30.3 to 30.7 above. (b) Incorporating [Engadine Medical Imaging] on 21 March 2022. (c) Registering [Engadine Medical Imaging] for GST on 2 April 2022. (d) Conducting the Competing Business from the Engadine Premises at the cost of EMIS on and from April 2022. (e) By no later than about 22 November 2022 causing [Engadine Medical Imaging] to procure a lease of the New Premises. (f) On and from late 2022 designing, constructing [and] completing a new bespoke fit out of the New Premises for the Competing Business. (g) By no later than 13 February 2023 causing the New Premises to appear as part of Focus Radiology on the Website. (h) By no later than 5 April 2023 causing [Engadine Medical Imaging] to obtain the business name "Focus Radiology Engadine". (i) Taking all records forming part of the Engadine Practice from the Engadine Premises and using them in the Competing Business. (j) In March 2023 engaging person/s to stand outside the Engadine Premises and informing people that the Engadine Practice had moved to the New Premises. (k) Affidavit of Ali Kyatt, sworn 24 April 2023. (l) Affidavit of Ameer Al-Khigani, affirmed 24 April 2023. (m) Further particulars may be provided after the processes of discovery, subpoenas, notices to produce and the exchange of witness evidence.
The plaintiffs' closing submissions were severally lacking in detail in explaining how each of the alleged breaches of duties were established. There was certainly no attempt made to tie particular allegations to particular breaches of duty as one might expect in a case of this sort.
The allegations in [29] and [30] of the FASOC are denied in [23] of Mr Chaudhry's defence.

Statutory provisions

Sections 180, 181, 182 and 183 of the Corporations Act provide: 180 Care and diligence - civil obligation only Care and diligence - directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. Business judgment rule (2) A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they: (a) make the judgment in good faith for a proper purpose; and (b) do not have a material personal interest in the subject matter of the judgment; and (c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and (d) rationally believe that the judgment is in the best interests of the corporation. The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold. Note: This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence) - it does not operate in relation to duties under any other provision of this Act or under any other laws. (3) In this section: business judgment means any decision to take or not take action in respect of a matter relevant to the business operations of the corporation. 181 Good faith - civil obligations Good faith - directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 182 Use of position - civil obligations Use of position - directors, other officers and employees (1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 183 Use of information - civil obligations Use of information - directors, other officers and employees (1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

Authorities

In Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789, Black J at [408]-[409] set out the applicable principles for an alleged contravention of s 180 of the Corporations Act as follows: [408] … In Australian Securities Commission v Gallagher above at 52-53, Pidgeon J observed that the test whether the statutory duty of care and diligence had been contravened was an objective one, that a director need not exhibit a greater degree of skill in the performance of his or her duties than may reasonably be expected for a person of his or her knowledge and experience, in the relevant circumstances, and that it was relevant to consider the way in which the work of the company was distributed between its directors and other officers, provided that distribution was reasonable. In Australian Securities and Investments Commission v Adler above at [372] (upheld by the Court of Appeal in Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1), Santow J noted that the duties imposed by the section are essentially the same as directors' duties at general law; that, in determining whether a director had exercised reasonable care and diligence, the test was what an ordinary person, with the director's knowledge and experience, might be expected to have done in the circumstances if he or she was acting on his or her own behalf; and that the duty of care and diligence would require special vigilance in a situation of potential conflict, requiring scrupulous concern on the part of those officers who become aware of that transaction to ensure that any necessary corporate approvals are obtained and safeguards put in place. That decision has been cited with approval in recent case law, including Parker v Tucker [2010] FCA 263; (2010) 77 ACSR 525 at [70] per Gordon J and Diamond Hill Mining Pty Ltd v Huang Jim Mining Pty Ltd [2011] VSC 288; (2011) 84 ACSR 616 at [90] per Croft J. [409] At first instance in Australian Securities & Investments Commission v Vines above, Austin J in turn noted (at [1058]-[1060]) that the section adopted an objective standard of care measured by reference to what a reasonable person of ordinary prudence would do, which could be more demanding in circumstances where the individual has been appointed by reference to a particular skill possessed by that individual. The Court of Appeal in Vines v Australian Securities & Investments Commission above in turn observed (at [141]-[145]) that the standard of care applicable to the statutory duty is similar to the general law duty and it is not necessary to establish a higher order of negligence in order to establish breach of that duty. In Australian Securities & Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FLR 1, Austin J noted (at [7203]) that the statutory duty incorporates a minimum standard of diligence and (at [7242]) that the question in respect of a contravention of s 180(1) was whether a company officer failed to meet the standard of care and diligence, and this was to be assessed with regard to the circumstances existing at the relevant time, without the benefits of hindsight and with the distinction between negligence and mistakes or errors of judgment firmly in mind.
In Mudgee Dolomite & Lime Pty Ltd v Robert Francis Murdoch; In the matter of Mudgee Dolomite & Lime Pty Ltd [2020] NSWSC 1510, Black J at [100] added the following observation about the operation of s 180 of the Corporations Act: A question whether this duty is breached can only be answered by balancing the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question: Vrisakis v Australian Securities Commission (1993) 9 WAR 395 at 450; 11 ACSR 162 at 209; Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 1023 at [479], aff'd Cassimatis v Australian Securities and Investments Commission (2020) 376 ALR 261; (2020) 144 ACSR 107; [2020] FCAFC 52; Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 at [55]; Taxa Australia Pty Ltd v G Wang (2018) 130 ACSR 531; [2018] NSWSC 1412. …
In Colorado, Black J at [419]-[421] also conveniently summarised the principles relevant to an alleged contravention of ss 181 of the Corporations Act as follows: [419] Section 181(1) of the Corporations Act requires a director or other officer of a corporation to exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation, and for a proper purpose. In Chew v R (1991) 4 WAR 21; 5 ACSR 473 at 499, Malcolm CJ summarised the requirements of that duty as being that directors (1) must exercise their powers in the interests of the company, and must not misuse or abuse their power; (2) must avoid conflict between their personal interests and those of the company; (3) must not take advantage of their position to make secret profits; and (4) must not misappropriate the company's assets for themselves. [420] The case law is divided as to whether a contravention of s 181(1)(a) of the Corporations Act requires that it be established that a director engaged deliberately in conduct which he or she knew was not in the company's best interests: for example, Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574 at [245] per McColl JA (with whom Handley and Santow JJA agreed); Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd above at [150], varied on appeal on another point in V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd above. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 44 WAR 1, the Court of Appeal of the Supreme Court of Western Australia unanimously held that the corresponding general law duty to act in good faith in the company's best interests was subjective and would be complied with if directors honestly believed they acted in the company's best interests (at [923] per Lee AJA, at [1988] per Drummond AJA, [2027], at [2772], [2795] per Carr AJA). The alternative view is that a contravention of that limb of s 181 can be established if the law objectively considers that what the director did was improper, even if the director subjectively believed that he or she was acting in the company's best interests: see, for example, Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261 at 270-271; 6 ACLC 529 per King CJ; Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd [2011] VSCA 392; (2011) 86 ACSR 277 at [32]-[33]. The difference in those approaches does not seem to me to be material for the purposes of this case. The section may be contravened if a director promotes his or her personal interest in a situation where there is a conflict or real or substantial possibility of a conflict between those interests and the company's interests: Australian Securities and Investments Commission v Adler above at [735]; Parker above at [72]. [421] A contravention of s 181(1)(b) may also be established if a director does not exercise his or her powers for the purpose for which they were conferred or exercised them for an improper purpose, and the bulk of authority indicates that question is to be determined objectively: Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; 14 ACSR 109 at 137 per Ipp J (with whom Malcolm CJ and Seaman J agreed); Australian Securities and Investments Commission v Adler above at [738]-[739]; Parker above at [73]. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) above, the majority held that whether a director acts for an improper purpose, for the purposes of the corresponding general law duty, is determined objectively involving an assessment by the Court of what was reasonable in the circumstances (at [933] per Lee AJA, at [1988], [2027], [2073] per Drummond AJA). By contrast, Carr AJA held that the test whether directors had acted for an improper purpose was primarily subjective, although a decision would be voidable if directors acted in good faith for a purpose that was beyond their powers or for a collateral purpose (at [2923]).
In Colorado, Black J at [432]-[433] went on to summarise the principles relevant to the alleged contravention of ss 182 of the Corporations Act in the following way: [432] Section 182(1) of the Corporations Act prohibits a director, secretary, officer or employee of a corporation from improperly using his or her position to gain an advantage for himself or herself or someone else or cause detriment to the corporation. An objective standard is to be applied in determining what amounts to an "improper" use of position, and impropriety is established by "a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case": R v Byrnes above at 514-515 per Brennan, Deane, Toohey and Gaudron JJ; R v Towey (1996) 132 FLR 434; 21 ACSR 46 at 57 per Gleeson CJ (with whom Allen and James JJ agreed). In Doyle v Australian Securities and Investments Commission [2005] HCA 78; (2005) 227 CLR 18, the High Court observed (at [35]) that the relevant conduct would be improper if it amounted to: a breach of the standards of conduct that would be expected of a person in [the director's] position by reasonable persons with knowledge of the duties, powers and authority of his position as director, and the circumstances of the case, including the commercial context. [433] It is not necessary that the relevant director gain an advantage for himself or herself or cause a detriment to the company in order to establish a contravention of the section: Chew v R [1992] HCA 18; (1992) 173 CLR 626 at 633 per Mason CJ, Brennan, Gaudron and McHugh JJ. An objective test was also applied to determine whether this section was contravened in Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd above and, in Hydrocool Pty Ltd v Hepburn (No 4) [2011] FCA 495; (2011) 279 ALR 646, Siopsis J followed R v Byrnes, above, in holding that impropriety for the purposes of this section was objective and did not require subjective knowledge of impropriety and followed Chew v R, above, in holding that a contravention could be established although the desired object was not achieved. In Angas Law Services Pty Ltd (in liq) v Carabelas [2005] HCA 23; (2005) 226 CLR 507 at [32], Gleeson CJ and Heydon JJ noted that, although shareholders cannot release directors from the statutory duties imposed by, relevantly, s 229 (4) of the Companies (SA) Code (which was a predecessor to s 182 of the Corporations Act), their acquiescence in a course of conduct might affect the practical content of those duties and be relevant to a question of impropriety.
In Colorado, Black at [443] said this about the principles relevant to an alleged contravention of s 183 of the Corporations Act: … The Plaintiffs refer to the summary of the elements of a contravention of [s 183 of the Corporations Act] in Commissioner for Corporate Affairs v Green [1978] VR 505 at 510, approved by Santow J in Forkserve Pty Ltd v Jack [2000] NSWSC 1064; (2000) 19 ACLC 299 at [114]-[118], namely that a person was at the relevant time an officer of the corporation; he or she acquired the relevant information and did so by virtue of his or her position as officer of the corporation; and he or she made improper use of that information in order to gain directly or indirectly an advantage for himself or herself or for some other person or, alternatively, he or she made that improper use to cause detriment to the corporation. The prohibition in s 183 of the Corporations Act substantially corresponds with the equitable duty of confidentiality and would be contravened where a director used information that was confidential to a company to make a personal profit: for example, Rosetex Co Pty Ltd v Licata (1994) 12 ACSR 779 at 783; 12 ACLC 269 per Young J. A broader view of the section would allow its application to an improper use of information obtained by a director, irrespective of whether that information is confidential in equity: for example, in Grove v Flavel (1986) 43 SASR 410; 11 ACLR 161; McNamara v Flavel (1988) 13 ACLR 619; 6 ACLC 802.
The principles relevant to the fiduciary duties owed by a director of a company were also drawn together in Colorado, Black J at [351]-[357] stating: [351] The relevant principles are well-established. Broadly, the no conflict rule prohibits conduct where a fiduciary has a personal interest or duty owed to a third party which gives rise to a real and sensible possibility of a conflict. That rule and the no profit rule, which provides that a fiduciary cannot obtain a profit from its fiduciary position without the principal's consent, may overlap. [352] In Boardman v Phipps [1967] 2 AC 46 at 123; [1966] 3 All ER 721; [1966] 3 WLR 1009, Lord Upjohn (dissenting) observed (in a statement that may require clarification as noted in paragraph 353 below) that the: relevant rule for the decision of this case is the fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict. His Lordship also there formulated (at 124) the test for whether a conflict exists as whether a: reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict. [353] In Chan v Zacharia above at 198, Deane J (with whom Brennan and Dawson JJ agreed) referred to an observation of Sir Frederick Jordan in Chapters in Equity in New South Wales (6th ed 1947) at 115 that: It has often been said that a person who occupies a fiduciary position ought to avoid placing himself in a position in which his duty and his interest, or two different fiduciary duties, conflict. This is rather a counsel of prudence than a rule of equity; the rule being that a fiduciary must not take advantage of such a conflict if it arises. His Honour noted (at 198) that that formulation, even as an unqualified counsel of prudence, may be inappropriate in some circumstances and that: The equitable principle governing the liability to account is concerned not so much with the mere existence of a conflict between personal interest and fiduciary duty as with the pursuit of personal interest by, for example, actually entering into a transaction or engagement 'in which he has, or can have, a personal interest conflicting ... with the interests of those whom he is bound to protect' (per Lord Cranworth L.C., Aberdeen Railway Co v Blaikie Brothers [1854] 1 Macq 461 at p 471 or the actual receipt of personal benefit or gain in circumstances where such conflict exists or has existed. [354] In Hospital Products Ltd v United States Surgical Corp [1984] HCA 64; (1984) 156 CLR 41 at 103, Mason J also referred to Sir Frederick Jordan's observation and noted that: [t]he fiduciary's duty may be more accurately expressed by saying that he is under an obligation not to promote his personal interest by making or pursuing a gain in circumstances in which there is a conflict or real or substantial possibility of conflict between his personal interests and those of the persons whom he is bound to protect. That formulation places emphasis upon the fiduciary's conduct in making or pursuing a gain, and not merely upon his or her occupying a position where a conflict or potential conflict exists. [355] Deane J in Chan v Zacharia above also observed (at 198-199) that the equitable rule involved two themes and that: The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage. Notwithstanding authoritative statements to the effect that the 'use of fiduciary position' doctrine is but an illustration or part of a wider 'conflict of interest and duty' doctrine (see, eg, Boardman v Phipps at p 123; N.Z. Netherlands Society "Oranje" Inc v Kuys at p 1229), the two themes, while overlapping, are distinct. Neither theme fully comprehends the other and a formulation of the principle by reference to one only of them will be incomplete. Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain; or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. [356] In Warman International Ltd v Dwyer above at 557-558, the High Court similarly observed that: A fiduciary must account for a profit or benefit if it was obtained either (1) when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or (2) by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position. The stringent rule that the fiduciary cannot profit from his trust is said to have two purposes: (1) that the fiduciary must account for what has been acquired at the expense of the trust, and (2) to ensure that fiduciaries generally conduct themselves "at a level higher than that trodden by the crowd". The objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage. [357] In Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 at 199, McHugh, Gummow, Hayne and Callinan JJ formulated the no conflict rule as follows: ... [t]he fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is 'a conflict or a real or substantial possibility of a conflict' between personal interests of the fiduciary and those to whom the duty is owed.

Consideration

Mr Chaudhry was a director of EMIS at all relevant times from 26 September 2019 until 22 February 2023 when he was removed by Dr Kyatt. As a result, in that period he owed the duties contained in ss 180, 181, 182 and 183 of the Corporations Act as well as fiduciary duties to EMIS. In relation to the allegations put by the plaintiffs, in closing submissions the plaintiffs identified the duties contained in ss 181 and 182 of the Corporations Act as central to their case.
The essence of the allegations made by the plaintiffs against Mr Chaudhry is that he conspired with Mr Ibrahim to the exclusion of Dr Kyatt to deprive EMIS of its lease of the Engadine Premises, established Focus Radiology and set in train Focus Radiology Engadine.
As I have found, in May 2022 the rebranding process of the Engadine Practice as part of the rebranding of the Woonona Practice, the Warrawong Practice, the Warilla Practice and the Dapto Practice to Focus Radiology was embarked upon by Mr Chaudhry, unbeknownst to Dr Kyatt, and substantially with the assistance of Ms Coles. Further, I have inferred that while the rebranding process was continuing in July 2022, Mr Chaudhry knew that Mr Ibrahim was undertaking the step of obtaining the New Lease in the name of Engadine Medical Imaging because the rebranding process to Focus Radiology was being coordinated by Mr Chaudhry and included the Engadine Practice located at the Engadine Premises.
By inference, I have found that the rebranding to Focus Radiology was discussed and agreed by Mr Ibrahim and Mr Chaudhry prior to 11 August 2022 and that Mr Ibrahim took active steps to take the business of EMIS and to set up the competing business on and from July 2022 to the knowledge of Mr Chaudhry.
From July 2022 onwards, Dr Kyatt worked to recover the lease of the Engadine Premises for EMIS, entering into drawn-out negotiations with Mr Ibrahim through their respective lawyers, ultimately resulting in the Deed of Settlement between them. This resulted in the rebranding process for the Engadine Premises to Focus Radiology coming to a halt in some respects from August 2022 until around November 2022 when it was revived. This is evidenced by the email on 15 August 2022 from Ms Coles sent to Focus staff, copied to Mr Chaudhry, with the subject line 'Referrals / Film Bags / Appointment Cards', informing them that new referrals, film bags and appointment cards were going to be delivered to the clinics in the coming week but warning that their use at the Engadine Premises should be held off and that they should "continue to use the [EMIS] stuff until further notice".
There is no evidence that Mr Chaudhry had any involvement: 1. in the operations or management of Engadine Medical Imaging, of which Mr Ibrahim was sole director, secretary and shareholder; 2. in the steps taken in July 2022 by Mr Ibrahim to obtain the New Lease of the Engadine Premises in the name of Engadine Medical Imaging; 3. in the steps taken across September, October and November 2022 by Mr Ibrahim to obtain the Focus Engadine Lease of the Focus Engadine Premises; and 4. in or had any knowledge of Mr Ibrahim's negotiations of the draft Deed which ultimately resulted in the execution of the Deed of Settlement and the Deed of Assignment.
In relation to the allegation that Mr Chaudhry failed to exercise the option under the Lease on behalf of EMIS and permitted the Lease to expire in order for Engadine Medical Imaging to then obtain the New Lease to the exclusion of EMIS, or alternatively assisted Mr Ibrahim to do this, there is evidence that Mr Chaudhry did act to renew the Lease. Firstly, Mr Chaudhry sent an email on 18 August 2021 to All Star Property Group expressing a desire to renew the Lease. Secondly, he sent an email on 25 November 2021 to Mr Inayat asking him if he had sent an email to renew the Lease, following which, on Mr Chaudhry's instructions, Mr Inayat emailed All Star Property Group expressing a desire to renew the Lease. Thirdly, I have inferred that at that time, Mr Chaudhry would have believed that the Lease would be renewed, having requested Mr Inayat to inform the agent of that request and having seen that Mr Inayat had done as he instructed. As I have said above, there is no evidence that Mr Chaudhry was involved in the steps taken in July 2022 by Mr Ibrahim to obtain the New Lease of the Engadine Premises in the name of Engadine Medical Imaging. In my opinion, the plaintiffs have failed to demonstrate that Mr Chaudhry breached his duties owed to EMIS as a director of EMIS in relation to the failure to renew the Lease and the granting of the New Lease to Engadine Medical Imaging.
In relation to the allegation that Mr Chaudhry induced or attempted to induce employees or contractors of EMIS, presumably to leave EMIS and join Engadine Medical Imaging, or assisted Mr Ibrahim to do this, the only evidence of steps being taken to have employees of EMIS leave and join Engadine Medical Imaging involving Mr Chaudhry is in March 2023, by which time Mr Chaudhry was no longer a director of EMIS and did not owe any duties to EMIS. Once Mr Chaudhry was removed as a director of EMIS on 22 February 2023, he no longer owed any duties to EMIS. Accordingly, any involvement Mr Chaudhry had in the staff at the Engadine Practice resigning and accepting offers of employment at Focus Radiology Engadine is not something which is actionable by EMIS.
In relation to the allegation that Mr Chaudhry retained and used for the benefit of himself and others and other than for the benefit of EMIS, the Confidential Information, or alternatively assisted Mr Ibrahim to do this, this allegation essentially fails for the same reasons as I have stated above for the failure of the confidential information claim against Mr Ibrahim, being the failure to identify what precise information Mr Chaudhry is said to have used the failure to demonstrate how Mr Chaudhry is said to have used the Confidential Information, and how such a use has caused loss to the plaintiffs or gain to Mr Chaudhry.
In relation to the allegation that Mr Chaudhry canvassed, solicited and accepted approaches from customers of the Engadine Practice, or alternatively assisted Mr Ibrahim to do this, there is simply no evidence to support this allegation.
In relation to the allegation that Mr Chaudhry established the Competing Business and used the Confidential Information and property for its benefit to the exclusion of EMIS and other than for the benefit of EMIS, or alternatively assisted Mr Ibrahim to do this, there is no evidence that Mr Chaudhry had any involvement in establishing the Focus Engadine Practice which was established by Mr Ibrahim as the sole director, secretary and shareholder of Engadine Medical Imaging. Further, the allegation about the Confidential Information essentially fails for the same reasons as I have stated above for the alleged breach arising from use of the Confidential Information.
In relation to the allegation that Mr Chaudhry refused and/or neglected to sign documents to enable the New Lease to be assigned from Engadine Medical Imaging to EMIS, there is no evidence that he did so. Dr Kyatt admitted that he did not ask Mr Chaudhry to do so and Mr Inayat was not called as a witness to say that he had asked Mr Chaudhry to do so. The Deed of Assignment was signed on 23 February 2023 on behalf of EMIS by Dr Kyatt. Mr Chaudhry had been removed as a director of EMIS the day before.
In my opinion, all of the pleaded allegations against Mr Chaudhry to the effect that he breached his statutory and fiduciary duties as a director of EMIS fail.

ISSUE 3: RELIEF

In light of the findings that I have made that none of the claims against Mr Ibrahim and Mr Chaudhry have been established it is not strictly necessary for me to make any findings about any relief that I might have granted to the plaintiffs if I had upheld one or more of their claims.
I do, however, want to make these comments about the way the case in relation to monetary relief was made, noting that the trial was held to deal with all issues of liability and relief.
I was not provided with any expert evidence on behalf of the plaintiffs to assist me in establishing the alleged value of EMIS but instead was asked to infer it from: 1. the amount paid in 2018 by Dr Kyatt for 51% of the Engadine Practice; plus 2. a further amount commensurate with the profit lost by EMIS.
I consider that this would be a highly unsatisfactory way in which to proceed to grant monetary relief in this case. Informing me that on 12 February 2018, Dr Kyatt paid $319,218.91 to Mr Ibrahim to acquire a 51% controlling interest in the Engadine Practice on behalf of Advanced Imaging tells me nothing about the value of those units in the Engadine Imaging Trust in 2024. Further, giving me profit and loss figures for EMIS in 2019, 2020, 2021 and 2022 does not provide me with any reliable indicator of what those units would be worth in 2024.
I agree with the closing submissions of Mr Ibrahim and Mr Chaudhry. The plaintiffs did not demonstrate by admissible evidence any loss which could support the claims against Mr Ibrahim and Mr Chaudhry.

ORDERS

For the reasons set out above, the plaintiffs have failed in their claims against Mr Ibrahim and Mr Chaudhry. They have also abandoned their claims against Engadine Medical Imaging, Focus Radiology Dapto, Focus Radiology Warrawong, Dapto Imaging and Warrawong Imaging. Accordingly, I propose to make the following orders: 1. The further amended statement of claim filed 18 July 2024 is dismissed. 2. The plaintiffs are to pay the costs of the defendants.

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: 06 November 2024

ACL, the Trade Practices Act 1974(Cth)

Trade Practices Act 1974(Cth)

Competition and Consumer Act 2010(Cth)s 131, Schedule, sch 2

Corporations Act 2001(Cth)s 9AD, 180, 181, 182, 183

td (1991) 171 CLR 506; [1991] HCA 12 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Mudgee Dolomite & Lime Pty Ltd v Robert Francis Murdoch; In the matter of Mudgee Dolomite & Lime Pty Ltd [2020] NSWSC 1510 Osborne v Iris Diversified Property Pty Limited [2014] NSWSC 1488 Payne v Parker [1976] 1 NSWLR 191 Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465; [2012] HCA 18 Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") (1924) 20 Ll L Rep 140 SSABR Pty Ltd v AMA Group Limited [2024] NSWCA 175 Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013) 85 NSWLR 196; [2013] NSWCA 2 Touma v Highfields Australia Pty Ltd [2024] NSWCA 160 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55 Watson v Foxman (1995) 49 NSWLR 315 White Constructions Pty Ltd v PBS Holdings Pty Ltd [2020] NSWCA 277 Wormald v Maradaca Pty Ltd [2020] NSWCA 289 Category: Principal judgment Parties: Engadine Medical Imaging Services Pty Ltd ATF the Engadine Unit Trust (First Plaintiff) Ali Kyatt (Second Plaintiff) Advanced Imaging Pty Ltd ATF the Kyatt Family Trust (Third Plaintiff) Mena Ibrahim (First Defendant) Engadine Medical Imaging Pty Ltd (Second Defendant) Nabeel Chaudhry (Third Defendant) Warilla Diagnostic Imaging Pty Ltd ATF Warilla Diagnostic Image Trust trading as Focus Radiology (Fourth Defendant) Focus Radiology Dapto Pty Ltd (Fifth Defendant) Focus Radiology Warrawong Pty Ltd (Sixth Defendant) Dapto Imaging Pty Ltd ATF the Dapto Medical Imaging Unit Trust (Seventh Defendant) Warrawong Imaging Pty Ltd ATF the Warrawong Medical Imaging Unit Trust (Eighth Defendant) Representation: Counsel: M Pesman SC and M Klooster (Plaintiffs) M Condon SC and M Collins (First, Second, Seventh and Eighth Defendants) G Sirtes SC and F Di Lizia (Third, Fourth, Fifth and Sixth Defendants)

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