Younan v Herberton Enterprises Pty Ltd

Solicitors: Reuben George Lawyers (Plaintiff/Cross-Defendants) S Lloyd Legal (Defendants/Cross-Claimants) File Number(s): 2022/00036869 Publication restriction: Nil

Judgment

1. The parties are in dispute in relation to a loan agreement and two joint venture agreements.
2. Various facts are not in dispute.
3. On 21 June 2017, the plaintiff, Charbel Younan, loaned $150,000 to the first defendant, Herberton Enterprises Pty Ltd (Herberton). The loan was repayable on 21 June 2018, together with interest of $120,000.
4. Herberton owned property at Hunters Hill, which was the family home of the Bechara siblings (Giselle, Licha and Maria), who are the witnesses for the first defendant. The loan was secured by that Hunters Hill property. On about 25 September 2017, Mr Younan registered a caveat on the title of that property, referencing the unpaid loan.
5. The second defendant, Giselle Bechara, was the sole director of Herberton and guaranteed its obligations under the loan. The loan and guarantee are recorded in two deeds, referred to as the Company Deed and the Director Deed.
6. Also on 21 June 2017, the first cross-defendant, Lexform Holdings Pty Ltd (Lexform), of which Mr Younan is the sole director and shareholder, entered into a joint venture with Ms Giselle Bechara "to purchase and develop" land at The Avenue, Riverstone (Avenue joint venture). The joint venture is recorded in a document entitled "joint venture agreement", which was executed as a deed.
7. The important clauses of the Avenue joint venture are set out below at [94], but essentially, Lexform was responsible for funding the purchase and holding costs of the property, and Giselle Bechara was responsible for improving and selling the property. The net profit was agreed to be split 50:50.
8. On 3 August 2017, Lexform entered a joint venture with the third cross-claimant, Licha Bechara, concerning land at Victoria Street, Riverstone (Victoria joint venture). This joint venture is in the same form as the Avenue joint venture, with the same structure, rights and obligations.
9. Maria Bechara negotiated the loan and joint ventures for her siblings, and was their "agent" for the purposes of performing the joint venture obligations. Maria Bechara had met Mr Younan in about 2015 and had been involved in other transactions with him. At the time of entry into the various agreements, Mr Younan had never met either Licha or Giselle Bechara.
10. After the loan was due to be repaid and from August 2018, Mr Younan exchanged emails with Maria Bechara seeking the repayment of the loan. In effect, Mr Younan was agitating for repayment of the loan, and the sale of the Avenue and Victoria properties, as contemplated in the joint venture agreements. Maria Bechara provided Mr Younan with email updates on the potential rezoning of the properties, the attempts to sell them and her siblings' attempts to repay the loan, including seeking to sell Herberton's Hunters Hill property. It may be that the Becharas intended to repay the loan from the hoped-for profit from the joint ventures, however, that was never agreed in writing by Mr Younan.
11. On 17 October 2021, Licha and Giselle Bechara each provided to Mr Younan a signed "agreement", executed as a deed, terminating the joint ventures, in identical terms: THIS AGREEMENT IS Made 17 of [sic] October 2021 BETWEEN LEXFORM HOLDINGS PTY LTD… (1st joint venturer) AND [LICHA/GISELLE] BECHARA …. (2nd joint venturer) RECITES 1. The joint venturers entered into a joint venture agreement dated 3rd August 2017 regarding the … [Avenue/Victoria St property]. 2. The purpose of the joint venture was to acquire the property and to sell it at a profit. 3. The property was purchased in the name of the 1st joint venturer. 4. The property has not been sold. 5. The joint venture has failed. 6. The joint venturers have agreed to terminate the joint venture. WITNESSES 1. The joint venturers agree that the joint venture has failed and is at an end. 2. The 2nd joint venturer assigns any interest that [she/he] had in the joint venture and the property to the 1st joint venturer. 3. The 1st joint venturer will not seek to recover from the 2nd joint venturer any contributions to the expenses of the joint venture paid by it. And acknowledges that it has no right to do so. 4. The 1st joint venturer is now the sole owner of the property. EXECUTED AS A DEED …
12. The loan has not been repaid. However, the Hunters Hill property has been sold and the sum of $310,000 is held in trust, pending the outcome of these proceedings. Mr Younan seeks an order that he holds a charge over the money held in trust, and that the defendants are liable to pay him the sum of $270,000, plus interest and costs.
13. Herberton and Giselle Bechara do not dispute that on its face the loan is repayable and Mr Younan is entitled to repayment. However, their defence to their liability to repay the loan is that Lexform, through Mr Younan, agreed to compromise the loan in return for the termination of the joint ventures.
14. Further, Herberton, Giselle and Licha Bechara cross-claim that Lexform, through Mr Younan, breached its "fiduciary duties" owed to its co joint-venturers, by sourcing a buyer for the Avenue and Victoria Street properties and failing to disclose that opportunity to them before they agreed to terminate the joint ventures in return for the compromise of the loan. They claim that Lexform is liable to account or pay equitable damages to them in relation to the purchase price received for those properties. Relief is also sought against Mr Younan personally, on the basis that he procured or induced Lexform to breach its fiduciary obligations.
15. Should an account be ordered or equitable compensation be payable, then a subsidiary issue is how such relief ought to be quantified, in circumstances where Lexform's evidence is that the purchase price for the properties was paid partly in AUD and partly in an alternative currency known as "trade dollars".
16. Giselle and Licha Bechara seek to set off the sum payable pursuant to the loan through an account, or damages from the obligation to repay the loan.
17. The defendants/cross-claimants did not advance a case based on misleading and deceptive conduct, any other vitiating factor or rectification.
18. I note that despite at the pretrial directions the Court requesting that the parties give careful consideration to the size of the court book and avoiding wasted material where facts could be agreed, a court book of almost 2000 pages was prepared and no facts were agreed. Most of the court book contained contracts, that were not in dispute and neither party took me to those contracts. Had the parties agreed on facts, an unnecessarily voluminous court book would not have been produced at the parties' expense.

Issues to be determined

1. The parties agree that the issues to be determined are: 1. Did Mr Younan agree to forgive the loan in return for the termination of the joint venture agreements? 2. Did Lexform owe its joint venturers any fiduciary obligation? 3. If so, did Lexform breach that fiduciary obligation by negotiating with a purchaser, and ultimately selling the joint venture properties to it or its related entity? 4. If a breach is established, is Mr Younan personally liable for inducing or procuring that breach of fiduciary duty? 5. If a breach is established, what is the appropriate form of relief, taking into account the purchase price for the properties was paid partly in AUD and partly in "trade dollars", despite the contract for the sale of the joint venture properties bearing a price in AUD only?

Was the loan compromised for termination of the joint venture agreements?

1. Herberton and Giselle Bechara submit that Mr Younan agreed to compromise the obligation to repay the loan in return for the termination of the joint venture agreements.
2. There is no such documented agreement. Instead, the alleged "contract of compromise" is particularised in the cross claim: The Contract of Compromise was partly express and partly implied and partly oral and partly in writing. The oral parts were made in discussions between [Mr Younan] (both in his individual capacity and as a director of [Lexform]) and [Maria Bechara] concerning the loan …; the Caveat [over Hunters Hill property]; and the Avenue and Victoria Street joint ventures. In those discussions it was agreed that the differences between the parties, then known, would be compromised upon terms that the said joint ventures would be terminated and the parties would walk away with the effect that any remaining debt under [the loan] would, by implication, be released. The written parts of the Contract of Compromise were contained in the two terminations in writing dated 17 and 18 October 2021.
3. The principles concerning the formation of agreements are well known, and include: 1. The party claiming a contract was formed has the onus of proving that contention on the balance of probabilities, based on an objective assessment of the parties' intentions derived from their words and behaviour. 2. Where a conversation is relied upon to prove the formation of a contract, the Court must feel an actual persuasion that any consensus reached was capable of forming a binding contract. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see eg Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 (Dixon J); Helton v Allen (1940) 63 CLR 691 at 712 (Dixon, Evatt and McTiernan JJ); Rejfek v McElroy (1965) 112 CLR 517 at 521 (Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ); Watson v Foxman (1995) 49 NSWLR 315 at 319 (McLelland CJ in Eq). 3. When determining the terms of an oral contract, the Court may consider factors such as the history of the relationship between the parties and their conduct prior to and at the time the alleged contract was entered: See eg Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 78; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 348 (Mason J, Stephen J agreeing); Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [24] (Heydon JA, Mason P agreeing). See also JD Heydon, Heydon on Contract (Thomson Reuters, 2022). 4. Post-contractual conduct may also be used to prove that a contract was formed. However, where there is a written agreement the question of contractual formation is a matter of construction, and the regard which ought to be had to evidence of post-contractual conduct is more limited than when determining the factual question of the existence of an oral contract: Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [84] (Beazley P)and at [124] (Basten JA, Gleeson JA agreeing). See also Lawrence v Ciantar [2020] NSWCA 89 at [114] (Bathurst CJ, Meagher and Gleeson JJA agreeing).

Written communications

1. As noted above, the only written component of the contract of compromise relied upon by the Becharas are the joint venture termination deeds. Those deeds are silent concerning the loan, including any compromise of the loan.
2. In determining the oral evidence and whether Mr Younan orally agreed to the contract of compromise, it is helpful to understand the circumstances of the alleged conversations, and, in particular, the other communications occurring between the parties, which were mostly in the form of emails and some text messages.
3. Overwhelmingly, Mr Younan's emails distinguished between the joint venture agreements and the loan liability. He also on numerous occasions asserted that the Becharas had repudiated the joint ventures and they needed to be terminated, and that he expected a loss and would be seeking contribution from them for such loss.
4. Some of the emails and text messages are reproduced below.
5. On 8 May 2019, Mr Younan emailed Maria Bechara including: … As you know, the primary purpose of selling the properties at this time in The Avenue and Lytton is to raise money to enable you to repay the loans owing to me. If it were not for the fact that you have not yet repaid the loans as they were due to me, I would not be looking to sell these properties in this current market, and would have the financial capacity to sit it out in the hope to better capitalise on our investment. … I have NO CONFIDENCE the property will sell at all and certainly not at the prices you have recently suggested or expected. … the properties are almost worthless and we would be lucky if we could sell and recover our costs! … You are expecting to use the profits of the sale to repay the loans owing to me (as I understand). However, the reality of the current situation is the property will NOT achieve any such value. … Maria the continued delay in repaying the loans to me is detrimental to my business… You MUST resolve this immediately and call on the parties to the agreements to make available the necessary funds to do so. …
6. Later in 2019, Maria Bechara promised Mr Younan he would be paid "a minimum of $150,000.00" on settlement of the sale of the Hunters Hill property, which was due on 30 November 2019.
7. During late 2019 and early 2020, Maria Bechara did seek Mr Younan's agreement to the forgiveness of the loan liability in return for the termination of the joint ventures. For example, on 19 December 2019, Maria Bechara emailed Mr Younan including: … As you know the purchaser of the Hunters Hill property is trying to delay settlement… In relation to the Avenue and Victoria Street the people who are interested in both are still to make a proposal … You have indicated to me in a message that you intend at the start of next year to put both Victoria Street and the Avenue for auction with the one dollar reserve price. I have repeatedly told you that my family has no issue if you want to take all their interest in the properties and they are prepared to sign a transfer to you for one dollar and set off their interest to you against the loan to you. …
8. On the same day, Mr Younan responded including: … YOU HAVE TO 30/1/20 TO PAY ME $300,000 AGAINST THE LOAN YOUR FAMILY/MY PARTNERS OWE ME. … All the properties will also be listed for auction with NO reserve. Any shortfall to the capital invested, I will need the partners to fund their 50% share of this as per agreement.
9. On 21 January 2020, Mr Younan in an email rejected a proposal from Maria Bechara to transfer the joint venture interests in consideration for the payment of the loan, including: … 6. I am not sure why you are saying the caveat at Hunters Hill was supposed to be removed once The Avenue was settled. There NEVER has been and still is NOT any proven collateral on the Avenue or Victoria St to secure this loan. The suggestion that upon buying The Avenue (with my money), would then provide collateral for your loan is absurd! … 8. Maria your suggestion that I take over The Avenue and Victoria St. in consideration of the loan is ludicrous. As it stands today, principal and interest to the loan on paper, is $43,800. As mentioned previously, we would be lucky, EXTREMELY lucky, if we could sell these properties and recover our costs, let alone at a net profit $887,600 (double the loan as that would represent your share adequate enough to repay me). You have suggested this a number of times Maria as your way out of this mess, where you walk away and leave me holding all the problems! Just like Lytton St! Unless there is a sale whereby we can assess our position, this is NOT an option to release you from the loan. The loan cannot be offset on false promises. … 10. My advice to move forward in the best possible way … Pursue your sale (or termination) of Hunters Hill and kindly repay the loan owing to me without any further delay. If the loan is repaid and we sell at least 1 property (The Avenue/Victoria/Lytton) I can sustain the remaining 2 properties. In this case we can maintain our position on the remaining properties in the hope we can realise a better sale on them. Should at this point you want out of the properties/partnerships we can discuss what options are available to us at that time.
10. On 7 February 2020, Mr Younan obtained a real estate agency agreement estimating the value of the Avenue property at $900,000-$990,000, and the Victoria property at $180,000-$198,000. On 13 February 2020, Mr Younan signed those agency agreements.
11. On 11 May 2020, Mr Younan emailed Giselle about the loan including: … I understand from your email, that the matter it presents in simple terms is, "how much will I accept for the settlement of the loan" … On another matter - if you (Giselle/Maria) have any thoughts about the offer to lease at The Ave, please present them by COB today. I think we should look at accepting this offer and it is my intention to do so unless you have any sound objections.
12. On 19 May 2020, Mr Younan emailed "Giselle AKA Maria" including: … With respect to the lease offer - IF you want to have a say, you need to get back to me by COB today, if you don't I will proceed on what I think is best. With respect to the loan - please CLEARLY state your intentions and what sum of money is available to you and when I will receive payment …
13. On 27 May 2020, Mr Younan emailed "Giselle Bechara (aka Maria) and Licha Bechara" setting out an agenda for a proposed meeting, including: … 1. Loan Matter 1. To finalise the loan repayment and settlement of this matter … 6. I propose that if we cannot reach an agreement as to the settlement figure and payment date, I choose to exercise my right to register a second mortgage on the Hunters Hill property immediately and consider my position with respect to recovery of the debt… 2. The situation at The Ave 1. So far we have listed the property for sale through numerous avenues and agents… 3. David yesterday received an offer of $575,000. … 5. I have rejected this offer and countered at $800,000… 8. It is my proposal to dissolve the JV at The Avenue immediately and ask you to consider the manner in which this is done. Per the agreement, this would be as follows … I envisage a significant loss will be realised and will demand reimbursement of your 50% share of the losses. 3. Victoria St … 3. There has been NO known interest or offers on the property. … 5. It is my proposal to dissolve the JV at Victoria immediately… I envisage a significant loss will be realised and will demand reimbursement of your 50% share of the losses. …
14. There is a lacuna in the email evidence from July 2020 to April 2021.
15. On 30 April 2021, Mr Younan emailed Maria Bechara including: Despite the numerous attempts to get a meeting with you and/or get any positive action whether a sale of any of the 3 properties and/or repayment of the loan from you, nothing has happened for quite a long time. … I am proposing that we revert to ending the relationships at the expiry of 4 weeks, unless we have sold at least 1 lot at The Avenue, PLUS either Lytton or Victoria St. Condition being the sale of a minimum of 2 properties within a formal exchange and 10% deposit (unless agreed otherwise). If this cannot be met, I am happy for you to take over all properties at cost to date (including interest on capital), otherwise I can. Alternatively you can Auction them at the 4 week period … if you think that is a better option. … The relationship is not performing in the manner it should be. A sale/s should have occurred by now and the loan should have been paid years ago… … If you choose an auction and properties do not sell, you must be in a position to either take them over immediately… otherwise I will take over. … This however will leave the matter of the loan, which must be paid very soon. I cannot just keep extending and waiting, so I need a proposal for the pay out of this immediately as well.
16. On 18 August 2021, Mr Younan emailed Maria Bechara including: Can you issue a formal statement/notice to dissolve all agreements and dealings on the joint venture properties we have… Given we have exhausted all other options either by way of sale, auction or for you to take over part or all properties, the situations remain unresolved …
17. On 20 August 2021, Mr Younan emailed Maria Bechara including: Many emails and conversations have taken place regarding the properties at The Avenue and Victoria Street. Despite your promises I have not received, in writing, any firm proposal from you regarding the properties. Attempts to sell the properties have not been successful. You have previously indicated that you were prepared to hand the properties over to me. I now wish to proceed with that proposal without further delay. What I need is confirmation, in writing, form [sic] Licha and Giselle that the joint ventures are at end and that they assign any interests they may have in the properties to me effective immediately…
18. On 23 August 2021, Mr Younan emailed Maria Bechara including: … given Licha, Giselle and your self have all previously agreed to dissolve the Joint Venture Agreements (JVA's) given the failure to sell the properties. … If there is no agreement to dissolve the JVA's at Victoria St and The Avenue immediately, then I will have to accept that Licha and Giselle have repudiated the agreements. With the greatest respect, the loan over Hunters Hill is something completely separate to the joint ventures. A matter that will need to be resolved separately. Maria, if Licha and Giselle do not unconditionally agree and formally instruct by signed and witnessed statements, to dissolve the 2 JVA's by the close of business tomorrow … you will have jeopardized my last opportunity to secure my financial position. A position brought about by failure to repay the loan and the matter at Lytton St. … I am aware of your SMS this morning, however due to the seriousness of your delayed email response today … it would be best that we maintain written correspondence until this matter is resolved.
19. On 25 August 2021, Mr Younan sent Licha Bechara a text message including: … I'm not sure if you are aware. However Maria for several months now has been promising to end the JV partnerships … We have tried for over 4 years to sell either or both properties with no success …She borrowed money at Hunters Hill and cannot repay - for over 4 years. … I have discussed with her for a year now to end both partnerships so I can refinance before I go broke. …My loan is ready for refinancing to save my family and business, but she refuses to end the JV! … If you and Giselle want either or both properties please sign a contract for them and take them at cost immediately … I need formal decision either way today …Failing that they will both be listed for unreserved auctions …She somehow wants to stronghold the JV as a way of negotiating the loan at Hunters Hill, that I have patiently awaiting for 4 years from the family!
20. Licha Bechara responded several hours later agreeing that the Victoria joint venture property should be auctioned. Mr Younan required Licha Bechara to provide a written witnessed authorisation and also included in his text message: If I do not receive above written and witnessed instructions and a postal address, I will have to presume you are repudiating your responsibility and I will take over the properties without any further consultation and do what is necessary to remedy this situation!
21. On 29 August 2021, Maria Bechara sent Mr Younan an email in response to the "text message to Licha last week". Her email included a request that Mr Younan "continue to work with us to resolve all issues".
22. On 30 August 2021, Mr Younan responded to that email including: Please provide details of the Solicitors for Licha and Giselle. The reluctance of Licha and Giselle to put forward confirmation of termination of the joint ventures, which have been promised numerous times, leaves me no alternative other than to have my Solicitor contact those Solicitors. Not withstanding and by your request, I will instruct my Solicitor not to contact those Solicitors until I grant time for 1 last attempt of dispute resolution in good faith. However, that is only on the basis that you present me your plan to "move forward", and that plan MUST BE COMPLETELY BINDING and FINAL on all matters! This Proposal must be put forward to me no later than this Wednesday 1/9/21. It MUST be signed and witnessed by Licha and Giselle for respective matters. The proposals for the 3 separate matters CANNOT RELY OR BE DEPENDENT ON EACH OF ANY OTHER MATTERS. They must be UNCONDITIONAL and deal separately with: 1. The JV at The Avenue 2. The JV at Victoria St 3. Repayment of the Hunters Hill Loan
23. By 31 August 2021, Mr Younan had not received what he had sought and he sent another text message to Licha Bechara including: WITHOUT PREJUDICE Giselle/Licha/Herberton Enterprises Pty Ltd c/o Maria Bechara All parties are hereby on notice that you continue to ignore and repudiate duties and responsibilities under the respective JVs and loan agreements. Please provide addresses for the service of notices immediately… Please present by tomorrow, and in detail with respect to each of the agreements, your proposal to "move forward" that I may consider. Any proposal must address each of the separate matters and each be independent of the others.
24. By 2 September 2021, Mr Younan was in discussions with real estate agents about selling the joint venture properties and a draft contract for sale of the Avenue property was prepared.
25. On 6 September 2021, Mr Younan sent Giselle Bechara a demand for the repayment of the loan including: The following is a demand notice for the $150,000.00 lent to Herberton Enterprises Pty Ltd on 21/6/2017. The loan agreement provided for the loan and interest of $120,000.00 to be repaid 21/6/2018. You guaranteed the repayment of the loan by the company. The loan has not been repaid. The amount now owing is $329,184.00 … If the amount is not paid by 21/9/2021 I will have to commence proceedings for the recovery of the amount owing. …
26. On 7 September 2021, Mr Younan sought an update from the real estate agents and the provision of a contract for the sale of the Victoria joint venture property.
27. On 24 September 2021, Maria Bechara sent Mr Younan an email: Further to our recent discussions I advise as follows: 1. There has not been any progress on the sale of the property at Hunters Hill nor can I indicate to you if there will be any funds left over to pay to you. I will once the sale proceeds ensure that you and I come to an agreement satisfactory to you regarding payment to you. 2. Both Giselle and Licha can send you a signed statement witnesses and dated in the below terms if no sale of the properties occurs by the end of the months: I (insert name) of (insert address) agree to assign all my interests in the joint venture agreement entered into between (insert parties names) to Charbel Younan (or other person or entity if you prefer) Signed: Dated: Witness signed and insert name Let me know if the above wording is acceptable and or if you want changes
28. On 5 October 2021, Maria emailed Mr Younan, including: … unfortunately we have had to make the heartbreaking decision of putting mum in palliative care yesterday. I have tried to call you several times today. I have been told by David that the exchange on Hunters Hill should happen tomorrow and once it does I can give you an estimate of the amount you are likely to receive subject to the mortgage payment. In relation to the document that your solicitor sent to be signed, I think there is a misunderstanding on the part of your solicitor in relation to the terms of the joint-venture agreement. … That clause specifically says that the second party does not have any liability in relation to the joint-venture agreement and that all contribution must come from the first party. If you still want the agreement signed before I can tell you what happens tomorrow, please let me know and I will try and arrange them as soon as possible with some amendments.
29. While Mr Younan had asserted that he would seek contribution for losses on the sale of the properties from the Becharas, and Maria Bechara asserted that the joint venture agreements did not provide for such liability, there is no further debate in the email correspondence. The termination deed finally executed specifies that the Becharas would not be liable for any losses.
30. On 6 and 7 October 2021, Mr Younan sought updates from the real estate agents concerning interest in the Avenue joint venture property and indicated "I may have to remove the property from market and entirely".
31. On 8 October 2021, Mr Younan sent a text message to Maria Bechara including: … Maria, I have my hands full and people screaming down my neck of the present situation. Can you either send through signed agreements today from Licha and Giselle OR If not, arrange to repay Hunters hill loan in full immediately. They are the only options. Time has gotten away on us, you agreed by the end of September to sign over, and it's now 8th Oct … You committed to signing over the 2 JV, but now appear reluctant. If Giselle and Licha haven't signed over by today, I will take it they no long [sic] wish to, and I will have to insist on loan repayment in full, immediately for Hunters Hill.
32. Maria Bechara responded: "Charlie please talk to mr [sic]. I told you they agree to sign" and also "My mother died this morning".
33. On that same day, Maria Bechara also emailed Mr Younan including: Thank you for your condolences and understanding. I am confirming to you that both Giselle and Licha have agreed to assign their rights to you in the properties and they will send you the signed document sometime next week.
34. From around that time, Mr Younan engaged his brother Ray Younan to try and source a buyer for the joint venture properties. It appears that Ray Younan was a customer of an alternative currency system, called "Trade dollars", and he had access to investors, who might be interested in purchasing the properties.
35. On 17 and 18 October 2021, Licha and Giselle Bechara signed and provided Mr Younan with the termination deeds. On 2 November 2021, Mr Younan provided Maria Bechara with his executed version of those deeds.
36. As the above indicates, apart from Maria Bechara's attempt in 2020 to have Mr Younan agree to the forgiveness of the loan liability in return for the termination of the joint ventures, at no point in time did she ever assert there was such an agreement.
37. Even when Giselle Bechara and Herberton sought to have Mr Younan's caveat protecting the loan removed, their lawyers did not assert that the loan had been forgiven through the termination of the joint ventures. Instead, the lawyers sent a letter to Mr Younan on 21 January 2022, including: …We are instructed that: 1. The monies you claim were secured in 2 separate agreements which are almost identical. One agreement was over the proceeds from joint venture in the property known as The Avenue … and the other agreement entailed was a caveat over the [Hunters Hill property]. 2. You agreed that once the purchase of the Avenue was settled you would withdraw the caveat over the [Hunters Hill property]. 3. You have received the benefit of a substantial lump sum of monies in relation to The Avenue. 4. You have the benefit on the Avenue of a long-term lease with a reputable company. 5. Not only did our client Giselle forgo her rights under the joint venture agreement in the Avenue, her brother Licha Bechara also subrogated his rights to you in relation to another joint venture property… 6. You have received the benefit of valuable rights under both joint venture agreements. Caveatable interest You do not have a caveatable interest, or arguable right, in the [Hunters Hill property] …
38. Maria Bechara deposes to a conversation, in which she agreed to Giselle giving Mr Younan security over the Hunters Hill property "in the short term and then she can use the Avenue property as security". Even if that conversation took place, she did not depose to Mr Younan agreeing to that proposal, and there was never any documented agreement varying the security provided in the Director Deed. I do not consider any such agreement was reached.
39. This is consistent with Mr Younan's email on 21 January 2020 set out above, rejecting his agreement to remove the caveat after the settlement of the purchase of the Avenue by the joint venture.

Evidence of "discussions"

1. There is very little by way of evidence from Maria Bechara of the "discussions" particularised to support the pleaded contract of compromise.
2. In her affidavit dated 7 November 2023, Maria Bechara deposes to a conversation with Mr Younan "in the months leading up to" the October 2021 termination agreements: Charlie: Giselle and Licha must transfer their interests in the Avenue and Victoria St to me. I need to refinance the properties and to do that I need to have the whole interest in the properties. Maria: They will only do that if you forgive the Hunters Hill loan.
3. This conversation was not specifically put to Mr Younan during the course of cross-examination. However, Mr Younan was asked about the email exchange dated 20 August 2021, referred to at paragraph [39] above, in relation to his request put to Maria Bechara that Giselle and Licha Bechara's interests in the joint venture properties be transferred to him. His response in cross-examination was as follows: I was only doing so on the basis that our initial agreement gave that as an option to - to end the joint venture. That is, we sold, she took [the properties] or I took them, and I gave her every option to take them herself and that was my favourable outcome but she chose not to. So, the - the structure or the wording there is pretty much on the basis that, in order to end the JV, that she takes them, I take them, or we sell; and numerous conversations came about where she - she offered me to take them over just so that I could move on and end the JV, because that was our wishes to do that at the time.
4. Later, when asked whether he resisted Maria Bechara's idea that she could "trade Hunters Hill for the joint ventures and you made it clear to her?", Mr Younan answered "yes". He was not challenged further.
5. Maria Bechara further deposes to a conversation in the month before the October termination agreements, when her mother was terminally ill: Charlie: Maria, I cannot wait any longer! The JV properties need to be transferred. Maria: Charlie, I think you are being extremely difficult and unfair. My siblings and I are under extraordinary pressure due to our mother being terminally ill and we are having to be at her side constantly. Charlie: If Licha and Giselle agree to transfer their interests in the JVs then I will remove the caveat from the property at Hunters Hill. Maria: I will speak to them.
6. In cross-examination, Mr Younan denied that he offered to remove the caveat from the Hunters Hill property in return for the termination of the joint ventures.
7. On these conversations, I prefer Mr Younan's evidence to that of Maria Bechara. His evidence is consistent with his repeated insistence in the email correspondence that the issues of the loan and the joint ventures were separate. Further, Maria Bechara's emails around that time did not refer to any such offer or agreement or even proposal by the Becharas. Even if the conversations did take place as Maria Bechara alleged, no documentation to their effect was prepared afterwards and the termination deeds did not refer to such an agreement.
8. In her affidavit, Maria Bechara refers to a text message on 8 October 2021 set out above, and her evidence is that after she received that text message: … I did advise Giselle and Licha to sign the dissolution deeds on the basis that the plaintiff would forgive the … loan.
9. While the text message is not particularised as part of the substance of the alleged contract of compromise, even if it is taken into account, I do not consider that it, or even alleged conversations, in the context of all the documentary evidence, is sufficient to persuade me that the parties formed an agreement compromising the loan.
10. However, even though I prefer Mr Younan's evidence about the conversations, I do not accept that generally Maria Bechara gave false evidence. On one matter, her veracity was challenged in cross-examination on a false basis. She denied she had prepared the legal documents, upon which Mr Younan relies. Mr Hopkins, counsel for the plaintiff/cross-defendants, suggested she was not telling the truth in relation to the joint venture agreements and loan. However, Mr Younan's affidavit evidence was that his own solicitor prepared those documents. The challenge in cross-examination ought not have been made. There was no reasonable basis for Mr Hopkins to allege the witness was not telling the truth; instead, there was a positive reason not to make such a challenge.
11. Mr Hopkins also challenged Maria Bechara's evidence that she did not prepare the termination deeds: Q. Is that the document that you drafted on page 399 [Licha Bechara termination deed]. Correct? A. No, that is not a document I drafted. Q. Who drafted that document? A. I believe Mr Younan's solicitor. Q. That's not true, is it? A. No, it is true. Q. Mr Younan gave you some suggested wording in an email and then you proceeded to draft this document. A. No, that's not correct. Mr Younan's solicitor drafted this document. … Q. This [Giselle termination deed] is also a document that you drafted, isn't it? A. No, it's not a document I drafted. Q. I put it to you that that's not the case and that you did draft this document. A. It's certainly not the case that I drafted this document. Mr Younan's solicitor I understood drafted this document.
12. I accept Maria Bechara's evidence. It is consistent with contemporaneous email correspondence. For example, on 5 October 2023, Maria Bechara emailed Mr Younan querying part of "the document that your solicitor sent to be signed", which from the context of the email was a reference to the termination deed. There is no evidence from Mr Younan that she was incorrect. I have no doubt that Maria Bechara did not prepare any of the legal documents.

Conclusion

1. In circumstances where Mr Younan had always required written agreements with the formality of being executed as "deeds", had the parties intended to be bound to the contract of compromise, then it could be expected that it would have been evidenced in writing.
2. For the reasons above, I do not accept the parties entered into the contract of compromise as alleged.

Pre-judgment interest

1. The defendants accept that if no contract of compromise is found, then the loan is repayable. The total principal sum sought is $270,000. Further, pre-judgment interest is sought at Court rates from the date the loan and contractual interest were repayable on 18 June 2018 until judgment.
2. No Court rule or other basis for pre-judgment interest was invoked in the statement of claim or submissions. Without that indication, it is assumed the plaintiff relies on s 100 of the Civil Procedure Act 2005 (NSW) (CPA). Gleeson JA (with White JA and Emmett AJA agreeing) summarised the basic approach taken to pre-judgment interest in Spotlight Pty Ltd v Fatseas Investments Pty Ltd [2020] NSWCA 132 at [103]-[104], citations omitted: … Interest is compensatory; it is not to be withheld to punish delay. It has been said that interest should generally be awarded on the "neutral" basis that the defendant "ought to have paid" the plaintiff money at a particular time, but did not and since that time the plaintiff has been out-of-pocket of that money and the defendant has had the benefit of it.
3. Mr Shephard's only submission against such interest being ordered was: … we would say, in relation to interest, your Honour, if you went against us on that, that in the case we have a loan for 80% in the first instance, then that would invoke the Court's discretion about taking into account exactly how much interest should be allowed after that date, and whether it would be proper to provide it in that case …We say the [loan] document itself made it clear that there was a lump sum to be paid. There was an amount to be paid as a lump sum. It was described as 80%, but it's not described as an annual interest rate, it's not described as an interest rate attached to the document.
4. I do not accept that, merely because the loan did not specify an ongoing annual interest rate, that is a reason to refuse pre-judgment interest. The loan agreement was a commercial contract and Mr Younan has been held out of the loaned funds longer than agreed. In these circumstances and where no waiver or other defence has been raised in relation to interest, I consider it is appropriate to order the defendants pay pre-judgment interest in accordance with Practice Note SC GEN 16.

Indemnity costs from Giselle Bechara

1. Against Giselle Bechara, Mr Younan seeks indemnity costs of enforcement of the loan repayment, relying on clause 9 of the Company Deed, which provides: In consideration of the Lender contracting with the corporate Borrower (the guarantor), as is evidenced by the guarantor's execution hereof, the guarantor guarantees the performance by the Borrower of all of the Borrower's obligations under this deed and indemnifies the Lender against any cost or loss whatsoever arising as a result of the default by the Borrower in performing its obligations under this deed for whatever reason. The Lender may seek to recover any loss from the guarantor before seeking recovery from the Borrower and any settlement or compromise with the Borrower will not release the guarantor from the obligation to pay any balance that may be owing to the Lender. This guarantee is binding on the guarantors, their executors, administrators and assigns and the benefit of the guarantee is available to any assignee of the benefit of this contract by the Lender.
2. Even in circumstances where the parties have contemplated the question of costs in a written agreement, the Court maintains its discretion to award costs. The weight of authority suggests that in such a circumstance the Court ought to give effect to the contractual right as agreed between the parties: GE Dal Pont, Law of Costs (LexisNexis Butterworths, 5th ed, 2021) at 555 [15.40].
3. However, as explained in Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 at [12]-[13] by Beazley JA, with whom Hodgson and Ipp JJA agreed, the "contractual right" must first be construed: It is well established that a mortgagee may rely upon its contractual entitlement to costs so as to claim an order other than on a party/party basis. In Re Adelphi Hotel (Brighton) Limited [1953] 2 All ER 498, Vaisey J at 502 observed that the prima facie rule was that costs were awarded on a party/party basis unless some alternative basis was shown "either on some well-recognised principle, or under some contract plainly and unambiguously expressed"… The application of the principle is well recognised in Australia: see Inglis and Anor. v. Commonwealth Trading Bank of Australia (1973) 47 ALJR 234 at 235. In AGC (Advances) Limited v. West (1984) 5 NSWLR 301, Hodgson J stated (at 304-305) that at general law a mortgagee was entitled to party/party costs only but that the general law was subject to the precise terms of any provision of the mortgage. Cole J accepted this to be correct in Sandtara Pty Limited & Others v. Australian European Finance Corporation Ltd & Others (1990) 20 NSWLR 82, at 97.
4. In construing clause 9, I consider the language is sufficiently clear to justify an award of indemnity costs, including because it stipulates that Giselle Bechara will be liable for "any cost or loss whatsoever arising as a result of the default by the Borrower [can be recovered by the Lender]".

Did Lexform owe its joint venture counterparties fiduciary obligations?

1. The cross-claimants plead that Lexform owed them fiduciary duties, said to "arise by operation of law out of the relationship between the parties… as joint venturers".
2. The Becharas alleged Lexform breached its fiduciary obligations by failing to disclose the existence of an opportunity to sell the joint venture properties for the benefit of the joint venturers before the Becharas signed the termination deeds, and then Lexform taking advantage of that opportunity to obtain profit.
3. In written submissions, the defendants/cross-claimants rely on United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 (United Dominions) to establish the existence of a fiduciary relationship between Lexform and Giselle Bechara pursuant to the Avenue joint venture, and between Lexform and Licha Bechara pursuant to the Victoria joint venture. Mr Shephard submitted orally: … We say that this is clearly a United Dominions case joint venture where a fiduciary duty arises from it. There is nothing in this document that excludes it other than, indeed, as I pointed out to your Honour about the requirements of trust and the requirements not to be in breach of confidence - I don't rely on the most contractual requirements, but I rely on them as requirements in the contract - which show that the fiduciary duty sits comfortably on top of that.
4. There is no presumption that a fiduciary relationship exists between parties to a joint venture. In United Dominions, the Court found that the relationship between the parties was akin to a partnership, which therefore attracted fiduciary obligations. This conclusion was drawn with reference to "the form which the particular joint venture [took]" and "upon the content of the obligations which the parties to it have undertaken" (at 11 per Mason, Brennan and Deane JJ). Relevantly, the Court found that (at 11): Under the agreement, the participants were joint venturers in a commercial enterprise with a view to profit. Profits were to be shared. The joint venture property was held upon trust. The participants indemnified the managing participant against losses. The policy of the joint enterprise was ultimately a matter for joint decision. Apart from the absence of any reference in the agreement to "partnership" or "partners", the relationship between the participants under the agreement exhibited all the indicia of, and plainly was a partnership.
5. As explained in United Dominions, there are two bases on which fiduciary obligations can bind parties to a joint venture agreement: first, by concluding that the parties were in partnership with one another; or second, with reference to the obligations in the contract. However, the Court ought not to superimpose fiduciary obligations on top of a commercial agreement, unless the relationship between the parties meets the requisite standard of loyalty that is expected of fiduciaries. This can be determined with reference to the terms of the written agreement, and the economic freedom each party has to financially benefit from the relationship.
6. In John Alexander's Clubs Pty Ltd v White City Tennis Club Limited (2010) 241 CLR 1, the High Court made reference to the dissenting judgment of Mason J in Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 and endorsed his Honour's view as to the principles relevant to the existence of a fiduciary relationship outside of established categories. Relevantly, the Court accepted that a contractual relationship can be fiduciary in nature, to the extent it does not change the operation of the rights and obligations of the parties, as expressed in the written agreement. At [36], the Court noted (citations omitted): [Mason J] said of cases where contract provides the foundation for a fiduciary relationship: In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.
7. No fiduciary relationship was found because the Court concluded (at [83]) that "the only vulnerability … was that which any contracting party has to breach by another. The only reliance was that which any contracting party has on performance by another".
8. In resisting that any fiduciary relationship ought to be found, Lexform and Mr Younan rely on the decision in Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd (2017) VR 625 (Adventure Golf). In that case, at [123]-[124] Santamaria JA (with whom Kaye and Ashley JJA agreed) stated: In Breen v Williams, Gaudron and McHugh JJ identified several circumstances that point towards, but do not determine, the existence of a fiduciary relationship: These circumstances, which are not exhaustive and may overlap, have included: the existence of a relation of confidence; inequality of bargaining power; an undertaking by one party to perform a task or fulfil a duty in the interests of another party; the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another; and a dependency or vulnerability on the part of one party that causes that party to rely on another. The existence of one or more of the above indicia is not determinative of the existence of a fiduciary relationship; 'the fundamental question is for what purpose, and for the promotion of whose interests, are powers held?' That being said, a fundamental and inflexible feature of a fiduciary relationship is the existence of an obligation of loyalty: '[t]he principal is entitled to the single-minded loyalty of his fiduciary'.
9. During the course of oral argument, Mr Hopkins emphasised the alleged want of vulnerability of Giselle and Licha Bechara, for example: … As I said, in the cases where there are JVs down to breach of fiduciary obligations, it's because one party is in a position of vulnerability and one party has all the power and so forth and that's not been proven to be this case because, really, all the Bechara parties have to do, when you go there, was to find purchasers and sell the property.
10. Whilst I accept that there might be no special vulnerability established in this case, that alone does not preclude me from finding that the nature of the relationship between the parties was that of fiduciaries; instead, it is a question of whether there are sufficient indicia of a fiduciary relationship, and in particular whether the joint ventures imposed an obligation of loyalty.

Application

1. The joint venture agreements contain the following clauses relevant to the question of whether the parties owed each other fiduciary obligations: 6. Contribution of capital and share of profits and losses (a) The company shall contribute the capital required to purchase the property including the deposit, balance of the purchase price, stamp duty and the holding costs. (b) The Second Party has sourced the property and shall take all steps necessary to secure purchasers to purchase part or whole of the property and to assist in the management of the project to obtain the highest yield at no cost to the joint venture. The Second Party shall contribute the legal costs for the purchase and the sale of the property and the costs associated with subdivision of the property into 6 lots. (c) Any proceeds of the sale of the property, after payment of all monies contributed by the company and incurred by the company for the joint venture, shall be distributed as follows: (i) The First Party 50% (ii) The Second Party 50% 7. Joint venture parties (a) The parties must: (i) Not use or disclose confidential information of the joint venture or any other party and each venturer promises to ensure compliance by its employees with this obligation; (ii) At all times act in the best interests of the joint venture and in good faith; and (iii) Not be involved in any undertaking which may compete with that of the joint venture nor obtain goods or services at a discounted price due to the supply of similar goods or services to the joint venture, nor seek or obtain commissions or discounts in relation to goods or services which are not also offered to the other joint venturers. (b) The rights and obligations of the parties under this agreement are individual and nothing in this agreement constitutes the parties as partners of one another nor do they have any other relationship except that of joint venturers. (c) Each venturer owes the others a duty of trust, and must immediately inform the others of any conflict of interest, must not profit separately from the joint venture and must account to the other venturers for all benefits received as a result of a breach of this duty. (d) No party may incur debts or commit another party to liabilities. Every undertaking of responsibility must be made jointly with the other venturers for this joint venture. … 8. Management of the joint venture project All decisions relating to the joint venture must be made by unanimous resolution of the parties or their representatives. … 11. Default (a) A venturer defaults under this agreement if: … (vi) It breaches any of its fiduciary duties to the other venturers, or is convicted of a criminal offence involving dishonesty …
2. Obviously, there are express terms in the joint venture agreements that use language reminiscent of fiduciary obligations. For example: 1. Clause 7(a)(ii) requires the parties to act "in the best interests of the joint venture and in good faith", and clause 7(a)(iii) prohibits a joint venture party competing. 2. Clause 7(c) confers mandatory obligations on the parties which resemble fiduciary duties. The clause makes reference to a "duty of trust", requires the parties to the joint venture to "inform the others of any conflict of interest" and expressly restricts any profits being obtained "separately from the joint venture" which, pursuant to clause 6(c), are to be distributed 50/50. 3. Clause 7(d) requires all undertakings of responsibility to be "mutual". 4. Clause 8 stipulates that the management of the joint venture is a matter for joint decision. On its proper construction, this clause precludes either party from making decisions in relation to the development and sale of the joint venture property without consultation. This clause operates to restrict the freedom of either venturer to operate alone, and requires loyalty to each other. 5. Further, clause 11(vi) provides that a venturer is in default if "it breaches any of its fiduciary duties…".
3. While clause 7(b) provides that "nothing in this agreement constitutes the parties as partners", that does not preclude the parties owing each other fiduciary duties: Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, at 1137 (Lord Pearson, Lords Reid, Morris of Borth-y-gest, Pearce and Wilberforce agreeing); see also JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5th ed, 2015, LexisNexis) at [5-010]. I note that while in several emails set out above Mr Younan refers to Giselle and Licha Bechara as his "partners", that cannot assist with the construction process. Further, the reference to "fiduciary duties" in clause 11(vi) does not require a finding that the parties in fact owed each other fiduciary duties.
4. Nevertheless, I consider the better view is that the relationship that existed between the parties to the joint ventures was only contractual in nature.
5. The primary obligations of the parties were simply for Lexform to fund, and the Becharas to source buyers for the properties. This was not a situation where either party was required to source business opportunities for the joint venture, which could be diverted for their personal interests.
6. As Lexform was the sole registered proprietor and did not hold the properties on trust for the joint venturers, it was not vulnerable to the Becharas selling the properties to others. Further, the Becharas were not vulnerable to Lexform, other than as a contracting party. If Lexform breached the agreement by not complying with its express obligations, such as making a decision or selling the properties, or not distributing profits equally, then the Becharas would have a claim for breach of contract. That would not be a situation of Lexform having a conflict of interest or profiting from an opportunity it was bound to obtain for the benefit of the Becharas as beneficiaries.
7. This case is far removed from situations where one party has the obligation of finding opportunities and can divert them for personal gain and therefore be considered a fiduciary: see eg Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373.
8. Here, by October 2021, the Becharas had been in breach of their obligations to find purchasers for years and had decided to terminate the joint ventures. Lexform was looking for other opportunities for its properties, where the Becharas, in effect as selling agents, had failed to find it purchasers.
9. Further, I am not persuaded that even if I ought to have found Lexform owed the Becharas fiduciary obligations, that it breached them for the reasons below.

Did Lexform breach its fiduciary obligations?

1. On the basis that Lexform owed its joint venture partners a fiduciary obligation, it would be necessary to determine whether Lexform breached that duty in the way pleaded. As noted above, the Becharas allege the breach of fiduciary duty is found in Lexform's failure to inform them of the "opportunity" to sell the properties before they signed the termination deeds on 17 and 18 October 2021, that it took that opportunity for itself, instead of the joint venturers, and obtained an unauthorised profit.
2. To decide that matter requires a determination of subsidiary questions: 1. Did Lexform breach its fiduciary duties by investigating business opportunities (namely, the possible sale of joint venture properties) and not disclosing those investigations before the Becharas signed the termination deeds? 2. When were the joint ventures and fiduciary relationships terminated? 3. Did Lexform take advantage of any opportunity that had been obtained in breach of its duty while the fiduciary relationship was still on foot?
3. I note that the cross-claimants did not claim any breach of clauses 7 or 8 of the joint venture agreements.

When did Mr Younan bind Lexform to the sale of the joint venture properties?

1. From the email correspondence and unchallenged evidence of Mr Younan, I make the following findings.
2. From August 2021, Mr Younan was in discussions with his brother, Ray Younan, about trying to sell the joint venture properties. Ray promised to make enquiries with his "property group and Trade Organisation". Shortly thereafter, according to Mr Younan, Ray suggested: I can find purchasers extremely quickly, however, there will be a large component of the transactions which incorporate trade dollars. I will also need to make the deal attractive and bundle up the offer to sell as a package which includes assisting the buyer with funding. … Using trade dollars is completely legal and above board. The trade dollars have little to no value to anyone who is not part of this property group or Trade Organisation. They assist purchasers with obtaining loans, but that means that the contract price recorded on any sale contract is inflated and the purchaser has to pay the GST and the stamp duty on the sales transaction. … The trade dollars can be donated to a charity and claimed as a deduction, so that you do not have to pay any tax on account of the uplift in contract price. If I find a buyer, you could donate the trade dollars to a charity that could use them.
3. Mr Younan expressed interest in such an arrangement, if he could obtain a net sale of AUD1,100,000.00, without paying any tax on any balance. He also told Ray: This is all conditional on whether the Becharas decide to terminate the joint ventures or assign their interest to me as well.
4. It therefore appears that Mr Younan was conscious of the obligations under the joint ventures.
5. On 2 September 2021, Mr Younan directed the real estate agents, who had been attempting to sell the joint venture properties, to deal only with him. It appears he was thinking of refinancing those properties if they could not be sold. No allegation is made by the Becharas that this conduct by Mr Younan was wrongful.
6. A valuation report of the properties in evidence is dated 7 September 2021 and provides a cumulative value for the joint venture properties as $2,760,000. It indicates that instructions were received to complete the valuation on 6 September 2021 and includes Mr Younan and Lexform as "clients". During cross-examination, Mr Younan said he did not organise for a valuation to occur. I accept his evidence that he did not seek, nor know about, the valuation as at its date.
7. On 8 October 2021, after Maria Bechara emailed Mr Younan confirming Giselle and Licha Bechara would sign the joint venture termination deeds, Mr Younan asked Ray to progress negotiating the potential sale opportunity. On that day, Ray provided an indicative sale price he expected to be able to obtain: The company assets [joint venture properties] will be $2,685,000 Cash component $1.1-1.2 mil balance in Barter Dollars [trade dollars]
8. On or about 28 or 29 October 2021, Ray informed Mr Younan of a purchaser, who would record a sale price of $2,700,000 with around $1,100,000 in AUD and $1,600,000 in trade dollars.
9. On 2 November 2021, Mr Younan informed his bank manager of a potential sale of the joint venture properties. On the same day, Mr Younan received the front page of contract for the sale of land from Ray which was dated 15 October 2021 and signed by the purchaser.
10. On that same day, Mr Younan provided his signed termination deeds to Maria Bechara.
11. On 8 November 2021, Mr Younan signed the contracts for the sale of land he had received from the purchaser on 2 November 2021.
12. On 25 November 2021, the sale of the joint venture properties completed.
13. The cross-claimants submit that the Court ought to find that the contract for sale of land was binding on the date it bore on its face, being 15 October 2021, rather than when it was actually executed by Mr Younan and exchanged, which was 8 November 2021.
14. I do not accept that submission. It is a question of fact as to when the parties were in fact bound, rather than the date on which they represented to each other that they were bound. I consider that Lexform was bound to sell the properties when the contracts were exchanged on 8 November 2021.

When were the joint ventures terminated?

1. The documents terminating the joint ventures are entitled "Agreement" but are "Executed as a deed". I accept that the documents are deeds, and therefore they became operable when the requirements for deeds were finalised on 2 November 2021.
2. I do not accept that the earlier communications between the parties amounted to a binding contract falling within category 1 or 2 of Masters v Cameron (1954) 91 CLR 353, such that the formal documentation was a formality that was not necessary for the parties to be bound. The parties had always dealt with each other formally; for example, all of Mr Younan's documentation was in the form of a deed, and his correspondence is littered with demands that the Becharas provide written and witnessed documentation. I do not consider the parties intended to be bound unless and until formal documentation was finalised: see eg Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [134] (Beazley P, Bathurst CJ and Meagher JA agreeing).

Did Lexform breach its fiduciary duty?

1. In written submissions, Mr Shepherd submits that Lexform breached its fiduciary duties by failing to disclose to Giselle and Licha Bechara of the opportunity to sell the joint venture properties and that there were likely purchasers of the properties in the amount of $2.6 million. This was developed orally: …getting back to my point about why our fiduciary duty - why we're entitled to it, to the benefits. We're entitled to the benefits of the joint venture, where we say that clearly, because Mr Younan was having these discussions with his brother beforehand, and he was aware of these opportunities beforehand, and you can see from the valuations and the person who bought this, in the end, for $2.6 million - and that links all the way back to these valuations that he was having, which started after the conversations with his brother - that, in this case, in direct consequence of the breach of fiduciary duty (and I wouldn't have thought there could be much argument, if a fiduciary applies to these circumstances, that this is a classic breach of fiduciary duty, there's a conflict of interest, and somebody's obtaining a benefit for themselves without disclosing it to the other party.) So if it applies to these circumstances, I would have thought it's a classic, your Honour.
2. In light of the findings made above, it cannot be said that Lexform derived a benefit in the form of an "unauthorised profit" whilst either joint venture arrangement was still on foot. The joint ventures were terminated on 2 November 2021. Any fiduciary relationship arising pursuant to a written agreement ends upon its termination: see Attorney General v Blake [1998] Ch 439 at 453-55 (Lord Woolf); Vanguard Financial Planners Pty Ltd v Ale (2018) 354 ALR 711 at [168] (Black J); Blyth v Northwood (2005) 63 NSWLR 531 at [195] (Mason P, Giles and Bryson JJA agreeing). Lexform, through Mr Younan, did not sign the contracts for sale of land until 8 November 2021.
3. However, it is well accepted that in addition to the rule against making unauthorised profits, a fiduciary can breach her duty if an arrangement is entered into, where a personal interest conflicts, or possibly may conflict, with the interests of the beneficiary: Aberdeen Railway Co. v Blaikie Brothers (1854) 1 Macq 461 at 471 (Lord Cranworth LC). As explained in the authorities, where a fiduciary becomes aware of an opportunity whilst acting in a fiduciary capacity, any benefit derived from the diverted opportunity could be subject to remedy for breach of the no conflicts rule: see eg Warman International Ltd v Dwyer (1995) 182 CLR 544 at [556]-559] (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).
4. In Gunasegaram v Blue Visions Management Pty Ltd; Same v Chidiac (2018) 129 ACSR 265 at [58]-[61], [64]-[65], Meagher JA summarised the authorities concerning the breach of conflict rule in this way: 58 Citing Mason J's influential dissent in Hospital Products Limited v United States Surgical Corporation at 103, the majority (McHugh, Gummow, Hayne and Callinan JJ) in Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 at [78] adopted the following formulation of the conflict rule: … the fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is "a conflict or a real or substantial possibility of a conflict" between personal interests of the fiduciary and those to whom the duty is owed. 59 As Deane J emphasised in Chan v Zacharia at 198, the principle of equity underlying the conflict rule is concerned: … not so much with the mere existence of a conflict between personal interest and fiduciary duty as with the pursuit of personal interest by, for example, actually entering into a transaction or engagement "in which he has, or can have, a personal interest conflicting … with the interests of those whom he is bound to protect" (per Lord Cranworth LC, Aberdeen Railway Co. v. Blaikie Brothers) or the actual receipt of personal benefit or gain in circumstances where such conflict exists or has existed. (Footnote omitted) 60 But the rule is not unlimited in its operation. Lord Upjohn (dissenting on the facts but not on the law) observed in Phipps v Boardman [1967] 2 AC 46 at 127 that the analysis required to identify a breach of the conflict rule in particular circumstances includes the following: 2. Once it is established that there is such a [fiduciary] relationship, that relationship must be examined to see what duties are thereby imposed upon the agent, to see what is the scope and ambit of the duties charged upon him. 3. Having defined the scope of those duties one must see whether he has committed some breach thereof and by placing himself within the scope and ambit of those duties in a position where his duty and interest may possibly conflict. It is only at this stage that any question of accountability arises. 61 In this context, as the Full Court of the Federal Court (Finn, Stone and Perram JJ) explained in Grimaldi v Chameleon Mining NL (No. 2) (2012) 200 FCR 296 at [179]; [2012] FCAFC 6, in a passage cited by Gageler J in Howard v Commissioner of Taxation at [110]: The concept of "duty" in the "conflict of duty and interest" formula of the first of these is convenient shorthand. It refers simply to the function, the responsibility, the fiduciary has assumed or undertaken to perform for, or on behalf of, his or her beneficiary. What that function or responsibility is, is a question of fact. It may be narrow and circumscribed, as is often the case with specific agencies; it may be broad and general, as is characteristically the case with the functions of company directors; its scope may have been antecedently defined or determined; it may have been ordained by past practice; it may be left to the fiduciary's discretion to determine; and it may evolve over time as is commonly the case with partnerships. … 64 The facts in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 supply two examples of the application of these principles. Grey was an employee and director of DPC, a company engaged in property development, which was in turn controlled by a solicitor, Walton. Grey's duties involved advising the company on the availability and acquisition of properties. At the same time, Clowes, whose family owned company, Consul, was engaged in property development, was an articled clerk employed in Walton's law practice. Grey and Clowes agreed that Grey would make recommendations to Clowes as to properties for purchase and development by Consul, and that in return they would share equally any profits or losses from the projects undertaken by Consul. In the proceedings, DPC claimed that properties acquired in this way were held by Consul on trust for it. Gibbs J's analysis of Grey's breaches of the conflict rule was as follows (at 394-395): … a person who though irregularly appointed assumes the position of director and on behalf of the company performs the tasks of finding, investigating and reporting upon properties suitable for purchase by the company owes a fiduciary duty to the company with which his private interests cannot be allowed to conflict. I consider, therefore, that it was a breach of the duty which was owed by Grey to D.P.C. to buy for himself properties suitable for purchase by that company and which the company might have wished to purchase. 65 His Honour also dealt with the alleged breaches by Clowes of the conflict rule with respect to DPC, and his solicitor employer, Walton (at 395): Clowes owed no fiduciary duty to D.P.C. and any fiduciary duty which he may have owed to his employer Walton was not broken by his taking part in the purchase of the properties: his employment did not extend to finding properties for purchase and no conflict between his interest and his duty to Walton was involved if he acquired a property for himself.
5. As Payne JA stated in Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 at [105] (citations omitted): A fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is a conflict, or a real or substantial possibility of a conflict, between the personal interest of the fiduciary and those to whom the duty is owed ... A conflict arises if there is a real and sensible possibility that the personal interests of the fiduciary divide the loyalty of the fiduciary with the result that he or she could not properly discharge their duties to the beneficiary...
6. It is therefore important to determine the precise scope of Lexform's fiduciary duties to the Becharas. As Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 at 102 stated, they are to be "moulded according to the nature of the relationship and the facts of the case": see also Howard v Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 at [34]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [179] per Finn, Stone and Perram JJ.
7. As noted above, Lexform's role was to fund the purchaser and holding of the properties, and jointly make decisions with its joint venture partners. It did not have the obligation to source purchasers, because that was the express obligation of the Becharas. Therefore, it is difficult to see how Lexform could be in conflict of its duties to the Becharas by looking for purchasers for the properties.
8. In any event, there is a question about what is alleged to have given rise to a breach. Not all investigations will amount to a breach of fiduciary duty. For example, in the employment context, an employee does not breach fiduciary duties by taking preliminary steps to compete with the employer after the employee's employment comes to an end: see Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 at [102] per Besanko J (Finkelstein and Jacobson JJ agreeing); Manildra Laboratories Pty Ltd v Campbell [2009] NSWSC 987 at [77] per McDougall J.
9. Similarly here, Mr Younan was seeking the assistance of his brother to find purchasers, should the Becharas agree to terminate the joint ventures. I consider it critical here that it was the Becharas who were obliged to find purchasers for the properties, not Lexform. The joint venturers needed to make decisions about the joint venture unanimously pursuant to clause 8; however, that duty only existed where the joint venture was on foot.
10. While unnecessary in light of the above, for completeness, I consider: 1. Whether Lexform, through Mr Younan, was in a "real sensible possibility of conflict" with any fiduciary duties prior to 17 October 2021, such that it ought to have disclosed the potential opportunity to sell the joint venture properties, or to disclose that it was investigating the prospects of selling. 2. Whether the Becharas consented to Lexform independently dealing with the joint venture properties, without their further consultation.

When was there an opportunity capable of being pursued?

1. In Boardman v Phipps [1967] 2 AC 46, Lord Upjohn (dissenting on the facts) concluded that a conflict is assessed by whether "…the reasonable man looking at the relevant facts…would think that there was a real sensible possibility of conflict" (at 124); cited with approval, for example, in Queensland Mines Ltd v Hudson (1978) 18 ALR 1 at 3 (per Lord Scarman). See also Hospital Products at 103 (per Mason J); Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1 at [425] (Spigelman CJ, Sheller and Stein JJA).
2. Whether a "real sensible possibility of conflict" arises is an objective question of fact: Boardman v Phipps at 124. It requires an assessment of the circumstances surrounding the alleged conflict. It is only once this threshold has been reached that that a fiduciary ought to disclose the conflict, if it is seeking to benefit from the arrangement.
3. For example, in Canadian Aero Services Ltd v O'Malley [1974] SCR 592, the defendant directors had pursued a contract for work on behalf of the company for a number of years. Once the defendants learned that the project would proceed, they resigned and established a new company which subsequently bid for, and was awarded, the contract. On the topic of whether an opportunity has the potential to place a fiduciary in a position of conflict, Laskin J commented at [48]: The general standards of loyalty, good faith and avoidance of a conflict of duty and self-interest to which the conduct of a director or senior officer must conform, must be tested in each case by many factors which it would be reckless to attempt to enumerate exhaustively. Among them are the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's or managerial officer's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or, indeed, even private, the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, and the circumstances under which the relationship was terminated, that is whether by retirement or resignation or discharge.
4. See also Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291 at [409] - [440] (Murphy JA, Buss JA agreeing).
5. Here, Mr Younan did not agitate for the termination of the joint ventures because of the opportunity to sell the properties to any particular purchaser. Instead, his correspondence indicates that for years he desired to terminate the joint ventures, because the Becharas had failed to find any purchaser and he was considering refinancing the properties until he could sell them. On multiple occasions he had asked the Becharas to purchase the properties from him, or agree to terminate the joint ventures and hand over the properties to Lexform. Mr Younan had sent the termination deeds in early October 2021, and Giselle and Licha Bechara had agreed to execute them by 8 October 2021, and provided executed versions to Mr Younan on 17 October 2021.
6. I do not accept that in investigating possible sales while the joint venture remained on foot was in breach of Lexform's fiduciary duty to the Becharas, particularly where it was the Becharas' obligation to find purchasers.
7. Further, if it was relevant, I consider that no real and sensible possibility of conflict could arise until an offer capable of acceptance had crystalised on 2 November 2021, when Mr Younan received the signed contract for sale of land. The earlier emails from his brother were indicative only.

Did the Becharas consent to Lexform pursuing sale opportunities?

1. Ought I to have found that a conflict did in fact arise, I consider that there is sufficient evidence to conclude that Giselle and Licha Bechara had renounced their obligations in joint venture properties, with the effect that they assented to Lexform dealing with the properties at his own risk and expense, for its own benefit.
2. In the well-known case of Queensland Mines Ltd v Hudson (1978) 18 ALR 1, the House of Lords (Viscount Dilhorne and Lords Hailsham, Simon, Edmund-Davies and Scarman) considered whether the managing director of Queensland Mines, Mr Hudson, had breached his duty to the company by entering a mining exploration licence in his own name, entitling him to royalties, after previously pursuing the licence on behalf of the company. In that case, Mr Korman, the co-director of Queensland Mines, was responsible for financing the company. When the company began experiencing cash flow issues, the directors mutually agreed to retain the corporate structure, but inactive, to mitigate the financial risk associated with the company's various mining projects. The Court commented (at 7): Mr Hudson was now in the position of utmost difficulty. Queensland Mines had been formed as a means for channelling Korman funds into the uranium options held by AOE [a related entity owned by Mr Hudson]. Nevertheless he and Mr Korman had used the company to advance their negotiations for an iron ore licence. The venture in iron ore, like that in uranium, was upon the assumption that Korman funds would be available. Such funds might, or might not, be channelled through Queensland Mines. Now that Korman funds were not to be available, Mr Hudson was confronted with immense obligations owed by him personally under the licences to the Tasmanian Government and no resources with which to meet them. AOE had combined with Factors [the principal holding company of Mr Korman] to form Queensland Mines because they needed finance for uranium development. It was not suggested in evidence that AOE, or Queensland, had, without the Korman provision, funds to develop the iron ore project. That source of finance having dried up, Mr Hudson was left with nothing save only his personal resources and a company which it had already been decided to "mothball".
3. It was after this that Mr Hudson personally pursued the licence, an opportunity known to all directors of Queensland Mines prior to the decision to "mothball" the company. The Court concluded (at 9): The board of the company knew the facts, decided to renounce the company's interest, whatever it was, in the Tasmanian iron ore venture, and assented to Mr Hudson doing what he could with the licences at his own risk and for his own benefit.
4. On the facts, the Court held that no breach of fiduciary duty could be found in the circumstances.
5. Whilst one of the factors raised by the Court in Queensland Mines was that all relevant facts of the opportunity were known to the company prior to Mr Hudson pursuing it, I consider it analogous to the joint venturers' situation where: 1. Giselle and Licha Bechara had failed to find a purchaser for years; 2. The parties were exposing themselves to considerable financial risk by continuing to hold the properties; 3. Licha and Giselle Bechara agreed to terminate the joint ventures on the express basis that they would be relieved of any liability for any losses arising from the later sale of the properties.
6. The Becharas' agreement amounted to consent to Lexform alone dealing with the properties as it saw fit, bearing the risks of selling, and conversely, retain any profit in fact derived.
7. This is sufficient for me to conclude that there can be no breach of fiduciary obligation, if one existed.

Did Mr Younan "induce and procure" Lexform's breach of fiduciary duty?

1. Because of the reasons above, it is not necessary to decide whether Mr Younan could be personally liable for "inducing or procuring" Lexform's breach of duty.
2. However, I note that for a third party to be liable for inducing or procuring a breach of trust or fiduciary duty requires the satisfaction of two elements according to Leeming JA in Pittmore Pty Ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [186] (Bell P and Brereton JA agreeing): The first is the intentional conduct which causes, and is intended to cause, the breach of trust or fiduciary duty. The second is that the third party knew that he or she was bringing about a breach of trust or fiduciary duty.
3. The cross-claim does not plead the second element at all, and the first element is only vaguely referenced. There is a complete failure to plead Mr Younan's knowledge that he was causing Lexform to take steps to breach its fiduciary duties. There was no cross-examination on this issue. Had it been necessary to decide, I consider the failure to plead and prove Mr Younan's knowledge means the claim must fail.
4. For completeness, I do not accept Mr Hopkins' submission that Pittmore assists Mr Younan, on the basis that it decides a director cannot be liable for inducing or procuring his company's breach of fiduciary duty, when merely acting as director. That submission goes too far. In Pittmore, Leeming JA discussed the authorities and academic commentary about accessorial liability for breaches of fiduciary duties. His Honour provided obiter to the effect that he was not persuaded that a director of a company can be found to have induced or procured the company's breach of fiduciary duty, just as a director cannot be liable for the tort of inducing breach of contract by the company, where the director is merely acting as a director: at [163]-[166]. However, his Honour did "see an argument in principle favouring a distinction between the two forms of ancillary liability in equity and at common law": at [169]. Had it been necessary to decide, his Honour indicates that he would have invited submissions as to whether liability can extend to a director for acts undertaking merely in their capacity as such: at [170].

Account or equitable damages

1. If, instead of the above, I ought to have found that Giselle and Licha Bechara are entitled to a remedy for a breach of fiduciary duty by Lexform and/or Mr Younan, then it is necessary to determine whether an account or equitable damages would be the appropriate remedy and how such remedy ought to be determined, including as to quantum.

Account of profits

1. It is not in dispute that the usual remedy for breach of fiduciary duty where there has been a misuse of an opportunity by the fiduciary that belonged to the beneficiary, is an account of profits: see Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1.
2. In Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd (No 2) [2021] NSWSC 1374 at [571], Ward CJ in Eq explained the procedure for taking of accounts: The taking of accounts is a procedure by which the financial dealings between parties are reviewed to determine their rights in relation to disputed funds. Such an account often occurs on the dissolution of a partnership. In Cheng v Lam (No 3) [2020] WASC 45 at [84], Whitbread R summarised the three types of account, by reference to Edelman J's judgment in Agricultural Land Management, as follows: 84. In Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102 [334] to [349], Edelman J identified, from old authority, those same three types of account as referenced in Glazier Holdings Pty Ltd, namely: (i) common account; (ii) account on the basis of wilful default; and (iii) account of profit. Simplistically explaining his Honour's approach, each provides a form of equitable compensation for different types of breach of duty by the accounting party and each applies to different situations as to misapplication of the fund, loss to beneficiaries, or gains to the accounting party. Firstly, on a common account, it is open to the party challenging the account to falsify an accounting item by showing that the expenditure was not authorised by the terms of the fiduciary relationship; ie that the accounting party made an unauthorised payment to a third party. In that case, the accounting party is obliged to make restitution to the fund regardless of loss to the beneficiary. Secondly, on an account on the basis of wilful default, the accounting party is required to compensate the fund for loss caused to the fund by reason of the accounting party's failure to protect or marshal the fund. So, for instance, a failure to make a claim on an insurance policy would be a potential instance of wilful default. The obligation of the accounting party to pay equitable compensation in this case depends on proof of loss. Thirdly, an account of profit applies where the accounting party has acted in breach of duty to derive a personal benefit. In that case the accounting party is required to compensate the fund by disgorging the profit derived.
3. The evidence demonstrates that Lexform received some of the purchase price of the joint venture properties in Trade dollars.

Trade dollar valuation?

1. The cross-claimants sought an account or equitable damages on the basis that the joint venture properties were sold for AUD2,765,000, which is the price listed on the front page of the contract.
2. Mr Younan resisted such a conclusion on the basis that an account ought to involve a determination of exactly what was received by the party liable to account, and that he received "Trade dollars" instead of AUD1,510,000 of the total purchase price listed on the contract.
3. Mr Younan submits the Court cannot conclude that the Trade dollar value is equivalent to AUD and order an account on that basis. He submits that the cross-claimants ought to have proved the value of Trade dollars through expert evidence and they have not. In particular, Mr Younan relied on a decision of Black J in In the matter of Waterfront Investments Group Pty Limited (in liquidation) [2015] NSWSC 18. That case concerned the breach of contract by a purchaser, who failed to pay the purchase price. One issue was the quantum of damages, where on the proper construction of the contract, the purchaser had agreed to pay some of the price in "BBX dollars". Black J concluded on this issue at [45]: … the Court cannot award substantive damages for the non-delivery of BBX trade dollars where no evidentiary basis for a valuation of BBX trade dollars was established.
4. I do not accept that Waterfront Investments is analogous here for the following reasons.
5. Here, there was evidence before the Court as to the value of Trade dollars. Mr Devon, who is the CEO of the company providing the trading platform for Trade dollars, and was called by the cross-defendants to give evidence, provided oral evidence in cross-examination about the value of Trade dollars: Q. But the trade dollars have no value at all, you say. A. No, I didn't say they had no value. The trade dollars are governed by an income tax ruling 2668, which says that one trade dollar is equal to A$1.
6. It was open to Lexform to provide evidence of the value of Trade dollars that contradicted this evidence of their witness, that they are each worth AUD1. Lexform received a tax deduction to the value of AUD1 for each of the Trade dollars it donated to a charity. Therefore, Lexform also valued the Trade dollars at the amount of AUD1.
7. Had it been necessary to decide, then I would order an accounting process be referred to consider the value of the profit obtained by reason of any breach of fiduciary duty, valuing trade dollars at AUD1.
8. I note that an issue also arose in relation to Mr Devon giving evidence remotely. Despite assurances from counsel when leave was granted for that remote evidence, Mr Devon could not readily access the electronic court book, had not been provided with a physical court book and gave evidence in the presence of a third person. There was an unfortunate waste of Court time as a result.

Equitable damages

1. The claim for equitable damages was not developed by either party in submissions. Mr Shephard's only submission was that the value of equitable damages was equivalent to the profits obtained. His submission orally was: … we are entitled to the profits that Mr Younan obtained. We're entitled to equitable compensation for the value of the profit we were done out of, or for the value of missing out on the opportunity of selling the land when, clearly, there wasn't an opportunity to sell the land. … We seek equitable compensation and account of profits … … whether you looked at it through a reparative or substitutive lens, the equitable compensation involved is the $2.6 million. … … The case I refer to is Agricultural Land Management Ltd v Jackson (No 2) [2014] 48 WAR 1. In particular, your Honour, you might find it helpful, from paragraph 333 onwards, which is page 164, where his Honour deals with equitable compensation - substitutive and reparative compensation.
2. Mr Shephard did not elaborate further. It may be that reliance was being placed, for example, on paragraph [341] in Agricultural Land Management, where Edelman J notes that there is no real difference between an account of profits and equitable compensation, where the focus is on the objective value of the property (or opportunity) lost. His Honour quoted Lord Millett in Libertarian Investments Ltd v Hall FACV Nos 14 and 16 of 2012, Court of Final Appeal, Hong Kong, 6 November 2013, [167] - [169]: Where the defendant is ordered to make good the deficit by the payment of money, the award is sometimes described as the payment of equitable compensation; but it is not compensation for loss but restitutionary or restorative. The amount of the award is measured by the objective value of the property lost determined at the date when the account is taken and with the full benefit of hindsight.
3. I accept that here, both an account of profits, or "restitutionary" equitable compensation would be the same and have the same effect here.

Conclusion

1. For the reasons above, it is appropriate to make the following orders: 1. Judgment in the sum of $270,000 against the first and second defendant; 2. First and second defendant to pay pre-judgment interest on the sum of $270,000 in accordance with s 100 Civil Procedure Act 2005 (NSW); 3. First defendant to pay the plaintiff's costs on the ordinary basis, as agreed or assessed; 4. Second defendant to pay the plaintiff's costs on the indemnity basis as agreed or assessed; 5. Direct HWL Ebsworth Lawyers to release the sum of $310,000 held on trust to the plaintiff, in satisfaction or part-satisfaction of the amounts payable by the defendants; 6. Dismiss the cross-claim with costs.

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: 15 December 2023