CONSTRUCTIVE TRUSTS — where the plaintiff paid monies to the
second
defendant to facilitate the purchase of a gold mine from the first defendant
Source
Original judgment source is linked above.
Catchwords
EQUITY — TRUSTS AND TRUSTEES — IMPLIED TRUSTS —CONSTRUCTIVE TRUSTS — where the plaintiff paid monies to theseconddefendant to facilitate the purchase of a gold mine from the first defendant— where the plaintiff and second defendantacted through an intermediaryin facilitating that purchase — where the plaintiff claims that, throughfraud of the intermediary,the agreement between the plaintiff and seconddefendant did not form a binding agreement — where the plaintiff claimsthatthe entitlement of the second defendant or, alternatively, the thirddefendant to be registered as owner of the tenements grantingauthority to
operate the mine are the traceable proceeds of the fraud of the intermediary
— where the plaintiff claims to have
put the second and third defendants
on notice about the intermediary’s fraud — whether the assets
comprising the mine
and the rights of the second defendant under the sale
agreement are held on constructive trust for the plaintiff.
RESTITUTION — MISTAKE — MISTAKEN PAYMENTS — MISTAKES OF
FACT AND OF LAW — MISTAKES OF LAW — where the
plaintiff paid monies
to the second defendant pursuant to an agreement which did not form a binding
agreement — where the plaintiff
claims that it was induced to make that
payment under the mistaken belief that the agreement with the second defendant
was valid
and binding — where the second and third defendants did not
plead a defence of change of position or any other defence to the
plaintiff’s claim in restitution — whether the plaintiff was
entitled to repayment of the monies it paid to the second
defendant as monies
had and received.
Australia & New Zealand Banking Group Ltd v Westpac
Banking Corporation [1988] HCA 17
(1988) 164 CLR 662, followed.
Black v S
Freedman & Co [1910] HCA 58
(1910) 12 CLR 105, followed.
David Securities
Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48
(1992) 175 CLR 353, cited.
Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81
(2016) 91 NSWLR 732,
cited.
Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6
(2012) 200 FCR 296,
cited.
Heperu Pty Ltd v Belle [2009] NSWCA 252
(2009) 76 NSWLR 230, cited.
Orchid Avenue Pty Ltd v Parniczky [2015] QSC 207, followed.
Re
DCA Enterprises [2023] NSWSC 11
(2023) 166 ACSR 156, cited.
Regie Nationale des Usines
Renault SA v Zhang [2002] HCA 10
(2002) 210 CLR 491, followed.
Sino Iron Pty Ltd v
Worldwide Wagering Pty Ltd [2017] VSC 101
(2017) 52 VR 664, considered.
Sze Tu v
Lowe (2014) 89 NSWLR 317, cited.
Tomlinson v Ramsey Food Processing
Pty Ltd [2015] HCA 28
(2015) 256 CLR 507, followed.
UBS v Tyne [2018] HCA 45
(2018) 265 CLR
77, cited.
Wambo Coal Pty Ltd v Ariff [2007] NSWSC 589
(2007) 63 ACSR 429,
cited.
Mineral and Energy Resources (Common Provisions) Act 2014
(Qld).
Mineral Resources Act 1989 (Qld).
Uniform Civil
Procedure Rules 1999 (Qld) rr 189, 476.
Judgment (92 paragraphs)
[1]
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS - where the plaintiff paid monies to the second defendant to facilitate the purchase of a gold mine from the first defendant - where the plaintiff and second defendant acted through an intermediary in facilitating that purchase - where the plaintiff claims that, through fraud of the intermediary, the agreement between the plaintiff and second defendant did not form a binding agreement - where the plaintiff claims that the entitlement of the second defendant or, alternatively, the third defendant to be registered as owner of the tenements granting authority to operate the mine are the traceable proceeds of the fraud of the intermediary - where the plaintiff claims to have put the second and third defendants on notice about the intermediary's fraud - whether the assets comprising the mine and the rights of the second defendant under the sale agreement are held on constructive trust for the plaintiff.
[2]
RESTITUTION - MISTAKE - MISTAKEN PAYMENTS - MISTAKES OF FACT AND OF LAW - MISTAKES OF LAW - where the plaintiff paid monies to the second defendant pursuant to an agreement which did not form a binding agreement - where the plaintiff claims that it was induced to make that payment under the mistaken belief that the agreement with the second defendant was valid and binding - where the second and third defendants did not plead a defence of change of position or any other defence to the plaintiff's claim in restitution - whether the plaintiff was entitled to repayment of the monies it paid to the second defendant as monies had and received.
[1] The plaintiff (Miracle Lane) alleges that it paid $2.3 million dollars[1] to the second defendant (Omega) to facilitate the purchase of the "Gilded Rose" gold mine under a sale agreement Omega had entered with the first defendant (Spinifex).[2] Under that sale agreement (as ultimately varied), Spinifex was required to transfer the tenements granting authority to operate the mine to the third defendant (Jin), a wholly owned subsidiary of Omega.
[2] Spinifex received payment under the sale agreement on 21 May 2020. Despite that payment, Spinifex has not transferred the tenements to Jin. Spinifex remains obliged, and is willing, to transfer the tenements. It is presently unable to do so, however, because Miracle Lane has lodged a caveat against the title of those tenements.
[3] Miracle Lane claims to be the victim of a fraud. It alleges that its director, Mr Chi Tai Wong (also known as Terence Wong), caused the $2.3 million payment to be made to Omega in the belief that Miracle Lane was discharging its obligations under an agreement with Omega set out in a document described as a "binding term sheet". It is common ground in this proceeding that, although that document bears the signature of Omega's director, Mr Che Wai Chan (also known as Aaron Chan), Mr Chan did not sign it. Miracle Lane alleges that Mr Chan's signature was forged by Mr Chin Yew Seah, the person responsible for brokering the transaction between Miracle Lane and Omega.
[4] In this proceeding, Miracle Lane seeks proprietary and personal relief against Omega and Jin. It asserts that those defendants have been on notice of Mr Seah's forgery since 28 October 2020 or, alternatively, 26 February 2021.
[5] By its proprietary claim, Miracle Lane seeks a declaration that the assets comprising the mine, and any rights under the agreement with Spinifex to purchase the mine, are held on constructive trust for it, on the basis that they are the traceable proceeds of the $2.3 million which Miracle Lane paid because of Mr Seah's fraud.
[6] As to personal relief, Miracle Lane seeks an order for repayment of the $2.3 million it says it paid to Omega.
[21]
The failure by Omega and Jin to appear at the trial
[22]
[7] When the trial commenced, Omega and Jin did not appear. That failure to appear occurred in the context of broader procedural issues which have arisen since June 2024.
[8] The proceeding has been managed on the Commercial List.
[9] When the proceeding commenced, Omega and Jin were legally represented. That remained the position until 13 June 2024, when they filed a notice stating that each of them was acting in person in defending the proceeding.
[10] At a case management review hearing on 16 August 2024, I granted leave to Mr Richard Trevillion, a director of Omega, to appear on behalf of Omega for the purposes of that review hearing. At the review, Miracle Lane objected to Mr Trevillion continuing to appear on behalf of either Omega or Jin unless those parties sought and obtained leave from the court for that to occur. Accordingly, one of the directions made at the review was that Omega and Jin were to file an application for leave if they wished to have Mr Trevillion appear on their behalf in the proceeding. A direction was also made that Omega and Jin were to file an application if they wished to argue that the proceeding should be permanently stayed. That direction was made after Mr Trevillion made submissions at the review about proceedings involving the same parties in Hong Kong. He indicated that Omega and Jin wished to argue that Hong Kong is the appropriate forum for the dispute to be determined.
[11] Omega and Jin subsequently prepared an application seeking the relief discussed at the review on 16 August 2024. Although the application was never filed, it was listed for hearing on 1 November 2024. Mr Trevillion provided written submissions in support of the application before the date for hearing.
[12] On 1 November 2024, the application was called on for hearing before Bradley J. Neither Omega nor Jin appeared at that hearing despite a Webex link being arranged for Mr Trevillion to take part.[3] Bradley J proceeded to hear the application, including by considering the written submissions previously provided by Mr Trevillion. His Honour refused to grant the relief sought by Omega and Jin.
[13] Omega and Jin have filed an appeal against the dismissal of the application. When the trial commenced, that appeal had not been heard.
[14] In the week before the trial was listed to commence, Mr Trevillion sent an email to the court requesting that the trial be adjourned. The registry was directed to send a response to Mr Trevillion informing him that if Omega or Jin wished to have the trial adjourned they would need to file and serve an application and supporting affidavit material and, in circumstances where Bradley J had refused to grant them leave to be represented by Mr Trevillion and the appeal from that refusal had yet to be heard, they would need to be legally represented if they wished to pursue such an application. Ultimately, neither Omega nor Jin filed any application to adjourn the trial.
[23]
"[8] If, however, the court is satisfied that it is appropriate to proceed under r 476(1), the pleadings set the limits of what may be proved against an absent defendant to establish an entitlement to judgment. For that reason, a plaintiff proceeding under this rule can go no further in proof of the claim than to call evidence to support the allegations which are already contained in the statement of claim. But, as to that, allegations which are admitted in the pleadings, either expressly or by operation of the UCPR, will of course not need to be proved; it is only that part of the pleaded case which is in issue on the pleadings which needs to be established by evidence. That may be achieved in the usual way through oral and documentary evidence or, if the court considers it expedient, a direction may be made pursuant to r 390 that evidence be received by affidavit.
[24]
[9] It is important to keep in mind when proceeding in accordance with r 476(1) that the contents of any filed defence cannot be ignored despite the feature that the defendant has failed to appear at the trial. As Brennan J (as his Honour then was) explained in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd, the whole object of pleadings is to bring the parties to an issue and, when that occurs, the court's function is to determine that issue. As such, the defence must be considered alongside the statement of claim and any reply in order to determine the issues to be tried in the defendant's absence. Once identified in that way, the issues will then be determined by the court in accordance with such evidence as may be called by the plaintiff. That, of course, does not mean that the plaintiff will or must succeed on all such issues, but it will mean that an absent defendant will likely fail on any issue in relation to which he, she or it has a burden of proof. For example, a defendant who sets up a defence by which it is alleged that a contractual bargain was induced by a fraudulent misrepresentation would need to support such an allegation with evidence. If no such evidence is adduced, that issue - alive as it may have been on the pleadings - must necessarily be decided in the plaintiff's favour."
[25]
[17] That is the approach which I have taken in this proceeding. Accordingly, I have not considered affidavits which Mr Trevillion prepared and sent to the court in the week preceding the trial which, to an extent, address issues in dispute in the proceeding. Omega and Jin did not read or tender those affidavits at the trial. Consequently, they did not form part of the evidence which I must consider in determining whether Miracle Lane has established an entitlement to judgment.
[26]
[18] By their defence, Omega and Jin admit the following relevant matters: Mr Chan was a director of Omega from about 18 September 2019 to 13 November 2020; Mr Trevillion has been a director of Omega from about 13 November 2020 to the present; Spinifex and Omega entered into an agreement for the sale and purchase of the mine for a price which included payment at closing of $2.3 million; when the sale closed, Spinifex was to allow Omega to take possession of the mine and deliver approved transfer documents in registrable form (signed by Spinifex) transferring the tenements granting authority to operate the mine to Jin; Omega and Spinifex completed the sale agreement on 21 May 2020; the closing payment of $2.3 million was paid to Spinifex; Omega did not execute the term sheet pleaded by Miracle Lane as the basis for the alleged fraud (the ML term sheet); on 28 October 2020, and again between 20 and 25 November 2020, Omega provided a copy of the ML term sheet to Omega, after which Mr Trevillion messaged Mr Seah stating that it was not the agreement he had signed; on or about 26 February 2021, Miracle Lane sent correspondence to Omega and Jin informing them of the alleged forgery and its claim to a proprietary interest in the mine.
[19] Omega and Jin either deny or do not admit the following relevant matters in their defence: that Miracle Lane paid $2.3 million (or any amount) to Omega; that Miracle Lane caused the money to be paid to Omega because it believed that the ML term sheet was a valid and binding agreement between it and Omega; Mr Seah was responsible for forging Mr Chan's signature on the ML term sheet; Omega and Jin knew (or ought to have known) of the forgery of Mr Chan's signature on the ML term sheet by 28 October 2020 or, alternatively, 25 November 2020 or, in the further alternative 26 February 2021; Omega or Jin hold any interest in, or rights associated with the mine, on constructive trust for Miracle Lane; Omega is liable to repay $2.3 million to Miracle Lane on a restitutionary basis.
[20] Further to those denials or non-admissions, Omega and Jin make the following positive allegations in their defence: Miracle Lane and Omega were bound by a different term sheet than that alleged by Miracle Lane (the alternative term sheet); pursuant to the alternative term sheet, Miracle Lane was to provide a loan to Omega to pay the balance of the purchase price to acquire the mine which was to be immediately followed by Omega's shareholders completing a reverse takeover by offering their shares to an entity already listed on the NASDAQ; at Miracle Lane's election, the loan would be converted into "equity, cash or convertible debt"; pursuant to the alternative term sheet, Miracle Lane paid $2.3 million to Howse Williams, a custodian instructed jointly by Miracle Lane and Omega; the events contemplated by the alternative term sheet before Miracle Lane became entitled to be repaid its debt, or to have its debt converted to equity, have not yet occurred; the alternative term sheet was governed by the law of Hong Kong; Miracle Lane is not a registered money lender as required by Hong Kong cap. 163 such that the loan by Miracle Lane is voidable under Hong Kong law; Miracle Lane is precluded from obtaining the relief it seeks in circumstances where it has allowed proceedings in Hong Kong seeking similar relief against Omega and Jin to lapse.
[27]
(a) whether Miracle Lane paid $2.3 million to Omega;
(b) whether Miracle Lane paid that sum in the belief that the ML term sheet was valid and binding;
(c) whether Mr Chan's signature on the ML term sheet was forged;
(d) whether Omega and Jin knew (or ought to have known) about the forgery by the various dates alleged by Miracle Lane;
(e) whether, based on facts established by the evidence adduced by Miracle Lane, it is entitled to succeed on its claims:
(i) as to the existence of a constructive trust over the mine and the interests of Omega and Jin under the sale agreement with Spinifex;
(ii) for repayment of $2.3 million by Omega on a restitutionary basis;
(f) whether any of the matters raised in Omega and Jin's defence prevent Miracle Lane from obtaining the relief it seeks.
[28]
[23] I am satisfied that the evidence adduced by Miracle Lane proves the facts set out in paragraphs [24] to [29] and [32] below.
[24] Miracle Lane was represented by Hong Kong solicitors, GPS McQuhae LLP (GPS), in relation to the transaction with Omega.
[25] On 5 May 2020, Mr Seah provided Mr Wong with details of GPS' trust account.
[26] Mr Wong then caused Miracle Lane to transfer funds totalling HK$12.5 million to GPS' trust account in three tranches: HK$8 million deposited by bank cheque on 5 May 2020; HK$3.5 million deposited by way of bank transfer on 6 May 2020; and HK$1 million deposited by way of bank transfer on 7 May 2020.
[27] On 18 May 2020, Mr Seah sent an email to Mr Wong and Mr Brett Stewien, a partner at GPS, forwarding an email from Mr Trevillion. Mr Trevillion's email attached a letter from Omega (which was then called Jin Resources (HK) Ltd) to Miracle Lane. By that letter, Omega asked that Miracle Lane co-ordinate the payment of the $2.3 million required to complete the sale agreement with Spinifex with David Coogans of Howse Williams (another law firm in Hong Kong) and, further, requested that the $2.3 million held in the GPS trust account should be transferred to Howse Williams.
[28] After he received the forwarded email and Omega's letter, Mr Wong spoke to Mr Stewien and instructed GPS to transfer the sum of $2.3 million it held on behalf of Miracle Lane to the trust account of Howse Williams.
[29] On 19 May 2020, GPS transferred $2.3 million to Howse Williams.
[30] As set out in [21] above, Omega and Jin are taken to have admitted that this sum was then transferred from Howse Williams to Spinifex (or one of its associated entities) in discharge of Omega's obligations under the sale agreement with Spinifex.
[31] When Omega and Jin were legally represented, they pleaded that Howse Williams was Omega's custodian.[7] However, after Omega and Jin ceased to be legally represented, they pleaded that Howse Williams was the custodian for both Miracle Lane and Omega.[8]
[29]
(a) evidence given by Mr Trevillion in earlier proceedings numbered BS13222/21, in which he stated:
[30]
"Completion under [the sale agreement with Spinifex] occurred at the office of my solicitors (Howse Williams) in Hong Kong. I did not personally attend completion, but my solicitor, Mr David Coogan [sic] told me that [Spinifex's representative] attended at their office in person. I had transferred into my solicitors' trust account the balance $2.3 million purchase price. My solicitors received the signed tenement transfer forms from [Spinifex's representative] by email ... I then authorised my solicitors to transfer the $2.3 million balance purchase price to Spinifex in return."
[31]
(b) the contents of the letter referred to at [27] above;
(c) email correspondence between Mr Stewien of GPS and Mr Coogans of Howse Williams on 18 May 2020, concerning the transfer of the $2.3 million, in which both solicitors refer to Omega as Howse Williams' client.
[32]
[33] Mr Wong's evidence, which I accept, is that:
[33]
(a) Miracle Lane never retained Howse Williams in relation to the transaction with Omega (or otherwise);
(b) he never gave any instructions to Howse Williams in relation to any aspect of the transaction with Omega.
[34]
(a) Miracle Lane paid $2.3 million to Omega on 18 May 2020;
(b) Omega, in turn, paid that $2.3 million to Spinifex in discharge of its obligations under the sale agreement for the mine.
[35]
[35] The evidence establishes that the total amount Omega paid to Spinifex under the agreement to purchase the mine was $2.5 million.[9] On that basis, the $2.3 million paid by Miracle Lane to Omega represents 92% of the purchase price Omega paid for the mine.
[36]
[36] Mr Wong deposes that when he caused Miracle Lane to pay $2.3 million to Omega, he believed:
[37]
(a) the ML term sheet had been signed by Mr Chan and was a valid and binding agreement between Miracle Lane and Omega;
(b) by making the payment, Miracle Lane was fulfilling its obligation to Omega under the ML term sheet.
[38]
[37] He further deposes that, if he had not held those beliefs, he would not have caused Miracle Lane to execute the ML term sheet or pay $2.3 million to Omega.
[38] I accept Mr Wong's evidence.
[39] Accordingly, I am satisfied that Miracle Lane paid the $2.3 million to Omega in the belief that the ML term sheet was valid and binding.
[39]
[40] I am satisfied that the evidence adduced by Miracle Lane proves the facts set out in paragraphs [41] to [60] below.
[40]
[41] In about May 2019, Mr Wong was introduced to Mr Seah. They subsequently exchanged messages about Mr Seah providing consulting services in relation to a business that Mr Wong was attempting to establish. That discussion culminated in Miracle Lane entering into a consultancy agreement with a company associated with Mr Seah in about October 2019. Shortly afterwards, Mr Seah informed Mr Wong about a business opportunity related to a gold mine in Australia (being the Gilded Rose mine).
[42] In early April 2020, Mr Seah introduced Mr Wong to Mr Trevillion at a meeting in Hong Kong. Following this initial meeting, discussions about Miracle Lane providing funds to facilitate the investment in the mine progressed. Throughout those discussions Mr Wong did not deal directly with Mr Trevillion. His communications were only with Mr Seah. At a further meeting about two weeks thereafter, Mr Seah told Mr Wong that he should not contact Mr Trevillion directly.
[43] Between 28 April 2020 and 14 May 2020, Mr Seah sent various drafts of a document titled "binding term sheet" to Mr Wong via messages on WhatsApp. The first draft which Mr Seah sent to Mr Wong on 28 April 2020, contained tracked changes showing amendments which both Mr Seah and Mr Trevillion had made to the document. The changes made by Mr Seah were marked in blue and the changes made by Mr Trevillion were marked in red. Relevantly, one of the changes which Mr Seah had made was to delete words from under the heading "Conversion" which would have provided for Miracle Lane to receive a return of $2.50, or 250%, for every $1.00 it invested with Omega.
[44] Ultimately, on 15 May 2020, Mr Seah sent a copy of what became the ML term sheet to Mr Wong. That document appeared to be signed by Mr Chan and witnessed by Mr Trevillion. After he received the document, Mr Wong printed it and signed it on behalf of Miracle Lane. Mr Wong then met Mr Seah and handed him the signed version of the ML term sheet.
[45] The ML term sheet:
[41]
(a) records the subject matter of the agreement (under the heading "Instrument") as being: "Investment loan for the payment of the option with Spinafex [sic]". The amount of the investment is recorded as $2.6 million;
(b) contemplates a new company called Blue Planet being listed by way of initial public offering on the Australian Stock Exchange (being the company through which Mr Wong hoped to pursue his new business) and Miracle Lane converting its loan to Omega into shares in that new company;
(c) provides that the investment amount (being $2.6 million) would be returned if the initial public offering for Blue Planet did not occur within 6 months of the date of the agreement (recorded on the document as being 4 May 2020);
(d) makes no provision for Miracle Lane to receive a 250% return (or any return) on the money it paid to Omega.
[42]
The alternative term sheet executed by Mr Trevillion
[43]
[46] The alternative term sheet pleaded by Omega and Jin in their defence has been disclosed by them and Mr Wong exhibits it to his affidavit. It purports to bear Mr Wong's signature and the company seal of Miracle Lane. Omega and Jin have also disclosed WhatsApp messages exchanged between Mr Seah and Mr Trevillion on 13 May 2020 in which Mr Seah provided the signature page of the alternative term sheet, purportedly executed by Miracle Lane, to Mr Trevillion.
[47] Mr Wong deposes, and I accept, that he did not execute the alterative term sheet or otherwise agree to its terms.
[48] The transaction recorded in the alternative term sheet differs significantly to that recorded in the ML term sheet. Most significantly, it contemplated that if the loan from Miracle Lane was not converted into equity it would be repaid and Miracle Lane would receive a return of 250% on the monies paid to Omega.
[44]
Mr Seah's response to Mr Wong's concerns about repayment of the $2.3 million
[45]
[49] By late October 2020, the initial public offering for Blue Planet had not occurred. In those circumstances, Mr Wong understood that Omega would be obliged the repay the $2.3 million to Miracle Lane on 4 November 2020, being the end of the six-month period specified in the ML term sheet.
[50] On 28 October 2020, Mr Wong sent several WhatsApp messages to Mr Seah. He explained that members of his family, who had provided part of the $2.3 million that Miracle Lane paid to Omega, wanted the whole amount repaid when the agreement expired on 4 November 2020. Mr Wong stated that he wanted to extend the agreement with Omega but that this would require that Omega repay at least HK$2 million to Miracle Lane. Mr Wong also asked if Mr Seah objected to him contacting Mr Trevillion directly. Mr Seah eventually responded to those messages by asking Mr Wong to let him seek to get an answer (which I infer to mean an answer from Mr Trevillion) and a solution that he hoped could satisfy all parties.
[51] Before he received Mr Seah's response to his messages, Mr Wong sent an email to Mr Trevillion. He stated that Miracle Lane's agreement with Omega would expire on 4 November 2020, and he wanted to discuss arrangements for the extension of that agreement. He asked Mr Trevillion to advise when was convenient for that to occur and indicated that Mr Seah would also be invited to take part in the discussion. Mr Wong attached a copy of the ML term sheet to his email.
[52] After Mr Trevillion received Mr Wong's email and read the ML term sheet he sent a message to Mr Seah stating that the ML term sheet was not the agreement he had signed, nor had he ever seen that document. Mr Seah's response to Mr Trevillion did not challenge that statement.
[53] On 29 October 2020, Mr Seah sent messages to Mr Wong in which he reassured Mr Wong that he was working with Mr Trevillion on the repayment issue and what terms Omega could offer to extend the agreement with Miracle Lane.
[54] On 30 October 2020, Mr Wong sent messages to Mr Seah, stating that his family had set 4 November 2020 as the date to conclude the terms of any extension of the agreement between Miracle Lane and Omega. Mr Wong asked again whether he could contact Mr Trevillion directly. Mr Seah responded by asking Mr Wong to let him handle the issue and assuring Mr Wong that he was working on it.
[46]
[60] Nowhere in Mr Seah's messages to Mr Trevillion did he say anything about Mr Trevillion having witnessed Mr Chan's signature on the ML term sheet (as appeared on the document which Mr Seah had provided to Mr Wong for signing on 15 May 2020 - see [44] above).
[47]
[61] Having regard to the matters that Omega and Jin have admitted in their defence, or are taken to have admitted under r 189, there is no dispute that:
[48]
(a) Omega did not execute the ML term sheet (see [18] above); and
(b) neither Mr Chan nor Mr Trevillion signed the ML term sheet (see [21] above).
[49]
[62] In those circumstances, and having regard to the facts set out at [41] to [60] above, I am satisfied that there is a proper basis to infer that Mr Chan's signature on the ML term sheet was forged by Mr Seah. I make that inference based on the following matters.
[63] First, Mr Seah was the only person who presented drafts of the ML term sheet to Mr Wong. Mr Wong did not have any direct dealings with Mr Trevillion. I am satisfied that, in those circumstances, the most rational explanation for Mr Chan's signature appearing on the ML term sheet is that Mr Seah applied the signature to the document.
[64] Secondly, Mr Seah was involved in providing the alternative term sheet, purportedly signed by Mr Wong, to Mr Trevillion. I am satisfied that Mr Seah's position as the sole intermediary between Mr Wong/Miracle Lane and Mr Trevillion/Omega would have enabled him to benefit from Omega (based on the alternative term sheet Mr Trevillion had signed) paying a return of 250% on Miracle Lane's investment in circumstances where Mr Wong (based on the ML term sheet) would not be expecting to receive such a return.
[65] Thirdly, Mr Seah was concerned to ensure that Mr Wong and Mr Trevillion not speak directly to each other (see [42], [54], [56] and [57] above). When Mr Trevillion responded to the ML term sheet from Mr Wong (see [52] above) and the letter from Miracle Lane's solicitors (see [59] above) by asserting that the ML term sheet was a forgery, Mr Seah sought to assure Mr Trevillion that he would handle Mr Wong. I am satisfied that this reflects Mr Seah's concern to prevent Mr Wong and Mr Trevillion speaking directly and discovering the existence of the different term sheets (and Mr Seah's role in the creation of those documents).
[66] Fourthly, in the face of Mr Revelle expressing concern about Mr Trevillion's integrity and the security of Miracle Lane's investment with Omega, Mr Seah sought to discredit Mr Revelle and discouraged Mr Wong from communicating with him. I am satisfied that this is consistent with Mr Seah not wanting Mr Wong to investigate the status of Miracle Lane's investment with Omega and discover that Mr Chan had not signed the ML term sheet or the existence of the alternative term sheet.
[50]
[68] Miracle Lane submits that Omega and Jin received notice of the forgery on 28 October 2020 when Mr Wong emailed the ML term sheet to Mr Trevillion (see [51] above).
[69] If that is not accepted, Miracle Lane relies upon a letter dated 26 February 2021 which its solicitors in Hong Kong sent to solicitors acting for Omega and Jin. By that letter, Miracle Lane asserted that:
[51]
(a) Mr Chan's signature on the ML term sheet had been forged;
(b) its payment of $2.3 million had been procured by a fraud on the part of Mr Seah (as well as Omega and Mr Trevillion[10]) which induced Mr Wong to believe that the ML term sheet was a valid agreement;
(c) Omega held the $2.3 million, or the traceable substitute of those monies, on constructive trust in favour of Miracle Lane;
(d) Further, Omega was liable to provide restitution of the $2.3 million to Miracle Lane based on unjust enrichment.
[52]
[70] The solicitors for Omega responded by letter dated (incorrectly) 12 March 2020,[11] which refuted Miracle Lane's assertions. Relevantly, on page 8 of that letter (in responding to paragraphs 21 to 23 of the letter of 26 February 2021), the solicitors confirmed that Mr Trevillion and Omega had become aware on 20 November 2020 that the ML term sheet (described in the letter as the "Fake Term Sheet") had not been signed by Mr Chan.
[71] Based on that exchange of correspondence, I am satisfied that Omega and Jin were on notice of the forgery by, at the latest, 26 February 2021.
[53]
[72] Miracle Lane seeks a declaration that Omega and Jin hold 92% of the assets comprising the mine and their rights under the sale agreement with Spinifex[12] on constructive trust for it, on the basis that those assets are the traceable proceeds of the $2.3 million which it was induced to pay to Omega by Mr Seah's fraud.
[54]
[73] Miracle Lane's claim for the declaration of a constructive trust relies on the principle which, in Australia, derives from the decision of the High Court in Black v S Freedman & Co.[13] That case has been held to be authority for the propositions that:
[55]
(a) a thief who steals property holds that property on trust;[14]
(b) any volunteer who receives that stolen property from the thief holds it on trust from the time the volunteer has notice of the theft.[15]
[56]
[74] The principles are not limited to stolen property. They extend to funds or property that are procured by reason of a fraud.[16] A volunteer who receives such property may be innocent of the fraud, and have had no notice of the fraud at the time the property is received, but will nevertheless hold the property, or so much of it as remains in the hands of the volunteer (whether in original form or traceable product), on trust from the time the volunteer comes to know of the fraud.[17]
[75] As this is an equitable claim, notice extends beyond actual notice and includes constructive notice which will attribute notice of the fraud to a person who, although lacking actual knowledge of the fraud, had knowledge of facts which would put a reasonable person on inquiry.[18]
[76] The principles also apply in cases where the defrauded party transfers property directly to a volunteer, without that property passing through the hands of the fraudster. An example of this is Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd,[19] where a fraudster caused payments by the plaintiffs to be directed to a bank account of Worldwide. Worldwide initially suspected that the funds might have been stolen but were told by the fraudster that he had deposited the funds with Worldwide and was authorised to place bets with the funds. Worldwide credited the funds to the fraudster's betting account and permitted him to place bets using those funds for six days before it received actual notice of the fraud and suspended the fraudster's betting account. Worldwide was found to have acquired sufficient knowledge of the fraud before any amounts were paid out of its accounts and, in those circumstances, was held to be trustee of the whole of the funds for the plaintiffs from that time.
[57]
[77] I am satisfied that the findings set out above establish that Miracle Lane is entitled to succeed on its claim for a constructive trust.
[78] In summary:
[58]
(a) Miracle Lane was induced to pay the $2.3 million to Omega by Mr Seah's forgery;
(b) Omega used the $2.3 million it received from Miracle Lane to purchase the mine such that the assets comprising the mine and the rights of Omega and Jin under the sale agreement with Spinifex are the traceable proceeds of that money;
(c) Omega and Jin were on notice of the forgery by, at the latest, 26 February 2021.
[59]
[79] On that basis all the elements of the constructive trust claim have been established.
[80] I accept Miracle Lane's submission that indefeasibility of title does not operate as a defence to the constructive trust claim in the circumstances of this case. Omega and Jin have not pleaded such a defence. If they had, it could not have succeeded in the circumstances of this case.
[81] Unlike cases where a volunteer uses the proceeds of fraud to acquire indefeasible title to real property,[20] there is no provision in the legislation regulating the tenements for the mine[21] which confers indefeasibility of title upon registration on the owner of the tenements. Even if there were such a provision, on the facts of this case, neither Omega nor Jin has been registered as the owner of the tenements (see [2] above). Accordingly, neither Omega nor Jin has acquired indefeasible title to the tenements.
[82] From 26 February 2021, Omega and Jin held 92% of the assets comprising the mine and their rights under the sale agreement with Spinifex on trust for Miracle Lane.
[60]
[83] Miracle Lane seeks repayment of the $2.3 million as money had and received in circumstances where I have found that it paid that money under the mistaken belief that the ML term sheet was a binding agreement.
[61]
[84] Receipt of a payment which has been made under a mistake gives rise to a prima facie obligation on the part of the payee to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the payer who has sustained the countervailing detriment, even if the specific money can no longer be identified in the hands of the payee or traced into other property that party holds.[22] The mistake which causes payment to be made may be a mistake of fact or a mistake of law, including a mistaken belief by the payer that the recipient was legally entitled to receive the payment.[23]
[62]
[85] The findings set out above are sufficient for Miracle Lane to establish its entitlement to succeed on the claim against Omega for repayment of the $2.3 million as money had and received.
[86] In circumstances where I am satisfied that Miracle Lane paid the $2.3 million to Omega in the belief that the ML term sheet was valid and binding, and because of Mr Seah's forgery that belief was mistaken, Omega has an obligation to repay the $2.3 million to Miracle Lane.
[87] Omega and Jin do not plead a defence that they changed their position in good faith in reliance upon the payment of $2.3 million by Miracle Lane,[24] or any other defence to the claim for restitution. Consequently, it does not matter that Omega paid the $2.3 million to Spinifex.
[63]
[88] Omega and Jin's defence raises two further matters for consideration (see [20] above).
[64]
[89] Omega and Jin allege that, because Miracle Lane is not registered in Hong Kong as a money lender, the Money Lenders Ordinance operates to render any loan agreement invalid and unenforceable with the result that Miracle Lane's loan of $2.3 million to Omega is voidable.
[90] I accept Miracle Lane's submission that (even if I was to accept that the Money Lenders Ordinance operates in the manner alleged by Omega and Jin) this would not affect the claim for a constructive trust or the claim in restitution. Neither of those claims depends upon the existence of a valid loan agreement. To the contrary, both claims are advanced on the basis that there was no valid agreement between Miracle Lane and Omega pursuant to which Miracle Lane paid the $2.3 million. Accordingly, even if I was able to conclude that the Money Lenders Ordinance rendered Miracle Lane's loan of $2.3 million unenforceable, that would not alter the conclusion I have reached on the claims Miracle Lane advances in this proceeding.
[91] In any event, there is no evidence before me which could support a conclusion that Miracle Lane's loan to Omega was unenforceable. The content of foreign law, such as the Money Lenders Ordinance, is a question of fact. Where a defendant wishes to rely on the content of a foreign law as an exculpatory fact then it is for that defendant to allege and prove the content of that law.[25]
[92] Having failed to appear at trial, Omega and Jin did not lead any evidence about the content of the Money Lenders Ordinance or its operation in the circumstances of this case. Under the approach identified in Orchid Avenue Pty Ltd v Parniczky (extracted at [16] above) any defence which Omega and Jin might have relied upon by reason of the operation of the Money Lenders Ordinance must fail because they have not discharged the burden of proof they bear in respect of such a defence.
[93] For both these reasons, the issues Omega and Jin have pleaded concerning the Money Lenders Ordinance do not alter my conclusion that Miracle Lane is entitled to succeed on the claims it advances in this proceeding.
[65]
[94] Omega and Jin also plead that Miracle Lane is not entitled to the relief it seeks because it allowed proceedings in Hong Kong to lapse.
[95] Mr Wong's evidence, which I accept, is that in March 2021 he caused Miracle Lane to file proceedings in Hong Kong against Omega, Jin, Mr Trevillion and Mr Seah. Mr Wong subsequently received advice that Miracle Lane should lodge a caveat over the tenements granting authority to operate the Gilded Rose mine and commence proceedings in Queensland to establish the interest it claimed in that caveat. Further, Miracle Lane received advice that to avoid claiming in both jurisdictions, only the proceeding commenced in Queensland should be prosecuted. Mr Wong caused Miracle Lane to follow that advice. The writ filed in Hong Kong was never served on the defendants and eventually lapsed.
[96] It appears that Omega and Jin's defence is directed to an argument that Miracle Lane's conduct in commencing, but not pursuing, the proceeding in Hong Kong and subsequently bringing this proceeding amounts to an abuse of process.
[97] The doctrine of abuse of process is informed in part by considerations of finality and fairness. The varied circumstances in which the use of the court's processes will amount to an abuse cannot be formulated as closed categories or exhaustively stated. It is capable of application in any circumstances where either of two conditions are shown to exist: where the use of a court's procedures would be unjustifiably oppressive to a party, or where the use serves to bring the administration of justice into disrepute.[26]
[98] I cannot see any basis to conclude that either of those conditions is met in the circumstances of this case. This is not a case where Miracle Lane makes a claim or raises an issue in the present proceeding which was raised and determined in the earlier Hong Kong proceeding.[27] It is difficult to see how Omega and Jin have been unjustifiably oppressed by the present proceeding in circumstances where they were never served with the Hong Kong proceeding. There is certainly no evidence which would support a finding of unjustifiable oppression.
[99] Nor can I accept that Miracle Lane's conduct in commencing the Hong Kong proceeding but allowing the writ to lapse without serving it on Omega and Jin and subsequently commencing and prosecuting this proceeding serves to bring the administration of justice into disrepute. Mr Wong has explained the reasons why he caused Miracle Lane not to pursue the Hong Kong proceeding and instead bring this proceeding. Having regard to that explanation, Miracle Lane's conduct cannot fairly be described as unreasonable or an affront to the administration of justice.
[66]
[101] Miracle Lane should succeed on both of its claims. It seeks to be heard on the form of orders which should be made to give effect to this judgment. That is the course I shall take.
[67]
[1] References to money sums in this judgment are to Australian dollars unless indicated to the contrary.
[68]
[2] Spinifex is in liquidation. Accordingly, the proceeding against it is stayed pursuant to the Corporations Act2001 (Cth). Spinifex did not take any part in the proceeding after it entered liquidation and Miracle Lane did not seek any orders against it upon the final hearing of its claims.
[69]
[3] Mr Trevillion was in Indonesia when the application was listed to be heard.
[6] Service was effected by emailing the document to the email address specified in the notice that Omega and Jin were acting in person filed on 13 June 2024.
[72]
[7] Defence to Further Amended Statement of Claim filed 24 August 2023 (CFI 14), para 11(a).
[73]
[8] Defence to Second Further Amended Statement of Claim filed 12 July 2024 (CFI 30), paras 13(c) and 14.
[74]
[9] Prior to making the closing payment of $2.3 million using the money received from Miracle Lane, Omega paid two option fees to Spinifex, each in the amount of $100,000, from other sources.
[75]
[10] In this proceeding, Miracle Lane does not allege that Mr Trevillion was involved in the fraud.
[76]
[11] The letter is stamped as having been received by Miracle Lane's solicitors on 17 March 2021 and refers to the letter from those solicitors dated 26 February 2021. I infer it was written on 12 March 2021.
[77]
[12] The figure of 92% represents the proportion which the $2.3 million paid by Miracle Lane bears to $2.5 million, being the total purchase price for the mine.
[15] When Omega and Jin did not appear at the commencement of the trial, Miracle Lane applied under r 476(1) of the Uniform Civil Procedure Rules1999 (Qld) (UCPR), for leave to call evidence to establish an entitlement to judgment against those defendants. After hearing that application, I granted leave and gave ex tempore reasons for that decision.[4]
[16] The approach which the court should take in identifying, and then deciding, the issues to be tried in a defendant's absence was explained by Burns J in Orchid Avenue Pty Ltd v Parniczky:[5]
Money Lenders Ordinance
[21] On 15 November 2024, Miracle Lane's solicitors served a notice to admit facts on Omega and Jin.[6] Omega and Jin did not serve any notice on Miracle Lane disputing the facts specified in the notice. Consequently, pursuant to r 189(2) of the UCPR, Omega and Jin are taken to have admitted the following relevant facts: neither Mr Chan nor Mr Trevillion signed the ML term sheet; in May 2020 the sum of $2.3 million was paid from the account of Howse Williams to Spinifex (or one of its associated entities); that payment was made in discharge of Omega's obligations under its agreement to purchase the mine from Spinifex; Jin is entitled to become registered as the holder of the tenements granting authority to operate the mine.
[22] From this analysis, the following critical matters fall to be determined in deciding if Miracle Lane has established an entitlement to judgment against Omega and Jin:
[32] I am satisfied that Howse Williams acted as Omega's solicitors and received the payment of $2.3 million from GPS on behalf of Omega. That can be inferred from:
[55] Mr Wong and Mr Seah exchanged further messages to similar effect on 2 and 3 November 2020, with Mr Wong asking for information about the extension of the agreement between Miracle Lane and Omega and Mr Seah seeking to reassure Mr Wong that he was speaking to Mr Trevillion about it.
[56] On 4 November 2020, Mr Seah sent a message to Mr Wong asking him to withdraw the email he had sent to Mr Trevillion on 28 October 2020. Mr Seah also asked that Mr Wong let him "coordinate" (which I infer was a reference to Mr Wong's request for repayment of at least part of the sum paid to Omega as a condition of extending the agreement between Miracle Lane and Omega beyond that date).
[57] Mr Wong complied with Mr Seah's request. On 4 November 2020, he sent an email to Mr Trevillion stating that he wished to withdraw his previous email and that, going forward, Mr Seah would "coordinate the business issues".
[58] On 16 November 2020, Mr Wong and Mr Seah received an email from Mr Stewien of GPS forwarding an email which Mr Stewien had received from a Mr Revelle expressing concern about Mr Trevillion's integrity, Omega's acquisition of the mine and the prospect that Miracle Lane would lose the $2.3 million it had paid to Omega. Mr Wong and Mr Seah exchanged messages after they had read the email. Mr Seah initially stated that he and Mr Wong could use the contents of that email to their advantage. Within the next few days, however, Mr Seah's position changed. He sent links to newspaper articles which referred to claims of embezzlement against Mr Revelle and suggested to Mr Wong that he should not have any communication with him.
[59] By 25 November 2020, Mr Wong had instructed solicitors to write to Omega seeking repayment of the $2.3 million advanced pursuant to the ML term sheet. Mr Trevillion sent a message to Mr Seah attaching the solicitors' letter and asking Mr Seah to speak to Mr Wong. Mr Trevillion said that the agreement under which Miracle Lane was seeking repayment, was a fraud. Mr Seah replied to Mr Trevillion:
[67] Accordingly, I am satisfied that Miracle Lane's payment of $2.3 million to Omega was induced by Mr Seah's fraud.
[100] Miracle Lane's conduct in commencing, but not pursuing, the proceeding in Hong Kong and subsequently bringing this proceeding does not alter my conclusion that it is entitled to succeed on the claims it advances in this proceeding.