Peter Chan
68 As already noted, at all times Peter Chan has been a shareholder and director of Hylepin and he is presently the sole shareholder of Hylepin. Peter Chan swore an affidavit dated 13 May 2019 and was cross-examined.
69 Peter Chan was born in Kedah, Malaysia on 18 July 1939. He came to Australia in 1958 and graduated in Dentistry from the University of Melbourne. Soon after his graduation, he found a job as a dentist in Kerang, northern Victoria. Later, he moved to Melbourne and started work in a dental surgery in St Kilda. In 1969, he married his late wife, Celia, and also opened up his own dental surgery in St Albans. He continued to work as a full-time dentist until around 1991 when he reduced his hours and worked part-time. He retired some years later. Celia Chan was a qualified accountant.
70 Peter Chan deposed that he met John So through his role with the Chinese Professional and Business Association. He explained that, during the 1980s, he became interested in Chinese community work so he joined the Association and, after a short time, became the Vice President. The Association held dinners in Little Bourke Street at various Chinese restaurants, which Peter Chan attended.
71 Peter Chan said that, after first meeting John So, he would see him from time to time in Chinatown (I interpolate, in Little Bourke Street, Melbourne) and talk with him. In around 1986 or 1987, Peter Chan had a conversation with John So about becoming a shareholder in Doshay. Peter Chan conceded that he cannot now recall the particular circumstances of the conversation, or the specifics of what was said, but that John So said words to the effect that Doshay would operate a Chinese restaurant to be called 'Dragon Boat' in Chinatown, that John So had a history of running Chinese restaurants and had considerable expertise, and that he would make Doshay profitable and would grow the company. John So also said that the business would be owned by him, Peter Chan, Andy Hui (who was to be the head dim sum chef), Willie Yeung (who was to be the head waiter), John So's three brothers, John So's wife Hellen, and a company called Pecosong Pty Ltd (Pecosong). Peter Chan agreed to the proposal and incorporated Hylepin for that purpose. On 30 March 1987, Hylepin subscribed for 30,000 ordinary shares in Doshay. Peter Chan said that, in late 1987, during an encounter in Chinatown, John So told him that Willie Yeung no longer wanted to be part of the Dragon Boat Restaurant. John So offered Willie Yeung's shares for sale to Peter Chan, and the other Doshay shareholders. In November 1987, Hylepin purchased 15,000 shares from Willie Yeung, and Pecosong purchased the other 15,000.
72 As discussed below, John So's recollection of these events differs somewhat from Peter Chan's, but nothing turns on the differences.
73 Peter Chan became a director of Doshay on 30 March 1987 and remained a director until 8 August 1991. In 1991, Peter Chan and his wife Celia used their company, Cathay International Pty Ltd trading with the business name "Cathay Gold Nugget", to commence operating a TAB agency on the ground floor of 117 Lonsdale Street, Melbourne. Peter Chan and his wife had owned the property at 117 Lonsdale Street since 1982. In 1991, the Victorian Government passed a law to allow gaming machines in Victoria. In 1992, after the relevant permits had been obtained, Cathay International Pty Ltd also operated a gaming machine business from the first floor of the building and managed the Cathay Gold Nugget business until it was sold in 2000.
74 In about the year 2000, Celia Chan became terminally ill. Peter Chan deposed that he and his wife then spent more time travelling outside of Australia and did not prioritise business affairs. Celia Chan died on 8 March 2004.
75 The burden of Peter Chan's evidence was to the effect that neither he nor his late wife were informed or consulted about the impugned transactions by John So and Hylepin never received financial statements concerning Doshay. Peter Chan expressly denied John So's evidence to the effect that John So met regularly with the members of Doshay (including Hylepin, represented by the Chans) to discuss its business affairs.
76 I do not consider that Peter Chan was a reliable witness, particularly on the question whether Hylepin was informed about the impugned transactions and whether Hylepin received copies of Doshay's financial statements. The evidence given by Peter Chan in cross-examination was often vague and inconsistent with both his own evidence and the documentary record. Peter Chan himself accepted that the events the subject of the proceeding occurred a long time ago and that, consequently, it was difficult to recall those events. However, the inconsistencies in Peter Chan's evidence went beyond the inevitable difficulty in recalling events from up to 30 years ago. In my view, aspects of Peter Chan's evidence involved reconstructions designed to favour the case brought by Hylepin. I regard the following matters as having particular significance and undermining Peter Chan's reliability and credibility as a witness:
(a) As stated above, Peter Chan became a director of Doshay on 30 March 1987 and remained a director until 8 August 1991. Although Peter Chan acknowledged during cross-examination that his duties as a director of Doshay included considering and approving annual financial statements, when asked whether he had performed that task during his tenure as director, he said he could not recall. When Peter Chan was shown the Doshay financial statements for FY1989, he denied having ever seen them. When it was put to Peter Chan that he had in fact seen financial statements of Doshay during his tenure as director, he said he could not recall. When asked whether it was possible that he had in fact seen the financial statements, but had forgotten that fact, Peter Chan said he could not recall. When Peter Chan was shown a resolution of the directors of Doshay, signed by him, in which he expressed the opinion that the information contained in the company's annual return for FY1989 was correct, and it was put to him that he would not have signed such a document unless he had first familiarised himself with those financial statements, he replied that he trusted John So's reporting on the activities of Doshay. I consider that Peter Chan's evidence as to whether he received or read Doshay's financial statements during his period as a director of the company was both inconsistent and implausible, entailing responses that included, "I can't recall reading the financials but apparently - maybe I have, maybe I haven't"; "I wasn't shown the financials whatsoever"; "I can't remember"; and stating that certain financial statements "were not tabled for discussion" and that from "day one" of his investment, he never saw a set of financials up until July 2014. I consider that the answers given by Peter Chan were evasive and inconsistent and undermined his credibility.
(b) In his affidavit, Peter Chan deposed that the first time that Hylepin and he had received any financial statements from Doshay was July 2014. When asked in cross-examination whether his wife, a director of Hylepin and a qualified accountant, ever asked for copies of the financial statements of Doshay, Peter Chan said she did but that she never received them. When asked whether Hylepin ever made any written request to John So for copies of Doshay's financial statements from 1991 to 2004, Peter Chan said it did not. Peter Chan said that his wife only told him verbally of the requests she had made to John So for financial statements. When Peter Chan was asked how John So's refusals to provide Doshay's financial statements to his wife made him feel, he said it made him feel anxious because he did not know how the company was performing. When asked why Hylepin did not send any written requests to John So regarding Doshay's financial statements, Peter Chan said he thought that the verbal requests made by his wife would be sufficient. When it was put to Peter Chan that he would have known that the verbal requests were insufficient, because on his evidence his wife had never received any financial statements when she had made those requests to John So, he agreed. When Peter Chan was asked whether he had personally asked John So for Doshay's financial statements, he said he did so on four occasions. When he was further asked about these four occasions, Peter Chan said he might have asked on more than four occasions, but he could not recall. Peter Chan's evidence was that, up until his wife's death in 2004, his focus was on her health and that this was why he did not follow up John So to obtain copies of Doshay's financial records. When it was put to Peter Chan that his wife only became terminally ill in 2000, and that his wife's illness would therefore not have prevented him from making inquiries with John So regarding Doshay's financial statements in the period from 1991 to 2000, Peter Chan said that they had no evidence of any wrongdoing on the part of John So and his wife's health was his priority. I regard Peter Chan's evidence as lacking cogency. It is inherently implausible that Peter Chan and his wife sought financial statements from John So, were rebuffed and then failed to act. The implausibility of the evidence is compounded by events in 2004. Peter Chan was asked whether information pertaining to Doshay had been sought and obtained in connection with administering his wife's deceased estate after she passed away in 2004. Peter Chan denied that that had occurred. However, a letter dated 15 May 2004 showed that Hylepin had (by means of a letter signed by Peter Chan himself) requested financial information from Doshay and asked for the information to be provided to QR Accounting Services. On 1 June 2004, Doshay's accountants, Paul Tjioe & Associates, wrote to QR Accounting Services enclosing income tax returns and financial statements for Doshay for the four financial years FY1999 - FY2002, and stated that the financial statements for FY2003 would be forwarded in the week commencing 14 June 2004. No evidence was called from Hylepin's accountants (the designated recipients of the financial statements) to suggest that those documents (or other financial statements pertaining to Doshay) had not been provided and I infer that the financial statements were provided. Confronted with the correspondence from 2004, Peter Chan ultimately conceded that his sworn evidence regarding non-receipt of Doshay's financial statements may have been mistaken.
(c) In an affidavit sworn 14 December 2016, Peter Chan deposed that it was in or around March 2008 that he learned of the formation of Global 2000 and its purchase of the Exhibition Street Property and the Lonsdale Street Property. His sworn evidence included the statement "From that time I became concerned that John So was moving assets away from Doshay into entities under his and Wendy Cheng's control". If that evidence were correct, it creates difficulties for Hylepin because Doshay has raised a limitations and laches defence in the proceeding (arising from Hylepin's failure to raise any concerns with Doshay at that time). In his affidavit sworn on 13 May 2019, Peter Chan's evidence changed: he deposed that it was on or around 15 May 2013 that he "became aware for the first time that Global 2000 and not Doshay was the registered proprietor of the Exhibition Street Property and the Lonsdale Street Property". During cross-examination, Peter Chan repeated that he first learned of the existence of Global 2000 in May 2013. When it was put to Peter Chan that he had in fact become aware of the existence of Global 2000 much earlier, shortly after Doshay's purchase of the Exhibition Street Property in 2000, he denied this. When asked whether he had become aware in 2008 of the purchase of the Exhibition Street and Lonsdale Street properties by Global 2000 rather than Doshay, Peter Chan said he had not. When asked if he had ever sworn an affidavit to that effect, Peter Chan said he could not recall. When the inconsistency in his affidavits was put to Peter Chan, he said that the statement in his earlier affidavit was due to an error of expression and that only his son (Ben) had learned of the purchase by Global 2000 in 2008 when he ran a title search, and his son did not inform him of that fact. I consider that Peter Chan's evidence that his 2016 affidavit contained a "mistake of expression" to be implausible and the evidence undermined his credit. It is also implausible that Peter Chan's son Ben discovered Global 2000's ownership of the Exhibition Street and Lonsdale Street properties in 2008 (when he was a director of Hylepin) and did not inform Peter Chan.
(d) In his affidavit, Peter Chan deposed that the first time that he became aware that Doshay had acquired shares in Westlake was in 2014. In cross-examination, it was put to Peter Chan that he knew that Doshay had made an investment in Westlake in 1989, to which he first replied "maybe" and subsequently replied "yes". Peter Chan then gave evidence that John So told him about the investment after it was made in the presence of Hellen Chin and Andy Hui, but he could not recall the month when he was told. Peter Chan was asked whether he asked John So the amount of the investment, and he replied that he did not. When asked why he did not, he said that there was no point because the investment had been made. I do not accept that Peter Chan has an actual recollection of that conversation which occurred 30 years before he gave evidence and that his evidence was an unreliable reconstruction.
(e) Although not directly relevant to the issues in dispute, Peter Chan was also asked during cross-examination whether he recalled the existence of a company named Lyleglow Pty Ltd (Lyleglow). Peter Chan said he did not. He was unable to explain why Hylepin, a company of which he is a director, is listed as a shareholder of Lyleglow in an ASIC extract for the company. When Peter Chan was asked whether he remembered a restaurant in Chinatown called Diamond Dynasty, he said that he did. When it was put to Peter Chan that Lyleglow owned the Diamond Dynasty restaurant, Peter Chan replied that he thought he was a shareholder, not Hylepin. When it was put to Peter Chan that his recollection that he was a shareholder of Lyleglow (as opposed to Hylepin) was likely mistaken, he said that "it appears so on paper". When it was put to Peter Chan that Lyleglow was a company which operated a restaurant business named Diamond Dynasty and that he had forgotten that fact, Peter Chan said that he had not previously been aware of the existence of Lyleglow. When Peter Chan was shown during cross-examination an administrator's report in respect of Lyleglow showing that Hylepin held 161,000 shares in Lyleglow, he said "I think I remember now" and offered the following evidence:
I remember the situation is like this. John So asked me to contribute or to pay $161,000 because he used Doshay to buy the defunct Diamond Dynasty. We were all against it, but he said that it's just too late; we have to come up with that money or else Doshay will lose all its money. So I think I have to ask my friend for a favour, Mr David Norris, my fellow colleague in the East Keilor Rotarian Club - Rotary Club, to give me a loan of $161,000. In two days he got it for me, and I paid Mr John So, and he said, "No, write it payable to Mr Chun Sek Cheng. Now I remember that incident. At no point we were part of - Hylepin was part of the Diamond Dynasty. Apparently, Mr John So take - on his own joined Hylepin into it. But to me it is a loan to him. But he converted it into shares. Now I remember why.
(f) When challenged about that evidence, Peter Chan agreed that his conclusion that John So had converted the loaned money into shares in the name of Hylepin was a conclusion he drew in the witness box based on having been shown the administrator's report. When asked whether Peter Chan had ever referred to the existence of the $161,000 which he said he had loaned to John So in written correspondence related to this proceeding, he said he had not. When asked why he had not included a claim for repayment of the $161,000 loan to John So in this proceeding, Peter Chan said he did not want to complicate the proceeding. I do not accept any aspect of Peter Chan's evidence about Lyleglow and Diamond Dynasty. In my view, Peter Chan's testimony demonstrated a propensity to speculate and reconstruct events based on limited evidence, particularly the statement that John So had applied monies intended as a loan as a subscription for shares.
77 As a result of the foregoing, I do not accept any aspect of Peter Chan's evidence unless it is corroborated by contemporaneous documentary evidence.