Rashazar v Tok

The Agreement

1. The Rashazar family came to Australia in August of 2013 on a Business Investment Visa (Subclass 163) from Iran.
2. In late 2015, Mr Hassan Rashazar was introduced to Mr Tok. Mr Hassan Rashazar was seeking to buy a business in Sydney for the purposes of his Investment Visa, which is a pathway to permanent residency.
3. At all relevant times, Mr Hassan Rashazar was assisted by his oldest son Omid because Omid's English is, in his father's words "far superior" to his fathers. Omid gave evidence in the plaintiffs' case. Omid was involved in all aspects of his father's business dealings with Mr Tok and had his father's full authority to act on his behalf. Mr Hassan Rashazar has another son who is younger than Omid, Navid, who also gave evidence. I reject Mr Tok's suggestion that he conducted relevant negotiations with Mr Hassan Rashazar alone, with both of them speaking Turkish. That evidence is inconsistent with the evidence of both Mr Hassan Rashazar and Omid, and their evidence is consistent with each other and was unshaken in cross-examination. The credibility of the witnesses is discussed in more detail below.
4. Omid was twenty-six years old in 2015. In Iran, prior to coming to Australia in 2013, he had been a university student. Upon arriving in Australia in 2013, Omid took on the task of finding work to earn an income for his family and finding a business for his family to invest in and develop in order to achieve permanent occupancy.
5. In 2015, Mr Tok told Mr Hassan Rashazar and Omid about his business, Fresh Cut, which he said was in the business of supplying fresh vegetables in the Sydney area. From July 2015 to January 2016, Mr Tok, Mr Hassan Rashazar and Omid discussed the possible sale of shares in Fresh Cut to Mr Hassan Rashazar and/or Omid or to a company associated with them.
6. Fresh Cut was not Mr Tok's only business. For example, he also had several kebab shops. Navid and Omid worked in one of them from 2016.
7. In his affidavit of 24 August 2023, Omid said that the visa held by him and his family allowed them to stay in Australia for five years, during which they could apply for another type of visa which would allow them to stay in Australia permanently if they could show that they had been in business in Australia for two years (together with other requirements). The family therefore sought to establish a successful business in Australia. In November 2015, Rashazar Pty Ltd was incorporated for that purpose.
8. In cross-examination, Omid explained his understanding of the visa requirements in the following way (transcript 15 May 2024 p 19-20): A. …they [ie the immigration lawyer] just tell us you guys have to transfer money from Iran to Australia and then you guys have to get business and I run the business for two years, first years turnover has to be minimum 200, 250,000 after business. Second year you have to be more than, turnover has to go high, and then you have to have two Australian permanent resident or citizen working over there as a fulltime or for part time. Q. Yes. And do you recall them, the lawyer was telling you that you had to invest at least $100,000 into the company? A. It was minimum. Q. Minimum $100,000? A. Minimum, yep.
9. It was Mr Hassan Rashazar's evidence, in his affidavit of 24 August 2023, that an agreement was reached for the sale by Mr Tok of 30% of the shares in Fresh Cut to Rashazar Pty Ltd for the total consideration of $275,000, which was to be paid in two tranches; $100,000 upon the signing of the Agreement and $175,000 two years after the signing of the Agreement.
10. Mr Hassan Rashazar signed the Agreement on 25 January 2016. Mr Tok had given Omid details of the account into which the first payment of $100,000 was to be made. Mr Hassan Rashazar and Omid then arranged for the transfer of $100,000 to that account (see p 18 of the annexure to Omid's affidavit of 24 August 2023). That account was an account of Fresh Cut. Omid said, in evidence, that he did not know the identity of the account holder at the time that the money was paid. At this stage, the Rashazars trusted Mr Tok and believed that he was helping them.
11. Mr Tok said, in his affidavit sworn on 9 November 2023: 12. In around early January 2016 Hassan and I orally agreed that Hassan would "purchase" a 30% share in Fresh Cut so that he could obtain a Business Visa; this was to be done by: a. executing a sale of business contract between me and Hassan purporting to sell 30% of my shares in Fresh Cut for $275,000 to allow Hassan to apply for and obtain a Business Visa. It was a matter for Hassan as to what entity would enter into this agreement on his behalf, which was ultimately Rashazar Pty Ltd; b. Hassan would pay $100,000 to Fresh Cut which was to be retained by it in order to meet the asset requirements of the Business Visa; c. A further $175,000 was to be paid by Hassan into Fresh Cut's bank account to show immigration that a payment had been made. This money would be returned to Hassan after it was deposited; d. Hassan, Omid and Navid were required to run and operate the business and make payments in respect of all costs and expenses related to the business. e. In order to facilitate this the sale of business contract was drafted to include the following terms to give effect to the above and obtain the Business Visa:- i. Rashazar Pty Ltd agreed to purchase 30% of the shares in Fresh Cut for the sum of $275,000 as follows: 1. The sum of $100,000 upon the transfer of shares. 2. The sum of $175,000 within 2 years from the date of the transfer of shares. 13. At the time I had a limited understanding as to what the Business Visa requirements were. I did, however, know that the business had to record a particular amount of earnings and Hassan had to be working in the business. Annexed and marked "B" is a copy of the Department of Home Affairs Eligibility requirements as of 18 October 2023. … 15. On or about 22 January 2016 the sale of business was entered into between Rashazar Pty Ltd, the entity nominated by Hassan, and me, as sole shareholder of Fresh Cut. Annexed and marked "C" is a copy of the Sale of Business Contract. 16. On 22 January 2016 Hassan transferred the sum of $100,000 into Fresh Cut's bank account in accordance with our oral agreement. This money should have been paid to me directly and not to Fresh Cut as Hassan was purchasing my shares. The reason, however, that Hassan transferred the money to Fresh Cut's account was because of our verbal agreement that this money would remain in the business account to meet the business visa requirements. This money remained in the Fresh Cut's account and was applied to the business expenses. 17. On or around 22 January 2016, 30 out of 100 shares were transferred from my name to Rashazar Pty Ltd. Annexed and marked "D" is a copy of the ASIC Document Image 2E304387.
12. Annexure C to Mr Tok's affidavit includes an extract from the Agreement, which is headed "Contract for the sale of business - 2004 edition". The entire Agreement is annexed to Omid's affidavit of 24 August 2023. The Agreement was between Mr Tok, as vendor, and Rashazar Pty Ltd, as purchaser, and provided for the sale of 30 shares in Fresh Cut for a total price of $275,000, $15,000 of which is attributed to trading stock, $150,000 of which is attributed to goodwill, and $110,000 of which is attributable to equipment, on the face of the Agreement. Special conditions are annexed to the Agreement, including special condition 11, which says: 11. PAYMENT OF PURCHASE PRICE The Purchase price shall be payable as follows: (a) The sum of One Hundred Thousand Dollars ($100,000) upon completion; (b) The sum of One Hundred and Seventy Five Thousand Dollars ($175,000) within two (2) years from the date of Completion. [sic]
13. In cross-examination, Mr Tok confirmed that he gave Mr Hassan Rashazar and Omid the bank account details for Fresh Cut because he wanted them to pay the $100,000 into the Fresh Cut account, even though he was the owner of the shares being sold.
14. It was Mr Hassan Rashazar's evidence that, in November of 2016, Mr Tok said that he would "cancel the contract" if he was not paid the second payment of $175,000 by the end of November 2016. The payment was not due under the terms of the Agreement until 24 January 2018. Omid also gave evidence of Mr Tok's demand and warning but said that it was first given in July 2016 and then repeated on a subsequent occasion.
15. In response to Mr Tok's demand and warning, Mr Hassan Rashazar and Omid arranged for $175,000 to be paid on 24 November 2016.
16. Mr Tok said, in his affidavit, that, in November 2016, Mr Hassan Rashazar initiated the early payment of the second instalment, being $175,000. He said that Mr Hassan Rashazar told him that his immigration lawyer had told him this was needed so that the visa could be processed quickly. I reject this evidence. I prefer the evidence of Mr Hassan Rashazar and Omid, which is more consistent with the terms of the visa, as recounted in evidence.
17. In his affidavit, Mr Tok said: 24. On 24 November 2016 Omid and Navid called me and we had a conversation of the gist of which was: Omid: We are coming to your shop. Are you there? Me: Yes I am. Omid: We want to deposit the $175,000 to you so that you can withdraw it and give it back to us. We have borrowed this money from family and friends, and we will need it back immediately. Me: Ok that's fine. 25. Soon after this conversation Omid and Navid came to my shop, New Star Kebab. After initial greetings we went to the Commonwealth Bank of Australia branch in Auburn. Hassan was not present on this occasion. Omid and Navid deposited $175,000 cash into Fresh Cut's account. I immediately withdrew the money and gave it back to Omid and Navid.
18. Counsel for the plaintiffs objected to those paragraphs of Mr Tok's affidavit in which he purported to quote direct speech, on the basis that it was likely that it was his intention to convey the gist of the conversation rather than to represent that the precise words set down were spoken. It was agreed by counsel for all parties that I should read those paragraphs as conveying Mr Tok's evidence of the gist of the conversations they set out, rather than deposing to the precise words set down, and I do that in all instances where direct speech is set out in Mr Tok's affidavit (see Gan v Xie [2023] NSWCA 163 at [25] and [97] to [123])
19. Mr Tok said, in cross-examination, that Omid brought $175,000 in cash in a single bag to the Commonwealth Bank branch in Auburn in November 2016. The following exchange took place (transcript 15 May 2024 p 83 and 84): Q. One bag of bank notes? A. Yes, correct. Q. What were they denominated in? A. Sorry? Q. What, they were bank notes? A. Bank notes. Q. Were they $50 notes? A. Obviously we open. Definitely there, you know, there was a bank note. Q. It was a bank note, not - A. Australian currency, bank note was in the bag, we deposit it, picking it up in the same minute because the bank know me very well. Q. So you're telling me - A. In and out, we give it to the, give it to bag because of the reason because I know it going to come up, these questions, we - I want to answer the clarities and simply they borrow the money from the people, was struggling to give back, and we get it in the same minute. By the way, I talk to the bank. All right if you order, they can bring the, the camera visions, whatever is the record over there, and showing in the same minute money was deposited in there, cash and the lady I, I know I've been dealing for long time in the banking over there covered our stamp and same minute she even not put any into the safe because we need to draw back. I make a note to her if he do it, is he can't do it in that way because they don't recognise him.
20. Mr Tok agreed that he had not put this account in his affidavit.
21. Later in cross-examination, Mr Tok agreed that what he was saying was that Omid gave the money in the bag to the bank teller and the bank teller gave it back. Mr Tok said the teller gave the money back to Omid (transcript 15 May 2024 p 86 line 49).
22. Mr Tok was under cross-examination for most of the afternoon of the first day of the hearing. On that day, the Commonwealth Bank provided a document to the plaintiffs' solicitors in response to a subpoena (Exhibit P9). At the beginning of the second day of the hearing, the document was shown to Mr Tok. The document unambiguously shows that, on 24 November 2016, at 12:08pm. Mr Hassan Rashazar transferred $175,000 to Fresh Cut's account using a card, the number of which is set out in the document. The deposit was not in cash. The document also shows that twenty minutes after the deposit, at 12:28pm, Fresh Cut transferred $175,000 to an account held by Mr Tok and his wife. Mr Tok agreed, in cross-examination, that this was inconsistent with his evidence the previous day.
23. Omid said, in his affidavit of 24 August 2023, that he went to the Commonwealth Bank with his father on 24 November 2016 and arranged the payment of $175,000 from his father's account to "Mr Tok's account". Omid provided the receipt from the Commonwealth Bank for the transfer (see pp 98 and 99 of Omid's affidavit of 24 August 2023). According to Omid's account, Mr Tok did not accompany him and his father to the bank.
24. In re-examination, Mr Tok said that "we" paid Omid from his account "later".
25. There is no documentary evidence of any payment of $175,000 to any of the Rashazars or to Rashazar Pty Ltd from Mr Tok, Fresh Cut or anyone else. In cross-examination, Omid denied that the money was returned to him (transcript p 29). I believe Omid.
26. Exhibit P9, which was produced to the plaintiffs' lawyers by the Commonwealth Bank, proves that Mr Tok made up his story about Omid having with him a bag of cash in the sum of $175,000 at the Commonwealth Bank branch on 24 November 2016. It further proves that Mr Tok lied under oath when he said, in cross-examination, that the cash was handed back to Omid after the deposit was recorded by the teller. This seriously undermined Mr Tok's credibility as a witness.
27. Mr Tok's credibility was further undermined by his evasive and unresponsive answers. He frequently gave inconsistent and contradictory answers to questions. He was argumentative and focussed on limiting the scope of the questions asked of him, rather than answering them truthfully and comprehensively. He was particularly resistant to questions concerning the content of financial records which he did not consider to be relevant to the proceedings. English is not Mr Tok's first language, but he did not seek the assistance of an interpreter, and I am satisfied that those aspects of his evidence which thoroughly undermined its reliability are not attributable to any difficulty in speaking and understanding English.
28. The evidence of Mr Hassan Rashazar, Omid and Navid was affected to some extent, to varying degrees, by the fact that English is not their first language. Mr Hassan Rashazar gave his evidence through an interpreter. However, each of them gave their evidence, to the best of their ability, in a frank and forthright manner, seeking to impart a truthful version of events. Where the evidence of any of them contradicts the evidence of Mr Tok, I prefer the evidence of Mr Hassan Rashazar, Omid and Navid.
29. It was Mr Hassan Rashazar's evidence that he did not, at any time, receive a "transfer of share certificate" from Fresh Cut or Mr Tok. Mr Hassan Rashazar also said that he was not paid any profits (which I assume includes dividends) from Fresh Cut. Mr Hassan Rashazar said that he continued to pay money into the business because he was applying for a visa through the company. It is clear from the terms of the visa, a version of which is annexed to Mr Rashazar's affidavit, that it is critical to the success of an application for permanent residency that the business relied upon in the application increases its turnover over a period of at least two years.
30. Omid said that, on 15 June 2016, he asked Mr Altug Sanli, who was Mr Tok's friend and accountant, and the accountant for Fresh Cut, for the Transfer of Shares, or for the shares themselves. Mr Sanli told him that the documents were not ready for him. Omid repeated his request on 29 June 2016 and Mr Sanli told him that he had provided the documents to Mr Tok, and that Omid could ask Mr Tok for them.
31. Omid asked Mr Tok for the documents on 1 July 2016 and Mr Tok told him that he did not have them.
32. Omid asked Mr Sanli again on 2 July 2016 and Mr Sanli, in effect, told him that he did not need proof of the shares, and that if his immigration lawyer sent Mr Sanli a request, Mr Sanli would provide a document proving share ownership.
33. Omid says, in his affidavit, that his father had a varied role at Fresh Cut, including receiving and talking to customers, cutting, washing and packing vegetables and assisting with the day to day running of the business. He did not, however, receive any wages for working at Fresh Cut, and nor did he receive any profits. Omid said that, at his father's request, he asked Mr Tok to involve his father in the management of Fresh Cut. Mr Tok would not accept a second director but allowed Mr Hassan Rashazar to be involved in "little management", which I take to mean aspects of the day to day running of the business (see transcript 15 May 2024 p 25-26). Throughout the relevant period, Mr Tok was the sole director of Fresh Cut.
34. No Share Transfer form or share certificate in the name of Rashazar Pty Ltd has been adduced in relation to the Agreement for the transfer of 30 shares in Fresh Cut from Mr Tok to Rashazar Pty Ltd. No minutes or memorandum of a resolution of the Director of Fresh Cut approving a transfer of shares from Mr Tok to Rashazar Pty Ltd has been adduced, notwithstanding that Mr Tok said, in his oral evidence, that he had searched the "books and records" of Fresh Cut (transcript 15 May 2024 p 70). However, Mr Tok provided a purported transfer form, a share certificate and a "Memorandum of Resolution of the Sole Director", signed by himself, in relation to his assertion that Rashazar Pty Ltd transferred the shares back to him (see Exhibit F to Mr Tok's affidavit).
35. It was Mr Hassan Rashazar's evidence that he worked for Fresh Cut full time throughout 2016 and January of 2017. His relationship with Mr Tok deteriorated following the conversation in November 2016 and after January 2017, Mr Hassan Rashazar worked only a couple of days per week at Fresh Cut. He stopped working at Fresh Cut altogether in December 2019.
36. Omid's evidence was consistent with his father's account. Omid's evidence was that his father worked five days a week at Fresh Cut, with one employee and Mr Tok's wife and Mr Tok's sister.
37. In cross-examination, Mr Hassan Rashazar said that he was willing to become involved in the management of Fresh Cut, but that Mr Tok "did not let me". He said that he was just given an ordinary job at Fresh Cut (see transcript 15 May 2024 at p 65).
38. Mr Tok said, in his affidavit, that Mr Hassan Rashazar worked at Fresh Cut for about one and a half weeks after the Agreement was entered into. After that, Mr Tok said, Mr Hassan Rashazar did not work in the business again. I reject this evidence. I accept the evidence of Mr Hassan Rashazar and Omid.
39. Mr Hassan Rashazar said that he never signed any document authorising the transfer of shares in Fresh Cut from Rashazar Pty Ltd to Mr Tok. He said that he was surprised when he was told that the shares had been transferred back to Mr Tok.
40. Mr Tok said the following in his affidavit: 26. In or around early 2020 I contacted Fresh Cut's accountant, Altug Sanli to see if there was any progress on the business visa for Hassan. I didn't think that the business visa would have taken this long. As outcome of the business visa was unknown, I had to continue operating the business despite the fact that it was financially struggling. 27. Altug and I had a conversation as follows:- Me: Hi Altug, do you have any update as to the business visa? Altug: Hi Atilla, I believe that the financial documentation lodged with the ATO don't match the financial information lodged by Hassan's immigration lawyer with the department of immigration. I can have a look at the discrepancy and see if it can be amended and resubmitted. Me: Ok let me speak to them and see what they want to do. 28. Annexed and marked E is a letter dated 19 September 2022 sent from the Plaintiff's solicitor to Home Migration Services, being the plaintiff's migration agent regarding the refusal of the business visa. My solicitor was provided with this letter during the course of these proceedings. 29. Soon after this conversation I met with Hassan and had a conversation with him as follows:- Me: There is too much pressure on me and I want to have this matter resolved. I am paying out of my pocket to the keep the business running. Altug said he can have a look at the numbers to see if the discrepancy can be amended. Hassan: Yes can you please do that. 30. A couple of days later, Hassan and Omid came to see me at New Star and we had a conversation as follows: Hassan: Don't request anything further from the accountant. My son does not agree to anything further being done and we want out of this agreement and business. Me: That's fine. I cannot also continue supporting the business. Let's have the shares transferred out of your name. 31. On or around 16 March 2020 Hassan, Omid and I walked together to the accountant's office. Altug and Angnin, an employee of Altug, prepared the paperwork. A document was given to Hassan and me to sign to have the shares transferred out of Rashazar's name and into my name. Annexed and marked "F" is a copy of the document. 32. After the document was signed Hassan said to me: "Thank you for your support all this time. Unfortunately it didn't work out". I replied to him, "I did my best to help you out. I don't think your lawyer was very good and took too long".
41. Mr Tok said that the share transfer from Rashazar Pty Ltd back to him was signed on 16 March 2020. It is, however, dated 30 June 2018. When asked about this in cross-examination, Mr Tok obfuscated for some time before eventually indicating that it was prepared in advance and kept on file.
42. I am not satisfied, on the balance of probabilities, that the meeting described by Mr Tok as having taken place on 16 March 2020 actually occurred. I am not satisfied that the share transfer is a genuine document and I don't believe that Mr Hassan Rashazar signed it. I prefer Mr Hassan Rashazar's evidence that he did not sign any document transferring the 30 shares back to Mr Tok. In cross-examination, Mr Hassan Rashazar was taken to the purported transfer of 30 shares in Fresh Cut from Rashazar Pty Ltd to Mr Tok, dated 30 June 2018, and he denied that he had signed his name in the place for his signature to the transfer. He said that the name written in that place was not his signature, and I believe him (see transcript 15 May 2024 at p 63). I note that the consideration for the 30 shares on the purported share transfer form is $30. There is no evidence that Rashazar Pty Ltd received $30 for the 30 shares from Mr Tok. It is improbable that Mr Hassan Rashazar, having paid, on behalf of Rashazar Pty Ltd, $275,000 for the 30 shares in Fresh Cut in two tranches, one in February 2016 and one in November 2016, would transfer those 30 shares back to Mr Tok for $30 in 2018 or in 2020.
43. The Register of Members of Fresh Cut (Exhibit P8), kept under the Corporations Law 2001 (C'th) (see ss 168, 169 and 178A), which was produced in response to a Notice to Produce, records the membership of the company at its inception on 9 October 2013 and does not record any change to that membership. Mr Tok is shown as holding 34 shares and two other shareholders are recorded as holding 33 shares each. No interest held by Rashazar Pty Ltd in Fresh Cut has ever been recorded on Fresh Cut's Register of Members.
44. Mr Tok annexed an Australian Securities and Investments Commission (ASIC) Form 484, Part C4, lodged on 28 January 2016 as annexure D to his affidavit. Mr Tok, as the director of Fresh Cut, is the company officeholder certifying that the information on the form is "true and complete". The form purports to record "Changes to member's register details". The form purports to record a change to Rashazar Pty Ltd's member "register details", being that Rashazar Pty Ltd's shares "increased" (ie from zero) by 30 ordinary shares on 22 January 2016.
45. The Corporations Act 2001 (C'th) provides, in s 1274B: CORPORATIONS ACT 2001 - SECT 1274B Use, in court proceedings, of information from ASIC's national database (1) In this section: 53 "data processor" means a mechanical, electronic or other device for processing data. (2) In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary. (3) A writing need not bear a certificate or signature in order to be taken to purport to have been prepared by ASIC. (4) Nothing in this section limits, or is limited by, section 1274 or 1274A.
46. Pursuant to s 1274B of the Corporations Law 2001 (C'th), Mr Tok relied upon the ASIC record of the Form 484, Part C4 as prima facie evidence that thirty shares in Fresh Cut were transferred from him to Rashazar Pty Ltd on 22 January 2016. The question, then, is whether there is evidence to the contrary sufficient to displace the prima facie evidence in the Form 484 (see Hong Liu & Anor v Australian Organic Eggs Pty Ltd (ACN 633 278 903) & Ors [2022] VSC 747 at [159]).
47. There is abundant evidence to contradict the information in the Form 484. It is clear from the Register of Members of Fresh Cut obtained under a Notice to Produce in 2024 (Exhibit P8) that, as a matter of fact, contrary to the information on the form lodged by Mr Tok with ASIC, no change to the members' register details took place on 22 January 2016 or at any other time since the incorporation of Fresh Cut in 2013 (although I note that, in his closing submissions, Mr Tok's counsel submitted that the other two original shareholders sold their shares to Mr Tok in June 2015, which would make Mr Tok the sole shareholder of Fresh Cut at all relevant times). Further, no record of the requisite documents underlying a share transfer from Mr Tok to Rashazar Pty Ltd, such as a share transfer, a share certificate or a memorandum or minute of a resolution of the director of Fresh Cut have been produced. I believe the evidence of Mr Hassan Rashazar and Omid, who said that they were never provided with a share transfer form or a share certificate in relation to the purported transfer of thirty shares in Fresh Cut to Rashazar Pty Ltd by Mr Tok. There is no evidence that such documents exist. They were not provided to ASIC. The prima facie evidence of the transfer of the shares from Mr Tok to Rashazar Pty Ltd on account of the ASIC record of the Form 484, Part C4 is displaced by the contradictory evidence, which leads irresistibly to the conclusion that no proper transfer of the shares from Mr Tok to Rashazar Pty Ltd took place in January 2016 or at any other time (see Dlakic v Vaughan [2018] NSWSC 1455 at [389]-[396]). This conclusion is reinforced by the fact that Mr Hassan Rashazar, as the director of Rashazar Pty Ltd, was not provided with relevant financial information about the conduct of Fresh Cut and was not paid any dividend. It is also consistent with Mr Tok's pleading and evidence that he did not consider the Agreement to be a genuine agreement.

Other payments

1. In the cross-examination of Omid the following exchange took place (transcript 15 May 2024 p 26): Q. And so as part of that agreement Mr Tok required essentially Rashazar [ie the company] …to make payments in respect of costs of expenses relating to Fresh Cut? A. Was not a part of agreement, but after everything he say you guys getting you perma-residence into this company so you have to accept all the payments Q. And that was your way of showing the Immigration Department that you were involved, or Rashazar and your father was involved - A. We had to pay all the superannuation and everything. Q. Yes, to show that you were in the management of the - A. To not show. We had to pay because immigration requires all the paperwork, superannuation for worker and then revenue and all the things.
2. Omid said, in his affidavit of 24 August 2023, that he had a meeting with Mr Altug Sanli, Mr Tok's friend and accountant, and the accountant for Fresh Cut, on 15 June 2016. As Fresh Cut's accountant, Mr Sanli must have been taking instructions from Mr Tok, as he was the sole director and there is no evidence of any management structure. At the meeting, Mr Sanli told Omid that Mr Hassan Rashazar was required to pay $16,772 on account of various expenses of Fresh Cut. Mr Sanli gave Omid a document, which bore Mr Sanli's electronic sign-off, setting out these "expenses" (p 96 of the annexure to Omid's affidavit of 24 August 2024): FRESH CUT ASIC DOCUMENTS $880 DUE NOW 2015 FINANCIALS & AMENDMENT $1650 DUE NOW EMPLOYEE PAYG $4590 DUE NOW COMPANY TAX $9602 DUE APRIL 2016 TOTAL $16772 Altug Sanli, Business Consultant, Chartered Tax Adviser …(Math), MAcc(CPA), MFin, MIPA, CPA, CTA.
3. Omid said that Mr Sanli told him he had until 22 June 2016 to arrange for payment of the sum to Mr Tok.
4. Omid said that he paid Mr Tok two payments in cash, in person; the first of $9,500 and the second of $7,272. He said that his brother Navid was with him on both of the occasions when he paid the money to Mr Tok. He said that Mr Tok made an entry of the payments in a black book. In his affidavit of 1 September 2023, Navid said that he was with Omid when these payments were made.
5. Mr Tok denies that these payments were made. In his affidavit, he said, at paragraph 35: 35. I deny ever having received any payment from Omid, Hassan or Navid in cash including the following sums of money: a. $16,772 in or around April to May 2016. b. $24,500 in or around June 2017. c. $42,875 in or around 2018.
6. In Mr Tok's cross-examination, he was referred to Omid's evidence about the payments, and the following exchange took place (transcript 15 May 2024 p 98-100): Q. 27, paragraph 27. So Omid's evidence is that he paid $9,500 to you in cash - you see that - and then if you read the next paragraph, at paragraph 29, he records that you wrote in a black book - A. I never had a black book. That's one thing we need to - Q. When you go - A. - put there we have the - Q. I didn't ask you anything about the black book - A. -ATO, ATO, ATO instalment paper was there, given to him by the accountant, all the instalment with the payment. Q. No, no, no. A. It's all about that. I don't have any black book - Q. Well, can I, can I - A. --like, at all. Q. --take you back to that. Is it your evidence that when the 9,500 was paid, the accountant was there? Is that what you're saying? A. I don't say that. Q. What's - … Q. So your evidence is that you don't have a black book. Is that right? A. I don't have a black book. Q. And you don't keep any records of cash kept at New Star - in 2016 you didn't keep any records as to cash kept at New Star Kebab? A. I don't have black book. Q. I'm asking you about cash records. A. I'm keeping my records, nothing to do with the New Star Kebab again. Q. Sorry. Could you say that for me again? A. This relating matter is nothing to do with the New Star. Q. Right. A. If you're asking the question about the - my accounting system over there, nothing to do. We talk about Fresh Cut Australia and at the moment I tell you clearly I don't have black book. Q. You don't have a black book? A. Yes. Q. And you didn't receive a payment of--- A. I missed the colour of the book. I have - Q. Sorry? Say again. A - many different colour of the book but not the black one. … Q. What I'm trying to address is whether or not you received cash payments from Omid and what I've asked you is whether or not you received $7,272 in cash from Omid in June 2016? A. I can't remember. Q. You can't remember that? A. Can't remember, exactly. Q. Thank you, and I'll take you to your evidence which is paragraph 35. A. Yeah. Q. You deny in paragraph 35 that you ever received that cash? A. I said I can't remember and I think it (not transcribable)..first.. … Q. You've read paragraph 35, which provides for a denial. You say you deny that you've ever received those sums at A, B and C? A. I deny, yeah. Q. It was your evidence a few - A. Something I can't remember. I deny, yeah. Q. You can't remember? A. Yeah.
7. On 26 October 2016, Omid and Mr Sanli had another meeting, on Omid's evidence. Mr Sanli told him that Mr Hassan was required to pay for "capital gains tax" in relation to the Agreement. Mr Sanli said that two payments were required, the first of $24,500 to be paid by June 2017, and the second of $42,875 to be paid by June 2018. Omid said that Mr Sanli wrote the numbers on a piece of paper and Omid took a photograph of the writing on his phone (see paragraphs 38-43 of Omid's affidavit of 24 August 2023 and p 97 of the annexure).
8. Omid's evidence was that, from October 2016 to June 2017, Omid and Navid attended Mr Tok's office on six occasions and gave Mr Tok cash on each occasion, on behalf of his father, which totalled $24,500 in payment of the first tranche of the asserted capital gains tax debt. Omid said that Mr Tok made an entry into his black book on each occasion.
9. Omid also gave evidence that, from June 2017 to July 2018, on about ten or twelve occasions, he went to Mr Tok's office with Navid and gave Mr Tok cash to the total of $42,675 on behalf of his father in payment of the second tranche of the asserted capital gains tax debt. Again, Mr Tok made an entry in his black book on each occasion.
10. Omid did not make his own payment record because he thought he could rely on Mr Tok's records. Navid said, in his affidavit, that he was present for all of the cash payments made by Omid to Mr Tok.
11. Mr Sanli was not called to give evidence. In the course of the hearing, counsel for the plaintiff suggested that it may be that a Jones v Dunkel inference ought to be made, but no submissions were made to that effect in the final submissions (see Jones v Dunkel (1959) 101 CLR 298 and Manly Council v Byrne and Anor [2004] NSWCA 123). Mr Tok mentioned during his evidence that his accountant was overseas, but there was no direct evidence of that. As the issue of what inference, specifically, might be drawn from the omission to call Mr Sanli in the defendant's case has not been developed, I will not draw any Jones v Dunkel inference.
12. In the defendant's case, a line of questioning was pursued with Omid which attempted to call into question the source of the funds which had been paid in response to requests for payments of Fresh Cut's "expenses". I accept Omid's explanation as to the source of funds, which was a combination of money earned and saved by him and by Navid and money borrowed from friends and family in Iran. Navid's evidence was consistent with Omid's. The following exchange took place in Omid's cross-examination (transcript 15 May 2024 p 45-46): Q. Sorry, and the $42,000 was your money? A. Me and my brother, we work cash and we paid for it. Q. This was purely in cash? A. Yes, we pay cash. $100, $200 not transaction. Q. There's no record of it? A. Nothing. Q. Okay. Similarly with $24,500? A. That's unessential. Q. Where did that money come from? A. Working 18 hours a day, seven days a week. Q. At the new star kebab? A. Yes. Q. That was on behalf of your father, was it? A. No, because of the money of payment, because of the behalf of the company. I had to cover all these things comes up because I had, I have a responsibility as a big son, look after the family. I was in this stage, I couldn't go over and I couldn't back so. Q. So - A. And he keep telling us, if I call immigration "they will kick you guys, you guys out from Australia and then you guys get no permanent residency." So I was stressing. I was younger. Q. With respect, who was making these threats you allegedly - Mr Tok? A. Sorry, sir? Q. Who was making these threats to call immigration? A. Sorry, I didn't understand. Q. Who was direct - A. Mr Tok told us, if I call immigration, they will "kick you guys out from Australia"….
13. It was Omid's evidence that he began the process of applying for a Business Owner (Subclass 890) Visa in about April 2018. He engaged Adam Khaze of Home Migration to assist him with the application.
14. In about September of 2019, Mr Khaze asked Omid for evidence that stamp duty had been paid on the Agreement. Omid made an enquiry of Mr Tok. The following day, Mr Tok sent Omid a NSW Revenue document entitled "Duties Notice of Assessment" which gave a figure of $7,590 for duty assessed and $2,520.45 for interest, resulting in a total of $10,110.45 payable (p 108 of the attachment to Omid's affidavit of 24 August 2023). In the panel for "Liable party", Rashazar Pty Ltd was named. The document was dated 5 September 2019 and the due date was 26 September 2019. Omid understood the document to mean that Rashazar Pty Ltd was liable for the amount stated on the document.
15. At around the same time. Mr Sanli telephoned Omid and said that Rashazar Pty Ltd was liable to pay a share of the superannuation cost of Fresh Cut, in the sum of $2,308.96. Omid arranged the payment of that amount to the Australian Taxation Office ("the ATO") from Rashazar Pty Ltd. The ATO provided Omid with a receipt dated 4 September 2019 (p 109 of the annexure to Omid's affidavit of 24 August 2023. See also p 110 of the annexure for an extract of Rashazar Pty Ltd's bank statement showing the payment).
16. On 11 September 2019 Omid arranged for the payment of the stamp duty of $10,110.45 from Rashazar Pty Ltd's account. NSW Revenue provided a receipt dated 11 September 2019 (see p 111 of the annexure to Omid's affidavit of 24 August 2023. See also p 112 for an extract from Rashazar's bank account evidencing the payment). I find that this payment was made by Rashazar Pty Ltd in the circumstances deposed to by Omid.
17. It was Omid's evidence that, on 16 November 2019, Mr Sanli told him that Fresh Cut owed $14,656.52 in further superannuation liabilities and that, as Mr Tok was refusing to pay, it was up to Mr Hassan Rashazar. Omid arranged for the payment of $14,656.52 to the Australian Taxation Office on 17 November 2019. The document sent to Omid by the accountant setting out the asserted superannuation liability is an annexure to Omid's affidavit of 24 August 2023 at p 103. The ATO's receipt for the payment is at p 104 of the annexure and the banking records for Rashazar Pty Ltd showing the transaction is at p 113 of the annexure. The documents are also annexed to Omid's affidavit of 10 May 2024.
18. In cross-examination, Omid said the following about why he thought that Rashazar Pty Ltd was required to pay the expenses (transcript 15 May 2024 at p 41): Q. Rashazar Pty paid some of Fresh Cut's debts? A. Yep. Q. And Rashazar was required to do so, your father was required to do so because that's what the immigration department needed to see. A. Immigration they, not immigration, the lawyer immigrate my mission when I ask for this list and then when I ask Mr Tok, he told me "This is not my business, you guys getting visa to do this. If you want, just cancel it and you guys get, they're going to kick you guys back to country. So, if you want, I could use, you have to pay these amounts."
19. I find that Rashazar Pty Ltd paid $14,656.52 to the ATO on 17 November 2019 in the circumstances deposed to by Omid.
20. The visa application lodged in reliance upon Rashazar Pty Ltd's investment in Fresh Cut was refused on 10 February 2022 (see Exhibit E to Mr Tok's affidavit).

Was the Share Sale Agreement an enforceable contract?

1. It is common ground among the parties that both Mr Tok and Mr Hassan Rashazar, on behalf of Rashazar Pty Ltd, executed the Agreement.
2. The plaintiffs plead, in their Further Amended Statement of Claim, that the Agreement was a legally enforceable Agreement as between the parties to it.
3. Mr Tok, in his Defence to Further Amended Statement of Claim, pleads as follows: 6. The First Defendant does not admit paragraph 6 and says that the agreement was a sham intended to assist First Plaintiff to obtain a Business Visa. Particulars I the initial $100,000 paid by the First Plaintiff was be retained in the business to ensure that the Business Visa was approved; [sic] II $175,000 would be paid to Mr Tok in order to show immigration that payment did occur; however, this money would be returned to the First Plaintiff as he had borrowed this money from family and friends. III in exchange the First Plaintiff, and his two sones, Omid and Navid Rashazar were required to run and operate the business and make payment of all costs and expenses related to the business. 7. The First Defendant does not admit paragraph 7 but repeats paragraph 6.
4. In his affidavit of 9 November 2023, Mr Tok said the following: 12 In or around early January 2016 Hassan and I orally agreed that Hassan would "purchase" a 30% share in Fresh Cut so that he could obtain a Business Visa; this was to be done by: a. executing a sale of business contract between me and Hassan purporting to sell 30% of my shares in Fresh Cut for $275,000 to allow Hassan to apply for and obtain a Business Visa. It was a matter for Hassan as to what entity would enter into this agreement on his behalf, which was ultimately Rashazar Pty Ltd; b. Hassan would pay $100,000 to Fresh Cut which was to be retained by it in order to meet the asset requirements of the Business Visa; c. A further $175,000 was to be paid by Hassan into Fresh Cut's bank account to show immigration that a payment had been made. This money would be returned to Hassan after it was deposited; d. Hassan, Omid and Navid were required to run and operate the business and make payments in respect of all costs and expenses related to the business. e. In order to facilitate this the sale of business contract was drafted to include the following terms to give effect to the above and obtain the Business Visa:- i. Rashazar Pty Ltd agreed to purchase 30% of the shares in Fresh Cut for the sum of $275,000 as follows: 1. The sum of $100,000 upon the transfer of shares. 2. The sum of $175,000.00 within 2 years from the date of the transfer of shares. 13. At the time I had a limited understanding as to what the Business Visa requirements were. I did, however, know that the business had to record a particular amount of earnings and Hassan had to be working in the business.
5. Mr Tok annexed to his affidavit a copy of the Department of Home Affairs Eligibility requirements as of 18 October 2023. I note that this document post-dates the visa application made on behalf of Mr Hassan Rashazar in 2018 and I assume that there is an earlier version of the eligibility requirements which may be different from the document provided by Mr Tok. That document says, in part, in relation to the pre-requisites for obtaining a Business Owner Visa: For the 2 years immediately before you apply, you must have had, and continue to have, an ownership interest in one or more actively operating main businesses in Australia. For each nominated main business you must prove evidence of: - ownership interest in the business - value of your ownership interest - for the 2 years immediately before you apply, the value of your ownership interest or the total value of the ownership interest of you and your partner must have been at least: - 51% of a business with a turnover of less than AUD400,000 per year; or - 30% of a business with a turnover of AUD400,000 or more per year, or - 10% of a publicly listed company - that you had and continue to have, a direct and continuous management role in that business on a day to day basis (including periods when you are outside of Australia) - that each main business meets the criteria to be assessed as a qualifying business - obtained an Australian Business Number (ABN) for each of your main businesses (you can rely on a maximum of two ABNs). - provide evidence of portal process Business Activity Statements issued by the Australian Taxation Office.
6. I take the quotation marks around the word "purchase" in paragraph 12 of Mr Tok's affidavit and the word "purporting" in paragraph 12.a. of the same affidavit to indicate that, in Mr Tok's mind, the purchase by Rashazar Pty Ltd of the shares under the Share Sale Agreement was to be an apparent purchase and not a real purchase. This impression is fortified by the device set out in paragraph 12.c. of Mr Tok's affidavit, quoted above, of the intended payment by Rashazar Pty Ltd of the second tranche of money, being $175,000 "to show immigration that a payment had been made", followed by the intended return of the money to "Hassan". As set out above at [33]-[37], the evidence shows that no such "return" took place. The second payment of $175,000 was transferred from the Fresh Cut account, into which Rashazar Pty Ltd had paid it at Mr Tok's direction, to Mr and Mrs Tok's account. I have rejected Mr Tok's assertion that he paid it back to Rashazar Pty Ltd at some later time. There is no documentary evidence of that, and the bank records are readily available. Omid and Mr Hassan Rashazar deny it, and I accept their evidence.
7. The elements of a transaction which lead to it being characterised as a sham are set out in some detail by the Full Court of the Federal Court in Re Sharrment Pty Ltd; Lee Wynyard; Mark Wynyard; Lorreine Claire Wynyard and Seyta Pty Ltd v The Official Trustee in Bankruptcy [1988] FCA 179. The Court said, at [8]-[17]: 8. In characterising the transactions as shams, the trial Judge referred to Snook v. London & West Riding Investments Limited (1967) 2 QB 276 per Diplock L.J. at 802. The trial Judge accepted that the test for a transaction to be a "sham" required both a common intention among participants to the transaction and a disjunction between the appearance and reality of the transaction. His Honour defined the critical question as "whether Mr. Wynyard intended to give to others the appearance of creating legal rights and obligations different from the actual legal rights and obligations (if any) which he intended to create". … 13. The meaning of the word "sham" has been considered in many cases. In Scott v. Federal Commissioner of Taxation (No. 2) (1966) 40 ALJR 265 Windeyer J. said at 279: "On the other hand, if the scheme, including the deed, was intended to be a mere facade behind which activities might be carried on which were not to be really directed to the stated purposes but to other ends, the words of the deed should be disregarded ... A disguise as a real thing: it may be an elaborate and carefully prepared thing; but it is nevertheless a disguise. The difficult and debatable philosophic questions of the meaning and relationship of reality, substance and form are for the purposes of our law generally resolved by asking did the parties who entered into the ostensible transaction mean it to be, and in fact use it as, merely a disguise, a facade, a sham, a false front - all these words have been metaphorically used - concealing their real transaction ..." 14. I shall have occasion to refer again to this passage later in this judgment. 15. Diplock L.J. described the "popular and pejorative word" sham in Snook v. London & West Riding Investments Limited (supra) at 802 in these terms: "I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the 'sham' which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities ... that for acts or documents to be a 'sham', with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating." See also Boydell v. James [1936] NSWStRp 53; (1936) 36 SR(NSW) 620 per Jordan C.J. at 627; Miles v. Bull (1969) 1 QB 258 per Megarry J. at 264; Coppleson v. Federal Commissioner of Taxation (1981) 34 ALR 377 per Hunt J. at 380-1; Northumberland Insurance Limited (In Liq) v. Alexander (1984) 8 ACLR 882 per Clarke J. at 888-889; Trimbole v. Donnelly, unreported, Full Court of the Federal Court, judgment delivered 5 November 1986 per Evatt, Lockhart and Wilcox JJ. at 9-10. There are many cases in the income tax field, particularly cases relating to the attempt to apply s. 260 of the Income Tax Assessment Act 1936, where the word "sham" has been considered: see, for example, Mullens v. Federal Commissioner of Taxation (1977) 135 CLR 291 per Barwick C.J. at 301, per Stephen J. at 316; Alloyweld v. Federal Commissioner of Taxation (1984) 84 ATC 4328 per Derrington J. at 4330; Cranstoun v. Federal Commissioner of Taxation (1984) 84 ATC 4876 per Carter J. at 4882. See also the decision of a Full Court of this Court in Oakey Abbatoirs Pty. Limited v. Federal Commissioner of Taxation (1984) 55 ALR 291 at 297. 16. A "sham" is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive. 17. The central issue in the case is the dichotomy between appearance and reality in characterising the transactions in 1979 as a sham. This dichotomy was recognised by the trial Judge in his reasons for judgment. The real difficulty in this case is not to determine the applicable principles of law but rather to characterise the transactions as a matter of fact.
8. In Chocron v Onkoud [2019] NSWSC 1823, Adams J considered the elements of a sham at [160] - [161]: 160. The primary defence advanced by Ms Onkoud was that the Deed was a "sham". As Gleeson CJ, Gummow and Crennan JJ observed in Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 238 CLR 516 at 531; [2008] HCA 21, the term "sham" in this context is ambiguous and uncertainty surrounds its meaning and application. In Esanda Ltd v Burgess (1984) 2 NSWLR 139; [1985] ANZ ConvR 32, Priestley JA noted that two conditions are generally required for a transaction to be found to be a "sham": "… (1) when parties to an agreement disguise the nature of the transaction they intend to carry out by casting it into a form which makes it appear to third parties as a different kind of transaction evidence is receivable to show the whole of the transaction; (2) although such a transaction attracts the description "sham" and the document or documents in some cases will be wholly inoperative, one or more of the documents concerned may be operative according to its true nature: see Boydell v James at 627; that is, subject to its true nature being given effect, its terms will be operative between the parties." 161. Diplock LJ in Snook v London & West Riding Investments Ltd [1967] 2 QB 786 at 802 defined a "sham" as: "… acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v. Maclure and Stoneleigh Finance Ltd. v. Phillips), that for acts or documents to be a "sham", with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a "shammer" affect the rights of a party whom he deceived."
9. Mr Tok was asked, in cross-examination, if he continued to say that the Agreement for the sale of the shares was a sham, as he had said in his affidavit at paragraph 12 and as had been pleaded by him in his Defence to Further Amended Statement of Claim at paragraph 6. Mr Tok was evasive (transcript 15 May 2024 at p 90): Q. What I'm suggesting to you is that the word "Purchase" is in inverted commas because it wasn't really the intention to create to - for anybody to purchase the shares. That was nobody's real intention? A. The purchasing share was really here with the proven with the contract. I don't really get the question. Q. What I'm suggest - A. We go around with the - Q. We are going around in circles. You're quite right. A. Can you come up with a clear question and I can answer it. Q. What I'm suggesting to you is that you did not intent - you intended for this agreement on page 45 to be a - to not give effect, to either not give effect to a transaction or to mislead the Department of Immigration? A. We're not misleading. …
10. Mr Tok denied, several times, that it was the intention of the Agreement to mislead the Department of Immigration (transcript 15 May 2024 p 92-93). However, he then indicated that he stood by what he said in his affidavit, which was that the Agreement was a sham (transcript 15 May 2024 at p 93). The following exchange took place (transcript 15 May 2024 p 93-94): Q. Is it your evidence that the contract at paragraph - sorry - at page 42 of your affidavit was a real document or not? Did you… … Q. Did you intend for that document to create obligations upon you? A. Which document are we talking about? Q. I'm talking about the contract at page 45 of your affidavit. A. Yes. Q. Did you - was it your intention when you signed it that it would create real obligations upon you? A. To make the lawyers simply - Q. Did it create - A. I didn't create the contract. Q. No, I'm not asking if you created the contract. Did you intend for the - by the contract, for you to be entitled or for you to be entitled to receive an amount of money from Rashazar Pty Ltd? A. Not receiving money, so just having the shares for the purpose of these people buying, we prepare the contract by the lawyers, get the advice and, and have supposed to be done and they done the contract. Q. But you intended to do the things set out in the contract? A. Request come from the other side to make the contract and after we prepared the contact with the - Q. But did you expect Rashazar to make you a payment after you had entered into this contract? A. They do, of course, as you can see in the contract all the conditions showing so you don't have to ask. Q. So you expected them to follow this contact? A. Of course.
11. There was no application to amend the Defence to delete paragraph 6, in which it is pleaded that the Agreement was a sham (see [81] above).
12. Mr Tok decided that the first payment by Rashazar Pty Ltd of $100,000 was to be paid by Rashazar Pty Ltd to Fresh Cut's account. He arranged for that to happen, by giving Omid the Fresh Cut account number to use in making the payment. In cross-examination, Mr Tok said (transcript 15 May 2024 at page 78): A. …And afterward, we spent this money for the keeping up the company. This company was not in good condition. I didn't take into my saving account, then spend it. Really understand that.
13. It is Mr Tok's evidence that the first payment of $100,000 from Rashazar Pty Ltd was used by him for the expenses of Fresh Cut.
14. As I have set out above, the second payment of $175,000 was made by Rashazar Pty Ltd to Fresh Cut but the Commonwealth Bank record shows that Mr Tok transferred it to an account in his and his wife's name twenty minutes after it was received in the Fresh Cut account.
15. The plaintiffs plead, in paragraph 7 of their Further Amended Statement of Claim, that the Agreement was a legally enforceable contract between Rashazar Pty Ltd and Mr Tok. All of the witnesses in the plaintiffs' case consistently characterised the Agreement as a genuine agreement.
16. Mr Hassan Rashazar, Omid and Navid went to considerable lengths to obtain a financial interest in Fresh Cut. They expended substantial sums of money, both in an attempt to have Rashazar Pty Ltd become a shareholder in Fresh Cut and to satisfy the demands for the payment of expenses made by Mr Tok and his accountant, Mr Sanli, on his or Fresh Cut's behalf. I accept that Mr Hassan Rashazar entered into the Agreement on behalf of Rashazar Pty Ltd genuinely expecting that Rashazar Pty Ltd would become a shareholder in Fresh Cut and expecting that, as the Director of Rashazar Pty Ltd he would also participate in the management of Fresh Cut. I accept that there were discussions in which Mr Tok indicated that Mr Hassan Rashazar would have a management role and that Rashazar Pty Ltd may be required to contribute to some of the expenses of Fresh Cut. Mr Tok never told Mr Hassan Rashazar or Omid or Navid that he did not regard the Agreement as reflecting a genuine bargain by which he was bound.
17. I find that the terms of the alleged oral agreement, set out in Mr Tok's affidavit at paragraph 12, which is set out at [82] above, were not, in fact, the subject of an oral Agreement with Mr Hassan Rashazar. There was no collateral arrangement sitting behind the Agreement and rendering the Agreement a sham as far as Mr Hassan Rashazar was concerned. Mr Hassan Rashazar and his sons were unaware that Mr Tok did not intend to honour the Agreement, and they expected that Rashazar Pty Ltd would receive thirty shares in Fresh Cut under the Agreement.
18. The Agreement was not a sham because there was no common intention among the participants to the transaction that the Agreement would not create the legal rights and obligations that it purported to create. From the point of view of Mr Hassan Rashazar and Rashazar Pty Ltd, as well as Omar and Navid, there was no disjunction between the appearance and the reality of the transaction.
19. Mr Tok indicated, by executing the Agreement, that he intended to be bound by it and Rashazar Pty Ltd is entitled to rely on that. The law is concerned with the objective interpretation of the Agreement, in the context of the words and actions of the parties, and not the subjective intention of a party (see Rymark Australia Development Consultants Pty Ltd v Draper [1977] QdR 336 and Contract Law In Australia 8th Edition 2023 JW Carter JW Carter Publishing p 46). The Agreement is an enforceable Agreement.

Is Mr Tok in breach of contract?

1. The plaintiffs allege, in paragraphs 14, 15 and 16 of the Further Amended Statement of Claim, that Mr Tok breached the Agreement by failing to transfer 30 shares in Fresh Cut to Rashazar Pty Ltd.
2. I have found that Mr Tok did not transfer his 30 shares in Fresh Cut to Rashazar Pty Ltd (see [45] to [58] above). He pretended that he had, and he informed ASIC that he had, but, in fact, he had not. This was a breach of a fundamental term of the Agreement. It was also a wrongful repudiation of the Agreement. Rashazar Pty Ltd received no consideration for the purchase price of $275,0000 it paid to the accounts nominated by Mr Tok.
3. Rashazar Pty Ltd is entitled to damages against Mr Tok.
4. In Copuss Pty Ltd v Nix & Anor [2012] NSWSC 671, Ball J said: 44 It follows from what I have said that Mr and Mrs Nix were not entitled to terminate the JV Deed based on Copuss's failure to comply with the notice of breach. Their termination of the JV Deed was wrongful and Copuss was entitled to accept that termination as a wrongful repudiation of the contract, terminate the contract itself and sue for damages. It is not prevented by cl 10.6 of the JV Deed from making that claim since the claim for damages does not arise from a termination under cl 10.5. It arises from a wrongful repudiation of the contract. 45 Normally, damages are assessed as the amount that would put the wronged party in the position it would have been in if the contract had been performed. However, in some circumstances, the wronged party may be entitled to recover damages by reference to expenditure reasonably incurred under a contract rather than the profit that that party would have earned under the contract on the basis that, absent proof to the contrary, it can be assumed that the wronged party would at least have recovered its expenditure if the contract had been performed. The right to claim damages for breach of contract on this basis depends on the impossibility or difficulty of proving what would have happened if the contract had been performed: The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80-86 per Mason CJ and Dawson J; 126-128 per Deane J; 164-166 per McHugh J. The choice between the two alternatives does not involve an election. Rather, they should be seen as two manifestations of the general principle that an award of damages for breach of contract should, so far as money can do it, place the wronged party in the position it would have been in if the contract had been performed: see Amann Aviation at 85 per Mason CJ and Dawson J.
5. There is no evidence before me upon which I could assess the sum of damages which would put Rashazar Pty Ltd into the position it would have been in had the contract been performed. I simply have no information about the value of Fresh Cut or its profitability, and neither do the plaintiffs. The question of what might have happened to Fresh Cut's value and profitability had Rashazar Pty Ltd become a shareholder in accordance with the Agreement is imponderable. In these circumstances, the expenditure reasonably incurred by Rashazar Pty Ltd in the performance of its obligations under the Agreement is the appropriate measure of damages for breach of contract given the total failure of consideration. That sum is $275,000, together with the sum of $10,110.45 (comprising $7,590 stamp duty on the Agreement and $2,520.45 for interest for late payment) which is also payable by way of damages as wasted expenditure incurred by Rashazar Pty Ltd in fulfillment of its obligations under the Agreement (see Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54 per Mason CJ and Dawson J at [25]-[27]). The total of those figures is $285,110.45.

Legal principles

1. The nature of an action for restitution was explained by the High Court in ANZ Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662 at [11]-[12]: 11. …The basis of the common law action of money had and received for recovery of an amount paid under fundamental mistake of fact should now be recognized as lying not in implied contract but in restitution or unjust enrichment (see, generally, Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour, Ltd. [1942] UKHL 4; (1943) AC 32, at pp 61-64; Goff and Jones, The Law of Restitution, 3rd ed. (1986), pp.5ff; Birks, "English and Roman Learning in Moses v. Macferlan" (1984) 37 Current Legal Problems 1). In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment (cf. Pavey & Matthews Pty. Ltd. v. Paul [1987] HCA 5; (1987) 162 CLR 221, at pp 227, 254-257, 267). The common law right of action may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to grant relief by way of constructive trust. However, notwithstanding that the grounds of the action for recovery are framed in the traditional words of trust or use and that contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience, the action itself is not for the enforcement of a trust or for tracing or the recovery of specific money or property. It is a common law action for recovery of the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property which he holds does not of itself constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution. Before that prima facie liability will be displaced, there must be circumstances (e.g. that the payment was made for good consideration such as the discharge of an existing debt or, arguably, that there has been some adverse change of position by the recipient in good faith and in reliance on the payment) which the law recognizes would make an order for restitution unjust. 12. The prima facie liability to make restitution is imposed by the law on the person who has been unjustly enriched. In the ordinary case of a payment of money, that person will be the payee. However, when the person to whom the payment is directly made receives it as an intermediary (e.g. as agent for a designated principal), there may be uncertainty about the identity of the actual recipient of the benefit at the moment of payment. If the circumstances are such that the intermediary is to be seen as being himself the initial recipient of the benefit, his prima facie liability will ordinarily be displaced when he has handed the money received on to the person for whom he received it. In such a case he has, in the event, not retained "the benefit of the windfall" but been "a mere conduit-pipe" (see per Collins M.R., Continental Caoutchouc and Gutta Percha Co. v. Kleinwort, Sons, and Co. (1904) 9 Com Cas 240, at p 248) and "the only remedy is to go against the principal" (per Greene M.R., Gowers v. Lloyds and National Provincial Foreign Bank, Ltd. (1938) 1 All ER 766, at p 773). A more difficult case arises where the intermediary has not made a physical payment of money to, or on behalf of, the person for whom the payment was received but has made a credit entry in his books in favour of that person. In such cases, the question will arise whether the benefit of the payment made under fundamental mistake has been wholly or partly retained by the intermediary or effectively passed on to the third person (Continental Caoutchouc, at pp 248-249). In answering that question, the courts will pay regard to the substance rather than to the form of what has occurred. Thus, the cases indicate that a mere book entry which has not been communicated to the third party or which can be reversed without affecting the substance of transactions or relationships will ordinarily not suffice (see, e.g., Buller v. Harrison [1777] EngR 25; (1777) 2 Cowp 565; (98 ER 1243); Cox v. Prentice [1815] EngR 458; (1815) 3 M & S 344; (105 ER 641); The Colonial Bank v. The Exchange Bank of Yarmouth, Nova Scotia (1886) 11 App Cas 84). It must appear that the third party has effectively received the benefit of the payment with the consequence that the prima facie liability to make restitution has become his.

Restitution and the Agreement

1. The plaintiffs sought restitution on the basis of unjust enrichment in the alternative to their claim for breach of contract. Having determined that Mr Tok was in breach of contract and is liable to Rashazar Pty Ltd for damages, it is strictly unnecessary to consider restitution in the context of the Agreement, but I will do so for completeness and in case I am found to be in error with respect to my determination as to the breach of contract by Mr Tok.
2. The evidence shows that the first payment by Rashazar Pty Ltd of $100,000 under the Agreement was paid into the Fresh Cut account at Mr Tok's direction. The payment was made by Rashazar Pty Ltd under a mistake of fact, namely that 30 shares in Fresh Cut would be transferred to Rashazar Pty Ltd by Mr Tok in exchange for the payment under the Agreement (see Miraki v Griffith [2021] ('Miraki") NSWCA 263 at [26]). As events unfolded, neither Rashazar Pty Ltd, nor its Director or his family received any benefit in exchange for the payment of $100,000. Fresh Cut was unjustly enriched by that amount and is liable to make restitution of $100,000 to Rashazar Pty Ltd (Miraki at [28] -[32]). I note that, at the time, the evidence shows that Mr Tok was the sole director of Fresh Cut and he determined how the $100,000 was spent.
3. The evidence shows that the second payment made by Rashazar Pty Ltd, of $175,000, was paid into the Fresh Cut account at Mr Tok's direction, but transferred twenty minutes later by Mr Tok, who was then Fresh Cut's sole director, into an account held in the names, jointly, of Mr Tok and his wife. Fresh Cut was thus a "mere intermediary" or "a mere conduit-pipe" for the money, and Mr Tok obtained the benefit of the windfall (see ANZ Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662 at [12]). Mr Tok made it clear, in cross-examination, that he controlled that account. The payment was made by Rashazar Pty Ltd under a mistake, being the false belief that Mr Tok had transferred 30 shares in Fresh Cut to Rashazar Pty Ltd upon the payment of the first tranche of $100,000 by Rashazar Pty Ltd. Mr Tok has been unjustly enriched in the amount of $175,000 and is liable to make restitution of that amount to Rashazar Pty Ltd.

The payments made by Rashazar Pty Ltd to the benefit of Fresh Cut

1. The plaintiffs have established that, on 4 September 2019, Rashazar Pty Ltd paid $2,308.96 to the ATO to discharge superannuation liabilities of Fresh Cut. Rashazar Pty Ltd was not contractually obliged to make that payment on behalf of Fresh Cut and made that payment under the mistaken belief, induced by Mr Tok, that it was a shareholder of Fresh Cut and obliged to make the payment. Fresh Cut received the benefit of that payment and was unjustly enriched in the sum of $2,308.96. Fresh Cut is liable to make restitution for that amount to Rashazar Pty Ltd.
2. The plaintiffs have established that, on 17 November 2019, Rashazar Pty Ltd paid $14,656.52 to the ATO to discharge a superannuation guarantee liability owed by Fresh Cut. Rashazar Pty Ltd was not contractually obliged to make that payment on behalf of Fresh Cut and made that payment under the mistaken belief that it was a shareholder of Fresh Cut and obliged to make the payment. Fresh Cut was unjustly enriched in the sum of $14,656.52 and is liable to make restitution for that amount to Rashazar Pty Ltd.
3. The total restitution Fresh Cut must make to Rashazar Pty Ltd is $16,965.48.

The payments made to Mr Tok

1. As I have said, I accept the evidence of Mr Hassan Rashazar, Omid and Navid. Where their evidence contradicts Mr Tok's evidence, I prefer the evidence of Mr Hassan Rashazar, Omid and Navid. I believe the evidence of Omid and Navid in relation to the cash payments made by Omid on behalf of Rashazar Pty Ltd to Mr Tok. Omid made the following cash payments to Mr Tok, at Mr Tok's request, under the mistaken belief, engendered by Mr Tok directly and through his accountant, Mr Sanli, that Rashazar Pty Ltd was liable to make the payments to Mr Tok: 1. $16,772 in or about April to May 2016, 2. $24,500 in or about June 2017, 3. $42,875 in or about 2018.
2. On account of the payments set out at [108] above, Mr Tok was unjustly enriched in the sum of $84,147 and is liable to make restitution of that amount to Rashazar Pty Ltd.
3. The sum total of damages against Mr Tok is $285,110.45 on account of his breach of contract plus $84,147 by way of restitution, which equals $369,257.45.

Orders

1. I make the following orders: 1. Verdict and judgment for Rashazar Pty Ltd ACN 609 249 836 against Atilla Tok in the sum of $369,257.45. 2. Verdict and judgment for Rashazar Pty Ltd ACN 609 249 836 against Fresh Cut Australia Pty Ltd ACN 166 183 062 in the sum of $16,965.48. 3. Atilla Tok and Fresh Cut Australia Pty Ltd ACN 166 183 062 are to pay the costs of Rashazar Pty Ltd as agreed or assessed. 4. I will hear the parties as to interest.

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