CHOU -v- AWAP SGT 26 INVESTMENT LTD [No 3] [2018] WASC 383 (11 December 2018)

1. Awap denies the claims. In particular, it says that its liability to Mr Chou and CN (Hong Kong) was discharged in the agreement for the sale of the shares to the Tans.

1. Mr Chou is a businessman resident in Singapore. In 1997, Mr Chou and another businessman, Foo Jong Kan, formed Awap as a vehicle to purchase and hold an investment property in Western Australia. The shares in Awap were held by companies controlled by Mr Chou and Mr Foo.
2. Awap is registered in Western Samoa.
3. CN 2000 is incorporated in Samoa. CN (Hong Kong) Limited is incorporated in Hong Kong. Both companies are associated with Mr Chou.
4. CN (Hong Kong) was a director of Awap from January 1997 to December 2008.[1] The plaintiffs claim that CN (Hong Kong) was appointed as Awap's Overseas Property Manager in 1997.
5. Tan Kah Hock and Tan Kah Hong are businessmen resident in Singapore. They are also known as Daniel and Richard Tan. Daniel Tan, who gave evidence, said he preferred that the court use the Anglicised form, and I will follow his preference. The Tans currently own all of the issued shares in Awap.

1. The following individuals are referred to in these reasons.

(1) Foo Jong Kan was a former associate of Mr Chou, and was secretary of Awap until April 2006;

(2) Goh Kim Hua was secretary of Awap until April 2006;

(3) David Gerrans was an accountant with Venture Accounting, the accountant for Awap up to December 2008;

(4) Gary Browning was a banker with Bendigo Bank, the banker for the Tans;

(5) Craig Dawson was State Director, Investment Property Management, Knight Frank (WA) Pty Ltd, managers of International House;

(6) Kevin Kwek, of Legal Solutions LLC, Singapore, was the solicitor for Mr Chou; and

(7) Lee Mun Hooi, of Lee Mun Hooi & Co, Singapore, was the solicitor for the Tans.

1. The following companies are referred to in these reasons:

(1) Assobuild Construction Pte Limited and Assobuild Pty Limited were incorporated in Singapore. They were shareholders in Awap before the transfer of shares to the Tans. I will refer to them collectively as the Assobuild Companies.

(2) Goldpex Investment Limited was a company associated with Mr Foo, and a director and member of Awap until April 2006 when it sold it shares to the Tans; and

(3) Deo Silver (Pte) Ltd was a company associated with the Tans.

The plaintiffs' claims and the defence - overview

1. Mr Chou claims the repayment of money loaned to Awap and repayable on demand. He claims that, at 30 January 2009, Awap was indebted to him for $1,825,000 for funds advanced. He further claims interest at the rate of 9.4608% per annum from 31 March 2006 to 17 June 2007 and at 15.786% per annum from 18 June 2007 pursuant to an undertaking by Awap on 8 February 1997, alternatively pursuant to an agreement. The agreement is said to have been, in part by a letter dated 17 December 2008.[2]
2. CN 2000 claims that, on or about 27 September 2007, it paid $875,000 as consideration for the allotment of 25 shares in Awap (the Additional Shares). The Additional Shares were issued. But on or about 17 December 2008, the issue was cancelled. CN 2000 claims a total failure of consideration, alternatively that it paid the amount of $875,000 to Awap under a mistake of fact and Awap had and received that sum to the use of CN 2000.[3]
3. CN (Hong Kong) claims that it was entitled to remuneration as a director of Awap at the rate of $108 per day, payable upon invoices being submitted for payment. On 17 December 2008, Awap was indebted to CN (Hong Kong) for $176,148 on invoices submitted on 30 June 2005, 1 March 2006, 30 June 2006, 30 June 2007, 30 June 2008, and 17 December 2008.[4]
4. CN (Hong Kong) also claims fees as the Offshore Property Manager of Awap, from 8 April 1997. The fee was initially $345.60 per day, and was reviewed to $362.88 per day in or about June 2000. CN (Hong Kong) claims $525,111.44 as unpaid management fees.[5]
5. Awap denies the claims.
6. As to the loan to Mr Chou, Awap alleges that any moneys owed by Awap to Mr Chou or CN (Hong Kong) have been paid. Mr Chou and Daniel Tan negotiated an agreement by which the Tans purchased the shares in Awap held by Mr Chou and the Assobuild companies. Awap says the amount paid under that agreement included all amounts owed to Mr Chou and CN (Hong Kong) by Awap for any loans or fees.[6]
7. In response to the claim by CN 2000, Awap pleads that the judgment entered in the High Court of the Republic of Singapore in October 2008 included the transfer of all subsequent rights-issued and bonus-issued shares and required those shares to be transferred to the Tans and included the Additional Shares.[7] Awap also pleads that, following a further dispute between Mr Chou and the Tans, the parties made an agreement by which Mr Chou and CN 2000 accepted the cancellation of the Additional Shares.[8]
8. Awap denies the validity of the appointment of CN (Hong Kong) as offshore property manager and does not admit its claim.[9]

1. Mr Chou was the only witness for the plaintiffs, and Daniel Tan the only witness for the defendant. Each spoke English, and testified primarily in English, although with the assistance of an interpreter if required. The emails passing between the parties, and other documents, were in English.
2. In November 2017, in Singapore, Mr Chou was convicted on two charges of attempting to cheat a government agency administering a wage credit scheme to obtain a total amount of S$33,000 and sentenced to a short term of imprisonment.[10] The offences were alleged to have been committed in December 2013. Both parties were aware before trial that Mr Chou had been charged. He was not asked about the charges at trial; he had not then been convicted.
3. On 7 December 2017, in correspondence to the court, the defendant foreshadowed an application to re-open its case. On 30 January 2018, the parties provided consent orders by which the defendant was granted leave to re-open its case to admit records of the convictions into evidence, and to make submissions in relation to the convictions, including their relevance and materiality.
4. The process followed circumvented that set out in s 23 and s 25 of the Evidence Act 1906 (WA) for crossexamination of a witness as to a previous conviction, and the duty of the court where questions relate only to credit. Because Mr Chou is resident in Singapore, the procedure agreed by the parties was more economical and efficient.
5. At the hearing on 26 February 2018 there was some disagreement about the extent to which submissions would be made. Counsel for Mr Chou wished to make further submissions on the materiality of Mr Chou's credibility to the issues for determination. I ruled that the issue was the relevance and materiality of the convictions to Mr Chou's credibility, and the submissions could not extend beyond that issue and reopen the question of what findings should be made on the issues for decision.
6. As the following reasons show, on at least some issues, Mr Chou's credibility was in issue. Independently of the convictions, I formed an unfavourable view of Mr Chou's credibility, particularly based on the evidence of his conduct on 19 January 2009.
7. On that day, Mr Chou sent an email to Craig Dawson of Knight Frank, the property managers for International House, marked 'private and confidential - strictly for your eyes only'. The email attached a 'full set' of 33 invoices, bills and claims from various entities including himself, CN (Hong Kong), and CN 2000, addressed to Awap. Mr Chou wrote:

As discussed just now, please delete this email after you save all the attached documents on your computer and you print all the attached files into hard copies of evidence and documents.

Please confirm to me that you have done so.[11]

1. The attached documents bore various dates, from 29 May 2006 to 17 December 2008. Eight were invoices or claims for interest for Goh Kim Hua; three were invoices for corporate director's fees for CN 2000; 15 claimed fees or interest owed to CN (Hong Kong); and two, dated 17 December 2008, claimed interest on behalf of CN 2000 and Mr Chou. Three of them had been paid.[12]
2. Mr Chou accepted that he asked for the email to be deleted because he did not want the Tans to know the invoices were only being sent belatedly.[13] I do not believe his evidence that he never thought of creating the impression that the invoices had been sent earlier.[14] The marking of the email 'strictly for your eyes only', and the request to destroy it have no other, more probable, explanation than an intention to deceive the Tans as to when the invoice had been provided. This affected from when interest ran. I am satisfied that was at least part of Mr Chou's purpose.
3. The convictions for dishonesty reflect on Mr Chou's character and credibility as a witness, and are consistent with the view I had already formed.
4. Daniel Tan was a difficult witness to assess. He spoke quickly, and his train of thought was not always easy to follow. At times he did not respond directly to questions. I do not, however, believe that he was evading questions. Like some other witnesses, he bucked against the restraint of an interrogation that sought to limit him to answering the particular question asked and, to him, was not on point.
5. More generally, there were language difficulties. English was not Daniel Tan's first language. And it may not have been Mr Chou's, although he spoke it well. The more serious difficulty was that Mr Chou and Daniel Tan gave evidence about a meeting where conversations were conducted, on at least one critical issue, in Hokkien or Mandarin. The difficulties that accompany recall of a conversation after 10 years were compounded by the fact that the witnesses were recounting in English a conversation in another language.
6. It was also apparent that there was a high level of distrust between Mr Chou and Mr Tan. The sale of Mr Chou's shares in Awap was precipitated by their inability to work together as co-owners. The emails immediately following the meeting to discuss the sale of the Awap shares demonstrate that each doubted the integrity of the other. Those sentiments appeared at times to affect their oral evidence.

1. Awap was incorporated under the International Companies Act 1987 of Samoa on 22 January 1997.[15] Awap has a registered office in Australia and is a foreign company registered under pt 5B.2 of the Corporations Act 2001 (Cth). Awap is the owner of the building called International House in Perth.
2. There were 50 issued shares in Awap. Half were owned by Goldpex Investments. Mr Chou held one share, and Assobuild Construction and Assobuild held 24 between them.[16]
3. Mr Chou was 'first secretary' to Awap.[17] The company had two directors: CN (Hong Kong) and Goldpex Investments. Mr Chou was a director of CN (Hong Kong) and says he was its First Secretary and Authorized Corporate Representative. The evidence does not disclose what authority he had as 'First Secretary' and Authorised Corporate Representative, although it was accepted that 'First Secretary' was equivalent to company secretary in Australia.[18]
4. Mr Foo and Goldpex Investments left the day to day management of Awap to Mr Chou.[19]
5. Awap operated relatively informally. On occasions, decisions of the board were not recorded as resolutions. Mr Chou said:

The order of the board is the conversation and discussion with Foo Jong Kan representing Goldpex'.

...

In ... our groups of companies never used minutes of meetings. So unless it's really a very something like going knowing there going to be a dispute.[20]

1. A file of resolutions was produced. It did not contain any resolution authorising the payment of interest on related party loans or fees; or any resolution appointing CN (Hong Kong) as offshore property manager for Awap.[21] Those matters were recorded only in letters signed by Mr Chou as First Secretary.[22]
2. There are also letters in evidence relating to the appointment by CN (Hong Kong) of Richard Ellis (WA) Pty Ltd, on 14 April 1997, and then Knight Frank, on 26 May 1999, as property managers for the building in Perth.[23] These letters also provide a record of the property management fee being charged from time to time.

1. Daniel Tan and Richard Tan purchased 25 shares in Awap from Goldpex Investments on 31 March 2006. From then, the Tans and Mr Chou (directly and indirectly) each owned 50% of the issued shares in Awap.
2. The negotiation of the purchase of the shares from Goldpex Investments was conducted by Mr Chou and Daniel Tan. On 5 January 2006, Mr Chou wrote to Mr Tan regarding the share price. In his email he said:

Apart from the share price consideration ... you are also required to clear the Shareholders' Loans and other shareholders-related indebtedness as reflected in the financial accounts ...

If Jong Kan decides to sell his shares to you, I will agree to sell you half of my shares in order for you to have ownership control of the company.[24]

1. In those negotiations, the amount to be paid to clear loans and sundry creditors was expressly and separately dealt with.[25] A document was prepared confirming the release of Awap from those liabilities.[26] In evidence at trial, Mr Chou agreed that it would not be sensible for a shareholder to sell their shares and resign as director, but still have money owed to it.[27]
2. The relationship between the Tans and Mr Chou was troubled. As early as June 2006, Daniel Tan accused Mr Chou of wrongfully withdrawing a large sum from the partnership account, referring to 'your usual shady manner'. Mr Chou, in reply, referred to Mr Tan's 'foul games'.[28] It was clear in 2006 that joint ownership and control of Awap was not feasible. The Tans attempted to buy Mr Chou's interests in Awap.
3. Daniel Tan and Mr Chou met in Singapore in November 2006. The Tans say that they agreed with Mr Chou to purchase the shares held by the Assobuild companies. The transfer of the shares was eventually achieved in 2008, but only after proceedings in the High Court of the Republic of Singapore.
4. Before further considering the facts relating to the transfer of the shares, it is important to put it into the context of this case. Awap was not a party to the agreement between Mr Chou and the Tans, and it does not seek to enforce the agreement in these proceedings. Nor is it suggested that Daniel Tan was acting as Awap's agent, that Awap is an assignee of rights under the agreement, or that Awap in some way succeeds to the rights of the Tans.
5. Awap's case is that, on or around 30 November 2006, Daniel Tan negotiated an agreement on terms that the Tans would procure full ownership and control of Awap by the payment of S$9 million and A$2.3 million in consideration for the Awap shares owned or controlled by Mr Chou, and all amounts owed to Mr Chou and CN (Hong Kong) by Awap for loans or fees.[29] The agreement was enforced by a judgment in the High Court of Singapore.[30] Awap contends that, the monies payable under the agreement, including monies owed for loans or fees, have been paid by the Tans pursuant to their obligation under the agreement. As a result:

(a) debts owed by Awap to Mr Chou, or to CN (Hong Kong), have been discharged or otherwise extinguished;

(b) alternatively, it would be an abuse of process for Mr Chou or CN (Hong Kong) to seek to recover those debts.[31]

1. Daniel Tan and Mr Chou met at the Singapore Swimming Club on 29 November 2006. They discussed who was going to buy the other out. Following the meeting, the parties exchanged emails in which they expressed their contentions about whether they had agreed and on what terms. They continued to show mutual distrust. It was not long before correspondence was being exchanged between Legal Solutions LLC and Lee Mun Hooi & Co.
2. Mr Chou and Daniel Tan gave evidence about the meetings in their witness statements and in oral evidence. The conversations were conducted, at least in part, in Hokkien or Mandarin.
3. Some things are common ground. Mr Tan offered to buy Mr Chou out for a total price of A$9.8 million.[32] Mr Chou agreed to sell his shares in Awap at that price, asking for the payment to be partly in SGD ($9.8 million) and AUD ($2.3 million). Mr Chou said he wanted the A$2.3 million as a deposit.[33] At that time, Mr Chou (or his companies) were owed about A$2.2 million, including about A$1.825 million for Mr Chou's shareholder loans.[34]
4. Otherwise, what happened at that meeting was in dispute.
5. Mr Tan said that Mr Chou wanted payment in two currencies and said that the payment in Australian dollars was for his loan and fees.[35] He said they shook hands to confirm the deal and while shaking Mr Tan pointed with his left hand and said two things - one in Mandarin and one in Hokkien, meaning 'all is included' and 'included until the end'.[36] Mr Tan said that he also said, in English, 'all in' while he and Mr Chou shook hands.
6. Mr Chou did not recall that Mr Tan used the words 'all in' when they shook hands. He agreed that the words 'all in' were used at some time, but said that they were used earlier in the discussions, not when shaking hands at the end.[37] Mr Chou's case is that those words were used in relation to capital gains, as they had been in the earlier negotiations regarding the sale of the shares by Goldpex Investments.
7. Mr Chou did not recall the words meaning 'all is included' or 'included until the end'.[38] Mr Chou's position, later put in writing, was that the only agreement was an agreement about price in principle and subject to contract.
8. In his crossexamination, Mr Tan was pressed about what had been said. He said that Mr Chou wanted payment for the equity in Singapore dollars, and A$2.3 m as a 'liability payment'.[39] He also agreed that Mr Chou said that he wanted the AUD amount as a deposit.[40]
9. Mr Tan also said that he knew that Mr Chou's figure for what he was owed was A$2.2 million or A$2.3 million. He did not want to speak to Mr Chou about the actual figures, because it was 'inflated every month'. He based the discussions on what had been paid to Mr Foo for his shares Mr Chou was to be paid almost double what had been paid to Goldpex Investments and they just spoke about 'everything all included'.[41]
10. It is difficult to determine with any precision what was said. Neither party gave a clear account. Some of the conversation was in English, but some was not. Parts of the exchange between Mr Chou and Mr Tan are not within my understanding. Apart from the words in Mandarin or Hokkien, Mr Tan testified that there was the further exchange when shaking hand: he said to Mr Chou that 'whoever backed out on the promise would be cursed'.[42]
11. The evidence about the meeting does not stand alone. The witnesses' accounts of the meeting need to be assessed by reference to the exchange of email correspondence following it, the proceedings commenced in Singapore to enforce the share sale, and the ultimate transfer of the shares.

1. Mr Tan and Mr Chou each referred to whether they had reached an agreement, and on what terms, in correspondence over the succeeding days. Later, the Tans sued Mr Chou and the Assobuild Companies in the High Court of Singapore. Before turning to the evidence of those matters, I should set out the basis on which I received that evidence and how I have used it.
2. What the parties said and did after the formation of a contract cannot be used as an aid in the construction of the contract.[43] The evidence in this case was not advanced on the issue of the meaning of what was said. There is a dispute between the parties about whether an agreement had been reached. Mr Tan and Mr Chou each challenge whether the other has accurately recalled what was said and done in their meeting. What either of them said and did in the following days is relevant to finding what was said at the Swimming Club, particularly where it helps in determining whether the parties accurately recall their conversation.[44] The later emails are also admissible on the question of whether a contract was formed.
3. In short, the evidence of the parties' subsequent correspondence is both relevant and admissible. It cannot, however, be used to resolve what the parties meant in the agreement (if any) that they reached.

1. On 30 November 2006, Mr Tan emailed his banker, Gary Browning, and advised him that he and Mr Chou had proceeded to a final settlement. He advised Mr Browning of the purchase price, referring to an initial deposit on signing, followed by A$2.3 million two weeks after.[45] Mr Tan forwarded a copy of the email to Mr Chou.
2. On 3 December 2006, Mr Chou wrote to Mr Tan, referring to three meetings and a phone call 'in the very early morning' of Friday, 1 December 2006. He wrote that he wished to 'add to record the following points of our discussions and mutual understandings ... for the purpose of complete transparency and clarity'. Mr Chou set out his account of the discussion and 'points of mutual understanding'. Relevantly, Mr Chou wrote:

You attempted to initially offer me a cash flow consideration of A$89m; and I said I could only consider if the price is to be A$10m ...

After deliberation, we then had the set of pricing which you had stated to Gary [Browning] hereinafter and to which I then felt agreeable in principle'.[46]

1. Mr Chou repeated that he had agreed 'in principle' and 'subject to contract'.
2. Mr Tan responded on 5 December 2006, saying, 'do you agree that you shake hands with me to confirm the price of S$9m and A$2.3m and you also said to me that whoever back out to this promise will be cursed'. Mr Tan referred to the need for everything to be settled that day and gave notice that he would sue to enforce the agreement.[47]
3. Mr Chou replied quickly. He again referred to the need for a transaction of that size to be subject to contract 'and commercial competition'.[48]
4. Mr Tan replied on 11 December 2006. In part, the correspondence between the parties was about the possibility of a third party buyer. Mr Tan also referred to the agreed price, as an 'in principle price of S$9m plus A$2.3m'. Mr Tan asked Mr Chou when he wanted the deposit and final settlement date.[49]
5. Mr Chou again replied quickly, on 11 December 2006. There are two relevant features to his response: first, the 'in principle' price was stated to be subject to contract; second, the A$2.3 million was to be a strictly non-refundable deposit to be paid forthwith on the written and signed acceptance of the offer. He concluded:

There shall be no further deliberations of whatsoever nature; and this particular email of mine herein contained and these email correspondence of our respective selves hereunder appended (all to be read in conjunction with one another in its entirety) shall be the sole basis of our mutual agreement and of the legally-binding contract to be drafted.[50]

1. Mr Tan responded on 13 December 2006, including:

I am grateful that at least for once you have been honest to me stating that you have reached an agreement with me to sell the remaining AWAP shares to me and my brother at the price of S$9m plus A$2.3m (all inclusive).

What remains to be done is only a formal agreement incorporating all other terms to complete the Sale and Purchase.

...

As for your request that I pay the sum of A$2.3 million as a non-refundable deposit, Li Chen, I am sure no person of his right mind would agree to such sums as deposit and be non-refundable.[51]

1. The email of 13 December 2006 is the first reference in the correspondence to the price being 'all inclusive'.
2. Subsequent correspondence was between the parties' lawyers. On 18 December 2006, solicitors for Mr Chou wrote, referring to an 'in principle agreement' reached between the parties, with the terms of the sale and purchase 'encapsulate in the exchange of emails between our respective clients dated between 30 November and 11 December 2006'.[52]
3. By a letter dated 20 December 2006, the solicitors for the Tans referred to the consideration as 'all inclusive of any sums due and payable to your client and the 2 companies by Awap including but not limited to all directors fees, bonuses and monies owing to your client'.[53] The two companies identified in the letter were the Assobuild Companies, named earlier in the letter. The letter did not refer to CN (Hong Kong). The Tans, in this letter, rejected the non-refundable deposit as unreasonable and offered a sum of S$100,000.
4. On 30 December 2006, CN (Hong Kong), as director of Awap, resolved to register the transfer of the shares that had been held by the Assobuild Companies to Mr Chou.[54]
5. The solicitors exchanged further correspondence in January 2007, with the solicitors for the Tans complaining about the delay in providing a draft written agreement.
6. The Tans, through their solicitors, pressed for finalisation of the agreement.
7. On 10 January 2007, the solicitors for Mr Chou wrote, expressing concern that the letter of 20 December 2006 added additional terms to the inprinciple agreement, and also the proposed terms relating to the deposit. The letter did not identify the 'additional' terms.[55]
8. On 16 January 2007, Mr Chou's solicitors wrote again. The A$2.3 million was described in this letter as a deposit, being approximately 10% of Mr Chou's half share of the value of the company's assets.[56]
9. The payment of a non-refundable deposit remained disputed. On 1 February 2007, the solicitors for Mr Tan contended that Mr Chou was attempting to impose an unreasonable term in order to abort the sale.[57] The Tans contended that Mr Chou was attempting to avoid the agreement to enable him to explore a sale to another party.

1. While dealing with Mr Tan, Mr Chou was also corresponding with Andrew Woodley-Page, a real estate agent with CB Richard Ellis, regarding a possible sale of shares in Awap to a third party.[58] On 1 December 2006, Mr Chou informed Mr WoodleyPage that his group would sell for around A$11.675, made up of share price of A$9.375 and a personal shareholder's loan of approximately A$2.3 million.[59] The figure for the shareholder's loan did not include the fees due to CN (Hong Kong), but Mr Chou had been considering reclassifying some of the sundry creditors into an increased shareholder's loan.[60]
2. On 2 December 2006, Mr Chou wrote that the other shareholder intended to acquire Mr Chou's shares 'at a slightly lower price' and then hold the building.[61]

1. On 3 May 2007, with Mr Chou continuing to refuse to complete the share sale, the Tans commenced proceedings by writ of summons against Mr Chou, Assobuild Construction, and Assobuild Private in the High Court of the Republic of Singapore.[62] They claimed specific performance of the Agreement (as pleaded in the indorsed statement of claim), and damages in addition to or in lieu of specific performance.
2. The Tans pleaded an earlier agreement by Mr Chou and Assobuild to sell 20% of their shareholding in Awap, alleging that Mr Chou and the Assobuild Companies refused to complete that agreement.[63] They then pleaded:[64]
   1. Several meetings were then held in Singapore between the 1st Plaintiff and/or the 2nd Plaintiff with the 1st Defendant on the agreement to sell 20% of the 1st, 2nd and 3rd Defendants' shareholding in the Company.
   2. These meetings subsequently culminated in an agreement in which the 1st Defendant for himself and on behalf of the 2nd and 3rd Defendants agreed to sell their entire shareholdings in the company to the 1st and 2nd Plaintiffs at the price of S$9 million andA$2.3 million (the Agreement).
   3. The Agreement was reached on the meeting held on 7 December 2006 between the 1st Defendant and the 1st Plaintiff (for himself and on behalf of the 2nd and 3rd Defendants)[65] and this Agreement was confirmed by the 1st Defendant's email message of 11 December 2006 to the 1st Plaintiff.
   4. The 1st Defendant's email message was followed by the defendants' solicitors ...letter of 18 December 2006 in which the Defendants' solicitors confirmed the Agreement reached and asked inter alia for confirmation that the 1st and 2nd Plaintiffs will have no objection to the internal transfer of the 2nd and 3rd Defendants' shareholdings in the Company to the 1st Defendant as this was to be done for the purpose of 'an internal restructuring' and 'tax planning'.[66]
3. The Tans pleaded that 'on a sudden turn of events' on 16 January 2008, Mr Chou and the Assobuild Companies insisted on confirmation of a non-refundable deposit of A$2.3 million before drafting the Sale and Purchase Agreement.[67] And that, on or about 12 April 2007, Mr Chou's solicitors wrote to the Tans' solicitors advising that Mr Chou had now sold the shares to a related corporation to raise funds for the purchase of the Tans' shares.[68]
4. The Tans pleaded that Mr Chou and the Assobuild Companies were in breach of the agreement, and had refused or neglected to carry out the agreement notwithstanding that the Tans were at all times ready and willing to complete.[69]
5. By his defence, Mr Chou denied the claim and asserted that the parties had agreed that either the Tans or Mr Chou had to exit the company for the other to have control of the company;[70] that Mr Chou and the Assobuild Companies had agreed in principle to sell their shareholding for an in principle price of S$9 million plus A$2.3 million; that the in principle agreement was expressly stated to be subject to contract; and that they demanded as part of the terms of the agreement a non-refundable deposit of A$2.3 million to be paid forthwith.[71]
6. Mr Chou pleaded the demand in the email of 11 December 2006 that the emails between 30 November and 11 December 2006 'be the sole basis of the agreement between the parties and of the contract to be drafted and entered into between the parties'.[72]
7. In their reply, the Tans joined issue with par 11 of the defence and affirmed that the parties reached the Agreement to sell to them the shareholding of Mr Chou and the Assobuild Companies on terms set out in the statement of claim.[73]
8. The Assobuild Companies filed a separate defence denying the claim and positively averring in terms consistent with the defence of Mr Chou.[74]
9. Mr Chou's defence is dated 30 May 2007; the Assobuild Companies' defence was dated 29 June 2007.
10. While the proceedings were on foot, on 18 June 2007, as sole director of Awap, CN (Hong Kong) resolved to register the transfer of the shares Mr Chou held in Awap to CN 2000.[75] One of those shares was later transferred, on 21 August 2007, to Goh Kim Hua.[76]
11. On 25 August 2007, Awap purported to appoint CN 2000 as additional corporate director.[77]
12. On 7 September 2007, CN (Hong Kong) gave notice of a general meeting to consider raising A$1.75 million in equity funding by a oneforone rights issue of shares to existing members.[78]
13. The meeting was held on 20 September 2007. The minutes record that the Tans, through their lawyer, asserted that CN (Hong Kong) had been removed from being a director of Awap on 14 September 2007, and the two company secretaries (including Mr Chou) had also been removed, and the meeting was invalid. The meeting resolved to raise A$1.75 million by the issue of 50 additional shares on a one-for-one rights issue. Each share being US$1, and carrying a premium of A$375.[79]
14. On 21 September 2007, Goh Kim Hua transferred his rights under the issue to CN 2000.[80] On 27 September 2007, CN 2000 took up the rights issue, paying A$875,000.
15. The Tans and Deo Silver, meanwhile, had commenced proceedings against Awap, CN (Hong Kong), Mr Chou, and CN 2000 (as respondents) in the Federal Court of Australia in 2007.[81]
16. On 27 September 2007, orders were made restraining the respondents in the Federal Court action from taking any further action regarding the affairs of Awap, including any action in relation to the purported meeting of 20 September 2007, without the prior written consent of the Tans and Deo Silver.[82] On 28 September 2007, the Federal Court ordered that Awap be restrained from taking any action in respect to its affairs other than upon the written consent of each of Deo Silver and CN (Hong Kong).[83]

1. On 17 October 2008, the solicitors for Mr Chou wrote to the solicitors for the Tans, advising that they were instructed that CN 2000 had reached an agreement with Mr Chou and stood ready to transfer the 25 Awap shares it had purchased from him back to him to enable him to agree to the Tans' claim in their action for specific performance. Mr Chou agreed to sell the 25 shares at the pleaded price.[84]
2. On 30 October 2008, final judgment was entered by consent in the Singapore proceedings in these terms:

(1) Judgment be entered for the Plaintiffs for specific performance of the Agreement, including the transfer of all subsequent rights-issued shares and bonus-issued shares, (if any) (collectively referred to as the said Shares) to the Plaintiffs but without prejudice to the Defendants and/or CN 2000 Holdings Limited's rights to claim in Australia the sum of A$875,000.00 plus interest, (if any) alleged to have been paid by CN 2000 Holdings Limited to Awap Sgt 26 Investment Limited;

(2) Completion shall take place within six (6) weeks from the date hereof;

(3) Completion shall include the transfer of the said shares and payment of S$9 million and A$2.3 million to the Plaintiffs' solicitors to hold as stakeholders and to be released to the Defendants' solicitors only upon final registration of the said Shares;

(4) Damages to the plaintiffs, if any, to be assessed; and

(5) Costs for the plaintiff to be agreed or taxed.[85]

1. On 3 November 2008, solicitors for Mr Chou wrote to the solicitors for the Tans, advising

Final Judgment has been entered into and approved by us on the understanding and on the basis that the sum of A$875,000 was paid by CN 2000 Holdings Limited to Awap Sgt 26 Investment Limited as a loan and not as rights-issued shares. As such, the draft Final Judgment is to be engrossed and filed on this basis and understanding.[86]

1. Mr Chou's solicitors also stated that there were no rights issued or bonus issued shares registered with the Samoan registry, and only 50 issued shares in Awap.

1. Completion was required, by order 2, to take place within six weeks.
2. On 18 November 2008, Mr Chou advised the solicitors for the Tans that he had committed to pay such amount of the judgment to a bank in Singapore as should be sufficient to satisfy his obligation to the bank, and irrevocably instructed payment of the sum to the bank.[87]
3. On 29 November 2008, the Tans' solicitors requested to see copies of the documents necessary for completion, including duly executed transfer forms for the shares 'including all rights and bonus shares'; notices of resignation of CN (Hong Kong) as director and Mr Chou as secretary of Awap; and letters terminating the services of the local agent and accountant for Awap.[88]
4. This resulted in further exchanges between the solicitors. On 5 December 2008, the solicitors for the Tans referred to the rights issued shares, and claimed that the Tans were entitled to have those shares transferred to them under the terms of the judgment.[89]
5. In response, on 10 December 2008 the solicitors for Mr Chou repeated their position that the judgment had been signed on the understanding set out in their letter of 3 November 2008. But they also asserted:

With regard to the alleged 'Rights-Issued' shares, our clients' position is that the shares were never registered in the Register of Members and with the Samoan Registry and thus there are no rights-issued shares to be transferred to your clients. If it is indeed your clients' position that the rights-issued shares were issued arising out of the payment of A$875,000 by CN 2000 Holdings Limited, and are also liable to be transferred to your clients, then it stands to reason that your clients should then agree to pay $875,000 plus interest to CN 2000 Holdings Limited for this rights-issued shares.[90]

1. Completion was scheduled for 11 December 2008. On 11 December 2008, Mr Chou's solicitors advised that CN 2000 had transferred its shares to Mr Chou, who would transfer the shares to the Tans that day. To facilitate the completion, the share certificate for those shares 'can be cancelled upon Transfer and a certified copy of the cancelled Share Certificate No 10 can be given upon completion'.[91]
2. On 11 December 2008, the solicitors for the Tans wrote requiring the 'rights-issued shares' held by CN 2000 to be transferred, 'irrespective of whether it had been registered'.[92]
3. On 15 December 2008, the solicitors for the Tans wrote again, referring to Mr Chou's contention that no share certificate had been issued for the rights-issued shares and requiring a share certificate to be issued and transferred.[93]
4. Mr Chou's solicitors replied on the same day, advising that it would take about two weeks to obtain fresh blank share certificates.[94] In a further letter on 15 December 2008, they advised that their instructions were that CN 2000 would be cancelling the allotment of 25 rightsissued shares and resigning as director of Awap.[95]
5. Completion was now set for 17 December 2008. On 16 December, Mr Chou's solicitors wrote enclosing drafts of documents, including the written consent of Deo Silver and CN (Hong Kong), as required by the orders made in the Federal Court, and a director's resolution for the cancellation of the 25 rights-issued shares.[96]
6. Completion was finally achieved on 17 December 2008 with two instruments of transfer, by which:

(1) in consideration of the sum of S$4,320,000 and A$1,104,000, Mr Chou did 'hereby bargain, sell, assign and transfer to [Daniel Tan], subject to actual receipt of the said Sum (the share price) plus interest accrued in the stakeholder's account of the transferee's solicitors', 13 shares in Awap; and

(2) in consideration of the sum of S$4,680,000 and A$1,196,000, Mr Chou did 'hereby bargain, sell, assign and transfer to [Richard Tan], subject to actual receipt of the said Sum (the share price) plus interest accrued in the stakeholder's account of the transferee's solicitors', 12 shares in Awap.[97]

1. Mr Chou also provided a letter, dated 17 December 2008, signed as a director of CN 2000, in these terms:

We refer to the allotment of 25 rights-issue shares of which 24 shares were allotted to us and one share was allotted to Goh Kim Chua pursuant to the Resolution passed on 20.9.07. Of date, we are entitled to the whole of the entire 25 shares allotted.

As no Share Certificates have been issued for the allotment of the entire 25 rights-issue shares and to facilitate the completion of the Consent Final Judgment of the High Court of the Republic of Singapore entered on 30.10.08 ..., we hereby propose to treat the aforesaid 25 rights-issue shares as cancelled.[98]

1. CN (Hong Kong) and CN 2000, as directors of Awap, resolved, subject to the written consent of each of CN (Hong Kong) and Deo Silver, as required pursuant to the orders of the Federal Court, to treat the 25 rights-issue shares in the capital of the company as cancelled. CN (Hong Kong) and Deo Silver acknowledged in writing their consent to the resolution.[99]
2. Resolution of the disputes between Mr Chou and the Tans was, however, far from complete.

1. On 18 December 2008, Daniel Tan wrote to David Gerrans of Venture Accountants, the accountants for Awap, enclosing the letter by which CN 2000 and CN (Hong Kong) resigned as directors, and Mr Chou resigned as first secretary. Mr Tan instructed Mr Gerrans that he was to take no further instructions from or divulge any information to any of those persons.[100]
2. On 13 January 2009, Mr Chou wrote to Mr Gerrans regarding 'the proper and legal steps with the proper time for you to transfer your professional works and duties, after CN 2000 and I cease to be the 'beneficial owner' of Awap's shares upon actual receipt of the share price consideration sums'. Mr Chou requested Mr Gerrans to courier the financial statements for the years 2005 to 2008 to him. The fraught relationship between Mr Chou and the Tans is evidenced in the last paragraph of the letter, where Mr Chou wrote: 'Craig has promised me to ensure all these as above stipulated are safeguarded just in case TKH may try to hide any crucial steps from me and may attempt to do something unjustifiable'.[101]
3. On 19 January 2009, Mr Chou wrote to Craig Dawson of Knight Frank, the property managers for International House, marked 'private and confidential - strictly for your eyes only' with a 'full set' of 33 invoices, bills and claims from various entities including himself, CN (Hong Kong), and CN 2000. He continued:

As discussed just now, please delete this email after you save all the attached documents on your computer and you print all the attached files into hard copies of evidencing documents.

Please confirm to me that you have done so. (Emphasis in original)[102]

1. The attached documents bear various dates, from 29 May 2006 to 17 December 2008, the date of completion.
2. Eight are invoices or claims for interest from Goh Kim Hua. One of them, dated 17 December 2008, is for interest claims 'until the date hereof' for non-settlement of outstanding debts beyond the due dates.[103] The 'outstanding debts' are the subject of invoices only sent on 19 January 2009.
3. Three invoices claim corporate director's fees for CN 2000 (although invoice Awap - DF - 2 is repeated).[104] The invoices claim interest from the date of billing, which makes the date significant. A further document dated 17 December 2008 claims interest 'until the date hereof' for non-settlement of outstanding debts beyond the due dates, referring to 'our various invoices and bills raised as from 30th June 2008'.[105]
4. There are 15 invoices which claim fees or interest owed to CN (Hong Kong).[106] Again interest is claimed from the date of billing.
5. One document is dated 17 December 2008, and purports to be a claim for interest for Mr Chou for his loan to Awap.[107] It is addressed to 'The Directors (just prior to resignation today)'. It claims interest 'from tomorrow'. No reasonable explanation has been given for why that document, with the date 17 December 2008, was sent on 19 January 2009.
6. The content of these documents reinforces my conclusion that the exercise of sending them, with the request to print hard copies and destroy the email, was deceptive. I am not satisfied that the court can rely on these documents, without more, as proof that the amounts claimed are owing.
7. On 21 January 2009, Mr Gerrans forwarded copies of the Financial Statements for the years ended 30 June 2005 up to 30 June 2008, and the period to 17 December 2008 for Mr Chou to review. He also forwarded to Mr Chou the complete printout of the general ledger reports for the years ended 30 June 2006 to 30 June 2008, and the period to 17 December 2008, and spreadsheets showing the breakdown of sundry creditors and members loans for that period.[108]
8. The evidence at trial included the financial statements for the period from 1997 to 17 December 2008. Earlier statements are signed by the directors. The statements from 2004 are not signed, and were only created by Mr Gerrans, on instructions from Mr Chou, after 17 December 2008.[109]
9. The loan from Mr Chou is consistently recorded as a current liability. Expenses include directors fees and, from the year ended 30 June 2005, 'management fees' and 'offshore management fees'.[110] No liability is recorded for unpaid fees.
10. In the balance sheet for the year ended 30 June 2008, a loan to CN 2000 is recorded in the amount of $875,000.[111]
11. The last profit and loss statement is for the period 1 July 2008 to 17 December 2008. The loan to Mr Chou is recorded as having increased from $1,825,000 to $2,511,564, and the loan to CN 2000 from $875,000 to $1,044,344.[112] Offshore property management fees are recorded as $139,914 for that period (compared with $83,009 for the full year to 30 June 2008). There is no obvious explanation for the figures, although the amount for the loan to Mr Chou corresponds with that claimed in the invoice dated 17 December 2008, but sent to Mr Gerrans in January 2009.

1. Mr Chou claims that, from time to time between 12 February 1997 and 30 January 2009, he advanced funds to Awap, resulting in a debt at 30 January 2009 of A$1,825,000. He claims repayment of the principal and interest at rates he says were agreed.
2. Awap initially denied the debt. The fact that the amount was owed by Awap at the time of the meeting at the Singapore Swimming Club was, ultimately, admitted. The substance of the defence is that, in November 2006, Daniel Tan and Mr Chou negotiated an agreement by which the Tans purchased the 25 shares owned or controlled by Mr Chou for consideration that included A$2.3 million for liabilities and included 'all amounts owed to [Mr Chou] and CN (Hong Kong) by [Awap] for any loans or fees.[113] The agreement was an oral agreement, concluded on or around 30 November 2006 at the Singapore Swimming Club. Settlement of that agreement was made by the transfer of shares and payment pursuant to the judgment in the Singapore proceedings.
3. Awap submits that:

(1) any debt it owed to Mr Chou for a loan was discharged or otherwise extinguished; and

(2) alternatively, it would be an abuse of process for Mr Chou to seek to recover that debt from Awap as it has been discharged.[114]

1. The defence being that the admitted debt was discharged, Awap has the burden of proof on the issue.
2. By their reply, the plaintiffs plead that as a result of the judgment in the Singapore proceedings, having regard to the terms of the judgment and the pleaded agreement, Awap is precluded from raising in these proceedings that it was a term of the agreement that the purchase price for the shares of Mr Chou in Awap included amounts owed by Awap for loans and fees.[115] In particulars, the plaintiffs plead that Awap is bound by a cause of action estoppel, alternatively issue estoppel, alternatively Anshun estoppel; that Mr Chou consented to judgment on the claim as pleaded.[116] Alternatively, the plaintiffs plead that the use of court procedures, by the defence in this action, constitutes an abuse of process.[117]
3. Alternatively, the plaintiffs deny that Mr Chou and the Tans entered into the agreement pleaded, or any other agreement, in or around 30 November 2006, or that if there was an agreement, it had the terms alleged by Awap.[118] Alternatively, the plaintiffs deny that Mr Chou was authorised to enter the agreements on behalf of CN (Hong Kong), and that consideration moved to CN (Hong Kong) to support the agreement.[119]

1. The parties have differing versions of the meeting at the Singapore Swimming Club. The court is not to judge which of the two versions it prefers. Awap relies on the agreement as its defence to the plaintiffs' claim in debt. Awap bears the onus of proving, and the court must be satisfied that there is sufficient evidence to support a positive finding that the agreement it alleges was made. It is trite law that for the court to find the agreement was made, the court 'must feel an actual persuasion of its occurrence or existence'.[120]
2. With respect, I would adopt the observations of Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd:

Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved.[121]

1. The court can have regard to the commercial context, and to both precontractual[122] and post-contractual conduct[123] as relevant to determining whether an agreement has come into existence between the parties. Subsequent conduct may also be admissible as evidence where the terms of an oral contract are in issue. As Sakar J said in King v Adams:

Ascertaining the existence and terms of an oral contract is a question of fact ...Consideration of surrounding circumstances and post contractual conduct is permissible when the existence or terms of an oral contract are in issue.[124]

1. In having regard to conduct after the date of the alleged agreement, the court must of course consider the possibility that a party may regret and seek to walk away from its earlier agreement.
2. In the present case, I accept the evidence of Mr Tan as to the discussion at the Singapore Swimming Club, followed by the parties shaking hands. That is strongly persuasive of a finding that the parties then reached an agreement containing essential terms that Mr Chou (and his associated companies) would sell their shares in Awap to the Tans, for an agreed price. I accept Mr Tan's evidence that Mr Chou said the AUD component of that price was for 'liabilities' or the loans and fees, and that the words to the effect that the agreement was 'all in' and 'all included' were said. Otherwise, Mr Tan did not testify with any clarity about what was said.
3. Mr Chou would maintain that it was an agreement in principle only and not binding without a formal contract.
4. To enable an objective determination of whether there was a mutual intention to contract the terms alleged by Awap, it is necessary to consider the evidence of pre and post contract conduct.
5. The pre-contract conduct of the parties shows a mutual intention to reach an agreement whereby one or the other of the shareholding groups in Awap would buy out the other. It does not take the matter further than that.
6. The later correspondence between Mr Chou and Mr Tan, and then their lawyers, is inconclusive. Mr Chou's letters are consistent in maintaining that there was no concluded agreement.
7. His conduct throughout, however, right up to when the shares were transferred, leads me to treat those letters with caution. The creation of the rights issue in 2007, while the Singapore proceedings were ongoing, appears calculated to circumvent any judgment that might be given against him and maintain (although indirectly) an interest in Awap. He was obstructive in the process of transferring the shares in Awap to the Tans.
8. There is an alternative explanation for some of Mr Chou's conduct in his apparent distrust of the Tans and his asserted sense of grievance at how they obtained judgment against him in the Singapore proceedings when he was being pressed by his other creditors. But I have, in general, treated his evidence and documents he created with caution.
9. I have taken into account the pleading in the Singapore proceedings. The Tans' case in that action was that an agreement was reached at a meeting held on 7 December 2006 and 'confirmed by [Mr Chou's] email message of 11 December 2006' and confirmed again by his solicitor's letter of 18 December 2006.[125] The date of the meeting does not correspond with Awap's case in this action. But the plea is of an agreement reached at a meeting, not a written agreement. The reference to the emails is to those emails confirming the earlier oral agreement, not containing its terms. I do not regard the particular of the date of the meeting in the pleading as being critical.
10. The pleading is a prior statement, made with the authority of Mr Tan, about relevant events. It does not refer to the terms of the agreement, other than price and that the agreement was for the whole of the shareholding in Awap.
11. Mr Chou also relies on the terms of the share transfers on 17 December 2008, which do not include any reference to the price including loans and fees. I am not satisfied that the transfer was an occasion for such a reference. The loans and fees had not then been put in issue.
12. Finally, I also accept that to produce a commercial result, the purchase of Mr Chou's interest in Awap should result in a clean break with no outstanding loans or fees.
13. On balance, I am satisfied that there was an agreement between Mr Tan and Mr Chou for the sale of the shares held or controlled by Mr Chou in Awap, and the agreed price included loans and any fees owed to Mr Chou. It will be necessary, later in these reasons, to separately consider the fees claimed by CN (Hong Kong).

1. Even if I was not satisfied that there was an agreement, I find that the fact of the agreement is established by the judgment in the Singapore proceedings.
2. Mr Chou is the only party common to the Singapore proceedings and also this action. The parties to the present action have, however, raised questions of res judicata, estoppel and abuse of process arising out of the judgment.
3. The judgment entered in the Singapore proceedings settles between the parties to those proceedings the existence of an obligation on Mr Chou and the Assobuild Companies to transfer the shares they held in Awap for payment of S$9 million and A$2.3 million.[126] The fact that the judgment was by consent does not prevent it acting as a res judicata in that sense.
4. A consent judgment also operates by way of estoppel in respect of 'those matters which a primary decree, order or judgment necessarily established as the legal foundation for the decision and nothing but that which is legally indispensable to the conclusion is thus finally closed or precluded'.[127]
5. In the present case, the matters necessarily established by the judgment do not, on an analysis of the pleadings and the terms of the judgment, go beyond the existence of a legally enforceable agreement to transfer the shares for the stated price, and 'without prejudice to the Defendants and/or CN 2000 Holdings Limited's rights to claim in Australia the sum of A$875,000.00 plus interest'. No party put in issue the amounts Mr Chou and CN (Hong Kong) now say they are owed, or whether the sale price was inclusive of those amounts. The judgment did not necessarily or conclusively determine any issue regarding those amounts.
6. This is not a case where Awap's claim that it has discharged its liability for loans and fees was so relevant to the subject matter of the Tan's action for specific performance in the Singapore proceedings that it would have been unreasonable for them to not to rely on it in that action. Awap was not party to the proceedings, nor was CN (Hong Kong). The dispute arose from Mr Chou's refusal to perform the agreement. It was eventually settled without trial. Awap should not be estopped from maintaining its defence.
7. For essentially the same reasons, I do not regard Awap's defence to this claim to be an abuse of process. While abuse of process cannot be described exhaustively, it has been said that many cases will involve at least one of three characteristics:

(a) the invoking of a court's processes for an illegitimate or collateral purpose;

(b) the use of the court's procedures would be unjustifiably oppressive to a party; or

(c) the use of the court's procedures would bring the administration of justice into disrepute. [128]

1. Awap's defence relies on an agreement which has been the subject of a judgment in the Singapore proceedings; it is pleaded defensively to a claim which denies the existence as well as the terms of the agreement. I find no misuse of court process or unjustifiable oppression in Awap maintaining facts which were not essential for the judgment in the Singapore proceedings, and which it proves independently.
2. In my opinion, however, it is an abuse of process for Mr Chou to claim in these proceedings that there was no agreement for the sale of his shares in Awap to the Tans. In Tomlinson v Ramsey Food Processing Pty Ltd, French CJ, Bell, Gageler and Keane JJ said:

... it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.

Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. Putting in issue the fact of an agreement, when you have consented to judgment on that agreement in other proceedings, is not bound by an estoppel.

Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.[129]

1. The judgment in the Singapore proceedings establishes the fact of the agreement against Mr Chou. It does not preclude dispute about the terms of that agreement, other than the price for the transfer of the shares. But, as set out above, I am satisfied that Mr Tan's evidence should be accepted and is sufficient evidence that the agreement included the discharge of Mr Chou's loan and fees.
2. Should it be necessary, I accept the alternative argument put forward on behalf of Awap. The Tans were not acting as agents for Awap. But the payment by the Tans of the S$9 million, and A$2.3 million was a payment under legal compulsion to discharge the debt of Awap, and is effective to discharge the debt even though the Tans voluntarily assumed the contractual obligation which was the basis of the Singapore judgment.[130]
3. Mr Chou's claim against Awap should be dismissed.

1. It is common ground that CN 2000 paid $875,000 for the issue of shares in Awap.
2. CN 2000 pleads that on or about 27 September 2007, Awap issued the Additional Shares to it, and on or about 17 December 2008, the issue of the Additional Shares was cancelled.[131] As a result there was a total failure of consideration, alternatively the payment was made under a mistake of fact.[132]
3. The mistake of fact pleaded was as to the validity of the general meeting, the resolution to issue the shares, and the issue of the shares. None of those matters was contested in the trial.
4. Awap pleaded that the Additional Shares were rights issue shares which, on a proper construction of the judgment in the Singapore proceedings, Mr Chou and the Assobuild Companies were required to transfer to the Tans.[133] It also contended that there was no failure of consideration because the shares were issued, although later cancelled.
5. I am not satisfied that the judgment does apply to the shares issued to CN 2000. CN 2000 was not a party to the Singapore proceedings, and could not be bound by the judgment in that action. The shares were issued to CN 2000 after the proceedings commenced, and were not in issue in the action. Nor were the shares issued to CN 2000 the subject of the agreement specifically enforced by the judgment in that action.
6. Mr Chou held 12.5% of the shares in CN 2000, and did not control it.[134] That is, a judgment against Mr Chou in person could not affect ownership of shares held by CN 2000.
7. The judgment in the Singapore proceedings expressly refers to CN 2000 and its right to claim A$875,000. Despite that reference, in my opinion, on its proper construction the judgment in the Singapore proceedings was not intended to apply to the property of someone who was not a party to the action. That is, the judgment applied to subsequent rights issued and bonus issued shares (if any) held by Mr Chou or the Assobuild Companies.
8. Although CN 2000 was not a party to the Singapore proceedings, and Mr Chou at no stage held any of the Additional Shares, the Tans claimed the judgment applied to the shares issued to CN 2000 and intended to enforce the judgment on that basis. The difficulty was resolved when, after correspondence between the parties, Mr Chou wrote on 17 December 2008, as a director of CN 2000, proposing to treat the rights-issued shares as cancelled.[135] By directors resolutions passed that day, with the consent of Deo Silver, CN (Hong Kong) and CN 2000, as directors of Awap, accepted and approved that proposal.[136]
9. In the course of submissions, counsel for CN 2000 argued that because Awap admitted that the issue of the shares had been cancelled, rather than the shares being cancelled, the matters pleaded by Awap regarding the agreement for the cancellation of the shares do not arise.[137] I do not accept that argument. First, it is not a fair reading of the defendant's pleading. Second, and in my opinion more importantly, the fact remains that there was an agreement under which the shares or their issue was cancelled. Whether the agreement operated retrospectively to cancel the issue of the shares is not to the point.
10. That is not, however, sufficient to defeat CN 2000's claim. The High Court has quoted with approval the description of failure of consideration in Birks, An Introduction to the Law of Restitution:[138]

Failure of the consideration for payment ... means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself.[139]

1. As a matter of substance, CN 2000 has not received the benefit for which it paid $875,000. No share certificates were issued, and the share issue was subsequently cancelled. Any benefit to CN 2000 contemplated by its payment to Awap has disappeared, while Awap has the benefit of the payment of $875,000. This result could not have been in the contemplation of the parties when CN 2000 agreed to take and paid for the shares.
2. In my opinion, as a result of the failure of consideration, it would be unconscionable for Awap to retain the $875,000. CN 2000 is entitled to recover the purchase price of the cancelled shares as money paid to and received by Awap for a consideration that has failed.[140]
3. Awap pleaded that $138,646 of the payment was immediately transferred to Mr Chou and his lawyer so that if CN 2000 was unjustly enriched, it was only to the amount of $736,354.[141] The evidence, however, is that CN 2000 was an arms-length entity. It has not been shown that CN 2000 received any benefit from the payment by Awap to Mr Chou.
4. There should be judgment for CN 2000 for the repayment of the amount of $875,000 that Awap received for the rights issue shares.
5. CN 2000 claims interest at the rate of 9.4068% per annum, pursuant to an agreement it says was made in or about December 2008 between it and Awap.[142]
6. Awap pleads that, by reason of orders made by the Federal Court on 27 September 2007, 28 September 2007 and 11 December 2008, it was restrained from paying or making any such agreement without first obtaining the written consent of Deo Silver and CN (Hong Kong), and that such consent was not given.[143]
7. It is unnecessary to determine whether the agreement alleged by CN 2000 was made. The orders made in the Federal Court, in my opinion, would defeat CN 2000's claim to an agreed rate of interest.
8. The payment by way of restitution should bear interest at the rate prescribed under the Supreme Court Act 1935 (WA). Although the cancellation of the share issue was, in effect, retrospective, CN 2000 only suffered loss from the failure of consideration from when the resolution cancelling the issue was made on 17 December 2008. Up until then, although share certificates had not issued, CN 2000 regarded itself as the owner of shares.

1. CN (Hong Kong) claims two separate fees: a fee as corporate director of Awap, and a fee as the appointed offshore property manager.

1. CN (Hong Kong) was a director of Awap from 28 January 1997. It claims that Awap resolved on 31 March 1997 to pay directors fees. Awap admits that CN (Hong Kong) was its director from 1997. It does not, in its pleading, admit the resolution of 28 March 1997 to pay director's fees, fixed at $108 per day.[144]
2. The liability of Awap to pay director's fees, however, is not really in issue. The shareholders' resolution of 31 March 1997 is in evidence.[145] There is no reason to doubt that the shareholders resolved that CN (Hong Kong) should be entitled to payment at the pleaded rate, although 'only upon bills being accordingly raised and submitted but subject to the availability of funds'.
3. The issues relating to the director's fee claimed by CN (Hong Kong) is the correct amount (that is, whether payments had been made); interest; and whether the director's fees were included in the A$2.3 million payment by the Tans for the shares in Awap.
4. There is no evidence that fees were paid for the period claimed. I am satisfied that CN (Hong Kong) is entitled to the fees for which it has rendered invoices.
5. The Tans, through their companies, had been shareholders in Awap from some months at the time of the meeting at the Singapore Swimming Club. Daniel Tan must have been aware of CN (Hong Kong) and its position as director. No mention is made of CN (Hong Kong) in his account of the meeting, in later correspondence, or in the Singapore proceedings. While I am satisfied that the agreement between Daniel Tan and Mr Chou included Mr Chou's shareholder's loans and any fees owed to him, I am not satisfied that the agreement included fees owed to CN (Hong Kong). Nothing was said that, objectively, extended the agreement to liabilities of Awap to a third party.
6. Further, no consideration seems to have been given at any time to whether Mr Chou was acting only on behalf of the shareholders (as sellers) but also others.
7. The onus is on Awap to show the debt has been paid. I am not satisfied that Awap has shown the agreement extended to fees or liabilities of Awap to others, including CN (Hong Kong).
8. Because the agreement did not extend to those liabilities, they are not subject to the judgment in Singapore. There is no abuse of process in CN (Hong Kong) now seeking to recover those fees from Awap.

1. CN (Hong Kong) further claims fees as the Offshore Property Manager for Awap from 8 April 1997. It pleads that it was appointed on 8 April 1997, with a management fee of $345.60 per day, later increased in or about June 2000 to $362.88.[146] CN (Hong Kong) then appointed first Richard Ellis, and later Knight Frank, as its offshore manager for the property in Australia.
2. Awap pleads that the appointment of CN (Hong Kong) was under the hand of Mr Chou and denies that he had authority to make the appointment. There was no formal record of a company resolution for the appointment of CN (Hong Kong).[147]
3. At the time the plaintiffs say CN (Hong Kong) was appointed as manager, it was one of two directors of Awap. Goldpex was the other. Mr Chou effectively had the day-to-day management of Awap.[148] His evidence was that 'the order of the board is the conversation and discussion with Foo Jong Kan representing Goldpex'.[149]
4. Awap's articles of association under The International Companies Act 1987 of Western Samoa provided:
   1. The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. A director may at any time... summon a meeting of the directors.
   2. Subject to these Articles, questions arising at any meeting of directors shall be decided by a majority of votes and a determination by a majority of directors shall for all purposes be deemed a determination of the director ...[150]
5. There are several authorities dealing with whether a formal meeting of directors passing a resolution is the only way in which a company may make decisions. Ford, Austin and Ramsay's Principles of Corporations Law, discusses the authorities in some detail. The learned authors identify the following from the authorities:

(1) there must at least be a concurrence with the resolution by each director in that capacity for the purpose of resolving as a director on the affairs of the company;

(3) the subject matter of the decision must be identifiable as a decision of the kind required for the particular purpose.[151]

1. Although there may not have been a formal meeting, I accept that all directors agreed to the appointment. The decision was documented and acted on by both Awap and CN (Hong Kong) for about 10 years. In the circumstances, I am satisfied that there is sufficient evidence to find that the appointment of CN (Hong Kong) was validly made, as were the subsequent appointments of Richard Ellis and Knight Frank.
2. For the reasons given above, I find that the agreement for the purchase of Mr Chou's shares in Awap did not include fees owing to CN (Hong Kong). I also find that CN (Hong Kong) was properly appointed. It follows that it is entitled to the fees claimed.

1. The shareholders' resolution appointing CN (Hong Kong) as director fixes remuneration but does not provide for interest.
2. The letter appointing CN (Hong Kong) as Offshore Property Manager for Awap similarly provides for an overall fee, but not interest.
3. The plaintiffs rely on a letter, dated 8 February 1997, signed by Mr Chou as First Secretary of Awap. The letter is addressed to 'Members and Members-related Parties of the Company' and is headed 'Loans to the Company and Interest Charging System'. The letter initially deals with members' financing of the company by loans. It sets out an 'interest charging system' described in this way:

each lender shall be entitled to charge interest at a rate floating from time to time as based on commercial reasonableness and comparable to the bank's lending rate accorded for overdraft facility drawn on an unsecured and on-demand basis, but not less than 0.02592% per day (ie 9.4608% per annum) unless willingly discounted by the lender. If it happens that any lender, not yet being repaid in full for whatsoever reasons, ceases as a shareholder and becomes an arms length creditor, then that particular lender may charge interest at reasonably higher rate up to 0.0432% per day (ie 15.768% per annum) from the date of becoming an arms length creditor. The respective interests, however subject to demands/claims being submitted, shall be calculated flat, from the respective lending or as-demand/as-claim commencement dates to the respective rate-revision or repayment dates, with no compounding effect.[152]

1. The letter further provides that the interest charging system 'save particularly for arms-length creditors, be equally applicable to the company's directors and officers so long as their entitled fees and expenses disbursements shall become due, subject to their claiming interest.[153]
2. Mr Chou said, for the decision to pay interest, there was no formal resolution of the directors of Awap, but he had spoken to Mr Foo and they had agreed.[154] He wrote the letter as First Secretary of Awap and sent it to the members. His evidence is corroborated by the letter, and I accept it.
3. The plaintiffs plead an alternative basis for the interest in an agreement, partly written and partly by conduct. They plead that CN (Hong Kong) wrote to Awap on 29 May 2006 requiring Awap to pay interest at 9.4608% per annum in respect of amounts due and payable but not paid and that, from that date, Awap paid interest at that rate from time to time and entered its indebtedness for that interest in its books of account.[155] The letter of 29 May 2006 is expressly with regard to the 60 day period from 31 March to 29 May 2006. It is not expressed to operate prospectively.[156]
4. I am satisfied, however, that Awap resolved to pay interest on fees to directors and officers, subject to their claiming interest.
5. CN (Hong Kong) claims interest at the rate of 9.4608% on its invoices for director's fees from various dates pleaded to be the dates of the invoices to the date of judgment. For reasons set out above, I am not satisfied that the invoices were sent on the dates alleged. The invoices, and the claim for interest, were only sent on 19 January 2009. CN (Hong Kong) is entitled to interest at the rate of 9.4608% on its director's fees from that date.
6. CN (Hong Kong) also claims interest on management fees. The letter dated 8 February 1997 and, by implication, the decision of the directors, does not provide for interest on payments to service providers, such as the Offshore Property Manager.
7. CN (Hong Kong) is entitled to interest on its claim, Awap having failed to pay an amount due and owing, from 19 January 2009. Interest should be at the rate prescribed by the Supreme Court Act 1935.

1. The claim by Mr Chou should be dismissed.
2. The claim by CN 2000 for repayment of $875,000 it paid for the issue of 25 shares in Awap is allowed.
3. The claims by CN (Hong Kong) for fees earned as director and offshore manager will also be allowed.
4. Interest is payable on the claims allowed, in accordance with these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Mr Chou said at ts 124 that it ceased to exist on 17 December 2008. It may have been a misunderstanding.

[5] Statement of claim [15] - [19] and Annexure B.

[23] Exhibit 7, 14 (Richard Ellis), 7, 18, 19 (Knight Frank).

[43] See James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, 603; Administration of Papua and New Guinea v Daera Guba [1973] HCA 59; (1973) 130 CLR 353, 446; Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35].

[44] Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 [139] [143].

[64] References to the parties in the Singapore proceedings refer to Tan Kah Hock (Daniel) (first plaintiff), Tan Kah Hong (Richard) (second plaintiff), Chou Li Chen (first defendant), Assobuild Construction Pty Ltd (second defendant) and Assobuild Private Ltd (third defendant).

[65] I assume the plea has inadvertently transposed defendant and plaintiff.

[120] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 361 (Dixon J); Helton v Allen [1940] HCA 20; (1940) 63 CLR 691, 712 (Dixon, Evatt & McTiernan JJ)

[121] John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [94].

[122] Pavlovic v Universal Music Australia Pty Limited [2015] NSWCA 313; (2015) 90 NSWLR 605 [15] (Bathurst CJ), [72], [84] (Beazley P), [162] (Meagher JA); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548.

[123] Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149, [69]; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, 105 106; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd, 548 549.

[124] King v Adams [2016] NSWSC 1798 [65] - [66]. I have not included his Honour's extensive citation of authority.

[126] See Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 [20].

[127] Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) 313 ALR 664 [112].

[128] PNJ v The Queen [2009] HCA 6; (2009) 83 ALJR 384 [3].

[129] Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 at 519 [24] - [26].

[130] See Ibrahim v Barclays Bank Plc [2012] 4 All ER 160; Carna Group Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2015] WASC 142[21].

[131] Statement of claim [8], [9].

[132] Statement of claim [10], [11].

[138] Birks, An Introduction to the Law of Restitution (Rev ed, 1989) 223.

[139] See David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 382; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 389; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [16] [104]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 [31].

[140] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [15], [16], [62].

[146] Statement of claim [8], [17].

[151] Ford, Austin & Ramsay's Principles of Corporations Law (17th ed) [7.340].