Fang Gu & Anor v An Jong Hong & Anor

Solicitors: Sun Lawyers (Plaintiffs) Cambridge Lawyers (Defendants) File Number(s): 2017/278414

Judgment Proceedings Background facts Legal principles The "four" categories of agreement Objective contractual construction Admissibility of extrinsic evidence Authority to act Non est factum Parties' submissions Plaintiffs Defendants Evidence Plaintiffs Mr Fang Gu Ms Xuxing Huang Ms Ping Xu Defendants Mr An Jong Hong Ms Bokhee Byun Consideration Authority Non est factum Assessment of the witnesses Conclusion

Proceedings

1. By Statement of Claim filed 13 September 2017 Mr Fang Gu (First Plaintiff) and Ms Xuxing Huang (Second Plaintiff) sought an order that Mr An Jong Hong (First Defendant) and Ms Bokhee Byun (Second Defendant) specifically perform the terms of an agreement dated 12 August 2017 (the Agreement) upon receipt of a bank cheque in the sum of $450,000.
2. On 11 October 2017 the Defendants filed a Defence and on 31 October 2017 the Defendants filed a Statement of Cross-Claim seeking an account of profits for the profits acquired from the company Sushiya Miranda Pty Ltd (Sushiya Miranda) as well as an injunction against the Plaintiffs preventing them from hindering the Defendants performing their duties as directors and shareholders of Sushiya Miranda.
3. On 13 November 2017 the Plaintiffs filed a Defence to the Cross-Claim. The Defendants filed two Amended Defences on 15 November 2017. The Plaintiffs filed an Amended Statement of Claim on 11 May 2018.
4. On 20 August 2018 the Defendants indicated they no longer pressed the Statement of Cross-Claim and I formally dismissed it. (T40/17-20).

Background facts

1. The Plaintiffs are a married couple, and the Defendants are a married couple (CB 58).
2. In approximately April 2014, the First Plaintiff met the First Defendant. The First Plaintiff was working for a supplier of food to Japanese restaurants, and the First Defendant was one of the customers of that supplier. At this time the Defendants were operating a sushi restaurant known as "Sushiya" in Castle Tower shopping centre (CB 58).
3. In approximately October 2014 the First Plaintiff was interested in purchasing a sushi restaurant in a Westfield shopping centre in Miranda known as "Lucky Sushi". He did not have any experience in operating a restaurant, and he approached the First Defendant to invest jointly with him and the First Defendant agreed (CB 58-59).
4. On 4 January 2015 Sushiya Miranda Pty Ltd (the Company) was registered and around that date the Company purchased the Lucky Sushi restaurant (CB 70).
5. In April 2015 the Company commenced operating the Lucky Sushi business pursuant to an agreement for early possession (CB 59).
6. In July 2015 the Company settled the purchase of the Lucky Sushi business and changed its name to "Sushiya". The First Plaintiff and First Defendant contributed $100,000 each towards the purchase price. The Plaintiffs assert that initially the First Defendant attended the business to work with the Plaintiffs for the first month however he gradually ceased to do so thereafter leaving the Plaintiffs with the day-to-day responsibility for the operations of the Company (CB 59, T48/45-T49/20).
7. In the period after the business commenced trading the Company was not making a profit, which caused the First Defendant to suggest to the First Plaintiff that they forfeit their deposits and mutually abandon the agreement to purchase. The First Plaintiff refused this request and gradually the business became profitable (CB 59-60).
8. In May 2016 the Company acquired another food business in the same Westfield Miranda named "Maru1" wherein the First Plaintiff and First Defendant again contributed $100,000 each to the purchase price (CB 60). At the same time, the Plaintiffs assert they became aware that the Defendants had purchased another business named "Waba Waba" in North Sydney and as a result the First Defendant informed the First Plaintiff he would be unable to attend the training for the Maru1 business (CB 60-61).

The "four" categories of agreement

1. In Masters v Cameron (1954) 91 CLR 353 at 360-1; [1954] HCA 72, Dixon CJ, McTiernan and Kitto JJ said (citations omitted): Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common … Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own …
2. The Courts have subsequently recognised a fourth category of agreements to contract, where the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms: Sir Kim Lewison and David Hughes (eds), The Interpretation of Contracts in Australia (Thomson Reuters, 1st ed, 2012) [8.16.1].
3. In relation to the fourth category see Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J: There is in reality a fourth class of case additional to the three mentioned in Masters v Cameron, as recognised by Knox CJ, Rich J and Dixon J, in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317, namely, "… one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms". Their Honours refer to the speech of Lord Loreburn, in Love & Stewart v S Instone & Co (1917) 33 TLR 475 at 476, where his Lordship said that: "It was quite lawful to make a bargain containing certain terms which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with the full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, none the less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain." It seems to me that subject to the matters yet to be considered the present case falls into this fourth class as described in Sinclair, Scott & Co v Naughton.

Objective contractual construction

1. Whether or not the parties here intended the agreement to be immediately binding is to be determined objectively having regard to the language contained in the relevant document. The High Court has repeatedly affirmed this proposition: Taylor v Johnson (1983) 151 CLR 422; [1983] HCA 5; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52; Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26.
2. More recently see Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52] ("Mount Bruce Mining"), Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170 at [163] and Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]. Mount Bruce Mining was cited by the High Court in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486 at [73].
3. The High Court in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said (at [22]) (citations omitted): The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction. In Codelfa Constructions Pty Ltd v State Rail Authority of NSW, Mason J set out with evident approval the statement by Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen: "In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating."
4. In International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151; [2008] HCA 3 Gleeson CJ remarked (at [8]) (citations omitted): In giving a commercial contract a businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract, and the objects which it is intended to secure. An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market. This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning.

Admissibility of extrinsic evidence

1. There are broadly three circumstances in which extrinsic materials can be taken into account in assessing objectively contractual intentions.
2. The first is that extrinsic materials can aid in construction of a contract in the event of an ambiguity. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352-3; [1982] HCA 24 ("Codelfa") Mason J (with Stephen and Wilson JJ agreeing) said: It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
3. There is some authority that ambiguity is not a necessary prerequisite to reference to extrinsic materials: Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407, but see Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1. The better view of the law is that expressed by Mason J in Codelfa.

Authority to act

1. There is further a question of whether the First Defendant had the authority or agency to contract on behalf of his wife the Second Defendant. In Press v Mathers [1927] VLR 326 at 332-3 Dixon AJ observed: In these circumstances the first question which arises is whether the defendant conferred upon her brother actual authority to carry on the business on her behalf as his undisclosed principal. It seems to have been considered that, as she took no beneficial interest whatever in the business or in anything arising out of it, she could not be the principal. But this is not necessarily so. No doubt in any ordinary case the question whether one person authorized another to do an act or series of acts on his behalf is best answered by considering for whose benefit or in whose interest it was intended it should be done. But, although the defendant intended that her brother should have complete control of the conduct of the business and exclusive enjoyment of its proceeds, yet it may have been the common intention of herself and her brother that she should be the party to the relations with others which arose out of the conduct of the business. … Whether she authorized him in this way to act on her behalf is a question of fact. On the one side it may be said that it is very unlikely that she would consent to occupy any situation which would expose her to a risk of liability, and on the other that they both intended to create an actual relation which would enable him to avoid breach of a covenant which, perhaps, was so drawn as to allow him to carry on as a representative of another.
2. In general a principal is responsible for all acts of his or her agent within the scope of that authority (actual or apparent) of the agent: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [79]-[82] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.
3. Actual authority is the authority which the principal has given the agent wholly or in part by means of words or writing (sometimes called express authority) or is regarded by the law as having given to him or her because of the interpretation put by the law on the relationship and dealings of the two parties. So in the first instance it will always be a question of fact what the words or conduct might be that are relied upon as the source of actual authority. Second in any event actual authority can of course be terminated either by agreement by principal and agent or if for example the agency is only for a limited period of time or for a particular transaction: Peter Watts and F M B Reynolds (eds), Bowstead & Reynolds on Agency (Sweet & Maxwell, 19th ed, 2010) at 3-003.

Non est factum

1. The doctrine of non est factum may be invoked by a limited class of person who, through no carelessness on their part, are unable to have any understanding of the meaning of a particular document and sign the document in the belief that it was radically different from what was in fact signed. Given its limited application, the party who seeks to rely on the defence bears the "heavy onus" of doing so: Petelin v Cullen (1975) 132 CLR 355 at 359-60; [1975] HCA 24.
2. The necessary difference between what the document was and what the person believed the document to be has also been described as "fundamental" or "serious" or "very substantial": see Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; [2009] NSWCA 186 at [42].

Plaintiffs

1. The Plaintiffs submit they seek relief in the form of specific performance in respect of a partly written and partly oral agreement contracted into on 12 August 2017 (the Agreement) (submissions [1]-[9], closing submissions [1]-[4]). The Plaintiffs note it is common ground that the First Plaintiff and First Defendant signed a written document dated 12 August 2017 (submissions [5]) however submit there are four issues that require determination (closing submissions [5]): 1. What are the terms of the Agreement; 2. Whether or not the parties intended the Agreement to be final and binding; 3. Whether the First Defendant had authority to enter into the Agreement on behalf of the Second Defendant; and 4. Whether the Defendants have established a defence of non est factum.
2. After outlining the factual background of the dispute (submissions [10]-[34], closing submissions [14]-[57]) and legal principles (submissions [35]-[40], closing submissions [58]-[63]) the Plaintiffs submit there are five reasons why they should be granted specific performance of the Agreement: 1. The First Plaintiff's account of the meeting of 12 August 2017 should be preferred to that of the First Defendant (submissions [41]-[42]); 2. Having regard to the surrounding circumstances, it is clear from the 8 August 2017 text messages and the conduct of the parties that the First Plaintiff and First Defendant attended the meeting of 12 August 2017 in order to reach a final and binding agreement on that date (submissions [43]); 3. Post-contractual conduct, particularly the text messages of 23 August 2017 and the letter of 25 August 2017, is consistent with the parties having reached a final and binding agreement on 12 August 2017 (submissions [44]); 4. The Plaintiffs have demonstrated they are willing, ready and able to perform the Agreement (submissions [45]); 5. It is clear from the 8 August 2017 text message that the First Defendant had authority to enter into the written agreement on behalf of the Second Defendant. The evidence of the First Defendant on this point is implausible and there is no evidence that between 8 August and 12 August 2017 that authority was revoked (submissions [46], closing submissions [71]-[75]).
3. The Plaintiffs note that there is no cross-claim filed by the Defendants that the Agreement is liable to be set aside on the basis of misleading and deceptive conduct (submissions [47]). The Plaintiffs reject the contention of the Defendants that the First Defendant does not have a competent grasp of English, as he did not require an interpreter to affirm his affidavit and his written communications demonstrate competency in English (submissions [47], closing submissions [76]-[78]).

Defendants

1. The Defendants did not provide a written outline of submissions or outline of closing submissions and I indicated during the hearing my dissatisfaction with this state of affairs. Such a position in the absence of an appropriate explanation is entirely unacceptable whether the usual order for hearing is made.
2. However during argument the Defendants indicated that their case would be advanced first on the basis that there was no intention to enter into legally binding relations as at 12 August 2017 (or a "Masters v Cameron" issue), secondly on the basis that the First Defendant did not have authority to enter into binding relations on behalf of the Second Defendant, and thirdly a non est factum issue derived from the First Defendant's poor English (T8/16-24) (see also T91/36-T96/43).

Mr Fang Gu

1. The First Plaintiff swore two affidavits on 11 December 2017 and 15 February 2018.
2. In his first affidavit (11 December 2017) the First Plaintiff outlined his position as presently a 25% shareholder of the Company. He was born in China and currently holds an Australian permanent resident visa and is married to the Second Plaintiff.
3. He is a native speaker in Chinese Mandarin. He is able to read and speak English however he said he would not describe himself as proficient in English.
4. The First Plaintiff got to know the First Defendant in or around April 2014, whilst he was working for a supplier of Japanese food restaurants and the Defendants were running a "Sushiya" restaurant at Castle Tower. In or around October 2014 he was interested in purchasing a "Lucky Sushi" restaurant at Miranda Westfield. He had no experience and he invited the First Defendant to invest jointly in the restaurant.
5. The First Plaintiff said the First Defendant said to him "[t]hat sounds like a good idea. I'm interest [sic] in opening another restaurant. If the business grows well, we can also make it a franchise business".
6. On 4 January 2015 the Plaintiffs and the Defendants established the Company with each of the four holding 25% shares. The First Plaintiff and First Defendant contributed $100,000 each towards the purchase price of the "Lucky Sushi" restaurant and for one month the First Defendant and Plaintiffs attended the daily operation of the business.
7. However the First Plaintiff said that after one month the First Defendant ceased to participate in the daily operation of the business and only attended on average once per week, leaving the Plaintiffs to assume full responsibility of the business.
8. The First Plaintiff said during this time the "Lucky Sushi" restaurant was not making a profit, and the Defendants had a discussion with him to the effect that they wanted to forfeit the deposit and withdraw from the purchase of the sushi business at Miranda. He said he refused and with his and his wife's effort they gradually improved the business whilst working approximately from 7am to 7pm daily with no weekend or holiday breaks.
9. In or around May 2016, the First Plaintiff described how he and the First Defendant became aware of the opportunity of buying another Japanese restaurant in Miranda called "Maru1". He recalled that a discussion took place between himself, the First Defendant and Second Defendant wherein they agreed to purchase the "Maru1" restaurant.

Ms Xuxing Huang

1. The Second Plaintiff swore two affidavits on 29 November 2017 and 11 December 2017.
2. In her first affidavit (29 November 2017) the Second Plaintiff described how she is married to the First Plaintiff and a 25% shareholder in the Company. In general terms she corroborated the Plaintiffs' case that the parties entered into an agreement on 12 August 2017.
3. The Second Plaintiff further provided grounds for expedition of the case including problems in lodging the Company's Business Activity Statements and providing bank guarantees.
4. In her second affidavit (11 December 2017) the Second Plaintiff described how she was born in China and currently holds an Australian permanent resident visa. She is a native speaker of Chinese Mandarin. She is able to read and speak English however said "I would not describe myself as proficient in English".
5. The Second Plaintiff described how between January 2015 and April 2015 she worked for the Defendants in their restaurant at Castle Tower and did not get paid for this work.
6. She asserted during the training of two weeks for the Company's "Maru1" restaurant she observed the First Defendant only attended for one half day. She affirmed that since opening the "Sushiya" business she has worked on average from 7am to 7pm seven days a week and has not been paid until November 2016.
7. The Second Plaintiff said on or around 11 August 2017 she had a conversation with her husband in Mandarin to the effect that she said "Sure. When you sign the agreement with him [the First Defendant] tomorrow, you can just sign for me. I don't want to deal with him directly".
8. The Second Plaintiff affirmed that her mother Ms Ping Xu had told her in Mandarin words to the effect that she would support the Plaintiffs by providing them money to pay the $450,000 for the Defendants' shares in the Company.
9. The Second Plaintiff was not required for cross-examination.

Ms Ping Xu

1. Mr Xu swore one affidavit on 11 December 2017.
2. In her affidavit Ms Xu said she is the mother of the Second Plaintiff and does not speak English. She affirmed the affidavit as translated to her from English by her Mandarin speaking solicitor.
3. She said on or about 15 August 2017 she had a conversation with her daughter to the effect that she would lend monies to the Plaintiffs to complete their purchase of the Defendants' shares in the Company for $450,000.
4. Ms Xu was not required for cross-examination.

Mr An Jong Hong

1. The First Defendant swore one affidavit on 30 January 2018.
2. In this affidavit he described how he was born in South Korea in 1965. He moved to Australia in 2008 when he was 42 years old and he could not read, write nor speak English prior to coming to Australia.
3. The First Defendant outlined how he and the First Plaintiff agreed to buy the "Lucky Sushi" business in Miranda. He said some time in December 2014 the Plaintiffs and Defendants met at a food court at Castle Tower Shopping Centre. The First Defendant's evidence is that he told the Plaintiffs that he and his wife were to be the overall directors of the Company, in that they would set up the business and get the business running: "My wife and I be [sic] the overall directors of the business. As you do not have the proper experience to run a sushi business we will train you so you can be the on-site managers of the business. We will not be onsite all the time as we also run another business".
4. The First Defendant said at this meeting he made it clear that he and his wife would purchase and supply food, deal with the accountant, develop the menu, maintain the equipment and train staff, whereas the Plaintiffs were to be the on-site managers.
5. The First Defendant then described how he pitched a business plan to Westfield Miranda to obtain approval of the transfer of the lease over the "Lucky Sushi" business to the Company, and that the Plaintiffs were not present at any of the negotiations with the lease manager. He said from January 2015 to March 2015 he trained both the Plaintiffs on how to run a sushi business day-to-day at the Defendants' shop at Castle Hill every day. After opening the Company's first sushi business in Miranda, the First Defendant said he attended the day-to-day business of the Company, and in May 2015 decided the Plaintiffs were ready to take over the day-to-day running of the shop.
6. The First Defendant said that the business "appeared to run smoothly to about November 2016". From November 2015 to November 2016, once a week he would attend the Company's business and the First Plaintiff would hand him an envelope which would contain cash on average of $3,000 per week.
7. The First Defendant described how the parties purchased on behalf of the Company a second sushi business called "Maru1", with the Plaintiffs contributing $100,000 and Defendants $100,000 to the price. He said he and his wife worked every day at the Maru1 restaurant for the first week. He expected this would increase the amount of cash he would be paid by the Plaintiffs, however the First Plaintiff began to pay him only $2,500 per week on average in cash.

Ms Bokhee Byun

1. The Second Defendant swore one affidavit on 30 January 2018.
2. In this affidavit she described how she was born in South Korea in 1969. She moved to Australia in 2008 when she was 39 years old, and could neither read, write nor speak English prior to coming to Australia.
3. She and her husband have been operating a sushi restaurant in Castle Tower Shopping Centre since 2012, and described how the parties came to set up the Company with each being 25% shareholders. The Second Defendant described how she generally disagreed with the affidavit evidence of the Plaintiffs.
4. The Second Defendant stated the operation of the Company "went well until November 2016". She said shortly after the purchase of the Maru1 restaurant she "became aware of the problems we were having" with the Plaintiffs.
5. In cross-examination the Second Defendant denied she discussed with her husband selling shares in the Company (T75/24-27). However she did later state that whilst she did not discuss with her husband selling shares, she did discuss with him that based on the dividends received from the Company she considered that $450,000 to $550,000 would be the price for their share in the Company (T75/40-50). She said they wanted to verify the financial costs and labour costs of the Company and "if those details can be given to us and I can [make sure] that these figures are reliable and true, then I can consider maybe selling the shares, but it was just a thought" (T76/18-26).
6. The Second Defendant denied on 7 or 8 August 2017 she and her husband agreed to make an offer of $450,000 to the Plaintiffs or that it was her idea for this amount (T77/34-41). She denied she knew her husband was going to meet the First Plaintiff on 12 August 2017 and said she was not aware an offer was made (T78/12-41). She did not accept that if the figures for the Company were correct she was prepared to consider $450,000 as the sale price, because she needed to know whether the figures were correct before confirming the amount (T79/5-11).

Authority

1. Two preliminary points arose in this case: the question of authority and the question of non est factum.
2. On the question of authority both parties worked as business partners together and worked alongside each other. This is true for the Defendants and the Plaintiffs. The Second Plaintiff expressly said her husband had authority to enter into an agreement on her behalf (CB 119).
3. The Second Defendant's occupation identifies herself as 'business owner' and said in cross-examination that she was analysing the Company's figures and financial data herself to determine the true value of the Company (T75/40-T76/26).
4. It is clear from the evidence that the Defendants wanted to expand their sushi restaurant businesses and did so jointly by investing in at least two new restaurants in Liverpool and North Sydney.
5. Furthermore it is clear that at 8:59pm on 8 August 2017 the First Defendant sent a text message to the First Plaintiff stating "I have made decision for $450k with Sharon. Thanks mate".
6. There was no reason for him to be untruthful in sending this text message and I do not believe this text message was dishonest. However I do think that the evidence given at the hearing by the Defendants that they never discussed the 12 August 2017 meeting and that the Second Defendant never authorised her husband to enter into contractual relations in relation to the Company was untruthful. This is at odds with the contemporaneous documents and especially the above text message. In my view the Defendants gave evidence at the hearing that in their view portrayed their case in the most favourable light.
7. The Second Defendant was obviously numerate and financially astute. She had analysed the figures supplied and by whatever methodology came up with a range of purchase price (T79/5-11).
8. In my view the First Defendant did have authority from the Second Defendant and their evidence on this point should be rejected as contrary to the contemporaneous documents and their prior business activity.

Non est factum

1. I am not satisfied that the First Defendant has established any defence or case of non est factum. In my assessment he clearly understood English and understood the document provided to him on 12 August 2017. This much is clear at the very least on the text messages exchanged between the parties which are in English and displayed a good understanding of English. Moreover I am satisfied the First Defendant understood precisely the content and import of the document of 12 August 2017. This is why he crossed out the last sentence and initialled over the two words most indicative of a binding agreement.
2. The Defendants have not satisfied the heavy onus of the doctrine of non est factum and I reject the First Defendant's account on this point.

Assessment of the witnesses

1. In my view each of the witnesses who were cross-examined gave evidence that is open to criticism and is in some respects problematical. There is I am inclined to think an element of truth on both sides but I am also satisfied a healthy amount of historical revision and exaggeration.
2. It is clear that the Plaintiffs and Defendants have had a falling out and it is no longer possible that they are able to continue working together. I am satisfied that this falling out occurred due to some level of distrust between the Plaintiffs and the Defendants, and reached a point where the First Plaintiff and First Defendant began to have discussions about severing ties and buying out the others' shares in the Company. This occurred clearly before 8 August 2017 and by that date it is clear the parties were not going to stay business partners.
3. Although at some point before August 2017 the Defendants were seeking further financial information regarding the Company including labour costs and wage records, I am satisfied that they had ceased these inquiries some time prior to 12 August 2017 when the First Plaintiff and First Defendant met and signed the written document of that date. This is because as evident from the text messages between the First Plaintiff and First Defendant they had discussed and agreed upon a price of $450,000.
4. The Defendants I am satisfied discussed the price they should value their 50% shareholding in the Company, and had felt comfortable on the information they had been provided to agree to an amount of $450,000. I do not accept the Defendants' accounts that they did not together discuss the price of the Company, did not discuss whether or not to sell the Company, and did not inform each other about the 12 August 2017 meeting.
5. Furthermore, as is apparent from the text messages between the First Plaintiff and First Defendant, the parties clearly wanted to come to some final agreement at some point and part ways. However, the crucial question is whether they intended to reach a final and legally binding agreement on 12 August 2017. This requires a consideration of the opposing parties' different versions of events.
6. The First Plaintiff says that the parties' agreed to be finally and immediately bound on 12 August 2017 when he and the First Defendant signed on the document of that date and also signed next to their wives' names. His version of events was that the First Defendant crossed out the last sentence of the document because he did not want to forfeit his rights to vote or participate in the Company until the Defendants received the purchase price.

Conclusion

1. In my opinion objectively viewed the parties did not intend to enter into a legally binding agreement on 12 August 2017.
2. I am satisfied however the First Defendant did have authority from the Second Defendant to enter a contract. I reject the defence of non est factum.
3. In light of my findings I would invite the parties to provide short minutes and I will hear the parties on the issue of costs if they cannot be agreed.

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: 30 August 2018