Plaintiffs v Defendants

(a) the Funds were paid pursuant to an incomplete, uncertain contract or a contract that was subject to a formal contract; and

(b) they are entitled to restitution of the Funds as moneys had and received by Ms Wei or Yummy to their use.

1. The plaintiffs do not press their claims in respect of repudiation, abandonment and misleading and deceptive conduct.
2. The trial before me proceeded on an undefended basis: the proceedings against Ms Wei are stayed because of her bankruptcy and Yummy did not appear.

(a) the statement of claim dated 15 September 2023;

(b) the witness outline of Ms Cheng dated 16 May 2025; and

(c) detailed written submissions dated 17 July 2025.

1. Ms Cheng adopted her witness outline in the witness box.
2. The defendants have filed a defence dated 27 November 2023 but did not appear.

1. The following have been drawn from Ms Cheng's affidavit, oral testimony and documents. These are my findings of fact.
2. Since around 2015, Ms Cheng and Ms Wei have been known to each other.
3. In 2016, Ms Cheng purchased a business from Ms Wei.
4. Prior to the present dispute, Ms Cheng and Ms Wei spoke often.
5. On 13 October 2021, Yummy was registered. Prior to her bankruptcy, Ms Wei was the sole director and secretary of Yummy and owned 100 fully paid ordinary shares, which was all of the issued share capital in Yummy. There is no evidence that Wei Equity Pty Ltd atf Wei Equity Discretionary Trust (Wei Equity) held any of the share capital, as was subsequently recorded in a draft shareholders agreement.
6. In late 2021, at the invitation of Ms Wei, Ms Cheng invested in Weii Pty Ltd which operated the Pacific Asian Supermarket (Pacific) in Elizabeth Street.
7. In mid-October 2021, Ms Wei asked Ms Cheng if she was interested in investing in her newly purchased company, Yummy, which operated a warehouse in Yarraville.
8. In around 25 October 2021, Ms Wei asked Ms Cheng to 'explore' a vacant store at 490-494 Elizabeth Street, Melbourne for the purpose of investment in another supermarket.
9. On 25 October 2021, Ms Cheng visited the Yarraville warehouse. During the visit, Ms Wei explained the business operations of Yummy, which was a supplier of supermarkets, including Pacific. Ms Wei said that the business was very profitable. Ms Cheng told Ms Wei that she needed time to think about it and would advise her of her decision after the Chinese New Year.
10. On 11 November 2021, Zenith was incorporated on the instructions of Ms Cheng for the purpose of holding her interest in Weii Pty Ltd. Ms Cheng is, and was at all relevant times, sole director and shareholder of Zenith.
11. In March 2022, Ms Wei contacted Ms Cheng and persuaded her to invest in Yummy after explaining the operations of the business in detail. There was a discussion about profit and profitability. Ms Cheng told Ms Wei that she 'would invest in Yummy if [she] could have the rights to make financial decisions, participate in its management including human resource decisions, similar to the arrangements [she] had with Pacific'. Ms Wei responded by promising that 'she would grant [Ms Cheng] the same management rights as [they] had agreed in Pacific, if [Ms Cheng] would invest funds by transferring money to her immediately' (March Conversation).
12. On 4 April 2022, Ms Cheng paid Ms Wei $200,000 in cash 'in accordance with her request'. At that time, Ms Wei advised Ms Cheng that the total funds needed for Ms Cheng to invest in Yummy had not been confirmed at that stage. Ms Wei advised Ms Cheng that the $200,000 invested 'was going to be used by her to refund to another investor, as she preferred to go into business with [Ms Cheng]' (4 April Conversation).
13. Around April 2022 (and presumably prior to 4 April 2022), Ms Wei and Ms Cheng agreed that Ms Cheng 'would be involved in the running of Yummy from the day when [she] made the first investment payment'.
14. On 27 April 2022, Ms Cheng met with Ms Wei to look at another new business located in Clayton. During that meeting, Ms Wei asked Ms Cheng for more money to invest in Yummy. By this time, Ms Cheng had begun making payments to Ms Wei. Ms Wei and Ms Cheng had a conversation to the following effect: Ms Wei said 'Sister Ying, how much do you think you can invest in Yummy each year?' Ms Cheng replied, 'How much do you need?' Ms Wei said, 'If I asked for $800,000 in 2022 will there be a problem?' Ms Cheng said 'That would not be a problem'. Ms Wei said that she needed to invest $800,000 between August and October 2022. Ms Cheng confirmed that the funds would be transferred by instalments from April to October and that $800,000 in total would be fully paid before the end of October 2022 (27 April Conversation).
15. On 29 April 2022, Ms Wei and Ms Cheng created a WeChat group named 'Yummy Cooperation Group' (Group Chat). In the chat, Ms Wei instructed her lawyer, Grace Xiao (Ms Xiao), of Q&L Lawyers (Q&L) to prepare a shareholder agreement between Ms Wei and Ms Cheng in relation to Yummy. Ms Xiao responded 'no problem'.
16. From 30 April 2022 to 5 July 2022, Ms Wei continued to ask Ms Cheng for more funds.
17. Ms Cheng or Zenith paid amounts totalling $450,000 to Ms Wei and $150,000 to Yummy at Ms Wei's request:

(a) on 4 April 2022, the sum of $200,000 by cash in hand to Ms Wei;

(b) on 4 May 2022, the sum of $50,000 by bank transfer to Yummy;

(c) on 10 May 2022, the sum of $50,000 by bank transfer to Yummy and the sum of $100,000 by cash in hand to Ms Wei;

(d) on 11 June 2022, the sum of $50,000 by bank transfer to Yummy and $100,000 by cash in hand to Ms Wei; and

(e) on 25 June 2022, the sum of $50,000 by cash in hand to Ms Wei's agent.

1. There is evidence that in some instances the moneys invested came from Ms Cheng's accounts that, according to Ms Cheng's evidence, she 'used for Zenith to invest with'.
2. Ms Wei provided handwritten receipts in respect of some of the payments:

(a) on 4 April 2022, Ms Wei provided a receipt that recorded:

Receipt - Hereby received, the first instalment of the investment funds from Ying CHENG to Global Yummy Au today. Amount: AUD$200,000. The total investment ratio is 4:6

(b) on 10 May 2022, Ms Wei provided a receipt that recorded:

Receipt - Hereby received the investment fund from Ying CHENG to Global Yummy P/L of AUD$200,000, of which $100,000 is in cash, and $100,000 is transferred to the account of Global Yummy P/L

(c) on 11 June 2022, Ms Wei provided a receipt that recorded:

Receipt - Hereby received the investment fund from Ying CHENG to Global Yummy Au P/L of AUD$100,000 in cash and AUD$50,000 via transfer, and another AUD$50,000 will be paid in cash before 18/06/2022

1. On 5 July 2022, Ms Xiao messaged Ms Cheng in the Group Chat confirming that Q&L would draft the shareholders agreement. At that point in time, $600,000 had been paid in respect of Yummy.
2. On 11 July 2022, Q&L emailed a draft agreement to Ms Wei and Ms Cheng which recorded the following:

(a) Wei Equity was the sole shareholder of Yummy with 100 ordinary shares;

(b) proposed shareholding of 40 of 100 shares for Zenith equalling capital contributions of $920,000; and

(c) proposed shareholding of 60 of 100 shares for Wei Equity equalling capital contributions of $1,380,000.

1. On 10 August 2022, Ms Cheng requested to meet with Ms Wei to negotiate detailed terms. Ms Cheng believed that the draft shareholders agreement did not reflect her discussions with Ms Wei.
2. On 2 September 2022, Ms Cheng and her husband attended a meeting with Ms Wei and Ruihan Cao (Mr Cao) at Q&L's office. Mr Cao was the other shareholder in Weii Pty Ltd. Ms Wei proposed that she or another investor would purchase Ms Cheng's and Mr Cao's shares in Weii Pty Ltd. Ms Cheng deposes that she 'clearly said' that she would be terminating all agreements and arrangements with Ms Wei for Yummy as well as Pacific. Ms Cheng says that Ms Wei agreed and confirmed that she would 'back pay the full amount instalments'. However, this latter agreement was not recorded in the minutes prepared for the meeting by Q&L.
3. On 9 September 2022, Ms Cheng and her husband attended another meeting at Q&L's office, this time without Mr Cao. Ms Cheng's evidence is that Ms Wei agreed to sell her own shares in Pacific together with those held by Mr Cao for $1,018,750. Ms Cheng says that all parties agreed that the amount of $600,000 owing to Zenith, which had been paid to Ms Wei and/or Yummy, would be offset against the $1,018,750, with a balance of $418,750 to be paid by instalments. This was recorded in the minutes. Ms Cheng says that she did not sign the minutes because Ms Wei refused to provide her initial investments funds records as her 55% shares in the company, nor the up-to-date financial information for Pacific.
4. On 20 November 2025, Ms Wei became a bankrupt and Mr Vrkic became trustee of Ms Wei's bankrupt estate.

1. The first issue that arises is what effect the bankruptcy of Ms Wei has on the claims made against her in the proceedings.
2. Section 58(3) of the Bankruptcy Act 1966 (Cth) (Act) provides that except as provided by the Act, after a debtor has become a bankrupt, it is not competent for a creditor (a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or (b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
3. The plaintiffs do not seek to proceed against Ms Wei and have limited the claims that they make against Yummy to restitutionary claims to recover moneys paid to it by Zenith or Ms Chen, consequent upon the agreement being ineffective. Such claims, if made against Ms Wei, would have been claims in respect of a provable debt, and hence stayed by s 58(3) of the Act.

Whether there was a binding agreement for the sale of shares

1. The next issue is whether the Funds were paid pursuant to a binding (oral) agreement. There are two distinct aspects to this issue:[1]

(a) first, whether the parties intended to create a binding contract or make a concluded bargain (the intention issue); and

(b) second, assuming there was such an intention, whether the parties reached agreement on sufficient terms to constitute a legally enforceable agreement (the enforceability issue).

1. In Ermogenous v Greek Orthodox Community of SA Inc,[2] Gaudron, McHugh, Hayne and Callinan JJ stated the objective theory of contractual formation is directed to the search for 'the intention to create contractual relations' ascertained by an 'objective assessment of the state of affairs between the parties'.[3] The word 'objective' describes what it is that would objectively be conveyed by what was said or done, having regard to relevant circumstances. They emphasised that it is not a search for the uncommunicated subjective motives or intentions of the parties.
2. In Godecke v Kirwan (Godecke),[4] Gibbs J discussed the status of a contract for sale of land that left the price to be settled by either the buyer or the seller:[5]

I should perhaps make it clear that it does not necessarily follow from what I have said that an agreement which left further terms to be settled by one of the parties, rather than by his solicitors, would be treated as a concluded contract. In May and Butcher Ltd v R ([1934] 2 KB, at 21) Viscount Dunedin suggested that a sale of land which left the price to be settled by the buyer himself would be good. With great respect, it seems to me that there would be no binding contract in such a case, which would fall within the principle that "where words which by themselves constitute a promise are accompanied by words which show that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought": Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, at 605 (citing Loftus v Roberts (1902) 18 TLR 532, at 534); Placer Development Ltd v Commonwealth [1969] HCA 29; [1969] ALR 801 ; 121 CLR 353, at 359-61. It might be suggested that the same principle would not apply if the determination of the price were left to the seller, for then it would be the promisee, not the promisor, who was left with the discretion as to performance. However, in Beattie v Fine [1925] ArgusLawRp 38; [1925] VLR 363, Cussen J drew no such distinction and held that an option for renewal "at a rental to be agreed upon by the lessor" did not give rise to any contractual obligation. He based his decision on the principle of Loftus v Roberts, supra, but the same conclusion might have been reached by holding that there can be no concluded bargain if a vital matter (such as price or rental) has been left to the determination of one of the parties (see also the dicta in Foster v Wheeler (38 Ch D), at 132, 133). Perhaps it may be different where agreement has been reached on all essential terms, but the determination of subsidiary matters has been left to one of the parties. In Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699; [1964] 3 All ER 30, it was held by the Court of Appeal that an agreement for a lease which was to contain "such other covenants and conditions as shall be reasonably required" by the lessor was sufficiently certain to be a concluded contract for a lease and was capable of specific performance. In Powell and Berry v Jones and Jones [1968] SASR 394, Bray CJ went further and upheld the validity of an agreement for a lease which was "to be in terms and to contain such special clauses as the landlord may require". His Honour said (at 400) that "there is nothing in the Sweet and Maxwell Case to indicate that the Court of Appeal would have held the agreement to make the lease unenforceable if the word 'reasonably' had been omitted". I am, with respect unable to agree with that observation, for it seems to me that the members of the Court of Appeal in Sweet & Maxwell Ltd v Universal News Services Ltd, supra, placed considerable reliance on the fact that the parties had imported the familiar and objective standard of reasonableness ([1964] 2 QB, at 726, 733 and 735). However, it is unnecessary to express any concluded opinion on these matters because, as I have said, in the present case the settlement of the further terms is left to the determination of persons who are not parties to the contract.

1. In Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd,[6] Kirby P noted that in determining whether an oral agreement had been created, it was relevant to consider matters including whether the parties contemplated the 'drawing up and execution' of a formal contract; the existence of consensus as to matters of importance; the examination of the parties subsequent conduct; the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable; and the nature and importance of the transaction which the parties contemplate.[7]

1. The question of whether a binding oral agreement had been reached between Zenith (as purchaser) and Ms Wei (as vendor) for the sale of the Shares (in Yummy) turns on two principal issues: the intention issue and the enforceability issue. The issues are not discreet. Many of the matters relevant to the intention issue are relevant to the enforceability issue, and vice versa.[8]
2. The plaintiffs contend the Purported Agreement was uncertain because the parties had agreed that Ms Cheng would participate in the management of the Business and be permitted the rights to make decisions that affect the financial affairs of Yummy, but without agreeing on certain terms as how that would operate and be achieved. They contend that the Purported Agreement was incomplete because Ms Wei and Ms Cheng had not agreed on a purchase price for the Shares.
3. In my opinion, the March Conversation, the 4 April Conversation or the 27 April Conversation, either separately or in combination, and when viewed in the context of the prevailing circumstances as a whole, did not evidence an intention between Zenith or Ms Cheng and Ms Wei to enter into a binding agreement at that time for the sale and purchase of the Shares.
4. According to Ms Cheng's account of the March Conversation, there was no discussion about price. Further the discussions regarding involvement in management were vague and lacking in detail, particularly having regard to the range of tasks that might be embraced by the term 'management'. The 4 April Conversation, while resulting in an immediate payment of $200,000, did not include agreement as to a sale price. The suggested involvement in management was not clarified. The 27 April Conversation discussed an 'investment' in Yummy, but not the nature of that 'investment'. Tellingly, the amount discussed ($800,000) appeared to be based upon Yummy's cashflow needs, rather than the value of the shareholding to be acquired by Ms Cheng. In short, the parties did not reach agreement on the essential terms constituting an agreement.
5. For similar reasons, I also consider the Purported Agreement did not constitute agreement on sufficient terms to constitute a legally enforceable agreement. The Purported Agreement did not include agreement on the critical terms of price and the nature and extent of Ms Cheng's involvement in the management of Yummy. The discussion about those matters was too uncertain to be enforceable. I accept the plaintiffs' submission that the Purported Agreement is 'so imprecise and vague that it was incapable of supporting attribution to Ms Cheng / ZC Zenith and Ms Wei of any particular contractual intention'.

1. The next issue is who paid the $600,000 that is sought to be recovered in these proceedings, in particular was the payment made by Ms Cheng or Zenith. This question is relevant for the purpose of identifying the person in whose favour any orders ought to be made in these proceedings.
2. Ms Cheng's evidence is that Zenith was the intended purchaser in respect of Ms Wei's shares in Yummy. It had been incorporated for that purpose. While some of the payments were made by Ms Cheng from her own sources, she has deposed that such payments were 'used for Zenith to invest with'. I am satisfied that, to the extent funds were ultimately sourced from her, she intended to make such payments on behalf of Zenith, the intended shareholder or investor. Accordingly, I find that Zenith paid the $600,000 that is sought to be recovered in these proceedings.

1. The next issue is who received the $600,000 that is sought to be recovered in these proceedings, in particular was the moneys received by Ms Wei or Yummy.
2. Ms Cheng or Zenith paid amounts totalling $450,000 to Ms Wei and $150,000 to Yummy, at Ms Wei's request. Questions arise as to whether Ms Wei received the $450,000 as agent for Yummy, or whether Yummy received the $150,000 as agent for Ms Wei. There is also a question as to whether, even if the moneys were paid to Yummy as agent for Ms Wei, it was the ultimately received by Yummy.
3. The logical starting point in answering these questions is evidence as to the actual identity of the recipient of the $600,000; here Ms Wei as to $450,000 and Yummy as to $150,000. In the absence of any other evidence, the plaintiffs' claims would be against Ms Wei and Yummy in the amounts in fact received by them.
4. Another significant matter in determining the identity of the recipient is the question of what the payments were for. While the parties intended that Ms Cheng would acquire shares in Yummy that were owned by Ms Wei, as I have indicated above, there was no binding oral agreement reached as to purchase at the time of the payments. There are a number of indications that the $450,000 paid to Ms Wei was either intended to be or was in fact applied to, or for the benefit, of Yummy - even if ultimately intended to be applied towards the acquisition of the Shares when an agreement was finalised.
5. Following the 4 April Conversation, an amount of $200,000 of the $450,000 was paid by Zenith to Ms Wei. In that conversation Ms Wei advised Ms Cheng that the money 'was going to be used by her to refund to another investor, as she preferred to go into business with [Ms Cheng]'. The moneys were described in the receipt as 'first instalment of the investment funds'. The nature of the 'investment' in each case is not explained, however a current and historical company search of Yummy obtained on 10 May 2025 does not record any change in shareholding, suggesting that the 'investment' referred to in the conversation was in Yummy and not its shares. On this basis, and in the absence of any other evidence, I conclude that while the $200,000 was paid to Ms Wei, she received it as agent for Yummy.
6. Following the 27 April Conversation, the balance of the $450,000 was paid by Zenith to Ms Wei by instalments on 10 May 2022, 11 June 2022 and 25 June 2022. It is significant that the question asked by Ms Wei was how much she could invest 'in Yummy each year'. Application of funds towards the purchase price of shares owned by Ms Wei ought logically to have involved a single payment or staged payments, but not an open ended arrangement. The nature of this conversation in the context of the earlier one suggests that the nature and attribution of the payments had a degree of fluidity. According to Ms Wei, the funds were moneys required by Yummy, not Ms Wei. On this basis, and in the absence of a concluded shareholders' agreement, I find that the payments made in respect of the balance of the $450,000 were payments made to Ms Wei on behalf of Yummy and used by Yummy as suggested in the conversation.
7. Having regard to the totality of the evidence, I conclude on the balance of probabilities that Ms Wei received $450,000 of the $600,000 as agent for Yummy and that Yummy received the $150,000 in its own right.

1. The next question is whether the plaintiffs, or either of them, have a right to recover the moneys paid in respect of the shares in Yummy.

1. In David Securities Pty Ltd v Commonwealth Bank of Australia,[9] Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ held that a payer has a prima facie entitlement to recover moneys paid under a mistake if it appears that the moneys were paid in the mistaken belief by the payer that he was under a legal obligation to pay them or that the payee was legally entitled to payment.[10]
2. In Equuscorp Pty Ltd v Haxton,[11] French CJ, Crennan and Kiefel JJ considered the availability of restitutionary claims to recover moneys lent under loan agreements that were held to have been made in furtherance of an illegal purpose. Equuscorp's claim was for moneys had and received on the basis of a 'total failure of consideration'.[12] Their Honours noted that failure of consideration is one of the factors that makes retention of a prima facie benefit unjust.[13] The Court held that the lender did not have a right to recover the moneys advanced because of the illegality of the loan agreements.[14]
3. In Redland City County v Kozik,[15] Gageler CJ and Jagot J explained the role of unjust enrichment in restitutionary claims.[16] They explained the two staged enquiry involved in determining whether to grant a remedy:[17]

Unjust enrichment was said in David Securities, quoting Pavey & Matthews, to constitute not "a definitive legal principle according to its own terms" but "a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case". The concept of unjust enrichment has since been said to perform a "taxonomical function referring to categories of cases in which the law allows recovery by one person of a benefit retained by another", without founding or reflecting any "all-embracing theory of restitutionary rights and remedies".

The analytical framework for a common law action for restitution set out in ANZ v Westpac and refined in David Securities involves a two-stage inquiry into the entitlement of a plaintiff to recover from a defendant an amount of money paid by the plaintiff to the defendant. At the first stage, it is sufficient to give rise to a prima facie entitlement to restitution that the plaintiff point to a recognised "qualifying or vitiating factor", such as mistake or duress, having operated on the making of the payment. At the second stage, it is open to a defendant to displace the prima facie entitlement of the plaintiff by pointing to "circumstances which the law recognizes would make an order for restitution unjust". For that purpose, "the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust".

This analytical framework accordingly draws a clear distinction between a specific qualifying or vitiating factor giving rise to the prima facie entitlement to restitution and the circumstances which may enable a "defence" to be established. ANZ v Westpac and David Securities provide no reason for considering that the range of circumstances which may enable a defence to be established to the whole or some part of a prima facie entitlement to restitution should be narrowly confined. The equitable underpinning of the common law action for restitution provides every reason for considering that it should not.

1. The following questions arise in relation to the $600,000 paid by Zenith to Yummy:

(a) first, can Zenith point to a recognised 'qualifying or vitiating factor', such as mistake or duress, having operated on the making of the payment that would give rise to a prima facie entitlement to restitution?; and

(b) second, is the prima facie entitlement displaced by 'circumstances which the law recognises would make an order for restitution unjust?'

1. The 'qualifying or vitiating' factor relied upon by Zenith is that the Purported Agreement was ineffective and, therefore, there has been a total failure of consideration in respect of the payments made under it, or alternatively a mistake as to the basis of the payment. I accept that the plaintiffs have established a prima facie entitlement to restitution on these grounds. Ms Cheng caused the payments to be made in the belief that there was, or would be, an agreement for the purchase of the Shares. Further, there is no evidence of matters that would make the prima facie entitlement of Zenith to restitution unjust, such as evidence of change of position.
2. I find that Zenith is entitled to restitution from Yummy in respect of the amount of $600,000 paid to it as money had and received by Yummy to the use of Zenith.

1. Zenith has established an entitlement to judgment against Yummy for amounts paid to Yummy totalling $600,000 on the basis that there has been a total failure of consideration. Zenith is also entitled to interest on that amount pursuant to s 58(1) of the Supreme Court Act 1986 (Vic) from 18 September 2023, being the date of commencement of these proceedings. I will ask the plaintiffs to provide a calculation before I make the orders.

[1] Compare Citius Property Pty Ltd v Logos Australia Group Pty Ltd [2022] VSC 656, [678] (Lyons J).

[2] [2002] HCA 8; (2002) 209 CLR 95.

[4] [1973] HCA 38; (1973) 129 CLR 629.

[8] Compare Citius Property Pty Ltd v Logos Australia Group Pty Ltd [2022] VSC 655, [678].

[9] [1992] HCA 48; (1992) 175 CLR 353.

[15] [2024] HCA 7; (2024) 281 CLR 202 .

[17] Ibid (citations omitted, emphasis added).