Nano Logistics Pty Ltd v Raby Omran

What happened between Nano and RDS?

1. In a case with almost no contemporaneous or independent documents, before turning to the witness' evidence it is convenient to deal with what the Court can conclude from the limited documents which were available. The first such issue is what the arrangement was between Nano and RDS.
2. Evidence was adduced from three witnesses during the proceedings. Mr Kei, a director of Nano, was Nano's only witness. Mr Omran gave evidence in his defence. The Court was also taken to affidavit evidence from Ms E Goebbels, who was employed at the relevant time by RD Supplies as an Administration and Finance Manager. Ms Goebbels was unavailable for cross-examination due to being hospitalised overseas, but nothing turns on that because the way the case developed meant that her affidavit evidence did not have to be considered.
3. As to what occurred between Nano and RDS, the best evidence is the following chain of emails tendered in Mr Omran's case: 1. On 23 August 2017 at 4.11pm, Ms Goebbels emailed Mr Kei and another person at Nano referred to in the evidence as "Hanni" (or Hany) (but it is not apparent whether or not she copied anyone else in RDS into the email) including: Good afternoon Stan and Hanni, As discussed in our meeting yesterday, please be so kind to confirm full refund of monies as per attached payment summary spreadsheet of total amount $501,983.59. Please confirm via reply email that The payment amount as per attached spreadsheet is correct and matches your records (or advise different amount) The refund will be processed in full by on or around Tuesday of next week (29th August 2017) ….. 1. Someone - the Court infers Mr Kei - replied to Ms Goebbels by email on 24 August 2017 at 1.14 am with the subject line "Re: Refund/Our Meeting" saying "Thank you Ellen will get back to you guys soon". 2. On 29 August 2017 at 2.14pm, Ms Goebbels emailed Mr Kei and Hany with the same subject line and including: Hi Stan and Hanni, Even though you did state you were coming back to us soon as per your last email, I still have not received your credit notes for the payment of ply. As per your discussions with Amin yesterday, you now stated verbally to him that a full refund of all monies paid will be transferred on Thursday 31st August 2017. Again, please Raise credit notes to the total value of $501,983.59 Confirm that payment to our specified bank account will be made on Thursday 31st August 2017. …..
4. Ms Goebbels copied the third email to three other people, each of whom had RDS email addresses: Mr Fakhri, Mr Omran and Mr Rabhi Ibrahim. According to an ASIC record to which I shall return, each of those gentlemen was a shareholder in RDS until 1 July 2017 and, on the face of the record, Mr Fakhri and Mr Omran were directors until 1 July 2017.
5. Based on these emails, the Court finds: 1. The agreement between Nano and RDS required a full refund of $501,983.59; 2. The agreement was first struck at a meeting on 22 August 2017 attended by Mr Kei and Hany for Nano, and at least Mr Fakhri and Ms Goebbels for RDS. 3. There was a second meeting on 28 August 2017 between Mr Kei and Hany for Nano, and at least Mr Fakhri for RDS.
6. While not discussed in the emails, it was common ground, and accords with common and commercial sense, that the agreement between Nano and RDS was that RDS would return the containers upon payment of the full refund, for which Ms Goebbels was obviously pressing in the third email I have set out above.
7. Turning to the second meeting, the Court finds that this meeting was also attended by at least Mr Omran. For the reasons set out below, the Court accepts Mr Omran as a witness of truth. His evidence was that the agreement had already been made by the time of the meeting he attended (but took no active part in) at which the refund and return of the plywood was discussed. This is consistent with him attending that second meeting, but not the first, and his being copied in on the email which refers to that second meeting.
8. I also record that Ms Goebbels' emails (especially the email dated 29 August 2017) are consistent with Mr Kei's evidence against interest, to which I shall return, that it was Mr Fakhri who "did all the talking" for RDS and that Mr Omran did not make the refund representation.

Was Mr Omran a director of RDS at the relevant time?

1. The second piece of documentary evidence was the ASIC record referred to in [11] above. This was dated 21 August 2018, a date well after the changes in directors and shareholdings that it recorded as having taken effect on 1 July 2017. Mr Allen submitted that the considerably later date of the document, the fact that on any view Mr Fakhri continued to speak for RDS in August 2017, and that Mr Omran still had an RDS email address all suggested that the record was not correct and that Mr Omran was still a director of RDS in August 2017. He also relied on an admission in Mr Omran's defence that Mr Omran was a director of RDS "at all material times".
2. Mr Omran said he never used the email address and that he had ceased to be a director and shareholder in early July 2017. His evidence (which the Court accepts in the light of its conclusions as to credit set out in what follows) was that he continued to be interested in the fate of the arrangement between Nano and RDS because, being otherwise unemployed, he expected to be asked to sell on commission the new plywood which RDS was going to buy with the refund from Nano.
3. As the case has turned out, it is not necessary for me to resolve the question of Mr Omran's directorship. However, in what follows I shall assume, without deciding, that Mr Omran was an actual or de facto director of RDS as at 28 August 2017.

Credit - Mr Kei

1. Mr Allen submitted that Mr Kei should be accepted as an honest witness. Mr Reynolds submitted otherwise, including that I should find that Mr Kei's evidence of what I shall refer to as the airport meeting was a complete fabrication. By reference to the accumulation of matters which I next set out, I accept Mr Reynolds' submission. The Court finds that Mr Kei is a witness whose evidence should only be accepted if it is against interest, inherently likely or corroborated by contemporaneous documentary or independent testimony.
2. There were seven difficulties with Mr Kei's evidence.
3. First, while there were several conversations to which Mr Kei deposed in the exact words (not "to the following effect") or in the case of the airport conversation in "words to the following effect", his evidence of the Refund Representation - his most critical evidence one would have thought - appears in the terms of the statement of claim (set out in [5] above). His affidavit stated (emphasis added): 27 On and about 18 August 2017, the Defendant on behalf of RD Supplies Pty Ltd demanded the refund of the 20 containers. 28 The Defendant made representations on behalf of RD Supplies Pty Ltd by saying that RD Supplies Pty Ltd would return the eight containers in their possession if the Plaintiff refunded RD Supplies Pty Ltd. The Defendant's representation of refund was made orally and confirmed by email on 6 November 2017.
4. Mr Kei's affidavits were made before the Court of Appeal's decision on 17 July 2023 in Gan v Xie [2023] NSWCA 163, which confirmed the acceptability of gist evidence. Nevertheless, the form of his evidence of the Refund Representation, the most critical point of the case, when compared to direct evidence of other conversations plants the first seed of doubt about the reliability of his evidence.
5. Second, as to the email referred to in his affidavit evidence as confirming his version of events, he conceded in cross-examination that no such email existed.
6. Third, he first said that his precise evidence of the dates and amounts of invoices of payments made between Nano and RDS was based on his memory. He later accepted that he had in fact had had reference to primary records which he had not annexed to his affidavit.
7. Fourth, he gave completely implausible evidence in relation to Ms Goebbels' affidavit. This was an affidavit of 8 pages with 9 pages of business records annexed. He initially said that he had not read it. It was then drawn to his attention that he had in fact replied to it. He then sought to explain this by saying that he was very busy and that it was true to say he had not read it because he had arranged for his solicitor to read it to him (including the bank statements and other records) in parts over several days. This evidence was ludicrous.
8. Fifth, in relation to the August 2017 meetings, I am satisfied that he must have had access to the email chain set out in [10] above. His affidavit evidence (see 21 above) referred to a demand made "on or about 18 August 2017" when he accepted after being shown the email chain that it must have been 22 August 2017, a fact he could easily have ascertained.
9. Sixth, of serious concern in relation to the email chain was his admission in cross-examination that he had not mentioned in his evidence the second meeting referred to in the emails because the reference to his "discussions with Amin" (see [10(3)] above) was "inconvenient" for the case he wanted to advance that it was Mr Omran who had made the Refund Representation.
10. These six matters are the basis on which I have concluded Mr Kei is an unreliable witness. When the seventh matter, to which I next refer, is added into the equation, the Court is compelled to find Mr Kei was a dishonest witness.
11. The seventh matter is the airport meeting. This appeared for the first time in an affidavit in reply filed by Mr Kei. It purported to give a verbatim "words to the following effect" account of what was said between him and Mr Omran at a meeting at Sydney International Airport in June 2018: "Me: Raby can you tell us who sold our materials? Raby: I sold all materials myself. Me: Why did you sell our materials and who instructed you to do so Raby: I made the decision myself. Me: Was Amin involved in the sale? Raby: No, it had nothing to do with Amin. I made the decision myself. Me: How much did you sell them for and when can we get the money from the sale? Raby: I sold the materials, and I took the money for my own personal use. Me: Raby you cannot do that. We previously agreed that we would refund the money to you if you returned the materials to us. The money is ours and you need to pay it to us immediately. Raby: No. I will not return anything to you. I spent the money for personal reasons. Me: You cannot do that. If you don't return the materials or the proceeds of the sale of the materials, we will sue you personally. Raby: If you and Hany help me with finance to complete the construction for my duplex at XXX Port Hacking Road, Dolan's Bay, I will give you one of the properties to compensate you for the materials I sold and your losses. Hany: Fine Raby we agreed, and we will assist you with the finance to complete the construction and give us one of the duplexes. Raby: Yes, it is a deal."
12. Mr Omran denied the conversation. Given the view to which I have come about Mr Omran's credit (see [31] below) as opposed to Mr Kei's, I accept Mr Omran's denial. Furthermore, by reason of the following five matters the Court is satisfied that the evidence of the airport meeting is so fanciful that it can only be a deliberate fabrication: 1. It is inherently implausible. 2. It first appeared in Mr Kei's evidence in reply. Mr Kei sought to explain this away by saying he had forgotten the conversation at the time he deposed his initial affidavit. 3. He accepted that it was important and that it should have been in his evidence in chief. Yet he had made no note of the conversation, nor had he sought to confirm it in writing with Mr Omran, notwithstanding the purported conversation included discussions about something as obviously important as an agreement to convey an interest in property. 4. He said in cross-examination despite the apparently verbatim account, "Whether the wording is correct is, you know? It was said, but maybe not those correct words" (Tcpt, 6 March 2024, p 45(8-9)). 5. Mr Kei's attention was drawn to text messages between him and Mr Omran in February 2019 - only eight months after the alleged airport meeting - in which Mr Kei says words including "also when are you free for a catch up with Hany and I", "Love ya my bro. You r the most fucken honest brother of the lot", and calls Mr Omran a "true gentleman". I reject as unbelievable and contrary to common experience Mr Kei's attempted explanation that his relationship with Mr Omran was such that he could (allegedly) be forcefully in conversation threatening to sue Mr Omran personally in June 2018 at the airport meeting and only a few months later be on such good terms as the text messages demonstrate.

Credit - Mr Omran

1. The Court has no hesitation in finding Mr Omran to be a reliable witness. He remained steadfast in his denials (which were in the most critical respects supported by the concessions against interest made by Mr Kei) and otherwise presented under cross-examination as a witness who was doing his best to recollect accurately events of several years ago. In any direct conflict, the Court prefers Mr Omran's evidence to that of Mr Kei.

Consideration

1. Mr Kei accepted in his evidence - and the Court finds, given it is against Mr Kei and Nano's interest - that to the extent any representation was made to the effect of the Refund Representation, it was made by Mr Fakhri. Mr Kei accepted in terms that Mr Fakhri had said what was alleged in paragraph 35 of the Statement of Claim (see [5] above) (Tscpt 6 March 2024, p.39(36)) and that in their meetings it was Mr Fakhri who "did all the talking" (Tscpt 6 March 2024, p.37(21)). Because Nano's case depended entirely on Mr Omran having made the Refund Representation, it fails.
2. I will next turn to the two submissions which Mr Allen made in final address against the background of his acceptance that Mr Kei had given the evidence to which I have referred in the preceding paragraph. The conclusions to which the Court has come reflect an acceptance by the Court of Mr Reynolds' submissions in response to Mr Allen.
3. Mr Allen's first point was that at various points in his evidence, Mr Kei did say that both Mr Fakhri and Mr Omran had made the Refund Representation. He submitted that by reference to that evidence the Court should find that Mr Omran had also made the Refund Representation.
4. An examination of the transcript discloses that Mr Allen's submission is factually correct. However, Mr Allen, also entirely properly in my respectful view, accepted that when that evidence was taken in the context of Mr Kei's entire cross-examination on this topic, it could be said that Mr Kei's attempts to say that it was both Messrs Omran and Fakhri who had made the Refund Representation was an attempt to salvage his (Mr Kei's) position, having realised the consequences for Nano's case of his evidence that it was in fact Mr Fakhri who had made the Refund Representation. I have no doubt that is how the totality of Mr Kei's evidence under cross-examination is properly and fairly to be read.
5. As is recorded in [32] above, Mr Kei clearly conceded more than once that it was Mr Fakhri who had made the Refund Representation and had "done all the talking". The Court finds that the two or three passing attempts by Mr Kei to say that it was both Messrs Omran and Fakhri who had made the Refund Representation were no more than yet another indication of Mr Kei's unreliability as a witness, driven by his consciousness of the difficulties for Nano's case which his evidence had created.
6. For the reasons set out in the preceding two paragraphs, I do not accept Mr Allen's submission that the Court should find that the Refund Representation was made by both Mr Omran and Mr Fakhri.
7. Mr Allen's second submission was directed to establishing that Mr Omran had made the Refund Representation with knowledge that it was not to be honoured. It is not necessary for me to consider this argument having regard to the Court's conclusion that Mr Omran did not make the Refund Representation.
8. Nevertheless, given the seriousness of the allegations made against Mr Omran, I record the Court's firm rejection of Mr Allen's submission. There is no evidence on which the Court could make such a serious finding, being to the effect that Mr Omran, in whatever position he held at the time, was aware of any intention on the part of RDS that the Refund Representation was not to be honoured. The Court accepts Mr Omran's denial of that proposition.
9. Mr Allen's submission relied on two propositions.
10. First, he submitted that Mr Omran was a director of RDS. As set out in [18] above, I have assumed that to be the case. But even assuming it to be the case, the fact that someone is a director of a company which is said to have engaged in misleading and deceptive conduct by misrepresentation is no more than, at best, an initial starting point in building a case that the person was actually aware that the representation was untrue at the time it was made.
11. Even assuming, as I do for present purposes, that Mr Omran was a director of RDS as at 28 August 2017, that fact, in and of itself, is not sufficient to make a finding that he was aware that RDS did not intend to honour the Refund Representation. As I observed during the course of argument, such a finding is a serious finding as to which the Court would have to be satisfied on the statutory equivalent of the Briginshaw standard. The evidence in this case goes nowhere near approaching satisfaction of that standard, or any finding at all, that Mr Omran had the alleged knowledge.
12. The second matter upon which Mr Allen relied was the fact, as appears to be the case, that the plywood was never returned. For the purposes of determining Mr Omran's state of knowledge at the time of the Refund Representation, I do not accept that the fact that the plywood was never returned takes the matter any further. If the Court had to draw any inference, it would be that there was an intention to return the plywood because commercially it would have been much better for RDS to have the refund money than be left with below standard plywood. Furthermore, rather than there being an intention at the time of the Refund Representation not to return the plywood, the far more plausible conclusion on the evidence for the failure to return the plywood is that Nano did not pay the full refund amount (being what the Court has found in [12] above Nano had agreed to do).
13. For these reasons, there is nothing in the evidence that would support a finding of the seriousness that the Court is invited to make by Nano's case, if it were otherwise satisfied that Mr Omran had in fact made the Refund Representation.
14. Finally, I should record that insofar as the statement of claim purports to plead a case of fraud against Mr Omran, there is no evidence that would support the Court making that finding. On the evidence before the Court, an allegation of fraud should never have been made.

CONCLUSION

1. The orders of the Court are:
2. Statement of claim dismissed.
3. The plaintiff is to pay the defendant's costs of the proceedings. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 March 2024