Balout v Dobro Dosle Pty Ltd

1. [1]

   BELL CJ: This proceeding involves an appeal commenced by Mr Alan Balout and his wife Ms Karen Balout (the Appellants or Mr and Mrs Balout) against Mr Joseph Touma (Mr Touma) and Dobro Dosle Pty Ltd (Dobro) trading as “Amalgamated Investments Trust” (the Respondents) in respect of a decision by Lindsay J (the primary judge): Balout v Touma; Dobro Dosle Pty Limited t/as Amalgamated Investments Trust v Balout [2025] NSWSC 459 (PJ or the primary judgment).

2. [2]

   Dobro’s claim relevantly was for the payment of $1 million pursuant to an agreement entered into on 1 August 2014 between Mr and Mrs Balout and an entity described as Amalgamated Pty Ltd (the August Agreement). It emerged that no such company of this name existed and the parties and, as explained below, the primary judge ultimately treated the August Agreement as one between Mr Touma and the Appellants.

3. [3]

   The obligation to make the $1 million payment was said to have been triggered by the sale of a property owned by the Respondents (Property 127) on or about 22 August 2019 to Kirby Projects Pty Limited, a company associated with Mr Jean Nassif, which had secured an option in respect of Property 127 on or about 26 June 2015 (Put and Call Option Deed).

4. [4]

   Under the August Agreement, Dobro lent the Appellants the sum of $140,000 and undertook to fund the Appellants in the sum of $20,000 per month until completion or sale of Property 127 at which time $1 million would become payable to Dobro [Mr Touma] although whether this was dependent upon a particular sale price being achieved was in issue. Only two monthly payments of $20,000 were ever made, namely in November and December 2014.

5. [5]

   An earlier handwritten agreement had been entered into between Mr Touma and Mr Balout and Mr Haiden Walsh (a business partner of Mr Touma who was at the time dating Mr Balout’s daughter) on 23 July 2014 (the July Agreement). An issue on appeal related to the interaction and relationship, if any, between the July and August Agreements.

6. [6]

   The Appellants contended, contrary to the primary judge’s conclusion, that no liability to pay $1 million arose on the proper construction of cl 4.2 of the August Agreement but, in the event that it did, that claim was met by a Deed of Settlement entered into on 13 July 2015 between Mr and Mrs Balout and Mr Touma (the Deed of Settlement).

7. [7]

   At first instance, the Respondents successfully resisted the Appellants’ contentions based on the construction of cl 4.2 of the August Agreement and also succeeded in setting aside the Deed of Settlement on the ground of misleading or deceptive conduct. The conduct alleged to have contravened s 18 of the Australian Consumer Law included the non-disclosure of Mr and Mrs Balouts’ direct negotiations with Mr Nassif to sell Property 127 to him without Mr Touma’s involvement, and representations to Mr Touma that they did not require his financial assistance due to receiving an inheritance from Mrs Balout’s mother.

8. [8]

   The primary judge held that a fair inference from the Deed of Settlement “read as a whole and in the context of the July Agreement and the August Agreement, is that the identity with whom the Balouts contracted on each occasion they executed an Agreement involving the interests of Mr Touma was Mr Touma personally and, provided he performed the contractual obligations imposed on him or his nominee, they were indifferent to his deployment of a nominee to take the benefit of the contract(s)”: PJ [95]. This aspect of the primary judgment was not challenged.

9. [9]

   Accordingly, the primary judge held that the $1 million was owing under the August Agreement and that the Deed of Settlement should be set aside for misleading or deceptive conduct engaged in by Mr Balout, in which Mrs Balout was held to have been involved. The primary judge ordered that the $1 million be paid to Mr Touma, explaining this at PJ [96]:

10. [10]

    The primary judge elaborated on this at PJ [67]-[68]:

11. [11]

    Mr and Mrs Balout both gave evidence and the sole witness for the Respondent was Mr Touma who swore two affidavits. The primary judge generally preferred the evidence of Mr Touma to the extent that it conflicted with the evidence of Mr Balout: PJ [134], [161]-[163].

12. [12]

    The affidavit of a further witness, Ms Joandarc Khouzame (also known as Joan Darc), was sought to be read on behalf of the Appellants but the primary judge rejected it. She was the operator of a real estate business to which Mr Balout was indebted in the sum of $140,000 prior to entry into the July and August Agreements. Her further significance in the case will be explained later in these reasons.

Grounds of appeal

1. [13]

   The Appellants raised the following grounds of appeal, noting that what follows reflects the grounds as narrowed by Mr Afshar who appeared on behalf of the Appellants together with Mr Pokoney:

2. [14]

   The first four grounds of appeal related to the proper construction of the August Agreement. They can be dealt with together. It is first necessary to note the terms of the July and August Agreements and the primary judge’s key findings as to the proper construction of those Agreements.

The July and August Agreements

1. [15]

   On 23 July 2014, Mr Touma, Mr Balout and Mr Walsh signed the July Agreement which provided:

2. [16]

   On 1 August 2014, the non-existent company, Amalgamated Pty Ltd, described as “the Investor” and Mr and Mrs Balout entered the August Agreement. The preamble to the August Agreement provided:

3. [17]

   The “Operative Provisions” of the August Agreement, which were not a model of clarity (for example, there were no cll 5a-5c), relevantly provided as follows:

4. [18]

   His Honour observed at PJ [58] that “the immediate commercial object of the parties in executing the August Agreement appears to have been to bring “Amalgamated Pty Ltd” and Mrs Balout expressly into the contractual relationship between Mr Touma and Mr Balout contemplated by the July Agreement”.

5. [19]

   The primary judge construed the July and August Agreements as standing together (PJ [64]) notwithstanding that the Respondents abandoned any reliance on the July Agreement in closing submissions as indicated by the following exchange:

6. [20]

   The primary judge correctly observed that the “August Agreement does not, in terms, refer to the July Agreement or the ‘trigger’ of $16 million to which the July Agreement refers”: PJ [47]. Notwithstanding the concession by Mr O’Neill noted at [19] above, his Honour relevantly held that:

7. [21]

   His Honour reached the conclusion that the August and July Agreements must be read together because:

8. [22]

   One difference between the July Agreement and the August Agreement was, as the primary judge observed at PJ [59]:

9. [23]

   Notwithstanding this difference, including that in the July Agreement, $20,000 was expressed as a capped or maximum amount required to be lent, the primary judge held at PJ [66] that:

10. [24]

    In respect of cl 4.2 of the August Agreement, the primary judge held at PJ [53] that:

11. [25]

    The primary judge’s conclusion at PJ [66] together with his Honour’s reading of the two agreements together forms the basis of the first two appeal grounds. These grounds in turn feed into grounds 3 and 4. His Honour’s conclusion in PJ [63] as to the $16 million remaining a sale threshold under the August Agreement notwithstanding the absence of any reference to it is also an aspect of appeal ground 1.

12. [26]

    For completeness, his Honour noted at PJ [46] that cll 4.1(c), 4.1(d) and 5(e) of the August Agreement appeared “wholly aspirational in the absence of any immediate expectation that the Property could be sold for $30 million or more”.

13. [27]

    On 5 September 2014, consistent with cl 4.1(b) of the August Agreement, Mr Touma caused $140,000 to be paid into a bank account of Mr and Mrs Balout.

14. [28]

    In late October 2014, a conversation took place between Mr Balout and Mr Touma about the non-payment of the monthly amounts provided for under the August Agreement. On 31 October 2014, Mr Touma sent an email to Highfields (a company associated with Mr Balout) and copied to himself noting that “Alan has request[ed] double payments in Feb and March”. It may be inferred that this was to make up for the non-payment of the $20,000 payments in August and September or October, with the arrangement being for the non-payments to be made up with double payments in February and March 2015. The request for double payments in February and March plainly followed a demand having been made in respect of non-payments in breach of the August Agreement. As matters transpired, these payments were never made.

15. [29]

    At PJ [52], the primary judge held that in or about November 2014 Mr Balout called Mr Touma on two occasions and requested a transfer of $20,000 for payment of his bills, which requests led to the payments of $20,000 on each of 27 November 2014 and 1 December 2014, both times with an entry in Mr Balout’s bank statement reading “direct credit, from: J A Touma Ref: Loan Balout”.

16. [30]

    No further payments were made after 1 December 2014, including (as noted above), the double payments that were requested and due to be made in February and March 2015.

Grounds 1 to 4: Construction of the August Agreement

1. [31]

   Ground 1 has been set out at [13] above. As noted at [19] above, counsel for Mr Touma appeared to abandon any reliance on the July Agreement in the proceedings at first instance, or at least any reliance on its continuing operation and effect. Moreover, contrary to the primary judge’s finding at PJ [66], reproduced at [23] above, Mr Touma positively pleaded that the August Agreement imposed an obligation to fund Mr Balout $20,000 a month.

2. [32]

   In my view, there was no warrant for his Honour’s finding that, objectively, the August Agreement was not intended to terminate the July Agreement but, rather, the intention was that the August Agreement be read together with the July Agreement, even putting to one side the fact that this was not the construction contended for by either party. The Respondents advanced no written argument on appeal supporting his Honour’s construction.

3. [33]

   As to his Honour’s construction of cl 4.1(a) of the August Agreement and his conclusion that it “did not establish a fixed liability in Mr Touma to pay $20,000 per month, or any other sum, independent of an established need or a request by the Balouts for funding to meet their expenses”, that construction is not sustainable in light of the plain language of cl 4.1(a) and the reference to “the sum of” which may be contrasted with the expression “living costs on the condition these costs do not exceed $20,000” as per the July Agreement. Again, the Respondents advanced no written argument on appeal supporting his Honour’s construction.

4. [34]

   There was no indication in the August Agreement that the payment obligation in cl 4.1(a) was somehow intended to be qualified by the July Agreement. In point of fact, the execution of the August Agreement and the broad repetition of the subject matter of the July Agreement was only consistent with an objective understanding that, by the August Agreement, the parties intended to replace what they had informally agreed in the handwritten July Agreement and to regularise the parties to their commercial arrangement by that new agreement.

5. [35]

   As will be seen when appeal ground 4 is reached, his Honour’s misconstruction of the cl 4.1(a) obligation was critical to his finding that the non-payment of the monthly $20,000 instalments did not cause Mr Touma to forfeit his rights under cl 4.2 by reason of non-payment.

6. [36]

   Another feature of his Honour’s running of the July and August Agreements together was the fact that $16 million was treated as the trigger point for the payment of the $1 million under the August Agreement although there was no such reference to that being the trigger as opposed to the sale of Property 127 being the trigger, with a further bonus if a sale price of greater than $22 million was achieved. Again, Mr Touma did not plead that the trigger was $16 million and did not place any relevant reliance on the July Agreement.

7. [37]

   For these reasons, appeal ground 1a should be upheld.

8. [38]

   Appeal ground 1b asserted that the primary judge erred in finding that the trigger for the payment of the $1 million was a sale of Property 127 for a sum greater than $16 million as opposed to the $22 million referred to in cl 5d of the August Agreement. The forensic purpose for this contention was that, when Property 127 was sold, it was for an amount less than $22 million such that, on the Appellants’ construction, the obligation to make the $1 million payment never arose because the $22 million sale price was never achieved.

9. [39]

   This argument and appeal ground 1b is not supported by a plain reading of cl 5d of the August Agreement which provided:

10. [40]

    Appeal ground 1b should be dismissed.

11. [41]

    Appeal ground 2 related to the primary judge’s finding at PJ [66], reproduced at [23] above, that cl 4.1(a) did not establish a fixed liability for Mr Touma to pay Mr Balout $20,000 per month from the date of the agreement until the sale of Property 127. Again, his Honour’s finding was in the face of the clear language of cl 4.1(a) which provided that:

12. [42]

    Clause 4.1(a) clearly contemplated a fixed monthly payment, and such payments were made in November and December 2014 and double payments were agreed to be made (by way of partial catch up and discharge of the ongoing monthly obligations) in February and March 2015: see [28] above. Further, there was no requirement for an “established need or request by the Balouts for funding to meet their expenses”, as the primary judge held.

13. [43]

    Appeal ground 2 should be upheld.

14. [44]

    The primary judge proceeded on the basis that the demand for payment contemplated by cl 4.2 was required to be in writing although his Honour, with respect, gave no reason for this conclusion at PJ [53]: see [24] above and the Respondents advanced no argument on appeal in support of such a construction. In fairness, they had not argued that any demand needed to be in writing. Rather, the Respondents’ sole argument in relation to appeal grounds 1-4 was that Mr Touma “never relevantly notified [Mr Balout] of a breach” of his obligations under the August Agreement.

15. [45]

    This was contested but, for present purposes, there was no basis for his Honour to construe the August Agreement as requiring a written demand for payment of $20,000 on a monthly basis. The Agreement does not in terms require any demand to be in writing, and there was no reason to imply such a requirement.

16. [46]

    It follows that appeal ground 3a should be upheld.

17. [47]

    Appeal ground 3b involved a challenge to the primary judge’s finding, also in PJ [53], that time was not of the essence in relation to the payments of $20,000 per month. That may have been so but cl 4.2 contained a notice requirement which had the effect, as a matter of law, of making time of the essence following a demand for payment or rectification of a breach within 2 months of the demand (or, it might be added, any further time that might be agreed to by Mr Balout). So much is consistent with well established authority: Louinder v Leis (1982) 149 CLR 509 at 518-21; [1982] HCA 28; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 554; [1982] HCA 29.

18. [48]

    Again, the Respondents did not seek to defend this aspect of the primary judge’s reasoning. In fairness to the primary judge, his finding that time was not of the essence may have been dictated by his view that a written demand for payment on breach was required and that, because no such written demand had been made, time did not become of the essence. That analysis fails with the fact that a demand for payment was in fact made, albeit not in writing: see [28] above. Appeal ground 3b must be upheld.

19. [49]

    Appeal grounds 3c and 4 are the mirror image of each other. Both relate to cl 4.2 of the August Agreement which, if engaged, would have disentitled Mr Touma to any payment of $1 million pursuant to cl 5d of the August Agreement.

20. [50]

    Clause 4.2 provided as follows:

21. [51]

    The $1 million payment was one of the “returns on investments pursuant to clause 5” of the August Agreement.

22. [52]

    It was not seriously disputed that Mr Balout had notified Mr Touma of default of his obligations under cl 4.1 and that this was what had led to Mr Touma’s email to Highfields and himself on 31 October 2014 that “Alan has request[ed] double payments in Feb and March”: see [28] above. It was a necessary aspect of the primary judge’s analysis that, as this request was not in writing, it did not engage cl 4.2 but, for reasons already given, there was no requirement for any demand or notification to be in writing.

23. [53]

    The primary judge held at PJ [53] that “Mr Balout either acquiesced in a pause of payments or, in any event, refrained from seeking payments.” This conclusion is inconsistent with what Mr Touma recorded in his own email of 31 October 2014 referred to at [28] above.

24. [54]

    To the extent that there was any acquiescence or refraining in insisting upon the monthly $20,000 payments, it was conditional, that is to say, the acquiescence was conditional upon double payments being made in February and March 2015 to make up for past shortfalls. As earlier noted, no such payments were made.

25. [55]

    The only argument which then separated the parties was as to whether, when no payments, let alone the double payments, were made in March 2015 by Mr Touma, Mr Balout had to notify Mr Touma again of his default with the consequence that a further two months would run until his rights under cl 5d were forfeited, it being submitted on behalf of Mr Touma that there were no further demands made of him by Mr Balout after those in late October 2014 and no notification to him that he had not rectified his earlier defaults as he had been required to do, and thus forfeited his rights.

26. [56]

    I do not accept this construction of cl 4.2 of the August Agreement. It is inconsistent with its clear and simple operation. It requires:

27. [57]

    There is no basis in the text of cl 4.2 for the defaulting party to be given further notification of his own default. Such a construction would not accord with either the text of the clause or commercial common sense.

28. [58]

    It follows from the above, and in the absence of any claim for a relief against forfeiture, that Mr Touma forfeited his rights under cl 5d upon his failure to make any monthly payments after March 2015 and, consistent with appeal ground 4, his Honour should have so held.

29. [59]

    It follows from this conclusion that the appeal must be upheld. The question of the efficacy of the Deed of Settlement and whether his Honour erred in setting it aside for misleading or deceptive conduct does not arise given that the Deed was being relied upon by the Appellants in the alternative to their answer to Mr Touma’s claim in reliance upon cl 4.2 of the August Agreement.

30. [60]

    For completeness, however, I will deal with grounds 5-8, albeit more concisely than may otherwise have been the case given that it is strictly not necessary to address them in view of the Appellants’ success on grounds 1-4.

Grounds 5-8 – misleading or deceptive conduct

1. [61]

   To address grounds 5-8, it is necessary to set out a little further detail in relation to events anterior to entry into the Deed of Settlement and the essence of the primary judge’s reasoning.

2. [62]

   The starting point is that on 10 September 2014, Mr Touma procured from Mr Nassif a “handshake deal” to buy Property 127 for approximately $20,000,000. Mr Nassif subsequently disclaimed that deal, but renegotiated with Mr Balout when, in the primary judge’s language, Mr Touma had been “sidelined” by Messrs Balout and Mr Nassif.

3. [63]

   On 24 June 2015, a caveat was lodged on behalf of Dobro against the title to Property 127, claiming an “equitable interest [in the Property] pursuant to Property Investment Agreement dated 1 August 2014”. The primary judge held at PJ [85] that the caveat was lodged with “Mr Touma’s permission but at the request of business associates of Mr Touma (and, through their solicitor) for the purpose of securing the business associates’ interests in connection with a deal with Mr Touma (relating to a property known as 133 Castle Hill Road, West Pennant Hills) that did not involve the Balouts”.

4. [64]

   It was a hotly contested issue at trial as to whether Mr Touma authorised the lodging of this caveat when he did because he had, by that time, become aware of Mr Balout’s negotiations with Mr Nassif for entry into a Put and Call Option Deed to acquire Property 127. This Deed was entered into on or about 1 July 2015.

5. [65]

   The caveat was withdrawn on 10 August 2015. The primary judge held at PJ [88] that “[w]hen the caveat came to Mr Balout’s notice (via the Land Titles Office) and he confronted Mr Touma on or about 14 July 2015 …, Mr Touma, without hesitation, instructed the solicitor who had lodged the caveat to lodge a notice of withdrawal of it with the Land Titles Office.”

6. [66]

   On the day before, on or about 13 July 2015, the parties (Mr Touma and Messrs Balout) executed the Deed of Settlement, noting that the references to $140,000 in the Deed were amended by hand to refer to $180,000 representing the $140,000 that had been advanced and the two $20,000 instalments paid in November and December 2014. (Mr Touma in his first affidavit said that he signed this document on 29 June 2015 without reading it.)

7. [67]

   The preamble to the Deed of Settlement provides:

8. [68]

   The Operative Provisions of the Deed of Settlement provide:

9. [69]

   The primary judge held that “Mr Touma signed the Deed of Settlement in a casual manner believing it to be nothing more than a formal receipt for the repayment of the $180,000 the Balouts had borrowed”: PJ [152]. The fact that Mr Touma picked up the need to change the document in five separate places (to amend $140,000 to $180,000), each of which he amended in hand and initialled, with respect sits somewhat uncomfortably with this conclusion.

10. [70]

    On 13 July 2015, Mr and Mrs Balout transferred the sum of $180,000 to Mr Touma as required by the Deed of Settlement.

11. [71]

    The primary judge held that the Mr Balout failed to disclose to Mr Touma prior to entry into the Deed of Settlement that, on 1 July 2015, he and his wife had entered into the Put and Call Option Deed with an entity associated with a developer (Kirby Projects Pty Ltd, a company of Jean Nassif), named in the Deed as “the Buyer”, for a sale of Property 127 at a price of $19.5 million.

12. [72]

    His Honour also held that Mr Balout positively represented to Mr Touma that he no longer required Mr Touma’s financial assistance because he and his wife had received an inheritance from Mrs Balout’s mother.

13. [73]

    The primary judge’s holding at PJ [126] that at no time before the Deed of Settlement was executed did Mr Touma have knowledge of the Balouts’ entry into the Put and Call Option Deed was also a hotly contested issue at trial. The primary judge recorded the three arguments advanced by the Balouts as follows:

14. [74]

    The primary judge rejected the first two of these contentions and, in this context, preferred the evidence of Mr Touma over that of Mr Balout.

15. [75]

    The third contention related to evidence given by Mr Touma, namely that a series of documents was deposited in his letterbox relating to Mr Balout’s negotiations with Mr Nassif in relation to sale of Property 127 following an anonymous tip-off by telephone from an unidentified female who asserted that Mr Balout had “ripped him off” and that he should check his letterbox: PJ [135]. The last of these documents was dated 17 June 2015. The timing of the tip-off was important. Critically, Mr Touma placed it as having occurred after execution of the Deed of Settlement on 13 July 2015 whereas the Balouts emphasised that the lodging of the caveat on behalf of Dobro and Mr Touma on 24 June 2015 was consistent with the “letterbox documents” having come to Mr Touma’s evidence at some time between 17 and 22 June 2015, this last date being the date of the solicitor’s statutory declaration in relation to the lodging of the caveat.

16. [76]

    At PJ [146], the primary judge held that “[o]n the whole of the evidence, it is more likely than not that Mr Touma received the anonymous documents in August 2015 rather than July 2015, but the precise date remains unclear”.

17. [77]

    The importance of the timing of Mr Touma having become aware of the “letterbox documents” was reflected in the primary judge’s observation at PJ [131] that:

18. [78]

    The primary judge noted that “[i]n the course of his cross examination, Mr Touma said that the day after he received the documents he had a conversation with Joan Darc in which she revealed herself as the anonymous source of the documents placed in his letterbox”: PJ [137]. This had not been mentioned in his first Affidavit in which he said:

19. [79]

    Mr Touma was squarely challenged in cross examination in relation to these paragraphs of his first Affidavit and his evidence in cross examination in relation to Joan Darc revealing herself as the anonymous source of the documents. Thus, it was expressly put to Mr Touma in cross examination on 8 August 2024, and he denied, the following propositions:

20. [80]

    Against this background, it is convenient, first, to deal with appeal ground 6.

21. [81]

    Appeal ground 6 was as follows:

22. [82]

    Before turning to the primary judge’s reasoning, it should be noted that the affidavit was sworn on 9 April 2024 and that it was served on Mr Touma’s solicitors on or about that date. In this context, it should also be noted that Mr Touma gave evidence in chief and was cross examined on 2 and 3 April 2024 and was due to return to the witness box on 4 April 2024 but that, on that day, the parties sought to have the matter stood down by reason of settlement discussions and, later that day, informed the primary judge that the matter had settled in principle. His Honour stood the matter over until 10 April 2024 “for further consideration or directions as the case may require”. As matters transpired, the “in principle” settlement fell over and the matter had to be relisted to resume in October 2024.

23. [83]

    As already noted, Ms Khouzame’s affidavit was sworn on 9 April 2024 and served shortly thereafter. It was relevantly in the following terms:

24. [84]

    Ms Khouzame was required for cross examination by Mr Touma’s legal representatives when the hearing was due to resume in October. Mr O’Neill, however, who appeared for Mr Touma, objected to the reading of the affidavit. As recorded at PJ [138], the primary judge refused to allow the affidavit to be read on the following bases:

25. [85]

    His Honour’s decision to refuse to allow the affidavit to be read was a discretionary decision, only amenable to appellate interference on House v The King (1936) 55 CLR 499; [1936] HCA 40 terms. However, the appellate restraint dictated by that case does not apply where the decision is vitiated by an error of fact. Here, with respect, the first strand of his Honour’s reasoning at PJ [138], namely that “its subject matter had not been fairly put to Mr Touma in cross examination (as required by the “rule in Browne v Dunn” (1893) 6 R 67)”, was wrong, as the cross examination summarised at [79] above makes apparent and as counsel for Mr Touma in fact conceded before the primary judge. Indeed, a more direct and thorough challenge could not have been imagined.

26. [86]

    Further, and again with respect, I disagree with his Honour’s characterisation of the affidavit as being “relevant only to Mr Touma’s credibility”. A fact centrally in issue was the timing of Mr Touma becoming aware of the fact or possibility that Mr Balout was in negotiations with Mr Nassif in relation to Property 127 without disclosing that to him. Mr Touma’s evidence was that he was wholly unaware of this until sometime after entry into the Deed of Settlement and he linked his knowledge and its timing to a conversation and subsequent meeting with Ms Khouzame or Joan Darc. While there is no doubt that acceptance of Ms Khouzame’s evidence would have been highly adverse to Mr Touma’s credibility, the proposed evidence was also relevant to a fact or facts in issue.

27. [87]

    It was relevant to when and how Mr Touma became aware of the Put and Call Option Deed or of Mr Balout’s negotiations with Mr Nassif in relation to it. If Ms Khouzame’s affidavit had been admitted and accepted, with the consequence that there had been no meeting immediately following Mr Touma’s claimed discovery of the “letterbox documents”, the inference contended for by the Balouts arising from the temporal coincidence of the emails plainly in Mr Touma’s possession, the last of which was dated 17 June 2015, and the lodging of the caveat shortly thereafter would have been extremely powerful, and would not have been rebutted, as his Honour must have found it was, by Mr Touma’s linking of his first knowledge to a meeting with Ms Khouzame at all and, in particular, after the date of entry into the Settlement Deed.

28. [88]

    Insofar as his Honour rested his decision on s 135 of the Evidence Act 1995 (NSW), that aspect of the decision was wholly conclusory. No prejudice was identified nor weighed against the undoubted probative value of the proposed evidence.

29. [89]

    In submissions, counsel for Mr Touma submitted that “long gone are the days when commercial litigation was conducted by ambush” but this objection was not apposite when the affidavit was served some 8 months before it was sought to be relied upon and arose, in part at least, from evidence first given by Mr Touma in cross examination only a week before the affidavit was served.

30. [90]

    It was also submitted that “the fact that Ms Khouzame was going to provide sworn evidence contradicting [Mr Touma] was not put to him in cross-examination”. This submission reflects a misstatement or misunderstanding of the rule in Browne v Dunn (1893) 6 R 67. What that rule requires is a challenge to propositions in the deponent’s evidence. This obligation was discharged. The deponent is to be given an opportunity to stand by his or her evidence, and the deponent’s obligation to tell the truth should not be affected by his or her knowledge that a witness may be called in reply to contradict it.

31. [91]

    In these circumstances, appeal ground 6 should be upheld. If the Appellants had succeeded on this ground alone, a retrial would regrettably have been necessary.

32. [92]

    My conclusion in relation to appeal ground 6 feeds into the challenge to the primary judgment reflected in appeal ground 5 which was as follows:

33. [93]

    The primary judge’s conclusion as to when Mr Touma became aware of the Put and Call Option Deed was undoubtedly affected by his Honour’s preference for the evidence of Mr Touma over that of Mr Balout who gave evidence, rejected by the primary judge, that he told Mr Touma of his dealings with Mr Nassif on or around 29 June 2015. As such, his Honour’s findings, including his acceptance of Mr Touma’s evidence in relation to the circumstances surrounding the lodging of the caveat, would need to be “glaringly improbable” or “contrary to compelling inferences”: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29].

34. [94]

    Were it not for his Honour’s acceptance of Mr Touma’s evidence in relation to his conversation and meeting with Ms Khouzame after he had entered into the Deed of Settlement (a matter affected by the ruling in relation to Ms Khouzame’s affidavit), I would have found his Honour’s acceptance of Mr Touma’s evidence as to when he became aware of the existence of the Put and Call Deed or at least as to the negotiations in relation to it “glaringly improbable”. That acceptance, however, did not make the challenged finding “glaringly improbable”, and thus I would not uphold ground 5.

35. [95]

    This ground of appeal was as follows:

36. [96]

    PJ [177] was expressed as follows:

37. [97]

    I respectfully disagree with the primary judge’s conclusion that the Settlement Deed was implicitly predicated on a common understanding that the Touma parties “ostensibly had an entitlement to a success fee of $1 million if the Property was sold by the Balouts for $16 million or more”.

38. [98]

    First, this conclusion was itself predicated upon a reading of the August Agreement with the July Agreement. That view was misplaced for reasons already given earlier in this judgment.

39. [99]

    Perhaps more significantly, though, the conclusion ignores the terms of cl 4.2 of the August Agreement and the forfeiture of all of Mr Touma’s interests in circumstances of non-payment of the monthly $20,000 amounts and the failure to rectify the breach. The entitlement to a $1 million payment had been lost or at least very arguably so. Further, in this context, the Settlement Deed referred not only to entitlements but also to “claims” and “demands”. Why the parties would be taken to have a common understanding of an entitlement to a $1 million success fee in circumstances where Mr Touma had ceased to make the monthly contributions he had promised was not explained by his Honour.

40. [100]

    In this context, it is necessary to say something of his Honour’s statement that “[i]t is highly unlikely that Mr Touma would have executed the Deed of Settlement or withdrawn the caveat in mid-July 2015 had he been aware of a deal between the Balouts and Mr Nassif which emanated from the “handshake deal” he had secured from Mr Nassif in September 2024”: PJ [131]. That supposition may be doubted in circumstances where Mr Touma was able to secure, as a result of the Deed of Settlement, repayments of amounts, namely the $140,000 and the two $20,000 instalments, which, as a consequence of the operation of cl 4.2 of the August Agreement, he would otherwise not have had any entitlement to recoup.

41. [101]

    If Mr Touma had forfeited his entitlement to the $1 million payment by reason of his non-payment of the monthly instalments of $20,000, it would not, in my view, have been misleading or deceptive for Mr Balout not to disclose to him his dealings with Mr Nassif in relation to the sale of Property 127. Mr Touma, in submissions, eschewed any suggestion that the August Agreement created some sort of exclusive agency agreement in relation to the sale of Property 127. It was Mr Balout’s property to sell and, according to the terms of the August Agreement – an agreement Mr Touma had drafted or caused to be drafted – Mr Touma was “out of the money” by his non-payments. In these circumstances, it was not misleading or deceptive for Mr Balout not to refer to his dealings with Mr Nassif.

42. [102]

    For these reasons, had it been necessary to do so, I would have upheld this ground of appeal. This conclusion also makes it unnecessary to deal with appeal ground 8.

Conclusion

1. [103]

   For the above reasons, the appeal should be allowed with costs.

2. [104]

   Orders 1-4 of the primary judge made on 29 May 2025 should be set aside and, in lieu thereof, it should be ordered that the Commercial List Summons should be dismissed with costs.

3. [105]

   WARD P: I agree with Bell CJ.

4. [106]

   MITCHELMORE JA: I agree with Bell CJ.