Mr Shin
188Mr Shin of course is the only person called on behalf of the plaintiff who was privy to the alleged oral representations said to have been made to him and which induced RSE as he alleges to act by entering into the various agreements as alleged. It is therefore important to analyse his evidence in some detail.
189Mr Shin emigrated to Australia from South Korea in May 1988. Since 2001 he has been an Australian citizen.
190Before coming to Australia he had worked in the building industry since about 1981 in South Korea, Saudi Arabia and Libya. In South Korea he worked as a labourer and supervisor on commercial and residential building sites. In Saudi Arabia he was a superintendent of several projects. As such he was expected to check building works and review them for the purposes of correcting any defects. Whilst in Libya he did similar work but again as a superintendent. From his descriptions he held what appears to be management roles on a number of sites in these countries.
191When he arrived in Australia he asserts that he could speak very little English, although he had to speak English on building sites in Saudi Arabia and Libya. After about three or four years of being in Australia he accepts that he was able to understand conversational English very well. He said he occasionally had difficulties in understanding technical language. However he accepts that he had little difficulty in understanding conversations on various building sites that he worked on. At present he suggests that he understands approximately 90% of everything he reads but he still has some difficulty with his spelling and grammar (Shin Affidavit at [13]-[14], T68/8-T68/19, T76/33-T76/42, T85/11-T85/24).
192After he arrived in Australia he commenced working on building sites in Geelong and remained there until about 1990. He appears to have been a carpenter by trade but whilst working in Geelong he also worked as a superintendent. He however obtained a formal carpenter's licence in about 1992. He then commenced working in the shop fit-out industry.
193From 1994 he operated a building company on a 50/50 basis with an Australian, a Mr Henry Taudian. There is no evidence Mr Taudian was or spoke Korean. The company traded until about 1998.
194In 1997 he attended Granville TAFE and undertook a builders licence course which took approximately 6 months. The course was I infer conducted in English. He then became a licensed builder and has held a licence since 1997. In 1997 he commenced working as a property developer. He nominates his first project as the purchase of land and the construction and sale of eight villas in Eastwood.
195In about 1998 he opened his own company Base Design and Construction Pty Limited. He ran this company in partnership it seems with his brother-in-law until 2003. In or about that year he incorporated a company called Spacecon Pty Limited of which he is the sole director and shareholder. The company holds a licence as a builder, drainer, gas fitter, plumber and roof plumber.
196RSE is the trustee of the Shin Family Trust. It or other related companies has undertaken various property development projects and owns some other businesses including 15 Japanese restaurants, a Korean daily newspaper and an education company for Korean students which also brings Korean cultural performers, including singers, dancers and other artists to Australia. Mr Shin's wife Rebecca is responsible for managing the day to day operations of these businesses. He is also involved in researching and testing new building projects. Without giving any detail he also asserts that he has business interests in Indonesia carrying out building and infrastructure work in partnership with Indonesian companies. For that purpose he has incorporated two companies in that country.
197On any view Mr Shin is (and was at the relevant time) an experienced, successful, self-made and obviously a sophisticated businessman, given his achievements and the diversity of his businesses. He has built what appears to be a substantial empire since his arrival in Australia. He accepted in evidence that in the period since he arrived in Australia he has either built or helped build by way of fitout what he described as "less 100" for which he accepted he had contracts in writing for almost all of the work undertaken (T69/4-T69/20). This was amplified by his solicitor who indicated that over approximately 20 years he had acted for Mr Shin in "hundreds" of transactions (T130/25).
198Mr Shin asserts that in or about February 2008 he was introduced to the property the subject matter of this case by Mr Kim whom he had known for some years. Mr Shin asserts that Mr Kim said that he would like to introduce him to a good site at Meadowbank for a new restaurant and asked whether he was interested. He also gave Mr Shin some details about the scale of the development comprising some 750 apartments and a shopping centre and that a DA had already been approved for a restaurant from the site, although it had not been fitted out. Mr Shin says that he simply responded that he was interested. Mr Kim confirms that a conversation took place to that general effect and insists that he informed Mr Shin that although a DA had been approved with conditions, a proper fitout was required after the construction certificate was obtained. He asserts that he gave Mr Shin a copy of the DA floor plan.
199There is very little difference at least in substance between the two versions of events and I am satisfied that Mr Shin was introduced to the property, that is the restaurant lot, in about February 2008 as asserted by him.
200Mr Shin then asserts that within a day or two of that conversation Mr Kim took him to the site to inspect it although he was broadly familiar with it, having previously visited it in 2006 whilst the project was under construction. Mr Kim cannot recall such a visit in 2006. Mr Shin was clearly familiar with the site and was well aware of its existence.
201Mr Shin asserts that during the visit in 2008 Mr Kim informed him that the restaurant was a stratum whereas the other properties adjacent to the restaurant were on a strata title. Mr Shin asserts that whilst he was familiar with strata title and operations of the Owners Corporation he was not familiar with stratum title until the matter had been mentioned by Mr Kim. Mr Kim agrees with Mr Shin's version in general terms but also asserts that he made comment about the stratum title being less controlled in comparison to a strata title.
202Again there is very little if any difference between these two versions and I am inclined however to accept Mr Kim's assertion of the terms of the discussion.
203Mr Shin then asserts that after the inspection he was asked by Mr Kim whether he was interested and he said he was subject to price. Mr Kim, according to Mr Shin, indicated the price was negotiable and that he would negotiate the best that he could and would get back to Mr Shin.
204In the meantime Mr Kim, who agrees that a conversation along the lines suggested by Mr Shin took place, asserts that he spoke to Mr Ristway and informed him that he thought $3 million (which the defendant was then asking) was too much for the restaurant and that although it would be a good site for an a la carte restaurant the location was a bit quiet. Mr Kim, whose evidence I accept, asserts he told Mr Ristway that he had a potential buyer who was interested. He thought however $2.5 million should be the asking price for the restaurant.
205There is no issue it would appear but that two or three days later Mr Kim communicated with Mr Shin indicating that the owner would accept $2.5 million as a result of which Mr Shin indicated that he would check with his wife and get back to Mr Kim.
206Mr Shin asserts that after discussing the price with his wife he spoke with Mr Kim and indicated that he was only prepared to offer $2 million as he believed there was some risk with the site as it was quiet and isolated and accordingly the price should be reduced. Mr Kim again does not deny that this conversation took place and agrees that in general terms it did.
207As a result of Mr Shin apparently only being prepared to offer $2 million for the restaurant site Mr Kim indicated that he would arrange a meeting with the vendor. According to Mr Shin, Mr Kim did so in about February 2008. Mr Shin says he attended the site with Mr Kim where they met Mr Joe Ristway. Mr Shin had never met Mr Ristway before. During the course of the meeting the sale of a nearby restaurant at $1.68 million was discussed and Mr Kim again suggested at the meeting that $2.5 million for the restaurant was a very good price. Mr Shin asserts that he responded by saying however there were risks which he had identified and he would like to offer $2 million. Mr Ristway indicated that he would speak to his board and get back to Mr Shin.
208Mr Kim asserts that he sought instructions from Mr Ristway who told him that the defendant was not prepared at that stage to go lower than $2.5 million and he communicated that to Mr Shin. Again there is no real difference in substance in the recollections of Mr Shin and Mr Kim in relation to this event. I am satisfied that such an exchange took place.
209Mr Shin however in his affidavit asserts that the next event which took place was that in about mid February Mr Kim allegedly said to him that Mr Ristway had invited him to meet and he had a proposal that Mr Shin might be interested in. At a time not specifically identified by Mr Shin he asserts that he and Mr Kim visited the restaurant site and met with Mr Ristway who showed Mr Shin the storage underneath the restaurant site indicating that he could purchase the storage area together with the restaurant. I will return to this meeting.
210For the reasons that follow, I do not consider that this is an entirely accurate account of events. Mr Kim denies ever telling Mr Shin in mid February that Mr Ristway wanted to see him and had a proposal that he wanted to put to him. However Mr Kim asserts that there were many conversations in late February with both Mr Shin and for that matter Mr Ristway separately, obviously trying to broker some arrangement. That much I am prepared to accept.
211For various reasons I do not consider that Mr Shin's account as to the events in relation to when the storage unit was first raised could be correct and I am satisfied indeed that it is not. My view is based on partly the contemporaneous records made by Mr Kim and also some evidence given by Mr Shin himself. Generally I accept Mr Kim's account as to these events.
212Mr Kim gave evidence that following his conversations with Mr Ristway and having been informed that the defendant would not go any lower than $2.5 million he had a number of conversations with Mr Shin and Mr Ristway separately. I accept that evidence. Credibly I also accept that Mr Kim was unable to give any indication as to the precise content of those conversations however he states that he made a contemporaneous note which I took to reflect a conversation or conversations perhaps he had with certainly Mr Shin and perhaps Mr Ristway. The note is dated 26 February 2008 and refers to a selling price of $2.42 million which is stated to be inclusive of $220,000 for GST. It was noted the settlement was to take place on or before 1 December 2008 with occupation taking place prior to exchange. Further 2.5% was to be paid by way of deposit on exchange. There are other details included in the note, but there is little doubt that the note only refers to the restaurant lot. Notwithstanding any evidence to the contrary from Mr Shin I am satisfied that on or about at least the 26 February 2008 conversation with Mr Kim, Mr Shin indicated that he was prepared to acquire the restaurant lot for $2.2 million plus GST. Insofar as Mr Ristway in his evidence did not recall there being an offer for the restaurant lot, it seems to me the contemporaneous note of Mr Kim alone together with his recollection, albeit limited, are both reliable and I am satisfied accurate.
213At or about this time or possibly 1 March Mr Kim drafted what was the first of a number of sales advices. The first one he drafted was in his handwriting. He noted the contract price of $2.2 million plus GST and that $55,000 would be received by way of deposit. He also noted on that sales advice (CB2/580) that Mr Ben Johnston was Mr Shin's solicitor. The settlement date was amended to 2 March 2009. The earlier note of Mr Kim's created on 26 February had it seems erroneously noted the settlement date of 1 March 2008 but I am satisfied that indeed was an error and it should have been 1 March 2009. This advice only refers to the restaurant lot.
214Mr Kim identified a further handwritten draft of a sales advice (CB2/581) as being the next in point of time he created. Again there is no change in the basic details and again it clearly only refers to the restaurant lot.
215The first typed sales advice which is partially incomplete was next created. It does not set out the contract price or the deposit received (CB2/582). There is no issue but that Mr Shin at some point provided a cheque to Mr Kim for $55,000 apparently post dated to 10 March 2008. In my view the $55,000 cheque is clearly referable to the $55,000 deposit identified in the handwritten drafts. The last sales advice prepared by Mr Kim when typed clearly only referred to the restaurant lot but he has added in handwriting the words "+ storage as at Cost agreed" (CB2/579). There is certainly no way of telling from the face of the document which does indeed bear a typed date of 1 March 2008 when Mr Kim put those handwritten additions on the sales advice. However clearly it was done at a time when Mr Shin had indicated he was prepared to acquire the storage lot. However there was no change made in handwriting or otherwise on that sales advice to the contract price.
216Ms Phillippa Russell, a solicitor who at the time acted for the Billbergia Group of Companies which included the defendant, had been retained to act on the proposed sale of the restaurant. She said in her affidavit evidence that on 5 March she had a meeting with Mr Ristway in which she was instructed to prepare a contract of sale only for the restaurant. She made enquiries of a Mr Allen who worked for the Billbergia Group to obtain certain details to include in the contract of sale. Her email to Mr Allen of 5 March and his response on 6 March corroborate entirely Ms Russell's account. Further on 6 March she made some notes for her own purposes to assist her in the preparation of the contract.
217By 10 March she had prepared a letter which she had proposed would be sent to Mr Johnston, solicitor for the plaintiff, including a copy of the contract and other documents referred to in her covering letter.
218Ms Russell further says that following the preparation of the contract and other documents relating to the restaurant she received instructions to prepare a contract for the potential sale of the storage lot. She asserted that these instructions occurred sometime after 6 March but she has no documentation or diary notes suggesting precisely when that might have occurred.
219The letter which she had prepared to send with enclosures to Mr Johnston was dated 10 March. She however says that it was not issued on that date and suggests that it may not have been sent until shortly after 19 March 2008. Ms Russell was not cross-examined and she has contemporaneous documents supporting her alleged sequence of events. I accept her evidence.
220Mr Johnston in an affidavit prepared by him had no recollection of receiving the letter of 10 March 2008, however he did locate the letter and the draft of the contract on his file. Mr Johnston also indicated that he had no recollection of receiving instructions from Mr Shin about purchasing the restaurant lot alone.
221In his evidence before me, Mr Shin accepted that he had offered $2 million plus GST to purchase the restaurant lot at a time when he was not aware of the availability of the storage lot. He also agreed that the offer of $2 million was made two or three days after having first seen the restaurant (T56/37). As I have already observed notwithstanding the sequence of events asserted by Mr Shin I am satisfied that the evidence of Mr Kim, corroborated as he is in my view by Ms Russell and in particular their contemporaneous documents, provides ample support for the finding that Mr Shin prior to him being introduced to the storage lot was clearly prepared to acquire the restaurant lot alone.
222There is also little doubt that at some point, perhaps in late February or more likely March, Mr Shin did become aware of the storage lot and at some other point also made a decision to make an offer to purchase it as well.
223Mr Shin asserts that at the meeting he had as a result of an invitation from Mr Ristway at which Mr Kim was also present, Mr Ristway informed him that if he purchased the storage lot together with the restaurant lot the areas would be useful and there would be created a synergy which would give Mr Shin a great deal of potential. He asserts that at the same meeting Mr Kim spoke about the possibility of using the storage space as a karaoke bar and further discussion took place about whether the two could be consolidated as one stratum lot. Mr Shin asserted that Mr Kim suggested he might discuss matters with Ms Russell the solicitor for the defendant who is an expert in the field. Further Mr Shin asserts that he as always continued discussions with Mr Kim in Korean and further requested Mr Kim ask Mr Ristway whether four holes could be cut in the ceiling of the storage area for a staircase, a lift shaft, a dumb waiter for the kitchen and a hole for a ventilation system. Mr Shin asserts that Mr Ristway said they could easily be done and that he could have as many holes as he wanted but he would have to mark where he wanted the holes to be created. At this point Mr Shin asserts that Mr Kim indicated that the storage unit was valued at $500,000 but he could buy the restaurant and the storage lot for a total of $2.7 million to which Mr Shin said he would give the matter some thought.
224Mr Shin further asserts that Mr Kim had a conversation in his presence with Ms Phillippa Russell about the possibility of consolidating the restaurant and storage lots.
225Mr Kim denied the conversation which allegedly took place between himself, Mr Shin and Mr Ristway concerning the storage unit and which Mr Shin had asserted had taken place sometime in February 2008 (Shin Affidavit at [46]-[48] at CB2/461; Kim affidavit of 21 June 2012 at [35]-[40] at CB2/569). Mr Kim asserts that he did not visit the restaurant site with Mr Shin and/or Mr Ristway at that time. He does agree the conversation about such matters did take place, he thought in or about mid March to April. At that time Mr Kim asserted that Mr Shin told him that Mr Shin had negotiated directly with the vendor to buy the storage lot for $300,000 to which Mr Kim replied that he did not expect the vendor to have dropped the price from $500,000 to $300,000. However he agrees that he did have a conversation with Mr Shin in the same period (mid March to April) about the possibility of consolidating the lots (Kim affidavit of 21 June 2012 at [37]-[39] at CB2/570). I accept Mr Kim's version of events and the substance of the conversations he alleges took place. He impressed me as telling the truth on this issue. To some extent I consider his handwritten note on the sales advice "$300,000 as at cost agreed" also provides some corroboration he was simply told an agreement was reached rather than his having brokered one directly.
226Mr Ristway on the other hand denied speaking about the possibility of synergy, but does agree that at some point he indicated that "We" were prepared to sell the storage with the restaurant simply because it was useless to anybody else (Ristway affidavit of 26 June 2012 at [21] at CB2/590). Mr Ristway does recall discussing with Mr Shin the possibility of development approval for the use of the restaurant during one of these conversations. Further Mr Ristway does accept that a meeting did take place between himself, Mr Shin and Mr Kim in which both Mr Shin and Mr Kim spoke to each other in Korean (Ristway affidavit of 26 June 2012 at [24] at CB2/591). In relation to any discussion about holes Mr Ristway asserted in his evidence (without being specific as to time) that he did recall that he told Mr Shin via Mr Kim that Mr Shin could have as many holes as he wanted but that the holes would have to be approved by a structural engineer and if Mr Shin were to mark out where he wanted them a structural engineer would have to be consulted to see whether they could be done in the locations he required them (Ristway affidavit of 26 June 2012 at [26] at CB2/591). I am satisfied Mr Ristway's version is broadly accurate and in particular I accept his evidence when he denies speaking of synergy at the meeting with Mr Shin and I accept he said that any holes would have to be approved by a structural engineer.
227Under cross-examination, Mr Shin agreed that he made an offer of $2 million two or three days after he initially saw the restaurant (T56/37), although earlier he had denied this (T55/29). It was suggested to Mr Shin that he had not made any offer to purchase the storage lot until after 10 March 2008 but he replied that he made an offer in the middle of February, although no records, emails or notes were made by him or sent to his solicitor to support such an allegation (T60/45-T61/44).
228Mr Ristway, under cross-examination, agreed that a meeting had been organised between himself, Mr Kim and Mr Shin to see what could be "worked out" (T153/45) but denied that the storage lot had been raised at that stage (T154/3). To that extent again I accept Mr Ristway, but it was clear his recollection of some events was vague.
229It was put to Mr Kim in cross-examination that Mr Ristway had suggested the purchase of the storage lot in a conversation between the three men in February 2008, but Mr Kim replied as follows (T187/34):
Q. In the course of one of these discussions in February 2008 between Mr Shin, yourself and Mr Ristway, Mr Ristway suggested to Mr Shin the purchase of the storage area below the restaurant, correct?
A. I didn't know. I was not attended on that. I aware of that - they had meeting very initially to introduced by someone, but I realised later on was Ristway, introduced. But I heard from Mr Raphael Shin they met on site without knowing me.
230Mr Kim agreed that he was a party to conversations with Mr Shin and Mr Ristway about the storage lot (T188/7) but suggested "it might be much later" than February 2008. He reiterated that some private negotiations had occurred between Mr Shin and Mr Ristway to the effect that the figure of $500,000 for the storage lot had been reduced to $300,000 (T188/25, T189/13). Mr Kim was not challenged on this assertion of these private negotiations.
231Neither Mr Shin, Mr Kim or Mr Ristway for that matter have any notes of any of these later conversations or meetings. Mr Kim had his note however of 26 February together with his sales advices. I am however satisfied some conversation or conversations took place between the participants in the February/March/April period although it is near to impossible to fix precisely those dates, or for that matter precisely what was said. There may have been more than one discussion by telephone and there was probably more than one meeting, but I am simply not able to make any clear findings. I am satisfied it is likely Mr Shin raised the question of some form of penetration between the two lots. He may well have raised the possibility of multiple holes. Mr Ristway's evidence corroborates that at least. The parties were obviously attempting to negotiate a price. Beyond that I am simply not satisfied as to the precise content of any of the conversations as alleged by Mr Shin. Indeed generally I reject his versions and where indicated I prefer the evidence of Mr Kim or Mr Ristway.
232In his evidence Mr Shin asserted that he formed the opinion that although the restaurant site was in a prominent part of the project it had low passing traffic and the shopping centre in the development was not well patronised. He also asserts that he formed the view that the residents of the complex might consider the restaurant was too expensive and would not be regular patrons and therefore concluded that an upmarket restaurant would be a high risk venture. He also asserts that he was prepared to take the risk provided the price was right because there was no other up market Korean or Japanese restaurant in the area and he formed a view about the expected population in and around the restaurant site over a period of 5 - 10 years. He also asserts in his evidence that in his opinion the venture would have been a better opportunity if the restaurant site and the storage area were inter connected.
233He was not asked questions about his assessment of the risk but it seems to me that as an experienced developer and restaurateur he had carefully considered all of the various factors that might affect the ultimate viability and hence profitability of the restaurant and made his own mind up as to these risks. He was however as I have found quite prepared to buy the restaurant independently of the storage lot in any event. Mr Shin does however say in his evidence that had the two lots been sold as separate unconnected properties he may have purchased the two however he would have offered less than the offer he made and which was ultimately agreed to. I am simply not satisfied that that is a credible assertion on his part. It is self serving and highly speculative. As a shrewd and experienced businessman I am assuming having made his assessment of the risks he ultimately paid what he thought was an appropriate price to pay for the two lots.
234Mr Shin asserts that he had a further conversation with Mr Kim (Shin Affidavit at [59]). The structure of the preceding paragraphs of that affidavit would tend to suggest that the conversation he alleges occurred also took place in February 2008. That is also made relatively clear by reference to paragraph [62]. In any event, Mr Shin asserts that at a meeting with Mr Kim he indicated that he was prepared to offer $2.3 million, being $2 million for the restaurant and $300,000 for the storage lot, indicating as he suggested to Mr Kim that the asking price of $500,000 was simply too high. He alleges that in the course of this conversation he told Mr Kim he would pay the combined price of $2.3 million provided the vendor undertook a significant amount of work at its own expense.
235Thereafter in a long paragraph he asserts he discussed with Mr Kim are at least 7 or 8 or more items which include the construction of a staircase, a lift shaft and a dumb waiter and provision for air ventilation which he required to be done at the expense of the vendor. He also alleges he requested that the vendor provide all relevant permits and approvals and after all the works were done he would then commence fitting out the restaurant.
236Mr Shin asserts that he imposed a further condition that after the fitout works were complete he should have the right to trade from the site for at least six months prior to completion at a nominal licence fee although he would reimburse the vendors rates and taxes.
237Mr Shin asserts that Mr Kim said he would speak to the vendor and get back to him. Subsequently he asserts Mr Kim did get back to him and told him simply the vendor had agreed to all of the requests however not at the price of $2.3 million. Mr Shin indicated he would consider the price again.
238I am unable to accept this evidence. It is entirely without any objective or contemporaneous support from Mr Shin or for that matter in my view anyone else. I do not regard this account as credible.
239Mr Shin did accept for example that one reason for a lengthy settlement and a trading period was that he desired to minimise his cash payments by paying for the fitout and the services into the storage lot himself without the need of bank finance. Once the fitout was completed and the restaurant had traded for at least six months he formed a view that any valuation obtained by a bank would be higher, hence his borrowing capacity would be greater (Shin Affidavit at [61]). The structure of the deal was to enable him to settle the purchase in due course obviously on the most favourable terms. Although he does not say so in terms and it was not explored at the trial, I infer that his commercial strategy was to get the restaurant trading profitably and then link the security for the raising of finance to the property alone without recourse to any other of his or RSE's assets.
240In any event Mr Shin asserts that later again in February in a conversation with Mr Kim he indicated that he would increase his offer to $2.5 million which would be his final offer. Mr Kim apparently indicated to him that although he thought the vendor would agree there would need to be some further discussions and the agreement in relation to cutting holes in the floor would have to go in a side letter. Mr Shin indicated that he told Mr Kim that he would prefer all conditions relating to the holes and other works to be placed in the main contract and not in a side letter but he was rebuffed by Mr Kim and pliantly accepted the structure proposed by the vendor.
241Mr Kim certainly agrees that some of the things mentioned by Mr Shin in these conversations indeed occurred but does not accept that Mr Shin mentioned authorities, permits or council approvals or construction certificates in relation to the proposed stairway. He denies talking to Mr Shin and indicating that the various requests made by Mr Shin were all agreed to subject to price. However Mr Kim agrees that there was a discussion about a side letter but rather than it being in late February such a conversation did not take place until March or April. Mr Kim further denies indicating to Mr Shin that the vendor preferred to have the conditions in relation to cutting of the holes in a side letter.
242I am again inclined to accept the version of these conversations given by Mr Kim and in particular his specific denials of speaking about consents and approvals. I also accept his denial that he told Mr Shin all of his requests were agreed subject to price. In addition, given that Mr Shin had retained a solicitor to act for him in respect of the acquisition and given the multitude and variety of the various requests he was making in respect of all manner of things to be undertaken at the vendor's expense, I find it implausible that if true he neither confirmed his instructions in relation to all of those supposed matters with Mr Johnston or alternatively sent an email to either Mr Kim or perhaps more importantly Mr Ristway recording the so called discussions and arrangements. He left the requests and the supposed agreement itself entirely presumably to Mr Kim's memory. If these requests were so important as Mr Shin asserts, to my mind this strikes me as improbable. However much he may have dealt previously with Mr Kim, he had never dealt with Mr Ristway or Waterpoint before. For an experienced and successful businessman this was a most unbusinesslike approach. He simply did not impress me as prone to that kind of behaviour.
243There is no doubt that at some point there was clearly a discussion about requiring the vendor to perform certain work and there was clearly a discussion about a side letter. I am satisfied of that. But I do not accept Mr Shin's evidence otherwise.
244Mr Shin was clearly concerned about using a side letter as a matter of principle because he understood that there were risks to him in documenting the transaction in that way. He said in his evidence quite explicitly (T77/44) that one concern he had about the side letter was that the owner might be able lawfully to ignore any agreement to cut holes before he was required for example to complete the contract of the purchase.
245He had apparently previously been advised by his solicitor in relation to another transaction that a side letter may not be enforceable against a vendor. Mr Johnston could not recall giving Mr Shin specific advice about the potential perils associated with a side letter in relation to this particular transaction but he accepted that Mr Shin by reason of prior dealings well understood in his own mind the risks associated with such side agreements (T141/15-T141/35).
246In summary I am not satisfied that matters that Mr Shin asserts were discussed with Mr Kim about his various requirements were indeed outlined in that level of detail or in some aspects at all. I am also not satisfied for example Mr Kim conveyed in effect Waterpoint's blanket approval of all of Mr Shin's requests. The more compelling view is that the correspondence to which I shall now refer is the most accurate guide as to precisely what was being discussed and indeed what Mr Shin was requiring be undertaken. Another view is of course that Mr Shin requested all of these matters as part of negotiations and in the end settled for much less, but I consider that unlikely given the correspondence I will shortly refer to.
247In passing, I note that in paragraph [10] of the Amended Commercial List Statement, it is asserted that in or about February 2008, at or about the time that the other representations were made, the defendant orally represented to the plaintiff that the proposed contracts to purchase the Restaurant Lot and the Storage Lot would not need to be completed until the Works (defined in paragraph [7] as the penetrations, supply and installation of the staircase and the installation of fire doors) had been completed. The particulars state that such a representation was made during conversations between Mr Kim and Mr Shin in February 2008. Of the materials read (particularly the Shin Affidavit and his other affidavits dated 24 September 2012 and 30 July 2013), there is no reference to any such conversation that I can detect. In particular, in the Shin Affidavit I would expect to see such a conversation recalled at paragraphs [59]-[65], but it does not appear.
248Furthermore, the cross examination of Mr Shin at T76-T77 (to the effect that Mr Shin understood he could be forced to complete the contract) saw him make no mention of any purported oral representation in the manner set out in paragraph [10] of the Amended Commercial List Statement.
249I should also say in passing, and consistently with my earlier impressions of Mr Shin as set out above, I would have found such a representation difficult to accept in the absence of contemporaneous material and I am not satisfied any such representation was ever made to Mr Shin as alleged.
250Importantly however in my mind, on 6 June 2008 the plaintiff's solicitor sent a letter to the solicitor for the defendant. The letter, which I have previously set out in part, clearly sought to convey that Mr Shin was agreeable to the use of a side letter subject to the vendor acknowledging an obligation to complete the stairs between the restaurant and the storage lot, cut the relevant one metre squared access for the dumb waiter and to provide details of a certifier (item 5). It seems to me that it is couched in the language of negotiation rather than seeking confirmation of a position already agreed. I am satisfied the letter was sent by Mr Johnston on instructions from Mr Shin, indicating what he needed clarified or agreed to. The letter does not support Mr Shin's alleged detailed requests in his conversation with Mr Kim, let alone Waterpoint's agreement to them.
251When he gave evidence before me however and when asked about the letter of 6 June, Mr Shin, with the assistance of an interpreter, asserted unequivocally that he was seeing the letter for the first time "today" (T66/40). Indeed he specifically denied ever having given Mr Johnston instructions to write the letter of 6 June (T67/25) and further that he never had any idea about the letter (T69/34). I do not accept that evidence.
252Mr Shin clearly knew about the letter and I am satisfied was responsible for its terms. That is, I am satisfied that that letter truly reflected Mr Shin's requirements and state of mind at the date it was sent.
253Mr Johnston was cross examined about that letter and whilst he said he could not recall precisely getting instructions to that effect he accepted that as a matter of practice that unsurprisingly the contents of letters would reflect instructions he had received, and that it would be most unlikely for him to have sent such a letter without instructions from Mr Shin (T130/45, T131/5). Mr Johnston also accepted that it was his practice that if Mr Shin had told him he was relying on some particular or important statement that an owner or owner's agent had made to him he would have included it in any letter (T132/7).
254Contrary to the evidence he gave before me and in which he asserted he never previously saw the letter of 6 June before going into the witness box in his affidavit Mr Shin accepts that he gave Mr Johnston instructions in March 2008 to act on RSE's behalf to negotiate an agreement for the occupation and purchase of the restaurant and storage lots but he asserts that the letter of 6 June did not accurately set out the entirety of his requests. In particular he asserts it missed out the requirement to include a reference to the other two holes that he asserts were discussed. Again I do not accept Mr Shin's evidence in this regard as accurate or for that matter truthful. I am satisfied it is a reconstruction after the event, having realised the letter did not assist his case.
255It may well be that Mr Shin made many demands and requests during his negotiations for all manner of things including multiple penetrations at the defendant's expense. But requests are not agreements. No doubt he was attempting to negotiate a deal with the maximum benefits to RSE; of that there could be little controversy.
256However many conversations he had with Mr Kim or Mr Ristway, or however many holes Mr Ristway mentioned in negotiations, one thing is abundantly clear, at some point prior to 6 June Mr Shin was told that the arrangement on these items was going to be set out in a side letter. By that date at least Mr Shin, grudgingly or otherwise, had accepted the regime.
257This signalled clearly that whatever discussions had taken place between the parties they were going to "exchange" a side letter setting out the vendor's obligations. That served in turn to identify the means by which they would deal with each other on the proposed works. Mr Shin may not have liked the idea but he agreed and instructed his solicitor to formally adopt that procedure.
258In any event on 10 June, Ms Russell on behalf of the defendant responded to Mr Johnston's letter of 6 June. In particular in relation to item 5 she informed Mr Johnston that her client would cut the hole for the stairs but would not construct them. She also informed him that her client would cut the hole for the stairs and the dumb waiter after locations were indicated as to where they might be required. She also confirmed that her client would provide details of a certifier.
259Mr Johnston on 10 June sent an email to Mr Kim, attaching both his letter of 6 June and Ms Russell's letter to him of 10 June (CB5/1972A). In that email Mr Johnston indicated that Mr Shin had two concerns, the first was that he would like to avoid the payment on 30 September 2008 and pay the balance of the deposit by 31 December 2008 and importantly what he described as Mr Shin's understanding that the vendor would construct the stairs between the storage area and the restaurant area. There is no mention of multiple holes.
260Mr Shin was asked about Ms Russell's letter of 10 June and again insisted that his solicitor did not tell him about the letter at the time it was received (T70/22, T71/16). However, Mr Johnston agreed that he had discussed Ms Russell's reply with Mr Shin and that arising from that discussion there were these two matters that he sought to raise with the owner (T137/40-T137/46). Whether or not Mr Shin saw the precise terms of it, again I am satisfied that Mr Johnston sent the email of 10 June with instructions to do so.
261Mr Kim asserts he had a meeting with Mr Shin, Mr Ristway and Mr Allen on 9 July. He has a contemporaneous file note on Waterpoint letterhead in the following terms (CB5/1970):
a hole at kitchen area ]
] a side letter
cut exit ]
bal 10% by Dec 2008
settlement by 30/6/2009
262The note does refer to quite specific penetrations, and that such matters would be the subject of a side letter.
263In his affidavit evidence at [51], Mr Kim accepted that he had no independent recollection of this meeting beyond his note.
264Mr Kim was cross-examined on the note and, despite acknowledging that he was basing his recollection of the meeting on the note, maintained that there was no reference to consents or approvals at the meeting, nor cutting the other penetrations (T246/26). I accept Mr Kim's evidence as candid and truthful.
265Mr Shin made no reference to this meeting in the Shin Affidavit. However in his affidavit in reply dated 24 September 2012 at [37]-[39] he gives, for the first time, an extensive account of what he says occurred at the meeting.
266Mr Shin asserts he told those present that he wanted 4 or 5 holes cut in the slab, a fire door, emergency access and "more holes if necessary". Mr Ristway is asserted to reply "We are going to cut holes so 4 or 5 or even more holes won't make a lot of difference to the construction". Importantly, however, Mr Shin asserts there was no discussion of a side letter.
267However, Mr Shin was not cross-examined on his evidence of the meeting.
268Mr Ristway makes no mention of the meeting in his affidavit of 26 June 2012. Under cross-examination, Mr Ristway gave evidence he could "vaguely recollect the meeting" but does not recall the matters in Mr Kim's file note (T169/8).
269Mr Kim's contemporaneous note is the best evidence in my view of what took place at the meeting of 9 July. It is reasonable to infer that although a hole in the kitchen and exit were discussed, there was no note taken by Mr Kim of multiple holes or anything like Mr Shin's previous version of events.
270Because it is a note of a meeting only two days before the issue of a side letter, which in turn does not mention multiple holes, those two contemporaneous documents taken together are not only broadly consistent as to the scope of work which was discussed but also clearly at substantial variance to the version of events asserted by Mr Shin. Without the benefit of any contemporaneous notes taken by Mr Shin to corroborate his version of events, I simply reject his evidence as to what he asserts took place at the meeting. His account I consider on this issue given only in reply is untenable, and so at variance with what I regard to be a reliable contemporaneous note, as likely to amount to a concoction.
271On 11 July a Mr Lum (who it seems had no previous dealings with Mr Kim) or for that matter Mr Shin sent a letter on behalf of Waterpoint in relation to this transaction directly to RSE which stated relevantly:
Please take this letter as confirmation the following works will be carried out (at no expense to your client) after exchange of Put and Call Options by your client for the purchase of the above properties.
...
3. Creation of a penetration and stairs connecting the restaurant with the storage lot (subject to our engineers acceptance of the proposed location and design).
272I note that it was not of course until 25 July that the Put and Call Options and licences were executed and exchanged.
273However after reading the letter of 11 July Mr Shin asserts that he had a conversation with Mr Kim in Korean but in the presence of Mr Ristway. Mr Shin says he explicitly raised his perceived deficiencies in the letter in that it only referred to one hole yet he asserts there was an agreement that the vendor would at its expense cut four holes. Mr Shin asserts that Mr Ristway told Mr Shin not to worry that the letter only referred to one hole because it was the largest and that he accepted that the vendor would have to cut the four holes in total. Indeed Mr Shin asserts that Mr Ristway said "whatever number of holes you want we can construct". Mr Shin also asserts that during the course of this conversation Mr Kim made comments about how the additional holes would enhance the potential business from both parties point of view.
274Mr Kim says he does not recall the terms of any conversation taking place in relation to the alleged deficiencies in the letter of 11 July but denies speaking about the business as being enhanced by the drilling of the holes. I accept Mr Kim's evidence.
275Mr Ristway on the other hand says that he did not in fact become aware of the letter of 11 July until he was handed a copy of it after the proceedings in the current matter were in fact commenced. He was not challenged on this assertion. Certainly on its face the letter was not sent or forwarded to Mr Ristway. He says he was not responsible for the issue of such a letter, nor did he have any discussions with anyone prior to the letter being sent. In particular he denied that any meeting agreeing with Mr Shin that the letter was deficient in any way but he does accept that he had told Mr Shin that he could have as many holes as he wanted provided a structural engineer certified them as safe.
276I am satisfied Mr Ristway had nothing to do with the terms of the letter and I otherwise accept his denial such a meeting took place at which the so-called deficiencies of the letter were discussed. I accept Mr Ristway on this matter and I reject Mr Shin's version of this so called meeting.
277Again neither Mr Shin, Mr Kim nor Mr Ristway has any contemporaneous notes of any discussions about the letter of 11 July.
278I am simply not satisfied that Mr Shin had the conversation he asserted in which he pointed out various deficiencies in the letter and was told in particular not to worry. It is simply in my mind incredible that, having been dissatisfied in the first place with the whole notion of a side letter and then allegedly worried and concerned about the deficiencies of it, although a meeting might be a logical step a letter or email from him or his solicitor was clearly called for. He did no such thing, nor did he instruct his solicitor to write to Waterpoint. However in any event the earlier correspondence to which I have referred to and from the solicitors also runs quite contrary to Mr Shin's evidence about the so called deficiencies.
279His evidence before me on the letter was confusing, inconsistent and implausible. In cross examination Mr Shin at first agreed that he got the letter of 11 July at or about the date it bears and he regarded it as an important document which he discussed with his solicitor (T79/5-T79/20). He also agreed he discussed it with his solicitor before he signed the Put and Call Options (T79/29). He also asserted that he told his solicitor about the conversations he had with Mr Kim and about the deficiencies in the letter. However it seems he did not tell his solicitor what Mr Kim had apparently agreed to during the course of the meeting (T80/45).
280A little later in his evidence however he appeared to indicate that he did recall speaking with his solicitor about what he and Mr Kim had discussed about the letter of 11 July (T82/15). However again an answer or two later he seemed to be saying that he had not told everything to his solicitor but only told him some of the detail of the discussion he had with Mr Kim (T82/28). I regard this evidence (which was given with the benefit of an interpreter) as unreliable and in effect a prevarication on his part when he found himself in an untenable situation. He found it difficult to give a consistent and I consider truthful account of his reaction to the side letter.
281Mr Shin did assert however that he told his solicitor, between possibly March and June (T82/50), that the vendors had agreed to get all the relevant consents and approvals for the penetration works. I am simply not satisfied that he did. Mr Johnston's evidence (at least that which was read) is entirely silent on the side letter.
282However Mr Shin was further cross examined about the side letter. Frankly I found Mr Shin's later answers again were internally inconsistent. It was put to him directly that he must have told his solicitor that the letter of 11 July for example wrongly did not say that the owner was to obtain relevant consents and approvals. The answer he gave was entirely confusing. He insisted that he was agreeing with or wanted to act in accordance with what Mr Kim had said but that he did not think that he should be too "serious" about the letter at the time (T83/45). He confirmed that he did not think the letter was too important and he proceeded on the basis that he could "trust them" (T84/2).
283At yet another point in his cross examination he accepted he read the letter carefully when he received it and discussed it with his solicitor and agreed that he did not raise the absence of any promise to obtain consents and approvals from the owners point of view with his solicitor (T84/24). Mr Shin agreed that nowhere in the letter of 11 July was it suggested that any consents or approvals would be obtained (T84/49). Of course both in his affidavit evidence and his oral testimony Mr Shin was at pains to allege that the letter of 11 July was quite inconsistent with things Mr Kim had told him and that he appreciated that when he read the letter.
284When asked quite explicitly why he did not tell his solicitor that the letter was not the same as what Mr Kim had said at the meeting his response was as follows (at T86/16-T86/18):
Sometime my solicitor does not understand. Different nationality with some custom, I am sorry talking this way. But usually Korean discuss something else without any evidence and talk in the trust.
285The cross examiner attempted to persist in asking further questions, but in my view Mr Shin prevaricated in giving his responses with or without the aid of an interpreter. He had stated unequivocally in evidence in chief that having received the letter of 11 July he immediately appreciated amongst other things that it did not refer to the number of holes he had been promised would be made at the vendor's expense. He was so concerned apparently that he felt the need to raise the matter with both Mr Kim and Mr Ristway. However when he gave his evidence his account as to why he did not raise any concerns with his solicitor varied from him not taking the letter seriously to believing his solicitor of some twenty odd years would not understand his concerns by reason of some vague, ambiguous and frankly implausible cultural differences. At an earlier point in his evidence (T76/5) he even tried to suggest that he did not know what the side letter meant at the time he received it, and later he thought it was like some sort of special condition (T84/35).
286His evidence on the matter of the side letter in large measure and his alleged reaction to it is both implausible and improbable and I regret to say having observed him carefully untruthful. Mr Shin readily appreciated that he at no time sought any further clarification in writing notwithstanding the fact that he alleges he had a conversation with Mr Kim about the deficiencies of the letter. He was wary of the existence of a side letter and concerned that the term or terms had not been incorporated in the Put and Call Agreement.
287One thing that is clear is that he was obviously in regular contact with his solicitor who it seems was never instructed to reply to the letter of 11 July at all. That is in my mind compelling evidence it satisfied his requirements.
288But the inconsistencies however do not stop there. In the Shin Affidavit when dealing with the period in August 2009, Mr Shin purports to set out a conversation he had with Mr Kim about the updating of contractual materials. Mr Shin asserts that Mr Kim said during the course of such a meeting that the side letter would not be renewed and that there would be no side letter going forward. In paragraph [111], Mr Shin asserted that he said in response to this:
The side letter is binding and I will not agree to change it.
289There is no doubt that the side letter that he was referring to in his evidence was indeed the side letter of 11 July. He does not suggest that in the conversation that he told Mr Kim he also relied upon any oral representations. Quite the contrary, it seems to me that it is a clear concession that the letter was self contained and suited his purposes entirely.
290Mr Kim on the other hand does not recall the conversation with Mr Shin about the updating of contractual documents. It was put in oral submissions that at [111], Mr Shin was not attempting to be exhaustive in describing the relevant contractual obligations. In fairness I observe he was not cross examined on [111]. I however do not accept that interpretation of the evidence. I do not consider he had forgotten the so called all important oral representations, but rather it should be considered as an unguarded and candid account of his view of the side letter.
291I would have expected Mr Shin given his very long association with Mr Johnston and their discussion in the first place about the undesirability of such a side letter to have discussed the terms of the 11 July letter and to have discussed its deficiencies, if any. A shrewd experienced businessman like Mr Shin who bothered to retain a solicitor to act in hundreds of property transactions would do exactly that. If he were dissatisfied with any aspect which he thought would materially affect his interests not only would he have raised it with his solicitor but he would have insisted that a clarifying letter go back. But this did not happen.
292Yet again I am left with the position where Mr Shin's version of history is so unreliable that I am simply unable to accept what he had to say about the alleged conversations with Mr Kim and or Mr Ristway about the letter. I am simply not persuaded that he had the conversations he suggested he had prior to 11 July with Mr Kim and Mr Ristway nor am I persuaded he raised as he asserts he did with Mr Kim or Mr Ristway the so called deficiencies in that letter.
293In passing I observe that not only did the letter of 11 July not mention the so-called extra holes that had apparently been promised but it made no mention of the six months rent free trading period. Mr Shin again implausibly in my view said that he did not raise that issue with Mr Kim even though he asserts he raised the question about the holes because he did not think about it (T91/3-T91/9). I reject his evidence in this regard. It seems more than a little odd, given the economic significance as he now would have it of such an arrangement on his financial planning, that he simply forgot it.
294On 25 July the parties exchanged Put and Call Options for contracts for the sale of the restaurant and storage lots. The parties also entered into licence agreements in respect of these lots that allowed the plaintiff to occupy, fitout and trade from the lots after exchange of the option agreements.
295The terms of the options agreements had a "Whole Agreement" clause that provided that the Deed constituted the entire agreement between the parties and "supersedes all prior discussions, undertakings and agreements". There was a further representation that each party had entered into the deed without relying on any representation by any party or "any person" purporting to represent that party.
296The sale of land contracts annexed to the option agreements also included a special condition to similar effect of the entire agreement clause in the Put and Call Options. In the sale of land contract there was included clause 10.1.5 of the standard conditions that prohibited the purchaser from rescinding or terminating in respect of a "promised representation or statement about the contract or property". Clause 7 of the standard form of contract allowed the purchaser to make a claim for compensation but only if such a claim was served before completion.
297Shortly after the exchange of the Put and Call Options and on 12 August 2008 Mr Allen on behalf of the defendant sent an email to Mr Shin's employees at Spacecon and also to Mr Kim. By this stage the defendant was in receipt of Mr Shin's proposed cut out plan for the restaurant. Mr Allen informed the recipients of the email that he was unable to cut into the slab for a number of reasons but importantly because it was common property and would require permission from the strata body. There was thereafter an attempt by the architect retained by the plaintiff to arrange a meeting between Mr Shin to discuss the difficulties. The email of 12 August makes no mention of multiple holes being drilled through the slab.
298Mr Shin agreed that on or about 12 August 2008 he was indeed informed about the difficulty in carrying out the penetration work. When asked whether he was aware that there may be problems with the Owners Corporation Mr Shin indicated that at the time he did not consider that would be a difficulty (T99/6). He certainly had no recollection of having any meeting with Mr Allen or anybody else about this issue.
299It was put to Mr Shin that notwithstanding that he understood there were difficulties with the Owners Corporation he instructed another Mr Kim (his employee) to tell Mr Allen to go ahead and do the penetrations anyway. Mr Shin denied this (T99/30).
300Mr Shin was shown an email dated 10 September 2008 from Mr Allen to a number of Mr Shin's employees at Spacecon, Mr Kim and a copy further sent to Mr Ristway. It is plain from this email (CB8/2799) that one of Mr Shin's employees forwarded the email to him. The email records that Mr Allen had simply been told to proceed to cut five holes by a Mr Kim when Mr Allen clearly had some concerns and required an urgent site co-ordination meeting. When asked who the Mr Kim was referred to in the email Mr Shin indicated that he did not believe that it was Mr Kim, the real estate agent, but rather another Mr Kim who worked for his company Spacecon.
301It was then put to Mr Shin that although he was aware from the email from Mr Allen that the Owners Corporation consent was not forthcoming to the penetrations he nonetheless directed Mr Kim to go ahead and mark the holes and directed Mr Allen to do so notwithstanding there was no consent. It was put to him explicitly that notwithstanding the lack of consent he was prepared to do the work anyway. His answer or answers were I consider a prevarication (T102/4). I consider he was clearly quite prepared to direct the work be done notwithstanding the consequences. He did not care about the lack of consent or approval in my view.
302I consider this rather indicates that technically consent or no consent, nor indeed who was responsible for seeking and obtaining it, was not a matter of any concern to Mr Shin. He was prepared to press on regardless.
303It is uncontroversial that no work was done or correspondence was entered into by the parties in relation to the works the subject of the "side letter" between 12 August 2008 and 20 April 2009. Mr Shin claims he was verbally contacting Mr Kim about all these matters but Mr Kim does not recall such conversations taking place. However Mr Shin never once put anything in writing to Mr Kim or anyone else, even in Korean. I am unable to accept the extent to which Mr Shin alleges he was making contact. I consider he was grossly exaggerating.
304As I have already observed for the last half of 2008 nothing if anything much appears to have occurred. But according to Mr Shin at [91], [93] and [94] of the Shin Affidavit he was aware that there were difficulties in the defendant performing the work and/or some alleged dispute internally between Mr Ristway and Mr Allen over what, if any, work was going to be undertaken by the defendant. Again, none of this prompted Mr Shin to approach his solicitor to formally record his concerns or complain.
305It is clear that the parties agreed to vary by way of formal extension the Put and Call Options to provide that the last day for the exercise of the call option was varied from 3pm 31 December 2008 to 3pm Friday 30 January 2009. Mr Shin asserts that this occurred in the context of a discussion with Mr Kim in which Mr Kim indicated that the vendor required an extension for the purposes of cutting the holes in the slab. However I consider that cannot be correct. I consider the variation in the Call Option was clearly to enable the purchaser to have an additional period in which to make a call. Mr Kim does not recall any conversation in relation to the extension being requested for the purposes of making the penetrations. It seems unlikely however that it was done to suit anyone but the purchaser. Again the evidence on this issue is at best vague, and hence unsatisfactory.
306On 20 April 2009 the defendant purported to exercise its rights under the put option in relation to both the Restaurant and Storage Lots. Letters between solicitors then passed making assertions and counter assertions about the respective rights of the parties to either complete or refuse to complete the arrangements. Leaving aside the question of who was right and who was wrong it is certainly true that Mr Shin had not had an approval for finance to complete the purchase.
307Mr Shin says that in a conversation with Mr Kim he asked that the whole question of "new target dates" be raised subject to the penetration works being done (Shin Affidavit at [110]). Again Mr Kim does not recall this conversation, and again there was no confirmation in writing.
308By August 2009, knowing fully well that the penetration holes had not been undertaken, Mr Shin asserts that in a conversation with Mr Kim (a matter to which I have already made reference), Mr Kim suggested that there should be some new updated documentation by way of a new contract. Mr Shin asserts that Mr Kim said that the "side letter" will not be renewed or "there will be no side letter". Mr Shin asserts, as I have already mentioned, that he resisted any change in documentation especially the side letter because of its "binding" nature. This is hardly the expected reaction to a letter which exhibited serious alleged deficiencies.
309Mr Shin says ultimately that he would not agree to the issue of any new contractual documentation and although Ms Russell forwarded under cover of a letter of 31 August 2009 a new contract for the sale of land he refused to sign it. Indeed he says at [118] that he told Mr Kim one of the reasons that he would not sign the proposed contract was because the side letter was not attached.
310By 4 September 2009 both sides had been sparring with each other for some considerable time. Mr Shin suggests that the vendor was delaying the penetration works because of the failure to obtain consent or approval. On the other hand he appears to concede that Mr Kim told him at [120] that the vendor was worried that they would do the penetration works and then Mr Shin would go slow with the fitout and delay completion further.
311Mr Kim asserts that he had a conversation with Mr Ristway at or about this time (September) in which Mr Ristway expressed his concern that if the defendant were to go ahead and make the holes which would "cost a lot" Mr Shin might then refuse to settle and they were left with holes in the floor. Mr Ristway was concerned that Mr Shin had done very little towards the fitout and had only paid a deposit of $20,000. Both Mr Shin and Mr Ristway agree that a conversation did take place about the parties walking away from the arrangements. There is no doubt that the defendant harboured concerns as to whether Mr Shin really intended to complete the purchase. It may well be that Mr Shin was at the time negotiating with prospective financiers but again as at September 2009 he had not arranged finance to complete. He confirmed under cross-examination that he had not organised an unconditional offer of finance as at June 2009 (T116/13), nor even by 25 November 2010 (T125/21) or 10 December 2010 (T125/38).
312There is some accord in Mr Shin's account of the 4 September meeting, set out in the Shin Affidavit at [120]-[124], and Mr Kim's account in his affidavit of 21 June 2012 at [69] which largely confirms the substance of the conversations except in respect of whether it occurred in Korean or English and the demeanour of Mr Shin, or Mr Ristway's affidavit of 26 June 2012 at [38]-[44] which places greater emphasis on Mr Ristway conveying the wishes of Mr John Kinsella, but there is no suggestion that Mr Shin asserted that Waterpoint had breached any contractual obligations.
313It seems uncontroversial that some discussion took place at the September meeting about whether Mr Shin would pay an additional sum of money towards a deposit as an act of good faith. In any event the parties seemingly agreed at this meeting that the defendant would create a number of penetrations upon the undertaking by Mr Shin to commence fitout works within 28 days of the completion of the stairs (see Shin Affidavit at [121]). I infer although it was not the subject of any express reference that the balance of the holes (other than the staircase) would be created at the expense of the defendant. No document was prepared by the parties recording what was it seem then agreed. My impression is that the defendant decided to undertake the work partly out of frustration and pragmatism and also to force Mr Shin's hand.
314In or about October, after Mr Shin marked the places where he wanted the holes to be made, the vendor completed a number of penetrations and constructed the stairs. Mr Shin inspected the works and it seems was content with them. He was well aware at the time that the Owners Corporation had not been asked for or had not consented to the work.
315On 29 October 2009 Ms Russell on behalf of the defendant sought the consent of the Owners Corporation for the works but only two of the holes one of which at least comprised the stairs. She also asked for a special privilege and exclusive use by law in relation to the works that had or were being carried out at the time. It is not plain from Mr Shin's evidence whether he knew of this letter but as I have said I am satisfied on the evidence he certainly knew no consent had been obtained at or by the time the holes were penetrated nor had it been obtained by the time he commenced his fitout and yet he never at this point suggested any breach of contract for example.
316The restaurant fitout works were commenced in late 2009 it seems and completed in early January 2010. The restaurant began trading on 15 January 2010.
317Mr Shin asserts that he had a conversation with Mr Kim in which he informed him that Mr Geoffrey Pearce of the McKenzie Group (a private certifier) could not issue an occupation certificate for the restaurant because a section 96 modification for the staircase and penetrations had not been obtained. He asked Mr Kim to have the vendor resolve the issue. Mr Shin says Mr Kim said he would speak to Mr Ristway. Mr Kim agrees that such a conversation took place. Mr Shin also asserts that he was told by Mr Kim that Mr Ristway had arranged to obtain an interim certificate however Mr Shin indicated that a final certificate was necessary otherwise the property could not be sold and he would not be settling on the contract. Again Mr Kim accepts that such a conversation took place. Mr Ristway says, on the other hand, that he did not have any direct contact with Mr Shin but asserts that he would only have told Mr Kim that he would investigate such approvals as may be necessary.
318Between January and July 2010 Mr Shin asserts that he met with Mr Kim several times a week and continuously asked where the occupation certificate was. He knew none had been issued and traded through the whole period. During this time, he does say that he told Mr Kim that the vendor should obtain all approvals and certificates and Mr Kim does not deny that this was said by Mr Shin. Nothing was resolved however at this point and again neither Mr Shin nor his solicitor put anything in writing about these alleged conversations, nor it seems did Mr Shin raise any such matters with Waterpoint directly.
319At or about this time Mr Shin asserts that Mr Kim told him that the Owners Corporation was not very happy that the work had been done and that was the reason why they were not giving their consent. That did not seem to perturb Mr Shin who kept trading in his restaurant.
320For a good portion of July and August 2010 the parties' respective solicitors corresponded with each other for the purposes of attempting to resolve the outstanding question of certification. However Mr Shin asserts that he told Mr Kim that the vendor had to provide the "owners consent" for the staircase. Mr Kim does not recall such a request. On 31 August 2010 Mr Shin asserts that his solicitor told him that Ms Russell believed that the Owners Corporation was hostile and that there would be no approval or exclusive use by-law. Mr Shin asserts that having had previous experience with such matters if the Owners Corporation had not consented and if various by-laws had not been complied with in relation to building work, it was very difficult to obtain approvals for work already carried out because the Owners Corporation could seek a rectification order requiring the removal of the non approved work. He asserted that he was also aware that a Council being asked to issue an occupation certificate would generally wish to be satisfied that the Owners Corporation had approved or consented to the work. It should be noted that neither the Owners Corporation nor any local authority has ever taken any step against the defendant. At the date of the trial nothing had emerged from either the Owners Corporation or local authority to suggest they had any intention whatsoever of taking any action in relation to the unauthorised penetrations. There is no evidence either had ever complained in writing making any formal objection.
321Somewhat remarkably given his evidence otherwise Mr Shin volunteered in the Shin Affidavit at [158] that he had a conversation with Mr Kim in October 2010 in words as follows:
If the vendor is not prepared to obtain the owners consent I am prepared to settle on the contract for $2,200,000. I will then take the risk of any rectification notice issued by the Owners Corporation in relation to a failure to obtain or comply with a development consent.
322Mr Kim substantially agrees that such an offer was made however he asserts that Mr Shin offered $2.2 million upon which he would enter into an unconditional agreement to settle within three months. In his affidavit in response to Mr Kim (dated 24 September 2012) at [47] Mr Shin agrees that he indicated that he would settle within 3 months of an exchange as he said it would take him that long to finalise the finance for the purchase.
323Mr Shin concedes that on 8 November 2010 a building certificate was issued for the staircase and on 17 November 2010 an interim occupation certificate was issued. On 29 November a final occupation certificate was issued.
324Notwithstanding the fact that the Owners Corporation had not consented, and despite the fact that no section 96 certificate was issued, by October 2010 Mr Shin was therefore nonetheless prepared to make a reduced offer to $2.2 million to complete the agreement and take all risks associated (i.e. rectification) with the alleged failure on the part of the vendor to obtain Owners Corporation consent. For a reduced price he was prepared to face the consequences legally and or commercially of there being no consent from the Owners Corporation. In my view he had likely assessed they would do nothing. In any event, the risk did not unduly phase or perturb him as long as he could opportunistically and cynically use it to RSE's commercial advantage.