Engadine Medical Imaging Services Pty Ltd atf The Engadine Unit Trust v Mena Ibrahim & Ors

1. [1]

   PAYNE JA: I agree with the orders proposed by Black J and with his Honour’s reasons.

2. [2]

   STERN JA: I agree with Black J and with his Honour’s reasons.

3. [3]

   BLACK J: By a First Further Amended Notice of Appeal, filed by leave on 24 November 2025 after the conclusion of oral submissions on the appeal, the Appellants, Engadine Medical Imaging Services Pty Ltd (“EMIS”) and others appeal from orders made by the Primary Judge (McGrath J) on 6 November 2024. His Honour there ordered that the proceedings at first instance be dismissed with costs, for the reasons set out in a lengthy judgment (Engadine Imaging Services Pty Ltd as trustee for the Engadine Unit Trust v Ibrahim [2024] NSWSC 1399) (“Judgment”). This appeal primarily raises challenges to the facts found by the Primary Judge and the Appellants seek substantive orders that they contend would follow from the making of different findings of fact. Although I will address the applicable legal principles below, there is little or no contest about them in the appeal.

4. [4]

   The proceedings concerned the circumstances in which Second Respondent, Engadine Medical Imaging Pty Ltd (“EMI”), a company controlled by the First Respondent, Mr Ibrahim, obtained a lease over premises at Engadine (“Original Premises”) occupied by EMIS; the status of a Deed of Settlement and Release dated 23 February 2023 between EMI, Mr Ibrahim, EMIS and Dr Kyatt (“Settlement Deed”) executed following a dispute concerning that lease; and steps subsequently taken by EMI, not long after the Settlement Deed was executed, to establish a competing business to that conducted by EMIS (“Competing Business”) in nearby premises (“New Premises”) and employ many of EMIS’s previous staff in that business.

5. [5]

   The Further Amended Notice of Appeal, in the form filed with leave by the Appellants at the commencement of the appeal, did not raise any challenge to the Primary Judge’s findings as to whether Mr Ibrahim and the Third Respondent, Mr Chaudhry, had breached the duties which the Appellants contended they owed to EMIS. That omission may have had the consequence that the appeal could not have succeeded irrespective of the result as to the other matters raised on appeal. The Respondents had highlighted that omission in written submissions prior to the hearing and returned to it in oral submissions. Shortly after oral submissions in the appeal had concluded, the Court permitted the Appellants to file their First Further Amended Notice of Appeal (which was in fact their Second Further Amended Notice of Appeal), by which the Appellants contended that the Primary Judge should have found only two of the several breaches alleged against Mr Ibrahim and Mr Chaudhry by their Further Amended Statement of Claim (“FASOC”) filed on 18 July 2024. We took that course because the Respondents can hardly have been caught by surprise, despite the omissions in the Further Amended Notice of Appeal, by the fact that the Appellants sought on appeal, at least in part, the findings of breach that they had unsuccessfully sought at first instance. Allowing the amendment did no more than leave the Respondents to address a narrower case of breach than had been brought against them at first instance. It would hardly have served the interests of justice to determine the appeal, after two hearing days, on the basis that the omissions in the Further Amended Notice of Appeal had the consequence that the appeal could never have succeeded irrespective of any underlying factual or legal merit.

6. [6]

   The first ground of appeal challenges the Primary Judge’s approach to the evidence and several factual findings made by the Primary Judge. The second ground of appeal relates to a claim for a constructive trust over the business established by EMI. The third ground of appeal challenges the dismissal of the claims against the several Respondents. The fourth ground of appeal relates to the Settlement Deed. The fifth and sixth grounds of appeal, added by the First Further Amended Notice of Appeal, relate to two breaches of the duties alleged against each of Mr Ibrahim and Mr Chaudhry.

The proceedings at first instance and the Judgment

1. [7]

   The Appellants sought a range of relief against Mr Ibrahim at first instance. Broadly, they contended that Mr Ibrahim was an officer of EMIS for the purposes of s 9 of the Corporations Act 2001 (Cth) (“Act”) or its successor provision, s 9AD of the Act, which took effect after the events in issue; that he engaged in conduct in breach of fiduciary duties owed to EMIS and in breach of ss 180–183 of the Act; and they sought compensation under s 1317H of the Act and other relief against Mr Ibrahim on that basis. The Appellants also brought a claim for misleading or deceptive conduct and sought an order under s 237 of the Australian Consumer Law comprised in Schedule 2 of the Competition and Consumer Act 2010 (Cth) setting aside or varying the Settlement Deed. The Appellants also brought claims against the Second Respondent, EMI, but did not press those claims in closing submissions at first instance. The Appellants also brought claims against Mr Chaudhry, contending that he was a director of EMIS within the meaning of s 9 of the Act or its successor provision, s 9AC of the Act, and had also breached fiduciary duties and ss 180–183 of the Act. Claims against several other Defendants were abandoned in the FASOC.

2. [8]

   The Primary Judge reviewed the evidence led by the Second Appellant, Dr Kyatt, and noted the applicable principles in respect of the assessment of the credit of a witness and the difficulties which arise where a witness gives evidence after disputes have arisen, referring to the often cited decision in Watson v Foxman (1995) 49 NSWLR 315 and to the approval of that decision in Touma v Highfields Australia Pty Ltd [2024] NSWCA 160. The Primary Judge noted at ([14]) that he had formed an adverse view as to the credibility of Dr Kyatt and the reliability of his evidence. Mr Pesman, with whom Mr Klooster appeared for the Appellants, indicated in oral submissions on appeal that the Appellants do not challenge the Primary Judge’s credit findings in respect of Dr Kyatt. The Primary Judge also noted that Mr Ibrahim and Mr Chaudhry did not give evidence. Ms Coles, a member of the staff of the businesses that Mr Chaudhry and Mr Ibrahim owned at various times, also did not give evidence and the Primary Judge had regard to the principle in Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”) in that regard.

3. [9]

   The Primary Judge then outlined the relevant facts in a very detailed review of the chronology of events that extended to nearly 100 pages in the Judgment. His Honour reached further findings as to aspects of the evidence given by Dr Kyatt and also reached a number of findings that were adverse to the Respondents. I will more briefly set out the relevant chronology below. The Primary Judge then turned to the claims against Mr Ibrahim by addressing the question whether Mr Ibrahim was an officer of EMIS and then the misleading or deceptive conduct claim against Mr Ibrahim. His Honour’s findings as to those claims are challenged in this appeal. His Honour then addressed the claims against Mr Chaudhry, relevantly, for breach of director’s duties under the Act and for breach of fiduciary duties. His Honour briefly addressed the question of relief, which did not strictly arise where he had found that the Appellants had not established their case and then made the orders dismissing the proceedings and as to costs which I noted above.

The Primary Judge’s findings of fact

1. [10]

   As I noted above, the Primary Judge undertook a very detailed review of events in the Judgment and, in submissions on appeal, the Appellants addressed the chronology of events at length. The Appellants fairly recognised that the Primary Judge had addressed all or substantially all of the relevant events and documents in the Judgment but submitted that his Honour had not drawn inferences that should properly be drawn from them. The Appellants contend, in substance, that the Primary Judge was incorrect in his findings as to some matters and in not drawing further inferences favourable to the Appellants from those matters.

2. [11]

   I will address specific aspects of that challenge in dealing with the chronology below before turning to several wider aspects of that challenge. I will here identify many of the documents to which the Appellants referred, without seeking to repeat the Primary Judge’s detailed and accurate analysis of them. While a review of these events and documents is necessary given the factual issues raised in the appeal, its limitations should be recognised. It was plain enough that Mr Ibrahim and Mr Chaudhry were both involved, in different ways and possibly at different times, in events which had the consequence that EMIS retained a lease over the Original Premises but lost the staff that had previously worked for it and that EMI opened the Competing Business in the New Premises. Those events were plainly disadvantageous to EMIS and to Dr Kyatt. Significant aspects of them were not disclosed to EMIS or Dr Kyatt. Some aspects of them appear to have been actively concealed from EMIS and Dr Kyatt and some aspects of them involved misleading conduct, including false representations to the public that the business had moved from the Old Premises to the New Premises.

3. [12]

   However, it is important to recognise that the Primary Judge was required to determine the claims that were pressed at the hearing before him, relating to breach of officer’s and director’s fiduciary and statutory duties, which depended, on the part of Mr Ibrahim, on his being an officer of EMIS and, on the part of Mr Chaudhry, on his acting in a manner that was contrary to his duties to EMIS at a time that he remained a director of EMIS. The Appellants’ claim for misleading or deceptive conduct in respect of the Settlement Deed also depended on the claim that Mr Ibrahim was an officer of EMIS. One should not forget that, unless Mr Ibrahim owed duties to EMIS which prevented him from doing so, he and any other third party were free to set up a new business in competition with EMIS, in a manner that may diminish or deprive EMIS of its existing business. After a review of these events and documents, it will be necessary to consider whether the Primary Judge erred in concluding that they did not establish the causes of action on which the Appellants relied.

4. [13]

   Turning now to the chronology of events, EMIS conducted a radiology practice trading at the Original Premises. On 12 February 2018, the Third Appellant (“Advanced Imaging”), controlled by Dr Kyatt, acquired a 51% controlling interest in EMIS for $319,218.91. The lease of the Original Premises was assigned to EMIS in that sale and had a term to 31 January 2022. EMIS subsequently conducted that business as trustee, under a trust deed dated 1 February 2018 between Advanced Imaging, companies associated with Mr Ibrahim and Mr Chaudhry and EMIS as trustee. After Dr Kyatt acquired the controlling interest in the Engadine Imaging Trust, of which EMIS was trustee, MI No 2 Family Pty Ltd (“MI No 2”), a company controlled by Mr Ibrahim, remained a 30% unitholder of the trust.

5. [14]

   As the Primary Judge observed (Judgment [50]), on 22 February 2018, Mr Inayat, an accountant working with Dr Kyatt, introduced himself to the lessor of the Original Premises as now the accountant for EMIS and indicated he would deal with some matters relating to those premises.

6. [15]

   As the Primary Judge also observed (Judgment [56]), in September 2018, Dr Kyatt and Messrs Ibrahim and Chaudhry exchanged messages concerning steps that they would take to “close down” a third party radiology practice in Dapto by taking staff away from that practice, although they would advertise for the relevant positions on a third party site rather than approach the staff directly. Mr Chaudhry recognised the effect of that approach in an email dated 25 September 2018 to Dr Kyatt and Mr Ibrahim which observed that:

7. [16]

   This exchange is significant in two respects. First, there is no suggestion that Dr Kyatt then objected to that approach, and he plainly understood that a third party could take steps to hire staff away from a radiology practice and establish a competing practice because he had himself acquiesced in that strategy to the potential disadvantage of the then operators of the Dapto practice. He cannot have been caught by surprise when EMIS later became the victim of a strategy that he was prepared to deploy against others. Second, Mr Ibrahim also knew of that strategy and it was later adopted by EMI in hiring staff away from EMIS.

8. [17]

   The Appellants point out, and the Primary Judge recognised (Judgment [80]), that from 12 March 2020, Mr Ibrahim was given unrestricted access to EMIS’s Xero accounting system. Obviously enough, access to information concerning a company’s business does not in itself allow a capacity to control that business. I return to that issue below.

9. [18]

   The Appellants also refer to the circumstances in which the employment of an employee of the Engadine practice was terminated by a letter signed by Mr Ibrahim, as recognised by the Primary Judge (Judgment [92]ff). The Appellants submit, and I accept, that Mr Ibrahim was also shown as the contact point in a settlement agreement in respect of an employment claim subsequently brought by that employee, a matter to which the Primary Judge did not refer. The status of the latter document is uncertain where it is in evidence as signed by the former employee but not by EMIS.

10. [19]

    On 17 August 2021, Mr Chaudhry asked Mr Ibrahim how he would like to reply to correspondence from the lessor’s real estate agent as to renewal by EMIS of the lease over the Original Premises (“Original Lease”). On 18 August 2021, Mr Ibrahim sent a draft response to Mr Chaudhry and Mr Chaudhry subsequently sent that email unaltered to the agent. On 25 November 2021, Mr Chaudhry sent an instruction to Mr Inayat seeking to bring about a renewal of the lease, but then for a shorter period than originally suggested by Mr Ibrahim and previously proposed by Mr Chaudhry to the agent. It appears those steps did not lead to the renewal of that lease although the evidence before the Primary Judge, and on appeal, does not show why that did not occur.

11. [20]

    On 23 February 2022, Mr Ibrahim sent Mr Chaudhry a draft of a proposed communication to the lessor’s estate agent which sought a lease of those premises for Logan Medical Imaging Pty Ltd (“LMI”), in which Mr Ibrahim and Mr Chaudhry but not Mr Kyatt had an interest, and improperly sought to redirect correspondence from the lessor away from Mr Inayat as EMIS’s accountant in doing so. Mr Chaudhry responded that that email was “perfect” and advised a further email address for the estate agent to which it should be sent. Mr Ibrahim then sent that email to the lessor’s real estate agent and that agent conveyed the proposal to the lessor and wrongly described Mr Ibraham as the existing tenant in doing so. It is plain enough that Mr Ibrahim was there acting for himself or LMI and not for EMIS and that this action was adverse to EMIS. This conduct may be the high point of EMIS’s claim for breach of duty against Mr Chaudhry although it has the difficulty that that proposal did not go forward. LMI did not acquire a lease of the premises and EMI, in which Mr Ibrahim and not Mr Chaudhry had an interest, subsequently acquired a lease of the premises.

12. [21]

    The Appellants also drew attention to correspondence and documents relating to a proposed rebranding of several practices associated with Mr Chaudhry and the Engadine practice to “Focus Radiology”, which they contend was developed without Dr Kyatt’s consent or involvement. That proposal was ultimately not implemented in respect of the business operated by EMIS at the Original Premises and the Competing Business opened by EMI at the New Premises instead opened under that name. The Primary Judge reviewed the steps taken in respect of the rebranding in detail (Judgment [127]ff, [155]ff, [194]ff, [278]ff and [411]–[412]). I will return to that matter below.

13. [22]

    On 12 July 2022, EMI, in a letter signed by Mr Ibrahim, advised Dr Kyatt and Mr Chaudhry that EMIS’s lease of the Original Premises had expired, that they had “failed, neglected and/or refused to renew the Lease and/or enter into negotiations in respect of the continued tenure at the Premises” and that EMI had now entered into a lease in respect of the Original Premises and required EMIS to vacate the premises. There is no doubt that this step and the steps by which EMI acquired the lease were adverse to EMIS but the question remains whether Mr Ibrahim owed a duty to EMIS which was breached by these steps. I return to that question below.

14. [23]

    After the receipt of that letter, on 12 July 2022, Mr Chaudhry sent an email to Mr Ibrahim, with a copy to Dr Kyatt, expressing surprise to what had occurred, observing that:

15. [24]

    On the same date, Mr Chaudhry sent a further email to EMIS’s accountant and Dr Kyatt observing that:

16. [25]

    The Primary Judge observed (Judgment [143]–[144]), in respect of these matters, that:

17. [26]

    The first of the inferences drawn by the Primary Judge is not challenged on appeal by Mr Ibrahim or Mr Chaudhry. The second finding is challenged, so far as the Plaintiffs seek to have wider findings made as to Mr Chaudhry’s involvement, to which I return below.

18. [27]

    Further correspondence followed in respect of the proposed rebranding. Mr Ibrahim subsequently sought, without success, to persuade the lessor of the Original Premises to obtain possession of the premises from EMIS; when the lessor did not do so, he took steps to obtain a lease for EMI of the New Premises, which were in relatively close proximity to the Original Premises (Judgment [333]). Without disclosing those steps, Mr Ibrahim then negotiated the Settlement Deed by which the lease of the Original Premises was reassigned to EMI. In the course of those negotiations, there was a debate as between the parties’ solicitors as to the scope of the release sought by Mr Ibrahim. Dr Kyatt ultimately agreed that EMIS would provide a wider release, which it is common ground extended to Mr Ibrahim’s conduct in issue in the proceedings. All of these matters are addressed, accurately and at length, by the Primary Judge in the Judgment.

19. [28]

    Mr Chaudhry was removed as a director of EMIS on 22 February 2023.

20. [29]

    The Settlement Deed was dated 23 February 2023. Recital H of the Settlement Deed recorded the position of the parties that:

21. [30]

    The Settlement Deed also included mutual releases, including a release by EMIS and Dr Kyatt of EMI and Mr Ibrahim as follows:

22. [31]

    The term “Dispute” was defined as “the disagreement between the Parties in relation to or in connection with the Lease and occupation of the Premises, and the Allegations”. The term “Allegations” was defined as allegations made by EMIS that Mr Ibrahim, inter alia, is a director or officer of EMIS. Unless set aside, that release defeats the allegations made by the Appellants on the basis that Mr Ibrahim was an officer of EMIS. I return to the Appellants’ claim to set aside the Settlement Deed, in whole or in part, at first instance and on appeal below.

23. [32]

    By letter dated 17 March 2023, Mr Chaudhry resigned as a director of EMIS and from his position as manager and sonographer of EMIS; however, little turned on his resignation as a director on that date, where, as I noted above, he had previously been removed as a director of EMIS on 22 February 2023.

24. [33]

    The Appellants draw attention to a somewhat artificial process, coordinated by Ms Coles, one of the staff at the radiology practices associated with Mr Ibrahim or Mr Chaudhry, by which employees of EMIS were encouraged to apply for corresponding jobs at EMI and then resigned from EMIS by letters of resignation in similar terms, before taking up positions with EMI. I recognise that this conduct could plainly be characterised as sharp practice (although of a kind that had previously been planned in respect of the Dapto practice, as I noted above) but those employees were not subject to restraints of trade and a third party may employ staff from a competitor, unless any relevant legal duty is breached by doing so.

25. [34]

    The Appellants also refer to an email dated 23 March 2024 from Mr Ibrahim, copied to Mr Chaudhry, where Mr Ibrahim observed:

26. [35]

    On 26 March 2023, five employees of EMIS at the Engadine practice resigned by email and four of them then commenced work with EMI in the Competing Business (Judgment [329], [331]).

27. [36]

    EMIS’s Engadine practice was apparently closed by 29 March 2023 (Judgment [335]). On 30 March 2023, flyers were handed out outside the (closed) Engadine practice which falsely stated that the practice had relocated to the New Premises operated by EMI (Judgment [336]–[337]). Again, these matters involve sharp practice on the part of EMI and Mr Ibrahim.

28. [37]

    Correspondence between the parties’ legal advisers followed, before these proceedings were commenced. By a letter dated 4 August 2022, solicitors acting for EMIS and Dr Kyatt recorded their contention that:

29. [38]

    The solicitors for Mr Ibrahim took issue with that contention by their response dated 5 August 2022, contending that:

The issue as to “rebranding”

1. [39]

   It is convenient to deal here with a wider submission put by the Appellants as to the “rebranding” of the EMIS business, which did not occur, and the branding of the Competing Business established by EMI as “Focus Radiology.” The Primary Judge referred (Judgment [410]) to the Plaintiffs’ contention that Mr Ibrahim and Mr Chaudhry had “conspired” to the exclusion of Dr Kyatt “to deprive EMIS of its lease of the [Original] Premises, established Focus Radiology and set in train Focus Radiology Engadine.” The Primary Judge referred to the steps taken in respect of the rebranding (Judgment [127]ff), observing that:

2. [40]

   His Honour then reviewed (Judgment [155]ff, [194]ff) subsequent steps in that process, including Ms Coles’ role in that process. His Honour also observed (Judgment [278]–[280]) that:

3. [41]

   The Primary Judge summarised (Judgment [411]–[413]) his findings as to the rebranding process, reflected in the detailed factual findings to which I have referred above, as follows:

4. [42]

   I recognise that the Appellants had submitted at first instance that:

5. [43]

   The Primary Judge does not appear to have specifically addressed that submission although he addressed the rebranding at length. There are apparent difficulties with that submission. First, it appears to have the premise that the “scheme” involving the rebranding was directed to the position in respect of EMIS’s Engadine practice although the evidence before the Primary Judge showed that the rebranding was directed to several practices associated with Mr Chaudhry rather than specifically to the Engadine practice. Second, that submission does not identify how that rebranding had any necessary link with EMI’s establishing the Competing Business where that depended on EMI acquiring a lease to the New Premises and then recruiting staff from EMIS, neither of which required that the new business be branded under the “Focus Radiology” name. Third, it is also unclear how the rebranding had any effect on whether the establishment of a Competing Business would “cripple” EMIS’s Engadine practice which would presumably occur only if EMIS, with the benefit of the lease of the Original Premises and after seeking to retain its existing staff or recruit new staff, could not compete with the Competing Business.

6. [44]

   The Appellants submitted that the rebranding was developed without Dr Kyatt’s consent or involvement and I noted above that it proceeded in respect of EMI’s new business at the New Premises rather than EMIS at the Original Premises.

7. [45]

   Mr Condon, with whom Mr Collins appears for Mr Ibrahim and EMI, accepted in oral submissions on the appeal that a case as to rebranding was put below. Mr Sirtes, with whom Mr Di Lizia appeared for Mr Chaudhry, also recognised that the Appellants had relied on the rebranding at first instance as part of their complaint that EMI established the Competing Business under the Focus Radiology name. Mr Chaudhry also submitted that the rebranding may well have been advantageous to the other practices owned by Mr Chaudhry but it did not follow that the rebranding was contrary to the interests of EMIS. Mr Chaudhry also submitted that, although the Primary Judge dealt with the rebranding in the Judgment, his Honour did not reach any finding that the rebranding was a breach of duty by Mr Chaudhry; he was not asked to reach such a finding; and the Schedule of findings for which the Appellants contended on appeal does not seek any factual finding that that would support a conclusion that Mr Chaudhry breached his duties as a director of EMIS in respect of the rebranding; and the Appellants also do not contend, in the Schedule, that his Honour erred in not finding that the rebranding was an essential part of any scheme to “cripple the Engadine practice”, so far as that proposition was put below.

8. [46]

   The Appellants also sought to attribute Ms Coles’ actions in respect for the rebranding of the Competing Business established by EMI to Mr Chaudhry. Mr Chaudhry responded that Ms Coles cannot be treated as a representative of Mr Chaudhry for all purposes, where the Primary Judge recognised (Judgment [128]) that Ms Coles was employed in one or more of the radiology practices owned by Messrs Ibrahim and/or Mr Chaudhry at different times and there is no challenge to that finding. There is force in that submission.

9. [47]

   As I have noted above, the Primary Judge reviewed the steps taken in the rebranding at length in the Judgment. Where the Plaintiffs had not pleaded a claim arising from the rebranding, as distinct from a claim as to the Competing Business trading under the “Focus Radiology” name, there was no need for the Primary Judge to seek to resolve the gaps and implicit contradictions in the Plaintiffs’ approach to the rebranding. However, where this matter is pressed on appeal, I should note that these gaps and contradictions include at least that the Appellants complained that Dr Kyatt had not consented to the rebranding, although he had by then relocated to Jordan and appears to have left the management of the Engadine business to Mr Chaudhry; the Appellants do not appear to have taken a position at first instance or on appeal as to whether the rebranding would have been advantageous or disadvantageous to EMIS, so that it should or should not have proceeded in respect of EMIS, had it been authorised; and they ultimately complained, likely inconsistently, that the rebranding was not authorised in respect of EMIS and that it was implemented in respect of EMI at the New Premises and not in respect of EMIS. Where the rebranding was not authorised by Dr Kyatt in respect of EMIS, there is no obvious basis for a complaint that it was not implemented in respect of EMIS; and, where the Plaintiffs did not contend that the rebranding would have been advantageous to EMIS, there is also no basis for a complaint that it was not implemented in respect of EMIS or that EMIS was left to trade (had it continued to do so) under its former name. These issues did not need to be resolved at first instance because the Plaintiffs’ pleaded (and real) complaint was that EMIS had opened the Competing Business and the development of the rebranding and the fact that the Competing Business traded under the name “Focus Radiology” were background facts to that complaint.

The first, fifth and sixth grounds of appeal — Challenges to the Primary Judge’s findings of fact; whether Mr Ibrahim was an officer of EMIS; and alleged breaches of duty by Mr Ibrahim and Mr Chaudhry

1. [48]

   As I noted above, this appeal primarily raised challenges to the facts found by the Primary Judge. I will first refer address the first, fifth and sixth grounds of appeal, which allows a more logical order than dealing with the grounds of appeal in numerical order. By the first ground of the First Further Amended Notice of Appeal, the Appellants contended that the primary Judge erred in the approach taken to fact finding by failing to consider objectively determined facts, being contemporaneous communications and the logic of events and/or by failing properly to apply the rule in Jones v Dunkel informed by those matters, in respect of several contested factual findings. The Appellants here relied on a Schedule provided under Uniform Civil Procedure Rules 2005 (NSW) rr 51.18 and 51.36 (“Schedule”) which relevantly requires that the Appellants specify in the Notice of Appeal material facts that they contend that the Court below should, or should not, have found. There was a dispute as to the adequacy of the Appellants’ specification of those matters, which is a significant requirement in an appeal: South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 at [135]; Best v Rosamond [2020] NSWCA 90 at [21]ff; Magann v The Trustees of the Roman Catholic Church for the Diocese of Parramatta [2020] NSWCA 167 at [53]ff. This issue had no real impact on the conduct of the appeal and it is not necessary to address it further.

2. [49]

   The Appellants also advanced several criticisms of the Primary Judge’s approach to Dr Kyatt’s evidence, referring to the limitations on making credit assessments by reference to demeanour, which do not appear to have played any significant part in his Honour’s approach; the fallibility of recollection; and the risks of global findings as to credibility. The Appellants also submitted, uncontroversially, that findings of fact should be made on the basis of contemporary documents, by reference to objectively established facts and the apparent logic of events: ET-China.com International Holdings Ltd v Cheung (2021) 150 ACSR 461; [2021] NSWCA 24 at [212]; Gestmin SGPS SA v Credit Suisse UK Ltd [2013] EWHC 3560 (Comm) at [22]. There can be no suggestion that the Primary Judge did not take that approach, although the Appellants challenge the findings that he reached having done so. The Appellants also pointed to an appellate court’s obligation to undertake a real review of the trial and weigh conflicting evidence and draw its own inferences and conclusions as may be properly drawn from the evidence available on appeal, although recognising that we had not seen the cross-examination of the witnesses at first instance: Fox v Percy (2013) 214 CLR 118 at [25]; [2003] HCA 22; Bauer Media Pty Ltd v Wilson (No 2) (2018) 56 VR 674 at [264]ff; [2018] VSCA 154. I proceed on that basis.

3. [50]

   This ground of appeal ultimately directs attention to the question whether the Primary Judge erred in the range of factual findings that are challenged by the Appellants. I address relevant findings in turn, which primarily arise in respect of the claims against each of Messrs Ibrahim and Chaudhry. It is not necessary to address the position in respect of EMI for the reason noted below in respect of the second ground of appeal. I address the questions of breach of duty raised in respect of Mr Ibrahim and Mr Chaudhry in dealing with the fifth and sixth grounds of appeal below.

4. [51]

   I first address the Primary Judge’s challenged findings in respect of the claim that Mr Ibrahim was an officer of EMIS, including factual findings challenged in the Schedule. In dealing with this question, the Primary Judge referred to the definition of “officer” in s 9AD of the Act, on which Counsel below relied, although it is now common ground that the relevant definition was then found in s 9 of the Act and was in relevantly identical terms. That section relevantly provided that an “officer” of a corporation is a person who makes or participates in making decisions that affect the whole or a substantial part of a corporation’s business or who has the capacity to affect significantly the corporation’s financial standing or in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (subject to an exclusion that is not relevant here): Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) (2007) 160 FCR 35; (2007) 62 ACSR 427; [2007] FCA 963 at [490]; Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; [2010] NSWCA 331 at [893]; Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465; (2012) 88 ACSR 126; [2012] HCA 18 (“Shafron”).

5. [52]

   In Shafron at [23], in discussing paragraph (b)(i) of the definition of “officer”, the plurality in the High Court observed that the necessary inquiry is directed to what role the person in question plays in the corporation although it is not confined to the role that the person played in relation to the alleged breach of duty. Their Honours observed (at [25]) that:

6. [53]

   Their Honours also observed (at [26)] that subparagraph (b)(i) of the definition of “director” distinguishes between making decisions of a particular character and participating in making those decisions, and that the concept of “participation” directs attention to the role that a person has in the ultimate act of making a decision, even if that final act is undertaken by some other person or persons and raises a question of fact and degree in which the significance to be given to the role played by the person in question must be assessed and (at [27]) that:

7. [54]

   The scope of paragraph (b)(ii) of the definition of “officer” was in turn considered by Full Court of the Federal Court in Grimaldi v Chameleon Mining (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [73] (“Grimaldi”), observing that:

8. [55]

   In Australian Securities and Investments Commission v King (2020) 270 CLR 1; [2020] HCA 4 at [35] (“King”), Kiefel CJ, Gageler and Keane JJ referred to Shafron and observed that:

9. [56]

   Their Honours also noted at [39] that:

10. [57]

    Nettle and Gordon JJ in turn observed (at [88]) that:

11. [58]

    The Primary Judge also referred (at [344]) to Nixon J’s review of relevant authorities, including Shafron and King, in Global Risk Alliance Group Services Pty Ltd v Harmer [2024] NSWSC 79 at [495]ff. There was ultimately no contest on appeal as to the scope of these principles, or the correctness of his Honour’s statement of them, as distinct from a contest as to the facts to which they were to be applied.

12. [59]

    His Honour then noted the matters pleaded in paragraph 17 of the FASOC as supporting the claim, in paragraph 18, that Mr Ibrahim was an officer of EMIS and Mr Ibrahim’s response in his Defence. His Honour addressed (Judgment [348]) nine matters on which the Appellants there relied to contend that Mr Ibrahim was an officer of EMIS. The Plaintiffs do not press the first three of those matters on appeal.

13. [60]

    The Appellants pressed their reliance on Mr Ibrahim’s involvement in terminating an employee of EMIS and in a settlement with that employee, to which I referred in the chronology above. In closing submissions at first instance, the Appellants had submitted that Mr Ibrahim was involved in terminating the employee of EMIS and that he resolved the litigation commenced by that employee against EMIS but provided no reference to evidence that had been admitted at the hearing supporting that proposition.

14. [61]

    The Primary Judge in turn held (Judgment [348(4)] that:

15. [62]

    His Honour also held (Judgment [348(5)]) that:

16. [63]

    The Appellants pointed to events relating to Mr Ibrahim’s suggested involvement in negotiating or agreeing the terms of the settlement with this employee. Mr Ibrahim and EMI responded that there was no evidence that the terms of settlement with the relevant employee were agreed or signed on behalf of EMIS, by Mr Ibrahim or anyone else, and that Dr Kyatt gave no evidence that the matter was resolved on that basis. They submitted that there was no need for Mr Ibrahim to lead evidence as to that matter, where there was no evidence which called for any response on his part.

17. [64]

    I can see no error in his Honour’s reasoning by reference to the facts that he found or the matters raised on appeal. His Honour recognised the significance of the termination of the employee; while he did not expressly note the reference to Mr Ibrahim in the settlement agreement with that employee; he was correct in observing that the Appellants had identified no evidence for this proposition at first instance; and I have addressed the Appellants’ approach in the appeal above. It seems to me that his Honour was also correct in recognising that the fact that the termination of the employee was a “single instance”; there was no other evidence of Mr Ibrahim’s involvement in employment matters; the lapse of time between 2021 and the later steps taken by Mr Ibrahim in obtaining the lease for EMI; and the absence of evidence of Mr Ibrahim’s involvement in the settlement agreement with that employee (if it was executed by EMIS) had the consequence that he could not find, by reference to these matters, that Mr Ibrahim was an “officer” of EMIS at any relevant time.

18. [65]

    The Appellants challenged the Primary Judge’s factual findings (Judgment [348(9)]) as to Mr Ibrahim’s conduct in relation to the Original Lease between August 2021 and February 2022. His Honour there found that:

19. [66]

    The Appellants contended (Schedule [5.1]–[5.2]) that his Honour erred in finding that Mr Ibrahim’s conduct in relation to the Original Lease did not entail the holding out of Mr Ibrahim as a person entitled to make a significant decision on behalf of EMIS and in failing to find Mr Ibrahim’s conduct in relation to the Original Lease entailed holding him out as a person entitled to make a significant decision on behalf of EMIS. The Appellants emphasised that, as I noted above, by the 17 August 2021 email, Mr Chaudhry sought Mr Ibrahim’s view as to the terms of a renewal of the Original Lease for EMIS and that Mr Ibrahim then drafted an email as to the proposed length of the new lease and Mr Chaudhry initially put that proposal to the lessor’s agent. They also submitted, by reference to Mr Inrahim’s email, that:

20. [67]

    Mr Ibrahim and EMI responded by supporting the Primary Judge’s finding (Judgment [348(9)]) that this was an isolated act which did not have the result that Mr Ibrahim was an officer of EMIS.

21. [68]

    As I also noted above, on 25 November 2021, Mr Chaudhry subsequently sent an instruction to Mr Inayat seeking to bring about a renewal of the lease for a shorter term than initially proposed by Mr Ibrahim.

22. [69]

    This matter is also not sufficient to allow the finding, for which the Appellants contend, that Mr Chaudhry acted in accordance with instructions from Mr Ibrahim as to these matters. A director who accepts a suggestion from another person does not necessarily act under instruction and the fact that Mr Chaudhry’s later proposal for renewal of the lease differed from Mr Ibrahim’s earlier suggestion undermines any inference that he was acting under instruction from Mr Ibrahim in that regard. As the Primary Judge recognised, this conduct also related to a single, although significant, matter in August 2021, a significant time before EMI acquired the lease over the Original Premises and later established the Competing Business. Mr Ibrahim was also not held out to any third party as having authority to make decisions on behalf of EMIS, where he exchanged emails with Mr Chaudhry rather than a third party.

23. [70]

    The Appellants also challenged the Primary Judge’s factual findings (Judgment [348(8)]) as to whether Mr Ibrahim was involved in decision making with respect to when to take profit out of EMIS. The Appellants contended (Schedule [1.1]–[1.2]) that the Primary Judge erred (Judgment [91]) in finding that there was no evidence of what, if any, action was taken in response to a request by Mr Ibrahim to take out $300,000 from EMIS; and also in failing to find the sum of $300,000 was taken out from EMIS at the request of Mr Ibrahim. In an overlapping contention, the Appellants also contended (Schedule [4.1]–[4.2]) that the Primary Judge erred (Judgment [348(8)]) in finding that Mr Ibrahim was not involved in decision-making with respect to when to take profits out of EMIS; and in failing to find that Mr Ibrahim was involved in decision-making with respect to when to take profits out of EMIS.

24. [71]

    The Primary Judge relevantly found (Judgment [90]–[91]) that:

25. [72]

    The Primary Judge also found (as recorded in the second sentence in Judgment [90]) that how the income of the trust was to be distributed was the decision of Advanced Imaging, a company controlled by Dr Kyatt, under cl 10.3(a) of the Trust Deed and not something over which Mr Ibraham had any control. That finding is not challenged.

26. [73]

    The Primary Judge also relevantly observed that (Judgment [348(8)]:

27. [74]

    The Appellants pointed in submissions to Mr Ibrahim’s request for a distribution from EMIS on 28 January 2021. Mr Ibrahim and EMI responded that Mr Ibrahim’s request for a distribution of profits on 28 January 2021 did not support a finding that he was an officer of EMIS, for the reasons given by the Primary Judge (Judgment [348(8)]). I can see no error in the Primary Judge’s findings (challenged in Schedule [1.1]–[1.2]) as to the $300,000 distribution from the trust on 28 January 2021. The fact that a shareholder or unitholder’s request for a distribution from a company or trust is accommodated by the controllers of that company or trust does not, without more, indicate that that shareholder or unitholder control or is an officer of the company.

28. [75]

    In support of their wider contention (Schedule [4.1]–[4.2]) as to Mr Ibrahim’s involvement in decisions to take profits from EMIS, the Appellants relied on the payment of consulting fees to Dr Kyatt, Mr Ibrahim and Mr Chaudhry. Mr Ibrahim and EMI responded that the payment of those fees to Mr Ibrahim did not support a finding that he was an officer of EMIS where there is no evidence of his involvement in the decision to pay them. That submission seems to me to be correct. For completeness, the fact that the payments were characterised as “consulting fees” does not support an inference that any work that Mr Ibrahim did involved making decisions that affected the whole or a substantial part of EMIS’s business or otherwise made him an officer of EMIS. The Appellants also relied on an occasion which Mr Ibrahim withdrew a distribution amount from EMIS’s bank account, allegedly without consulting Dr Kyatt, in December 2021. Mr Ibrahim and EMIS responded that the claim that Mr Ibrahim withdrew an amount from EMIS’s bank account without consulting Dr Kyatt was not part of the case put by the Appellants at first instance (a matter which we need not decide) and that the emails to which the Appellants refer do not indicate that Mr Ibrahim, rather than Mr Chaudhry who then had the day-to-day management of EMIS, effected the transfer of that amount from EMIS’s bank account. I accept the latter submission and the factual basis of this contention was not established.

29. [76]

    The Appellants also relied on Mr Ibrahim’s access to financial information concerning EMIS. The Primary Judge observed (Judgment [350]–[351]) that:

30. [77]

    The Appellants drew attention to the fact that Mr Ibrahim was permitted wider access to EMIS’s accounting system, Xero, in March 2020, than was arguably his entitlement under the terms of the Engadine Unit Trust and contended that that access permitted him the ability to make informed decisions about EMIS. Mr Ibrahim and EMI responded that Mr Ibrahim’s access to accounts in electronic form on Xero were consistent with the entitlements of a unitholder under cl 13.2 of the Trust Deed and, in any event, did not provide any ability to make decisions of or for EMIS. I accept that access to information to allow a unitholder to make informed decision does not, alone or with the other matters to which the Appellants refer in respect of Mr Inrahim, make him an officer of EMIS.

31. [78]

    The Appellants then contend, in a wider challenge to the Primary Judge’s findings (Schedule [6.1]–[6.2]), that the Primary Judge erred in finding (Judgment [352]) that Mr Ibrahim was not an officer of EMIS and in failing to find that Mr Ibrahim was an officer of EMIS. His Honour relevantly found that:

32. [79]

    The Appellants pointed out, and I recognise, that the conduct on which they rely occurred after Dr Kyatt moved to Jordan in October 2019, and that Mr Ibrahim could have but did not give evidence as to that conduct at first instance. The Appellants also relied on matters relating to the rebranding of the EMIS business which I addressed above.

33. [80]

    Mr Ibrahim and EMI in turn drew attention to the Primary Judge’s unchallenged finding (Judgment [72]) that, after Dr Kyatt had returned to Jordan, Mr Chaudhry took over management of EMIS’s Engadine practice and assumed “primary responsibility” for its day-to-day operations. Mr Ibrahim and EMI also submitted that it was not sufficient for the Appellants to point to discrete acts of Mr Ibrahim in order to establish that he was an officer of EMIS at the relevant time. They submitted that the Appellants do not challenge the Primary Judge’s findings that Dr Kyatt and then Mr Chaudhry had managed EMIS’s business. I recognise that the fact that Dr Kyatt or Mr Chaudhry controlled the day-to-day management of EMIS does not necessarily exclude a proposition that Mr Ibrahim also satisfied one or more of the criteria necessary to have been an “officer” of EMIS. Mr Ibrahim and EMI also pointed to the gap in time between the acts on which the Appellants rely and the time at which EMI established the Competing Business.

34. [81]

    Mr Ibrahim and EMI also submitted that conduct of Mr Ibrahim, on behalf of EMI rather than EMIS, would not establish that Mr Ibrahim was an officer of EMIS. They emphasised that Mr Ibrahim was not acting in the business of EMIS, or for EMIS, at least from 12 July 2022 when EMI had issued the notice, signed by Mr Ibrahim, requiring EMIS to vacate the original Premises and, as the Primary Judge had held, Dr Kyatt had recognised that Mr Ibrahim was seeking to take EMIS’s business and run the Competing Business (Judgment [146], [239], [241], [247], [292]). They also submitted, with substantial force, that Dr Kyatt did not then permit Mr Ibrahim to be involved in decision-making for EMIS from July 2022 onwards, when Mr Ibrahim was plainly then acting contrary to EMIS’s interests, and the Appellants do not contend that Mr Ibrahim was, in fact, involved in such decision-making or exercising other control of EMIS either at the time the Settlement Deed was executed or when EMI acquired a lease to the Original Premises and subsequently opened the Competing Business.

35. [82]

    Turning now to the rebranding, the Appellants submitted that Mr Ibrahim was a person on whose instructions the directors of EMIS were accustomed to act with respect to the rebranding of the Engadine practice and they relied on Judgment [278] in support of that proposition. The Primary Judge’s findings in that paragraph were only that, relevantly, the rebranding of the various practices to Focus Radiology was discussed and agreed by Mr Ibrahim and Mr Chaudhry prior to 11 August 2022 and that Mr Ibrahim took active steps to take the business of EMIS and to set up the Competing Business on and from July 2022 to Mr Chaudhry’s knowledge. The Primary Judge held that those matters did not support a finding that Mr Chaudhry acted in accordance with Mr Ibrahim’s “instructions” in that regard, as distinct from consulting with him, still less that he did so in respect of the business of EMIS.

36. [83]

    Mr Ibrahim and EMI respond that the rebranding was not relied on at first instance as a basis on which it was said that Mr Ibrahim was an officer of EMIS, although they accept that it was relied on to establish a breach of Mr Ibrahim’s duties as an officer. It is not necessary to decide that question. Mr Ibrahim and EMI also point out that the Schedule did not seek a factual finding that the rebranding constituted a basis on which Mr Ibrahim was an officer of EMIS. I have addressed the question of rebranding above. I am not persuaded that the proposition that Mr Ibrahim was a person on whose instructions the directors of EMIS were accustomed to act with respect to the rebranding of the Engadine practice was established by the Appellants, where Mr Ibrahim’s involvement appears to have been with the rebranding of the Competing Business established by EMI in competition with EMIS, rather than with the proposal to, or subsequent failure to, rebrand the Engadine practice operated by EMIS .

37. [84]

    I recognise that the matters on which the Appellants rely must be considered as a whole, together with the significant number of findings that were favourable to the Appellants that were made by the Primary Judge and with reference to any inference is available to assist the Plaintiffs by the application of the principles in Jones v Dunkel. The question whether Mr Ibrahim was an “officer” of EMIS also needs to be approached in the context that the Primary Judge had found, and the Appellants do not challenge his findings that, Dr Kyatt obtained “total control of the day-to-day management of the [EMIS Practice] and assumed the capacity to make all decisions in relation to it” from February 2018 and Mr Ibrahim thereafter “had no power to manage the [EMIS business] as Advanced Imaging alone, acting through Dr Kyatt, had total control of the day-to-day management of, and decision-making in relation to, the [EMIS Practice]” (Judgment [47], [49]). Plainly, Dr Kyatt was less active in the business after he relocated to Jordan in 2019, but the Primary Judge found, and there is also no challenge to the finding that, Mr Chaudhry then “took over management of the Engadine Practice and assumed primary responsibility for day-to-day operations at that time (Judgment [72]). It seems to me that the Primary Judge was correct in taking the view that each of these matters did not establish that Mr Ibrahim was an officer of EMIS and the totality of them also do not establish that matter.

38. [85]

    For completeness, as I noted above, recital H of the Settlement Deed recorded the position of the parties that:

39. [86]

    That recital is likely adverse to the Appellants’ claim that Mr Ibrahim was an officer of EMIS so far it records an agreed position that Mr Ibrahim’s only interest in EMIS is as unitholder in respect in the trust. I recognise that, by their misleading or deceptive conduct claim, which I address below, the Appellants seek to set aside the Deed of Settlement as a whole or in respect of specific provisions. However, the proposition that the releases in the Settlement Deed were induced by misleading or deceptive conduct, even if was established, would not give rise to any apparent basis to treat a recital of fact in the Settlement Deed, to which the parties had committed themselves, as false. The appeal against his Honour’s finding that it was not established that Mr Ibrahim was an officer of EMIS must fail for these reasons.

40. [87]

    It is convenient now to address the fifth and sixth grounds of appeal and to do so together, since they overlap. The parties were allowed an opportunity for brief further submissions in response to these amendments which I address below. By the fifth ground of appeal, added by the First Further Amended Notice of Appeal by leave on 24 November 2025, the Appellants contended that the Primary Judge erred in dismissing two allegations of breach of duty against Mr Ibrahim. They contended that:

41. [88]

    By the sixth ground of appeal, also added by the First Further Amended Notice of Appeal, the Appellants contended that the Primary Judge erred in dismissing the same two allegations of breach of duty against Mr Chaudhry.

42. [89]

    Dealing first with the position in respect of Mr Ibrahim, by FASOC [21.2]–[21.3], the Appellants had pleaded that, by reason of specified circumstances, Mr Ibrahim owed specified fiduciary duties and equitable duties to, relevantly, EMIS and statutory duties as an officer of EMIS. The relevant circumstances appear to be that Mr Ibrahim had specified duties and responsibilities in respect of the Engadine practice (FASOC [17]), he was an officer of EMIS within the meaning of s 9 of the Act (FASOC [18]; and he had access to confidential information (FASOC [19]–[20]). The Primary Judge did not accept these contentions or their factual basis. No challenge is brought to several of his findings and the challenge brought to the balance of those findings has failed for the reasons noted above. This ground of appeal must fail in respect of Mr Ibrahim, because the relevant duties were not established.

43. [90]

    It is therefore not strictly necessary to address the other aspects of this ground of appeal in respect of Mr Ibrahim, although I will do so for completeness. The first aspect of this ground is that, if the pleaded duties existed, the Primary Judge erred by failing to find that Mr Ibrahim breached them by acting in the manner pleaded in FASOC [25.8] which alleged that he induced or attempted to induce employees or contractors of EMIS, presumably to join EMI, or assisted Mr Chaudhry to do so.

44. [91]

    Mr Ibrahim and EMI made brief further submissions as to the question whether there was evidence that Mr Ibrahim had induced or attempted to induce employees of EMIS to work in the Competing Business. They submitted that the claim that Ms Coles’ conduct in respect of employees was undertaken at Mr Ibrahim’s direction was inconsistent with the Appellants’ claim, in other contexts, that Ms Coles’ conduct was undertaken at Mr Chaudhry’s direction. There is no necessary inconsistency in those submissions, if (as the Primary Judge found) Ms Coles sometimes worked for Mr Ibrahim and sometimes for Mr Chaudhry or if, as the Appellants contend, Mr Ibrahim and Mr Chaudhry were acting together. However, I also bear in mind the Primary Judge’s finding that Ms Coles was acting for Mr Ibrahim in respect of the rebranding of the Competing Business, which I have addressed above.

45. [92]

    It was not necessary for the Primary Judge to determine the claim that Mr Ibrahim had induced or attempted to induce employees of EMIS to work in the Competing Business, given the findings he had reached. I accept this breach would likely have been established, by an inference that Ms Coles was acting on EMI’s and Mr Ibrahim’s behalf in dealing with the recruitment of EMIS’s staff, had Mr Ibrahim been an officer of EMIS, but that has not been established. This aspect of the appeal must also fail.

46. [93]

    The second aspect of this ground of appeal is that, if the pleaded duties existed, the Primary Judge erred by failing to find that Mr Ibrahim breached them by acting in the manner pleaded in FASOC [25.12] by:

47. [94]

    Mr Ibrahim and EMI also addressed the question of Mr Ibrahim’s conduct in establishing the Competing Business. They rightly observed that the question whether a director or officer’s involvement in a competing business constitutes a breach of duty depends on the particular circumstances: Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) 340 ALR 580; [2016] NSWCA 347 at [133]ff. They also submitted that, even if Mr Ibrahim owed fiduciary or statutory duties to EMIS as an officer, they would not have been breached by EMI’s competition with EMIS. In response, the Appellants accept that holding a directorship or being an officer of a competing company does not of itself constitute a breach of fiduciary duty but submit that Mr Ibrahim did more than simply hold an office in EMI.

48. [95]

    This submission also does not assist the Appellants, where any breach of duty still depended upon the Appellants establishing that Mr Ibrahim was an officer of EMIS at the relevant time. For completeness, this ground of appeal must also fail in respect of Mr Ibrahim because this claim was released by the Settlement Deed, the application to set that Deed aside failed at first instance and the appeal as to that issue also fails for the reasons noted below.

49. [96]

    Turning now to the sixth ground of appeal in respect of Mr Chaudhry, he was, until 22 February 2023, a director of EMIS and plainly owed fiduciary, equitable and statutory duties to EMIS arising from that position. Several of the factual findings challenged in the Schedule relate to the claim for breach of duty against Mr Chaudhry. In dealing with that claim, the Primary Judge noted (Judgment [394]–[401]) the scope of the pleaded claim for breach of statutory and fiduciary duties against him and noted the pleaded breaches of duty, many of which are not pressed on appeal. His Honour identified (Judgment [402]–[408]) the applicable statutory provisions and reviewed case law considering their content, including Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789. The content of the duties and the applicable law were not in contest on the appeal.

50. [97]

    The first aspect of this ground of appeal is that the Primary Judge erred by failing to find that Mr Chaudhry breached his duties as a director of EMIS by acting in the manner pleaded in FASOC [25.8] which alleged that he induced or attempted to induce employees or contractors of EMIS, presumably to join EMI, or assisted Mr Ibrahim to do so. The Appellants also challenged (Schedule [12.1]–[12.2]) the Primary Judge’s finding (Judgment [416]) that:

51. [98]

    Mr Chaudhry submitted that the Appellants had not identified in the Schedule, or in submissions, the steps which Mr Chaudhry was alleged to have taken, prior to his removal as a director of EMIS on February 2023, amounting to any inducement or attempted inducement of employees or contractors of EMIS or any assistance in Mr Ibrahim doing so and that there was no evidence before the Primary Judge of any such inducement at the relevant time. That submission depends upon the proposition that Ms Coles’ conduct in respect of the Competing Business cannot, on the evidence at the trial, be attributed to Mr Chaudhry. Mr Chaudhry also pointed to the Primary Judge’s finding (Judgment [416]) that the only evidence of relevant conduct by Mr Chaudhry related to the period from March 2023, after he was no longer a director of EMIS and did not owe any duties to EMIS.

52. [99]

    The Appellants responded that:

53. [100]

    It seems to me that the Primary Judge’s finding as to this matter was correct and that his Honour was also correct in holding that no breach arose from this matter. The Appellants did not challenge the finding that Mr Chaudhry was removed as a director of EMIS on 22 February 2023. Although they contended that Mr Chaudhry had acted in breach of duty prior to that date, there was no evidence to support that contention in respect of any dealing with EMIS’s employees, and I accept Mr Chaudhry’s submission that Ms Coles’ conduct in respect of the recruitment of employees for EMI cannot be attributed to Mr Chaudhry, as distinct from Mr Ibrahim, for the reasons noted above. So far as Mr Chaudhry’s conduct after his removal as a director of EMIS is concerned, fiduciary obligations generally do not continue beyond the termination of the fiduciary relationship: Attorney-General v Blake [1998] Ch 439 at 453–5; [1998] 1 All ER 833; Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 235; [1999] 1 All ER 517; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 at [83]. An exception to that proposition may arise where a director resigns in order to perfect a breach of duty which he or she has earlier commenced: Southern Real Estate Pty Ltd v Dellow (2003) 87 SASR 1; [2003] SASC 318. However, I can see no reason to extend that exception to the position where a director or fiduciary ceases to hold office because he or she is removed from that office, as occurred here.

54. [101]

    The second aspect of this ground of appeal is that the Primary Judge erred by failing to find that Mr Chaudhry breached his duties as a director of EMIS by acting in the manner pleaded in FASOC [25.12], by, broadly, establishing the Competing Business. The Appellants also contended (Schedule [2.1]–[2.2]) that the Primary Judge erred in finding (Judgment [144], [415]) that Mr Chaudhry was not directly or actively involved in EMI obtaining the lease of the New Premises and in failing to find that Mr Chaudhry was directly or actively involved in obtaining the lease of those premises; and (Schedule [11.1]–[11.2]) that the Primary Judge erred in finding (Judgment [414]) that Mr Chaudhry was not involved in the operations or management of EMI, acquiring the lease for EMI, or alternatively in not finding that he was involved in acquiring that lease.

55. [102]

    His Honour relevantly held (Judgment [144]) that:

56. [103]

    His Honour also held (Judgment [414]–[415]) that:

57. [104]

    The Appellants also challenge (Schedule [12.6]–[12.7]) his Honour’s finding (Judgment [419]) that:

58. [105]

    The Appellants pointed to several matters to establish Mr Chaudhry’s “involvement” in EMI’s establishing the Competing Business at the New Premises. The first matter relied on was that Mr Chaudhry knew that Mr Ibrahim was taking steps to set up a competing business from July 2012 (Judgment [278], [412]). The second matter was that Crowd IT issued an information technology proposal to Mr Chaudhry on 18 February 2023, which referred to the provision of information technology services to several other businesses associated with Mr Chaudhry that would trade under the “Focus Radiology” name and also to the business to be conducted by EMI at the New Premises (Judgment [276(8)]); the third matter was that Mr Chaudhry signed that document on 26 February 2023 (Judgment [276(10)]); the fourth matter was a claim that the receipt of that document and signing it was an “active step taken by Mr Chaudhry to assist Mr Ibrahim establish the Competing Business”.

59. [106]

    The Appellants placed particular weight upon Mr Chaudhry’s receipt of the proposal from Crowd IT, and submitted that there would be no reason to issue this document in the name of Mr Chaudhry unless he was assisting Mr Ibrahim to establish the Competing Business. The Appellants also submitted that Mr Chaudhry was not aware, at the time he signed that document, that he had been removed as a director of EMIS on 22 February 2023, and was continuing to attend to responsibilities as a manager of the business at that time. Mr Chaudhry’s knowledge of his removal as a director of EMIS was not here to the point, where his obligations as a director ceased when he ceased to be a director of EMIS.

60. [107]

    Mr Chaudhry responded that the rebranding proposal was directed to several practices which would trade under the name Focus Radiology and that his involvement in that proposal could readily be explained by his involvement with those practices rather than the new Engadine practice to be established by EMI. I recognise that Mr Chaudhry did not give evidence at first instance to advance that explanation. Mr Chaudhry also submitted that the receipt of that document by Mr Chaudhry did not establish that Mr Chaudhry, rather than other staff, had taken any earlier steps to have Crown IT prepare and submit that document. Mr Chaudhry also submitted that the receipt of the Crowd IT proposal was not a breach of Mr Chaudhry’s statutory or fiduciary duties as a director of EMIS, where mere receipt of that proposal could not have placed Mr Chaudhry in a position of conflict or given rise to any undisclosed profit on his part or any breach of his statutory duties.

61. [108]

    In further submissions as to this ground of appeal, Mr Chaudhry also submitted that, on appeal, the Appellants seek to narrow their claims at first instance in respect of the Competing Business and contends that the Primary Judge was not required to reach findings as to a narrower claim than had been put at first instance. There is force in that proposition but, in any event, as Mr Chaudhry pointed out, the claim that is now put depends upon Mr Chaudhry’s receipt of the Crowd IT proposal and the attribution of Ms Coles’ conduct in respect of EMI to Mr Chaudhry and those matters were not established at first instance or on appeal for the reasons noted above. In response, the Appellants emphasised that Mr Chaudhry did not give evidence at first instance and that their case was based on documents and inferences that could be drawn from them. The Appellants otherwise repeat the submission that Ms Coles was acting under the direction of Mr Chaudhry in respect to the rebranding but this does not advance this ground of appeal for the reasons noted above.

62. [109]

    It seems to me that it is not possible, even with the aid of Jones v Dunkel, to infer Mr Chaudhry’s involvement in EMI’s opening the Competing Business in the New Premises from his receipt of the Crowd IT proposal, where it was also directed to the other practices with which he was involved and he had a proper interest in receiving it on that basis. In any event, the signature certificate in respect of that proposal recorded that Mr Chaudhry viewed it on 26 February 2023 and signed it on the same day, after he had been removed as a director of EMIS, and there was no evidence to support an inference that he had reviewed it an earlier date. It also seems to me that, where it was not shown that Mr Chaudhry took any positive steps to obtain the New Lease for EMI or took any active step in EMI’s business before he was removed as a director of EMIS, and having regard to the evidence as to the rebranding to which I have referred, the evidence is at least equally consistent with Mr Chaudhry’s merely standing by while Mr Ibrahim took steps to obtain the New Lease and establish the Competing Business for the benefit of EMI. The Appellants did not, at first instance or on appeal, seek to establish Mr Chaudhry’s liability on that basis, as distinct from putting, in strong terms, allegations of active wrongdoing on his part and that he was actively involved in wrongdoing by Mr Ibrahim. While the principle in Jones v Dunkel would allow the Primary Judge more readily to draw an inference that was available from the evidence as to Mr Chaudhry’s involvement, it seems to me that his Honour was correct in finding that he could not draw that inference in the absence of an evidentiary basis for it.

63. [110]

    The fifth matter on which the Appellants relied is that other documents were not available from mid-December 2022 because efforts were taken to ensure there was no paper trail revealing Mr Chaudhry’s involvement (Judgment [276(3)]), but that is a matter that would be relevant to allow inferences more readily to be drawn if some evidentiary basis for them is established, and none is here. The sixth matter is that Mr Chaudhry was copied into emails relating to the Competing Business shortly after his resignation as a director of EMIS on 17 March 2023, but nothing turns on this if he had previously been removed as a director of EMIS in February 2023. The Appellants also pointed to the fact that Mr Chaudhry did not give evidence as to these matters, but, as the Primary Judge rightly recognised, a Jones v Dunkel inference could not be used to reach positive findings that are adverse to Mr Chaudhry without an evidentiary basis, as distinct from drawing inferences with greater confidence where there was a proper basis for them. This matter does not assist the Appellants where it occurred after Mr Chaudhry had been removed as a director of EMIS and his statutory and fiduciary duties to EMIS had ceased, for the reasons I have noted above. The seventh matter is that the steps that Mr Chaudhry had taken were within his knowledge and he had not given evidence of them, but that is a matter that will be relevant to allow inferences more readily to be drawn if some evidentiary basis for them is established.

64. [111]

    For these reasons, the fifth and sixth grounds of appeal are also not established against either Mr Ibrahim or Mr Chaudhry.

The second ground of appeal — Constructive trust and other claims for relief

1. [112]

   By this ground of the First Further Amended Notice of Appeal, the Appellants contended that the Primary Judge erred (Judgment [422]–[426]) in dismissing the Appellants’ claim to a constructive trust over the competing radiology business operated by EMI. The Appellants characterised this ground of appeal as directed to the question whether a constructive trust should have been imposed over the Focus Radiology Engadine business established by EMI, by reason of Mr Ibrahim’s and Mr Chaudhry’s alleged breaches of duties owed to EMIS. Plainly, that proposition turns upon the Appellants’ success in establishing, on appeal, the existence of those duties on the part of Mr Ibrahim, and the breach of those duties on the part of Mr Ibrahim and Mr Chaudhry. It cannot succeed where the Appellants have not succeeded in respect of those matters.

The third ground of appeal — The dismissal of the claims against the Respondents

1. [113]

   By their third ground of appeal, the Appellants contended that the Primary Judge erred in dismissing their claims against the Respondents, Mr Ibrahim, EMI and Mr Chaudhry. The Appellants treated this ground of appeal as directed to factual findings as to the extent of Mr Chaudhry’s involvement in relevant matters and consequential on grounds 1 and 2 of the appeal, and this ground of appeal cannot succeed where those grounds of appeal have not succeeded. The Appellants also sought a range of other relief on appeal, including allowing the appeal, setting aside the orders made by the Primary Judge on 6 November 2024, and making a range of the orders sought at first instance. Those orders could not be made as against Mr Ibrahim or Mr Chaudhry where the appeal has not otherwise been successful.

2. [114]

   For completeness, no relief is available on appeal against EMI where that relief was not pressed at first instance. In closing submissions at first instance, the Appellants accepted that:

3. [115]

   Also for completeness, the Appellants had pleaded a claim for accessorial liability in the FASOC, apparently by way of knowing assistance, against each of Mr Ibrahim and Mr Chaudhry, in several combinations. The Appellants’’ closing submissions at first instance had noted that the issues in dispute had narrowed significantly and did not include claims for accessorial liability in the list of matters that remained in issue, although they were referred to in the Respondents’ closing submissions at first instance. The Primary Judge then substantially adopted the Appellants’ summary of the issues which remained to be decided (Judgment [8]) which did not include claims for accessorial liability. Unsurprisingly, the Primary Judge did not address those claims and they were not pressed on appeal.

The fourth ground of appeal — Misleading and deceptive conduct claim in respect of the Settlement Deed

1. [116]

   The Appellants’ fourth ground of appeal related to the Primary Judge’s findings as to the Settlement Deed. The Appellants contended that the Primary Judge (Judgment [372], [377]) erred by:

2. [117]

   The Appellants submitted that this ground of appeal raised a question of law and they contended that the Primary Judge ought not to have considered the terms of the Deed of Settlement when considering the factual question of reliance. The Appellants accepted that if the Primary Judge’s finding that Mr Ibrahim was not an officer of EMIS was not overturned (as it has not been), then any question as to the Settlement Deed did not arise because there would be no relevant liability of Mr Ibrahim to release. I will nonetheless briefly address this matter.

3. [118]

   The Primary Judge noted (Judgment [353]) that it was not necessary for him to address this claim because the claim that Mr Ibrahim was an officer of EMI, so as to have breached obligations arising from that capacity, had failed. His Honour nonetheless summarised the Appellants’ pleaded case below (Judgment [354]) and noted the Appellants’ contention at first instance that Mr Ibrahim had made, inter alia, representations, relevantly to include entry into the Deed of Settlement that:

4. [119]

   The Primary Judge then accurately summarised (Judgment [357]ff) the applicable statutory provisions and the case law, referring, inter alia, to Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 475, approved in Wormald v Maradaca Pty Ltd [2020] NSWCA 289 at [111]ff, Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [16]ff and to observations of Payne JA (with whom Bell CJ and White JA agreed) in Lin v Zheng [2023] NSWCA 174 at [31]–[36].

5. [120]

   The Primary Judge then addressed (Judgment [374]ff) the several representations on which the Appellants claimed to have relied but the Appellants contend for different factual findings in respect of only some of those representations. His Honour referred to the alleged representations made during a “Negotiation Period” over an extended period, between July 2022 and 23 February 2023, when Dr Kyatt, Mr Chaudhry and Mr Ibrahim entered into negotiations to have the lease obtained by EMI over the Original Property assigned by it to EMIS. His Honour observed (Judgment [374(5)]) in respect of the third, fourth and fifth alleged representations, as to which his findings are challenged, that:

6. [121]

   The Appellants contended (Schedule [10.1]–[10.2]) that the Primary Judge erred in finding (Judgment [378]) that it was not misleading or deceptive for Mr Ibrahim to stay silent about the details of the plans he had for establishing a new radiology practice in Engadine in competition with the Engadine practice and in failing to find that it was misleading or deceptive for Mr Ibrahim to stay silent as to that matter. His Honour relevantly found (Judgment [378]–[379) that:

7. [122]

   The parties addressed the question whether a non-disclosure of EMI’s plans to open the Competing Business was misleading or deceptive or likely to mislead or deceive in the context of the negotiations in respect of the Settlement Deed. The Appellants rightly recognised that the Primary Judge’s finding that Mr Ibrahim was not an officer of EMIS was significant to his finding that Mr Ibrahim’s non-disclosure of his plan to establish a Competing Business (the risk of which, as the Primary Judge found, had plainly been recognised by Dr Kyatt) was not misleading or deceptive conduct. On appeal, the Appellants appear to have accepted that, unless it was found that Mr Ibrahim was an officer of EMIS, there would be no expectation of disclosure of those matters in arm’s length negotiations to the Settlement Deed. There was greater dispute as to whether, if Mr Ibrahim were an officer of EMIS, an expectation of disclosure would have arisen, and Mr Ibrahim did not concede that matter. It is not necessary to resolve that question.

8. [123]

   The Appellants submitted that:

9. [124]

   Mr Ibrahim and EMI responded, with some force, that the Appellants did not explain how, even if Mr Ibrahim was an officer of EMIS, an expectation of disclosure arose where Mr Ibrahim was plainly involved in the Settlement Deed for EMI rather than for EMIS. They also submitted that the Appellants had pleaded, at first instance, misrepresentations made by Mr Ibrahim that he was not taking any steps to establish a Competing Business; that the Primary Judge had found there was no evidence that any of those representations were made; neither the grounds of appeal nor the Schedule challenged that finding; and, where there is an unchallenged finding that the representations were not established, then no question of reliance on them or causation in respect of them arises.

10. [125]

    It seems to me that his Honour was correct in not finding misleading or deceptive conduct arising from a non-disclosure of any plans as to the Competing Business where the relevant negotiations were taking place at arm’s length and in circumstances that Dr Kyatt was rightly suspicious of Mr Ibrahim’s conduct and had no reason to think that matters adverse to his interests would be disclosed to him by Mr Ibrahim. The proposition that any expectation that disclosure is qualified in the context of arm’s length negotiations has been recognised in the case law and professional commentary: for example, Dubois v Ong [2004] QCA 185 at [40]; C Lockhart, The Law of Misleading or Deceptive Conduct, 6th ed, 2023 [5.20].

11. [126]

    It is not necessary to determine whether the position would have changed had Mr Ibrahim then been an officer of EMIS because that was not established at first instance and the appeal against his Honour’s findings as to that matter has not succeeded. I recognise that non-disclosure in those circumstances is likely not treated as a breach of fiduciary duty under Australian law: P&V Industries Pty Ltd v Porto [2007] VSC 64 at [24]–[30]; Diakovasili v Order of AHEPA NSW Inc [2023] NSWSC 1282 at [190]. The Appellants referred to the possibility that positive duties of a company director may have a fiduciary character, left open on appeal on Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 89 ACSR 1; [2012] WASCA 157 at [1960]; Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [111]. It is not necessary to resolve the complexities of that question in order to determine this appeal. It is also by no means self-evident that when a company and its director or officer are dealing with each other in a contentious negotiation either has an expectation of disclosure by the other. It is particularly unlikely that any representation that “[t]here would be no Competing Business” was made, by silence or otherwise, where it is not apparent that Dr Kyatt could have had any reasonable expectation that, simply because EMI had assigned the lease of the Original Premises to EMIS and the parties released each other from liabilities relating to the circumstances in which EMI had taken the lease of the premises, then EMIS would be free from competition from EMI into the indeterminate future.

12. [127]

    The Appellants did not press a further contention (Schedule [7.1]–[7.2]) that the Primary Judge erred (Judgment [374(5)]) in finding that Dr Kyatt did not rely on the three alleged representations as to the “Competing Business” (as defined), and in failing to find that Dr Kyatt relied on such representations. Nonetheless, the Appellants referred to a somewhat fine distinction that was drawn by Dr Kyatt in cross-examination at first instance where he accepted that he knew that Mr Ibrahim wanted to “take the business” but did not accept that he knew that Mr Ibrahim could do so by establishing a competing business. Mr Ibrahim and EMI responded by reference to several findings of the Primary Judge (for example, Judgment [146], [241], [247], [254], [284]) that are relevantly unchallenged, which are inconsistent with Dr Kyatt’s giving weight to any representation, whether express or implied from silence, that Mr Ibrahim did not seek to establish a competing business or take over EMIS’s business. It seems to me that once Dr Kyatt knew that Mr Ibrahim wanted to take the business, as he accepted and where he was an experienced businessman as the Primary Judge had found, the possibility that Mr Ibrahim could seek to do so by establishing a competing business must have been obvious to Dr Kyatt.

13. [128]

    The Appellants also did not press a contention (Schedule [9.1]–[9.2]) that the Primary Judge erred (Judgment ([374(7)]) in finding that Dr Kyatt did not rely on a statement in an email dated 15 February 2023 from Mr Ibrahim’s solicitors that “there would be no loss to your client to include this release and in failing to find that Dr Kyatt did rely on that statement”. Mr Ibrahim and EMI in turn pointed to findings made by the Primary Judge (for example, Judgment [201], [310], [376]) that, unsurprisingly, Dr Kyatt had relied on his legal advisers in executing the Settlement Deed rather than on representations made by Mr Ibrahim or Mr Ibrahim’s advisers. These findings have lesser significance where the Appellants no longer challenge the Primary Judge’s findings that they had not relied on Mr Ibrahim or his solicitors in respect of the execution of the Settlement Deed.

14. [129]

    I recognise that, in some circumstances, causation can be established in a misleading or deceptive conduct case absent reliance. However, it does not seem to me that it can be established here, where Mr Ibrahim’s silence as to the risk that he or EMI would establish the Competing Business cannot have had any causative effect unless Dr Kyatt relied on it to understand that that would not occur. In the course of the hearing of the appeal, the Appellants relied on an aide memoir which, under the heading “reasonable expectation”, contended for a counter-factual that had Mr Ibrahim disclosed one or more of three matters prior to the execution of the Settlement Deed on 23 February 2023, then the Settlement Deed would not have been executed, the release under that Settlement Deed would not have been provided, EMIS would not have taken the assignment of the lease, Dr Kyatt would not have guaranteed EMIS’s obligations and they would therefore have no liability in relation to the that lease. So far as that proposition is relied on for a claim of causation, it has the difficulties that no such factual finding was identified in the Schedule; the Primary Judge rejected Dr Kyatt’s reliance evidence, so far as it goes to those issues and the Appellants do not now attack that finding; and no inference to that effect could be drawn without evidence. If Dr Kyatt had been told that EMI was planning to operate a competing business from other premises, the first course available to him was to seek to preserve the value of EMIS’s business and his investment in it which would likely have required that he execute the Settlement Deed (as he did) so as to retain the right to occupy the Original Premises and then seek to retain EMIS’s existing staff or recruit new staff. A second available course would have been not to execute the Settlement Deed and simply surrender EMIS’s business to EMI without seeking to defend it and, implicitly, abandon his existing investment in the business. There is no basis to find without evidence that, on the balance of probabilities, Dr Kyatt (as he now contends) would have taken the second course rather than the first if faced with that choice.

15. [130]

    The Appellants also challenged the Primary Judge’s analysis (Judgment [372]) of the effect of a contractual disclaimer in a claim of misleading or deceptive conduct, where he referred to Osborne v Iris Diversified Property Pty Ltd [2014] NSWSC 1488 at [25]–[31], and his finding (Judgment [377]) that:

16. [131]

    The Appellants submitted that the Primary Judge placed too much weight on what he described as a “solemn disclaimer” (Judgment [377]) in cl 13.2 of the Settlement Deed. The Appellants rightly submitted, as his Honour had recognised, that the case law does not permit a party to contract out of liability arising under a statutory prohibition on misleading or deceptive conduct although the existence of a disclaimer may be relevant to whether conduct meets that description as a matter of fact: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [138]; [2009] HCA 25. The position was summarised in Viterra Malt Pty Ltd v Cargill Australia Ltd (2023) 74 VR 1; [2023] VSCA 157 at [379] (omitting citations) as follows:

17. [132]

    It seems to me that his Honour would have overstated the effect of cll 13.1 and 13.2 of the Settlement Deed if he is to be understood as describing it, standing alone, as an “insurmountable obstacle” to the Appellants’ claim at first instance (Judgment [375]). I accept that, as Mr Ibrahim and EMI point out, that may not have been his Honour’s intent, where there were plainly other, and substantial, obstacles to the Appellants’ success in respect of reliance. In any event, his Honour’s reasoning as to those matters is ultimately not necessary to the result that he reached where it was not established that Mr Ibrahim was an officer of EMIS; recital H to the Settlement Deed had acknowledged, as a matter of fact, Mr Ibrahim’s more limited role in EMIS and, irrespective of the Appellants’ misleading or deceptive conduct case, there is no suggestion that recital was false; and the Appellants could not succeed in their claim against Mr Ibrahim irrespective of any claim for misleading or deceptive conduct in respect of the Settlement Deed and irrespective of the effect of disclaimer contained in the Settlement Deed.

18. [133]

    For these reasons, I would order that the appeal be dismissed with costs.