The Reasoning of the Primary Judge in Lantrak I
180 After a difficult upbringing, Mr Yammine worked as a labourer for his cousins in a large excavation company, Moits, in Sydney. The primary judge referred to Mr Yammine learning how that business operated, and perceiving that there was a gap in the market for transport logistics. After marrying in about 2012, Mr Yammine and his wife, Ms Mikhael, began a logistics business called "Nojo", an acronym of their first names. Nojo provided trucks to carry excavated material to landfill sights and its first customer was Moits. In late 2015, Mr Yammine commenced trading through Recycling and Transport Solutions Pty Ltd (RTS), a new business providing road haulage of earth waste, soil and other materials: [9]. I should add that a separate company, RTS Plant & Equipment Pty Ltd (RTS Plant & Equipment) owned the trucks.
181 Mr Liemant and his brother, Mark, conducted the Lantrak Group, which operated prior to 2016 in Victoria and Queensland. The primary judge referred to the Lantrak Group's predominant business being to dispose of volumes of material for its customers, to act as broker in the civil construction industry for dirt and clean fill materials and to undertake land reclamation projects. Mr Liemant was in his mid-fifties when he met Mr Yammine, who was then in his thirties. The primary judge referred to Mr Liemant as being an experienced, astute and successful businessman: [11]. Unlike RTS, Lantrak used trucks owned by external contractors.
182 For the year ended 30 June 2016, the unaudited financial statements of RTS showed that it had gross receipts of about $12.65 million and recorded a net profit before tax of about $770,000: [14]. In October or November 2016, Mr Yammine met with the two Liemant brothers in Sydney, having learned that the Liemant brothers were seeking to expand their business into the Sydney market: [15]. That was followed by a discussion in a Melbourne restaurant, attended also by Mr Yammine's accountant, Mr Kalil, and his associate, at which they struck a deal with the following elements: first, RTS's business would be transferred to a Lantrak-branded company, which in the event was Lantrak NSW Pty Ltd (Lantrak NSW); second, Gary and Mark Liemant would pay Mr Yammine $5 million for 50% of his business, $2 million of which was payable immediately and the balance "by way of earnout": [16]. It was agreed that the shareholding in Lantrak NSW would be held as to 50% by NJA as trustee of the NJA Family Trust, and 50% by Lantrak Holdings: [3]. That agreement never completed, Lantrak Holdings did not purchase RTS, and Mr Yammine did not receive $5 million: [16]. That first deal was never recorded in a written contract: [3]. Lantrak NSW was in fact incorporated on 20 December 2016 with the shareholding held as had been agreed: [3]. Mr Liemant and Mr Yammine became directors of Lantrak NSW on that date.
183 The primary judge found that, in entering into that substantial transaction without formal documentation, Mr Liemant understood that Mr Yammine had had a limited formal education and that he trusted Mr Liemant, and he later understood that Mr Yammine regarded him as a "father figure": [19]-[20]. The primary judge found that at this time, it was apparent to Mr Liemant, and through him the Lantrak Group, that Mr Yammine was very trusting of him, both generally and in their business dealings, and that Mr Liemant knew that Mr Yammine took him at his word because they had "broken bread": [22]. The primary judge referred to the relationship as a "close or trusting business relationship", but also described it as "non-fiduciary": [1]. It is apparent from the primary judge's reasoning that the parties did in fact attempt to reduce the 2016 agreement to writing, and his Honour referred to the delay in finalising the transaction documents: [22]. Indeed, the primary judge referred to the solicitor for the Liemant Parties corresponding about drafts of contractual documents to record the transaction, and expressing concern in an email of 1 March 2017 with the time that that was taking. Mr Yammine's solicitor responded on 20 March 2017 with substantive corrections to the then draft and proposed a differently expressed transaction which remained undocumented: [26]-[27].
184 The primary judge summarised the matter in terms that, because of Mr Yammine's trust in Mr Liemant's integrity, Mr Yammine had given the Liemant Parties part of his business by transferring all of RTS's operations to Lantrak NSW and then continued to run and expand that business without the Liemant side of the first "deal" actually paying for it: [23]. The primary judge referred to Mr Liemant acknowledging in cross-examination that Mr Yammine had been promised $5 million for a half-share of RTS's business and, in economic terms, only ever received $1 million in cash, yet Mr Yammine continued in the relationship without questioning why he had not been paid what had been agreed: [23].
185 The primary judge referred to Mr Yammine having confirmed in his evidence that he made no claim in this proceeding that he had not been paid $5 million (a matter which, it will be seen, is central to the Lantrak II appeal), and gave evidence of his understanding that Gary and Mark Liemant had paid him $2 million as the first payment for RTS's business so that (assisted with finance from the Lantrak Group's bank, Westpac Banking Corporation (Westpac)) he could use that money to buy a fleet of trucks from a landscape gardening business. The primary judge referred to Mr Yammine's evidence that, to his understanding, the $2 million payment was not a loan but was so described because there was no contract, and that the payment had occurred in about May 2017 after the formation of Lantrak NSW: [24]. The primary judge referred to Mr Yammine's understanding that the $3 million balance of the purchase price would be paid to him out of the profits of Lantrak NSW in priority to the distribution of profits equally between the shareholders: [25]. The primary judge referred to Mr Yammine's explanation of this aspect of the transaction as manifesting Mr Yammine's "unsophisticated and trusting approach to comprehension of his dealings with Gary and Mark Liemant": [24].
186 The primary judge concluded that the evidence of the parties' relationship and dealing to this point demonstrated Mr Yammine having "a degree of commercial generosity and a preparedness (of which Mr Liemant, as a savvy, experienced businessman, was fully cognisant) to rely on what he believed was a 'deal' that Mr Liemant (and the Lantrak group) would 'honour'": [28]. The primary judge referred to the mutual approach to the relationship based on "breaking bread" or shaking hands, and Mr Yammine trusting Mr Liemant, as a "critical component in the evaluation of what occurred subsequently": [28].
187 The primary judge referred to the business of Lantrak NSW growing rapidly, and attributed that to Mr Yammine's energetic exertions in securing more custom: [29]. However, from early 2017 and throughout 2017, Mr Liemant expressed concern to Mr Yammine about the aged trade debtors' position of the new business: [29]-[30]. On 17 November 2017, the Lantrak Group's chief financial officer, Ms Sumanada, sent an email to Mr Pinto, a qualified accountant who was Mr Yammine's personal assistant, attaching the then trade debtors' ledger which showed that there was then owing about $2.8 million over 90 days past due and another amount of about $1.8 million that would become over 60 days past due on 30 November 2017: [31]. By 22 January 2018, Ms Sumanada was seeking an indication from Lantrak NSW's in-house accountant of when it expected to receive payment of over $3.08 million outstanding for over 90 days, and $3.03 million that would become over 90 days past due by 31 January 2018: [33].
188 On 7 May 2018, Mr Liemant met with Mr Yammine and told him that the Lantrak Group needed to extend its Westpac facility for trade debtor finance of Lantrak NSW because of the delays in recovering what was due to it: [34]. As a result of that meeting, Mr Yammine instructed his then solicitor, Mr Nehme of Fortis Law Group, to write a letter dated 10 May 2018 to Lantrak Holdings. The letter referred to the meeting of 7 May 2018, the need to extend the Westpac facility and NJA's willingness (as 50% shareholder in Lantrak NSW) to negotiate for the sale of its shares to Lantrak Holdings, and Mr Yammine's resignation as a director. The primary judge referred to the letter proposing that there be a term sheet giving Lantrak Holdings an exclusive right, exercisable by no later than 30 June 2018, to agree and execute transaction documents including a share sale agreement: [35]. The primary judge referred to Mr Nehme's insistence on his letter representing the only basis for the negotiation of a formal contractual arrangement and that the letter was not intended to be binding, as being "in contrast to Mr Yammine's personal approach to negotiations". Senior counsel for the Liemant Parties on the appeal drew attention to the fact that the letter stated that that proposal was made on instructions, having referred to Mr Nehme's clients being NJA and Mr Yammine, and observed (in my view correctly) that the supposed contrast was at odds with the fact that Mr Nehme's insistence on formality was expressly on the instructions of his clients. In any event, the primary judge found that Mr Yammine understood that if the share sale were to proceed, there would need to be formal documentation, which normally lawyers and accountants would draft: [36].
189 The primary judge found that Mr Liemant had two principal concerns at this time: first, his expectation that the Lantrak Group would struggle to fund an acquisition of Mr Yammine's interest, and second, that he felt the business depended on Mr Yammine as the person to get sales and he was concerned about Mr Yammine not being in the business: [37]. Mr Liemant told Mr Yammine that, if he sold his shares, Mr Liemant wanted Mr Yammine to continue being involved in the business: [37]. Subsequently, negotiations for a share sale commenced in which Mr Touma of Lionheart Legal acted as the Yammine Parties' solicitor, and Mr Pinto assisted Mr Yammine: [38]. The primary judge referred to the Yammine Parties accepting that their failure to call Mr Touma warranted the primary judge inferring that Mr Touma's evidence would not have assisted the Yammine Parties' case: [38].
190 The primary judge then referred to Mr Liemant's evidence that in about mid-2018, Westpac indicated that it was no longer prepared to finance Lantrak NSW, in the context of Mr Yammine saying that he wanted to sell his half share: [39]. The primary judge found that that led, in late May 2018, to Mr Liemant approaching corporate finance advisers, O'Connell Partners, who suggested that Alpha Group might wish to assist in him and Mark Liemant acquiring 100% of Lantrak NSW, resulting in Mr Yammine not having any continuing ownership interest. Mr Tromboli was an adviser for Alpha Group. The primary judge found at [40] that Mr Tromboli had the following documents in about late May or early June 2018 to assist in the work Alpha Group was undertaking:
(a) an unaudited summary of the Lantrak Group's results for the year ended 30 June 2016 (which excluded Lantrak NSW) showing total receipts of about $237.5 million and a net profit before tax of about $9.8 million;
(b) a similar unaudited summary of the Lantrak Group's results for the year ended 30 June 2017 showing total receipts of about $335 million, including about $24.9 million for Lantrak NSW, with a net profit before tax of about $21.825 million, including about $1.75 million for Lantrak NSW and no provision for impairment or bad or doubtful debts;
(c) a comparable unaudited summary of the Lantrak Group's results for the seven months to 31 January 2018, showing total receipts of about $220 million, including about $33 million for Lantrak NSW, and a net profit before tax of about $10.4 million, including about $995,000 for Lantrak NSW; and
(d) an internal Lantrak Group balance sheet as at 31 March 2018 showing net assets of about $41.86 million.
The primary judge also noted that Lantrak NSW's unaudited financial report for the year ended 30 June 2017 reported similar figures to those included in respect of Lantrak NSW in the Lantrak Group's above summary of the company's results for that financial year: [41].
191 The primary judge referred to a meeting on 26 July 2018 at the offices of PricewaterhouseCoopers (PwC) in Sydney between Mr Yammine, Mr Pinto, Gary and Mark Liemant and Mr Dean of PwC. The primary judge referred to this as a high level discussion to explore possibilities, and Mr Dean suggested that the Liemant brothers should deal with PwC's Melbourne office as that was where they were located. Mr Liemant took up that suggestion: [42].
192 On 21 August 2018, Gary and Mark Liemant, together with Mr Jeraj and Mr Diamond of PwC, met at PwC's Melbourne offices with Mr Yammine, Mr Pinto and Mr Touma. The primary judge referred to Mr Yammine's side reiterating his interest in selling his share of the business and the conversation turned to how a value could be ascribed to it. Mr Jeraj led the discussion in which the primary judge found that Mr Jeraj, Mr Diamond and Mr Pinto agreed that a multiple of five times Lantrak NSW's earnings before interest and tax (EBIT) was an appropriate means of arriving at a value: [43]. The primary judge also referred to Mr Liemant's evidence that valuation was Mr Jeraj's area of expertise and that Mr Jeraj told the meeting that businesses of the nature of Lantrak NSW typically sold for a multiple of five times EBIT less debt: [44]. Mr Liemant's evidence was that Mr Yammine said that he did not understand what was involved in the concept of "less debt" and, after Mr Jeraj explained what he meant, Mr Yammine said that he would ensure that there was no debt at the time of sale: [44].
193 The primary judge referred to the Lantrak Group using a Pronto accounting system to produce management reports, and before the meeting Mr Yammine had seen the Pronto profit and loss report of Lantrak NSW for the 12 months ended June 2018 that was created on 2 August 2018 (Exhibit B). That report recorded total sales of about $63.1 million, a gross profit of about $7.05 million and a net profit of about $1.727 million: [45].
194 The primary judge said that Mr Yammine thought that EBIT or earnings before interest, tax, depreciation and amortisation (EBITDA) meant something like net profits, but had never heard of the concepts of EBIT and EBITDA before this meeting: [46]. The primary judge said that Mr Liemant did not recall Mr Yammine referring to the $7 million as gross profit at the meeting and asserted that "it was quite clear in that meeting that it was $7 million EBIT". That is, I interpolate, Mr Liemant's memory of what Mr Yammine was asserting, because the answer by Mr Liemant that "it was quite clear in that meeting that it was 7 million EBIT" was in response to the question: "I suggest to you that Mr Yammine did raise the topic of the gross profit figure at the PwC meeting": T474.44-47. The primary judge referred to Mr Yammine saying that, on the basis of either Exhibit B or a similar Pronto report for Lantrak NSW used at the meeting, he thought that the business would easily achieve an EBIT of $7 million for the 2019 financial year: [47]. The primary judge then referred to an extract of Mr Yammine's evidence on that topic, in which Mr Yammine agreed that he was the one who suggested that five times seven was "about the right number", with the seven coming from the gross profit in the Pronto system: [47]. The primary judge concluded that Mr Yammine's less than coherent explanation revealed Mr Yammine's obvious lack of financial literacy, including understanding of accounting concepts such as EBIT: [48]. The primary judge said that Mr Yammine appeared to have understood that EBIT and gross profit were commensurable when he referred to the figure of $7 million, and that the primary judge did not think that anyone at the meeting understood Mr Yammine as being capable of making a reliable prediction of Lantrak NSW's EBIT or EBITDA (as opposed to profitability) for the purposes of the negotiation: [48].
195 I read those statements by the primary judge at [48] as a reference to Mr Yammine's misunderstanding of the concept of EBIT, in that Mr Yammine thought that the concept was based on gross profit, rather than the conventional meaning of EBIT being the net profit for a period without deducting payments for interest and tax. Further, I read the primary judge's finding as to the views of others present at the meeting concerning Mr Yammine's financial ability as meaning that the others present at the meeting had a proper understanding of the concept of EBIT, namely that it was based on net profits not gross profits. Although the primary judge did not refer to it, the cross-examination of Mr Pinto (Mr Yammine's personal assistant and a qualified accountant) demonstrated that Mr Pinto understood that a calculation of EBIT based on Exhibit B began with the net profit of about $1.7 million, and then adding back interest (or finance expenses) and tax: T292.34-297.15. Exhibit B records finance expenses in the amount of $539,199.80, and tax (if one includes fringe benefits tax) of $97,498.14, thereby producing an EBIT of $2,364,185.43. There is no evidence that those present at the PwC meeting made that calculation, but the primary judge's reasoning, which in my view reflects the evidence, is that Mr Yammine was alone in thinking that the EBIT figure was about $7 million. I note at this point that five times an EBIT of $2,364,185.43 is $11,820,927.15, which is relatively close to the purchase price of $13 million struck between the parties on 12 November 2018.
196 The primary judge said that everyone at the meeting used the same financial information, and the Liemant side had experienced accountants, including Mr Jeraj from PwC (whom the primary judge said was not called and whose evidence, it was inferred, would not have assisted the Liemant Parties' case) to assist them, and Mr Yammine had Mr Pinto, who was also an accountant, to assist him: [49]. The primary judge then found at [49] as follows:
The meeting discussed the potential value of Lantrak NSW as five times the EBIT derived from exhibit B, or a similar Pronto print out, being $35 million, which they all could then use as a basis for the negotiations. Mr Liemant understood at this meeting that Mr Yammine was expecting to receive a price of $35 million for his interest in Lantrak NSW based on what he and his expert advisors from PwC had calculated was an EBIT figure of $7 million. Mr Pinto also understood this, as (I infer), did Mr Touma.
197 With great respect to his Honour, that reasoning wrongly attributes to the others present at the meeting (including experts from PwC) the fundamental and elementary error of Mr Yammine in thinking that EBIT and gross profit were commensurable, and that EBIT was therefore in the amount of $7 million, being the very error which the primary judge had found at [48] was Mr Yammine's idiosyncratic view. The evidence does support the proposition that those present at the meeting discussed the potential value of Lantrak NSW as five times the EBIT derived from Exhibit B or a similar document, but it was only Mr Yammine who thought that that would amount to $35 million, because he was the only one who thought that the EBIT figure was $7 million. Mr Liemant understood that Mr Yammine was expecting to receive a price of $35 million, because Mr Yammine had been asserting that the EBIT figure was $7 million. But there is no evidence to suggest that Mr Liemant shared that misunderstanding or that Mr Liemant thought that a figure in the order of $7 million for EBIT or $35 million for the value of Lantrak NSW was in any way justified. The reasoning of the primary judge at [49] becomes an important element in the primary judge's later reasoning, because his Honour proceeded on the basis that there was a consensus among those present at the PwC meeting to the effect that the appropriate EBIT figure was $7 million and the appropriate valuation was understood by everyone to be $35 million. (At one point in his argument, senior counsel for the Liemant Parties drew attention to the fact that the primary judge had given judgment 12 months after hearing the evidence, but that argument was not further developed.)
198 I also note that, although the proposal concerned the purchase of the 50% shareholding in Lantrak NSW held by NJA, the discussions proceeded on the basis that the price would reflect the value of the whole of Lantrak NSW's business. That oddity appears to stem from the fact that the 2016 agreement for the purchase of RTS by Lantrak Holdings had not been completed, although the shares in Lantrak NSW had been issued as to 50% to each of NJA and Lantrak Holdings. Therefore the parties approached the new proposal on the basis that the Liemant Parties were effectively acquiring the whole of the issued shares in Lantrak NSW. As the value of Lantrak NSW had increased since late 2016, that approach was commercially very beneficial to the Yammine Parties, although the primary judge made no reference to that benefit.
199 The primary judge then said that during the meeting, Mr Liemant told Mr Yammine and the others that the Liemant side would need to obtain funding to enable an acquisition of Mr Yammine's interest in Lantrak NSW, and that there would be a need for due diligence to be done because the Liemant side had to raise capital: [50]. Mr Jeraj also said that the Liemant side would need to conduct due diligence on the business of Lantrak NSW. The primary judge said that Mr Yammine was unhappy about this, saying that they already knew what the business's financial position was because they did the back office work: [50]. The primary judge said that the meeting also discussed a possible value of between $12.5 million and $15 million for the trucks owned by Mr Yammine's interests that Lantrak NSW used in its business, but at that point Mr Liemant's evidence was that his side was not then interested in acquiring the trucks: [51]. On 22 August 2018, Messrs Yammine, Touma, Liemant and Jeraj met again to further the discussion, but the primary judge made no findings about what was said at that meeting: [52].
200 On 27 August 2018, Mr Touma, being the solicitor for Mr Yammine, emailed a first draft of the proposed heads of agreement to various parties, including Mr Jeraj and Mr Diamond of PwC. The primary judge summarised the draft as follows at [53]. The draft provided that the price of NJA's shares in Lantrak NSW was $35 million, the price for the business, inventory and trucks was $15 million and $3 million was the price of the units held by Ari Investments Aust Pty Ltd (Ari) as trustee for the Ari Investments Family Trust in the McGraths Hill Property Unit Trust, which owned the land at McGraths Hill where Lantrak NSW's office was located. The parties were to exchange finalised transaction documents by 6 September 2018. The total consideration in the first draft was $53 million, payable in three instalments being $23 million on 8 October 2018, $10 million on 1 March 2019 and $20 million on 2 December 2019. Mr Yammine was to repay $3 million in loans to Mr Liemant and Mr Yammine would be engaged to provide consultancy services at $10,000 plus GST per week until 2 December 2019. The draft provided that it was not binding and did not create any legal obligations.
201 The primary judge then referred to an email on 28 August 2018 by Ms Sumanada to Mr Liemant providing a draft budget for Lantrak NSW for the year ended 30 June 2019. The primary judge said that this projected total income of about $99.7 million, finance expenses of about $890,000 and a net profit before tax of about $6.2 million, so that if the finance expenses were added back to the net profit before tax to give an EBIT calculation, that would equate to about $7.1 million: [54]. The primary judge then said that on Lantrak NSW's own internal projections, the $7 million EBIT figure, which the primary judge found the participants had discussed at the meeting of 21 August 2018, was at that time realistic: [54]. The primary judge referred to Mr Liemant's evidence as to being sceptical about that forecast, saying that Lantrak NSW had never achieved a 6% in profit and the profit was more like 2%, but the primary judge said that he did not believe that evidence: [55]. The primary judge's reason for rejecting Mr Liemant's evidence was said to be "because throughout the negotiations of the heads of agreement neither he, nor others on the Liemant side, including their expert in valuation, Mr Jeraj, conveyed any substantive doubt about, or sought to resile from, the use of the $7 million EBIT figure or the $35 million valuation of the shares": [55]. I have already discussed the fundamental error by the primary judge in [49] in attributing to others at the PwC meeting the idiosyncratic error of Mr Yammine in thinking that EBIT was derived from gross profit rather than net profit. The primary judge said that if Mr Liemant had believed that a realistic EBIT was $2 million, then he would have equated that with a value of $10 million, and his Honour could not understand why Mr Liemant would not have raised this scepticism at the time, rather than proceeding on what he would have had to regard as a gross over-value and allowing everyone involved to waste time and entertain unrealistic expectations based on a misconception: [55]. That reasoning also reflects the primary judge's error in [49], in that, except for Mr Yammine, everyone involved in the discussions understood that EBIT was based on net profit, and accordingly was in the order of about $2 million. Given that Mr Yammine had a competent adviser in Mr Pinto, it does not seem to me at all surprising that Mr Liemant would have left it to Mr Pinto to explain to Mr Yammine his fundamental misunderstanding, rather than taking on that burden himself. As a separate matter, I note that there was no expert valuation evidence to the effect that a draft budget for the year ended 30 June 2019, which was made less than two months into that accounting period, provided a proper basis for an EBIT calculation to be used to value the business of Lantrak NSW, and there is no evidence that anyone made such a calculation at the time.
202 On 30 August 2018, Mr Diamond of PwC responded to the first draft of the heads of agreement with a second version in mark-up. The primary judge noted that this draft deleted individual pricing for each item (which I interpolate included deletion of the figure of $35 million for the shares in Lantrak NSW), but retained a total price of $53 million payable in three instalments with the values for the items to be inserted: [56]. The primary judge noted that the parties' representatives exchanged several further drafts of the heads of agreement: [57]. On about 10 September 2018, Lantrak Holdings engaged Mr Peeke, through his company BCQ Holdings Pty Ltd, to provide financial and strategic advice and consultancy services: [58]. On 12 September 2018, Ms Barton of PwC sent a further draft which provided for adjustment of the purchase price to be between $47.5 million and $53 million, depending on variations to be agreed relating to debts associated with certain assets and a loan that Mr Yammine had to repay to Mr Liemant: [59]. The primary judge said that the price continued to include a value for Lantrak NSW of $35 million based on an EBIT of $7 million: [59]. That draft has not been included in the appeal book, which I assume reflects a view held by both parties that the draft is not of any real significance to the appeal, and thus I interpret the primary judge's comment as meaning that the purchase price of between $47.5 million and $53 million was consistent with an unstated price for the shares in Lantrak of $35 million, which the primary judge thought was based on an EBIT of $7 million. That is consistent with the written submissions of the Yammine Parties on this appeal (at [25]) that there was only one earlier draft of the heads of agreement which included the figure of $35 million. The primary judge then noted that the parties exchanged further drafts on 12 September 2018 until about 9 pm, when Ms Barton emailed the final version: [59].
203 On 13 September 2018, the heads of agreement were signed and exchanged between the purchasing parties (Lantrak Holdings, Earthtrak Pty Ltd as trustee of the Liemant Unit Trust as the land purchaser, and Gary and Mark Liemant) and the selling parties (Mr Yammine, Ari as trustee of the Ari Investments Family Trust as the land vendor, NJA as trustee of the NJA Family Trust as share vendor and Yammine Pty Ltd as business investor and truck sales vendor) (the Heads of Agreement). The individual prices for the shares in Lantrak NSW, the business operated by Nojo (being the owner of the trucks and other transport inventory used in Lantrak NSW's operations) and the McGraths Hill land were not specified in the total consideration of $47.5 million. The price was proposed to be payable in three instalments, $5 million on execution of binding transaction documents on 27 September 2018, $23 million payable on completion of the sale of the trucks and shares on 29 March 2019 and $19.5 million payable on completion of the McGraths Hill property sale on 2 December 2019: [60]. Lantrak Holdings agreed that it or its nominee would purchase NJA's 50% shareholding in Lantrak NSW (cl 2.1) and would discharge the debt owing on the trucks of up to $5.5 million as well as paying the price for the trucks, and, by 30 October 2018, would obtain a release for Mr Yammine and Ms Mikhael from the financier of that debt (cll 3.2, 3.3). The Lantrak Group agreed that, in addition to Lantrak Holdings paying for the McGraths Hill property, it would discharge all the debts of the McGraths Hill Property Unit Trust on or before completion by 2 December 2019 (cll 4.2, 6.3(c)). In addition, Lantrak Holdings or a nominee would engage Mr Yammine or a nominee to provide consulting services in the period to 2 December 2019 at the rate of $10,000 plus GST per week (cl 5). Clause 6.1 provided that the parties would negotiate in good faith to finalise the transaction documents to give effect to the transaction contemplated in the Heads of Agreement in preparation for exchange on or before 27 September 2018. Mr Yammine agreed that he would resign as a director of each of eleven companies, including Lantrak NSW, prior to settlement of a debtor finance facility that Lantrak NSW had with Scottish Pacific Business Finance Pty Ltd (Scottish Pacific) (cl 6.2).
204 The parties agreed that the total consideration payable by Lantrak Holdings was $47.5 million and that they would negotiate in good faith with respect to its allocation between the assets being sold (cl 7.1). They agreed that Mr Yammine would repay $3 million to Mr Liemant out of the second instalment due on 29 March 2019 (cll 7.2, 7.3). The deposit of $5 million payable on exchange of the transaction documents was to be non-refundable (cll 10.1, 10.2) and the Lantrak Group, together with Gary and Mark Liemant, would guarantee and indemnify the sellers in respect of the purchasers' obligations. The Liemant brothers would also give security over real property (cll 10.3-10.6).
205 Clause 11.1 provided that, except with respect to confidentiality under cl 12, the parties agreed that there was no legal obligation on either party to enter into the transactions proposed by the Heads of Agreement.
206 On 14 September 2018, Ms Sumanada emailed Mr Peeke a copy of the Heads of Agreement, details of the Lantrak Group's finance facilities and Mr Pinto's contact details to enable Mr Peeke to obtain information about financing for the trucks, as the primary judge said he had earlier discussed with Mr Liemant: [66]. On 18 September 2018, Mr Taylor, a director of PwC's Mergers and Acquisitions Unit, emailed Ms Sumanada with a daily timetable for the forthcoming five weeks, which he told her that he planned to provide to Gary and Mark Liemant. The timetable envisaged that discussions with potential lenders would occur by 5 October 2018 and with potential investors (referred to as Project Sahara) by 16 October 2018. It programmed that a decision on whether or not to proceed with the transactions with Mr Yammine would occur on 17 October 2018. Under the heading "NSW business acquisition workstreams", the timetable referred to the drafting and negotiation of a Share Purchase Agreement with the comment "(Lantrak to intentionally delay the timetable)": [67]. The primary judge referred to Mr Liemant's evidence that he did not recall seeing that timetable and that the comment as to Lantrak intentionally delaying the timetable did not come from him, and denied that he did delay the timetable intentionally: [68]. The primary judge found that evidence to be implausible, on the basis that Mr Liemant knew that his side still had to raise finance if it were to proceed to an exchange of contracts: [70].
207 On 25 September 2018, Mr Peeke asked Ms Sumanada for a balance sheet and profit and loss account for Lantrak NSW and she forwarded these to him soon afterwards on that day. Those profit and loss accounts were for the year ended 30 June 2018 and the two months ended 31 August 2018. Mr Peeke said that, on reviewing them, he formed the view that it was unlikely the business would achieve an EBIT of $7 million: [71]. The total revenues for each period were respectively about $63.1 million and $18.75 million, and the net profits were about $1.25 million and $850,000.
208 On 25 September 2018, Ms Barton of PwC circulated the first draft of the sale agreement. The primary judge set out the following salient aspects of that draft at [72]. The purchase price remained as $47.5 million, but its allocation between the assets was left blank. The sellers were to enter into a restraint of trade for up to five years (cl 11). There was an entire agreement clause (cl 14.7) and a clause in which the parties acknowledged the receipt of, or the opportunity to receive, legal advice in respect of the sale agreement (cl 14.12). The primary judge found that Mr Yammine did not read this or any other version of the sale agreement, but accepted that he received legal advice from Mr Touma as to its provisions (including the final version): [72]. At [73], the primary judge inferred that Mr Touma gave Mr Yammine all relevant legal advice as to the terms of each version of the sale agreement, and in particular the executed sale agreement. The primary judge found that that advice included the effect of the entire agreement clause "in precluding the ability of any party to assert that the sale agreement was incomplete or that there were other agreements, arrangements or understandings between them (or any of them) that were not contained in its terms". The primary judge rejected Mr Yammine's denial that Mr Touma explained to him the effect of the entire agreement clause (which was at cl 14.7 in the sale agreement) before he executed the sale agreement: [74]. However, the primary judge said that whether, and to what extent, Mr Yammine may have listened to or understood a solicitor's explanation of the terms of the sale agreement was a different question from whether he received such an explanation: [74]. The primary judge expressed the view that Mr Yammine focused on his personal interactive relationship with individuals with whom he dealt, and had little time for paperwork or detail, despite some consciousness of their importance in defining legal rights and obligations: [74].
209 On 26 September 2018, Mr Yammine resigned as a director of Lantrak NSW and the other companies as the Heads of Agreement had contemplated: [75]. The primary judge referred to Mr Yammine's unchallenged evidence that Mr Liemant had asked him to resign so that the funds needed to settle the deal could be obtained: [75].
210 The primary judge found that before the resignation, Mr Liemant had not told Mr Yammine of any difficulties that the Liemant side perceived or was having in raising finance: [76]. The primary judge then referred to Mr Liemant's evidence that he understood that, as far as Mr Yammine was concerned, he had resigned on the basis that he expected that the Liemant side would be paying him $35 million for Lantrak NSW: [76]. Although the primary judge did not say so, the cross-examination which elicited that concession (at T477, 482 and 484) also included Mr Liemant's clear and unequivocal denial as to having promised to pay Mr Yammine $35 million for the Lantrak NSW business (T482). In my view, reading those passages of transcript as a whole, Mr Liemant's concession that he understood that Mr Yammine expected as at 26 September 2018 that the Liemant side would be paying $35 million for Lantrak NSW was no more than a reflection of what Mr Yammine had been demanding to date, both at the PwC meeting on 21 August 2018 and in his solicitor's first draft of the Heads of Agreement on 27 August 2018. As I have said, that demand was based on a misconception on the part of Mr Yammine, which no other party to the discussion shared, that the EBIT figure for Lantrak NSW was based on gross profit and therefore was an amount of about $7 million. In my view, Mr Liemant's concession in that passage of cross-examination cannot be taken as evidence that there was in fact any expression of preparedness on the part of Mr Liemant to pay an amount of $35 million for Lantrak NSW shares, but merely a recognition that that was what Mr Yammine was demanding.
211 The primary judge was critical of Mr Liemant asking Mr Yammine to resign as a director at this time, saying that it was an example of Mr Liemant, without any contractual basis, using Mr Yammine's trust in him to move Mr Yammine to a position in negotiations that was advantageous to Mr Liemant's interests: [76]. The primary judge also referred to Mr Liemant's evidence that he was not keeping Mr Yammine informed of progress on the Project Sahara timetable beyond "some broad discussions": [76].
212 On 26 September 2018, Mr Touma replied to Ms Barton's email of 25 September 2018, reminding the Liemant side that the Heads of Agreement provided for the exchange of the transaction documents on the following day. Mr Touma asked for a complete first draft of the transaction documents and also required payment of the first instalment of $5 million by the next day as a sign of good faith and commitment towards the transaction, which could be released to his client on exchange: [77].
213 On 26 September 2018, Mr Peeke sent Ms Sumanada his analysis of Lantrak NSW's net profit for the year ended 30 June 2018 of about $1.25 million. Although the primary judge did not say so, a net profit of that amount could not conceivably support an EBIT figure of $7 million. On 27 September 2018, Mr Touma and Mr Jeraj discussed the Liemant side's proposal that Lantrak Victoria draw down $5 million on the Scottish Pacific facility to use as the deposit on the sale agreement, and they exchanged emails about this and progressing the then proposed transaction: [79].
214 On 2 October 2018, Mr Peeke emailed Mr Liemant and Ms Sumanada attaching an estimate that he had made of Lantrak NSW's results for the first quarter of the 2018/19 financial year. The primary judge referred to Mr Peeke saying that he had had to make estimates because not all of the figures for September 2018 were yet available, nor for that year as a whole: [80]. Mr Peeke estimated that Lantrak NSW would earn about $1.08 million for the quarter and commented in his email that that would make a $7 million target "aggressive". The primary judge referred to Mr Peeke saying that by then he probably had formed a view that the Liemant interests would not be able to raise finance to do the deal as it was represented in the Heads of Agreement, and had discussed this with Mr Liemant: [80]. The primary judge referred to both Mr Liemant and Mr Peeke agreeing in evidence that Mr Peeke's estimate was of (net) profit, not EBIT, and that Mr Liemant accepted that if financing and fringe benefits tax expenses were added back to produce an EBIT figure, EBIT for the first quarter would have been $1,266,660: [80]. The primary judge then said that they agreed that using Mr Peeke's methodology would result in an EBIT of $5,066,640 for the whole year. I note, however, that there was no expert evidence to the effect that an EBIT for valuation purposes could be extrapolated from only three months of figures which were themselves based on estimates. More importantly, there is no evidence or any finding that Mr Yammine or Mr Peeke attempted such an extrapolation and valuation at the time.
215 The primary judge then found that Mr Liemant sought to eschew the "obvious consequence" and result of Mr Peeke's analysis by saying in answer to a question as to whether Lantrak NSW would be doing more business by the fourth quarter of the year than it was in the first quarter, Mr Liemant said that he would not have exposure to that far out: [81]. The primary judge then referred to Mr Liemant's evidence that, despite what the figures appeared to show for the 2018/19 financial year to date and forecast, he had a concern with aged debtors that were not being collected and only took the actual results that he had up until the end of 2018 into account: [82]. The primary judge referred to Mr Liemant's response to the proposition that with an EBIT forecast of about $5 million the value of the business using the multiplier of 5 times was about $25 million, namely that Mr Liemant said that he works on the actual results not the estimates: [82]. The primary judge did not make any finding to the effect that that was not in fact Mr Liemant's approach, or that it was an unreasonable approach, but merely said that Mr Liemant never discussed Mr Peeke's estimates with Mr Yammine: [82].
216 On 2 October 2018, Mr Jeraj emailed Mr Touma saying that his clients were not prepared to pay any money to a trust account or pay interest on a deposit until there was a signed contract of sale: [83]. Mr Jeraj said that his clients had started discussions with debt or capital providers who required information about the trucks and forecasts for the 2018/19 financial year profit and loss account and balance sheet for Lantrak NSW. Mr Yammine said that, at this time, Mr Liemant had told him that he needed another week to get the deal done, to which he had agreed: [83].
217 On 4 October 2018, Mr Jeraj emailed Mr Touma informing him that the Liemant side had had preliminary discussions with their debt providers and that those financiers would need to undertake minimum diligence, including seeking market valuations of the trucks, giving a level of comfort on the 2019 EBIT forecast for Lantrak NSW and the contracts in place for customers, waste disposal sites and the like. The primary judge at [84] quoted from Mr Jeraj's email to Mr Touma as follows:
Our valuation is based on the business making circa $7m this year and the run rate to August indicates a level of risk on the earnings. We therefore need results for Sept and forecast for the balance of the year.
218 The primary judge then said that Mr Jeraj asked for that information, and told Mr Touma that "we will be unable to sign a Sale and Purchase Document if we have no capacity to complete on the transaction. This in fact is misleading conduct.": [85]. On 5 October 2018, Mr Touma replied, reminding Mr Jeraj that their respective clients had spent a significant amount of time and money in negotiating and documenting the key terms of the deal in the Heads of Agreement, which contemplated the parties exchanging transaction documents on 27 September 2018. Mr Touma said that it was nowhere stated that the sale agreement was conditional upon securing funding: [86].
219 At 12.39 pm on 9 October 2018, Mr Peeke emailed Gary and Mark Liemant a first draft of a proposal to be put to Mr Yammine, proposing a total purchase price of $15 million that would result in a payment to the Yammine interests of a net $12 million. The primary judge explained that Mr Peeke proposed that the first $5 million payable at settlement would be offset by the $3 million "loan" owing by Mr Yammine to Mr Liemant to which the Heads of Agreement had referred: [87]. Mr Peeke proposed that payments of $2.5 million be made 12 and 24 months after settlement and a further payment of up to $2.5 million in the 2018/19 and 2019/20 financial years if future pre-tax profits of Lantrak NSW exceeded $6 million. The primary judge said that the other terms that Mr Peeke drafted made the proposal "even more conditional" [87]. The primary judge referred to Mr Liemant's evidence that Mr Peeke had prepared the draft proposal at his request, and inferred that Mr Liemant had read that draft before he spoke on the phone to Mr Yammine later on 9 October 2018: [87].
220 Later on 9 October 2018, Mr Liemant and Mr Yammine, who was at the home of his mother-in-law, had a telephone conversation. The primary judge referred to Mr Yammine's evidence that the 9 October conversation followed several discussions in which Mr Liemant had asked him for more time to exchange a binding sale and purchase agreement beyond the target date of 27 September 2018, saying that Mr Liemant had been assuring him that he would "get this deal done": [88]. The primary judge then referred again to Mr Liemant's cross-examination in which Mr Liemant was reminded of his admission that he understood as at the end of September 2018 that Mr Yammine had an expectation that Mr Liemant was going to pay him $35 million for the Lantrak NSW business, and Mr Liemant's response, "Prior to the phone call where we agreed on a final price for that, yes" (T484). As I have indicated above, I do not read that evidence as providing any support for the proposition that Mr Liemant had expressed a preparedness to pay $35 million for shares in Lantrak NSW, as distinct from Mr Liemant acknowledging the demands which Mr Yammine had been making for a payment in that amount.
221 The primary judge then referred to the context for the 9 October conversation, being that the Liemant side was seeking funding and delaying the preparation of the contracts to give effect to the Heads of Agreement while contemplating a reduction in the purchase price, and Mr Touma was agitating with the Liemant side's lawyers about the need to move things along: [89].
222 The primary judge found that in the 9 October conversation, Mr Yammine had his mobile phone on speaker so that others, including his wife, Ms Mikhael, and the husband of her sister, Mr Tartac, came to overhear what both men said: [90]. The primary judge said that each of Ms Mikhail and, to a lesser extent, Mr Tartac, was in a close relationship with Mr Yammine and was likely to have discussed with him matters to do with this proceeding, but that none of them was cross-examined to suggest that Ms Mikhael or Mr Tartac contrived with Mr Yammine to corroborate his account, or that Ms Mikhael or Mr Tartac was being deliberately untruthful in giving their evidence as to the substance of the conversation that they overheard between Mr Liemant and Mr Yammine: [90].
223 The primary judge at [91] then extracted a passage of evidence in chief (at T14-15) which his Honour described as Mr Yammine's evidence of the 9 October conversation. I note that, contrary to the primary judge's description, the passage which is extracted at [91] was not said by Mr Yammine to have occurred on 9 October, but at some unspecified time or times after signing the Heads of Agreement on 13 September 2018, or possibly after Mr Yammine had resigned as director of various companies on 26 September 2018. The passage was as follows:
then pretty much said to me "look, I don't think … we can get this done. I can't raise funds. But I always honour what I sign. You know, we started this on breaking bread, you know, but work out something that I can give you for now, okay, and then I will be able to get the rest. I will work out something so we can get this deal, you know, this deal happening".
What did you say to Gary? --- Then, basically, by then I was in need of money and I just said "look, Gary, you know, I believe that. If you can give me 10 million ..... $10,000 a week, and then that way at least that will give you a chance to raise the funds. But I won't go into non-compete, that's going to be my security for the remainder of what you signed and what you said", your Honour. Because at that time as well, he didn't want the trucks no more. … it was just basically the business.
…
And what did Gary say in response to you saying you would take 10 million clear, etcetera. What did he say? --- He said to me "look, write up that part of the deal and - - -
Write up what part of the deal? --- The what we, like, spoke about.
Yes? --- For the first part. He said "look, you know, I always honour what I sign. Just send me something so I can get this deal to move. But I will honour you". Like, you know, "I will make this work", you know. And that's why I believed in him.
"I will honour you, I will make you sweet", is that … what you said? --- "I will honour you". "I will honour you". Like, "I will make this right, I will - - -
"Make this right"? --- Yes. Sorry.
Did Gary say what he was going to make right? --- What he signed in the heads of agreement for the business. So basically if I get the 10 now, then in 12 months he will be able to raise the funds to finalise the 22.
In my view that last sentence was not responsive to the question of what Mr Liemant actually said, as distinct from Mr Yammine's personal understanding.
224 At [92], the primary judge extracted a passage of the transcript (at T19-20) in which Mr Yammine gave evidence of a particular conversation which he said he recalled more clearly than others, being a conversation when he was at his mother-in-law's house. That does appear to be a reference to the 9 October conversation. Mr Yammine's evidence in chief of that conversation was as follows:
Like, he said, "I need the funding to get the deal done." He goes, "Take something for now. I will always get this deal done that I signed. I will always honour it". And then, that's when I said to Gary, "All right. I will draw up this deal, but because I'm waiting for money, I'm not going to sign the non-compete in the agreement. And then when you pay me the rest of the money in 12 months' time, that's when I will sign off, and I will give you the non-compete." That was my security, basically, you know. But that's why I sent that. That's - this part of the 35, this was the first part of the 35.
I interpolate that the last three sentences are not evidence of the words spoken in the conversation, but merely evidence of Mr Yammine's subjective understanding and thought process.
225 The primary judge explained that Mr Yammine's words in that passage "that's why I sent that" referred to what he wrote down on a sheet of paper as the points that would comprise what he was prepared to accept, after the 9 October conversation, while waiting for the payment of the balance of the anticipated $35 million price for Lantrak NSW and before entering into a non-compete provision (the 9 October note): [93]. Using his phone at 9.27 pm on 9 October 2018, Mr Yammine sent a photo of the 9 October note to Mr Liemant in a text message. A sheet of paper recorded under the heading "Lantrak deal", "10 m clear 5 m upfront Friday 5 m 29 March [2019] all taxes paid". The primary judge interpreted that as meaning that the $10 million was to be paid in two instalments of $5 million each, one on execution and, as in the Heads of Agreement, a second on 29 March 2019, and the Liemant interests would pay any capital gains and other taxes for which the Yammine interests would otherwise be liable: [93].The primary judge then referred at [94] to the other elements of the 9 October note as follows:
"3 m Debt cleared".
"In Good faith".
The McGraths Hill property would be transferred to Mr Yammine's family trust.
Lantrak NSW would enter into a contract with Mr Yammine's trucking company, Nojo, to guarantee it the first offer to supply trucks for any work Lantrak NSW needed so that the Yammine interests could sell the trucking business with a contract that ensured it would have valuable work opportunities.
Mr Yammine would be retained as a consultant to Lantrak NSW for 12 months at $10,000 per week plus GST, a car, phone and toll and petrol expenses.
Mr Yammine would also be paid a percentage commission on any jobs that he brought in to the overall Lantrak business in any state after the Liemant interests had finished their due diligence.
Two managers employed by Lantrak NSW, Mr Simpson and Wally (whose surname was not recorded but which I note appears from cl 6.4 of the sale and purchase agreement to be Ghareev) would each be retained and be paid a profit share of 5% or be issued 5% of the shares in Lantrak NSW.
226 The primary judge then stated that unlike the Heads of Agreement, the 9 October note made no provision for the sale by Mr Yammine's interests of the trucking business and its assets or the McGraths Hill property (the outstanding interest in which, instead, Mr Yammine's family trust would acquire). Further, unlike the Heads of Agreement, the 9 October note provided that Mr Yammine's $3 million debt due to Mr Liemant will be cleared "in good faith": [95]. In addition, the primary judge commented that "of course" the 9 October note made no reference to there being a further element to the proposal, namely Mr Liemant's promise to pay the balance of the $35 million if Mr Yammine proceeded in accordance with the terms in that note: [96]. In my view, it is difficult to discern in any of the evidence referred to in the primary judge's reasoning up to this point any basis for a finding that Mr Liemant had promised to pay the balance of the $35 million if Mr Yammine proceeded in accordance with the terms in the 9 October note.
227 The primary judge then referred to the evidence of Mr Tartac as to having heard a conversation that Mr Yammine had with "Gary" on Mr Yammine's phone's loudspeaker at Mr Yammine's mother-in-law's home at which Mr Liemant had said that he would pay $10 million and "pay the rest later". At [97], the primary judge quoted the following from Mr Tartac's evidence in chief as to what Mr Liemant said to Mr Yammine in that conversation:
to take the deal and … he will honour the rest of the moneys that - that was owed to him … in due course. And I remember that Gary was saying that "I won't let your family down. I won't, I won't. I'll definitely pay you."
228 The primary judge then stated that "Mr Tartac said that Mr Liemant told Mr Yammine to take the $10 million and that he would pay the balance of the $35 million later": [98]. In my view, however, Mr Tartac did not actually give evidence that Mr Liemant expressly said that he would pay a total of $35 million. In his evidence in chief, Mr Tartac said that it was Mr Yammine at the start of the conversation who was actually saying "$35 million", and it was Mr Liemant's response that Mr Yammine should "take the $10 million now and I will pay the rest in due course": T362.42-45. Mr Tartac gave substantially the same evidence in cross-examination, that it was Mr Yammine who said "I want the whole 35 now" and then Mr Liemant said "look, take the 10 now and I will pay you the rest in due course": T366.2-3. The references in Mr Tartac's evidence as to the use of the words "the rest", in circumstances where Mr Yammine and Mr Liemant had not actually agreed upon a price for the shares in Lantrak NSW, may have meant the difference between $10 million and whatever figure was ultimately agreed between the parties for the sale of those shares. In my view, that is the better interpretation of the words which Mr Tartac attributed to Mr Liemant. The words "the rest" would only be a reference to $35 million in circumstances where Mr Yammine and Mr Liemant had reached an agreement or consensus as to the price which was being demanded by Mr Yammine, as to which there is no evidence. The primary judge then continued at [98] by referring to Mr Tartac's evidence that Mr Liemant said to Mr Yammine to "take the 10 million" and he would "fix the rest of it up in due course". The primary judge also referred to Mr Tartac's evidence that on other occasions he heard other conversations on loudspeaker between Mr Yammine and Mr Liemant to similar effect: [98]. The primary judge accepted the submission by the Liemant Parties that Mr Tartac was the only witness who gave evidence that Mr Liemant first proposed the figure of $10 million: [98].
229 The primary judge then referred to the evidence of Ms Mikhael to the effect that in the 9 October conversation, Mr Liemant said that he could not raise the funds to pay $35 million and said to Mr Yammine: "take something for now and I will honour the rest. Just give me a number now and I will honour the rest": [99] (T385.43-386.2). The primary judge then referred to Ms Mikhael's evidence that Mr Yammine asked for "10 million clear …add up to 13, and then you can pay me the 22 within 12 months" (T386.4-14). Ms Mikhael did not give any evidence as to any response by Mr Liemant to that proposition by Mr Yammine, although the primary judge did not refer to that gap in the evidence. The primary judge then referred to Ms Mikhael recalling that Mr Yammine asked for a weekly $10,000 consulting fee as "the reassurance of the 12 months" in which Mr Liemant could raise the balance of the $35 million price: [99]. That appears to be a reference to the cross-examination of Ms Mikhael (at T409-412). However, nowhere in that passage or elsewhere in Ms Mikhael's evidence did Ms Mikhael give express evidence to that effect. In answer to a question put by the primary judge as to whether Ms Mikhael was giving evidence of her understanding or evidence of what Mr Liemant told Mr Yammine that she overheard, Ms Mikhael replied:
The conversation was Gary said, "Take something for now, and I will honour the rest later. Just take something for now. I can't get the funds for the $35 million." (T411.17-21).
230 The primary judge then referred to Mr Liemant's evidence in chief that he did not know that the 9 October conversation had occurred with Mr Yammine on speaker phone. Mr Liemant said that Mr Yammine called him and, after the two men discussed Mr Liemant's attempts to raise funds, Mr Yammine said "It's not going to happen, is it, Gaz?" Mr Liemant said that he replied, "No, it's not. I can't see it happening" and after a pause, Mr Yammine said, "well, would you take 10?". Mr Liemant testified that "I was quite taken aback" but responded "well, that sounds more realistic. Let me have a look at it": [100]. The primary judge referred to Mr Liemant's understanding that the discussion concerned the price of the 50% shareholding of the Yammine interests in Lantrak NSW, and also that Mr Liemant did not remember discussing in the 9 October conversation keeping Mr Yammine involved in the business, but accepted that was possible. The primary judge referred to Mr Liemant's denial that he said that he would pay the remainder of the $35 million at a later time, and referred to Mr Liemant saying that at that stage he considered that the $35 million price was too high and that $10 million "would be more realistic for what we were achieving … having a multiple of five [times] of results in mind": [100].
231 The primary judge then referred to Mr Liemant's evidence that if, contrary to his recollection, he had said something in the 9 October conversation to the effect that he would pay the $22 million later, then he would have had that documented and that his company would have to look at funding options because it did not have the capacity to fund that sort of money: [101]. The primary judge then referred to Mr Liemant's evidence in cross-examination that Mr Yammine had implied that he needed money, and denied that Mr Yammine said that he would take $10 million clear now and that Mr Liemant could pay the balance later, and further denied that his only explanation for why the parties moved from $35 million to $10 million clear was because he understood that Mr Yammine needed money: [101].
232 The primary judge accepted that one reason why Mr Liemant wanted the price reduced was that his side did not have the capacity to pay $35 million at that time: [102]. However, the primary judge said that it "beggars belief" that Mr Yammine would have arrived at his first offer of taking a net $10 million without any bargaining or enquiry of Mr Liemant about what he could afford to pay, especially given the background of the Heads of Agreement: [102]. The primary judge did not accept Mr Liemant's evidence that Mr Yammine did not say directly to him that he needed money: [102]. The primary judge then referred to Mr Liemant denying that he had any discussion with Mr Yammine at any time in October 2018 in which Mr Liemant said that he would honour the payment of a total of $35 million, or pay the balance of $22 million in 12 months at a time later than paying the $10 million clear: [103].
233 The primary judge then turned to the 9 October note, which had not been discovered by Mr Yammine: [104]. The primary judge said that Mr Yammine's failure to inform his lawyers about the 9 October note or to explain why he did not do so, together with his initial incorrect assertion that he had informed them, caused his Honour considerable concern as to Mr Yammine's veracity, and inferred that Mr Yammine did not give the 9 October note to his lawyer because it may have damaged his case: [105]. The primary judge said that this episode made his Honour cautious to scrutinise Mr Yammine's evidence carefully in assessing the reliability of his account and that while Mr Yammine was not a person with a mastery of the detail of commercial negotiations, his Honour found him to be generally honest and his evidence reliable, except when his Honour made specific findings not to prefer or accept what he said: [106].
234 The primary judge said that in its terms, the 9 October note told strongly against any suggestion that Mr Yammine and Mr Liemant had a discussion in which Mr Liemant said anything about the $22 million or balance of the $35 million being paid later or in addition to the $10 million "clear": [107]. The primary judge said that at the time of the 9 October conversation, neither man knew what the difference would be between the $35 million price for the Yammine side's 50% interest in Lantrak NSW, that was used to arrive at the price in the Heads of Agreement, and the amount of $10 million clear of any liability that any of the vendors would have for capital gains tax. However, the primary judge said that because Mr Yammine was agreeing to repay the $3 million loan to Mr Liemant out of the sale proceeds on the basis that he would receive $10 million clear of that and any tax liability, the discussion may have included mention of $22 million as a "balance", being the difference between $35 million and $13 million, even though that did not take account of the further reduction for the tax payable: [107]. I note that finding was expressed in the language of mere possibility (the operative expression being "may have").
235 The primary judge then stated that his Honour was "comfortably satisfied that, despite Mr Yammine's failure to discover the 9 October note and incorrect evidence about what he had given to his lawyers, in their conversation on 9 October 2018, Mr Liemant said to Mr Yammine that he would pay the balance of the $35 million for Lantrak NSW later if Mr Yammine went ahead with a deal in which he would be paid a net $10 million and would enter into a consultancy agreement at $10,000 per week without a non-compete clause, while Mr Liemant went about raising finance for the balance": [108]. The primary judge referred to Ms Mikhael and Mr Tartac not having been active participants in the 9 October conversation, but said that each gave a "broadly consistent account of its content": [109]. In forming that conclusion, the primary judge said that he had taken into consideration the Liemant Parties' submission that Ms Mikhael's evidence was unreliable because of her reference to the conversation including what was not then known, in that the figures of $13 million and $22 million that she used must have taken account of the taxation liability, which was not known or quantified when Mr Yammine and Mr Liemant were speaking in the 9 October conversation. The primary judge said that Ms Mikhael's evidence was not generally unreliable, although she may have used the figures that later emerged erroneously in recounting what she heard of the 9 October conversation: [109]. The primary judge then inferred that Ms Mikhael blended more than one conversation or attributed her later knowledge or understanding of the numbers to what she recounted as having heard on 9 October 2018 as the conversation progressed, and that that was likely to have occurred because she and her husband would have discussed the overall transaction and their recollection of conversations between Mr Yammine and Mr Liemant many times: [109].
236 The primary judge then said that it would be "out of all experience" if the three witnesses to the 9 October conversation (being Mr Yammine, Ms Mikhael and Mr Tartac) gave an exactly identical account of the conversation: [110]. His Honour referred to the observation of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-9 that the words spoken must be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. The primary judge then made the following finding at [110]:
The broad thrust of what each of Mr Yammine, Ms Mikhael and Mr Tartac recalled as having been said in the 9 October conversation was consistent in attributing to Mr Liemant the "promise" that if Mr Yammine proceeded on the basis of Mr Liemant paying $10 million now, he would "honour the rest".
I note at this point that that formulation does not contain any reference to a figure of $35 million as being the total amount to be paid by the Liemant interests. In my view, the amount (if any) of "the rest" depended on the outcome in the future of the parties' negotiations, and the figure of $35 million was Mr Yammine's repeated position in the negotiations to date.
237 The primary judge then referred to the evidence of Mr Pinto to the effect that he recalled being in Mr Yammine's car with him on speakerphone talking to Mr Liemant after he first saw the 9 October note. Mr Pinto said that Mr Liemant told Mr Yammine that "they needed to … execute the transaction, and that he would look at … some sort of way of making up the difference" because Mr Liemant could not "obtain the finance … to fulfil the contract": [111]. Mr Pinto said that there were "lots of discussions between Gary and Norm with regards to getting the purchase [and] sale agreement … executed". The primary judge recorded that Mr Pinto said that Mr Liemant suggested that Mr Yammine "take something for now", they agreed to $13 million and Mr Liemant said that he would "make up the difference [of $22 million] on the back end": [111] (T280.11-22). The use of the square brackets around $22 million was added by the primary judge. Mr Pinto said that Mr Yammine "agreed to $13 million" and they also discussed consultancy and non-compete agreements: [111] (T280.5, 280.44-5). Mr Pinto said that Mr Yammine and Mr Liemant discussed that, as part of Mr Yammine executing the agreement to purchase the shares, he would then enter into a non-compete agreement but would work out a way of Mr Liemant raising finance: [112]. The primary judge referred to Mr Pinto's evidence in cross-examination that in a later conversation, Mr Liemant and Mr Yammine arrived at a figure of between $10 and $13 million after taking into account a $3 million component for capital gains tax that would be deducted from the $35 million which Mr Liemant would pay. Mr Pinto said that Mr Liemant and Mr Yammine discussed that Mr Yammine would have "a consultancy agreement … to assist growing the business whilst [Mr Liemant] was looking for the capital": [112]. The primary judge at [112] then quoted from Mr Pinto's evidence as follows:
… when they were communicating, Norm said, "Okay, Gary. I will take something for now". And Gary, you know, would have said, I don't know what the exact words are, but, say, you know, "this is great … we can work together and get this thing done and then look for capital and whatnot to pay out the balance".
238 The primary judge accepted Mr Pinto's evidence that he overheard conversations between Mr Yammine and Mr Liemant, in which Mr Liemant told Mr Yammine that he would look for capital or finance to pay the balance, after the initial payment of $10 million net of the $3 million capital gains tax: [113]. The primary judge said that he was satisfied that, although he did not have an exact recollection of the conversations that he overheard between Mr Yammine and Mr Liemant, Mr Pinto did hear Mr Liemant agree after the 9 October conversation, in effect, that he would pay Mr Yammine the balance of $35 million for the shares in Lantrak NSW later, once he raised the finance, and that, at that time, Mr Yammine would not enter into a non-compete agreement but would work as a consultant in the meantime: [113]. The second of those findings, but not the first, quantifies the "balance" of the amount of $35 million (ie $22 million). The primary judge did not refer to the concessions by Mr Pinto in cross-examination that he did not think that the conversations between Mr Yammine and Mr Liemant which he heard were "specific as to the actual number", or that Mr Pinto thought there was a "mutual understanding … between the two parties of what the number is": T312.36-313.3. I note that Mr Pinto tended to resort to giving evidence of what he thought was "a mutual understanding" (T314), which led the cross-examiner to put the following questions:
Just try and remember what they said? --- So what I believe that they said was that - so when they were communicating, Norm said, "Okay, Gary. I will take something for now." And Gary, you know, would have said - I don't know what the exact words are, but, say, you know, "this is great, you know, we can work together and get this thing done and then look for capital and whatnot to pay out the balance."
And did they talk about what the balance was? --- Not specifically the actual balance. (T314.42-315.1).
That is, of course, the passage which the primary judge extracted at [112], except that the primary judge did not go on to refer to the clear concession by Mr Pinto that Mr Yammine and Mr Liemant did not talk specifically about the actual balance. In light of that concession, the finding of the primary judge that Mr Pinto heard Mr Liemant agree after the 9 October conversation that he would pay Mr Yammine the balance of $35 million for the shares in Lantrak NSW later was in error.
239 The primary judge then identified the real issue as being whether, in substance, Mr Liemant entered into a contract or made a representation in the 9 October conversation that, if Mr Yammine agreed to being paid $10 million clear in the immediate transaction instead of the original $35 million, Mr Liemant would "honour" the original deal and pay the balance of the $35 million at a later time: [114]. I note that that formulation of the issue tends to assume that the parties had in fact reached a consensus (ie a "deal") that the Liemant interests would pay the amount of $35 million in total. That was a matter in issue between the parties, not a matter to be assumed in favour of the Yammine interests. As I have said, in my view, the evidence did not establish any such consensus. The primary judge then said that he formed the clear view that, first, Mr Liemant conveyed to Mr Yammine in the 9 October conversation, and subsequently confirmed in later conversations that Mr Pinto and Mr Tartac overheard, that he would pay the balance of the $35 million at a later time if they proceeded with the transaction along the lines recorded in the 9 October note and, secondly, they proceeded on the basis that Mr Yammine's security for the payment of the balance was that he would only sign the non-compete agreement when that balance was paid: [115]. I have indicated above the deficiencies in the evidence concerning whether Mr Liemant in fact conveyed that he would pay "the balance of the $35 million at a later time", as distinct from references to paying "the balance" being references to whatever figure (if any) Mr Yammine and Mr Liemant ultimately agreed upon in the future in their negotiations.
240 The primary judge then dealt with the events leading up to the entry into the sale and purchase agreement on 12 November 2018 (SPA). After 9 October 2018, PwC and Mr Touma prepared several drafts (including the final version) of the SPA and a consultancy agreement, and circulated those to the Liemant Parties and the Yammine Parties. The primary judge said that after 16 October 2018, all of the drafts and the final version which the parties signed on 12 November 2018 had no non-compete provision from Mr Yammine, made no reference to any payment of $22 million at any time, and contained an entire agreement clause: [117].
241 On 11 October 2018, Mr Peeke and Gary and Mark Liemant had a meeting with PwC and Quadrant Private Equity about Project Sahara, and a PwC note of the meeting recorded that:
Mark Liemant was interested in selling down his stake in the Lantrak Group.
The Lantrak Group was earning about $20 million EBITDA and, in the year to date, first quarter 2018/19 was ahead of budget with EBITDA of about $6 million.
All aspects of the business were performing well, with logistics being more stable: [118].
242 On 12 October 2018, Mr Jeraj emailed Mr Touma a copy of a further draft of the transaction documents, other than one for the truck sale which he asked Mr Touma to draft. Those drafts included a sale agreement and a consultancy agreement. The draft sale agreement again included a restraint of trade clause, which Mr Yammine instructed Mr Touma to remove. Mr Yammine said in cross-examination that he told Mr Touma to do this "because Gary has still got to pay me the last bit of the money" and that he "would have told him" that the $22 million was still to come: [119]. The primary judge then referred to the cross-examination of Mr Yammine in which it was put to Mr Yammine that if Mr Liemant had agreed to pay $22 million a year later, and if Mr Yammine had told Mr Touma about that, then Mr Touma would have put the $22 million in the draft sale agreement. Mr Yammine was unable to explain why Mr Touma would not have inserted that in the draft if Mr Yammine had told him about it, responding, "No, I understand how it looks": T213.24-27. When it was put to Mr Yammine that the only reason for not putting that in was that it just was not part of the deal then, Mr Yammine simply responded, "I disagree": T213.32-36.
243 The primary judge then said that, damaging as Mr Yammine's evidence just referred to and the failure to call Mr Touma may appear at first blush to Mr Yammine's credibility on this crucial issue, Mr Liemant's evidence at the end of his cross-examination about the omission of the restraint clause, that came about from his discussions with Mr Yammine in October and early November 2018, is an important part of the factual matrix: [120]. In the quoted extract from Mr Liemant's evidence, Mr Liemant agreed that Mr Yammine said he would not agree to a restraint of trade clause appearing in the executed version of the SPA but denied that Mr Yammine said that he would not give the restraint so he would have some security for the $22 million that was still to come, adding that Mr Yammine said he was not prepared to sign the restraint clause because that was his security in case the SPA did not complete. When asked by the primary judge what he thought he was buying for the $13 million if he did not get a restraint of trade from Mr Yammine, who could then go out the next day after completion and compete, Mr Liemant said that it was investing in the people that were there and it was important to keep the people on side. Mr Liemant pointed out that Mr Yammine was retained on a consultancy agreement for a further 12 months and at the end of that he was hoping to extend it for a further 10 years. Mr Liemant recognised that the majority of the customers of Lantrak NSW were loyal to Mr Yammine, and in the 12 month period of the consultancy agreement he either hoped to renew the consultancy agreement or bring people into the business that they could then continue. The primary judge said that as problematic as Mr Yammine's evidence appeared at first blush, Mr Liemant's explanation for the commercial benefit of the $13 million that the Liemant Parties paid for the Lantrak NSW group did not "ring true" to his Honour: [121]. The primary judge referred to Mr Liemant's view that Mr Yammine was critical to the ongoing performance of Lantrak NSW, and also that a consultancy worth $520,000 (being one year at $10,000 per week) without a non-compete clause was not likely to attract Mr Yammine to keep up his efforts to maintain or generate further growth in revenue and profitability: [121].
244 On 2 November 2018, Ms Sumanada emailed Mr Touma a copy of the management accounts for Lantrak NSW for the three months ending 30 September 2018, which showed that total revenue was about $25.8 million and net profit was about $1.18 million: [122]. The primary judge inferred that Mr Liemant saw and received those contemporaneously. The primary judge then said that if the financing and fringe benefits expenses of about $170,000 were added back to the net profit to produce an EBIT figure, that would equate to $1,477,477.40 or, if annualised, to $5,883,000, and if the agreed multiple of 5 times EBIT were used, the rough value of the interest Mr Yammine was selling was about $29.5 million: [122]. The primary judge referred to Mr Liemant's evidence in cross-examination that he assumed that the results for the first quarter would be seasonally higher than could be expected for the rest of the 2018/19 financial year, but admitted that he did not know if that were so, and in re-examination, Mr Liemant said that he formed the view by the time of seeing the September 2018 quarter management accounts that there was "definitely a downward trend at the time": [122]. The primary judge did not accept Mr Liemant's qualification with which he sought to reduce the likely EBIT for the full 2018/19 financial year: [123]. The primary judge said that Mr Liemant gave no coherent explanation as to why he agreed to remove the restraint provision at Mr Yammine's insistence: [124]. His Honour referred to Mr Liemant's knowledge that Mr Yammine's active participation had been integral to the growth of Lantrak NSW's business success, and Mr Liemant was an experienced, sophisticated businessman who received specialised expert advice in negotiating the Heads of Agreement and the SPA. The primary judge then said that he did not accept that Mr Liemant thought that the value of $35 million for what Mr Yammine was selling, based on its likely EBIT that the negotiations adopted, was unrealistic or other than a reasonable reflection of its value: [124]. I have indicated above that the negotiations "adopted" a value of $35 million only in the sense that that was what Mr Yammine understood would be paid and was demanding, but there was no consensus on the part of the Liemant interests that that was indeed an appropriate valuation or a price they were prepared to pay. I note that there was no expert evidence to the effect that a reasonably competent valuer would calculate an EBIT figure based on extrapolating from the results of only a 3 month period what figure should be adopted for annualised earnings. Even if that were an acceptable approach to valuation, which I doubt, the primary judge's analysis would fall some $5.5 million short of $35 million.
245 The primary judge said that the Lantrak Group management accounts for that quarter, available immediately prior to entry into the SPA on 12 November 2018, "arguably" may have warranted negotiating a reduction in the price of $35 million by a figure in the order of $5 or so million: [125]. The primary judge then said the following at [125]:
However, there was no intelligible reason why Mr Yammine, a month before the quarterly accounts became available to Mr Liemant (and remained unknown to Mr Yammine), would have agreed to give up over $20 million from the negotiated value used in the heads of agreement. In chief, Mr Liemant said that when Mr Yammine proposed taking $10 million, "I paused for a minute. I was quite taken aback. I thought it was a considerable change". Indeed, it would have been an extraordinary change, and one which made no sense, if that was all there was to the negotiation. Like Mr Yammine's original "sale" of RTS' business to Lantrak NSW, both men dealt with each other in an unorthodox, almost commercially bizarre, fashion, based on Mr Yammine's trust in Mr Liemant's integrity.
That passage proceeds on the basis that there had been a consensus reached between Mr Yammine and Mr Liemant as to the value of shares in Lantrak NSW being $35 million. As I have indicated above, that was what Mr Yammine was seeking, but Mr Liemant never accepted that the value of the shares was $35 million and never agreed to pay that figure. The "considerable change" of which Mr Liemant spoke was a change in what Mr Yammine was proposing. In my view, Mr Yammine's evidence is consistent with Mr Yammine accepting $10 million "clear" for the time being, with a view to negotiating a further amount with Mr Liemant subsequently, trusting that Mr Liemant would approach those negotiations in good faith, but the evidence given by Mr Yammine does not establish that Mr Liemant had actually conveyed that he would pay a total of $35 million.
246 On 12 November 2018, Mr Yammine and NJA (as trustee of the NJA Family Trust) as sellers, Lantrak Holdings as buyer, Gary and Mark Liemant and 21 companies as guarantors, executed the SPA. The primary judge summarised the provisions of the SPA relevantly as follows:
The sale shares (as defined) represented a 50% interest in the business operated by the Lantrak NSW Group, comprising 11 companies including Lantrak NSW, the shares in which were defined as the "sale shares" (recital A);
The sale agreement was intended to be legally binding and the parties agreed to effect the transaction that he contemplated (recital C);
The sellers agreed to sell, and Lantrak Holdings agreed to buy, the sale shares free from any encumbrances on the completion date, defined as 29 March 2019 (cl 2.1);
The consideration for the sale of the shares was the payment to the sellers by Lantrak Holdings (as buyer) of the purchase price of $13 million in two instalments, the first of $5 million on or before 29 November 2018 (to be released unconditionally to the sellers on payment) and the second of $8 million on or before 29 March 2019 (cl 3.1);
Any loans owed by companies that Mr Yammine would continue to own, such as RTS and Nojo, were released immediately and Mr Yammine and Ms Mikhael would be released from any liabilities owed to financiers in respect of the Lantrak NSW Group (cll 4.1, 4.4);
Mr Yammine would resign as the director of each of the Lantrak NSW Group companies by 29 November 2018 (cl 4.2);
The parties agreed that the first instalment would be funded by the Lantrak NSW Group drawing down on its debtor finance facility with Scottish Pacific (cl 4.3);
If the Commissioner of Taxation assessed or re-assessed the aggregate tax payable by Mr Yammine, Ms Mikhael or any beneficiary of the NJA Family Trust at more than $3 million, then Lantrak Holdings and the guarantors would indemnify them for that liability (cl 4.8);
The sellers gave a series of usual sellers' warranties (cl 7.1);
Clauses 11.7 and 11.12 provided, respectively:
11.7 Entire Agreement
(a) This agreement embodies the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes any prior negotiation, arrangement, understanding or agreement with respect to the subject matter or any term of this Agreement.
(b) Any statement, representation, term, warranty, condition, promise or undertaking made, given or agreed to in any prior negotiation, arrangement, understanding or agreement, has no effect except to the extent expressly set out or incorporated by reference in this Agreement.
…
11.12 Legal Advice
Each party acknowledges that it has received legal advice in respect of this Agreement or has had the opportunity of receiving legal advice about this Agreement.
Mr Yammine's nominee company would provide his services for one year at $10,000 per week plus GST and expenses.
247 Completion of the sale agreement occurred on 29 March 2019 by payment of the second instalment of $8 million: [127].
248 On 29 April 2019, Mr Liemant and PwC, as auditors, signed the audited annual financial report of Lantrak NSW for the year ended 30 June 2018. The statement of comprehensive income for the audited year ended 30 June 2018 gave a figure for revenue from continuing operations of $62,885,417, profit before income tax of $39,079, and profit for the year of $11,182: [128]. The primary judge did not perform a calculation of EBIT based on those audited accounts, but if one takes the net profit of $11,182, and adds back finance expenses of $388,973 and tax of $27,897, one has an EBIT of $428,052. If one had adopted the valuation method of five times EBIT, that would yield a value of $2,140,260.
249 The primary judge also referred to the 2018/19 audited financial report of Lantrak NSW, and noted that the management fee and administration expenses were substantially lower than previously, and the revenue had increased to about $73.1 million: [130]. Again, the primary judge did not perform an EBIT analysis, but if one adopts the net profit figure of $995,508 (adding back the loan write-off), and adds back finance expenses of $738,075 and tax of $518,279, one reaches an EBIT of $2,251,862. Five times that EBIT yields a figure of $11,259,310.
250 The primary judge then referred to a meeting in May 2019 between Mr Yammine, Mr Liemant and Mr Peeke: [131]. The primary judge said that Mr Yammine asked when he would get the balance of the money from the original deal and Mr Peeke said that there was nothing owing; however, Mr Yammine said that Mr Liemant told him: "just bear with me": [131]. Mr Yammine had a copy of the Heads of Agreement with him and told Mr Liemant that he was not happy with the deal that they had done. The primary judge referred to Mr Liemant's evidence that he was "quite surprised and taken aback" that Mr Yammine was not happy with the deal, but the primary judge said that that assertion "rang hollow": [134]. The primary judge said that Mr Liemant knew that, despite the seriousness of the negotiations for, and entry into, the Heads of Agreement, he and his brother had not gone ahead with the proposed $47.5 million overall purchase, or even the $35 million for the Lantrak NSW business, and instead Mr Yammine had to conclude a sale valuing the latter at about $13 million. Further, the primary judge said that Mr Liemant wanted to maintain a relationship with Mr Yammine, who was "capable of driving customers to that business" and was not subject to any restraint of trade: [134]. The primary judge said that, accepting that the Heads of Agreement were not binding, it was difficult to think that Mr Liemant could have believed that Mr Yammine would have been happy with a deal in which he had come out so far behind his expectations of the worth of what he had to sell, and which all of the professionals and Mr Liemant had adopted in the Heads of Agreement: [135]. In my view, that reasoning again proceeds on the erroneous basis that there was a consensus between the parties that the Liemant interests would pay a total of $35 million for the Lantrak NSW business, and that Mr Liemant's professional advisers valued Lantrak NSW at $35 million, neither of those propositions being supported by the evidence. The primary judge also referred to the findings that Mr Yammine had refused to enter into a restraint of trade as his "security" for Mr Liemant's assurances that he would "honour the deal" and pay the balance later: [135].
251 On 20 June 2019, Mr Yammine arranged a meeting in a restaurant in Melbourne Airport with Mr Liemant, which was also attended by a friend of Mr Yammine's, Mr Akkawi. The primary judge found that Mr Yammine said that Mr Liemant told him "I will always honour our deal", and that he would get it done, but needed time to raise the funds: [136]. The primary judge accepted the evidence of Mr Akkawi that during the meeting he heard Mr Yammine ask Mr Liemant, "when are you going to fulfil the payment of the $22 million?", to which Mr Liemant responded "Just be patient and bear with me and everything will be sorted": [138]. I do not read that finding as an acceptance by Mr Liemant that he was honour-bound to pay the full amount of $22 million, as distinct from anticipating further negotiations on that matter.
252 On 28 June 2019, Mr Touma emailed Mr Peeke referring to his instructions "that our client has communicated the below offer to your client". The email set out details of an offer to sell RTS's and Nojo's business and assets, and for Mr Yammine to enter into a contract not to compete in relation to haulage in consideration of the payment of $15 million payable in three instalments: [139]. Mr Peeke had a discussion with Mr Touma later that day and sent him an email saying that the Liemant side had no detail about the assets or business but "crudely" understood that the assets were worth between $5 and 6 million so that the goodwill component in the offer was about $10 million, and said that "[w]e would not be able to proceed on this basis", but suggested that this may change if Mr Peeke's understanding of the value of the assets were incorrect: [140]. On 2 July 2019, Mr Touma emailed Mr Peeke with Nojo's financial statements, an asset schedule and their valuation, which Mr Peeke forwarded to Mr Liemant, noting that the assets at market value were worth $6.1 million: [141]. On 3 July 2019, Mr Peeke emailed Mr Touma saying that they did not wish to proceed with the offer: [141]. The primary judge said that nothing further transpired in relation to this offer: [142]. The primary judge accepted that Mr Touma's correspondence did not suggest that Mr Yammine had instructed him to propound a claim that they owed, or had promised to pay, $22 million in addition to the consideration payable under the SPA: [142]. The primary judge said that he had taken that omission into account in evaluating the evidence as a whole and referred to Mr Yammine's continuing trust in Mr Liemant: [142].
253 On 22 August 2019, Mr Liemant went to Mr Yammine's house and met with him and Ms Mikhael. Mr Yammine said that he enquired "how's the funding going?" to which Mr Liemant said that it was going well, as was his business. Mr Yammine asked how they were going to finalise the deal and Mr Liemant told him, "Norm, I'm going to get this done" and mentioned a possible sale of a cornerstone of his business. Mr Yammine gave evidence that Mr Liemant said "I will honour the deal. It's your kids' super". Ms Mikhael said that during the conversation Mr Liemant kept assuring them, saying "I will honour the rest of the money", and said to her "don't worry, I will honour your kids' super. There's no need to worry". The primary judge was not satisfied that Mr Liemant said "I will honour your kids' super" on this occasion. However, the primary judge was satisfied that Mr Liemant said that he would "honour the deal": [146]. The primary judge then said that by this time, Mr Liemant knew that he had led Mr Yammine to expect that he would be paid the balance of what they had identified in the negotiations for the Heads of Agreement as the price of $35 million for the Lantrak NSW business: [146]. The primary judge said that Mr Liemant did not tell Mr Yammine that he was unwilling to proceed with that price because it overvalued the business, but rather he said that the Liemant side could not raise the funds to pay the $35 million: [146]. I do not read those findings as findings that Mr Liemant promised to pay $35 million at the meeting on 22 August 2019. Further, for the reasons already given, in my view there was no consensus as to the $35 million figure between Mr Yammine and Mr Liemant. I accept that Mr Yammine was expecting to be paid a total of $35 million, but that was an expectation which Mr Yammine had generated himself, not one which Mr Liemant had led him to form.
254 In September 2019, Mr Yammine met with Mr Simpson, who was one of the Lantrak NSW employees referred to in the 9 October note. Mr Simpson told him that the business was earning revenue between $10 and $12 million per month and that Mr Liemant was looking to sell 10% for $10 million, adding that the then value of the Lantrak NSW Group was about $100 million: [147]. Soon after this, Mr Pinto gave Mr Yammine the three documents that he had received from Mr Tromboli to which the primary judge referred at [40], namely the unaudited summaries of the Lantrak Group's results for the years ended 30 June 2016, 2017 and 2018 and the Lantrak Group balance sheet as at 31 March 2018. The primary judge said that when he received this new financial information, Mr Yammine formed the view that Mr Liemant had lied to him about the Lantrak Group's financial position: [148].
255 On 5 October 2019, Mr Yammine met with Mr Liemant and told him what Mr Simpson had informed him as to the Lantrak NSW Group's earnings and value: [149]. Mr Yammine gave evidence that Mr Liemant responded by saying in reference to Mr Liemant proposing to sell a cornerstone for $10 million, "I am doing that so I can pay you back or pay you the money to finish the deal" and said further "I always make right. I always make right": [149]. On that afternoon, after the discussion, Mr Liemant sent a text message to Mr Yammine saying "Don't worry I will always honour What is right Together we can achieve great things": [150]. When asked about that in cross-examination, Mr Liemant referred to honouring a possible future deal, which the primary judge found unconvincing: [152]. The primary judge said that the text was carefully non-committal in what it was that Mr Liemant would honour, just as his previous assurances to Mr Yammine had been crafted to placate and encourage Mr Yammine to believe that Mr Liemant was working toward paying him the balance of what they had agreed, in negotiating the Heads of Agreement, to be the value of the Lantrak NSW Group: [152]. I observe that, fundamental to that finding, is the proposition that the parties had reached a consensus in negotiating the Heads of Agreement as to the value of the Lantrak NSW Group, being a proposition which I do not regard as having been established by the evidence. I agree with the primary judge that Mr Liemant was non-committal in what it was that he would honour, and in my view that had been a consistent feature to date of Mr Liemant's communications on the subject.
256 On 11 October 2019, Mr Yammine and Mr Liemant met in Docklands in Melbourne. The conversation on that occasion was the subject of a claim by the Yammine Parties that Mr Yammine and Mr Liemant entered into a binding contract for the payment of $10 million in consideration of Mr Yammine, and entities in which he was interested, promising not to compete with the Lantrak NSW Group's business and giving up any claim to the $22 million. The primary judge rejected that claim: [272]-[275]. The primary judge found that Mr Yammine and Mr Liemant discussed the broad commercial outlines of such an arrangement, but was not satisfied that the Yammine Parties had established that the discussion resulted in a sufficiently certain consensus so as to create an enforceable contract: [273].
257 On 12 October 2019, Mr Yammine sent a text message to Mr Liemant saying "thank you for understanding and honouring what is right": [159]. Mr Liemant responded by text saying: "A good partnership always respects each other": [159].
258 The primary judge then dealt with the argument by the Yammine Parties for a collateral contract, the contention being that Mr Liemant, on behalf of the Liemant parties, orally agreed in the 9 October conversation that, in order to accommodate the financial position of Lantrak Holdings, they would enter into a written agreement for the purchase of the Yammine Parties' shares in the Lantrak NSW Group for $13 million, instead of $35 million, and that in consideration of the Yammine Parties entering into that written agreement, the Liemant Parties agreed in a collateral contract that they subsequently would pay the $22 million balance of the $35 million to the Yammine Parties: [202]. The primary judge rejected that argument: [206]. The primary judge held that such a contract would be wholly inconsistent with the entire agreement clause in cl 11.7 of the SPA, and in any event it was impossible to identify with sufficient certainty what the terms of any such collateral contract were: [206]-[222].
259 The primary judge then dealt with the contention by the Yammine Parties that the Liemant parties were estopped from denying that they had promised to pay $22 million in consideration of the transfer of the balance of the 50% of NJA's shareholdings in Lantrak NSW: [223]. The primary judge rejected that contention on the basis that the Yammine Parties failed to prove that Mr Liemant's promise was sufficiently clear and unambiguous to give rise to an estoppel: [224]-[233]. At one stage there was a cross-appeal from the primary judge's conclusions concerning the estoppel claim, but that was dismissed by consent.
260 The primary judge then turned to the misleading conduct case, pursuant to s 18 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL). The primary judge summarised the submissions by the Liemant Parties to the effect that Mr Yammine's evidence fell well short of the degree of clarity and specificity necessary to establish a contravention of s 18(1) of the ACL, contending that his evidence that Mr Liemant "promised" or assured him that "I will honour what I have signed", "I will honour the deal" and similar statements were platitudinous, vague, general and contrary to the express terms of the sale of the SPA. The Liemant Parties submitted that, even if Mr Liemant had made such statements, the Yammine Parties had not propounded an intelligible basis to discern what "honouring" the expressly non-binding Heads of Agreement could entail. Further, the Liemant Parties argued that, even if Mr Liemant had made a misleading representation on which Mr Yammine had relied, the Yammine Parties had not proved, or even articulated how they claimed to have suffered, any loss or damage: [241].
261 The primary judge expressed the following conclusion at [243]:
In my opinion, the interactions between Mr Liemant and Mr Yammine before and after completion of the sale agreement on 29 March 2019 supported the Yammine parties' claim that Mr Liemant represented in the 9 October conversation and thereafter, in the period leading up to entry in the sale agreement that, if Mr Yammine entered into the sale agreement, Mr Liemant (and Lantrak Holdings) would pay Mr Yammine the balance of the original purchase price of $22 million for the Lantrak NSW group. As I will explain below, the fact that both Mr Yammine and Mr Liemant continued to discuss the payment of $10 million and a non-compete agreement also supports the Yammine parties' claim that there was more to the radical reduction in the purchase price from $35 million to $10 million than the terms of the sale agreement, including its entire agreement clause, provided.
262 The primary judge also found that Mr Liemant's "promise" to "honour the deal" was a representation with respect to a future matter, within the meaning of s 4(1) and (2) of the ACL, requiring that a person who makes a representation as to a future matter must have reasonable grounds for making it: [244]. The primary judge said that the parties did not suggest that the case turned on whether Mr Liemant had reasonable grounds for what he said; rather, the factual contest concerned whether he did or did not make the representation, and there were no submissions that the deeming provisions in s 4 had any determinative role to play in the resolution of the evidentiary contest between the parties: [244]. The primary judge said that there was "a wealth of evidence to the contrary" and that it was "clear enough" that if, as the primary judge had found, the representation was made, it was misleading and that in relying on it, Mr Yammine was misled into acting to the detriment of the Yammine Parties by entering into the SPA without any written or other contractual recognition that Mr Liemant would "honour the deal": [244]. The primary judge said that he was comfortably satisfied that Mr Liemant led Mr Yammine to believe that the Liemant Parties would "honour the deal"; that is, make up the difference of $22 million later if Mr Yammine caused the Yammine Parties to enter into the sale agreement, as he did based on that inducement: [245]. The primary judge said that Mr Liemant's representations that the Liemant Parties would "honour the deal" was promissory, although not contractual and did not create any estoppel, and induced Mr Yammine to believe that, despite whatever may have been the binding force of the SPA, he could trust Mr Liemant to make up, within the reasonably foreseeable future, the difference of $22 million between the non-binding, but apparently accepted, value of the Lantrak NSW Group of $35 million and the $13 million payable under the SPA, once the Liemant Parties could arrange their finances to do so: [246]. I observe that in making that finding, the primary judge was clearly proceeding on what I regard as the erroneous basis that the value of the Lantrak NSW Group of $35 million had been accepted between Mr Yammine and Mr Liemant, albeit in a non-binding way.
263 The primary judge found that the Yammine Parties acted to their detriment when Mr Yammine (on their behalf) caused them to enter into the SPA because he believed, and relied on, Mr Liemant's "promise" that he would honour the deal, despite the effect of the entire agreement clause: [247]. The primary judge said that Mr Yammine may have been under some financial pressure, but there was no evidence that it was so extreme that he would have abandoned the non-binding result of the hard-nosed bargaining in the negotiations of the Heads of Agreement, that had resulted in the "apparently joint" view that the Lantrak NSW Group was worth $35 million, and settle on a sale price of about one third of that amount, without any substantive bargaining, because of what his trusted friend, Mr Liemant, said about being able to raise the $35 million at that time: [247]. Again, I observe that the reasoning is based on the finding that the view that Lantrak NSW was worth $35 million was a "joint" view shared by both of them.
264 As to the question of loss, the primary judge rejected the Liemant Parties' argument that the Yammine Parties' case required the proof of a particular loss: [250]. The primary judge said that the Yammine Parties' pleaded claim in their originating application was for damages which included loss of a commercial opportunity to negotiate a different, more financially favourable, transaction than that in the SPA, referring to Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. I note that the primary judge did not set out the paragraph of the pleaded claim to which his Honour referred.
265 The primary judge then proceeded to consider the evidence as to whether Mr Yammine could have received a better price than that recorded in the SPA: [252]-[259]. The primary judge made a finding that if Mr Yammine had not trusted Mr Liemant and kept negotiations for an immediate, but perhaps lesser, price on foot, there was a "real possibility" that both men would have arrived at a price substantially in excess of the $13 million in the SPA, and that the Lantrak Group had significant financial capacity, even if not enough at that time to enable it immediately to pay $35 million: [260]. The primary judge said that it followed that the Yammine Parties were entitled to compensation under s 236(1) of the ACL for the loss of that chance: [260]. The primary judge said that that commercial opportunity or chance had a value that was not susceptible of precise calculation, and that the relevant time for valuing that loss was 12 November 2018 when the Yammine Parties entered into the SPA in reliance on Mr Liemant's promise: [264]. The primary judge considered that the Yammine Parties had a 50% chance of negotiating a price of $25 million to $30 million in lieu of the $13 million in the sale agreement. The average of $27.5 million produces a price of $14.5 million greater than $13 million, 50% of which equates to $7.25 million, and the primary judge held that that was an appropriate amount of compensation: [267]. Accordingly, his Honour found that the Yammine Parties were entitled to an award of $7.25 million as compensation under s 236(1) of the ACL, with interest from 12 November 2018: [268].
266 The primary judge then dealt with the argument by the Yammine Parties that, as an alternative to their claim for $22 million, Mr Yammine and Mr Liemant agreed on 11 October 2019 in the Docklands meeting, that the Liemant Parties would pay Mr Yammine $10 million in consideration of him agreeing that neither he nor any entity which he was interested would compete with the business of Lantrak NSW Group for ten years and that, subsequently, this agreement would be formally documented: [269]. The primary judge rejected the Yammine Parties' argument, at the Docklands meeting, Mr Yammine and Mr Liemant entered into the binding contract for the payment of $10 million in consideration of Mr Yammine, and entities in which he was interested, promising not to compete with the Lantrak NSW Group's business and giving up any claim to the $22 million: [272]. As I have mentioned above, while the primary judge found that Mr Yammine and Mr Liemant discussed the broad commercial outlines of such an arrangement, his Honour was not satisfied that the Yammine Parties had established that the discussion resulted in a sufficiently certain consensus so as to create an enforceable contract: [273]. I observe that none of the evidence to which the primary judge referred in relation to this alleged agreement asserted that Mr Liemant acknowledged in some way that he was honour-bound to pay the amount of $22 million.