Goo v Sim

Background facts and summary of the evidence

1. Unless indicated otherwise, I am satisfied of the following matters. Where reference is made to a document that was written in Korean, I have referred to the English translation of that document.

The parties

1. Mr Goo is a management consultant who has experience in the currency exchange and money transfer industry.
2. Oakwood was incorporated in July 2008 by Mr Goo. Mr Goo was appointed a director but resigned on 10 February 2012 due to a change in his visa status. Oakwood's current sole director and secretary is Mr Junghwan Kim, a friend and business associate of Mr Goo.
3. Oakwood has 125 ordinary shares on issue. 20 shares are held by Mr Jun Won You and 105 by Mr Kim, who holds them on trust for Mr Goo.
4. Oakwood was initially run by Mr Goo as a Sydney-based investment company. In January 2012, it changed its business to run a currency exchange and money transfer service for Australian-based customers seeking to transfer money to Korea and operated on a cash basis.
5. Tokorea was incorporated in March 2013 by Mr Goo. Mr Goo is currently the sole director and secretary, having been appointed to both positions on 23 November 2018. On Tokorea's incorporation, Oakwood held all 100 shares on issue. As at the hearing, Oakwood held 75 shares and Mr Sim held 25.
6. Mr Sim is an information technology engineer. Throughout the relevant period, he was employed as a Senior IT Support Engineer Sydney Architect with ACM Group and Collection House, a credit management company.
7. Mr Goo and Mr Sim met through their respective wives. There is a dispute between Mr Goo and Mr Sim as to when that occurred which is not necessary to resolve. Mr Goo says they met in December 2007. Mr Sim says it was in October 2013. Mr Goo's evidence, which I accept, is that he and Mr Sim became friends, frequently talked about business when they met (such as when they had dinner with their wives) and that Mr Goo understood that Mr Sim was employed as a project manager at an information technology company.

Late 2013/early 2014: Mr Goo and Mr Sim discuss online remittance business and working with Oakwood

1. Mr Goo's evidence is that in late 2013, he first floated his idea of an online exchange business with Mr Sim. He gives evidence of a discussion with Mr Sim in which Mr Goo referred to "an idea to turn the Oakwood business into an online exchange business" and wanting to make a "website" but not being able to because of his "lack of… English [skills] and resources". Mr Goo says that Mr Sim said he thought it was a "good idea", mentioned that he was an "IT professional" who works in technology as a project manager, and "could help with this".
2. Mr Goo gives evidence that, in March 2014, Mr Sim told Mr Goo that he wanted to be involved in Mr Goo's "new business venture". Mr Goo says that he told Mr Sim he would be happy for Mr Sim to "join my company" as "[w]e need someone with IT specialisation who has the ability to build the website". Mr Goo says that, at the time, he trusted Mr Sim, they were close friends and had met frequently to discuss Mr Goo's business.
3. Mr Goo's evidence is that they agreed that Mr Sim would invest $50,000 into Oakwood, which would subsequently be invested in Tokorea, Oakwood would pay Mr Sim $2,000 per month and Mr Sim would be allowed to have a stake in the company. According to Mr Goo, they had a conversation in the following terms: "Mr Sim: I want to be paid $2,000 per month as payment for my work on the Tokorea Website. Once Tokorea is fully established, I want 25% of the shares as I've invested $50,000 in Oakwood. Until Tokorea is fully setup, I want to have shares in Oakwood. Mr Goo: Ok, that sounds reasonable. Mr Sim: I do not want to have to pay too much tax. Could you please pay the $2000 each month to my wife rather than me. Mr Goo: That's fine - I can organise that."
4. Mr Sim does not accept Mr Goo's evidence about the conversations referred to at [19]-[21] above. He denies asking to be involved in Mr Goo's business and says that Mr Goo approached Mr Sim to join. Mr Sim deposes to a conversation in which Mr Goo said he was intending to set up a bank using the Oakwood name to run a stable remittance business, if Mr Sim invested into Oakwood he would make a good return, that Mr Goo intended on buying a city office, a café, a remittance website and other businesses through Oakwood, and asked Mr Sim if he would like to invest in Oakwood and "come on board as a manager". According to Mr Sim, he said he would like to invest and work with Mr Goo, he would need a suitable salary and return on his investment, asked for $2,000 per month, and if the business did well, they could discuss sharing the profit later.

April 2014: Mr Sim appointed director of Tokorea and signs Management Contract with Mr Sim

1. On 14 April 2014, Mr Sim was appointed as a director and secretary of Tokorea. Mr Goo explains that he agreed to Mr Sim becoming the director because he believed that his own visa status at the beginning of 2014 prevented him from being a director.
2. According to Mr Goo, soon after Mr Sim was appointed as the director of Tokorea, Mr Sim proposed bringing in an external software company to build the website for the online remittance business, with Mr Sim to oversee the project and the costs being Oakwood's responsibility. Mr Goo's evidence is that he raised with Mr Sim the possibility of both of them investing $200,000. According to Mr Goo, Mr Sim said he only had $50,000 available to invest and agreed to take on the full responsibility for the development of the online exchange platform.
3. Mr Sim recalls a conversation around that time. While it is to a different effect, namely that Mr Goo asked Mr Sim to find out how another entity did real-time remittance through their website, Mr Sim agrees that he offered to introduce Mr Goo to someone who might be able to do the work on the website.
4. In or around April 2014, Mr Sim introduced Mr Goo to Mr Sam Yoon, a director of Vivito Communications. According to Mr Goo's evidence, at the meeting, Mr Sim indicated that Vivito would build the website and "everything will probably be done by August 2014". It is common ground that Vivito were retained by Oakwood to construct the Tokorea website, although Mr Sim denies that he or Mr Yoon indicated that it would be completed by August 2014.
5. On 28 April 2014, Mr Goo and Mr Sim executed a document written in Korean titled 'Oakwood Pty Ltd and Tokorea Pty Ltd Management Contract' (Management Contract) (TB49-52). The Management Contract refers to Mr Goo as "Managing Director", Mr Sim as "Independent Director", and Oakwood and Tokorea as consisting of Mr Goo and Mr Sim as the management, as well as several shareholders and branch managers. It provides for Mr Goo to be paid an additional 30% when total sales exceed $100,000, that Mr Sim will be paid up to half of Mr Sim's salary when the total sales exceed $100,000 and refers to Mr Joon Won Yoo [1] as a "Company Shareholder" in addition to Mr Goo and Mr Sim. It also states the following: "Strategy The company based on Strathfield Remittance company makes it a goal to expand its business to City, Chatswood, Brisbane branches and other location [sic] and pursue stability by diversifying its business (including banks and cafes). Leadership and Team … Mr … Goo, as the CEO of Oakwood will concentrate on creating a business model and making profit offline and be in charge of sales, customer relationship etc of all branches. Mr …Sim will focus on effective management of the business and making profit online and be in charge of internal management and marketing of all branches Business strategy decision All internal decisions can only be made by 100% agreement of Messrs. … Goo and … Sim"

May 2014: Partnership Agreement prepared

1. Mr Goo deposes that, fifteen months after Tokorea was incorporated (namely, May 2014), he decided that Tokorea would run a business providing currency exchange and money transfer services for Australian and Korean based customers seeking to transfer money to Korea and Australia, respectively. He envisaged that the business would be conducted online by a specially designed website for Tokorea that would enable real-time money transfers to be made, with a pool of funds to be maintained by Tokorea in banking institutions in each of Australia and Korea for the purpose of carrying on the business which he understood would need to comply with the relevant legal requirements in Australia and Korea for sending and receiving money internationally.
2. According to the minutes of a meeting of the shareholders and directors of Oakwood convened on 8 May 2014 (TB104), at which Mr Goo was appointed chairman, a resolution was passed that acknowledged Mr Sim and Mr Jun Won You as new investors in and members of Oakwood. The minutes record that the company would pay a cash dividend of 1% of the total investment made by each investor each month and that Mr Sim was responsible for managing the "online business of the company" and was entitled to 50% of the net profit of the company, which might be adjusted down to 30% by the passing of a general resolution at a shareholders meeting.
3. On 9 May 2014, Mr Sim invested $50,000 in Oakwood and was allocated five shares in Oakwood (TB108). Mr You was allocated 20 shares based on his investment of $200,000 (TB109). According to Mr Goo, the allocation of shares to Mr Sim in Oakwood was a temporary measure until the online business to be run through Tokorea was established (Goo 1 at [39]).
4. In evidence is a document titled 'Details of KoreaSongGum Partnership Agreement' that is signed by Mr Goo, Mr Sim and Mr You but is undated (Partnership Agreement) (Goo 1 at [48], [59] and [60], TB 53-58). In cross-examination, Mr Sim gave evidence that "SongGum" means "remittance" (T113.1-8).
5. The Partnership Agreement refers to investment amounts of $50,000 by Mr Sim and $200,000 by Mr You, and "the directorship" of Mr Ahn (Mr Ahn was a director of Oakwood between 11 December 2013 and 28 September 2018 and of Tokorea between 8 August 2013 and 11 April 2014). It contains sections which refer to the following: "Division of roles for each partner", with Mr Goo's role described as "President - clients, HR and exchange rate (business)", Mr Sim as "IT, accounting and auditing" and Mr You as "Apprenticeship, shareholder"; "Earnings Distribution", with each of Mr Goo, Mr You and Mr Sim to obtain a 1% dividend and salary of 10,000, 2,200 and 1,000 respectively, and 50% of the earnings to be distributed at the end of the year; and "Partnership Break (if a partner leaves the partnership)", which identifies the earnings and property distribution and dividends to Mr Goo, Mr You and Mr Sim in the event of profit remaining or not.

Late June to Sept 2014: Preparation for business in Korea

1. On 30 June and 1 July 2014, Mr Goo and Mr Sim exchanged a number of emails while Mr Sim was travelling overseas about the Korean end of the proposed online remittance business (TB117ff). The emails record the following.
2. On 3 June, Mr Goo requested Mr Sim to research the laws about firm banking with the bank "we are going to deal with" to find out whether any of "this infringes Korean Foreign Exchange laws". Mr Goo's email also states that if further research was not necessary, Mr Sim needed to go to Korea and make a "corporate company without delay, form a firm banking contract… and start the work on activating the online transactions immediately".
3. In response, Mr Sim indicated that he had "checked everything out" and that if Mr Goo wanted to do it immediately, it should be possible if he spent more than $30,000, to which Mr Goo asked why it would cost that much, but if it allowed continuous transactions without infringing regulations, he would be willing to pay "even $50,000". Mr Sim sent a further email on 1 July 2014, saying he could explain it later.
4. Mr Sim gives evidence that, after discussions with Mr Goo, he sent an email to L & C Legal Agency on 14 August 2014 to seek assistance with the formation of a Korean company and to advise on the law that applies to money remittance businesses in Korea. According to Mr Sim's evidence, the reason why a Korean company needed to be formed was to allow electronic transfer of funds to and from Korea (Sim at [24]). The email from Mr Sim (TB125) refers to wanting to establish a "firm banking arrangement in Korea", that the work involved is "payment" and that "[w]e are… trying to radically switch to a fast and accurate real-time payment system", and requests a quotation. It also describes the profile of their company, called "Global HR & Trading", which "has set up a system to send workers or students needed in Australia" and other countries.
5. On 18 August 2014, Mr Sim received an email from L&C (TB127) referring to what was to be done prior to setting up a company, that states the following: "Since your main areas of business, according to what you have sent me, is supply of workforce and outsourcing, I think you need at least 100 million won as capital to set up a company".
6. Pausing here, at the time 100 million Korean Won equated to approximately AUD $100,000 (T83.20-45).

October 2014: Mr Sim receives the $110,000 and Global HR established

1. On 1 October 2014, Mr Sim attended the city office and was given $109,000 in cash. It is common ground that Mr You and Mr Back were in attendance when Mr Sim was given the cash and it was Oakwood's money. There is a dispute as to whether Mr Goo was also present.
2. Mr Goo gives evidence that he obtained the cash from the Oakwood Strathfield office, then met Mr Back, Mr You and Mr Sim in the city where a "loan agreement" was entered into, after which he gave the cash to Mr Sim. Mr Back also gives evidence that Mr Goo was at the office when Mr Sim was given the $109,000 cash.
3. Mr Sim denies that Mr Goo was at the city office when he received the cash and signed the loan agreement.
4. The "loan agreement" that Mr Sim signed was a one page proforma document in Korean headed "Loan Transaction Bond Certificate" [2] (Loan Document) (TB154) with handwriting that identifies Tokorea as the Borrower, Mr Sim as the Borrower's representative, and Oakwood as the Lender, and is signed by Mr Sim. It does not include any details in the section headed "Loan Transaction Details" other than the amount of AUD109,000; there is no length of period of the loan, the interest rate or calculation method or repayment date.
5. Mr Sim gives evidence that Mr You said that Mr Goo had wanted Mr Sim to sign the Loan Document, that it would only apply until the funds were deposited in the Korean account and that once they were deposited, the document would be destroyed. When asked in cross-examination why the Loan Document was to be destroyed, Mr Sim's gave evidence (T133.23-34) that: "…this money is not borrowing money: this one is own invest money to Korea … Mr Goo promised me this - I - I - I asked Mr Yu why I have to sign on this form, and then Mr Yu told me, 'This is only for the confirmation, I'm not taking money and then going out, because this is our cash in Australia.'"
6. Mr Goo's evidence is that it was not agreed or contemplated that the Loan Document would be destroyed and it was intended to be retained for record keeping purposes. He deposes that the Loan Agreement was entered into to reflect Oakwood lending money to Tokorea and that Mr Back and Mr You had insisted on a loan agreement to be drawn up to reflect that Tokorea was borrowing $109,000. He also gave evidence in cross-examination that he asked for the Loan Document to be signed by Mr Sim because the other shareholders had told him that they would need the document to protect their money (T98.39-41).

Oral evidence about the $110,000

1. In cross-examination, Mr Sim gave evidence that he deposited the 100 million Won directly into a bank account held by Global HR (T139.43-45) and that the Transfer Receipt recorded this (T142.0-3). When asked how he could have deposited the funds into a bank account of a company that did not yet exist, he gave the following evidence (T143.47-144.14): "A. Okay. Just allow me to explain. At the time only Korean Exchange Bank, KE Bank, Hana Bank she mention - only allowed to receive the investment from the Korean account, Tokorea. So if anyone want to invest into Korean - set up the company in Korea and invest the money in Korea, they have to go through to the Korean Exchange Bank. So everything - we have to - instructed by the Korean Exchange Bank. So we have to provide all the identification. They have someone to process and then we have to contact the KEB bank, and then they going to instruct who is going to send the money, how they going to send the money, how much is going to send the money, from where. So this 161 document, the telegraph; and then initially I would instructed by the Hana Bank, they want extra given by the legal agents, Korean legal agency, and then see what he's saying, if just following the instruction by the bank. If we sending the money to Korea, and then they going to holding the Global HR Trading money, and then after we set up the bank account, need to transfer the money to there. This is how work either invest money in Korea. Q. So it wasn't directly transferred into a bank account of Global HR? A. That's right."
2. Later in cross-examination, Mr Sim gave evidence that he understood that the KE Bank "would hold the 100 million won until the Global HR bank accounts were established" (T146.47-T147.3) and sought to explain the fact that he had not referred to that in his affidavit because it was "too complex" (T147.8-31).
3. During cross-examination, Mr Sim gave evidence that the $110,000 was "all spent" in Korea and was no longer held by Global HR (T151.28-T152.41). When asked what the money was spent on, his evidence was that: 1. approximately 50 million Korean Won was spent on a personal salary he decided to pay to himself in April 2015 without consulting Mr Goo or a director at Oakwood (T153.37-41, T188.41-50, T189.5-7, T189.26-28); 2. approximately 20 million Korean Won was paid to Vivito (T154.3-5); 3. approximately 10 million Korean Won was spent on hardware (T154.27-29); 4. approximately 10 million Korean Won was paid for software (T154.42-43); and 5. 10 million Korean Won was spent on accounting fees and Mr Goo's mother (T155.30-32).

December 2014: Return of Units and alleged $50,000 cash payment

1. Mr Goo gives evidence that on or around 1 December 2014, he had a meeting with Mr Back and Mr You during which Mr Back expressed concern that Mr Sim was given units in the "city office" when they had invested more than Mr Sim. According to Mr Goo, he said he might return Mr Sim's investment in Oakwood in return for getting Mr Sim's units back.
2. Mr Goo deposes that, on or around 5 December 2014, Mr Sim came to Mr Goo's house on which occasion Mr Goo gave Mr Sim $50,000 in cash from his own money. According to Mr Goo, they had a conversation to the following effect: "Mr Goo: The investors are complaining you are not doing what you're supposed to do. Because of that, I need to remove you from the KS Unit Trust. I'll give you $50,000. Mr Sim: Ok, I agree. But please let me continue with Tokorea - let me finish this. Mr Goo: Invest the $50,000 in Tokorea to finish the website and start the business - do what you're supposed to do."
3. In cross-examination, Mr Goo gave evidence that the $50,000 was taken from his safe at home, had not been withdrawn from a bank account, and that he gave the money to Mr Sim while they were in the garage (T49.8-9; T49.47-49; T51.50-52.5). Mr Goo accepted that the date of 5 December "maybe is likely incorrect" but said he had a reason to believe that it was on 1 December 2014 (T46.17). Later in cross-examination, Mr Goo gave evidence that he gave Mr Sim $50,000 in the evening of 1 December but "I received something in return, a document, his signature on it" (T51.42-43).
4. On 5 December 2014 at 11.14 am, Mr Goo sent a text message to Mr Sim that referred to the "real estate documents" that were in the city office, that "All of the ownership is being changed to Oakwood Sydney", and that Mr Sim just needed to "come in and sign when he had time" (TB170). Mr Goo's evidence is that the text message related to the signing of "the KS Unit Trust paperwork".
5. Mr Sim denies meeting with Mr Goo at his house and receiving $50,000 while they were in Mr Goo's garage, and denies the conversation referred to at [80]. According to Mr Sim, sometime in December 2014, he had a conversation with Mr Goo during which he told Mr Goo that Tokorea would need capital funds of at least $100,000 and a balance sheet to apply for an Australian Financial Services Licence (AFSL). He says that Mr Goo instructed Mr Sim that Oakwood would remit approximately $125,000 to Tokorea, that Mr Sim should get a bank statement that shows that balance and give it to the solicitor, and also instructed Mr Sim to then transfer $75,000 back to Oakwood and withdraw $50,000 cash and give it to Mr You.

February 2015: Website demonstration

1. Sometime between 20 February 2015 and 23 February 2015, Mr Back, Mr You, Mr Goo, Mr Jung and Mr Sim attended the city office to view a demonstration by Mr Sim of the Tokorea business website.
2. According to Mr Goo's evidence, when Mr Sim demonstrated the website it appeared basic, presentable and capable of performing the function of transferring money from Australia to Korea and back again. He also gives evidence that Mr Sim "used the Korea-based [Global HR] … bank account when he transferred money from Australia to Korea". However, Mr Goo says the website was not fit-for-purpose as it was unable to verify identification, could not report on the sending of funds to AUSTRAC, and did not incorporate any reporting or analytical tools and could only send money (Goo 1 at [101]).
3. Mr Sim gives evidence that Mr Goo said the website looked good and asked for some additional functions, such as automatic reporting to AUSTRAC, to which Mr Sim said he had already mentioned that to Mr Yoon who said it would cost more as it was not in the contract. Mr Sim also gives evidence that the website was completed sometime in or around February 2015 (Sim at [65]-[67]).
4. On 27 February 2015, Mr Sim caused 75 shares in Tokorea to be transferred from Oakwood to himself. Mr Sim does not give evidence about why or in what circumstances this occurred and was not asked about it in cross-examination.
5. Mr Goo's evidence (which was unchallenged by Mr Sim) is that he became aware of the transfer around this time and that, shortly after, he raised the issue with Mr Sim who said he would "fix it". According to the ASIC Historical Extract in relation to Tokorea, the 75 shares were transferred from Mr Sim to Oakwood on 6 May 2015 (TB6).
6. Sometime in March 2015, Mr Goo was told by Ms Huh (who appears may have been an Oakwood employee) that Mr Sim had come into the Oakwood office at Strathfield and wrote "something that said all his debts are repaid on a loan agreement document".
7. In evidence are two other versions of the Loan Document (referred to at [64]) that contain additional handwriting in Korean and English that was inserted on the documents by Mr Sim. One version (TB155) includes Korean characters which translate to "Repayment of whole amount is confirmed" and are followed by the words "(No Debt)" in English. Mr Sim accepts that he wrote those words and deposed that the version at (TB155) was the "final version of the document" and the version annexed to Mr Goo's affidavit (referred to at [64] above) is not final. The other version of the document (the provenance of which is not clear from the evidence) (TB157) includes the words "Copy" at the top of the page and "Tokorea has no debt fully returned (money back)" in English.

April/May 2015: Breakdown of relationship with Mr Sim

1. Mr Goo gives evidence that, by around April 2015, Mr Sim had ceased coming to the weekly Monday meetings and he began to have concerns about "Tokorea's money banked in Korea". Mr Goo says he had several conversations with Mr Sim during which he asked whether the money had been moved from the Korean bank account and Mr Sim told him that: "…I haven't touched the money except for a few small transactions related to the business."
2. Mr Sim denies that conversation ever occurred.
3. Mr Goo deposes that, in late April 2015, Mr Sim showed him a copy of a bank statement for the Global HR bank account.
4. A translated version of the April 2015 bank statement Mr Goo refers to is in evidence. Mr Goo says he did not know who translated it and was trying to locate the original Korean document. The Korean version was not made available to the court. According to the document, it was translated by Deok Kon Kim on 19 December 2016. I note that it is referred to at [9] of Mr Kim's affidavit as a document he translated.
5. The translated April 2015 statement is a document headed "Recent Transactions Statement" (Transaction Statement) that appears to record transactions in Global HR's bank account with the Woori Bank in Korea during early 2014. It refers to the "Accountholder" as "Global H", an "Account No" ending in 7292, a period of enquiry as 17 October 2014 to 17 April 2015, a printout date of 17 April 2015, a "Withdrawable balance" of 56,567,696 Korean Won, and "Woori Bank". It contains details of the transaction time and date, amount paid or deposited (and to or by whom), and a running balance in respect of 22 transactions, including the following: 1. a payment on 7 January 2015 to "Shinhan Judicial Scrivener" in the amount of 616,940, leaving a balance of 98,138,899; 2. payments made to "Accounting firm Oneul" in the amount of 110,000 on each of 26 January, 25 February and 25 March 2014; 3. payments to "Sirex Pay Co Ltd" of 10,000,000 on 9 March 2015 and 1,000,000 on 10 March 2015; 4. a payment to "Goo" on 2 March 2015 for 854,000; 5. a deposit of 130,000 in respect of a transfer to national treasury "Geumcheon Tax Office" on 13 February 2015; and 6. eight payments, in respect of which the payee is unidentified (and signified by "???") in various amounts, including three payments of 1,500,000, 4,275,000 and 17,100,000 on 15 and 16 April 2014.

Meeting at the PappaRoti cafe

1. Sometime in April or May 2015 (Mr Goo asserts it was May), Mr Sim and Mr Goo met at the PappaRoti café in Strathfield. Mr Goo says that, on that occasion, he asked Mr Sim to return the $110,000 as soon as possible as there was no need for them to be sitting in a bank in Korea without an operational website. According to Mr Goo, Mr Sim said the following: "Mr Sim: I don't have the money. I don't want any legal issues so please don't sue me. Brother, I do not wish to continue working with you or to continue the project so, if you want to continue this project, sign this contract saying that you will not charge me criminally or sue in the civil court and I will hand over the work-in-progress material and source codes for the project. As for the $110,000 that was in Korea - I had personal debt and credit card debt that needed clearing so I have nothing to give you. Mr Goo: You cannot do this. You are obligated to return the funds and hand over the work done so far for the website. Mr Sim: I spent the money so do not talk about the money anymore. I will not hand over the work done so far if you refuse to sign the agreement that you will not pursue me with criminal charges or in the civil court. Mr Goo: You must return the funds. You are responsible for this. Mr Sim: (As he leaves) If you want the source codes sign the agreement and don't contact me anymore."
2. Mr Goo says that he "refused to sign the contract".
3. Mr Sim denies that the conversation referred to at [104] occurred and gave evidence in cross-examination that they met at the PappaRoti café in April 2015 (T213.31). Mr Sim deposes that Mr Goo did not ask him to return the $110,000 he described as the "Test Funds". He also says that he never told Mr Goo about any personal debt or credit card debt in Korea or that he had spent Oakwood's money on such debt and did not ever threaten to keep source codes from Mr Goo, Tokorea or Oakwood, arguing they were with Vivito who was building the website (Sim 1 at [68]).
4. Mr Goo and Mr Sim were both challenged in cross-examination about the meeting and what was discussed. Mr Goo did not accept that what he had said was incorrect (T90.35-38). Nor did Mr Sim (T214.7-9).

Deposits into Mr Sim's Westpac account

1. On 16 April 2015, two deposits of AUD $5,000 and $20,000 were made into Mr Sim and his wife's Westpac bank account. The following day $25,000 was deposited into the account and two withdrawals were made by way of payments to Citibank and ANZ Cards totalling $13,116.12 (Ex B at 303).
2. In cross-examination, Mr Sim accepted that the withdrawals made from his Westpac bank account involved payments to his personal credit cards (T205.5-12), rejected that the deposits (which totalled $50,000) was the $50,000 that Mr Goo says he gave Mr Sim in his garage for the Tokorea business (T205.19-21), and said he did not receive any cash from Mr Goo (T205.40-46). Mr Sim's explanation in cross-examination for why he had $50,000 cash landing in his personal bank account was that it was "the salary I received from Korea" (T207.5-7, T207.43-46). When asked why he did not refer to this in his affidavit, he gave evidence that it was "[n]ot necessary to add it" (T207.13, T207.49).

May 2015: Tokorea Shareholder Letter

1. On 15 May 2015, Mr Ahn (in his capacity as the sole director of Oakwood) issued a Notice of General Meeting of Tokorea to Tokorea's shareholders to move a resolution at a meeting on 5 June 2015 that Mr Sim be removed as a director effective immediately. The shareholders statement attached to the Notice refers to concerns about the direction of Tokorea under Mr Sim's directorship in light of the following: 1. internal auditing that Mr Sim withdrew the capital fund of $110,000 held in Woo Ri Bank in Korea under the name Global HR without consultation with the company; 2. the fund of $110,000 that was raised with the loan from Oakwood as the working capital for the intended remittance service through the website: www.2korea.com.au; 3. a conversation between Mr Sim and Mr Goo in April 2015 in Korean in the following terms: "Mr SIM: Mr. Goo, I don't want to do this business with you anymore. I used the capital fund held at Woo Ri Bank in Korea to pay off my credit card debt. Please take the balance of the capital fund left at Woo Ri Bank and the website developed for the company until today. Mr GOO: Please note that the fund held at Woo Ri Bank is not your personal asset. It is the company's working capital. Please pay back the funds misused by you to the company." 1. Oakwood continually requesting Mr Sim to return the money; 2. Mr Sim's absence from the office since mid-April 2015; and, 3. a suspicion that Mr Sim has embezzled or misused the money.
2. Mr Sim did not attend the 6 June shareholders meeting (T215.24). On 12 June 2015, Mr Sim was removed as director and secretary of Tokorea. There is no evidence that Mr Sim had any further dealings with Mr Sim, Oakwood or Tokorea after this, other than as a defendant in these proceedings.
3. Mr Sim accepted that he did nothing in response to the shareholder letter (referred to at [112]). He did not tell Mr Goo to stop saying that Mr Sim had embezzled money, did not start defamation proceedings or issue a cease and desist letter (T215.39-T216.5, T215.39-40), which he explained by reference to legal advice not having much money (T216.18-20, T216.39 and T217.17).

Later events

1. According to Mr Goo, Tokorea has never traded. On 27 June 2016, AUSTRAC cancelled Tokorea's registration as an independent remittance dealer on the Remittance Sector Register (TB115).
2. In June 2016, Mr Goo established an online remittance business using a website through a company called Hoju Jobs Pty Ltd.
3. The plaintiffs commenced these proceedings on 6 May 2019.

Attempts to obtain documents in these proceedings

1. On 19 March 2020, the plaintiffs served a notice to produce on Mr Sim that sought, amongst other documents: "All bank statements for all accounts from all banking institutions held in the name of [Global HR] for the period 1 October 2014 to 31 July 2015."
2. No documents were produced by Mr Sim in response to that request. According to correspondence sent by his solicitor on 15 April and 7 October 2020, Mr Sim had no documents in his custody or control that fell within the scope of that request, did not have any physical copies of bank statements concerning Global HR, had been unable to access electronic copies of the bank statements sought and could only obtain physical copies by travelling to South Korea which was not an option in late 2020 due to travel restrictions and cost.
3. Mr Sim was also cross-examined about why he did not produce Global HR's bank statements in response to the notice to produce. He gave evidence that "online banking was not possible" (T221.13), then accepted that he could access Global HR's bank statements online through online banking by using a log-in ID and password (T221.25-31, T221.44-49), then gave evidence that he could not get a bank statement unless he went to Korea (T222.2-4, T222.36-39), said he could not get a bank statement online but could access a "transaction" and extracts of online banking of Global HR from 2015 to 2020, and then agreed that he did not include the extracts in his affidavit (T222.19-30, T224.16-29). In re-examination, Mr Sim explained that Korean online banking does not provide the official bank statement (T225.2-T225.7).
4. On 28 July 2020, the plaintiffs issued a subpoena to KE Bank seeking the production of bank statements and documents relating to accounts in the name of Mr Sim and Global HR during the period 1 February 2014 to 31 July 2015. No documents were produced in response to the subpoena.
5. On 2 December 2020, the plaintiffs issued a letter of request for service of a subpoena on KE Bank in South Korea. A subpoena was issued on 17 December 2020, was returnable on 28 January 2021 and stood over to the hearing. There was no response to that subpoena.

Global HR dissolved

1. On 7 December 2020, Global HR was dissolved.

Claims and issues for determination

1. In the Further Amended Statement of Claim (FASOC), the plaintiffs assert that: 1. $110,000 (which the plaintiffs refer to as the "Test Funds") was given by Oakwood to Mr Sim for the specific purpose of testing the functionality of the online foreign exchange portal and website for the Tokorea business (testing purpose) and once transferred to South Korea, was to be used to establish the Tokorea business: at [24] and [25]; 2. the $110,000 was held by Mr Sim on trust for Oakwood for use for the specific purpose: at [26]; 3. the $110,000 was used by Mr Sim for his personal needs, not for the testing purpose which meant that the testing was not carried out and he has refused to refund or return the $110,000: [27], [28] and [29]; 4. $50,000 (which the plaintiffs refer to as the "December 2014 Investment") was given by Mr Goo to Mr Sim to use for the Tokorea business and to complete the Tokorea website: [30]; and 5. Mr Sim did not use the $50,000 to complete the website and refused requests to rectify defaults unless Mr Goo signed a release in respect of proceedings relating to his use of the "Test Funds": at [33A], [33] and [34].
2. The plaintiffs claim that, by reason of Mr Sim's conduct (at [124(c)] and [124(e)] above), Mr Sim has breached fiduciary, equitable and statutory duties he owed to Oakwood, Mr Goo and Tokorea, and is in breach of trusts (including an implied trust) in favour of Oakwood and/or Tokorea: FASOC at [19], [21], [41]-[43A] and [44]-[45]. They assert that those duties and trusts arose in circumstances which included that Mr Sim had been party to a joint venture with Mr Goo and Oakwood which provided, for the establishment of the online remittance business to be operated through Tokorea (FASOC at [16] and [17]) and an employee of Oakwood and director and shareholder of Tokorea: FASOC at [18] and [20].
3. They also plead that the $110,000 and the $50,000 are repayable as money had and received for the use of Oakwood and the Tokorea Business: FASOC at [47].
4. By way of relief, the plaintiffs seek a declaration, equitable compensation or judgment for the sum of the $110,000, equitable compensation for the $50,000, an account of profits, interest and costs: FASOC at [1]-[7].
5. In his defence to the FASOC (Defence), Mr Sim denies or does not admit each of the allegations save for admitting that he owes fiduciary and statutory duties to Tokorea as an officer and director, that he received the $110,000 from associates of Mr Goo and was an employee of Oakwood: at [21], [24] and [47]. Mr Sim also asserts that he was instructed by Mr Goo to transfer the $110,000 to Global HR (which he did), was not required to refund or return the money and says that the money is no longer in his possession: Defence at [24] and [29].

Pleading issues

1. The first issue raised by the parties' submissions relates to the plaintiffs' pleadings.
2. Mr Sim contended that the plaintiffs did not plead a Quistclose trust or that the funds were stolen and submits that it is now not open for the plaintiffs to argue that they were the subject of theft by Mr Sim, relying on Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 15.3. He submitted that the plaintiff did not plead that Mr Sim was an employee and contended that the plaintiffs cannot look to rectify their pleadings with the issuing of closing submissions. He also submitted that the plaintiffs' failure to join Global HR is critical as, if the Court is to accept that the funds did reach Global HR, then any claim for the return of the money necessarily needed to include orders made against the company.
3. In my view, the plaintiffs have fairly raised a cause of action based on a Quistclose trust. As the plaintiffs submit, a Quistclose trust is shorthand for a case in which an implied trust may be found to exist by reason of a specific purpose for which funds are given, the nature of which is clearly pleaded in this case: FASOC at [24]. The pleading of an implied trust is also made clearly in this case: FASOC at [44].
4. Contrary to Mr Sim's submissions, the FASOC pleads that Mr Sim was an employee of Oakwood: FASOC at [18].
5. As to Global HR, while accepting it was a proper party, in the context where the evidence indicates that all the money was "spent" in 2015 and the company has since been dissolved (TB36) there is a question as to the utility of doing so. That said, and for reasons which I will come to, the position of Global HR and its absence from the pleaded case is a significant issue in this case.
6. I deal with the submission relating to plaintiffs' assertion that money was stolen by Mr Sim later in these reasons.

Legal principles applicable to fact finding

1. The plaintiffs' submissions recognise that, to the extent that they allege a misappropriation of funds by Mr Sim, such allegations are serious and must discharge the onus as set out in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; [1938] HCA 34 that the Court "must feel an actual persuasion of its occurrence or existence before 'a fact' can be found".
2. Actual persuasion is achieved where the allegation is made out to the reasonable satisfaction of the court taking into account the seriousness of the allegation made, the inherent unlikelihood of the occurrence and the gravity of the consequences flowing from the particular finding: Evidence Act 1995 (NSW), s 140(2); Warner v Hung, In the matter of Bellpac Pty Limited (Receivers and Managers appointed) (In Liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48]; Perry v Perry [2021] NSWSC 1669 at [150].
3. Reference was also made to the observations of the plurality in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992)110 ALR 449 at 450 (Mason CJ, Brennan, Deane and Gaudron JJ): "… the strength of the evidence necessary to establish a facts or facts on the balance of probabilities may vary according to the nature of what/'s sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that member of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct. ..." (citations omitted)
4. The absence of documentary evidence where a party might be expected to be in possession of documents to corroborate their account, may give rise to an inference that such documents as they may be expected to have would not support their account: Jones v Dunkel at 321.
5. The unexplained failure warrants only the inference that the uncalled evidence would not have assisted that party's case (not an inference that such evidence would have been adverse) and the court drawing, with greater confidence, an inference open on the evidence. A Jones v Dunkel inference does not permit a choice between two guesses or conjectures or supply a missing gap in the evidence: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 111 at [63]-[64]; Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd [2017] NSWCA 99 at [174].

Mr Goo

1. As noted above, Mr Goo gave evidence through a Korean translator. On occasion, this appeared to lead to some misunderstandings, such as the evidence regarding the shadow director (T54.35-42, T58.34-36) and the need for questions to be repeated, particularly on the second day of cross-examination when Mr Goo said he was having difficulty with the interpreter (T89.6-12). In assessing his evidence, I have taken this into account and have been cautious before attaching significant weight to evidence that may have involved a misunderstanding of what was asked and answered.
2. There were times when Mr Goo was non-responsive and appeared to be argumentative (T40.26-34, T40.45-48, T49.49, T96.34). He had to be asked to answer the questions put by Mr Sim's counsel and was directed to answer a question by the court on one occasion (T88.18, T84.39-43).
3. There were also some aspects of Mr Sim's evidence that were new, unexplained and uncorroborated, such as his evidence that he received a document with Mr Goo's signature on it in return for the $50,000 (T51.41-43, T53.23-26). His evidence in cross-examination that he paid expenses relating to Global HR was also new and unsupported by any documents.
4. The reliability and credibility of Mr Goo's evidence was also undermined by the fact that aspects of his pleaded case and/or the submissions advanced at the hearing were inconsistent with his evidence. See for example, Mr Goo's evidence that Mr Sim was never considered to be an employee of Oakwood (Goo 2 at [9]) and the pleaded allegation that Mr Sim was an employee of Oakwood (FASOC at [18]); the evidence that Mr Goo agreed to give Mr Sim the 5 units in the FS Unit Trust for no consideration (Goo 1 at [76]) and the pleaded allegation that Oakwood transferred the units to Mr Sim by reason of his $50,000 investment in Oakwood (FASOC at [21B]); and Mr Goo's evidence that he agreed to enter into a partnership with Mr Sim and Mr You (Goo 1 at [60]) whereas the pleading asserts a joint venture between he, Mr Sim and Oakwood (FASOC at [14A]).
5. I did not find Mr Goo's clarification evidence regarding the Transaction Statement convincing (see [101] and [103] above). His evidence to the effect that the Transaction Statement reflected that the funds were mostly intact as debits from the Global HR account in Korea meant that money would be credited to the "Korea account in Australia" is difficult to accept (T88.23-26). It made little sense given the identity and business of some of the payees (who were apparently located in Korea and included service providers, as referred to at , (b) and (e) above) and the fact that some of the transactions pre-dated the website demonstration referred to at [89].

Mr Sim

1. During cross-examination, it was apparent that Mr Sim's English language skills impacted his evidence, English not being his first language. On occasion, he did not understand a question, the meaning of a word or the import of his answer (see e.g., T120.48-T121-14, T156.10, T198.5-7, T188.9-30, T207.5-37). At other times, his evidence was far from clear and difficult to follow (e.gT143.45-T143.12). I have taken this into account (adopting a similar approach to my treatment of Mr Goo's evidence).
2. In cross-examination, Mr Sim gave evidence about matters that were material to the issues in the case that had not been addressed in his affidavit and were unsupported by the documents. In particular, he gave evidence that the $110,000 was all spent on expenses and his salary (T153.37-41, T188.41-43, T154.3-43, T155.18-24),.
3. Mr Sim's explanation for why he did not include that evidence in his affidavit was that he thought his affidavit "was enough" (T162.1-2), he did not want anything "confusing" and it was not "necessary" (T181.48-T182.1). That was implausible in the context of a case where the plaintiffs were asserting that he had used the funds for his personal benefit. Similarly, Mr Sim's explanations for why he did not address other matters in his affidavit evidence were unconvincing, referring to them being "too complex" (T147.14-46), the affidavit would not "finish" (T135.30-34) and "not important" (T149.4-33).
4. Mr Sim's evidence in cross-examination about his ability to access bank statements for Global HR was inconsistent and his reasoning for why he did not produce bank statements relied on a technical distinction between an official hard copy bank statements and online transaction records (T164.2). Even accepting that was a proper basis for non-production, Mr Sim's failure to produce any bank records or other documents evidencing what the $110,000 fund was spent on was, in my view, indicative of a general lack of candour on his part, particularly as he had asserted in cross-examination that he had "proof" and such "documents did exist" (T160.8-11, T207.46).
5. During cross-examination, Mr Sim also gave inconsistent evidence regarding the deposit of the $110,000 into Global HR's bank account, new evidence on that topic (T143.45-144.11, T144.47-49).
6. I do not accept Mr Sim's evidence that he understood the Loan Document would be destroyed once the money was in South Korea. Mr Sim's evidence is inherently implausible and at odds with his later conduct, in which he falsely wrote that the $109,000 had been returned, which reflected badly on his credit (as referred to at [96]). Mr Goo's evidence regarding the Loan Document (at [66]), which I accept, is corroborated by Mr Back and is more consistent with the logic of events at that time.

In what capacity and for what purpose did Mr Sim receive the $110,000?

1. The plaintiffs' primary submission was that the $110,000 was given to Mr Sim in his capacity as a senior employee of Oakwood, and the money was and remained Oakwood's (by reason of a trust) (PCS at 94[a] and 94[c]). In the alternative, and if it is found that the money was Tokorea's (having been loaned by Oakwood), then it is contended that Mr Sim received it in his capacity as a director of Tokorea (PCS at 94[c]).
2. As to purpose, in written submissions, the plaintiffs seemed to resile from the pleaded purpose and submitted that the specific purpose for which the money was given to Mr Sim was for establishing the online remittance business in South Korea or, at least, to establish a bank account and company in South Korea which could be used as the South Korean end of the remittance transfers (PCS at [49]-[51]).
3. Mr Sim contended that the $110,000 was advanced by Oakwood to Tokorea to establish business operations in Korea (DCS at [73]). It was noted that, at the time Mr Sim received the money, Mr Sim was an employee of Oakwood and a director of Tokorea. Mr Sim accepts that when he received the funds, he owed duties to Tokorea at that time to ensure that the funds were deposited to Global HR to establish the business. However, Mr Sim says that he did not owe any duties to Mr Goo or Oakwood in respect of the funds because they were advanced by Oakwood to Tokorea (DCS at [71]).
4. In relation to the 1 October 2014 meeting, I accept Mr Goo's evidence and reject Mr Sim's and find that Mr Sim was present when Mr Goo was given the $109,000 cash. Mr Sim's evidence is corroborated by Mr Back. I draw no inference from the failure to call Mr You by either Mr Goo or Mr Sim. There is sufficient direct evidence as to who was at the 1 October meeting and what was (and was not) discussed. Further evidence from Mr You is not required to explain or contradict something in respect of those matters.
5. I find that the Loan Document was signed by Mr Sim to record that the $109,000 was received by him on behalf of Tokorea.
6. I accept that the Loan Document lacks a number of terms that would ordinarily be expected in such an agreement (such as a repayment date) and Oakwood does not sue under it. However, the evidence indicates that it was intended by the parties that the $110,000 was to be treated as a loan from Oakwood to Tokorea. In particular, Mr Goo's evidence (at [66]) makes that clear. The May 2015 shareholder statement also refers to the $110,000 as the subject of a loan from Oakwood to Tokorea. Mr Sim's signature on the Loan Document as Tokorea's representative is consistent with this conclusion and, in my view, reflects the capacity in which he received the money that day.

Was the $110,000 paid into Global HR's bank account?

1. I cannot be certain if and when Mr Sim caused the $110,000 to be transferred into a bank account in South Korea in the name of Global HR. The Transfer Receipt merely records that Mr Sim arranged for the money to be transferred by Westpac Bank to an account in his name at the KE Bank in Seoul on 1 October 2014 and that the money was intended for "investment in Global HR". There is also no document that evidences the transfer from Mr Sim's KE Bank account into a bank account in the name of Global HR after 8 October 2014, the date on which Global HR was incorporated.
2. Nevertheless, overall, the evidence satisfies me that, on the balance of probabilities, an account was established in the name of Global HR at the Woori Bank in South Korea that was used in connection with the online remittance business and that the $110,000 was deposited into that account sometime after 8 October 2014, and I so find. This is based on the following.
3. First, the evidence satisfies me that Global HR was set up by Mr Sim at the request of Mr Goo as a corporate vehicle to enable the establishment of a banking contract and to activate online transactions as part of the Tokorea business, that Global HR was to be run by Mr Sim on instruction from Mr Goo (similar to the position in relation to Oakwood and Tokorea), that the $110,000 represented an amount of capital required to establish that company for the Korean arm of the Tokorea business, and a bank account for that company was required to be set up. I also find that it was intended and known to Mr Goo that the $110,000 was to be transferred to a bank account to be established in the name of Global HR. This is supported by the contemporaneous documents that were sent by Mr Sim to Mr Goo and Mr Goo's own evidence in cross-examination (at [68] and [78]).
4. Second, Mr Goo's evidence that Mr Sim "used the Korea-based [Global HR] … bank account when he transferred money from Australia to Korea" during the website demonstration in February 2015 indicates that a bank account in Global HR's name was in existence.
5. Third, the Tokorea shareholder statement refers to the withdrawal by Mr Sim of the capital fund of $110,000 from the "Woo Ri Bank in Korea under the name of Global HR" which was "investigated through internal auditing". The document is a contemporaneous record that acknowledges the existence of the account and the money deposited into it by reference to internal auditing that had been carried out.

What happened to the $110,000? Has there been a failure of the purpose for which it was provided, was Mr Sim entitled to receive a salary from it, and did Mr Sim use it for his own benefit/misappropriate the money?

1. I find that Mr Sim was aware that the $110,000 was paid for the purpose of and to be used as capital and legitimate business expenses relating to the operation of Global HR in connection with the establishment of Tokorea's online remittance business in Korea. The evidence makes plain that Mr Sim had informed Mr Goo about the expenses prior to the establishment of Global HR and I find it likely that Mr Sim understood that he was expected to keep Mr Goo informed about costs in relation to the online remittance business after 8 October 2014.
2. I reject Mr Sim's oral evidence (at [155] above) that all of the $110,000 was paid on business expenses for Global HR other than the $50,000 he paid to himself as salary. I also reject his submission that the Transaction Statement and the Westpac bank account records are consistent with that position (DCS at [62] and [74]). Leaving to one side that Mr Sim disclaims the Transaction Statement, from a timing point of view, it does not seem possible that the 56 million Won balance referred to on the Transaction Statement (which recorded transactions up to 17 April 2015) could have been deducted from the Global HR bank account so as to appear in an Australian Westpac bank account on 16 and 17 April. That said, I accept that the large deposits into Mr Sim's account is evidence that supports the inference that the money in that account may have been sourced from the $110,000 at one time.
3. I do not accept that Mr Sim genuinely believed that a payment of $50,000 to himself as salary was consistent with the purpose for which the $110,000 was provided and that he had authority to do so. I reject his evidence that the money he gave himself represented salary for work done in relation to Tokorea's online remittance business and Global HR.
4. I accept Mr Goo's evidence that he paid Mr Sim separately for some expenses to set up the business and Global HR in South Korea, such as IT expenses. However, in the absence of documents from Mr Goo that identify what expenses he paid, the evidence that the $110,000 was to pay operating costs and business expenses and that Mr Sim had to pay accounting expenses, and the evidence of expense receipts sent by Mr Sim to Mr Go, I find it likely that Mr Sim paid some expenses relating to Global HR and its operations on Korea from the $110,000.

Claims pressed by the plaintiffs in light of findings

1. The plaintiffs accept that if the court finds (as I have) that the $110,000 was paid by Oakwood and received by Tokorea (by Mr Sim as its director and representative), they cannot maintain the claims advanced on behalf of Oakwood that were premised on Mr Sim having received Oakwood's money in his personal capacity and/or in his capacity as a senior employee of Oakwood or joint venture partner of Oakwood. Those claims were described in the PCS as the money had and received for use for Oakwood (Claim 1, PCS at [97]), a Quistclose trust in favour of Oakwood (Claim 2, PCS at [98]), a stolen funds given rise to a trust in favour of Oakwood (Claim 3, PCS at [99]), a breach of fiduciary and equitable duties owed to Oakwood as a senior employee (Claim 4, PCS at [100]) and a breach of fiduciary and equitable duties owed to Oakwood as a partner in the alleged joint venture (Claim 5, PCS at [101]).
2. As the plaintiffs also accepted that it was not necessary to deal with all of their pleaded claims and identified their primary claims for relief in cascading order (with the claims made on behalf of Tokorea as alternative claims to those made in favour of Oakwood: PCS at [96] and [102]), I have approached the consideration of the remaining issues by reference to the alternative claims identified in the plaintiffs' PCS that are made on behalf of Tokorea.
3. I should record that I would not have been satisfied that the plaintiffs had established that Mr Sim was a senior employee of Oakwood or owed fiduciary or equitable duties as a party to the alleged joint venture with Oakwood and Mr Goo when he received the $110,000 (assuming the money was received by him in one of those capacities).
4. The plaintiffs' claim that Mr Sim was a senior employee of Oakwood was supported by some documents (see for example, the Management Contract that referred to Mr Sim being part of the management team of Oakwood and Tokorea, the 8 May minutes that referred to him being responsible for the online business of the company and having the potential to share in profits).
5. However, but for the admission in Mr Sim's defence (DCS at [42]), I would have concluded that he was not in a fiduciary relationship as an employee of Oakwood as the contention was directly contradicted by Mr Goo's own evidence, in which he asserted that Mr Sim was never considered an employee (at [149] above). The quantum of Mr Sim's remuneration from Oakwood of only $2,000 per month, the fact that Mr Sim was not a shareholder in Oakwood on 1 October 2014 (but was a shareholder in Tokorea) and the absence of any steps taken by Oakwood to terminate his employment in 2015 (at or around the time he was dismissed as a director of Tokorea) are also factors that, in my mind, militate against a finding of an employment arrangement with Oakwood that provided that Mr Sim was in a position of ascendancy, with powers and discretions vested in him in that company: Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004 at [69]).

Does Mr Sim have a personal obligation to pay Tokorea the $110,000?

1. The plaintiffs advance three claims that they contend give rise to a personal obligation on Mr Sim to repay the $110,000 to Tokorea.
2. The first claim is for money had and received on the basis of a failure of the purpose for which the money was given to Mr Sim, which is said to be a failure of consideration, without permission. They also say that the cause of action is available in circumstances where the money was stolen by Mr Goo, as an independent restitutionary claim based on unjust enrichment.
3. Second, they claim that the specific purpose and the circumstances of receipt of the $110,000 imbued it as trust money in which respect of which Mr Sim held as trustee for Tokorea pursuant to a Quistclose trust.
4. Third, they say that Mr Sim stole the $110,000 by using the money for his personal expenditure, which gave rise to a trust in accordance with the principle from Black v Freedman at 110: "Where money has been stolen, it is trust money in the hands of the thief, and he cannot divest it of that character."
5. Mr Sim submits that the plaintiffs money had and received and the Quistclose trust claims must fail as once the money was paid to Global HR the money became part of its assets and Mr Sim ceased to be a trustee of the money for Tokorea. He also argues that to the extent there was any trust in respect of the $110,000 (which is denied), the money would have been held on trust by Global HR, with any liability to repay the funds falling on the company rather than Mr Sim.
6. In addition to raising the pleading point taken (referred to above), Mr Sim submitted that it was not open to the plaintiffs to advance the argument that the money was stolen as it was freely given by Mr Goo to Mr Sim and then to Global HR in accordance with Mr Sim's instructions.
7. In reply, the plaintiffs contended that Mr Sim's submission failed to engage with the substance of the Quistclose submission they propounded. They argued that their common law money had and received and other equitable claims are not defeated even if there is no Quistclose trust because the court should find that the $110,000 was at some point transferred back to Mr Sim and was personally spent by him.

Was there a Quistclose Trust in relation to the $110,000?

1. The plaintiffs submitted that a Quistclose trust arose in favour of Tokorea as the $110,000 was received by Mr Sim to be used exclusively for a specific purpose, namely the establishment of the online remittance business in South Korea or, at least, to establish a bank account and company in South Korea, with the intention that if that purpose failed, the money was to be returned to Australia (PCS at [49]-[51]). They referred to the principles in Raulfs v Fishy Bite at [42] and [47] (PCS at [98]).
2. The plaintiffs contended the $110,000 did not become Global HR's property or part of its assets because of the specific purpose for which the money was paid, which Global HR knew through Mr Sim's knowledge (PCS at 94). They argued that Mr Sim's trusteeship of the money did not come to an end when the money was received by Global HR and that he is liable for breach of trust as the $110,000 must have been paid out from Global HR's bank account to Mr Sim on his direction subject to his obligation as a trustee of the money.
3. Mr Sim, who submitted that there is no Quistclose trust issue arising in the circumstances, also relied on Raulfs v Fishy Bite at [51]. He said that there was nothing to suggest that he should be deemed a trustee of the money as it was deposited into Global HR's account in accordance with instructions, was advanced for the general purpose of paying business expenses and capital, was not segregated from the other assets of Global HR and there is an absence of evidence suggestive of any intention to create a trust over the money.
4. In Raulfs v Fishy Bite at [42], Campbell JA referred to Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335, in which Gibbs ACJ (at 353) (Jacobs and Murphy JJ agreeing) referred to the decision in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 as: "…authority for the proposition that where money is advanced by A to B, with the mutual intention that it should not become part of the assets of B, but should be used exclusively for a specific purpose, there will be implied (at least in the absence of an indication of a contrary intention) a stipulation that if the purpose fails the money will be repaid, and the arrangement will give rise to a relationship of a fiduciary character, or trust"

Money had and received

1. The claim for money had and received by Mr Sim for the use of Tokorea is not pleaded in the FASOC (the only moneys had and received claim as pleaded was for the use of Oakwood and the Tokorea business by reference to Mr Sim's failure and refusal to refund the $110,000 and $50,000 to Mr Goo and Oakwood). However, as no objection was taken by Mr Sim to the way in which the claim was advanced in the plaintiffs' written submissions, I have dealt with it below.
2. A money had and received claim is a common law personal restitutionary remedy. It has been described as a "[a] cause of action … [which] is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff": Juul v Northey [2010] NSWCA 211 at [216] (McColl JA, Basten and Campbell JJA agreeing).
3. Total failure of consideration is an established basis for restitution and a claim for money had and received: Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 (Roxborough) at [20], [101]-[109]. It arises where the state of affairs contemplated as the basis or reason for the plaintiff's payment have failed to materialise or, if it did exist, have failed to sustain itself: Roxborough at [16], [104].
4. It is the performance of the defendant's promise not the promise itself which constitutes the relevant consideration for the purposes of this principle: Raulfs v Fishy Bite at [87], citing Baltic Shipping Company v Dillon (1993) 176 CLR 344 (Baltic Shipping) at 350-1; [1993] HCA 4. There is also a general requirement that failure of consideration be "total" in the sense that there must have been no part of the agreed return provided, unless perhaps the consideration can be apportioned or severed: Baltic Shipping at 350 (Mason CJ); David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (David Securities) at 382-3; [1992] HCA 48.
5. In Roxborough, Gleeson CJ, Gaudron and Hayne JJ explained the meaning of the term failure of consideration in the restitutionary context at [16]: "Failure of consideration is not limited to non-performance of a contractual obligation, although it may include that. The authorities referred to by Deane J, in his discussion of the common law count for money had and received in Muschinski v Dodds (1985) 160 CLR 583 at 619-620, show that the concept embraces payment for a purpose which has failed as, for example, where a condition has not been fulfilled, or a contemplated state of affairs has disappeared (see Birks, An Introduction to the Law of Restitution (1985) at p 223). Deane J, referring to "the general equitable notions which find expression in the common law count", gave as an example "a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it" (Muschinski v Dodds (1985) 160 CLR 583 at 619-620). In the case of money paid pursuant to a contract, it would involve too narrow a view of those "general equitable notions" to limit failure of consideration to failure of contractual performance."

Black v Freedman trust

1. In Black v Freedman, the High Court held (at 110) that money given by a thief to a third party who received that money as a volunteer could be recovered by the victim of the theft although the third party had not participated in the theft.
2. The Black v Freedman principle applies not only where the plaintiff's money has been stolen, but also where it has been misappropriated or obtained by fraud: Re Courtenay House Capital Trading at [30] (Brereton J); Voyages Indigenous Tourism Australia Pty Ltd v Tristar Alliance Group Pty Ltd [2020] NSWSC 477 at [43]; Alesco Corp Ltd v Te Maari [2015] NSWSC 469 at [142].
3. In the matter of Courtenay House Capital Trading Group Pty Limited (in liquidation) and Courtenay House Pty Limited (in liquidation) [2019] NSWSC 1113, a company had procured deposits into Westpac Accounts not for the advertised purpose of undertaking foreign exchange trading, but to return funds to earlier investors in the course of a Ponzi scheme which was contrary to the documentation provided to investors (although a small percentage of the deposits went to foreign exchange trading): at [36]. Black J held that money given by investors to the Companies for a specific purpose was held on a Black v Freedman trust for the investors: at [38].
4. The plaintiffs claim for a Black v Freedman trust is sought on the basis of an allegation that Mr Sim stole the money by using the $110,000 for personal expenditure. It was submitted that Mr Sim cannot divest himself of the trust by alleging (without evidence) he removed the funds to a corporate entity of which he had sole control. They submitted that the obligation to repay continues and survives any temporary receipt by Global HR as Mr Sim was always in control of the funds and his legal obligations still existed when he then must have personally received the money and spent it.
5. The plaintiffs did not advance a case that the $110,000 was procured by Mr Sim by misrepresenting the purpose for which the money was required, or by fraud. The only pleaded allegation is that Mr Sim did not use the money for the purpose for which it was given to him and used it for his personal needs. It is only in submissions that the plaintiffs contended Mr Sim had stolen the money and was a "thief".
6. I reject the plaintiffs' claim based on a Black v Freedman trust for two reasons.

Has Mr Sim breached his fiduciary or directors' duties owed to Tokorea?

1. The final claim advanced by the plaintiffs in relation to Tokorea is the claim that Mr Sim's conduct was in breach of his fiduciary duty owed to Tokorea as a director to not derive a personal profit from Tokorea by personally spending the money for no benefit to Tokorea.
2. Mr Sim's closing submissions did not address this claim, other than to acknowledge that Mr Sim was a director of both Tokorea and Global HR, and to contend that the only duty he owed to Tokorea was to ensure that the $110,000 was deposited to Global HR's account (which he had done). He also admitted that he owed fiduciary duties to Tokorea as its director (Defence at [21]).
3. The plaintiffs submitted that Mr Sim owed a fiduciary duty to Tokorea to not derive a personal profit from Tokorea, citing Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 (Ancient Order) at [68]-[69]. They claim that the duty arose from his statutory position as director of that company (PCS at [103], [116]-[117]).
4. The plaintiffs also submitted that Mr Sim breached his fiduciary duty as a director by personally spending the money for no benefit to Tokorea (PCS at [103]). They claim that the use of the $110,000 was not in good faith or in the best interests of Tokorea, nor for a proper purpose (FASOC at 42(a)(i); PCS at [131]), that Mr Sim used his position to gain an advantage or profit for himself or someone else, that he caused detriment to Tokorea by depriving it of the benefit of the $110,000 (FASOC at 42(a)(ii)-(iii)), and that he put himself in a position where he advanced his own personal interest in conflict with Tokorea's best interests (FASOC at 42(a)(iv)).
5. As a director of Tokorea, Mr Sim could not use its property for his personal benefit without the company's authority and could not take remuneration or other benefits from the company's resources unless authorised by law, any company constitution or with the fully informed consent of the company in general meeting: Robert Austin and Ian Ramsay, Ford, Austin and Ramsay's Principles of Corporations Law (17th ed, 2018, LexisNexis Butterworths) at [9.200].
6. The fiduciary duties of a director not to promote their personal interests by taking profits or advantaging from a company's property or funds for themselves in circumstances where there is a conflict or a real or substantial possibility of a conflict between his personal interests and those of the company cover the same grounds as the similar statutory duties under the Corporations Act 2011 (Cth): ASIC v Adler at [735].

Equitable compensation and relief

1. Given my conclusion that the plaintiffs have not established any claims based on a breach of equitable obligations or duties, it is not necessary to address the issues raised by the plaintiffs' submissions with respect to the quantification of equitable compensation. I simply record their reliance on the principles from Ancient Order and Houghton v Immer (No 155) (1997) 44 NSWLR 46, emphasising that Mr Sim's failure to keep and produce proper accounts has made it difficult assess the compensation due to the plaintiffs and the court should assess it in a robust manner, relying on the presumption against wrongdoers.

Claims in relation to the $50,000

1. The remaining claims relate to the asserted payment of $50,000 to Mr Sim by Mr Goo.
2. The plaintiffs contend that Mr Goo, from his own personal source of funds, paid the $50,000 to Mr Sim, in Mr Sim's personal capacity, or in the alternative, it was in his capacity as director of Tokorea. They submit that the court should conclude that the money was advanced for the specific purpose of finishing building the website needed for Tokorea's online remittance business.
3. Mr Sim denies receiving the $50,000.

Consideration and determination

1. Even accepting that Mr Goo was a trusting person who dealt with large amounts of cash, I found the concept of him handing over $50,000 in cash to Mr Sim without something in writing somewhat odd given his evidence that he was told by Mr Back that Mr Sim was spending all the company money and not doing the work. It was unhelpful to Mr Goo's case that there was no text, email or other document referring to that amount, and no document in evidence that could be construed as "I received something in return, a document, [with] his signature on it" (at [81]) that Mr Goo got in return from around that time, or later.
2. That said, there is some objective evidence that supports Mr Goo's claim that he gave Mr Sim $50,000 in cash. The facts make plain that Mr Goo was seeking for Mr Sim to return his five units in the KS Unit Trust and they were valued at $50,000 (at [79] and [88]). His explanation for why the Loan Document was prepared for the $110,000 but not the $50,000, (namely, the $110,000 was Oakwood's money and other investors were involved T98.23-T99.1) was plausible, in contrast to Mr Sim who could give no plausible explanation for why he would give up his units worth $50,000 without any return, other than to refer to some new evidence about a conversation with Mr Goo (at [88] above).
3. The deposits into Mr Sim's Westpac bank account that add up to $50,000 also provide some objective support for the payment, albeit some five months later. Mr Goo was also clear and firm that he gave the money to Mr Sim.
4. On balance and having weighed up the evidence of Mr Goo and Mr Sim against the other matters and the logic of events, I am persuaded to accept Mr Goo's evidence that he gave Mr Sim $50,00 in cash in early December 2014. However, for the following reasons, I have concluded that Mr Goo's claims for the return of that money must fail.
5. In this case, Mr Goo's causes of action in relation to the $50,000 are based on a finding that Mr Goo gave the $50,000 to Mr Sim to use for the Tokorea business and to complete the website, and that he did not use it for that purpose. The evidence relied on by the plaintiffs is Mr Goo's evidence of his conversation with Mr Sim (at [80]), and the contention that Mr Sim received the money on the understanding that it was to be used by him for the purpose of finishing building the website.

Conclusion, costs and orders

1. In summary, I am not satisfied that the plaintiffs have established any of their claims against Mr Sim and refuse their application for the relief claimed in the FASOC. It follows that I will order that the FASOC be dismissed.
2. I see no reason why the usual order that costs follow the event should not apply and propose to make an order for the plaintiffs to pay Mr Sim's costs of these proceedings. However, as the parties have not addressed the issue of costs and the plaintiffs indicated they wished to be heard on that issue, I have deferred entry of the proposed costs order for 21 days to enable the parties to make an application if they consider a different order should be made. In that event, the party seeking a different costs order should confer with the other parties and, before the orders take effect, notify my Associate by email of such together with their written submissions on that issue (of no more than three pages) and an agreed date for submissions in response, with a view to the issue of costs being determined on the papers.
3. For these reasons, I make the following orders: 1. Dismiss the Further Amended Statement of Claim. 2. Unless any party makes an application for a different cost order within 21 days, the defendant's costs of these proceedings be paid by the plaintiffs on an ordinary basis as agreed or assessed.

Endnotes

1. I infer from the spelling and the context that Mr Joon Won Yoo is Mr Jun Won You, who is recorded as a shareholder of Oakwood in 2014.
2. I note that another English version of the document in evidence translates the heading as "Letter of Confirmation of Loan Bond" (TB156).

Amendments 11 April 2022 - 11/04/22 - deletion of heading above paragraph [86] and "on" corrected to "of" in heading above paragraph [97] 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: 11 April 2022