Comlin Holdings Pty Ltd v Metlej Developments Pty Ltd (No 3)

1. [1]

   BASTEN JA and MEAGHER JA: On 29 September 2014 the appellant, Comlin Holdings Pty Ltd, commenced proceedings against the four respondents, claiming that it had a 20% interest in a large residential property development at South Terrace, Bankstown in south-western Sydney. A trial was held before Parker J in the Equity Division in November 2017. In May 2018, the trial judge dismissed the claim. [1]

2. [2]

   The claim was based upon a conversation, on 13 September 2001, following an auction of the land on which the development was to take place. A director of Comlin, Mr Antonios (Tony) Bassil, attended the auction and claimed that he made the successful bid. However, the contract for sale was executed in the names of the four respondents, companies associated with the Metlej and Kayrouz families, and together known as the “Venture Group”. In broad terms, Mr Bassil asserted that his father-in-law, the late Youssef Metlej (who also attended the auction), told Mr Bassil in the signing room that he wanted the property. Mr Bassil claimed that he was offered a 20% partnership share in the ownership and development of the property if he allowed the Venture Group companies to purchase it. The contract of sale was then completed with the names of the four respondents, and not Comlin.

3. [3]

   The amended statement of claim filed on 3 November 2017 alleged a partnership or joint venture between Comlin and the four respondents with respect to the ownership and development of the Bankstown property or, in the alternative, a declaration that the denial by the respondents of Comlin’s entitlements amounted to equitable fraud. [2] Defences filed by the respondents denied the existence of the alleged partnership or joint venture and any basis for a claim in equity; reliance was also placed on defences under the Limitation Act 1969 (NSW), and by way of laches and abandonment with respect to the claims in equity.

4. [4]

   The structure of the judgment may be noted. It commenced with a comprehensive analysis of the evidence, both documentary and oral. [3] There was a long passage setting out “conclusions and commentary”, [4] followed by an analysis of Comlin’s case. However, the judge did not immediately dispose of the case on the basis that neither the partnership agreement, nor the claim of equitable fraud, had been established on the facts, although he did reach that conclusion later in his reasons. Rather, he first dealt with the defences based on a lack of written agreement (Conveyancing Act 1919 (NSW), ss 23C and 54A), [5] which were rejected, and then the defences under the Limitation Act and, in relation to the equitable claim, laches and abandonment. [6] The judge concluded that the claim for an account of profits, being the substantive relief sought, was barred by s 15 of the Limitation Act, on the basis that any partnership was dissolved more than six years before the commencement of the proceedings, [7] and that the claim for equitable fraud, though not barred by s 47 of the Limitation Act, could not be maintained because the defence of laches had been made out, based on inordinate delay and actual prejudice to the respondents. [8] The judge also expressed the view, on the same grounds, that there had been a common intention to abandon any agreement involving participation by Comlin. [9]

5. [5]

   Finally, the judge turned to consider whether, if he were wrong in upholding the defences, Comlin’s case was otherwise made out. He concluded that the claim of a partnership or joint venture failed because the relevant agreement had not been made out in the terms pleaded by Comlin. [10] Further, it followed that, having failed to establish an agreement in the terms alleged, the claim of equitable estoppel or equitable fraud also failed. [11]

Issues on appeal

1. [6]

   The amended notice of appeal, filed with leave in the course of the hearing, took issue with all these adverse findings, as it had to for Comlin to succeed. The respondents filed notices of contention in similar (though not identical) terms comprising a number of grounds of which only three were pursued at the hearing.

2. [7]

   The relevant contentions were as follows. The second, third and fourth respondents claimed that, if there were some agreement between Mr Bassil and Mr Youssef Metlej on 13 September 2001, they were not bound. Mr Youssef Metlej as the principal of Metlej Developments Pty Ltd (the first respondent) had no direct interest in or authority from any of the other respondents. All respondents challenged the failure of the trial judge to conclude that Comlin lacked the financial capacity to pay for the development, thus rendering the alleged agreement improbable. Further, they alleged that particular aspects of Mr Bassil’s evidence, critical to upholding the agreement, were not put to the principals of the other respondents in cross-examination. Apart from the first contention, the other matters would have supported the finding of the trial judge that there was no agreement entered into on 13 September 2001 in the terms propounded by Comlin.

3. [8]

   The defences based on the Limitation Act and equitable doctrines such as laches and abandonment presented a number of legal issues requiring resolution before the defences could be assessed. Further, to the extent that the defences were addressed in the judgment before making factual findings as to the causes of action, they had to be dealt with on the basis of hypothesis, rather than facts as found. The difficulties in considering the defences first mirror the difficulties in determining limitation questions in interlocutory proceedings, in advance of the hearing of an action, referred to in Wardley Australia Ltd v Western Australia. [12] The existence of the agreement will therefore be addressed first in these reasons.

Post-auction agreement

1. [9]

   The case pleaded by Comlin in its amended statement of claim referred to Mr Youssef Metlej as “Joe” and Mr Bassil as “Tony”. The key passages read as follows:

2. [10]

   There was no doubt that the purchase price for the property, determined at the auction, was $6.6 million. Beyond that undisputed fact, it was not clear how much of pars 11-14 of the statement of claim the trial judge accepted. However, it was clear that the judge was not satisfied as to the substance of pars 15 and 16. [13]

3. [11]

   Secondly, the amended statement of claim relied upon estoppel, the substance of which was pleaded as follows:

4. [12]

   There were further pleadings of inducement and reliance, which were not the focus of attention on the appeal. Rather, the important aspects of the estoppel pleading were (i) the assumption in the chapeau of par 32 of the existence of a “Partnership Agreement” or a “Joint Venture Agreement”, prior to which representations were made, together with (ii) the particulars of the representations which depended upon the conversation between Mr Youssef Metlej and Mr Bassil, being the same particulars as those of the partnership agreement set out in par 15.

5. [13]

   Thirdly, the amended statement of claim asserted equitable fraud which was pleaded in the following terms:

6. [14]

   On the basis of the assumption referred to at [12(i)] above, and the common particulars, the trial judge concluded that the claims based on equitable estoppel and equitable fraud failed because there was a failure to establish the pleaded agreement. [14] The amended notice of appeal did not, in terms, challenge the rejection of the cause of action based on estoppel, but did challenge the failure to accept the claim based on equitable fraud.

7. [15]

   At the hearing of the appeal, the appellant focused upon the claim in equity, relying on the proposition that it had surrendered a valuable interest in the property on the understanding that it would obtain a 20% share in the property and in the profit from its development. That contention relied on the reasoning of the English Court of Appeal in Pallant v Morgan. [15] However, it is clear that the better approach is to focus on the factual basis of the pleaded agreement. If there were an arrangement which constituted an enforceable contract, there would be no need to rely upon equity; if there were no arrangement as pleaded, the basis of the equitable claim was not established.

8. [16]

   The factual case propounded by Comlin, in summary, involved the following elements:

   1. (1)

      Mr Bassil made the final bid at the auction, which was accepted;

   2. (2)

      the bid was made on behalf of Comlin;

   3. (3)

      before the contract for sale was signed, Mr Youssef Metlej said to Mr Bassil that he wanted the property for the four respondent companies;

   4. (4)

      Mr Bassil agreed that the purchasers would be the four respondents, on condition that Comlin would receive one-fifth of any profits from the development and an equivalent interest in the property.

9. [17]

   The Bankstown property was put up for auction after a previous developer had gone into administration. A company controlled by Mr Bassil (not Comlin) had had the benefit of a subcontract to pump concrete. However, at the time that the developer failed, the pumping contractor had an unpaid account in the order of $200,000. Further, the whole of the contract was apparently worth some $1.5 million. Accordingly, Mr Bassil had an interest in recovering the unpaid debt.

10. [18]

    It was not in doubt that Mr Bassil told Youssef Metlej of the fact that the development was likely to come onto the market and that Mr Bassil took some steps to explore possibilities of one of his companies taking over the project. On 8 June 2001 Mr Metlej made an offer to the owner of the land in the sum of $9 million, in order to purchase “land, work to date, DA plus BA and all working drawings….” [16] The offer identified the Venture Group’s solicitor, Mr Alphonse. There was no response to that offer in evidence. Mr Metlej was overseas from 12 June until 1 August 2001.

11. [19]

    Apart from providing context, the pre-auction arrangements were largely neutral. The trial judge posited that Mr Bassil was interested in purchasing the property both prior to and, possibly, at auction. [17] That finding had two consequences. First, it supported Comlin’s claim that Mr Bassil was bidding on its behalf at the auction; on the other hand, it focused the question of whether or not there was a partnership squarely on what happened following the auction, because the earlier discussions did not create such a partnership. The latter point was consistent with Comlin’s pleading.

12. [20]

    Comlin’s evidence as to what happened at the auction came from two sources. First, it tendered extracts from Mr Bassil’s diary for 2001; secondly, it relied upon Mr Bassil’s affidavit evidence. Comlin’s submissions on the appeal, consistently with ground 1 in the notice of appeal, relied heavily on the handwritten entries. [18]

13. [21]

    There were aspects of the diary notes which suggested that they may not have been contemporaneous with events they recorded, but rather a later reconstruction. However, the respondents had had an opportunity prior to trial to investigate the provenance of the diary notes and provided no challenge to their authenticity. Accordingly, the judge properly concluded that the diary entries were to be treated as contemporaneous and authentic. As a result, cross-examination challenging their authenticity was not analysed. [19]

14. [22]

    Two diary notes are relevant for present purposes: first the diary note for Wednesday, 12 September read as follows:

15. [23]

    The diary note on 13 September was lengthy; the relevant part read as follows:

16. [24]

    Mr Bassil’s affidavit of 14 August 2015 described the events at the auction in some detail:

17. [25]

    Before identifying the relevant passages in the evidence, it is convenient to note that the oral testimony at the trial was limited in its scope and reliability. There were three main reasons for that.

18. [26]

    First, the auction took place in September 2001; the trial took place in November 2017, a little over 16 years later. Most of the affidavits were sworn in late 2015, more than 14 years after the date of the auction.

19. [27]

    Secondly, the conversation relied upon by Comlin occurred between Mr Bassil and Youssef Metlej. Mr Metlej died in December 2012. Apart from a diary note prepared by Mr Bassil at or shortly after the auction, there was no documentary evidence of any agreement reached in 2001, nor did any of the company records of either Comlin or the respondents refer to any interest of Comlin in the development of the property.

20. [28]

    Thirdly, while representatives of three of the respondents were present at the auction, they all denied, could not recall, or were not asked about events said by Mr Bassil to have occurred. Youssef Metlej, who was a director and the secretary of Metlej Developments in 2001, was present. The directors of that company at the time of the trial were William Metlej and Antoinette Elias. William Metlej was then (and remains) a director of the second respondent, Nova Scotia Developments. He was not present at the auction, but attended later to sign the contract.

21. [29]

    The remaining two respondents are companies associated with the Kayrouz family. Toufic Kayrouz had been a director of Kayrouz Constructions Pty Ltd since 1993. He was present at the auction. The principal of L.A.D.S. Developments Pty Ltd was (and remains) Lichha Kayrouz. His son, Donny Kayrouz was also a director of the company up until November 2000 and was secretary of the company from that date until June 2014. He attended the auction on behalf of L.A.D.S. Developments, apparently arriving in company with Youssef Metlej and Toufic Kayrouz.

22. [30]

    William Metlej gave evidence that he did not attend the auction on 13 September 2001, but approved his father and the Kayrouz parties bidding on his behalf. He said that his father called him after the auction, said that the partnership had been successful in purchasing the South Terrace site and told him to attend to sign the contract. He recalled that when he arrived at the auction room, he was met by Youssef Metlej, Donny Kayrouz and Terry (Toufic) Kayrouz, but did not see Mr Bassil. That evidence was not challenged in cross-examination.

23. [31]

    Toufic Kayrouz, the brother of Lichha Kayrouz, gave evidence of attending the auction and suggesting to Youssef Metlej that they should sit on opposite sides of the room, and both bid. He said that Youssef agreed and walked to the other side of the room and sat with Mr Bassil. His evidence as to the conduct of the auction was as follows: [20]

24. [32]

    Toufic Kayrouz recalled going with the agent to a separate room with Youssef, Dan Kayrouz (who was also known as Donny) and Mr Bassil. He said:

25. [33]

    The only significant cross-examination of Toufic Kayrouz was to the effect that “[b]y the time you went into the agent’s room you were aware weren’t you or you were told by somebody, probably Youssef, that Youssef had come to an arrangement with his son-in-law Tony?” That was denied.

26. [34]

    Dan (Donny) Kayrouz gave evidence that he attended the auction with Toufic and Youssef and that Mr Bassil was also present. He said that he did not bid at the auction but watched the auction take place. He recalled that “someone who was bidding on behalf of the Venture Group got the last bid, and purchased the property for $6.6 million, but I cannot recall who was the final bidder.” [21] He proffered no evidence in his affidavit as to what happened with respect to signing the contract. In cross-examination, Donny Kayrouz agreed that he was at the auction, that he and Toufic sat together, and that Youssef and Tony were there as well. [22]

27. [35]

    He remembered signing the contract on behalf of L.A.D.S., with Toufic and Youssef. He did not recall Mr Bassil being in the signing room at that time. He agreed that William Metlej was not there on that day and signed later. [23]

28. [36]

    The principals and officers of the respondents referred to the arrangements under which the development of the property was undertaken as a “Venture Group partnership”. Shortly before undertaking the development, that partnership had completed a separate development in Marrickville. In addition to the principals of the respondents, two accountants for the Venture Group, Mr Khoury and Mr Wu, gave evidence. They noted that there was no formal written partnership agreement but that partnership accounts were prepared, a tax file number obtained and tax returns lodged. In 2000 an ABN was obtained for the partnership business and it was registered for GST purposes. [24] The trial judge noted:

29. [37]

    Comlin’s entire case turned on the acceptance of Mr Bassil’s evidence. The trial judge gave extensive consideration to his evidence, expressing a conclusion in the following terms:

30. [38]

    No doubt such a bald statement would not be taken at face value if it were unaccompanied by detailed consideration of the specific aspects of his evidence which were not accepted. However, that detailed consideration was contained in the judgment. A finding in those terms, and with that support, was in substance fatal to Comlin’s case. It was possible that, in making the signal to Toufic Kayrouz (referred to in his affidavit evidence extracted at [31] above), Youssef Metlej believed that Mr Bassil was bidding on behalf of the Venture Group, when in fact he was not, but was bidding in his own interest.

31. [39]

    Assuming in favour of Comlin that that was the case, one of two things must have occurred. Either Youssef Metlej had a conversation with Mr Bassil, persuading him, as his son-in-law, that he should allow the Venture Group partners to take over the property. Alternatively, he was unable to persuade Mr Bassil to take that step and offered him a one-fifth partnership share in the development and property on the terms outlined in the pleadings. The latter hypothesis raised two further possibilities. One was that Mr Metlej explained that new arrangement to the other members of the Venture Group; the alternative was that Mr Metlej did not explain it to the others and proceeded on the basis that no such agreement existed.

32. [40]

    The trial judge addressed the claims by identifying “five important difficulties with, or shortcomings in, Comlin’s case.” [25] Those difficulties may be summarised in the following terms, by reference to the judgment below:

33. [41]

    As to (a), the lack of “commercial logic” in the proposed expanded partnership agreement may be briefly explained. As the judge noted, the Venture Group, on the one hand, did not need Mr Bassil’s help either to purchase or develop the property; so much could be inferred merely from the fact that he had no input, financial or otherwise into the purchase and development. It is also apparent from the fact that the Venture Group had been prepared to offer $9 million prior to the auction. There was no hint in the evidence that they did not have the capacity to pay that sum; rather the contrary.

34. [42]

    On the other hand, as the respondents argued on the appeal, there was no evidence to support the conclusion that Mr Bassil would have had the resources, or indeed the experience, to undertake such a development alone. The respondents contended that, had the judge properly assessed the evidence, it would have provided powerful support for the conclusion that he never intended to purchase the development on his own behalf. This point was addressed by the trial judge in the following terms:

35. [43]

    The better reading of that passage, in our view, is that the judge in fact accepted the submissions put by the respondents in this Court. It is true that, at an earlier point, in considering a diary note made by Mr Bassil the day before the auction that he would take his cheque book, the judge inferred that he was intending to bid himself rather than together with the Venture Group partners. The judge asked, rhetorically, “why else take the cheque book?” [26]

36. [44]

    The respondents suggested that that was the wrong question; the lack of evidence of capacity to pay rather suggested some doubt as to the correctness of the note. However, a possibility which could not be entirely discounted was that he hoped to pay one-fifth of the deposit. Nevertheless, there was, as the judge noted, no evidence to support any prior agreement of that kind.

37. [45]

    With respect to (b), there was no issue as to the admissibility of the diary note, but there was a dispute, both at trial and on the appeal, concerning its significance. As the judge observed, [27] the terms and sequence of the matters dealt with in the 13 September entry suggested that any agreement made with Youssef Metlej was made after Mr Bassil gave up his interest and walked away, with the consequence that “any subsequent agreement or understanding would be unsupported by consideration or detrimental reliance”. With respect to (c), the trial judge, having set out the evidence for the respondents, dealt with it somewhat obliquely, in addressing the difficulties inherent in Comlin’s case. Thus, the third difficulty was said to be “the lack of evidence of any agreement with the Venture Group principals apart from Youssef Metlej.” [28]

38. [46]

    The trial judge noted first that there had been an attack in submissions on Toufic Kayrouz’s account of where the parties were sitting in the auction room. The trial judge rejected that challenge. [29] The judge also noted that Toufic Kayrouz’ unchallenged evidence was that he and Mr Metlej had agreed prior to the auction to offer up to $9 million. It was therefore implausible that Toufic Kayrouz did not respond to a bid of $6.6 million if he thought that had been an adverse bid. Accordingly, his evidence that he understood Youssef Metlej’s hand signal to mean that it was in their camp was plausible. Further, it was not challenged in cross-examination.

39. [47]

    The trial judge concluded that, if the Kayrouz brothers had either overhead such a conversation between Mr Bassil and Mr Metlej, or Mr Metlej had told them of it, it would have been a matter of sufficient significance that they would have remembered it. Alternatively, they did remember it and their evidence was false. Putting to one side the other difficulties with Comlin’s case, the judge did not accept the ultimate conclusion that the Venture Group partners (other than Youssef Metlej) had knowledge of such an agreement. There was, as the judge stated, a lack of evidence of any such knowledge, let alone acquiescence in the proposed new arrangement.

40. [48]

    It may be noted in passing that there was cross-examination of Toufic Kayrouz which appeared to be directed towards the proposition that he and the principals of the other Venture Group partners would happily have accepted, or at least acquiesced in, any proposal put forward by Mr Metlej. However, the context of that cross-examination was the determination of the price to which the partnership would bid at the auction; it was not suggested to any of the principals who gave evidence for the respondents that Youssef Metlej had authority to dispose of 20% of the profits of a proposed development project without the express agreement of the other partners.

41. [49]

    The submissions on the appeal barely challenged the series of findings necessary for the rejection of the judge’s conclusion based on a lack of evidence of any agreement binding the Venture Group.

42. [50]

    With respect to (d), the objective evidence relied upon by the trial judge was the absence of any reference in Comlin’s accounts to its having any interest in the Bankstown property. That reasoning was set out in the following passages:

43. [51]

    With respect to (e), it is convenient to deal with the subsequent conduct of Mr Bassil in addressing the grounds of appeal. It depended on an assessment of the inconsistent positions taken by Mr Bassil at different times.

(1) principal findings: Mr Bassil’s evidence

1. [52]

   The grounds of appeal relevant to Mr Bassil’s evidence are as follows:

2. [53]

   With respect to 8(b), the contribution relied upon was the transfer of Comlin’s interest as the successful bidder at the auction to the Venture Group partners. It was not suggested that there was any contribution of capital in any other way either to the purchase of the property, or to the cost of the development. So understood ground 8 provides no specific complaint about the findings of fact and the rejection of Mr Bassil’s evidence.

3. [54]

   Ground 1 involves three elements. First, there is the reliance upon the judge’s acceptance of the critical diary notes as authentic and contemporaneous; secondly, there is reliance upon “essentially uncontradicted” evidence of Mr Bassil and, thirdly, there is an alleged failure to draw inferences from known facts and contemporaneous records.

4. [55]

   With respect to the “authentic and contemporaneous” diary note, the respondents submitted that the trial judge did not affirmatively find that Mr Bassil made the winning bid. Comlin submitted that he accepted Mr Bassil’s evidence in that regard. Ultimately, little turns upon the point because the findings made by the trial judge appear to have assumed that Mr Bassil did make the winning bid. If he did not, there was nothing further to consider; the agreement would have lacked its essential subject matter and there would have been no consideration for any concession by Mr Metlej as Comlin would not have foregone any benefit.

5. [56]

   However, the tenor of ground 1 should be rejected. The diary note was in itself far from conclusive. In circumstances where the existence of a contract is in issue, the court is required to determine the question by reference to what each party’s words or conduct would have led a reasonable person in the position of the other party to believe. As expressed in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd, [30] “[t]he legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.” It is therefore of critical importance in circumstances where a contract is said to be entirely oral, and where the language used is disputed, to distinguish between intentions which were communicated and intentions or beliefs which were not communicated to the other party. The judge concluded that “Mr Bassil’s diary notes do not go far enough to establish that an agreement in the particular terms alleged was actually made.” [31] The only express statements contained in the note are Youssef Metlej saying “I want it” and Mr Bassil responding “Good luck you can have it.” The final sentence does not record what was said and by whom; rather, it is a statement of Mr Bassil’s understanding as to the outcome.

6. [57]

   These grounds should otherwise not be upheld; to explain why that is so it is necessary to have some further regard to the reasoning of the trial judge leading to his rejection of Mr Bassil’s evidence. In short, the rejection turned on discrepancies between, chronologically:

7. [58]

   As the trial judge noted, there were a number of significant discrepancies between the pleading, the diary note and the affidavit. Although Comlin contended that Mr Bassil’s account of the events following the end of the bidding should have been accepted, the appellant did not seek to address the detailed discrepancies relied upon by the trial judge in rejecting his account.

8. [59]

   First, the statement of claim alleged that Youssef Metlej undertook the bidding on behalf of the Venture Group, up to $6 million and then stopped. However, the diary note stated that Toufic Kayrouz started the bidding at $4 million. The affidavit also said that Toufic started the bidding and bid up to $6 million. Nonetheless, in the 16 April 2014 claim made on his behalf, Mr Bassil said that it was Youssef Metlej and not Toufic Kayrouz who initially bid and then “dropped out” before Mr Bassil started bidding.

9. [60]

   Secondly, Mr Bassil’s affidavit indicated that Mr Bassil was sitting or standing close enough to Toufic Kayrouz to ask him why he had stopped bidding. Mr Kayrouz did not agree that that had happened. However, there is a further inference based on the account in the affidavit (pars 108-111) that Mr Bassil was happy to bid against third parties, but had not intended to bid against the Venture Group. That was consistent with that part of the diary note which stated that when Youssef Metlej had said that the Venture Group wanted the property, Mr Bassil had said “Good luck” and walked away. That conversation, recorded in the diary note, did not appear in the statement of claim or in the affidavit.

10. [61]

    Thirdly, Mr Bassil was cross-examined as to what he meant at par 110 of his affidavit when he said that it was in his interest to get the property, “so we could develop it.” He was pressed on to whom he was referring as “we”. He was unable to explain. [32]

11. [62]

    Fourthly, as to the discrepancy between the instructions which led to the identification of the bidders in the statement of claim, Mr Bassil was taken to the 16 April 2014 letter in which he had stated that both he and Youssef Metlej had completed separate bidder forms and made separate bids at the auction. There was no reference in his affidavit to him completing a separate bidder form and he could not recall any longer whether that was the case. [33]

12. [63]

    Fifthly, as the trial judge noted, the tenor of the diary note was not consistent with a binding legal agreement. It read as if Mr Bassil had willingly allowed Youssef Metlej to take the benefit of the purchase and for the Venture Group to sign the contract and pay the deposit, with a promise at some later point to pay him a portion (one fifth) of the profits. By contrast, the statement of claim was precise that an agreement to develop the property “as partners” was made before the plaintiff executed the contract for sale. [34] However, his affidavit stated that Mr Bassil had signed the contract and handed it to the agent and said, “Here, I signed it”, and then took out his cheque book before Youssef Metlej and Toufic Kayrouz (and he thought Dan Kayrouz) came into the room. The diary note contained no reference to any of the conversation set out at par 119 of his affidavit, except words to the effect of Youssef’s statement, “We want to buy the property”; the diary note said “I want it.”

13. [64]

    Sixthly, the note of surprise expressed in the affidavit was, as the cross-examiner put to Mr Bassil, inconsistent with the statement in the affidavit of a conversation with Youssef Metlej the previous day indicating that the Venture Group and Mr Bassil would buy the property together.

14. [65]

    Seventhly, the subsequent conduct of Mr Bassil was inconsistent with the claimed partnership agreement. According to Mr Bassil’s affidavit, he had no further conversation with Youssef Metlej about the partnership to develop the property until 2005, after the development was finished. He alleged that he had asked “When do I get my share?” He said that Youssef Metlej had replied that there was “too much profit for all of us” and it was best not to sell the building then. At no stage did he ask, “How much is my share?”

15. [66]

    This conversation was referred to as the “roll over” agreement. The trial judge separately declined to accept Mr Bassil’s evidence in that regard. [35]

16. [67]

    Eighthly, there was a further significant discrepancy between the objective evidence and the assertions of interest contained in Mr Bassil’s affidavit. On 29 May 2013, some five months after Youssef Metlej died, Mr Bassil’s solicitor wrote on behalf of Comlin to Mr Alphonse, who was then acting for the estate of the late Youssef Metlej, referring to the Bankstown property in the heading of the letter. The letter read:

17. [68]

    The nature of the claim is significant in a number of respects: (i) it was a claim against Mr Youssef Metlej personally, with no reference to any of the four respondents; (ii) although it claimed an “interest” in the property, the interest was not identified as to quantum or nature; (iii) the assertion was inconsistent with the existence of a partnership with the four respondents; (iv) the solicitor who wrote the letter, Mr John McEncroe, had been the solicitor for Comlin at the time of the auction; (v) finally, if it be read as indicating that Mr Metlej had “on many occasions between 2002 and about May 2012” given assurances to Mr Bassil, Mr Bassil’s affidavit contained reference to only one, being the conversation in 2005.

18. [69]

    Addressing the “two further possibilities” referred to in [39] above, Comlin’s case was inconsistent with the first possibility, because it alleged that the conversation took place in the presence of representatives of three of the respondents. The alternative left open the possibility that Mr Bassil had a personal claim against Youssef Metlej and, after his death, against his estate. However, no such claim was raised in the proceedings; the claim against the estate was not pursued. In its submissions on the appeal Comlin criticised the trial judge for indulging in speculation, rather than making findings on the evidence. No doubt, this court should also eschew speculation; however, on the evidence Comlin must fail.

19. [70]

    Finally, the trial judge relied on other evidence that did not accord with Mr Bassil having an early and continuing understanding as to the partnership interest which he asserted he obtained on 13 September 2001. One matter concerned a diary note relating to a conversation he had had with Mr Albert Chahine, who had controlled the second or third mortgagee of the property before the auction. Mr Bassil had been in contact with Mr Chahine since March 2001, when he was seeking payment for the concrete pouring undertaken by him on the site. In November 2001, some two months after the auction, Mr Chahine was again in contact with Mr Bassil. The judge assessed the tenor of the communications as follows:

20. [71]

    The absence of any assertion of interest until after the death of Youssef Metlej, the inconsistencies in the accounts given thereafter and the need to reconcile Mr Bassil’s evidence with that of the respondents provided ample basis for the judge to conclude that his evidence was not reliable. If the court were not able to accept his evidence, it was clear that the claim as to a partnership agreement was not made out. On the appeal, Comlin provided no satisfactory basis to challenge, let alone overturn, the factual findings made by the trial judge.

21. [72]

    For reasons already explained, it followed that the factual basis sufficient to establish equitable fraud on the part of the four respondents in rejecting Comlin’s claim to a share of the profit of the development was also missing.

(2) failure to call Mrs Betty Bassil

1. [73]

   Ground 2 of the appeal challenged the finding by the trial judge that “an adverse Jones v Dunkel inference” should be drawn against Comlin from the failure to call Mrs Betty Bassil.

2. [74]

   Following the judge’s finding that he was “not satisfied that Mr Bassil’s affidavit account of the purchase of the Bankstown property is reliable” and did not “place any independent weight on Mr Bassil’s affidavit account or his oral evidence”, [36] there was discussion of other matters addressed by Mr Bassil. The judge then turned to the respondents’ submission that, if there had been an agreement in the terms alleged by Comlin, “Mrs Bassil could be expected to have been able to give evidence about it.” [37] She was a director, shareholder and secretary of Comlin at the relevant time.

3. [75]

   The judge considered the possibility that “Betty Bassil’s directorship and share ownership were purely passive.” He noted, however, Mr Bassil’s evidence that his wife was “involved in doing the accounts for the concrete pumping business” and continued: [38]

4. [76]

   The judge accepted that, even if Mrs Bassil were not an active director of Comlin, it might have been expected that Mr Bassil would have told her about his interest in the project and he said in cross-examination that he did so. [39] The judge continued:

5. [77]

   In written submissions, Comlin contended that Mrs Bassil’s evidence would have been inadmissible hearsay, to the extent that she was simply recounting information provided to her by Mr Bassil. However, as explained in Cross on Evidence in considering prior consistent statements, “[w]here the statement is admitted under this rule, it is admitted not as evidence of the truth of its contents, but as tending to disprove a concoction.” [41] Such evidence is now admitted pursuant to s 108(3) of the Evidence Act 1995 (NSW) and, by virtue of s 60, if admitted would be available to prove the truth of the facts asserted.

6. [78]

   The absence of evidence from Mrs Bassil was not explained. Accordingly it was open to the judge in the circumstances to conclude that her evidence would not have helped Comlin. There was, as noted above, a lack of evidence in the accounts of Comlin that it had any interest in the ownership or development of the property. It might be inferred that she, as secretary of the company, had some role with the keeping of the accounts, even if only to record information supplied by others involved with the company. In a colloquial sense, the judge was correct to say that her absence weakened Comlin’s case. Beyond the ambiguous diary note, there was a remarkable absence of contemporaneous evidence that Comlin was a “silent” partner in a commercial development which, it was suggested in evidence, was now valued at some $100 million.

7. [79]

   It is apparent from the structure of the reasons that little weight was given to the absence of Mrs Bassil in the reasoning of the trial judge; nevertheless, there was no error to the extent that the judge did take this matter into account. Ground 2 should be rejected.

Conclusions

1. [80]

   For these reasons, the appeal must fail. It is neither necessary nor appropriate to address the other issues raised by the appellant in circumstances where the factual basis upon which those issues arise can only be dealt with hypothetically. The issues themselves are dependent upon relevant findings of fact.

2. [81]

   The Court should make the following orders:

   1. (1)

      Dismiss the appeal of Comlin Holdings Pty Ltd from the orders made in the Equity Division on 28 May 2018.

   2. (2)

      Order that the appellant pay the respondents’ costs of the proceedings in this Court.

3. [82]

   EMMETT AJA: On 16 April 2019, the Court published its reasons for the orders that it made on 19 March 2019. [42] I outlined the nature of the issues raised in the appeal in my reasons of that date. [43] The Court has now heard argument on the substantive appeal. I have had the advantage of reading in draft form the proposed reasons of Basten and Meagher JJA. I agree, for the reasons proposed by Basten and Meagher JJA, that there was an ample basis for the primary judge to conclude that the evidence of Mr Bassil was not reliable. In those circumstances, the claim that a partnership agreement came into existence was not made out. I agree that no satisfactory basis for overturning the factual findings made by the primary judge have been established. I also agree that it follows that the factual basis for the claim of equitable fraud on the part of the four respondents was not made out.

4. [83]

   I also agree with Basten and Meagher JJA that the extent to which the primary judge took into account the absence of evidence from Betty Bassil did not entail any error. The ground in relation to Betty Bassil’s evidence is not made out.

5. [84]

   I agree, for the reasons proposed by Basten and Meagher JJA, that the appeal from the orders made by the primary judge should be dismissed and that the appellant should pay the respondents’ costs of the appeal to this Court. I agree with the orders proposed by their Honours.