Access Training Group Limited v James Michael Jane & Ors; Access Group Training Limited v Venture Capital Fund Australia Limited

Introduction

1. These proceedings arise from an abandoned attempt to list a vocational training business on the Australian Stock Exchange (ASX). Each of the two main sets of commercial entities involved in this failed endeavour claims to be owed money by the other.
2. Access Group Training Pty Ltd (AGT) is a company that provided, in the period from early 1997 to late 2019, nationally accredited vocational training services in New South Wales, Queensland, Victoria and the Australian Capital Territory.
3. At all relevant times, all of the shares in AGT were held by two married couples: James and Judith Jane, and John and Suellen Goard (the AGT Shareholders). Each of the four AGT Shareholders held 25% of the shares in AGT, and each was a director of AGT.
4. Venture Capital Fund Australia Limited (VCFA) was incorporated on 13 January 2015, and specialises in identifying venture capital opportunities for high net-worth investors. Ross Lambert was a founder of VCFA and is its managing director.
5. Mr Jane and Mr Lambert met in the mid-1990s and they became, together with each other's spouses, close friends.
6. From around mid-2014, Mr Lambert and Mr Jane had a number of discussions regarding the possibility of expanding AGT's operations into the Chinese market. Mr Lambert and his business associates were looking, at this time, to develop the aged care sector in China, and thought that AGT could assist with the training and accreditation of Chinese aged care workers.
7. Mr Lambert suggested that Mr Jane should consider listing AGT on the ASX. He explained that this would assist AGT to become registered in China as a vocational training provider, and would also mean that the AGT Shareholders could get a return by selling shares in the business to Chinese investors.
8. The proposed listing would also have been for VCFA's benefit. In order to provide training for aged care workers in China, VCFA needed either to be included in the Chinese Central Government's education curriculum or to offer its training services through a listed education company on a respected international stock exchange.
9. Initially, the proposal being discussed involved the listing of AGT. However, because of a concern that this course of action might affect profitable contracts which AGT held with the Commonwealth government, the proposal subsequently changed. Instead, the plan became to set up a parent company to hold all of the shares in AGT, and to list this parent company on the ASX. For this purpose, a company which was called Access Group Training Holdings Limited (Holdings), was incorporated on 20 October 2015. (Its name was subsequently changed to Access Training Group Limited and then, after it was converted from a public company into a proprietary company, Access Training Group Pty Limited.) Initially, all of the shares in Holdings were owned by the AGT Shareholders.
10. It was proposed, in broad terms, that the following steps would be taken in respect of the proposed listing: VCFA would subscribe for 17m shares in Holdings for a price of $1.7m (or $0.10 per share), and would thereby acquire a 74% stake in the company; Holdings would use this $1.7m for the sole purpose of paying a deposit to the AGT Shareholders for the purchase of their shares in AGT; Holdings would become the sole shareholder of AGT; Mr Jane would enter an employment agreement with Holdings and become its managing director; Holdings would issue 6 million shares to Mr Jane (representing a 26% shareholding); and Holdings would then undertake an initial public offering (IPO) at a price of $0.20 per share, with a view to listing on the ASX by 31 December 2016.
11. In late August 2016, pursuant to the terms of a Share Subscription Agreement between VCFA and Holdings, VCFA acquired a 74% stake in Holdings for the payment of $1.7m. Holdings immediately paid this sum to the AGT Shareholders. At the time of payment, the terms of an agreement between Holdings and the AGT Shareholders relating to the sale of the shares in AGT (the Share Sale Agreement) had been negotiated, but had not been executed. As matters transpired, the planned IPO did not proceed, and the AGT Shareholders did not transfer their shares in AGT to Holdings, but retained the $1.7m deposit.
12. These events led to two proceedings, which were heard together.
13. In the first proceeding, numbered 2019/374869 (the 2019 Proceeding), Holdings sues the four AGT Shareholders for the return of the amount of $1.7m which was paid to them in August 2016. Holdings contends that, in circumstances where this sum was paid to the AGT Shareholders and where the proposed Share Sale Agreement was never executed, let alone completed, the AGT Shareholders are liable to repay this sum as money had and received.
14. In response, the AGT Shareholders contend that a Share Sale Agreement was in fact entered in around late February 2017. They acknowledge that, pursuant to the terms of this agreement, they were obliged to repay the $1.7m deposit to Holdings by the date 12 months after the termination of that agreement. However, the AGT Shareholders contend that they were entitled, pursuant to the terms of the Share Sale Agreement, to set off against that obligation any amounts payable to AGT by either Holdings or VCFA.
15. In the second proceeding, numbered 2020/219022 (the 2020 Proceeding), AGT sues VCFA for repayment of a loan of $1.3m said to have been made by AGT, together with interest. VCFA accepts that payments totalling $1.3m were made to VCFA, but disputes that those payments were made by way of a loan, and instead contends that those payments represented a fee for services which had been rendered by VCFA in relation to the proposed expansion of AGT's business into the Chinese market.
16. In the 2020 Proceeding, AGT also claims money said to be owed by VCFA pursuant to an agreement between them which was entered in 2015, relating to shared office premises in Chatswood. It is common ground that AGT and VCFA agreed to share, on a 50/50 basis, the rental and outgoings in respect of those premises. The only issue in dispute is whether AGT has established that any amount is outstanding pursuant to this agreement.
17. Mr Doyle Gray appeared for the plaintiff in the 2019 Proceeding (Holdings), and the defendant in the 2020 Proceeding (VCFA). VCFA is now the holder of 100% of the equity in Holdings.
18. Mr Crispin appeared for the defendants in the 2019 Proceeding (the AGT Shareholders) and for the plaintiff in the 2020 Proceeding (AGT). The AGT Shareholders remain the holders of 100% of the equity in AGT.
19. Because the events which are the subject of the 2020 Proceeding precede those which are the subject of the 2019 Proceeding, I deal first with the claim made by AGT against VCFA in respect of the alleged $1.3m loan; secondly with the claim by AGT against VCFA in respect of the rent and outgoings on the Chatswood premises; and thirdly, with the claim by VCFA against the AGT Shareholders for repayment of the $1.7m deposit.

Claim for repayment of Loan

1. It is common ground that AGT and AGT Management Pty Ltd (AGT Management) paid, between August 2015 and March 2016, the sum of $1.3m to VCFA. The main dispute regarding those payments is whether they represented the payment of fees for services which had been rendered by VCFA (as VCFA contended); or instead, loans made by AGT to VCFA (as AGT contended).
2. There was no document predating the payments which recorded, or referred to, either an agreement for services or an agreement for loan. Each of AGT and VCFA contended that the agreement which gave rise to the payments was an oral agreement between Mr Jane of AGT and Mr Lambert of VCFA.
3. According to Mr Lambert, in around 2015, he proposed to Mr Jane that, in order to strengthen the proposed listed business, it would be beneficial for AGT to offer certain educational businesses in China as part of the IPO. These included an online game-based maths teaching program, a training management system, and a company to offer AGT vocational training courses in China (the Chinese Businesses). Mr Lambert deposed that the Chinese Business required considerable cost and time to develop to a point of being operational and available for AGT to offer as part of the IPO.
4. Mr Lambert gave evidence that he and Mr Jane had a number of discussions in around mid-2015 about funding the costs of the float: "I do not now recall all the details of these conversations, but Mr Jane and I agreed that the best way to account for AGT's portion of the funding was for VCFA to invoice the AGT parties for the various services that VCFA would be providing and that the AGT parties would simply pay these invoices. During one of these conversations, Mr Jane said words to the effect of: Mr Jane: We (the AGT parties) will start with a payment of $600,000 and down the line as we proceed you (VCFA) will issue further invoices when AGT has further funds available."
5. Mr Jane did not dispute that VCFA was developing the Chinese Businesses. However, it was his evidence that AGT "loaned money to VCFA to further this": "It was agreed that if VCFA was successful in expanding the business then it would receive additional shares in AGT at the IPO. AGT also loaned money to VCFA to assist VCFA with another, unrelated IPO that it was involved in."
6. Mr Jane denied that he requested VCFA to issue invoices to AGT in respect of any of the payments made by AGT. He deposed that "VCFA did not have any contract or agreement with AGT to provide services for which it could invoice AGT", and that he "always maintained to Ross [Lambert] that the money paid by AGT to VCFA were loans".

The invoices and the payments

1. VCFA placed particular reliance on three invoices which it issued in August and September 2015. The payments in question were made after those invoices were issued and, except in the case of the third invoice, the amounts of those payments corresponded with the amounts stated in the invoices as being due and payable.
2. The first invoice was numbered 0000001 and was issued by VCFA to AGT Management on 3 August 2015. AGT Management is a related party of AGT. Its directors were Mr Jane and Mr Goard.
3. The invoice was for an amount of $600,000 plus GST, for a total of $660,000. The due date was specified to be the date of issue of the invoice.
4. The description given on the invoice was "AGT float costs as discussed". There was no detail provided of the matters to which these costs related, or the basis on which the figure had been calculated, with the invoice merely stating "Rate $600,000.00 + GST".
5. Mr Lambert claimed that there was "a more detailed breakdown" in respect of the amounts claimed on each of the invoices. His re-examination was deferred in order to allow him time to search for what he described as "the detailed document relating to the invoices". However, none was subsequently produced. It must be inferred that no such document is available.
6. On 4 August 2015, the day after the invoice was issued, AGT Management paid the amount of $660,000 to VCFA.
7. The fact that GST was included in the invoice for $660,000 which was issued by VCFA, and that this amount was paid by AGT Management, provides some evidence in support of the contention that services were rendered by VCFA to AGT. However, as against that, AGT Management did not treat any part of the payment made as being for GST in its own accounts. When Ms Pearce entered this payment in the accounts of AGT Management, she allocated the whole of the payment of $660,035 to the account "Loan - Venture Capital", and noted that it was "BAS Excluded". The difference between the amount of the payment received by VCFA ($660,000) and the amount recorded in AGT Management's accounts ($660,035) was due to a bank fee of $35 that was paid by AGT Management.
8. Mr Jane gave unchallenged evidence that, if the invoices were bona fide and payable, it would have been AGT's normal business practice to claim a credit for the GST. That makes obvious commercial sense. The fact that the entire payment was treated as "BAS Excluded" is evidence of a contemporaneous view, on AGT Management's part, that no part of the sum of $660,035 that it had paid represented GST. That is consistent with the view, also expressed in these contemporaneous allocations, that the whole of the amount was paid by way of a loan.

Communications contemporaneous with the payments

1. In contrast, there are some communications between the parties, in November 2015 and February 2016, which were contemporaneous with a number of the payments in question being made, and which do reveal a common assumption that the substance of the transaction was that the moneys paid by AGT and AGT Management were being advanced as loans to VCFA.
2. First, on 20 November 2015, Mr Jane wrote to Mr Lambert, Mr Poulos and Mr Campbell of VCFA, stating: "I have just authorised a transfer of $100k to VCFA - AGT and AGT Management have now advanced as loan funds $1.2 million to VCFA."
3. This email was sent shortly after the first two payments totalling $1.1m had been made in August and September 2015, and on the day that a further payment of $100,000 was made by AGT Management to VCFA. The email unequivocally states that AGT and AGT Management were of the view that the payments totalling $1.2m, had all been "advanced as loan funds … to VCFA". There was no reference to any invoice, let alone any suggestion that the payments represented an agreed fee for services.
4. In response, none of the officers of VCFA to whom the email was addressed disputed Mr Jane's statement that all of the payments which had been made to date represented advances to VCFA. None referred to any agreement for services, or claimed that the amounts were in fact paid in respect of services. Instead, the only response from Mr Lambert, on 26 November 2015, was "Thanks Jim". Neither Mr Lambert nor Mr Poulos referred to this email, which was attached to Mr Jane's affidavit, in their own affidavit evidence.
5. The payment of $100,000 to VCFA was entered in AGT Management's accounts at around that time with the allocation "Loan - Venture Capital". As with the earlier entries, the tax rate for this payment was "BAS Excluded", reflecting that no input tax credit was claimed by AGT Management. This payment was reallocated on 5 August 2016 by Ms Pearce from "Loan - Venture Capital" to "Loan - Access Group Training Pty Ltd", reflecting that there was an intercompany loan by AGT Management to AGT in respect of the moneys that AGT Management had advanced to VCFA on AGT's behalf.
6. Secondly, on 15 February 2016, Mr Lambert sent, on VCFA's letterhead, a letter to AGT, marked for the attention of Mr Jane. The letter stated that "we have been honouring our loan repayments as per our agreement and confirm the following loan repayment position". The letter indicated that the "Amount owed" as at 31 December 2015 was $440,000.

Mr Lambert's evidence of the common understanding of the parties

1. Mr Lambert gave evidence in his affidavit to the effect that Mr Jane agreed with him that there was never any loan agreement in place, and VCFA did not need to repay the sum of $1.3m, but asked Mr Lambert to say that this money had been loaned to VCFA (when each of them knew that was not true), in order "to justify this to [the other directors of AGT] when they find out the money's not there, Jack [Goard] in particular." This is, in substance, an allegation that Mr Jane requested Mr Lambert's assistance to create a paper trail, which they both knew to be false, in order to deceive Mr Jane's fellow directors of AGT.
2. When the trial opened, the parties indicated that they had reached a general consensus, between them, that they would not insist upon a strict application of the rule in Browne v Dunn. In that context, I emphasised to the parties that I would not make any finding that a party had behaved dishonestly, including by creating or signing documents which they knew to be false, unless this was squarely raised with them, and counsel for VCFA acknowledged the need to do so: "we appreciate any allegation in the nature of serious misconduct really does have to be confronted". Significantly, it was not suggested to Mr Jane in cross-examination that he had any intention to deceive his fellow directors, or that he knowingly created a false document in order to do so. Those were serious allegations which ought to have been put to him in detail, so that he had an opportunity to respond. I found Mr Jane to be an honest witness, who directly answered the questions put to him, who made concessions where appropriate, and whose evidence was consistent with the contemporaneous documents. His version of events was not challenged in any significant way.
3. Those matters provide a sufficient basis to reject any such allegation against Mr Jane. Further, and in any case, Mr Lambert made various concessions in cross-examination which were inconsistent with his affidavit evidence.
4. The most significant of those concessions concerned a document headed "Loan - Venture Capital Fund Transactions", which was signed by Mr Jane as director of AGT and Mr Lambert as director of VCFA (the Loan Acknowledgement). By this document, AGT acknowledged that the amounts shown in the document, totalling $1,300,035, "have been loaned to [VCFA]", and VCFA acknowledged that "the above amounts have been received by [VCFA] as a loan from [AGT]".

First Deed

1. In August 2016, Mr Jane, as a director of AGT, and Mr Lambert, as a director of VCFA, signed a deed regarding the amounts totalling $1.3m which had been paid to VCFA between August 2015 and March 2016 (the First Deed).
2. The Recitals to the First Deed were as follows: "A. [AGT] has advanced principal sums to VCFA of $1,300,035.00 ("The Primary Advances") as detailed in Schedule 1 hereof. B. VCFA has not paid the Primary Advances and remains indebted to [AGT] in respect thereto. C. [AGT] is entitled to interest on commercial terms of the Primary Advances at the rate of 10.00% on the variable balance of the Primary Advances from the date of first advance of 4th August 2015 to the date hereof and continuing. D. The interest due on the Primary Advances [is] calculated in accordance with Schedule 2 hereof. E. VCFA seeks to acknowledge the indebtedness to [AGT] and to secure its indebtedness and enter into this Deed in furtherance of its acknowledgment and covenant Operative Provisions."
3. Clause 2 of the First Deed provided as follows: "2. Acknowledgement of Debt VCFA hereby acknowledges that it is properly indebted to [AGT] for the repayment [of the] Primary Advances and interest thereon repayable under the terms of this Deed and that its liability continues until the full amount of the Primary Advances and interest and recovery costs of any nature are paid without limitation or set off."
4. Clause 3.1 provided as follows: "In consideration of [AGT] agreeing to enter into this Deed VCFA hereby agrees to grant unto [AGT] the following securities if required to further and better secure the Primary Advances and all interest and costs thereon (hereinafter called "The Indebtedness")"
5. Clause 3.3 provided as follows: "This deed shall constitute prima facie proof of the contents. This deed may be produced in court as to proof of the contents and VCFA consents to judgment against it in any court of competent jurisdiction in regard thereto."
6. Clause 3.4 provided as follows: "The parties agree that The indebtedness shall be recovered by the following mechanism and timetable: 3.4.1 to pay interest monthly on the indebtedness at the rate of 10% per annum until 30th September 2017 at which time the outstanding principal sum together with accrued and unpaid interest thereon will be repaid by VCFA. 3.4.2 In the event that there is any sum remaining unpaid as at 30th September 2017 then VCFA shall immediately transfer unto [AGT] such unescrowed shares in the capital of [Holdings] held by it to satisfy the remaining obligation to repay principal and interest and costs to [AGT]. PROVIDED HOWEVER that The Indebtedness shall not be deemed to have been discharged or released until and unless repaid in full."

Second Deed

1. On around 19 April 2017, Mr Jane, as director of AGT, and Mr Lambert, as director of VCFA, signed a further deed (the Second Deed). The Second Deed included the following recital C: "The sums due as the Primary Advances as defined in the Deed of Acknowledgment dated 29th August 2016 … have not been paid and are due and payable."
2. The reference to a deed dated "29th August 2016" is likely a typographical error. There was no evidence that there existed, in draft or final form, any deed dated 29 August 2016. The parties clearly intended to refer to the First Deed, which was dated 30 August 2016.
3. Mr Lambert agreed in cross-examination that, when he signed this Second Deed, it was because he accepted that its contents were true.
4. Again, and consistently with other communications between the parties outlined above, this document reveals a common assumption on the part of VCFA and AGT that a loan agreement had been entered between them, and that the terms of that agreement included that VCFA would pay the full amount of $1.3m which had been advanced by AGT.

Conclusion - Claim in respect of Loan

1. For the reasons set out above, I find that the amount of $1.3m was advanced by AGT to VCFA; that interest accrued on that loan at the rate of 10% from the date of each advance; and that no amount has been repaid by VCFA in respect of the principal or interest on that loan.
2. However, it does not follow that AGT is entitled to an order for repayment for the full amount of the loan and interest thereon, for reasons explained below.

Claim for breach of Lease Agreement

1. It is common ground that in around 2015 AGT and VCFA entered into an agreement to share, on a 50/50 basis, the rent and outgoings in respect of office premises at Chatswood.
2. The only issue in dispute is whether AGT has established that any amount is outstanding pursuant to this agreement.

The terms of the agreement

1. In early 2015, Mr Lambert had a conversation with Mr Jane about finding premises for the Sydney-based head office of the proposed listed company. As Mr Jane was based in Dubbo, and Mr Lambert was based in Sydney, Mr Jane asked Mr Lambert to see if he could find suitable premises.
2. Mr Lambert contacted a number of real estate agents and inspected a number of properties in Chatswood. He selected premises located on level 5, 8 Thomas Street, Chatswood (the Chatswood Premises) as suitable for the listed company.
3. Following discussions which involved, among others, Mr Jane and Mr Lambert, VCFA and AGT reached an agreement that AGT would lease the Chatswood Premises, on the basis that AGT and VCFA would share the use of the premises, and would split the rent and outgoings.
4. In its pleading, AGT alleged that the agreement reached was that AGT would pay the rent only for the first year, and that VCFA would pay the rent thereafter. However, this is at odds with the terms of a letter subsequently sent by AGT's Chief Financial Officer, Michael McGann.
5. On 30 June 2016, Mr McGann wrote to Mr Lambert setting out the terms of the agreement which had been reached regarding the sharing of rent and outgoings in respect of the Chatswood Premises. Omitting formal parts, the letter stated as follows: "This letter is to act as confirmation of the Sub-lease arrangement between Access Group Training Pty Limited and Venture Capital Fund Australia Limited for the premises at Level 5, 8 Thomas Street, Chatswood, NSW 2067. As per this agreement, 50% of rent and outgoings are split between both parties for the duration of the lease, being three years ending 21 May 2018."
6. When asked about this letter, Mr Lambert confirmed that this represented the agreement between the parties.
7. Accordingly, I find that the terms of the agreement reached between the parties in respect of rent and outgoings were as set out in Mr McGann's letter (the Chatswood Agreement).
8. On 22 May 2015, AGT entered into a lease of the Chatswood Premises for a term of 3 years with a 3 month rent free period (the Lease). The Lessor was Chatswood RSL Club Limited. The Lease was signed by Mr and Mrs Jane, as directors of AGT. The Lease provided that the annual rent in the first year of the term was $135,600 per annum gross plus GST, and the Lessee (AGT) must pay the annual rent in advance by monthly instalments (cl 5(4)). In the second and third years, the annual rent was the amount of the first year's rent, or any variation of it resulting from an increase of 4% of the preceding year's rent (cl 5(3)).

Claim for breach

1. In order to establish a breach of the Chatswood Agreement, it was a simple matter for AGT, as Lessee, to provide evidence of the total amount of rent and outgoings payable in respect of the Chatswood Premises during the term of the Lease, and the total amount which had in fact been paid by AGT for rent and outgoings. If the latter were shown to exceed 50% of the former, AGT would thereby establish a claim under the Chatswood Agreement for the amount of the difference.
2. However, AGT led no such evidence.
3. Instead, AGT relied on the terms of an email which Mr McGann sent to Mr Lambert on 17 October 2017. At this point in time, the Chatswood Lease still had more than seven months to run, until 22 May 2018. Mr McGann attached a summary statement, which was said to show that "AGT is owed $150,608 in rent/expenses (excluding the advanced funds)". (The reference to the "advanced funds" is likely a reference to the balance of the loan owing from VCFA to AGT. It should be noted that Mr Lambert did not respond to say that no sums had been advanced, and no such loan existed.)
4. The attached statement set out, by number and date, a list of invoices issued to VCFA. Those invoices were not in evidence. Further, there was no evidence that the amounts shown as "due" from VCFA for these invoices as at 31 October 2017 remained due when the Lease ended, or as of today. There was no updated statement as at any date after October 2017, or any primary documentary records to allow the calculation of any amount outstanding from VCFA under the Chatswood Agreement as at the date of the hearing.
5. In his email, Mr McGann stated that: "I regret to advise that unless payment is received by end of month, we will not be making further payments to this lease." Mr Lambert replied, on the same date, as follows: "I agree we do need to get this up to date". VCFA tendered documents showing that, from October 2017 through to May 2018 (that is, through to the end of the Chatswood Lease), it paid rent and outgoings directly to the Lessor.
6. Having regard to the evidence of those payments by VCFA, and in circumstances where AGT has not led evidence to establish the quantum of the payments which it made in respect of rent and outgoings over the term of the Chatswood Lease, AGT has not shown that VCFA failed to meet its obligation under the Chatswood Agreement to cover 50% of the rent and outgoings.

Conclusion - Claim regarding Chatswood Lease

1. For the reasons given above, I am not satisfied that AGT has established either breach or loss in respect of its claim concerning the Chatswood Agreement.
2. This aspect of its claim in the 2020 Proceeding must be dismissed.

Claim for repayment of $1.7m Deposit

1. It is common ground that: 1. in late August 2016, VCFA and Holdings entered into a Share Subscription Agreement, and VCFA paid an amount of $1.7m to Holdings, representing the subscription price for the issue of 17,000,000 shares in Holdings; 2. those 17,000,000 shares were issued to VCFA; 3. the terms of the Share Subscription Agreement provided for the amount of $1.7m to be used solely for the purpose of Holdings paying a deposit to the AGT Shareholders in respect of the proposed sale of their shares in AGT to Holdings; 4. shortly after the Share Subscription Agreement was entered, Holdings paid the full amount of $1.7m to the AGT Shareholders, in four amounts of $425,000 each; 5. under the terms of a proposed Share Sale Agreement between Holdings and the AGT Shareholders (which was not executed as at the date of this payment), the sum of $1.7m was payable by Holdings to the AGT Shareholders as a deposit for the sale of 100% of their shares in AGT to Holdings; and 6. the AGT Shareholders have retained the $1.7m paid to them, and have not transferred their shares in AGT to Holdings.
2. Holdings brought a claim against each of the AGT Shareholders for money had and received. Holdings submitted that: "the [AGT Shareholders having the deposit paid to them on behalf of [Holdings], and by failing to repay it to [Holdings], have been unjustly enriched at the expense of [Holdings]".
3. The High Court has emphasised that unjust enrichment is not to be determined by some subjective assessment of the merits of the case, but by reference to whether or not some qualifying or vitiating factor is present. In David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ observed (at 379) that: "it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation: 'In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.' … The respondent's submission that the appellants must independently prove 'unjustness' over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust."

Development of terms of deal prior to August 2016

1. On 7 June 2016, Mr Lambert asked Mr Stafford to draft a Share Sale Agreement based on an initial term sheet which had been prepared in relation to the planned IPO. Mr Stafford was a partner of Eakin McCaffery Cox, who acted for both the AGT parties and the VCFA parties in relation to the proposed IPO.
2. Mr Stafford provided a first draft of the Share Sale Agreement to Mr Jane, Mr Lambert and Ms Pearce on 20 June 2016. Mr Lambert accepted that he was subsequently sent several drafts of this agreement.
3. On 27 July 2016, a document headed "Access Group Training Holdings Ltd - Pre IPO Capital Raising Term Sheet" was executed as "a binding [sic] term sheet" by Mr Jane on behalf of AGT, and by Mr Lambert on behalf of VCFA.
4. This term sheet provided for the issue of new ordinary fully paid securities in the capital of Holdings to form part of the pre IPO Capital of Holdings at $0.10 per share, and for an amount of $1.7m, described as the "Pre IPO Amount" to be paid from the date of execution of the term sheet until "Close", which was expected to occur on 31 July 2016. The term sheet also included the following provision: "Failure to List: The Company agrees that if it fails to complete its listing on the ASX by 31st December 2016 the sum or sums paid hereunder, shall have the right to (a) convert the $1.7m to a fully diluted net equity position of 14.16% of the equity of The Company with all rights attaching thereto. Or (b) secure the money paid as a debt over AGT secured by a debenture charge and obtain repayment of all monies."
5. Although the language is confused, it appears that this clause is the genesis of what subsequently became cl 5.9(d) of the Share Sale Agreement, which is discussed further below.
6. On 11 August 2016, there was a meeting of the due diligence committee which was established in relation to the proposed IPO. It was attended by, among others, Mr Warwick Kerridge (as chair), Mr Jane, Mr Stafford, Dr Paula Robinson and Mr Lambert (as "observer"). Mr Kerridge was a representative of O'Connell Partners, who were retained in relation to the proposed IPO. Dr Robinson had been proposed, on the recommendation of Mr Kerridge, as a non-executive director of Holdings. She was subsequently appointed to that position on 24 August 2016.
7. The minutes of this meeting record that the "share sale agreement for the sale of shares in Access Group Training Pty Ltd was essentially complete and the balance of the transaction documents would be available in draft form by 17 August 2016 and available for discussion on 19th August 2016 as required", with the aim being to "finalise the terms thereof" on 19 August 2016. The minutes record that: "The structure of the AGT share sale was discussed. It was noted that there may be a number of alterations. It was agreed that the form of the agreement would be reviewed by [Eakin McCaffery Cox], The [AGT Shareholders] and O'Connell Partners and that they would discuss the amendments and submit the final form agreements to the parties after review. This also applied to the subscription agreement. It was agreed that the subscription agreement would then be signed first followed by the share sale agreement once signed off."

"Execution version" of Share Sale Agreement on 24 August 2016

1. On 24 August 2016 at 8.23am, Mr Kerridge sent an email to Dr Robinson, Mr Jane and Mr Lambert, attaching what was described as an "execution copy" of the Share Sale Agreement with a date stamp "19.8.2016", and a copy of the Share Subscription Agreement. Mr Kerridge stated that the intention was "to finalise the share subscription of 17,000,000 new securities in the capital of [Holdings] @ $0.10 per new security as well as the share sale agreement whereby [Holdings] enters into an agreement to acquire 100% of the issued capital of [AGT]". He further stated: "It is proposed that both of these agreements will be signed this morning at or about 10.00am." Mr Kerridge asked Dr Robinson to "execute the signing page of both of the enclosed agreements and return the signed pages", in order to "facilitate this completion". He said that he would "then attach these pages to the balance of the document"; and that he would telephone when "the remainder of the signatories are in place to seek your authority to complete exchange".
2. It is important to note that Mr Kerridge's proposal for effecting the entry into these agreements involved the following steps: (a) Mr Kerridge would send the entire agreement to each signatory; (b) the signatory would execute and return only the signing page of the agreement (and not the balance of the pages); and (c) Mr Kerridge would then attach the signed pages to the balance of the document. That procedure will be of some significance when it comes to the question of the execution of the Share Sale Agreement.
3. Mr Lambert responded to Mr Kerridge (copied to Mr Jane and Dr Robinson) at 10.00am on 24 August 2016, noting that this was "the first time we have seen the final versions of these documents and need time to review". Shortly afterwards, at 10.08am, Mr Kerridge sent execution copies of each of the Share Sale Agreement and the Subscription Agreement to Mr Jane, Mr Lambert, Mr Poulos and Dr Robinson, asking them to "use this version for your review", and to "review the documents as required in order that the final form can be signed off for exchange". Mr Kerridge proposed that once the final form of these documents was agreed, "the agreements be signed by the respective parties and held until the balance of the subscription funds are received (ie $200,000) into the trust account of Pearce Accountants". Dr Robinson responded that she would wait until the final version was sent through before execution, and suggested that she might speak to Mr Stafford to confirm the final copy before signing.

Entry into the Share Subscription Agreement

1. On 24 August 2016, Holdings and VCFA entered into the Share Subscription Agreement. It was common ground that this agreement was duly executed by the parties, and was binding on them.
2. The agreement was signed by two directors of Holdings, namely, Mr Jane and Dr Robinson. Further, the copy that was executed by VCFA and returned by Mr Lambert to Mr Jane at 5.11pm on 24 August 2016, was signed by two directors of VCFA, namely, Mr Lambert and Mr Dong.
3. Recital A to the Share Subscription Agreement recorded that Holdings agreed to issue the Subscription Shares to VCFA, and VCFA agreed to subscribe for the Subscription Shares on the terms contained in the agreement.
4. The Subscription Shares were defined as 17,000,000 ordinary class shares in the capital of Holdings at the Issue Price of $0.10 per Subscription Share (for a total "Subscription Price" of $1.7m), which "shall represent 74% of the total issued share capital of [Holdings] at the time of their issue to [VCFA]".
5. Clause 3.2 of the Share Subscription Agreement provided that Completion (meaning completion of the issue of the Subscription Shares to VCFA) will take place and effect as from 9.00am on the Completion Date.
6. The Completion Date was defined as "the date when the Share Sale Agreement is signed or [such] other date as agreed to by the Parties". The "Share Sale Agreement" was defined as meaning "the Share Sale Agreement between [Holdings] and [the AGT Shareholders] dated on or about the date of this Agreement" (emphasis added). By cl 2.6 of Sch 2 to the Share Subscription Agreement, Holdings warranted that "it has signed the Share Sale Agreement".
7. Clause 3.3 provided that on the Completion Date: "(a) [VCFA] shall pay [Holdings] the Subscription Price in immediately cleared funds; (b) [Holdings] shall allot and issue the Subscription Shares to [VCFA] free from any Encumbrances; (c) [Holdings] agrees to appoint one (1) person nominated by [VCFA] as a Director having received [his/her] consent to be a Director; (d) [Holdings] shall: (i) register [VCFA] as a Shareholder; and (ii) issue [VCFA] a Share certificate(s) in respect of the Subscription Shares; and (iii) apply the Subscription Price immediately and solely for the Purpose; (e) all Directors existing at the date of this Agreement shall resign as Directors as at Completion save for [Mr Jane]; and (f) the Shareholdings of the Shareholders be as that set out in section 2 of Schedule 1 [namely, VCFA owning 17,000,000 Shares (or 74% of the issued shares), and Mr Jane owning 6,000,000 Shares (or 26%)]."

Completion of the Share Subscription Agreement

1. It is common ground between the parties that the Share Sale Agreement was not in fact executed on or about the date that the Share Subscription Agreement was entered. The position of AGT and the AGT Shareholders is that the Share Sale Agreement was not executed until around 28 February 2017; and the position of VCFA and Holdings is that there is no evidence that it was ever executed.
2. Further, it is common ground that "Completion" under the Share Subscription Agreement (meaning the issue of 17m shares in Holdings to VCFA) occurred in circumstances where the Share Sale Agreement had not been executed. According to the ASIC extract for Holdings: 1. 17,000,000 shares were issued to VCFA (this appears to have occurred on around 26 August 2016, as evidenced by a share certificate bearing that date and signed by Mr Jane); 2. the directors of Holdings, other than Mr Jane, resigned as at 18 August 2016; and 3. VCFA's nominee, Mr Lambert, became a director of Holdings on 21 September 2016.
3. Further, as outlined below, VCFA paid the balance of $1.7m into the trust account of Ms Pearce, by way of the payment of the Subscription Price.
4. Having regard to the definition of "Completion Date" as meaning the date on which the Share Sale Agreement is executed, or such other date as the Parties agree, it must be inferred that Holdings and VCFA agreed that Completion should occur under the Share Subscription Agreement, even though the Share Sale Agreement had not been executed.

Flow of $1.7m

1. Mr Lambert gave unchallenged evidence that in around late July or early August 2016, he and Mr Jane had a conversation at the Chatswood Premises. Mr Jane explained that his wife was concerned about the deal going ahead and asked that "as a show of good faith", the amount of $1.7m be "paid straight away". Mr Jane proposed that the money be paid into the trust account of AGT's accountant, Ms Pearce, and that she "hold the money as a deposit against the expected sale of our AGT shares to [Holdings]". Mr Lambert indicated that VCFA could deposit $1.5m into Ms Pearce's trust account as "a sign of good faith" reasonably quickly, and could pay the remaining $200,000, which was coming from third party sources, into the trust account as soon as it became available.
2. On 8 August 2016, VCFA paid the sum of $1.5m into Ms Pearce's trust account.
3. Shortly before the Share Subscription Agreement was signed, a meeting took place which involved Mr Lambert, Mr Jane and Mr Poulos. Mr Lambert gave evidence that, at this meeting, it was agreed between him and Mr Jane that, if the proposed listing did not happen by 31 December 2016, Mr Jane would ensure that the $1.7m was paid back to VCFA within seven business days. (According to Mr Lambert's affidavit, the meeting took place on 26 August 2016 at the Chatswood Premises. Mr Jane disputed that the meeting could have taken place in Chatswood on 26 August, since he was in Dubbo on that date, but otherwise did not dispute Mr Lambert's evidence that a conversation took place in the terms he recorded. Although not much turns on the precise date, I find it is likely, given the terms of Mr Kerridge's email of 25 August 2016 referred to below, that the relevant meeting took place at his offices on 24 August 2016.)
4. On 25 August 2016 at 11.01am, being the morning after the Share Subscription Agreement was executed, Mr Kerridge sent an email to, among others, Mr Lambert, Mr Jane and Ms Pearce, noting that Ms Pearce had not yet received the remaining $200,000 of the $1.7m in subscription funds into her trust account or the authority to release funds from her trust account. Mr Kerridge noted that he had spoken to Mr Lambert "to confirm that these will be attended to in accordance with the agreement reached during the meeting yesterday at Level 12, 28 O'Connell Street Sydney in order for the subscription to be completed". This is likely a reference to the agreement between Mr Lambert and Mr Jane referred to in the previous paragraph. Mr Kerridge asked for confirmation to be given once the remaining $200,000 in funds had been transferred and the authority to release funds had been supplied.

Signed version of Share Sale Agreement dated 28 February 2017

1. There was in evidence a version of the Share Sale Agreement dated 28 February 2017, which included a number of copies of the execution page, signed by various persons.
2. There were a number of differences between this signed copy of the Share Sale Agreement and the "execution version" that had been circulated in August 2016. In particular, the signed Share Sale Agreement dated 28 February 2017 extended the Sunset Date from 31 December 2016 to "30 June 2017 or such other date as agreed to by the Parties". Clause 5.9(d) was in substantially similar terms to the corresponding clause in the execution version, with the exception of a variation in the terms of subclause 5.9(d)(ii)(1). The version in the signed agreement read as follows: "(d) Without limiting clause 5.9, in the event Completion does not occur for any reason: (i) [the AGT Shareholders] shall be entitled to retain the Deposit; and (ii) [VCFA] shall be entitled to: (1) 14.16% of all Shares then on issue in [AGT] in consideration for paying the Subscription Price or (2) at the option of [Holdings] elect to treat the Deposit as a debt due to [Holdings] by [the AGT Shareholders] in their Respective Proportions which shall become repayable within 12 months of the date of termination of this Agreement for failure to so complete, save where non-Completion is due to [Holdings'] breach of this Agreement or where there are payments due by [Holdings] or a Related Party of it to a [AGT Shareholder] or [AGT], then those payments shall be offset by [the AGT Shareholders]."
3. Mr Lambert was, in cross-examination, taken to the signature pages of the 28 February 2017 document, and accepted that the pages in question were signed by each of Mr Jane, Dr Robinson, Mrs Jane, Mr Goard and Mrs Goard.
4. Each of those signatures, other than that of Dr Robinson, was witnessed. Pursuant to s 149 of the Evidence Act, it is not necessary to adduce the evidence of an attesting witness to a document (not being a testamentary document) in order to prove that the document was signed or attested as it purports to have been signed or attested.
5. While not disputing that the persons who appear to have signed those pages did in fact sign those pages, Holdings disputed that the AGT Shareholders had established that the document signed by them was the same as the document signed by Dr Robinson. That was because the pages of the document leading up to, and following, the execution pages bore a footer 1955683_1.docx, which was the same as the footer on the execution page signed by Dr Robinson, but each of the pages signed by the AGT Shareholders bore a different footer ("AGT AUST FINAL SSA"). In addition, one of those pages, which was signed by Mr and Mrs Jane, bears two horizontal black lines not seen on the other pages, of the type that can be created when photocopying or faxing a document, while the other page, signed by Mr and Mrs Goard, is much darker than the rest.

Issue raised with respect to Mr Kerridge and Dr Robinson

1. Mr Jane was the last witness to be called to give evidence at the hearing. Towards the end of his cross-examination, he was asked by counsel for Holdings a number of questions regarding the nature of the relationship between Mr Kerridge and Dr Robinson, and regarding Mr Kerridge's conviction for fraud around 20 years prior to the events that are the subject of these proceedings.
2. In closing address, and in supplementary written submissions dated 24 October 2023 which were provided after the hearing had concluded, Holdings advanced a submission to the following effect: 1. Mr Kerridge lived with Dr Robinson, and concealed this fact from the parties when recommending her to be a remunerated non-executive director of Holdings; 2. Mr Kerridge was struck off the solicitor's roll in Victoria after two convictions for fraud, both of which concerned manufacturing false and misleading documents, and the second of which resulted in a sentence of imprisonment; and 3. the Court should conclude that Mr Kerridge has "done again what he has done before"; in particular, that he procured Dr Robinson's signature on a single piece of paper and inserted it into a sheaf of papers that became the disputed Share Sale Agreement. Mr Kerridge's motive for doing so was "to create apparently satisfactory paperwork which was never going to see the light of day, so that work could progress on a satisfactory float on the ASX".
3. Counsel for AGT and the AGT Shareholders objected to questions being asked and documents being tendered in relation to these matters, and to the submission being advanced, on the grounds that no such issue was pleaded or particularised.
4. There is considerable force in this objection. The case run by Holdings and VCFA was that the sum of $1.7m was paid to the AGT Shareholders in circumstances where no Share Sale Agreement was executed, with the result that there was a total failure of consideration and this sum was repayable as money had and received. That is, it was necessary for Holdings to establish, as part of its case, that no such agreement had been entered. In response, the AGT Shareholders pleaded that the signed Share Sale Agreement had been executed on around 28 February 2017, and referred specifically to the copy signed by Dr Robinson, Mr Jane, and the other AGT Shareholders. In its Amended Reply, Holdings "denie[d] that the pleaded Share Sale Agreement is a binding and effective agreement, including in circumstances where it was not duly executed by or on behalf of [Holdings]".

Was the agreement binding on Holdings?

1. Holdings submitted that, even if I found that each of Mr Jane and Dr Robinson executed the same version of the Share Sale Agreement, being the version which was dated 28 February 2017 and annexed to Mr Jane's affidavit (as Mr Jane deposed), nonetheless I should find that the agreement was not duly executed by Holdings.
2. Section 127(1) of the Corporations Act 2001 (Cth) provides as follows: "(1) A company may execute a document without using a common seal if the document is signed by: (a) 2 directors of the company; or (b) a director and a company secretary of the company; or (c) for a proprietary company that has a sole director - that director, if: (i) the director is also the sole company secretary; or (ii) the company does not have a company secretary."
3. As at 28 February 2017, Holdings had three directors: Mr Jane, Dr Robinson and Mr Lambert. In its submissions on this issue, Holdings pointed out that, while Dr Robinson signed above the line for a "Director" of Holdings, Mr Jane (who was a party in his own right) signed the agreement in only one place, alongside his own name, and not also above the line for a "Director" of Holdings, which appeared on the same page.
4. Section 127(1)(a) of the Corporations Act is satisfied if the document in question is signed by two directors of the company. There is no requirement that each director's signature appear alongside the name of the company. In Northside Veterinary Property Pty Ltd v Dalmacija Sydney Croatian Club Ltd [2022] NSWSC 589, the contract in question was signed by two persons who were in fact directors of the defendant club, but neither purported to sign in any particular capacity, such as a director. Darke J held (at [62]) that because the contract was signed by two persons who were directors, it was, as a matter of fact, executed in accordance with s 127(1)(a): "That is so even if the document, on its face, does not appear to have been signed in accordance with s 127(1) (see Corporations Act, s 129(5))."
5. In Gibbons v Pozzan (2007) 209 FLR 233; [2007] SASC 99 at [30], Duggan J (with whom Gray and White JJ agreed) said that the purpose of s 127 is to move away from certain common law formalities as to the execution of documents and look at substance and intention. Each of Dr Robinson and Mr Jane, as well as each of the other AGT Shareholders, clearly intended, by signing the agreement, that it would become a binding contract between Holdings and the AGT Shareholders. It would frustrate that evident intention, and elevate form over substance, to conclude that the agreement was not in fact duly executed by Holdings merely because Mr Jane signed the agreement in only one space (alongside his printed name), rather than two spaces on the same page (namely, both alongside his name and alongside the name of Holdings).

Steps taken to terminate the Share Sale Agreement

1. On 23 April 2018, Mr Stafford sent an email to Mr Jane, Dr Robinson and Mr Lambert, which referred to recent communications and discussions "regarding the apparent discontinuation of the IPO and the resulting fallout".
2. Mr Stafford's email noted that "under the Share Sale Agreement between the AGT [Shareholders] and [Holdings] (SSA) … all conditions precedent (CP's) had to be met by 30 November 2017". As noted above, the Sunset Date in the Share Sale Agreement dated 28 February 2017 was 30 June 2017. Mr Stafford's statement suggests not only that the agreement was understood to be binding, but also that it had been subsequently amended.
3. Mr Stafford noted that since one of those conditions precedent to the Share Sale Agreement, namely, the listing of Holdings, had not occurred, the parties had the right to terminate the Share Sale Agreement.
4. Mr Stafford's email attached a document headed "Position Paper". It identified the "primary issue" as follows: "To what extent, if any, must Jim and Judy Jane and John and Suellen Goard, as the sole shareholders of AGT ("AGT Vendors") return the deposit paid to them by Access Training Group Ltd ("IPO Vehicle") in the sum of $1.7M ("Deposit"), pursuant to a Share Sale Agreement between them dated 28 February 2017. This paper seeks to identify the position of the applicable stakeholders at a high level with a view to resolving legal issues between them in respect of the Deposit and related matters."
5. The Position Paper stated that the Share Sale Agreement had been signed on 28 February 2017 by Holdings and the AGT Shareholders. It recorded VCFA's position as being that the "SSA be terminated" and that the shares "to Jim [Jane] issued pursuant to the SSA and his employment agreement with [Holdings] be cancelled".
6. In response to this Position Paper, Dr Robinson relied on the terms of the Share Sale Agreement to argue that the Deposit was repayable by the AGT Shareholders to Holdings. On 14 May 2018, she wrote an email to Mr Jane, copied to Ms Cai, Mr Kerridge, Mr Stafford and Mr Doble, stating that: "My understanding and the independent advice I have received is that under the Share Sale Agreement, [Holdings] is entitled to receive the repayment of the deposit back as the contract is not proceeding. At no time was it ever suggested to me or, as far as I am aware, any of the [Holdings] Directors, that the deposit was non refundable".

Return of Deposit - Operation of clause 5.9(d)

1. For the reasons set out above, I have found that Holdings and the AGT Shareholders entered into the Share Sale Agreement dated 28 February 2017.
2. It follows that Holdings' claim for money had and received must fail, as it was premised on the contention that no such agreement was executed, with the result that there was a total failure of consideration in respect of the Deposit. Instead, and consistently with the position adopted in the resolutions of Holdings in 2018, the repayment of the Deposit is governed by the terms of clause 5.9(d) of the Share Sale Agreement.
3. Holdings did not seek in the 2020 Proceeding any amount said to be due pursuant to clause 5.9(d) of that agreement. However, the AGT Shareholders accepted that, in circumstances where the claim for money had and received failed because I upheld their contention that the Share Sale Agreement had been entered and clause 5.9(d) governed the repayment of the Deposit, it was open to me to determine whether any amount was in fact owing to Holdings under clause 5.9(d), after determining the extent of any set off available under that clause (which was put in issue by Holdings' Reply).
4. One oddity of the drafting of clause 5.9(d) is that it provides that in the event that Completion does not occur for any reason: 1. the AGT Shareholders "shall be entitled to retain the Deposit" (cl 5.9(d)(i)); and 2. Holdings has the option "to treat the Deposit as a debt due to [Holdings] by the [AGT Shareholders] in their Respective Proportions which shall become repayable within 12 months of the date of termination of this Agreement for failure to complete" (cl 5.9(d)(ii)(2)).
5. That is, the clause appears to provide, inconsistently, for a right on the part of the AGT Shareholders to "retain" the Deposit, and an obligation on the part of the same persons to repay the Deposit "as a debt due" to Holdings.
6. The apparent inconsistency is explained by the balance of cl 5.9(d)(ii)(2) and the circumstances known to the parties at the time when the Share Sale Agreement was entered in around early March 2017.
7. Clause 5.9(d)(ii)(2) provided that the obligation to repay the Deposit as a debt was subject to a right on the part of the AGT Shareholders to "offset" against that debt any "payments due by [Holdings] or a Related Party of it to [an AGT Shareholder] or to [AGT]". It was common ground that the reference to an "offset" in cl 5.9(d) invoked the legal notion of set off which, in general terms, means the setting of money cross-claims against each other to produce a balance. The reference to "payments due" must be a reference to payments due as at the time that the Deposit itself fell due for repayment. As noted above, this was to be 12 months after the date of termination. As at the time that the Share Sale Agreement was entered, the Sunset Date was 30 June 2017, and therefore any obligation to repay the Deposit as a debt would likely fall due around 12 months after that Sunset Date, that is, around 30 June 2018 (or later).

Set off - Payments due by VCFA

1. In their defences filed in the 2019 Proceeding, each of the AGT Shareholders pleaded (paragraph 58) that: "the company, [AGT], is wholly owned by the [AGT Shareholders] and: (a) [AGT] has brought proceedings against [VCFA], a related party of [Holdings], to recover the sum of $1,876,029.60 ("the Debt"); (b) The Debt is an offsetting amount as against any amount due or owing and claimed in the Amended Statement of Claim, pursuant to clause 5.9(d) of the Share Sale Agreement; (c) Any amount found to be due or payable to [Holdings] is reduced by the amount of the Debt."
2. Clause 5.9(d) allows the AGT Shareholders to set off, against their obligation to repay the Deposit in their respective proportions, any "payments due by … a Related Party of [Holdings] … to [AGT]".
3. The Share Sale Agreement defines a "Related Party" as meaning: "(a) a Related Body Corporate; (b) an entity whose board or shareholding is similar to another entity; or (c) an entity within the meaning of section 228 of the Corporations Act."
4. The relevant point of time to consider set off is when the Deposit falls due for repayment pursuant to clause 5.9(d), which is the date 12 months after the date of termination of the Share Sale Agreement (namely, 17 July 2019).
5. In November 2018, each of Mr Jane and Dr Robinson ceased to be a director of Holdings. So, by the time the deposit fell due for repayment in July 2019, there is no doubt that Holdings was controlled by VCFA, and VCFA was therefore a related party of Holdings: Corporations Act, ss 50AA and 228(1).
6. It follows that, according to its terms, clause 5.9(d) operates so that the AGT Shareholders can set off, against their obligation to repay the Deposit to Holdings, any debt owed by VCFA to AGT.
7. It is open for parties to a contract to agree not only to set off debts owing by each to the other, but also debts owing by or to related entities of either party: see, for example, Sinochem International Oil (London) Co Ltd v Mobil Sales and Supply Corp (Sinochem International Oil Co Ltd, third party) [2000] 1 All ER (Comm) 474 at [30]; [2000] 1 Lloyd's Rep 339; R Derham, Derham on the Law of Set-Off (4th ed, 2010) at [16.02]. In Sinochem, Mance LJ commented that "a straightforward wish to provide for set-off of affiliate indebtedness corresponds with obvious realities of the corporate groupings through which international organisations … commonly conduct their business".

Set off - Payments due by Holdings

1. In their defences, each of the AGT Shareholders pleads that prior to 17 July 2018, it was agreed between AGT and Holdings that costs of the IPO which had been incurred by AGT would be set off against the Deposit; and that on 17 July 2018, Holdings "passed a circular resolution giving effect to the agreement".
2. However, the resolution of 17 July 2018 does not acknowledge any pre-existing agreement, but instead commits Holdings to undertake discussions with AGT about costs, with a view to reaching an agreement about what is owing (see paragraphs 230 and 234 above).
3. The reason that the resolution was worded in this way appears to be explained by the terms of email correspondence between the directors of Holdings prior to the resolution being passed. In particular, on 20 May 2018, Dr Robinson sent an email to the other directors (Mr Jane and Ms Cai), as well as Mr Stafford and Mr Kerridge, expressing the view that the problem with the proposed set off of IPO expenses incurred by Holdings against the amount owing by the AGT Shareholders to Holdings was that Mr Jane was "on both sides of the fence". She stated that: "The debts, whatever they are, need to be examined and source documents provided so that they can be approved in a professional manner". There is no evidence that such a process was undertaken.
4. Instead, Ms Pearce deposed that in June 2018, Mr Jane instructed her to "generate invoices for the IPO expenses that [Holdings] owes to AGT". Ms Pearce generated two invoices on 25 June 2018, numbers 2273 and 2274. Despite being generated on that date, the invoices were dated, respectively, 30 June 2016 and 30 June 2017, and were stated to be due for payment on the dates they bore. Each invoice was addressed by AGT to Holdings. There was no reference on either invoice to any agreement pursuant to which they were issued. Instead, invoice no. 2273 simply stated that the amount of $113,652 was for consulting and legal fees, without any statement of the subject matter of the relevant work. Likewise, invoice no. 2274 for the amount of $628,193.34 referred to consultancy, legal, accounting and audit fees, as well as directors fees, filing fees and general expenses. The "reference" given on each of these invoices was in identical terms: "expenses paid on behalf". Ms Pearce did not explain how she arrived at the figures in these invoices, or how she determined that these amounts had been paid by AGT on behalf of Holdings, or were due by Holdings to AGT.

CONCLUSION

1. I have found that AGT loaned funds totalling some $1.3m to VCFA, and that no amount has been repaid by VCFA in respect of those advances, or in respect of interest which is accruing at the rate of 10% per annum on the loan balance.
2. I have found that a Share Sale Agreement was entered between Holdings and the AGT Shareholders. It follows that Holdings has not established that the state of affairs contemplated as the basis or reason for the payment of the $1.7m Deposit failed to materialise, and therefore has not established that there was a total failure of consideration. Accordingly, Holdings' claim for money had and received must fail.
3. Further, I have found that the question of repayment of the Deposit was governed by the terms of the Share Sale Agreement, and in particular by cl 5.9(d) of that agreement. Because Holdings terminated the Share Sale Agreement on 17 July 2018, and elected to seek repayment of the Deposit, the AGT Shareholders were, pursuant to that clause, obliged to pay that amount to Holdings by 17 July 2019, but were entitled to set off against that obligation any amount owing by VCFA to AGT in respect of the loan funds and interest accruing thereon. Because the sum owing by VCFA to AGT as at 17 July 2019 exceeded the amount of the Deposit, the effect of the set off being applied pursuant to clause 5.9(d) is that the AGT Shareholders have fully satisfied their obligations under that clause.
4. At the same time, the effect of the set off is to reduce the amount of the debt due by VCFA to AGT as at 17 July 2019 to $134,371.27. It follows that, in the 2020 Proceeding, AGT is entitled to judgment in an amount representing only the balance left after the application of the contractual set off, together with interest accruing at the rate of 10% per annum on that remaining balance from 18 July 2019 to the date of judgment.
5. The parties should bring in short minutes of order to give effect to these reasons for judgment, which deal with interest to the date of judgment.
6. I will provide the parties with an opportunity to confer regarding the appropriate costs orders in the light of these reasons, and to make submissions, with any supporting evidence, in the event that agreement cannot be reached on the proposed form of costs order in each proceeding. Similarly, I will hear any dispute about the interest calculations in the event that these cannot be agreed.

Orders

1. For those reasons, I make the following orders in each of the 2019 Proceeding and the 2020 Proceeding. The Court: 1. Directs the parties to bring in short minutes of order, by 5pm on 6 December 2023, to give effect to these reasons for judgment, including: 1. orders that deal with interest and costs, insofar as those matters can be agreed; and 2. insofar as interest and/or costs are not agreed, proposed directions for evidence and submissions in respect of issues of interests and/or costs.

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 November 2023