Leedman v Chahhoud

ty Partners Pty Ltd (trading as Captain Cook College) v Australian Competition and Consumer Commission [2024] HCA 27 Retirement Village Bargo Pty Ltd v Anwar (2023) 21 BPR 44,177; [2023] NSWSC 209 Roberts v Investwell Pty Ltd (in liq) (2012) 88 ACSR 689; [2012] NSWCA 134 Rogers v Rogers [2020] NSWSC 392 Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2023] NSWCA 102 Sood v Christianos (2008) 14 BPR 26,101; [2008] NSWSC 1087 Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Wakim v Senworth Capital Pty Ltd [2024] NSWCA 102 Watson v Foxman (1995) 49 NSWLR 315 Yerkey v Jones (1939) 63 CLR 649; [1939] HCA 3 Texts Cited: J D Heydon, M J Leeming, P G Turner, Meagher Gummow & Lehane's Equity Doctrines & Remedies (5th ed, 2015, LexisNexis) N Seddon, Seddon on Deeds (2nd ed, 2022, The Federation Press) Category: Principal judgment Parties: Kim Leedman (First Plaintiff) Anita Leedman (Second Plaintiff) Trilam Developments Pty Ltd (ACN 130 367 412) (Third Plaintiff) Chadia Chahhoud (First Defendant) Elias Taleb (Second Defendant) Fawaz Helou (Third Defendant) Ozem Kassem in his capacity as liquidator of Class 1 Form Pty Ltd (In liquidation) (Fourth Defendant) Representation: Counsel: Mr Daniel Krochmalik with Ms Ada Lim (Plaintiffs) Ms Chadia Chahhoud (Litigant in person) (First Defendant)

Solicitors: JHK Legal (Plaintiffs) Ms Chadia Chahhoud (Litigant in person) (First Defendant) File Number(s): 2022/158199 Publication restriction: N/A

Introduction

1. The plaintiffs in these proceedings are Mr Kim Leedman, Mrs Anita Leedman, and Trilam Developments Pty Limited. Mr and Mrs Leedman are the directors and shareholders of Trilam Developments.
2. The proceedings arise out of a deed dated 16 June 2017 between the plaintiffs (referred to in the deed as the "Retiring Entities") and Mr Elias Taleb (the second defendant), Ms Chadia Chahhoud (the first defendant), Class 1 Form Pty Limited, Steadiform Pty Limited, Steadiform Holdings Pty Limited, Akena Pty Limited, Akena Installations Pty Limited, and Elias Pty Limited (referred to in the deed as the "Continuing Entities").
3. The purpose of the deed, as recorded in the recitals, was to dissolve the legal and commercial relationships between the Retiring Entities and the Continuing Entities in relation to the activities of entities defined as the "Affected Entities" - Class 1 Form, Steadiform, Steadiform Holdings, Akena, Akena Installations, and the Steadiwall Intellectual Property Trust - including the development of structural formwork systems under the names "Class 1 Form" and "Steadiform".
4. The deed required the Retiring Entities to surrender their shares in the Affected Entities and their units in the Steadiwall Intellectual Property Trust, to assign their interest in the intellectual property in the structural formwork systems to the Continuing Entities, and to resign from all positions of office in the Affected Entities, in consideration for payment of a "Settlement Amount" of $2,100,000. The sum of $600,000 was payable on execution of the deed (the "Initial Payment"), with the balance of the Settlement Amount payable within two years (the "Deferred Payment"). Interest accrued on the balance at the rate of 1% per month, on a compounding basis. The deed provides that the Continuing Entities' liability to pay the Settlement Amount is joint and several.
5. By clause 7.1 of the deed, each of the Continuing Entities granted a security interest in its present and after-acquired property to each Retiring Entity to secure payment of the Settlement Amount.
6. The Retiring Entities complied with their obligations under the deed, including taking the necessary steps to surrender their shares in the Affected Entities and their units in the Steadiwall Intellectual Property Trust.
7. As referred to in more detail later in these reasons, the Retiring Entities' surrender of those shares and units resulted in Elias Pty Limited becoming the sole shareholder of Steadiform and Steadiform Holdings increasing its shareholding in Akena and Akena Installations, and becoming the sole unitholder in the Steadiwall Intellectual Property Trust.

Reliability and credibility of witness testimony

1. As referred to in more detail later in these reasons, Ms Chahhoud and Mr Taleb executed the deed on which the plaintiffs sue at the Canberra office of Ashurst, who were the solicitors acting for the plaintiffs in relation to the deed. Mr and Mrs Leedman were not present on that occasion. The signatures of Ms Chahhoud and Mr Taleb were witnessed by an employed solicitor of Ashurst, Mr Robert Andersen, who gave evidence in these proceedings.
2. As the plaintiffs submitted, and as discussed in more detail later in these reasons, Mr Andersen was careful to distinguish between his very limited recollection of the occasion when Mr Taleb and Ms Chahhoud attended Ashurst's office to sign the deed on 16 June 2017, and evidence of his usual practice when witnessing parties' execution of a deed. It is entirely unsurprising that Mr Andersen does not now claim to have a detailed recollection of that occasion seven years ago, and cannot even specifically recall watching Mr Taleb and Ms Chahhoud sign the deed. It is to Mr Andersen's credit that he took care not to overstate the extent of his recollection. As the plaintiffs submitted, Mr Andersen gave direct, non-evasive answers in cross-examination, including stating succinctly and without hesitation that he has no recollection of taking certain steps that Ms Chahhoud put to in him cross-examination should have been taken before she signed the deed. I accept Mr Andersen as a credible witness, who gave truthful evidence of his limited recollection of the occasion on which the deed was signed, and who put forward the contemporaneous documents that are capable of casting some light on what occurred at Ashurst's Canberra office on that occasion. [5] I reject Ms Chahhoud's submission, which I understood to be directed to Mr Andersen's credibility, that he had a conflict of interest, or that he may be biased in favour of the plaintiffs, because he is employed by a firm of solicitors who had acted for the plaintiffs in relation to the deed (although not in those proceedings), and because Mr Andersen personally had some involvement in representing Mr Leedman in other proceedings. It was not put to Mr Andersen in cross-examination that his evidence was affected by any such conflict or bias. It is inherently improbable that Mr Andersen would give untruthful evidence thereby breaching his legal obligations as a witness and exposing himself to disciplinary and other sanctions as a solicitor.

Nature of the business relationship between Mr and Mrs Leedman, Mr Taleb and their associated companies

1. Mr and Mrs Leedman operate an invoice financing business through a company called Leedman Financial Services Pty Ltd (LFS), which was a franchisee of Fifo Capital.
2. Mr and Mrs Leedman first met Mr Taleb in about late 2012 or early 2013 to discuss the invoice financing needs of his formwork business known as Class 1 Form. LFS provided invoice financing for Class 1 Form from about mid-2013.
3. Class 1 Form was in the business of erecting formwork for concrete in the construction industry, using a product called "Permaform". During a visit to Class 1 Form's warehouse in Queanbeyan after LFS began financing the company, Mr Taleb told Mr Leedman that he was developing a plastic formwork product, but that he needed investors to fund the work necessary to protect the intellectual property and to develop and commercialise the product, and to begin performing installations using the product. Mr Leedman discussed this with Mrs Leedman, and they decided to invest by acquiring an interest in the following companies which they established together with Mr Taleb, Mr Andrew Bannick and Mrs Nicole Bannick: 1. Akena Pty Ltd; [17] 2. Akena Installations Pty Ltd; [18] and 3. Akena Holdings Pty Ltd, which was established to act as the trustee of an intellectual property trust. This company subsequently changed its name to Steadiwall Holdings Pty Ltd, and then to Steadiform Holdings Pty Ltd. [19]
4. Each of those companies was registered in Queensland.
5. Mr and Mrs Leedman held their interest in those companies through Trilam Developments, a company registered in South Australia. Mr and Mrs Leedman were, and remain, the sole directors and shareholders of Trilam Developments.
6. Trilam Developments also acquired units in the Steadiwall Intellectual Property Trust, which had been established with Akena Holdings (ultimately renamed Steadiform Holdings) as the trustee. Mr Leedman became a director of that trustee company.
7. About six months after investing in the Akena companies, Mr and Mrs Leedman caused Trilam to invest $500,000 in Class 1 Form in consideration for a 50 per cent shareholding in that company. At the same time, Mr Leedman became a director of Class 1 Form, which was registered in New South Wales. [20]

Nature of the relationship between Ms Chahhoud and Mr Taleb

1. In her first affidavit sworn in these proceedings on 16 March 2023, Ms Chahhoud gave evidence concerning her marriage to Mr Taleb, in which she deposed: "I am of a culture where the husband controls all the financial and legal matters".
2. In her second affidavit affirmed on 12 March 2024, Ms Chahhoud gave more detailed evidence about the nature of her relationship with Mr Taleb. Ms Chahhoud deposed that she married Mr Taleb in January 2009, and she fell pregnant with their first child shortly thereafter. They moved to Australia in September 2009, and their first child - Jasmine - was born soon afterwards. At some stage, Mr Taleb's two daughters from his previous marriage came to live with them. They subsequently had three more daughters of their own. As I have mentioned earlier in these reasons, Ms Chahhoud, Mr Taleb and their family returned to Lebanon to live in October 2019. Ms Chahhoud and Mr Taleb separated in October 2021, although they remain legally married. Ms Chahhoud returned to Australia, together with her four daughters, in November 2023. Mr Taleb remains in Lebanon.
3. In her second affidavit, Ms Chahhoud deposed that, since she married Mr Taleb in 2009, her full-time role has been that of a homemaker, and her focus has been on raising her children. Ms Chahhoud deposed that, since the birth of her eldest daughter in 2009: "…I have not … engaged in any meaningful paid employment. During the time that I was married to Elias until October 2021, he was the sole income earner and my children and I relied solely upon him to provide for us financially."
4. Ms Chahhoud deposed that she did engage in some casual employment: "For a period between 2009 and 2014, I privately tutored 3 students in the French and Arabic languages - both reading and writing. I taught these students for about 2 hours 3 times per week, and only to fill my time during the days. I did not have any family or friends in Canberra. I was paid $25 per tutoring session, which money I gave to Elias to store in the safe that he kept at his yard."
5. Ms Chahhoud's tax returns and notices of income tax assessment were produced to the Court in response to a notice to produce issued by the plaintiffs in these proceedings on 21 May 2024, after Ms Chahhoud had affirmed her second affidavit. The plaintiffs tendered those documents, which record that Ms Chahhoud's taxable income was $55,188 in the 2015 financial year (being the year in which she was included on the payroll of Class 1 Form), $20,546 in the 2016 financial year, $20,646 in the 2017 financial year, $20,715 in the 2018 financial year, and $13,731 in the 2019 financial year. In each of those financial years, Ms Chahhoud claimed a deduction for business expenses that were described as motor vehicle expenses. In the 2020 and 2021 financial years, during which Ms Chahhoud was living in Lebanon, she submitted tax returns declaring taxable income of $21,654 and $22,850 (respectively). Ms Chahhoud again claimed a deduction for motor vehicle expenses in the 2021 financial year.

July 2014 dinner

1. It is common ground that Mr and Mrs Leedman came to dinner at the home of Mr Taleb and Ms Chahhoud in July 2014. This was the first occasion on which Ms Chahhoud met Mr and Mrs Leedman. Ms Chahhoud has given evidence that Mr Roi also attended the dinner. Mr and Mrs Leedman, who had met Mr Roi prior to the dinner, deny that he attended the dinner. Nothing turns on whether or not Mr Roi was present.
2. In her affidavit affirmed on 12 March 2024, Ms Chahhoud gave evidence that the conversation at the dinner was conducted in English. Ms Chahhoud deposed that everybody was speaking at a fast pace about things of which she says she had no background knowledge or understanding. She was preoccupied with cooking and serving the food, and the others did not invite her to participate in the conversation, or attempt to explain to her what they were talking about. Ms Chahhoud deposed that she cannot now recall what was said, and that they were speaking at a pace that was too fast for her to understand. According to Ms Chahhoud's evidence, she had some limited conversation with Mrs Leedman during the evening about the food that she had prepared for the dinner, about her children, and about how she would wash up all the dishes after the dinner.
3. In cross-examination, Ms Chahhoud initially said that she did not remember speaking to Mr and Mrs Leedman at all during the course of the evening. When reminded about the contents of her affidavit, Ms Chahhoud reverted to her evidence that she had limited conversation which involved her answering any questions that Mr and Mrs Leedman asked about the food or about her children. Ms Chahhoud said that she could not recall whether there was any discussion about her having undertaken some university studies in Lebanon. She did not recall whether she indicated to Mr and Mrs Leedman that she had any difficulty understanding English.
4. According to Mrs Leedman's first affidavit sworn on 4 October 2023, she had a conversation with Ms Chahhoud at dinner about her background, in which Mrs Leedman also shared her own family background with Ms Chahhoud. Mrs Leedman no longer recalls exactly what was said, but she recalls that either Ms Chahhoud or Mr Taleb mentioned that Ms Chahhoud had been to university or undertaken some further education after completing high school in Lebanon. Mrs Leedman gave evidence that, whilst she noticed that Ms Chahhoud had a slight accent, she had no difficulty speaking with Ms Chahhoud in English.

Limited dealings between Mr and Mrs Leedman and Ms Chahhoud

1. In his affidavits sworn on 5 October 2023 and 6 April 2024, Mr Leedman deposed that he saw Ms Chahhoud only a couple of times in the year or so after the July 2014 dinner, and that he did not recall seeing her or speaking with her at any time after about mid-2016. Mr Leedman did not recall what he spoke about with Ms Chahhoud on the few occasions that he saw her after the July 2014 dinner, but he did not suggest that they discussed any business matters. Mr Leedman did not recall any occasion on which Ms Chahhoud had indicated to him that she did not understand what he was saying to her in English.
2. In cross-examination, Mr Leedman was asked whether he knew that Mr Taleb was controlling and strict with Ms Chahhoud and their children. Mr Leedman answered that he did not know that. Mr Leedman was also asked whether he and Mr Taleb had ever discussed the relationship between Mr Taleb and Ms Chahhoud. Mr Leedman answered that he and Mr Taleb had sometimes discussed their families and that, during such discussions, Mr Taleb had spoken of Ms Chahhoud and their children in a caring, loving and respectful way, and that Mr Leedman "never thought for one time ever that there would be any issues with your, with your marriage or your relationship". Mr Leedman readily acknowledged in cross-examination that he had not asked Ms Chahhoud about her relationship with Mr Taleb. That is understandable, having regard to the very limited contact between Mr Leedman and Ms Chahhoud.
3. In her affidavit sworn on 4 October 2023, Mrs Leedman deposed that she and Ms Chahhoud were not close, and that she had spoken to Ms Chahhoud only a couple of times after first meeting her at the July 2014 dinner. Mrs Leedman deposed that she and Ms Chahhoud "never talked business".
4. Ms Chahhoud gave evidence that she had no further contact with Mr and Mrs Leedman after the July 2014 dinner until just after the birth of her daughter, Rebecca, in April 2015. According to Ms Chahhoud's evidence, Mrs Leedman came to visit her at her home one evening after Rebecca's birth, bringing a gift. Mrs Leedman stayed for about 25 minutes, during which they discussed their children, Ms Chahhoud's pregnancy, and how she was feeling. Mr Taleb was present throughout the visit.
5. Mrs Leedman gave evidence of visiting Ms Chahhoud at her home following the birth of a child in about September 2018. Save for the timing of the visit, Mrs Leedman's account of it was consistent with Ms Chahhoud's account in all material respects. I accept Ms Chahhoud's evidence that the visit occurred in 2015, shortly after the birth of her daughter, Rebecca. Ms Chahhoud's unchallenged evidence is that she has four children with Mr Taleb, who were aged 14, 11, 8 and 3 years old at the time Ms Chahhoud affirmed her affidavit in these proceedings on 12 March 2024. It follows that the youngest child, Elena, was born in 2020 or 2021, when Mr Taleb and Ms Chahhoud were living in Lebanon. No child was born to Ms Chahhoud in Australia after the birth of Rebecca in 2015. Mrs Leedman was mistaken in her recollection that the visit occurred in 2018. I note that this was not directly put to Mrs Leedman in cross-examination, but she did appear to be uncertain about the timing of the visit when asked about it. That is understandable, given the passage of time.

Negotiations for the dissolution of the business relationship from mid-2015

1. In mid-2015, Class 1 Form became involved in a security of payments dispute with a building company known as RGD Constructions.
2. Mr Leedman gave evidence that he lacked the appetite to deal with Class 1 Form's construction disputes, and he did not get along with Class 1 Form's employee who was responsible for managing those disputes, Mr Peter Zardo. Mr Leedman therefore resigned as a director of Class 1 Form in September 2015.
3. By late 2015, Mr and Mrs Leedman had decided that they wanted to exit their investment in Class 1 Form. Mr Leedman discussed this with Mr Taleb, who said that he would find another investor to buy them out.
4. Certain proceedings were commenced in about mid-2015, which Mr Leedman refers to as the "Arona litigation". Mr Taleb, LFS and Mr Leedman were defendants in those proceedings. Mr Taleb engaged Legal on London to represent him, and Mr Leedman engaged Ashurst to represent him and LFS.

October 2015: Ms Chahhoud becomes the sole director and shareholder of Elias Pty Limited

1. Ms Chahhoud was appointed as a director of Elias Pty Limited on 12 October 2015. Mr Taleb resigned as a director on the same date. As discussed earlier in these reasons, Ms Chahhoud consented to her appointment at the time. Contrary to the evidence given by Ms Chahhoud in these proceedings, she was well aware by no later than July 2021 that she was the sole director of Elias Pty Limited. I do not accept Ms Chahhoud's assertions in these proceedings that she was the director of Elias Pty Limited in name only. Those assertions are inconsistent with her evidence in the Helou proceedings, which clearly implied that Ms Chahhoud was in fact in control of the affairs of Elias Pty Limited. [31]
2. According to ASIC's records, Ms Chahhoud became the sole shareholder of Elias Pty Limited on about 2 November 2015. Elias Pty Limited, in turn, held shares in Akena, Akena Installations, Steadiform Holdings (then known as Akena Holdings) and Steadiform (then known as Steadiwall). Elias Pty Limited also held units in the Steadiwall Intellectual Property Trust.
3. As the plaintiffs acknowledged, Elias Pty Limited was the trustee of a trust. Ms Chahhoud did not adduce any evidence in these proceedings concerning the nature and terms of that trust. Nor did Ms Chahhoud adduce any evidence suggesting that Elias Pty Limited held the shares and units referred to above in its capacity as trustee of that trust, rather than for its own benefit, when Ms Chahhoud became the sole director and shareholder of Elias Pty Limited in October and November 2015, or in June 2017 when Ms Chahhoud signed the deed that is the subject of these proceedings. ASIC company extracts for Akena, Akena Installations, Steadiform Holdings, and Steadiform that were tendered in these proceedings record that Elias Pty Limited was the beneficial owner of the shares of which it was registered as the holder in each of those companies, at least at the various dates of those searches. No documents were produced to the Court in response to a notice to produce issued by the plaintiffs to Ms Chahhoud, and a subpoena issued by the plaintiffs to the proper officer of Elias Pty Limited, requiring production of, inter alia, the trust deed of the trust of which Elias Pty Limited is the trustee, tax returns for that trust and for Elias Pty Limited, and financial records of that trust.

Further negotiations for the dissolution of the business relationship in 2016

1. In the first half of 2016, CSR Building Products alleged that Steadiform's formwork invention infringed CSR's patent. Mr Leedman and Mr Taleb had different views about how Steadiform should respond to those allegations.
2. By June 2016, Mr and Mrs Leedman had decided to exit their investment in the Akena and Steadiform companies in addition to Class 1 Form. Mr Leedman and Mr Taleb began discussing the buyout terms.
3. On 11 July 2016, Mr Taleb sent an email to Mr Leedman asking "if you Accepting this offer or not so I know how to get the legal paper done…".
4. On the morning of 12 July 2016, Mr Leedman sent an email to Mr Taleb stating: "The offer of $2 million dollars now to buy my shares of the collective companies is accepted. This acceptance is subject to the preparation and receipt of a draft contract by your lawyer by cob next Monday, 18 July 2016 or earlier, for my review and if I agree to the terms and conditions. Is this timeframe possible? Please confirm. Our expectation is finalisation of formal documents and payment by 25 July 2016."
5. Mr Taleb replied to Mr Leedman by email on the afternoon of 12 July 2016, stating: "We can prepare it all by the time frame that you are requesting but still yet to receive the trust deed for the steadiwall intellectual property trust and other other trust that we set up … reason why is that we need to include in the deed all the parties involved."
6. I infer from this exchange of emails between Mr Taleb and Mr Leedman on 11 and 12 July 2016 that Mr Taleb had conveyed to Mr Leedman prior to 11 July 2016 an offer to buy out Trilam Developments' shares in Class 1 Form and in the Akena and Steadiform companies for $2,000,000.
7. On the afternoon of 13 July 2016, Mr Rod Barnett, a Senior Consultant with the firm Legal on London, sent an email to Mr Leedman attaching what Mr Barnett described as a first draft of a Deed of Dissolution, Separation and Release.
8. That first draft named Mr Taleb, Ms Chahhoud, Mr Leedman and Mrs Leedman as the parties to the proposed deed.
9. The Recitals to the first draft stated: "A. Both the Continuing and Retiring Entities have hitherto acted in association in carrying on business of structural formwork systems within the Australian Capital Territory and environs under the firm or style name Class 1 Form (the Firm) within the building industry. B. Both the Continuing and Retiring Entities are desirous of dissolving their association in the joint-enterprise of the firm and to that end have come to an agreement between them as to provisions relating to the Retiring Entities and their disassociation with the Continuing Entities. C. Both the Continuing and Retiring Entities are desirous of having their dissolution recorded in writing in accordance with the Operative Provisions set out hereunder."

Ms Chahhoud's purchase and sale of property in Harrison in September and October 2016

1. Ms Chahhoud purchased an apartment in a residential block in Harrison, a suburb of the Australian Capital Territory, in September 2016, which she then sold in October 2016. The stamped transfer to Ms Chahhoud dated 13 September 2016 records the consideration paid by Ms Chahhoud as $260,000. Ms Radhika Reddy of Legal on London witnessed the signature of Ms Chahhoud (as transferor) on the transfer of the property which was registered on 1 November 2016. That stamped transfer records the consideration paid to Ms Chahhoud as $330,000.
2. In her affidavit affirmed on 12 March 2024, Ms Chahhoud gave the following account of her purchase and sale of the Harrison property. Ms Chahhoud wanted to buy a large block of land, and to buy animals for the land, for her daughters to enjoy. She wanted the land to be in her own name, because she wanted something of her own in Australia and she wanted to be able to keep the land in the family for her daughters. Mr Taleb took charge of searching for a property that fit Ms Chahhoud's description. In 2016, he told her that he had found a property which he had bought in her name. When Mr Taleb took Ms Chahhoud to see the property, she saw that it was an apartment. She told Mr Taleb: "Get rid of it, I don't want it. I'm not moving here". Mr Taleb then made the arrangements to sell the property. According to Ms Chahhoud's evidence, it was not until late 2018 or early 2019 that Mr Taleb approached her again about her proposal to acquire a property. That led to Ms Chahhoud acquiring the Peak View property, as referred to later in these reasons.
3. In cross-examination, Ms Chahhoud denied meeting with lawyers about the sale of the Harrison property. Ms Chahhoud said that, if she had met with lawyers, then she did not know they were lawyers, that Mr Taleb had been with her, and that "Elias acted on everything, not me".
4. Ms Chahhoud's signature on the transfer of the Harrison property that was registered on 1 November 2016 was witnessed by Ms Radhika Reddy, solicitor, of Legal on London. After being shown that transfer document bearing her signature as transferor and the signature of Ms Reddy as the witness, Ms Chahhoud gave evidence that "I never had a, a lawyer under this name". Ms Chahhoud did not deny meeting Ms Reddy, saying "probably I met her, but I don't remember". Ms Chahhoud was firm in her evidence that "I did not engage lawyer. No. I left it with Elias. I don't know what Elias did". Ms Chahhoud denied that any lawyer ever sought instructions from her in relation to the Harrison property.

Further negotiations concerning the dissolution of the business relationship from early 2017

1. By early 2017, Mr and Mrs Leedman and Trilam Developments had relaxed their requirement for payment of the $2,000,000 Settlement Amount in full on settlement. Mr Leedman wrote to Mr Taleb on 9 January 2017 in the following terms: "It appears once again the whole exit process has stalled. I have a proposition for you. You want me gone, and I want to be gone. You want clear space to develop your products for local and overseas markets, and I want the same thing for you. I'm going to make it easy for you. I will sign out of everything - all of our shared companies and my Directorships and shareholdings and walk away - no Escrow. I will do this upon receipt of a $600,000 deposit and the balance of $1,500,000 payable over 2 years. (Yes that's $2.1m). I will not set a payment schedule at all, you can have the full 2 years to pay the balance, however to encourage you to pay instalments when you can, the debt will grow by 1% per month (compounding) on any outstanding balance month to month. Paying regular instalments will save money compared to paying it all at the end. The other part of the deal is that I will have the right to seek recourse after 2 years against the company(s) and you personally if you do not pay the balance by then. Simon Brown (my lawyer) will write this or add it to the Deed of Dissolution that your lawyer has (or will prepare) detailing my exit. … I want this done in the next 4 weeks. Please have your lawyer prepare the Deed of Dissolution along those lines. Your insistence on a valuation may result in unwelcome attention from other parties, and will require a lot of work to produce and be quite costly, however I am prepared to go through with it if we can't agree on an amicable Deed of Dissolution. It's fairly safe to assume you have not assembled any documentation to support the valuation process as per my email to you on 16th of December 2016, and to be frank I don't think you had any intention to do this anyway."
2. Mr Leedman sent a further email to Mr Taleb on 17 January 2017 in the following terms: "Please let me know your thoughts on my proposition in my email below. I would be happy to exist with an agreeable Deed of Dissolution, and this is our preference, and probably yours also. However, if you are unable to or unwilling to follow this path, then I will pursue the valuation if you would rather that. Vincents are perfectly capable and properly accredited to provide a valuation, so I don't think there would be any issues with the outcome once they have been engaged."

The events of 14 June 2017

1. At 8:50am on 14 June 2017, Mr Leedman sent an email to Ms Roach of Ashurst stating: "Elias has a bank cheque apparently ready to sign the deed. I texted him your number, he wants to meet the lawyers to sign the deed. However he is in Canberra. … I asked him to ring you to arrange a meeting. Obviously this will have to take place in the Canberra office of Ashurst. Would it be possible please when he calls if you were able to set up an appointment with someone at the Canberra office to do this today and preferably this morning as he has just texted and wants to meet someone at 9.30am. …"
2. It appears that the deed had not quite been finalised when Mr Taleb communicated to Mr Leedman that he was ready to sign it. Ms Roach sent an email to Mr Leedman at 10:06am on 14 June 2017 attaching a further revised draft deed, which Ms Roach described as having been amended to include the Steadiwall Intellectual Property Trust as an Affected Entity, and to provide for execution of the deed by Steadiform Holdings in its own capacity and in its capacity as trustee of the Steadiwall Intellectual Property Trust. Ms Roach's email to Mr Leedman continued: "Please sign the deed and return a signed copy to us to hold until Elias signs the deed. Please do not date the deed. We will arrange for someone in our Canberra office to be available to meet with Elias. I am still in the process of making those arrangements and will confirm a time as soon as possible. As discussed, there is a risk that even if Elias signs the deed, he may not follow the terms of the deed and may not pay you any further amounts owed under the deed. As previously discussed, there are a number of resolutions, share transfer forms and ASIC forms that are needed to cancel the shares/units in the various entities. Given the timing, these have not been prepared and they will take some time to prepare given the number of entities involved…"
3. In a further email to Mr Leedman at 10:12am on 14 June 2017, Ms Roach wrote: "… you should send a copy of the updated deed to Elias. He should have the deed prior to arriving at our Canberra office. Given that we are not representing Elias (and we understand that he will not have his legal representatives present), it will not be appropriate for our lawyers to explain the terms of the deed to him."
4. The deed in the further revised form attached to Ms Roach's 14 June 2017 email was executed by Mr Leedman in his personal capacity, by Mrs Leedman in her personal capacity, by Trilam Developments, and by Mr Leedman in his capacity as a director of Steadiform Holdings (in its own capacity, and its capacity as trustee of the Steadiwall Intellectual Property Trust). At 10:48am on 14 June 2017, Mr Leedman emailed a copy of the revised draft deed to Mr Taleb, stating: "Please see attached Deed of Dissolution, Separation and Release for your information. I have signed again today and forwarded a copy to the solicitor. It is undated. Rob Andersen is available from 11am till noon this morning at his office at Ashurst Solicitors, 12 Moore Street, Canberra City. You will need to take a signed copy of this Deed (including Chadia's signature and witnesses) to the appointment with the deposit cheque/s."

The events of 16 June 2017

1. At 7:46am on 16 June 2017, Mr Leedman forwarded to Mr Taleb an email that he had received from Ms Roach attaching the relevant company minutes, ASIC forms and similar documents and stipulating the order in which they were required to be signed. Mr Leedman requested Mr Taleb to follow the steps set out in Ms Roach's email.
2. Mr Leedman's email also stated that he agreed to "start the time period from today for $600K". It appears from other contemporaneous emails and text messages that this was an agreement by Mr Leedman to abandon his previous position that, if settlement did not occur on 5 May 2017, the amount of the initial payment under the deed would increase by $20,000 for each month thereafter.
3. Finally, Mr Leedman's email stated: "You will see that Chadia Chahhoud as Sole Director [sic] of Elias Pty Ltd needs to also sign the deed and ancillary documents and will need to be available today."
4. In fact, as Ms Chahhoud personally was named as a party to the deed, she was required to execute the deed in her personal capacity in addition to signing the deed in her capacity as sole director of Elias Pty Limited. Mr Leedman had previously pointed this out to Mr Taleb in his 14 June 2017 email to which I have referred above.
5. In his affidavits sworn on 5 October 2023 and 6 April 2024, Mr Leedman deposed that he did not discuss the terms of the proposed deed directly with Ms Chahhoud at any stage during the negotiations of those terms. Mr Leedman deposed that he assumed that Legal on London were representing Ms Chahhoud in relation to the deed because they had named her as a party to the first draft of the deed which they had prepared in July 2016. Mr Leedman handled all of those negotiations on behalf of Trilam Developments. Mrs Leedman did not participate in the negotiations, and did not have any communications with Mr Taleb or Ms Chahhoud about the terms on which Trilam Developments was to exit from its investment in Class 1 Form, the Akena companies and the Steadiform companies.
6. The email correspondence concerning the first draft of the deed, and the subsequent drafts prepared by Ashurst, refers to Legal on London taking instructions from Mr Taleb. That email correspondence makes no reference to Ms Chahhoud. However, Mr Taleb had emphasised in an email that he sent to Mr Leedman on 12 July 2016, before Legal on London prepared the first draft of the deed, the importance of including in the deed "all the parties involved". [34] I infer that Ms Chahhoud was named as one of those parties in the first draft of the deed circulated by Legal on London by email on 13 July 2016 because Mr Taleb instructed Legal on London that Ms Chahhoud was one of "the parties involved". As I have already observed, it appeared from the first draft of the deed that Ms Chahhoud was involved as one of the Continuing Entities to whom the Retiring Entities were obliged to transfer their units in the Steadiwall Intellectual Property Trust and to assign their interest in intellectual property, and as one of the Continuing Entities collectively obliged to pay $2,000,000 to the Retiring Entities in consideration for the transfer of those units and for the transfer of shares to Mr Taleb. The email sent by Mr Barnett of Legal on London to Mr Leedman on 13 July 2016 attaching the first draft of the deed was not sent to any other party, and made no reference to the need for the involvement of any other party in the review and negotiation of the terms of the draft deed. In those circumstances, it is readily understandable that Mr Leedman would have assumed that Legal on London were acting for all of the Continuing Entities defined in the first draft of the deed, including Ms Chahhoud, just as Mr Leedman was negotiating on behalf of himself, Mrs Leedman and Trilam Developments as the Retiring Entities and subsequently retained Ashurst to act on behalf of the all of the Retiring Entities. I accept Mr Leedman's evidence that he did assume that Legal on London were acting for Ms Chahhoud as well as for Mr Taleb in relation to the proposed deed. However, I reject the submission made on behalf of the plaintiffs that Legal on London were in fact acting for Ms Chahhoud in relation to the proposed deed. There is no evidence that the firm acted for Ms Chahhoud in relation to that matter. The fact that they acted for her in relation to the sale of the Harrison apartment in October 2016 does not provide a rational basis for inferring that they also acted for her in relation to the proposed deed. I repeat my observations at [150] above.

Terms of the deed executed on 16 June 2017

1. The deed executed on 16 June 2017 by Mr Taleb (in his personal capacity, and in his capacity as a director of Steadiform Holdings and as sole director of Class 1 Form, Steadiform, Akena and Akena Installations) and by Ms Chahhoud (in her personal capacity, and in her capacity as the sole director of Elias) is in the terms of the revised draft deed that I have summarised at [160]-[174] above, amended to include the Steadiwall Intellectual Property Trust as an Affected Entity as referred to at [180] above and further amended by the handwritten amendments made on 16 June 2017 referred to at [198]-[199] and [205] above.
2. The deed defines "the Association" in the same terms as the revised draft deed dated 27 April 2017. [59]
3. The definition of "the Business" in the deed is in the same terms as in the revised draft deed dated 27 April 2017, save that it is expanded by the inclusion of the Steadiwall Intellectual Property Trust in the definition of the "Affected Entities". [60] Thus, the deed defines "the Business" as meaning the commercial or legal relationship carried on by the Association in relation to the activities of the Affected Entities - being Class 1 Form, Steadiform, Steadiform Holdings, Akena, Akena Installations and the Steadiwall Intellectual Property Trust - including the development of structural formwork systems under the name "Class 1 Form" and "Steadiform".
4. Clause 3 of the deed relevantly provides for the dissolution of "the Association" on and from "the Effective Date" by: 1. the Retiring Entities - Mr Leedman, Mrs Leedman, and Trilam Developments: 1. surrendering their shares in Class 1 Form, Steadiform, Steadiform Holdings, Akena and Akena Installations; 2. surrendering their units in the Steadiwall Intellectual Property Trust; 3. assigning their interest in the intellectual property relating to the product known as "Steadiform and Steadiwall (International Application No. PCT/AU2015/050329)" and relating to the structural formwork systems carried on by "the Business", including the systems known as Stay-In-Place Structural formwork systems, Permanent Insulated Formwork, wall formwork systems and Engineered Formwork Systems, to the Continuing Entities - Mr Taleb, Ms Chahhoud, Class 1 Form, Steadiform Holdings, Steadiform, Elias, Akena and Akena Installations; 4. assigning to the Continuing Entities their interest in the other assets of "the Business", including plant and equipment and goodwill; and 1. the Continuing Entities - Mr Taleb, Ms Chahhoud, Class 1 Form, Steadiform Holdings, Steadiform, Elias, Akena, and Akena Installations - releasing and discharging the Retiring Entities from all claims in respect of the Business and the Affected Entities, and doing all things necessary to give effect to the Retiring Parties' surrender of their interests in the shares, units and assets referred to above.

Ms Chahhoud's acquisition of the Peak View property

1. As mentioned earlier in these reasons, Ms Chahhoud gave evidence that Mr Taleb had purchased an apartment in Harrison on her behalf in July 2016, which she had required him to sell because it did not meet her requirement for land on which she could raise animals that her daughters could enjoy. [70] In cross-examination, Ms Chahhoud gave evidence that it was "my decision to buy a big farm", and that the funds that she says were available to purchase such a property were hers but that "he has a job to look for this, for this, whatever I am, I want". Ms Chahhoud denied that she and Mr Taleb made the decision together for her to purchase the Peak View property, saying "we don't decide together. I am the one who decide if we buy it or not". Ms Chahhoud also said that the property was "[n]ot for him, I want it to be 100% for me". In her evidence in these proceedings, Ms Chahhoud described it as her "dream" to have a farm in Australia for herself and her daughters. This was a prominent theme in Ms Chahhoud's closing submissions. At the commencement of her oral closing submissions, Ms Chahhoud stated: "I want to focus on one thing, that this farm is my dream and my, my dream for myself and for my children. And if I knew about this deed, if I had known, I would've non [sic] put the farm under my name. I would've put it under someone else's name to protect it."
2. In her affidavit affirmed on 12 March 2024, Ms Chahhoud gave evidence that Mr Taleb came to her in late 2018 or early 2019 and told her that he had found a property that she would like. According to Ms Chahhoud, they then went together to see a person by the name of Ray Swift, who she described as the listing agent for the property. Ms Chahhoud deposed that she signed documents where Mr Taleb told her to, without questioning him. She did not participate in any discussions with "Ray", which Mr Taleb conducted in English.
3. Ms Chahhoud exchanged contracts to purchase the Peak View property for $575,000. The transfer was registered on or about 28 February 2019.
4. It will be recalled that Ms Chahhoud returned to Lebanon in October 2019, and lived there for four years before returning to live in Australia in November 2023. In her affidavit sworn on 8 July 2021 that was read in the Helou proceedings, Ms Chahhoud had deposed that she had seen the Peak View property, and that she had stayed in the two-bedroom residence on the Peak View property on two occasions since purchasing it. In cross-examination in the present proceedings, Ms Chahhoud confirmed that the Peak View property is a long drive of about two hours from where she and Mr Taleb were living with their children in 2019. Ms Chahhoud said that she had not had a chance to start growing crops or raising animals on the property before she and Mr Taleb returned to Lebanon to live in October 2019. When it was put to her that she had been to the Peak View property "a couple of times", Ms Chahhoud answered: "Nearly every weekend we would go there. I went more". When the cross-examiner reminded Ms Chahhoud of her evidence in the Helou proceedings that she had been to the property twice, Ms Chahhoud simply asserted that she had been there more than two times, and maintained that she and her daughters went there on weekends before moving back to Lebanon in October 2019. It was put to Ms Chahhoud that her evidence of having been there every weekend was a lie that she had invented in the witness box because she thought it would help her case. Ms Chahhoud denied this.

Default in payment of the Deferred Settlement Amount and commencement of these proceedings

1. The Continuing Entities failed to pay the Deferred Settlement Amount of $1,500,000 on or before the due date of 16 June 2019. As at the date of the hearing of these proceedings, the Continuing Entities had not paid any part of the Deferred Settlement Amount or Interest.
2. In about September 2021, Mr Leedman became aware from his review of the judgment of this Court in the Helou proceedings that Ms Chahhoud had acquired the Peak View property. [71] Prior to reading that judgment, Mr Leedman had not been aware that Ms Chahhoud owned any real property.
3. The Continuing Entities have not complied with their obligations under the deed to pay the Deferred Settlement Amount, together with Interest, to the Retiring Entities. As at June 2023, the total amount of Interest on the Deferred Settlement Amount, compounded monthly since 16 June 2017 at the rate of one per cent per month, was $1,570,648.97. Thus, the total amount owing under the deed at that time was $3,070,648.97. The whole of that amount, plus interest that has accrued since June 2023, remains outstanding. Mr and Mrs Leedman gave evidence that the plaintiffs have not recovered any part of the summary judgment that was entered against Mr Taleb in these proceedings on 11 July 2023.
4. Ms Chahhoud's title to the Peak View property is unencumbered, save for the equitable charge that the plaintiffs claim pursuant to the deed. That charge is the subject of a caveat that the plaintiffs registered against the title to the Peak View property on 15 September 2021.
5. The plaintiffs tendered a letter that they received from Mr Graeme Boller, a licensed real estate agent, dated 16 February 2022, in which, Mr Boller expressed the opinion that the Peak View property would realise a price of between $650,000 and $700,000 if it were marketed for sale at that time. The appraisal was expressed to be current for a period of four weeks from the date of the letter. No updated appraisal or valuation was tendered, and the plaintiffs did not adduce any evidence from Mr Boller.
6. Mr Leedman gave evidence that, throughout 2022, he and Mrs Leedman received advice from Mr Boller and two other property agents that, in their opinion, a sale of the Peak View property by private treaty is the best method of sale because there is a limited number of potentially interested buyers due to the unique nature and remoteness of the property. According to Mr Leedman's evidence, the agents have advised him that the property is not suitable for farming because it is hilly and covered in natural bushland with shallow shale. The agents consider that the property is suitable for recreational hunting or simply enjoying the wilderness, and that a sale by auction could be detrimental to achieving strong interest amongst buyers with potential interest in such a property.

Ms Chahhoud's contention that she did not intend to be bound by the deed

1. As I have explained earlier in these reasons, Ms Chahhoud does not dispute that she signed the deed. Ms Chahhoud's contention that she did not intend to be bound by the deed is founded on her evidence that she believed that she was signing a transfer of shares, and that she did not read the deed prior to signing it. I have rejected that evidence. [72]
2. That is sufficient to dispose of Ms Chahhoud's defence and cross-claim that the deed is ineffective, void or liable to be set aside on the basis that she did not intend to be bound by it.
3. Even if I had accepted Ms Chahhoud's evidence about her subjective state of mind, this would not have rendered the deed ineffective, void, or liable to be set aside on that basis. As the plaintiffs submitted, the question whether a deed or contract is intended to create legal relations is to be determined by "what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties". [73] I accept the plaintiffs' submission that, viewed objectively, Ms Chahhoud's conduct in signing the document, which bore all of the indicia of a deed, conveyed that she intended to be bound by the terms of that document. That is all the more so in circumstances where Ms Chahhoud attended the office of the solicitors acting for the Retiring Entities for the very purpose of signing the deed and having her signatures attested by their solicitor, she proceeded immediately thereafter to execute shareholders' resolutions which were necessary to give effect to Trilam Developments' surrender of its shares and units in the Affected Entities in accordance with the deed, and bank cheques were handed to the Retiring Entities' solicitor before Mr Taleb and Ms Chahhoud left that meeting to discharge the obligation of the Continuing Entities, including Ms Chahhoud, to make the Initial Payment under the deed. Thus, even if I had accepted Ms Chahhoud's evidence that she did not read the deed, and that her subjective intention was to sign a transfer of shares only, this would not preclude the deed from being legally binding on her.

The deed created an equitable charge

1. I accept the plaintiffs' submission that clause 7 of the deed created an equitable charge over any property then owned, or subsequently acquired by, each Continuing Entity, to secure payment of the Settlement Amount that the Continuing Entities were jointly and severally liable to pay under clauses 1.4 and 4 of the deed. The parties' intention that such present and future property is liable to the discharge of the Continuing Entities' obligations to pay that Settlement Amount is clear from the express words of clause 7.1 which provide for the granting of a "security interest" in such property "to secure payment" of the amounts due. It is clear from those words and from the provisions of clause 7.2, that the parties intended that the Retiring Entities would have an immediate right of recourse to present property - and to future property, once acquired - of each Continuing Entity upon the Settlement Amount, or any component of the Settlement Amount, becoming payable under the deed. [74] This satisfies the requirements for an equitable charge. The equitable remedies of the appointment of a receiver, and an order for judicial sale, are available to the Retiring Entities to realise the security. [75]

Alleged illegitimate pressure or duress

1. As the plaintiffs submitted, Ms Chahhoud bears the onus of proving the alleged facts on which each ground of her cross-claim is based, including the ground of illegitimate pressure or duress. I have rejected Ms Chahhoud's evidence about the nature and dynamic of her relationship with Mr Taleb, her evidence of the interactions between them on the morning of 16 June 2017 before she signed the deed, and her evidence that she felt pressured by Mr Taleb to sign the deed. [76] Ms Chahhoud has therefore failed to discharge her onus of proof in respect of her allegation that Mr Taleb procured her execution of the deed by illegitimate pressure or duress. Those elements of Ms Chahhoud's defence and cross-claim must therefore be dismissed.
2. Even if I had accepted Ms Chahhoud's evidence about those matters, and assuming that I had found that evidence established threatened or actual unlawful conduct by Mr Taleb in connection with Ms Chahhoud's execution of the deed, [77] I would have rejected her defence and cross-claim based on illegitimate pressure or duress. The deed would not have been liable to be set aside on the basis of alleged duress unless the plaintiffs had actual or constructive knowledge of the facts constituting the duress by Mr Taleb, or unless the plaintiffs procured Ms Chahhoud's entry into the deed through the agency of Mr Taleb who had subjected her to duress. [78] I have accepted the evidence of Mr and Mrs Leedman that they were not aware of any pressure exerted by Mr Taleb against Ms Chahhoud, either generally or in relation to the deed. [79] Ms Chahhoud does not contend that Mr Taleb did anything in the presence of Mr Andersen on 16 June 2017, or that Ms Chahhoud said anything to Mr Andersen, that could have alerted him to the pressure that Ms Chahhoud claims to have been subjected to when she signed the deed. [80] Mr Andersen does not recall noticing any signs of coercion or pressure. [81]
3. Further, I do not consider that the plaintiffs procured Ms Chahhoud's entry into the deed through the agency of Mr Taleb. Mr Leedman, on behalf of the plaintiffs, conducted an arm's length negotiation with Mr Taleb for the plaintiffs' exit from the business relationship that they had entered into for the development and commercialisation of structural formwork systems and products, including Trilam Developments relinquishing its shares and units in Class 1 Form, in the Akena and Steadiform companies, and in the Steadiwall Intellectual Property Trust. It was Mr Taleb who told Mr Leedman in July 2016 that "all the parties involved" should be included in a deed being prepared to provide for the plaintiffs to relinquish their shares and units in consideration for $2,000,000. [82] It was Legal on London who then prepared the first draft of that deed, which included Ms Chahhoud as a party. [83] Mr Leedman reasonably assumed that Legal on London were acting for Mr Taleb and Ms Chahhoud. [84] Mr Leedman encouraged Mr Taleb to obtain such legal advice as he wished, and reasonably assumed that the benefit of such advice would extend to Ms Chahhoud. [85]

Alleged undue influence

1. The doctrine of undue influence was considered by the High Court in Thorne v Kennedy. [90] Kiefel CJ, Bell, Gageler, Keane and Edelman JJ said: [91] "30. … undue influence can arise from widely different sources, one of which is excessive pressure. Importantly, however, since pressure is only one of the many sources for the influence that one person can have over another, it is not necessary that the pressure which contributes to a conclusion of undue influence be characterised as illegitimate or improper. 31. In 1836, in a passage which was copied verbatim by Snell thirty years later, Story said that a person can be subjected to undue influence where the effect of factors such as pressure is that the person 'has no free will, but stands in vinculis [in chains]'. He explained that 'the constant rule in Equity is, that, where a party is not a free agent, and is not equal to protecting himself, the Court will protect him'. In 1866, this approach was applied in equity by the House of Lords, recognising undue influence in a case of pressure that deprived the plaintiff of 'free agency'. In 1868, in probate, Sir James Wilde also described undue influence as arising where a person is not a 'free agent'. In Johnson v Buttress, Dixon J described how undue influence could arise from the 'deliberate contrivance' of another (which naturally includes pressure) giving rise to such influence over the mind of the other that the act of the other is not a 'free act'. And, in Bank of New South Wales v Rogers, McTiernan J characterised the absence of undue influence as a 'free and well-understood act' and Williams J referred to 'the free exercise of the respondent's will'. 32. The question whether a person's act is 'free' requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a 'mere channel through which the will of the defendant operated'. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be 'markedly sub-standard' as a result of the effect upon the person's mind of the will of another. 33. … 34 There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction. … Another way in which undue influence can be proved is by presumption. … Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a 'substantial benefit' to another, which cannot be explained by 'ordinary motives', or 'is not readily explicable by the relationship of the parties'. Although the classes are not closed, in Johnson v Buttress Latham CJ described the relationships that could give rise to the presumption as including parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient, and cases of religious influence. Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust. In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party's free will."

Unconscionability - the "special wives equity"

1. The principle in Yerkey v Jones, [96] which was confirmed by the High Court of Australia in Garcia v National Australia Bank Ltd, [97] applies to transactions in which a wife acts as surety by guaranteeing the obligations of her husband in a transaction from which the wife herself obtains no financial benefit.
2. The principle "begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee". [98]
3. In a case in which there is actual undue influence by the husband over the wife, the principle holds that "to enforce that voluntary transaction against her when in fact she did not bring a free will to its execution would be unconscionable". [99]
4. In a case in which there is no undue influence, but the husband fails to explain the suretyship transaction adequately and accurately to the wife, the principle holds that "to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger". [100]
5. What makes it unconscionable, in the second kind of case, to enforce the guarantee against the wife is: [101] "… the combination of circumstances that: (a) in fact the surety did not understand the purport and effect of the transaction; (b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed); (c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet (d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her."
6. The second kind of case does not depend on any presumption of undue influence by the husband over the wife. Nor does it depend on the husband acting as the agent of the creditor in procuring the wife's agreement to give the guarantee. Rather: [102] "… it depends upon the surety being a volunteer and mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction's purport and effect. To enforce the transaction against a mistaken volunteer when the creditor, the party that seeks to take the benefit of the transaction, has not itself explained the transaction, and does not know that a third party has done so, would be unconscionable."

Unconscionability

1. As Kiefel CJ, Bell, Gageler, Keane and Edelman JJ said in Thorne v Kennedy: [106] "A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage 'which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests'. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring 'victimisation', 'unconscientious conduct', or 'exploitation'. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage."
2. These considerations are not to be applied as if they were separate elements of a cause of action. Each case calls for a precise examination of its particular facts, including the relationship between the parties, and the circumstances of the party who is said to have been vulnerable by reason of a special disadvantage. [107] There are no fixed or closed categories of circumstances that might constitute a special disadvantage but, in this context, "special disadvantage" means something that "seriously affects the ability of the innocent party to make a judgment as to his [or her] own best interests". [108]
3. In determining whether one party has unconscientiously taken advantage of a special disadvantage of the other, it is necessary to consider whether the first party had actual knowledge of, or was wilfully ignorant of, the special disadvantage, or had constructive knowledge of that special disadvantage in the sense that they had knowledge of facts from which they ought to have known that the other party was suffering under the particular special disadvantage. Constructive notice - where the first party is on notice of facts that might lead on inquiry to discovery that the other party has a special disadvantage - will not suffice. [109]
4. As I explained at the outset of these reasons, the special disadvantage on which Ms Chahhoud relies in support of her unconscionability claim in these proceedings is said to have arisen from a combination of the following alleged circumstances: (1) not having been given an opportunity to negotiate any of the terms of the deed, and not having been represented during those negotiations; (2) not having been provided with a complete copy of the deed prior to signing the deed, and at the time of signing; (3) not being afforded the opportunity to review the deed prior to signing it; (4) not being afforded the opportunity to obtain independent legal advice in relation to the deed prior to signing it; (5) the provisions of the deed not being explained to her accurately, or at all, before she signed the deed; (6) the provisions of the deed, which was written in English, not being translated for her in a language that she could understand, before she signed the deed, her first language being Arabic; (7) her lack of knowledge or understanding of the nature or effect of the deed that she was being asked to sign; and (8) her lack of intention to be bound by the deed. Ms Chahhoud alleges that Mr and Mrs Leedman and Trilam Developments knew, or ought reasonably to have known, that they did not allow any time, or did not allow adequate time, for Ms Chahhoud to have the nature and effect of the deed explained to her, or to obtain independent legal advice before signing the deed.

Statutory unconscionability

1. As noted at the outset of these reasons, Ms Chahhoud relies on ss 12CA and 12CB of the Australian Securities and Investments Act.
2. Section 12CA provides: "12CA Unconscionable conduct within the meaning of the unwritten law of the States and Territories (1) A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. (2) This section does not apply to conduct that is prohibited by section 12CB."
3. Ms Chahhoud's claim relying on s 12CA fails for the same reasons that I have explained above in relation to her claim of unconscionability at general law. [120]
4. Section 12CB applies only in relation to conduct in connection with the supply or acquisition, or the possible supply or possible acquisition, of "financial services". I accept the plaintiffs' submission that s 12CB therefore does not apply to their conduct in connection with Ms Chahhoud's entry into the deed. The deed did not involve the supply or acquisition of "financial services" as defined in s 12BAB(1). Whilst s 12BAB(1) provides that a person provides a financial service if they "deal in a financial product", such as shares, the plaintiffs' were not "dealing" in Trilam Developments' shares and units by negotiating and entering into the deed because their promise to surrender those shares and units was merely a dealing on their own behalf: see s 12BAB(7) and (9).
5. Ms Chahhoud's claim relying on s 12CB fails for that reason.
6. Even if s 12CB had been applicable, I would have held that, having regard to all of the circumstances in which Ms Chahhoud signed the deed, including the matters referred to in s 12CC to the extent that they are applicable to the present case, the conduct of the plaintiffs was not "outside societal norms of acceptable commercial behaviour [so] as to warrant condemnation as conduct that is offensive to conscience". [121] I would have reached that conclusion for the reasons that I have already canvassed extensively above in addressing Ms Chahhoud's claims of duress, undue influence, and unconscionability at general law.

Contracts Review Act

1. As the plaintiffs submitted, s 17(3) of the Contracts Review Act provides that the Act applies to a contract only if the law of New South Wales is the proper law of the contract, or if the law of New South Wales would be the proper law of the contract but for a provision of the contract that stipulates the law of another place as the proper law of the contract.
2. As the plaintiffs submitted, the parties to the deed expressly selected the law of Queensland as the proper law by providing in clause 14.5 that the deed is governed by the laws of Queensland. [122] Neither the nature and terms of the deed, nor the circumstances in which it was entered into, support the view that the law of New South Wales would have been the proper law of the deed but for clause 14.5. [123] Mr and Mrs Leedman were resident in Queensland. Mr Taleb and Ms Chahhoud were resident in New South Wales. The deed concerned the surrender of shares by Trilam Developments (a company registered in South Australia) in the Akena and Steadiform companies (which were registered and conducted business in Queensland) and in Class 1 Form (which was registered in New South Wales, but which conducted business in the Australian Capital Territory and in Queensland). [124] It follows that the Contracts Review Act does not apply to the deed by reason of s 17(3) of the Act, and Ms Chahhoud's claim for relief under the Act must be dismissed.
3. If I had held that New South Wales was the proper law of the deed, I would have dismissed Ms Chahhoud's claim for relief under the Contracts Review Act for two further reasons. First, I would not have held that the provisions of the deed were unjust in the circumstances in which the deed was entered into, for all of the reasons that I have already canvassed above in addressing Ms Chahhoud's claims of duress, undue influence, and unconscionability. Second, as the plaintiff's submitted, Ms Chahhoud would not be entitled to relief in any event by reason of s 6(2) of the Act, because the deed was entered into for the purpose of the business carried on by Ms Chahhoud as sole director and shareholder of Elias Pty Limited by investing in the Akena and Steadiform companies that were developing and commercialising structural formwork systems and products.

Judicial sale

1. The plaintiffs have established that they have an equitable charge over the Peak View property by reason of clause 7.1 of the deed, that the charge is enforceable, and that there has been default in the payment of the full Settlement Amount plus interest under the deed by the chargor Ms Chahhoud, as one of the Continuing Entities who is jointly and severally liable to pay the full Settlement Amount plus interest by 16 June 2019. The outstanding principal is $1,500,000, being the Deferred Payment component of the Settlement Amount.
2. As the plaintiffs submitted, judicial sale is the standard remedy of an equitable chargee upon default by the chargor. [125] In the present case, there is no registered mortgagee or caveator with an interest in the Peak View property who might be adversely affected by an order for judicial sale. I note that Ms Chahhoud made no submission against an order for judicial sale in the event that she did not succeed in her claims to set aside the deed, or to have it declared void or ineffective, and in the event that the Court did not uphold her contention that the deed does not create an equitable charge over the Peak View property, once acquired.
3. I am satisfied that an order for judicial sale is appropriate, subject to the question of the terms on which the order should be made, including who should have the conduct of the sale, whether that person should be authorised to sell the property by public auction, by an expression of interest campaign, or by private treaty, and what reserve price should be fixed in the event that the sale is to be by public auction.
4. Ordinarily, the Court gives the conduct of the sale to the party with the greatest interest in maximising the sale price. When the value of the property is insufficient to cover the debt secured by the charge, the conduct of the sale will typically be given to the chargee because it has an interest in maximising the amount that will be recovered from the sale of the property. [126]
5. In the present case, there is no evidence of the current value of the Peak View property. The only evidence adduced by the plaintiffs is evidence of opinions expressed to the plaintiffs by a real estate agent in 2022 that the likely selling price of the Peak View property was, at that time, in the range of $650,000 to $700,000. [127] No objection was taken to that evidence, but it carries no weight beyond the mere fact that the agent expressed that opinion in 2022. The plaintiffs did not adduce evidence of the reasons for the agent's opinion, which would have been required if the Court were to accept the opinion as substantially based on the agent's specialised knowledge or experience. Nevertheless, I consider that the evidence of the agent's opinion, together with the evidence of the price of $575,000 that Ms Chahhoud paid to purchase the Peak View property in 2019, [128] provides a sufficient basis to conclude on the balance of probabilities that the value of the property is materially less than the principal sum of $1,500,000 owing under the deed, even before taking into account the interest on that principal sum which has been compounding monthly at the rate of 1% per month since 16 June 2017. I am therefore satisfied that the plaintiffs have the greatest interest in maximising the price achieved for the Peak View property, and that the terms of the order for judicial sale should appoint the plaintiffs to conduct the sale.

Costs

1. The plaintiffs seek an order that Ms Chahhoud pay the whole of the plaintiffs' costs of these proceedings to date on an indemnity basis, relying on clause 4.4(c)(B) of the deed, which in terms relates to commencing proceedings for payment of any amount owing under the deed as a liquidated debt, but which the plaintiffs construe as a contractual entitlement to indemnity costs in respect of their claim in these proceedings for declaratory relief, an order for judicial sale, and the judgment for a monetary sum (being the claim that the plaintiffs have deferred, as explained at [16] above). I did not have the benefit of any submissions from the plaintiffs in support of that construction of clause 4.4(c)(B) of the deed. In the circumstances, the most appropriate and efficient course is to defer determining the costs of the proceedings until the proceedings have been concluded.

Conclusion and orders

1. For all of the foregoing reasons, the orders and directions of the Court are as follows: 1. DECLARE that the plaintiffs hold an equitable charge (the Charge) over the whole of the land identified as [redacted] in Deposited Plan [redacted] (the Peak View Property), which secures all money owing by the first defendant to the plaintiffs pursuant to the deed entered into between the plaintiffs, the first defendant, the second defendant and others on or about 16 June 2017 (the Deed). 2. ORDER that the Peak View Property be judicially sold. 3. ORDER that the plaintiffs (jointly and severally) be appointed the Court's agent in order to effect the judicial sale of the Peak View Property. 4. ORDER that the first defendant deliver up vacant possession of the Peak View Property to the plaintiffs within 14 days of the date of these orders. 5. ORDER that the Peak View Property be sold by the plaintiffs in such manner and on such terms as the Court directs on the application to be filed in accordance with order 6 below, and in accordance with such other directions as the Court may make from time to time, and otherwise in accordance with the duties that a mortgagee owes when selling mortgaged land. 6. ORDER that the plaintiffs are to make an application for directions concerning the sale of the Peak View Property, including the manner of sale and any reserve price, by filing and serving a notice of motion, together with all supporting evidence and an outline of the plaintiffs' submissions in support of the directions sought, within 42 days after the date of these orders, and direct that the notice of motion be returnable before Williams J five business days after the date of filing for directions in the first instance. 7. ORDER that, in the event of the sale of the Peak View Property in accordance with these orders, and in accordance with the directions to be made by the Court pursuant to orders 5 and 6 above, the plaintiffs are to pay the proceeds of sale in the following order: 1. first, payment of all of the plaintiffs' proper costs and expenses relating to the sale (including any commission to be paid and expenses to be reimbursed to any real estate agent retained for the purpose of the sale); 2. second, payment to the plaintiffs of the amount secured by the Charge, subject to the plaintiffs providing 14 days' notice in writing to the first defendant of the amount which the plaintiffs contend is secured by the Charge as at the date of completion of sale of the Peak View property; and 3. third, payment of any remaining proceeds of sale into Court. 1. ORDER that, in the event of any dispute in relation to the amount referred to in order 7(b) above, the plaintiffs are to pay the disputed monies into Court. 2. ORDER that, in the event of the sale of the Peak View Property in accordance with these orders, and in accordance with the directions to be made by the Court pursuant to orders 5 and 6 above, the plaintiffs are appointed to transfer the Peak View Property to the purchaser. 3. ORDER that the cross-claim is dismissed. 4. Without limiting order 6 above, GRANT LIBERTY to the parties to apply on five business days' notice, including liberty to the plaintiffs to apply to move on their claim in prayer 11 of the statement of claim for judgment against the first defendant in the amount owing under the Deed. 5. ORDER that all questions of costs are reserved.

Endnotes

1. [Redacted] in deposited plan [redacted].
2. Abdallah v Baygan [2019] NSWSC 1507, especially at [17] (Ball J); Abdallah v Baygan (No. 4) [2020] NSWSC 1075.
3. (19393) 63 CLR 649; [1939] HCA 3.
4. The plaintiffs' written and oral opening submissions, Ms Chahhoud's oral opening submissions, all parties' written and oral closing submissions, and all parties' further supplementary closing submissions made in writing, with leave.
5. See [193]-[216] below.
6. See [279] below.
7. See [226]-[227] below.
8. See [76], [78] and [92]-[97] below.
9. See [76], [142]-[147] below.
10. See [79]-[82], [87], [235] below.
11. See [86] below.
12. See, for example, [78], [86] and [96] below.
13. Proceedings 2020/89187.
14. See [34] above.
15. Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.
16. MSPR Pty Ltd v Advanced Braking Technology Ltd [2013] NSWCA 416 at [53]-[54] (Macfarlan JA, Ward and Gleeson JJA agreeing).
17. ACN 167 892 953, now called Thermal Cladding Solutions Pty Ltd.
18. ACN 169 530 661, now called Tranquility Construction Group Pty Ltd.
19. ACN 169 965 351.
20. ACN 119 822 132.
21. ACN 605 375 568.
22. See [66] above.
23. See [40]-[50] above.
24. See [142]-[147] and [280]-[289] below.
25. See [78] above.
26. See [280]-[289] below.
27. See [65] above.
28. See [266] below.
29. See [42] above.
30. See [123]ff below.
31. See [83]-[84] and [89]-[98] above.
32. See [25]-[54] and [84]-[98] above.
33. See [132] above.
34. See [127] above.
35. See [119] above.
36. See [191] above.
37. See [56] above.
38. (1995) 49 NSWLR 315 at 319.
39. Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[31] (Gleeson CJ, Gummow and Kirby JJ); Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 at [77] (Bell P, as the Chief Justice then was, with the agreement of Leeming JA and Emmett AJA).