Robert Huang and Others v Dong Chen and Anor - [2017] NSWSC 1699 - NSWSC 2017 case summary — Zoe

NSWNSWSC

Robert Huang and Others v Dong Chen and Anor

[2017] NSWSC 1699

Supreme Court of NSW|2017-11-03|Before: Sackar J, Loans Australia P

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2017-11-03

Before

Sackar J, Loans Australia P

Source

Original judgment source is linked above.

Judgment (56 paragraphs)

[1]

Judgment The proceedings The parties Background facts Conduct of the litigation Legal Principles Intention to create legally binding relations Non est factum Misleading statements Unconscionability Uncertainty Specific performance Parties' submissions Overview Credibility Plaintiffs' submissions Defendants' submissions Is the JVA legally binding? Plaintiffs' submissions Defendants' submissions Non est factum Defendants' submissions Plaintiffs' submissions Misrepresentation and/or unconscionability Defendants' submissions Plaintiffs' submissions Uncertainty and the Home Building Act Defendants' submissions Plaintiffs' submissions Was the agreement lawfully terminated? Plaintiffs' submissions Defendants' submissions Consequences of PSR's payment of agreed purchase price for the shares Relief First and Third Plaintiffs' submissions Declarations Specific performance Restitution Second Plaintiff's submissions Defendants' submissions The Evidence Evidence of Robert Evidence of Tony Evidence of Mr Vaughn Evidence of David Evidence of Lilian Evidence of Peiwen Jian Credibility - general observations Robert Tony David Lilian Factual consideration (a) Witnesses' proficiencies at English David Lilian (b) Tony's understanding of the JVA (c) Robert's conversation with Lilian and Tony on 17-18 September 2016 (d) Robert's alleged representations to Tony, Lilian and David regarding the JVA Legal consideration Intention to be bound by the JVA Non est factum Misrepresentations or unconscionable conduct Uncertainty and unenforceability under the Home Building Act Breaches of the JVA The alleged breaches Consequences of findings on breach Relief Conclusion

[2]

[4]

Background facts

SPD was incorporated on 1 March 2010 for the purpose of acting as a potential investor or partner in the development of the Burwood Property. In 2011 SPD purchased the Burwood Property for a purchase price of $4.3 million which SPD had wholly borrowed from the National Australia Bank (NAB).
By August 2016 SPD was indebted to NAB for $4.7 in respect of the purchase of the Burwood Property. Tony, through himself and a family company CLT Development Pty Ltd (CLT), had also advanced to SPD the sum of approximately $2 million for costs associated with the early stages of the development of the Burwood Property.
In early 2016, Robert and Tony commenced discussions about the possibilities of Robert becoming involved in the development of the Burwood Property, including as a purchaser of the Burwood Property, as a partner in the development and as a builder through his company Oxford Constructions.
In late August or early September the Defendants contend that these discussions advanced to the stage of an oral agreement which both Robert and Tony sought to document in a revenue advantageous manner.
In early September 2016, Robert prepared a 'Feasibility & break even analysis schedule for Property Finance' (Feasibility Document) which recorded, among other things, the value of the Burwood Property as $20 million and the costs of construction as $36.5 million (CB381).
On or around 3 September 2016, Robert prepared the first iteration of the document which is referred to as the 'Deed of JV Agreement,' reflecting what Robert believed had been discussed in meetings with Tony, Lilian and David in the days prior (RH2 [34]).
On 5 September 2016 at 12.28pm, Robert emailed this draft 'Deed of JV Agreement' to David (CB382). At this point it was proposed that CLT and an entity owned and controlled by Robert (PSR Crown Investments Pty Ltd) (PSR Crown) be parties (CB382-384). Pursuant to this draft, SPD was to issue a further 48 shares to CLT and a further 50 shares to PSR Crown. It was proposed also that Tony and Robert were to be the only two directors of SPD. PSR Crown "was to lend" a total of $13.5 million to SPD. There were then a series of terms dealing with the circumstances in which various monies would be paid by PSR Crown to SPD and the times at which those payments would be made. It was also proposed that Oxford Constructions would build the development on a costs plus 7% basis. Further it was proposed that in the event of any disagreement on construction Robert was to be given authority to make any final decision.
On 5 September at 1.01pm, David replied to Robert's 12.28pm email saying "Please review," attaching a document labelled 'Joint Venture Payment Agreement' (CB386). This gave a revised time line for the payments of various monies by PSR Crown.
Paragraph 1 of the document contained the following statement: After sign the Joint Venture contract, Dong Chen and Robert Huang will open a new Joint Venture with two signatures authority bank account for Sky Profit Properties Development Pty Ltd.
At 1.10pm that same day on 5 September, David sent Mr Fei Pan, a solicitor working under a partner, Mr David Vaughn, at HWL Ebsworth (HWL) an email (in English), attaching a copy of the draft 'Deed of JV Agreement' and the 'Joint Venture Payment Agreement' (CB387-391). As attachments, the 'Deed of JV Agreement' appears to have been saved as 'B-POINT JV Agreement - draft 2019 09 05.docx (19.2KB)' and the 'Joint Venture Payment Agreement' appears to have been saved as 'Joint Venture Agreement.pdf (189.9KB),' as reflected at CB388 (see also Transcript dated 3 November 2017, T2/34-T3/15).
David's email to Mr Pan read (CB387): Hi Fei: Please see JV agreement and process payment. These condition agreed by both party at last weekend meeting. Now need David and you advice to turn this agreement to legal document soon. If you have any question, please do not hesitate to contact me anytime. Thank you.
On 6 September 2016 at 12.14pm, David sent to the email address of Tony and Lilian an email (in English) proposing what he described as "two possible solutions". One solution was described as a "loan note and profit share agreement" and the other was described as a "joint venture agreement" dealing with certain issues. David also forwarded that email to Robert at 12.26pm that same day (CB395/396).
At 3.38pm that same day, 6 September 2016, David sent an email to Mr Pan which included some advice he had received from the accountant, Ms Peggy Poon, who the Defendants had retained (CB397).
On 7 September Robert, Tony, Lilian and David attended a conference at HWL. The next day, on 8 September at 9.10pm, Mr Vaughn sent a detailed email to Tony, Lilian and David reporting on the meeting and the issues discussed. Mr Pan and Mr Mitchell were copied into the email (CB399-400). Mr Mitchell is an accountant who gave advice to Tony.
On 16 September 2016 at 12.18pm, Ms Alma Domingo, Business Banking Manager at NAB, sent an email to Lilian (CB442). She referred to "our telephone conversation this morning" and then said: As per your advice we can expect response from you by next week in relation the pending sale agreement and provide us copy of full executed agreement.
At 3.47am on 19 September 2016, Robert sent to Tony, Lilian and David a further draft of the JVA (CB414). There were numerous changes which had been implemented by this draft. First PSR Burwood was substituted for PSR Burwood Crown as party B. A new clause 6 provided that a further two shares would be issued to PSR Burwood. A new paragraph 1 was inserted providing that the value of the Property was to be agreed at $10 million. Further changes were made to the amounts and the timing of various payments. Clause 9 provided that Tony was to charge SPD a $5 million management fee at the end of the development.
PSR Burwood was also incorporated on 19 September 2016.
At 2.39pm on 19 September, Lilian sent an email to Robert (in English) asking "Please add your builder licence no. into the agreement".
Later on in the afternoon of 19 September, Tony, Lilian, David and Robert met at the offices of Tony where further discussions took place before and after dinner. The final version of the JVA was drafted on Tony's computer some time on the evening of 19 September. There is a dispute about who drafted the final version of the JVA but no dispute that it was drafted on Tony's computer.
Certain amendments were made to the JVA that evening. There is also a dispute as to who proposed the amendments.
At 9.41am on 20 September 2016, David sent the final version of the JVA to Robert (CB416-419). The amendments included requiring SPD to issue a further 10,499,998 shares to Tony under clause 6, and Tony to sell 5,250,000 shares to PSR Burwood under clause 7. Tony and PSR Burwood would also have equal shareholding in SPD, and Tony and Robert were to be the only directors of SPD and no additional shares were to be issued unless it was agreed by both persons.
In addition, the Burwood Property was now proposed to have an agreed value of $10,500,000. PSR Burwood was to pay $5,250,000 for the purchase of 5,250,000 shares by 30 September 2016, and Tony was to lend $5,250,000 to SPD to pay off all existing mortgages and any expenses incurred by SPD on or before 30 September 2016. Again there were further provisions about the payment of monies and the timing of those payments.
Clause 10 was also amended to provide that Tony was to charge SPD a $3,000,000 management fee at the end of the development.
The parties executed the JVA on 20 September. Although some typographical errors were corrected the signed agreement still bore the date 5 September 2016 (CB421-423).
Further on the afternoon of 20 September, Robert caused PSR Burwood to make the first payment of $300,000 pursuant to the JVA (CB429).
On 23 September at 12.31pm, Lilian sent an email to Ms Domingo at NAB in the following terms (CB441-442): Please see attached JV agreement of Sky Profit as per your request.
On 27 September at 12.10pm, Lilian forwarded to Ms Domingo by email a signed discharge form as requested.
On 29 September at 2.31pm, Ms Domingo informed Lilian and Tony by email that the total payout figure for the NAB loan was $4,725,138.50 and the facility was due to expire on 30 September 2016 (CB440).
On 29 September 2016, Robert caused PSR Burwood to pay a further $4.7 million to SPD. The NAB mortgage was discharged on 30 September 2016 (CB446-447).
On 6 October 2016, Robert caused PSR Burwood to make a payment of $1.1 million to CLT (CB448).
On 19 October 2016, Oxford Constructions commenced demolition work on the site.
On 27 October 2016, Robert caused PSR Burwood to pay a fee of $400,000 to CLT (CB462).
On 28 November 2016, Robert caused another $2 million payment to PSR Burwood (CB463).
On 2 December 2016, Robert was appointed a director of SPD (CB464).
On 1 February 2017 at 3.16pm, Robert sent an email to Ms Katerina Mihail, solicitor at Mihail Legal, which said amongst other things (CB474-475): The previously drafted Burwood JV Agreement by me as per attached would trigger the CGT and Stamp Duty immediately. PLEASE TAKE NOTE THAT we should enter a practical equivalent agreement to avoid the CGT and stamp duty burden at this early stage.
On 8 February 2017, Tony, Lilian and David had a meeting with Mr Pan. As a result of this meeting, on 13 February 2017 Mr Pan sent an email to Tony, Lilian and David setting out the instructions received which included the drafting of a development management agreement between SPD and PSR Crown (CB481-482). Mr Pan advised the relevant persons he would be obtaining advice on the tax implication of the various arrangements.
On 14 February 2017 at 10.36am, Lilian forwarded a copy of Mr Pan's email to Robert (CB483-485).
On 24 February 2017 at 2.53pm, Robert sent an email to Lilian with reference to the 14 February email of Mr Pan (CB489). He said among other things: The draft structure forwarded to me on 14/02/27 is different from what we agreed before.
On 24 February at 3.52pm, Robert sent a further email to Tony, Lilian and David (CB494). It raised the need to sign a formal agreement for Oxford Constructions to build the project. It pointed out that Oxford Constructions was only currently engaged on actual costs plus 7% margin to modify and/or improve the existing DA plans and attend to other matters. He suggested that if the agreement which "we had signed/agreed before" was not observed he reserved his right to "proceed or pull out of the deal and recover our costs immediately".
On 28 February 2017 at 12.21pm, Mr Pan sent an email to Lilian indicating certain amendments made to his draft by Robert (CB495-498).
On 31 March 2016, Mr Mark Riddington, solicitor at HWL, sent an email to Mr Peter Meades, solicitor for the Plaintiffs at Mills Oakley, attaching a number of documents including a summary of the amendments made by Robert and the differences between the two positions (CB547-548).
On 6 April 2017 at 8.08pm Mr Meades replied to Mr Riddington indicating his client wished to proceed with the joint venture "replicating the provisions set out in 5 September 2016 agreement" (CB547-549). Mr Meades pointed out that the documents which had previously been forwarded created a different position. Mr Meades pointed out that his clients primary concern was security over tax. He also pointed out that the Plaintiffs had paid to SPD $5,250,000 to purchase 5,250,000 shares in the company, but no shares had yet been issued.
He further pointed out that his clients requested a JV bank account be opened as soon as possible. He further pointed out his client had entered the JVA on the understanding that as builder and under the subsequent construction contract, the contract sum would be based on the actual construction cost plus 7%. A meeting was scheduled for the next day.
On 7 April 2017 at 6.25pm, Mr Riddington replied to Mr Meades' email by setting out his client's preferred position for the entry into a development management agreement (CB552-553). Mr Riddington suggested if the structure proposed was unacceptable then a shareholders agreement should contain certain provisions.
Mr Meades replied on 18 April 2017 at 2.07pm indicating that he was instructed his client's "final position" was that the structure of the deal must be based upon the terms set out in the parties' written agreement of September 2016.
On 21 April 2017, Mr Riddington wrote to Mr Meades alleging the Plaintiffs had breached a number of essential terms (CB560-561).
Mr Meades replied on 24 April 2017 at 2.45pm, noting his clients wanted the immediate transfer of the shares and the creation of a jointly managed bank account as per the terms of the agreement, and refuting the allegations of essential terms and their breach (CB566-568.
On 28 April at 5.03pm, Tony emailed Robert attachments of letters indicating that as alleged breaches of the "Agreement" had not been remedied by 27 April as requested, the "Agreement" is terminated effective immediately (CB569-570). On the same day, he wrote again to Robert indicating that he, Robert, had been removed as a director of SPD (CB571).

[6]

Intention to create legally binding relations

The question of whether parties intended to enter into legally binding relations is to be determined objectively, taking into account the totality of the evidence including the state of affairs between the parties. The High Court (Gaudron, McHugh, Hayne and Callinan JJ) elaborated on the appropriate test in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 (Ermogenous) at 105 - 106: It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty." (Australian Woollen Mills Pty Ltd v Commonwealth(1954) 92 CLR 424 at 457 per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ) To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet "[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts" (South Australia v Commonwealth(1962) 108 CLR 130 at 154 per Windeyer J). Because the inquiry about this last aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances (South Australia v Commonwealth(1962) 108 CLR 130 at 154; Placer Development Ltd v Commonwealth(1969) 121 CLR 353 at 367 per Windeyer J), not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (Masters v Cameron(1954) 91 CLR 353 at 362 per Dixon CJ, McTiernan and Kitto JJ; ABC v XIVth Commonwealth Games Ltd(1988) 18 NSWLR 540 at 548-549 per Gleeson CJ) (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (Codelfa Construction Pty Ltd v State Rail Authority (NSW)(1982) 149 CLR 337 at 348-353 per Mason J; Royal Botanic Gardens and Domain Trust v South Sydney City Council(2002) 76 ALJR 436 ; 186 ALR 289). It is not a search for the uncommunicated subjective motives or intentions of the parties.
These principles were reiterated by the High Court unanimously in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]: References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction[7]. (footnotes omitted).
In determining the existence of an agreement, it is further permissible to take into account the parties post-contractual conduct; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [23]-[27] and [85] per Heydon JA (as his Honour then was).
Ordinarily, parties are bound by written contracts they sign. As Scrutton LJ stated in L'Estrange v Graucob [1934] 2 KB 394 at 403: [w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.

[8]

Misleading statements

The observations of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are relevant to the allegations of misleading statements or misrepresentation raised by the Defendants: Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. … Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. … What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee).

[11]

Specific performance

Specific performance will not be ordered where there is an adequate remedy at law; Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279 at 284 per Lord Selborne.
Further, specific performance is generally not ordered where it enforces the maintenance of personal relationships or the performance of personal services; Maiden v Maiden (1909) 7 CLR 727. In J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282, Dixon J (with whom Gavan Duffy CJ agreed) observed at 297-298: Specific performance is inapplicable when the continued supervision of the Court is necessary in order to ensure the fulfilment of the contract. It is not a form of relief which can be granted if the contract involves the performance by one partv of services to the other or requires their continual co-operation.
However, as the High Court (Brennan CJ, McHugh, Gummow, Kirby, and Hayne JJ) explained in Patrick Stevedores v MUA (1998) 195 CLR 1 at [78], constant supervision by a Court is not by itself a useful criterion for refusing a decree of specific performance: We see in the orders no defect which sometimes is expressed as the involvement of the court in "constant supervision" of continued conduct. Reservations of that nature have been expressed in decisions of this Court[80]. However, questions of degree rather than absolute restrictions upon the scope of curial relief are involved[81]. Reference was made in the Federal Court judgments and in submissions to this Court to the speech of Lord Hoffmann in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd[82]. His Lordship affirmed the refusal by the judge at first instance of an order for specific performance of a lease for a term of 35 years containing a covenant to keep premises open for retail trade during usual hours of business in the locality. His Lordship's statement that the usual practice was not to grant specific performance to carry on an activity over a period of time was made in response to a submission by the lessor to the effect that the equitable remedy was no longer to be understood as granted in the auxiliary jurisdiction where damages would be an inadequate remedy. The lessor submitted, without success, that in cases such as Argyll Stores the court "should look at the whole panoply of available remedies and consider the appropriate one rather than the gloss of rules put on them restricting their use"[83]. (footnotes omitted).
The First and Third Plaintiffs also relied on CH Giles & Co Ltd v Morris [1972] 1 WLR 307 (CH Giles), applied in dicta by Ward J in Newtown Management Pty Ltd v Owners of Strata Plan 67219 [2009] NSWSC 150 (Newtown Management) at [201] in noting the difference between specifically enforcing a close personal relationship, and specifically enforcing an agreement to establish such a relationship. In ordering specific performance whereby a person would be appointed as managing director of a company, Megarry J observed in CH Giles at 316: The distinction between an order to perform a contract for services and an order to procure the execution of such a contract seems to me to be sound both in principle and on authority. I do not think that the mere fact that the contract to be made is one of which the court would not decree specific performance is a ground for refusing to decree that the contract be entered into.

[12]

Overview

The Plaintiffs submit the JVA executed by the parties on 20 September 2016 is a legally binding document which the Defendants were not entitled to terminate. The Plaintiffs submit it was the Defendants who were in fundamental breach of the JVA, through failing to issue additional shares in SPD, transfer 50% of the issued shares to PSR Burwood, and establish the jointly managed SPD bank account and in removing Robert as a director of SPD. Accordingly, the Plaintiffs' primarily seek relief by way of specific performance.
The Defendants accept the existence of an agreement, but contend the JVA did not reflect that agreement and was not intended to be legally binding. Rather, the Defendants maintain the parties reached an oral joint venture agreement, the terms of which were not reflected in the JVA. Further, the Defendants invoke a non est factum defence as the JVA was not explained to Tony as enforceable and binding, and also submit the Plaintiffs misled the Defendants, and/or engaged in unconscionable conduct through conveying shares at substantially less than their actual or agreed value.
In addition the Defendants submit the Plaintiffs were in breach of the JVA or the oral joint venture agreement through failure to pay the further $5 million, and in any case equity will not enforce the JVA by specific performance because the terms of the JVA are unclear and Plaintiffs are not ready, willing and able to perform all of the obligations set out in the JVA.
The Second Plaintiff adopts most but not all of the submissions made by the First and Third Plaintiffs. In short the Second Plaintiff presses specific performance of the JVA except for two terms - namely Robert be placed on the board of PSR Burwood and Oxford Constructions be the nominated building company. In summarising the parties' submissions, a reference to the Plaintiffs will be a reference to the First and Third Plaintiffs' submissions, relied upon by the Second Plaintiff, unless otherwise stated.

[13]

Plaintiffs' submissions

The Second Plaintiff expressly makes no submission as to credibility of any witnesses in the proceedings (Second Plaintiff's closing submissions [25]).
The First and Third Plaintiffs submit all three of the Defendants' witnesses lacked credibility and the Court should reject their recollections that are not corroborated by a contemporaneous document.
In respect of Tony, the Plaintiffs submit his evidence was, at times, evasive, illogical and designed to suit his purposes (First and Third Plaintiffs' closing submissions [14]-[28]). In respect of David, the Plaintiffs submit his recollection of events is unreliable and should be accepted. In particular, the Plaintiffs submit David's narrative that he cannot prepare nor understand professional documents in English was contradicted by his own evidence that he did in fact prepare the document at CB386, his accounts of what occurred at the meetings between 27 August 2016 and 3 December 2016 change and should not be preferred to that of Robert, and his evidence in explaining the final contents of the JVA to Tony should be seen as downplayed on his behalf (First and Third Plaintiffs' closing submissions [29]-[41]).
In respect of Lilian, the Plaintiffs provide three examples in support of their submission she was not a witness of truth. First, the Plaintiffs use Lilian's evidence on the NAB email exchange (CB441-CB442) as an example of her tendency to say what she thought assisted her case. Next, the Plaintiffs use Lilian's evidence on the receipt of documents in English to submit she can read English documents, and finally Lilian's evidence on the ability to draft emails in English to show she was capable of expressing ideas clearly in professional English language in an email (First and Third Plaintiffs' closing submissions [42]-[62]).
In respect of their witness Robert, the Plaintiffs submit the worst that can be said about him is he was prone to speeches and tangents, but none of these tendencies were designed to distract from the truth (First and Third Plaintiffs' closing submissions [63]).

[14]

Defendants' submissions

The Defendants characterise Robert as evasive and a "vigilant advocate for his cause." The Defendants point to two examples in support of their submission he should not be believed; first, his response to Chinese newspaper advertisements as to his qualifications and areas of expertise, and secondly, his dealings with the PSR Burwood investors and shareholders where he initially said he only dealt with them orally, but then produced documents regarding PSR Burwood's investment and shareholding which were agreements drafted by him which post-dated the JVA but made no reference to the JVA (Defendants' closing submissions [15]-[16]).
In respect of their own witnesses, the Defendants submit Tony, Lilian and David's departure from their affidavit evidence in oral evidence could be explained by the fact nuance of a language will change the response and perception of the person being questioned or explaining themselves (Defendants' closing submissions [40]).
In respect of Tony, the Defendants submit he gave evidence against his interest from time to time, and his departures from his affidavit evidence were often supported by facts, such as the $300,000 he denied saying he would pay to Robert as interest was not shown as interest owing to the NAB in the account records. Further, the Defendants submit the Plaintiffs' submissions on Tony's ability to translate and comprehend English documents should not be accepted, with Tony seeking Mandarin speaking solicitors when he wanted to reach agreements relating to complex matters. This is also supported by Tony's inability to recognise HWL's name in cross-examination, which the Defendants submit was not contrived but reflected the fact Tony did not read English (Defendants' closing submissions [41]-[46]).
In respect of David, the Defendants submit the joint venture payment agreement document sent from David to Robert for review on 5 September is not significant given there were other English speaking people who could have prepared the documents, including accountants and Piewan Jian as the book keeper for SPD. Further, the Defendants note the provision of emails by an employee (like David) to their employer in the language they receive them is evidence they are diligent in providing information and should not be a basis from impugning credibility. In addition, the Defendants note David's reading of the earlier versions of the JVA to Tony can be explained by the fact the initial documents were "records of intention" and the JVA was described by Robert as for taxation purposes and not a legal document so there was no need for David to translate the JVA (Defendants' closing submissions [47]-[51]).
In respect of Lilian, the Defendants submit in relation to her denial of a conversation with Ms Domingo of NAB, Ms Domingo may be mistaken. The Defendants also submit her provision of the JVA to NAB was simply to explain the fact the loan to SPD would be repaid shortly. Finally, the Defendants submit the Plaintiffs could not demonstrate Lilian's understanding of English was such that she could author any document in English or read enough English to understand the relevant documents in the proceedings. The Defendants note Piewen Jian typed Lilian's emails in English, even though the emails refer to Lilian in first person. Further, the reference to Lilian replying to messages, simply reflects, according to the Defendants, Lilian's ability to text using simplified Chinese characters or rudimentary English (Defendants' closing submissions [52]-[55]).

[15]

Plaintiffs' submissions

The Plaintiffs detail ten reasons which support the finding the parties objectively intended for the JVA to be legally binding. First, the JVA is signed. Secondly, the Plaintiffs rely on Lilian's oral evidence to submit the Defendants were under time pressure to have the JVA signed because they wanted to repay the NAB mortgage. Thirdly, the Plaintiffs rely on Robert's unchallenged recollection of a conversation on 17-18 September 2016 where he said he would not invest money until the fundamental terms of the agreement are signed by the parties. Fourthly, the Plaintiffs note David sent the draft JVA (as at 5 September 2016) to Mr Pan requesting it be turned into a legal document soon.
Fifthly, the Plaintiffs submit David negotiated amendments to the final JVA, sat with Robert who was making amendments to the JVA on David's computer, emailed the final version of the JVA to Robert for signing, and witnessed the signature of Tony on three occasions. Sixthly, Robert's act of causing PSR Burwood to make the first payment of $300,000 pursuant to the JVA was, according to the Plaintiffs, objective conduct consistent with the signed JVA intending to create contractual relations. Seventhly, Lilian sent the signed JVA as a "full executed agreement" to NAB on 23 September 2016. Eighthly, Robert caused PSR Burwood to pay a further $4.7 million to SPD pursuant to the JVA on 29 September 2016, which SPD then used to discharge the NAB mortgage on 30 September 2016.
Ninthly, when the Defendants purported to terminate the JVA in April 2017, the Plaintiffs submit there was no suggestion the JVA was not enforceable or not a binding agreement. Finally, the Plaintiffs submit the Defendants did not complain about the JVA until after SPD had paid off the debt to NAB, obtained further money to be held in a separate account, taken the benefit of Oxford Construction's building work for which the Defendants have not paid for, and the Plaintiffs had commenced the proceedings (First and Third Plaintiffs' closing submissions [65]-[80]).
In response to the Defendants' reliance on the parties working towards the production of a different agreement after the JVA was signed as evidence the JVA was not binding, the Plaintiffs submit it was always contemplated the parties may enter into a new, more tax effective arrangement. However, the Defendants' time pressure and Robert's requirement for a signed JVA meant the final form of the JVA intended to bind the parties to contractual relations (First and Third Plaintiffs' closing submissions [81]).

[16]

Defendants' submissions

The Defendants submit the factors relied upon by the Plaintiffs in arguing the JVA is binding are "largely equally congruent" with an oral agreement evinced by a document where the terms of that document were not intended to be binding (Defendants' closing submissions [56]).
The Defendants submit the determination of the provenance and authorship of the JVA resolves in broad terms the issue of whether the JVA is a binding written agreement. On this point they submit the JVA was the Plaintiffs' document, meaning the JVA was not explained to Tony, and the JVA was intended to serve a purpose which was not to create a binding. Further, the Defendants submit the terms of the agreement between the parties were not contained in the JVA, and the conduct involved would disentitle the Plaintiffs from enforcing the JVA, including the disavowal of its preparation and the Plaintiffs' involvement in its preparation (Defendants' closing submissions [6]).
The Defendants submit the following factual matters support their contention the JVA was authored and prepared by Robert. First, the only source of professional legal or accounting input suggested at the time was Robert's lawyer but no advice was given as a result of his lawyer being too busy. Secondly, Robert was an accountant who advertised himself as having professional experience to assist his clients in making investments. Thirdly, there is no evidence any other professional advisor was involved from when Robert sent a draft version of the JVA to the Defendants to the execution of the JVA on 20 September 2016. Fourthly, Charly Chen, Tony and Lilian's son, denied being in any way responsible for the preparation of the JVA.
Fifthly, Robert gave no evidence in his affidavits of any conversations on 19 September 2016, yet in cross-examination said there were negotiations resulting in changes in response to demands by the Defendants. Sixthly, the Defendants submit none of the negotiations, demands or discussions were pleaded or raised by the Plaintiffs and are inconsistent with the Plaintiff's case the JVA was "discussed line by line" with Tony, Lilian and David. Seventhly, there are, according to the Defendants, significant alterations between the documents sent by Robert on 19 September 2016 and the final executed JVA, with the changes explicable only as advantaging Robert and his interests. Eighthly, Robert accepted he said he was prepared to "amend" the JVA, and the Defendants submit this is merely evidence of the oral agreement and that a later written agreement would make provision for the concerns of both parties.
Ninthly, Robert sent an email on 1 February 2017 to a lawyer saying the JVA was "drafted…by him." Tenthly, Robert sent the documents but dismissed the advice of the independent solicitor as "too inexperienced." Finally, in cross-examination Robert accepted he drafted the JVA but nonetheless said it was a mutual agreement without providing any evidence of this mutuality (Defendants' closing submissions [12]).
The Defendants also set out evidence which, they submit, does not support the Plaintiffs' position as to the binding nature of the JVA. The Defendants submit there is an absence of any reference to a binding JVA in the deeds of agreements with the shareholders of PSR Burwood who have supplied the money for the purchase price. Further, the shareholders appear to have supplied Robert the $8.5 million provided to the Defendants, but Robert's 37% interest (amounting to $5 million) represents the outstanding amount payable to the Defendants which Robert appears to no longer have control over. Further, the Defendants note the delay between Robert drafting an agreement reflecting the terms he desired on 5 September 2016, and the execution of the JVA on 20 September 2016 on different terms to the 5 September agreement, including being concerned with addressing revenue and taxation issues. The Defendants also note Robert prepared further updates of the JVA during October 2016 (Defendants' closing submissions [13]).
If the Court were to find Robert prepared the JVA, the Defendants submit it follows the Court should find Tony could not read or understand the JVA and Robert knew this. The JVA differed materially from the oral discussions and previous drafts. Robert gave no evidence of any negotiations or explanation with Tony in relation to the JVA. Robert had prepared documents in a similar form as records of intention with provision for execution, but they were to be subject to amendments and advice so were not intended to be legally binding, and the JVA did not reflect the parties' discussions as to the terms of the JVA (Defendants' closing submissions [14]).
The Defendants submit based on the above circumstances, this is a case where the jural act of entering into a contract is not established by the signature. The Defendants submit the Plaintiffs first insisted on the performance of the JVA in April 2017, and up until that time there was no reason for Tony of SPD to regard the JVA as one that was contractual or binding in its terms. Further, the material difference from the terms previously discussed was a matter that required explanation (Defendants' closing submissions [17]-[20]).

[23]

Plaintiffs' submissions

The Plaintiffs submit the JVA was not lawfully terminated by the Defendants on 28 April 2017.
In response to the Defendants' contention PSR Burwood breached the JVA by failing to make the $5 million payment to SPD, the Plaintiffs submit a commercial construction of clauses 3 and 7 of the JVA should be read as only requiring the payment of the $5 million to take place a reasonable time after the Defendants transferred the shares and established the jointly managed SPD account. As the Defendants had not by 30 November 2016 transferred the 50% shareholding in SPD to PSR Burwood or established the jointly managed SPD bank account, PSR Burwood was prevented from performing its obligation to pay the final $5 million pursuant to clause 7. The Plaintiffs submit that as the law will not permit a party to take advantage of its own wrong, SPD cannot claim breach out of PSR Burwood being prevented from performing its obligation under the JVA (First and Third Plaintiffs' final submissions [109]-[117]).
The Plaintiffs also reject the Defendants' claim the Plaintiffs' failed to cause Oxford Construction to enter into a building contract with SPD for a maximum price of $36.5 million, on the grounds the JVA does not contain any such obligation, and clause 8 expressly contemplated any variation to construction costs should be discussed and agreed by Tony and Robert (First and Third Plaintiffs' final submissions [117]-[118]).
Further, the Plaintiffs submit if there was any breach of the JVA, it was not a breach giving rise to termination since it would not have passed the test of essentiality set out by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) NSWLR 633 at 641-642 (First and Third Plaintiffs' final submissions [119]-[120]). In addition, the Plaintiffs did not repudiate the JVA in the sense that no words or conduct evinced an intention to no longer be bound by the JVA or fulfil the JVA in a manner substantially inconsistent with its obligations (First and Third Plaintiffs' final submissions [124]-[127]).
As a separate argument, the Plaintiffs submit the Defendants lose any entitlement to terminate the JVA since they had breached and remain in breach of the JVA by failing to issue the additional shares in SPD and transfer 50% of the issued shares in SPD to PSR Burwood, failing to establish the jointly managed SPD bank account, failing to pay $2 million of the third capital contribution into the jointly managed SPD bank account, and removing Robert as SPD director prior to the purported termination of the JVA (First and Third Plaintiffs' final submissions [128]-[133]). The Second Plaintiff "demurs" from this latter submission regarding Robert as SPD director, submitting Tony was at all times bound by fiduciary duties to PSR Burwood, but not to Robert (Second Plaintiff's closing submissions [26]-[28]).

[27]

Specific performance

The First and Third Plaintiffs seek specific performance of the JVA in accordance with paragraph 10 of the Summons. First, the First and Third Plaintiffs set out the benefits the Defendants have obtained from the JVA, namely the use of $8.5 million from PSR Burwood which they could use to discharge the NAB loan and avoid payment of default interest under that loan, the project management skills of Robert, and Oxford Constructions performing its promise to enter into an agreement to perform construction works (First and Third Plaintiffs' closing submissions [147]).
The First and Third Plaintiffs note all the Court need do now is require performance of the balance of the obligations of the JVA. They note the Courts will readily compel the transfer of shares. Further, the purported removal of Robert as a director of SPD was, according to the First and Third Plaintiffs, a nullity and so the order at paragraph 10(d) operates as a restorative mandatory injunction. They characterise the obligation to engage Robert as director as falling within the types of clauses considered in cases like CH Giles and Newtown, being part of agreements to establish rather than enforce a personal relationship.
In respect of the obligation to open a joint bank account, the First and Third Plaintiffs submit this is clearly defined in the JVA and does not involve the performance of a large number of acts over a long period or constant supervision of the Court. They submit there is no risk arising from the obligation to jointly manage the bank account as pursuant to clause 9 the funds are to be applied for construction purposes, meaning the final decision on construction is to be made by Robert should the parties fail to agree. Further, the monies paid pursuant to clauses 3, 4 and 5 are earmarked funds.
In respect of the funds which are not earmarked, namely the $2 million in clause 6 and the $5 million in clause 7, which are to be paid into the jointly managed SPD bank account, the First and Third Plaintiffs submit the intention is for the funds to be used for construction purposes, as it would be "commercially insensible" if the $7 million in total was to be paid to Oxford Constructions, a company over which Tony has no control, especially since Oxford Constructions may not ultimately be the builder. The First and Third Plaintiffs submit it is far more sensible for $7 million to be paid into the SPD joint bank account and paid to Oxford Constructions as and when required (First and Third Plaintiffs' closing submissions [148]-[158]).

[30]

Defendants' submissions

The Defendants' submit the JVA cannot be enforced by specific performance, pointing to not just the distrust between the Defendants and the Plaintiffs, but the falling out between the Plaintiffs themselves. The Defendants note none of the persons seeking relief amongst the First and Third Plaintiffs have contributed money to the joint venture in accordance with the JVA.
The Defendants further submit the effect of orders made appointing Robert director would be opposed by all the PSR Burwood shareholders, with PSR Burwood being a joint venture partner with Tony. Further, the JVA involves no separate contracts in the sense the whole of the obligations of the joint venture are required to be performed to bring about the purpose of the venture, being the development of the property. Equity, it is submitted, will not enforce separate parts of promises where the consideration for the promise is the whole of the agreement (Defendants' closing submissions [27]-[30]).
The Defendants also use their submissions on the uncertainty of the JVA to support their claim for specific performance being unenforceable (Defendants' closing submissions [31]-[34]; see [110]-[113]).
Further, the Defendants submit the Plaintiffs are not ready willing and able to perform all of the obligations set out in the JVA. They submit the parties are in dispute as to the source and rights to use the money previously disclosed to the Court, meaning those funds can no longer be regarded as a basis for future performance since the First and Third Plaintiffs are now apparently not offered by PSR Burwood (Defendants' closing submissions [35]).
The Defendants also raise the doctrine of mutuality in closing submissions, submitting it applies to protect the Defendants against the prospect of the bargain that they made being defeated by the enforcement of the performance in a way that does not confer the mutual benefit. The absence of obtaining any benefit arises, according to the Defendants, because the Plaintiffs are at loggerheads and there is no agreement as to a builder or director to represent the other interests in the joint venture if it were ordered to be specifically performed (Defendants' closing submissions [36]).
In terms of restitution, the Defendants submit they have accepted from the outset the responsibility to repay the monies received under the failed JVA and the only questions for determination which remain if specific performance is not ordered are the terms of such repayment, bearing in mind consideration of the responsibility for its failure and any rights to damages and costs (Defendants' closing submissions [60]).

[31]

Evidence of Robert

Robert swore three affidavits, one of 12 May 2017 (RH1), another of 9 August 2017 (RH2) and a third of 21 August 2017 (RH3).
In his affidavit of 12 May 2017, Robert stated he was sole director of PSR Burwood, and that he became aware Tony had obtained development consent for the Burwood Property in or about 2013 (RH1 [2]-[9]).
On or about 28 November 2016 Robert asserted he had a conversation with Tony in which he told him that having paid the balance of $2.4 million to CLT, a joint bank account should be opened so he could make the final $5 million contribution. He said Tony said he would organise that. He also raised the question of the acquisition of 50% of the shares in SPD. Tony responded that he had been advised that that would trigger a capital gains tax liability by SPD and stamp duty liability on the part of PSR Burwood. Tony told Robert that his solicitor had some alternative solutions that he would like Robert to consider seriously. Robert said that he was happy to consider alternative solutions provided they were reviewed by his solicitor. He further said that now that he owned 50% of the shares in SPD he wished to be made a director (RH1 [18]).
Robert said he was appointed a director on 2 December 2016 but did not at that time receive any shares nor was he made a joint signatory to any joint bank account (RH1 [19]).
Robert said from September onward he caused Oxford Constructions to undertake various works in relation to the Burwood Property which included setting up a site office, appointing staff and consultants, obtaining quotes from various proposed sub-contractors, demolishing existing buildings and achieving a clearance certificate of contaminated soil. He said Oxford Constructions had invoiced SPD $1,038,953.46. Of that amount, $817,162.58 had been paid (RH1 [20]-[21]).
In his affidavit of 9 August 2017, Robert said he attended a function at law firm Colin Biggers and Paisley in February 2016. Prior to that he did not know Tony or Lilian or David. He met Lilian at the function who informed him she and her husband were developing the Burwood Property (RH2 [2]-[4]).
He next met Tony and Lilian at McDonalds in Strathfield. He recalled telling Tony and Lilian he had a degree in chemical engineering which he obtained in China. He studied accounting at UTS and worked as a trainee accountant for a couple of years, about 10 years ago. Since that time he had focussed on property development (RH2 [5]-[7]).
Soon after they met, Tony, Lilian and David went to Wollongong to see a project Robert was undertaking there. Robert also attended at their offices on several occasions between March and late April 2016 to discuss the development of the Burwood Property. Robert said that during one of the early meetings Lilian proposed SPD sell the land to him for $23 million. He said he thought that was too high. He denied ever telling them he was an accountant and further denied ever saying he was on the panel of CBA. He agreed he would have said that he had an existing relationship with CBA (RH2 [11]-[14]).
On 13 March 2016, Lilian sent him an email with some project feasibility figures she had prepared (RH2 [15]).
In March 2016, Robert took Mr Leeming, a senior relationship executive at CBA, to inspect the Burwood Property (RH2 [16]).
After the meeting with Mr Leeming, Robert said he had a meeting with Tony, Lilian and David. He told them he was prepared to buy into the project provided he got 51% of the shares in SPD. He further said the shares would be calculated on the basis that the land was worth $20 million and that his company Oxford Constructions would be the builder and would charge costs plus 7% on actual construction costs. He said Lilian accepted costs plus 7% but indicated that she would not accept a valuation of $20 million nor him getting 51% of the shares in SPD (RH2 [19]).
At that point Robert said that he withdrew from negotiations in early May 2016 (RH2 [20]).
Later in the year on 27 August 2016 Robert said he was again contacted by David Chau who asked whether he was still interested in being involved in the development. He said he was. He then had a meeting with Tony and Lilian and David. At the meeting he asserted that Lilian asked whether he was still interested in becoming a joint venture partner on the basis of land value at $20 million. She told Robert that he would need to invest the money quickly as they had to repay NAB who had been giving them "a hard time". Robert said he was interested.
He then said he had a series of meetings with Tony and Lilian between 31 August and 3 September 2016 discussing the terms of the proposed joint venture (RH2 [21]-[29]).
Robert asserted during the 2 September 2016 meeting, the Feasibility Document prepared by Lilian was discussed. He denied however that $36.5 million was referred to as the agreed price for construction. His recollection was that Oxford Constructions would charge costs plus 7% and he would do as best he could to keep construction costs at or below the limits (RH2 [30]).
At the end of the meeting however he recalled saying to everyone concerned that he needed a signed agreement and that he would not invest in the project until he had the fundamental terms of the agreement written down in an agreement they both signed. He further denied during the course of any meeting saying that he was an accountant and that a solicitor was not needed (RH2 [32]-[33]).
Shortly after that meeting on or about 3 September he agreed he prepared a draft document which reflected what he understood had been discussed. On 5 September at 12.28pm he sent that to David (RH2 [34]).
He received an email he said from David on 5 September attaching a document entitled "Joint Venture Payment Agreement". He did not draft that agreement and the first time he saw it was when he received the email from David on 5 September (RH2 [35]).
Robert said he attended a meeting at HWL, with Tony and Lilian and David and Mr Pan on 7 September 2016. Mr Vaughn was also present. Robert asserted Mr Vaughan said that he was concerned issuing shares in SPD would give rise to capital gains tax liability for the company as well as stamp duty liability for him. Mr Vaughan suggested the better structure was not to issue shares in SPD but to have a loan and profit share arrangement. Robert said he was not prepared to invest unless he was issued 50% of the shares in SPD and was made a director (RH2 [39]).
Robert denied he ever attended a meeting with Ms Peggy Poon prior to the JVA being signed, and stated he only attended a meeting with her on 29 September 2016 (RH2 [43]).
Robert said on the weekend of 17 and 18 September 2016 he had a further meeting with Tony and Lilian and David. During the meeting Lilian said it was important that they get the agreement finalised because they needed to pay out NAB. Lilian also suggested that Robert could pay the money now and sort the agreement out later. He rejected that idea and said the money he was investing was investor money and he was not willing to invest unless the fundamental terms were agreed in writing and signed by the parties (RH2 [44]).
As a result of the discussions he made some amendments to the JVA and at 3.47am on 19 September he sent an email to Tony and Lilian and David and a copy to his lawyer Mr Denis Zhou attaching the revised version (RH2 [46]).
At 2.26pm that day he sent a text to David with a copy of a certificate of registration of the new company PSR Burwood (RH2 [47]).
At 2.39pm on 19 September he received an email from Lilian asking for him to add his builder licence number to the agreement. He then contacted his lawyer Mr Zhou and asked him if he was able to look at the draft agreement on an urgent basis but he was told Mr Zhou was busy (RH2 [48]-[49]).
Robert said at 9.41am the next day on 20 September he received an email from David attaching an amended version of the JVA. He assumed the amendments had been made by Tony and Lilian to address the capital gains tax liability of SPD. Robert said he was comfortable with the changes (RH2 [50]-[51]).
Later on 20 September 2016 he attended the offices of CLT at Burwood. During the meeting he had with Lilian she indicated they had included some change in the version to try to help their GST position still however providing that Robert would get 50% of the shares in SPD (RH2 [54]).
Robert indicated he was happy with the document and that he was prepared to sign it. Lilian indicated that once signed the first payment would have to be made. She also said that she and Tony would look at how they might be able to improve the agreement from a tax point of view later. Robert said he responded by saying he would consider amending the document if they could come up with any improvement that he was happy about but he would need to look at it and agree with any amendment and further would need the agreement of his solicitors, his banker and investors (RH2 [54]).
Robert indicated he and Tony then signed the JVA, with David as a witness. Later that day he received a text message from David reminding him to transfer the deposit (RH2 [55]).
On 29 September 2016 at David's request, Robert attended a meeting with Tony and Lilian and their accountant Peggy Poon. Discussions were then conducted as to ways in which the deal could be restructured to minimise tax and stamp duty (RH2 [60]).
In late September 2016 Oxford Constructions undertook various early works on the property and he continued to make the payments (RH2 [65]).
Around Christmas 2016 Robert said Tony asked whether he could pay some more money to Tony. Robert said he would not do so as he needed a transfer of shares and a joint bank account opened (RH2 [76]).
In January 2017 the question of restructuring the arrangement was raised again by Tony and Lilian and David to Robert (RH2 [77]).
In a further meeting in early February 2017, Robert said he again requested Tony and Lilian to transfer the shares. Tony said he would sort it out (RH2 [81]).
He refused ultimately to agree to any restructuring as drafted by Tony's lawyers. In Robert's mind it altered the fundamental terms of the JVA (RH2 [82]-[84]).
Robert clarified what he had earlier said in relation to the payment of invoices. The invoices totalling $1,038,953.46 were received by Oxford Constructions from consultants and sub-contractors. The amount of $817,162.58 has been paid by Oxford Constructions ,not SPD (RH2 [88]).
In Robert's third affidavit of 21 August, Robert said he attended at the office of State Revenue in Wollongong for the purposes of paying stamp duty on 17 August 2017. The matter is currently being assessed (RH3 [1]-[2]).
Robert attached some documentation on the basis of which he asserted PSR Burwood had available to it $5,288,284 in funds in order to make the fourth capital contribution of $5 million (RH3 [3]-[7]).
Robert conceded that he was giving evidence via an interpreter because he felt more confident and comfortable speaking in that language (T39/15-20).
He also conceded that when he had conversations with Tony or Lilian or David, they were mostly in Mandarin (T39/35-40).
Robert accepted he never saw Tony writing in the English language, but he did see Lilian write in English language. He was also aware Tony and Lilian shared an email address (T40/15-45).
Robert said Lilian spoke perfect English (T40/40-50).
Robert was asked about his various qualifications. He conceded that he has an accounting and financial background. He has acted as an investment adviser. He did certain studies at the Securities Institute (T41/5-25).
Robert agreed he did some developments in Wollongong and that there are overlaps between the shareholders in PSR Burwood and the shareholders in Wollongong (T43/1-5).
Robert agreed he had commenced discussions with Tony and Lilian in March 2016 about the development. Cost of construction was part of those discussions. He gave them an estimate on the price of $36.5 million (T45/25-50).
Robert identified the document at CB381 as the estimate document he had prepared (T46/10-15).
Robert agreed after some preliminary discussions, negotiations with Tony and Lilian ended in about April 2016 (T47/15-20).
Robert said Lilian is an individual and powerful personality and if anyone gets in her way they are fired. She thinks she is more professional than most of the consultants and she hires professional lawyers to help her win cases. Although she is not an accountant she and Tony's arithmetic excellence surpasses normal people. They also told Robert they had a lot of success in businesses in China and were successful in various businesses in Australia (T48/1-29).
Robert agreed that by the end of August or beginning of September he had begun renegotiating again with Tony and Lilian. He also said Lilian "calls the shots" (T48/30-50).
Robert also said that he knew Tony was the boss (T49/1-3).
He identified the document at CB382 as one he had typed (T49/10-15).
It was put to Tony that he sent documents to Lilian and others on 5 September, 19 September and 20 September. He agreed with that but said there were more than three versions and more like dozens. The others were discarded (T50/20-25).
Robert denied ever using the computer of Tony and/or Lilian to type anything further. He said they would not allow him to use their computer (T51/20-30).
Robert agreed that the document at CB383 and 384 sent to David on 5 September was the document he was prepared to sign and agree to (T52/5-25).
Robert appeared to change his stance on the document and as to whether he was prepared to sign it in the form which it was circulated on 5 September. He said parties needed some waiting time (T52/40-50).
Robert said as at 5 September the parties were very close to signing but they needed to have a further look (T53/10-15).
Robert agreed there was a meeting which took place at the offices of HWL with others including Tony and Lilian at which the solicitor objected that the matter proceed by way of a share agreement. The solicitor advised that a form of loan arrangement should be brought into place. Robert would not agree with that (T53/45-50).
Robert did not obtain accounting advice before he signed the agreement (T54/10-15).
Robert said that when he thought Tony and Lilian were serious, he incorporated PSR Burwood (T54/25-30).
Robert said the document prepared on 5 September was a record of the basic structure that they intended to have, but he wanted to make sure that everyone intended to proceed before he signed the final agreement (T55/40-45).
Robert agreed he advertised in Chinese newspapers (T61/T62).
Robert said the reason why the negotiations broke off when they did in early 2016 was because of the disagreement over the issue of 51% of the shares in SPD (T65/25-30).
During negotiations, Robert said he made it clear to Tony that SPD had to be debt free (T70/45-50).
Robert agreed he did not discuss construction costs with Tony but he denied that he ever agreed to cap the costs at $36.5 million (T71/25-30). Robert agreed as a result of discussions at least with Mr Vaughan on 7 September there would be stamp duty issues from his point of view and capital gains tax issues for Tony (T73/10-25).
Robert denied ever telling Tony that he would prepare a contract that would be effective so as to limit the tax Tony had to pay (T74/10-15).
Robert agreed he went to Tony and Lilian's offices on 19 September to have discussions about the JVA (T78/20-30).
Robert agreed that at 2.39pm he was asked by Lilian for his builders licence number and thereafter he went to their offices for discussions (T82/14-20).
When Robert went to Tony and Lilian's offices on 19 September he did not see their son Charly Chen (T83/10-15).
Robert was asked whether when he went to the offices of Tony and Lilian he used their computer. He said from what he could remember they did not allow him to do that (T83/40-45).
When he went to the offices he brought a hard copy of the document with him although he did not know there would be any amendments to be made (T83/45-50).
He said he was ready to sign the document that he sent at 3.47am on 19 September (T84/5-10).
It was put to Robert that there were some discussions at Tony and Lilian's office. As a result certain amendments were made and Robert made the amendments on the computer at the office. He said he did not remember ever using their computer (T84/35-40).
Robert said $10 million was put in at the request of Tony and Lilian as was the increase to $10.5 million (T86/10-25).
Robert said he did not notice the change in management fee to be charged by CLT from $5 million down to $3 million (T87/35-50).
Robert said when he got to the offices of Tony and Lilian they gave him an unsigned copy of the agreement for signature. It was put to him that he made some amendments to the figures and corrected some typographical mistakes. He then produced it to Tony for signature. Robert would not accept that (T89/25-40).
Robert did say to Tony that if he wanted payment he would need a contract and the contract should include his promises to shareholders (T90/10-20).
Robert said he made it clear at all times that he needed some fundamental terms signed and a formal contract and he was happy to arrange for some modifications which could be discussed (T90/20-50).
Robert did not mind what the share structure was to be provided he got an issue of shares and had 50% of the shareholding (T92/20-30).
Robert denied that the structure of the ultimate agreement was devised by him to have an impact on capital gains tax. He would not accept that proposition (T93/1-9).
Robert agreed that he did not pay $5.25 million initially - he paid only $4.7 million. He asserted Tony said provided he could pay the $4.7 million before the 30 September, he could pay the rest of the money later (T94/30-40).
Robert agreed he prepared a draft agreement dated 15 October 2016 (T97/35-45).
Robert agreed there were numerous agreements entered into with respective investors enabling him to put $13.5 million together (T108/5-20).
Robert rejected the suggestion the document entered into on 20 September was only for the purpose of showing investors (T113/30-35).
Robert agreed he had produced a similar feasibility document for the Wollongong construction as he had for the Burwood Property (T118/5-20).
In February and March 2017 Robert agreed a dispute arose between himself and Tony about who would be responsible for the design and construction of the development (T119/35-50).
Robert agreed he instructed Mr Meades who attempted to negotiate a joint venture agreement with Tony's lawyers (T120-30-45).
Robert denied he told Tony the document they were signing was only needed so he could show investors and that there would be a new document arranged in due course drafted by lawyers at a later point (T126/5-20).
Robert said in re-examination that the $3.5 million which was being provided for working capital was to be put into a joint bank account (T128/1-10).

[32]

Evidence of Tony

Tony (Dong Chen) swore three affidavits, one of 30 May 2017 (DC1), one of 7 July 2017 (DC2) and the other of 15 July 2017 (DC3). His first affidavit of 30 May was not read by the Defendants, but ultimately tendered by the Plaintiffs (see T247/29-31), and I therefore propose to only summarise the relevant paragraphs Tony was cross-examined on.
In his first affidavit, Tony said in the course of discussions in late August/early September 2016, Tony told Robert the amounts of money SPD needed to pay the mortgage and interest, explaining if the JVA went ahead the first that needed to be paid was the interest bill of $300,000 and then the mortgage of $4.7 million and that Robert would need to pay them back for the cost of consultants (DC1 [68]).
Tony also recalled a meeting with Robert, Lilian and David in their Burwood offices in the days following their visit to Wollongong, where Robert said, among other things, he would pay $13.5 million and "You will have the $10 million from which to pay the mortgage and put in $3.5 million," and he would "prepare a record of intention" (DC1 [72]).
Tony further recalled a number of discussions at Burwood about the timing of the payments and how the money was to be paid, and how Lilian or him emphasised to Robert the need to pay the money to discharge the interest and mortgage (DC1 [74]).
Tony said on or about 7 September 2016 he attended a meeting with Lilian, David and Robert at HWL to discuss the form and structure of the final JVA. Tony said Mr Vaughn warned of the JVA not involving any share transfer to avoid stamp duty and other tax implications, to which Tony said Robert replied "No, I am an accountant, I am sure that transferring shares will not have significant tax implications for us" (DC1 [91]).
In his affidavit of 7 July 2017, Tony said he was born in mainland China and has limited speaking English although he can understand some amount of English. He is unable to read English and prepare business documents or emails in English (DC2 [5]-[6]).
Tony indicated he completed high school in China. After high school he started working as a mechanic in a chemical engineering company and came to Australia on 31 January 1990 to study on a student visa (DC2 [7]-[10]).
He married his wife in 1993 (DC2 [11]).
He purchased a convenience store in Kings Cross in 1999, then a warehouse in Walsh Bay converting part of the space into a Chinese restaurant, a supermarket and a bottle shop. For various purposes they used an English-speaking lawyer who dealt with his wife (DC2 [12]).
Most of his dealings in Australia had been with the Chinese community. He is not able to communicate effectively in English. He spoke with Robert in Mandarin. He shared an email address with his wife. His experience was that Robert spoke fluent Mandarin and David, when he spoke to Robert, would use a combination of English and Chinese (DC2 [14]-[15]).
He said SPD was incorporated on 1 March 2010 for the purpose of acting as a potential investor or partner in the property. He purchased the property from Portland Property Holdings Pty Ltd (Portland). He was the sole shareholder and originally the sole director of SPD (DC2 [16]-[18]).
Originally he was going to develop the land in conjunction with the owner Portland but it was unable to continue with the development. There was very little documentation in his dealing with Portland and he said he was accustomed to doing business with Chinese people by way of a handshake (DC2 [19]-[22]).
The consideration expressed for the purchase of the land for SPD was $4.3 million. His wife and he had already invested previously $2 million into Portland for management consulting fees and this was taken into account in the purchase price (DC2 [24]).
CLT was a family company that was incorporated on 3 December 2013. The directors of that company are himself, his wife and his son Charly (DC2 [28]).
The revised development consent for the property was obtained on 3 March 2016 and involved 112 serviced apartments, 42 apartments, 3 ground floor retail units and 3 ½ basement levels for car parking and services (DC2 [43]).
He and his wife and David made a number of enquiries of various banks in relation to the funding of the construction of the development. At this point, that is early 2016, he was unable to arrange construction finance from the major banks due to the projected construction costs (DC2 [47]).
Tony's wife met Robert on 10 February 2016 at a social function at the offices of Colin Biggers & Paisley lawyers. He and his wife and Robert later had a meal at McDonalds Strathfield where they discussed the possibility of a project. Robert said he was an accountant (DC2 [48]-[51]).
Tony said there were initial discussions with Robert about selling the land. Robert indicated that because of his accounting background he could give advice to Tony and Lilian on the form of any joint venture agreement and that he could make it tax effective so that there would be less stamp duty. The parties could not reach agreement and negotiations ceased (DC2 [52]-[56]).
Negotiations then commenced with a company called Shinetec. A joint venture heads of agreement was prepared with Shinetec. Ultimately because of the choice of builder, Tony decided not to proceed with a joint venture with Shinetec and it was decided to recommence discussions with Robert which occurred on 27 August 2016 (DC2 [59]-[63]).
Lilian met Robert in Wollongong on that day to discuss a way forward (DC2 [63]).
NAB was concerned about providing construction finance and Tony and his wife felt pressured to arrange finance to meet the mortgage on the $4.3 million. His bank manager indicated that they could increase the interest rates on the mortgage if Tony did not wish to pay penalty interest rates on the loan (DC2 [65]).
Marketing and promotion of the development had commenced as early as 2014 in an attempt to sell properties off the plan (DC2 [66]).
Tony said he told Robert early in their renegotiations that he wanted to pay the mortgage of $4.7 million off. Robert, during a meeting at Tony and Lilian's offices, set out the basis of the transaction and made mention of numerous terms indicating towards the end that he would prepare a "record of intention" (DC2 [70]-[76]).
Tony explained a record of intention is a Chinese expression meaning something different to a contract (DC2 [77]).
Robert said at one point the transaction needed to be set up the best way for tax. The document he received from Robert on 5 September was forwarded to David and also to his solicitor Mr Pan who worked with Mr Vaughn (DC2 [79]-[81]).
Tony said he attended a meeting on 7 September at his lawyer's offices with others including Robert (DC2 [82]).
During the meeting, Tony said Robert said to him in Mandarin that Mr Vaughan was not needed, and that he was an accountant and he would draft something simple (DC2 [83]).
Tony said he had obtained advice from Mr Vaughan and also Ms Peggy Poon who alerted Tony to stamp duty and tax liabilities (DC2 [85]).
Notwithstanding the JVA bears the date 5 September, Tony said he signed it in fact on the 19 September (DC2 [87]). Tony said Robert described it as the latest draft of the agreement with Tony and Lilian (DC2 [88]). He also said he needed a document signed urgently, but it would only be temporary and something to show the PSR Burwood shareholders who would progress the transfer of funds for the project so works could commence and they could sort the details out later (DC2 [89]). Tony also asserted that Robert said that he would put the value in at $10.5 million which meant Tony would not have to pay capital gains tax (DC2 [90]). Tony said he did not sit down and read the document because he could not read the terms but he recognised the figures and they looked "approximately right". He did say David read it. His only concern was that the payments be made and if the full $13.5 million was paid he was prepared to provide Robert with a 50% shareholding in SPD but he still wanted the arrangement to be tax effective (DC2 [91]).
He did not get a detailed explanation from either Robert or David as to the content of the document. He did not understand the document to be enforceable. Tony said he did not sign the document as a true record of any agreement with Robert but rather for him to provide it to his shareholders (DC2 [92]-[93]).
As at the execution of the JVA, SPD had sold and exchanged on some of the apartments with $47 million worth of property sold by way of "off the plan" (DC2 [97]).
After the meeting with Mr Vaughan and others, Tony said Robert showed him a document at a meeting between the two of them and Ms Poon, his accountant. Ms Poon advised tax would be payable regardless of the structure. Robert said at the meeting that as he had stopped practising as an accountant he was not aware of new legislation which Ms Poon referred to (DC2 [99]).
Tony then gave evidence of the various payments made by Robert. Tony said no joint bank account was opened because Robert did not raise it and he had not made full payment of $13.5 million (DC2 [101]-[111]).
Prior to April 2017 Robert had not asked for the transfer of shares but had made various payments (DC2 [112]).
Tony agreed a notice of termination was sent on 28 April 2017 (DC2 [130]-[132]).
Tony agreed in October 2016 Oxford Constructions commenced demolition works at the property, despite a building contract not being negotiated. However there have been variations to the proposed works and there was no building contract formally in place. Without it, finance could not be obtained (DC2 [138]-[141]).
Tony also said that after he signed the JVA he learnt about the reference to a feasibility study in the document. He had never seen the document until Mr Leeming of CBA provided it to him in April 2017 (DC2 [146]-[147]).
In his affidavit of 15 August 2017, Tony provided numerous answers to specific matters raised by Robert. In particular he asserted that on 19 September 2016 at his offices, Robert amended the JV document using David's computer. However he said that neither he nor David were present in the room when Robert made the changes (DC3 [10]). He therefore did not know what changes were made (DC3 [11]).
Tony agreed in cross-examination he was a business man based in Sydney for more than 17 years and that he conducted a number of successful businesses. However he said the Burwood development was the first time he had ever been involved in a property development project (T134/20-35).
Over the time whilst doing business in Sydney he signed many contracts in the English language (T135/5-10).
He further agreed the contract for the purchase of the warehouse in Walsh Bay and the land at Burwood were all in English, as was the loan agreement with NAB. However Tony indicated that although in English, he signed the agreements with the assistance of a lawyer and an interpreter or translator (T135/10-30).
His practise when signing contracts in English was to have someone proficient in both English and Mandarin to explain the document before he signed it (T135/40-45).
When signing a contract he always has the assistance of a lawyer or solicitor (T136/10-20).
Tony agreed he signed the document at CB375 (the Shinetec document) (T137/5-10).
Tony repeatedly said he could not understand the document when he was asked whether he signed the Shinetec document without the assistance of a lawyer. Further when asked whether his wife often explained English documents he indicated that he thought his wife's English level was very limited (T137/15-45). Tony agreed however that his wife was one of those people who would explain documents written in English to him (T137/45-50).
Tony said his wife, when explaining in English written documents to him, would give him a summary but she would often make mistakes and she could not understand the entire content of the document (T139/1-9).
Tony said that his brother in law David was able to speak English a little better than his wife, but he could not understand professional terminology (T139/15-20).
Tony said his son did not explain documents to him very often (T140/5-10).
Tony said that David's English was relatively good, he could speak fluent English but when it came to professional terminology he could not explain the terms (T140/40-50).
Tony agreed his brother in law David was employed to work full time on the Burwood project from about September 2014 (T142/25-30).
Tony agreed NAB took a mortgage over the Burwood Property when they bought it to secure the debt and he and his wife gave personal guarantees in favour of the bank. He was not familiar with the precise details involving the bank as his wife dealt with the bank (T143/20-40).
It was put to Tony that he was willing to swear affidavits if they contained information he believed would assist in his case whether he believed them to be true or not, to which he answered "Yes" (T143/45-50).
Tony agreed the initial loan limit of $4.3 million was increased to $4.7 million (T144/25-35).
Tony would not accept that NAB had rejected an application for construction finance. He never lodged an official application. However he agreed that NAB representatives had indicated to him that NAB was concerned about continuing to extend the facility given the lack of progress with the development (145/30-50).
Tony said he did not know that in April 2016, NAB had agreed to a short term extension of the facility to 30 September 2016 on certain conditions (T146/10-15).
It was put to Tony that his evidence that he did not know about the extension of time was a lie. He said he was being forced to understand a document he did not understand (T146/40-45).
Tony did not recall his wife telling him in April 2016 that she had told the bank they were trying to sell the property (T147/45-50).
Tony said he did not hear at any point that the bank was unlikely to extend the $4.7 million facility (T148/15-30).
Tony agreed in August 2016 he understood that the bank had indicated that a higher interest rate would be charged from 1 October 2016 if the loan was not repaid by 30 September 2016 (T148/45-50).
Tony agreed the bank required a valuation of the Burwood Property. This was going to cost $30,000 and he thought it was too expensive and they were looking around for another partner to finance the project so they could terminate the mortgage with NAB (T149/5-15).
Tony said that negotiations broke down with Shinetec because he did not want to use their builder (T149/20-30).
When discussions commenced with Robert, Tony and his wife could not agree to give Robert 51% of the total shares (T150/35-50).
Tony agreed when Robert spoke to David or his wife, he used a combination of English or Chinese (T152/30-40).
Tony denied ever telling Robert on 27 August 2016 that he was still interested in having him as a joint venture partner or that the NAB mortgage needed to be repaid by the end of September (T153/30-45).
Tony denied ever referring to the $300,000 payment as being referable to interest. He asserted that he had his own money sufficient to pay the interest (T155/20-35).
Tony's attention was drawn to his affidavit sworn on 30 May 2017 in which he set out a conversation on 28 August 2016 in which he told Robert that he had an interest bill of $300,000 to pay off the mortgage. Tony said that $300,000 was intended to show Robert's goodwill and an expression of interest (T56/15-25).
Tony said it was impossible for him ever to have asked Robert to pay $300,000 as interest and he never told Robert that (T157/1-15).
Tony denied telling his solicitors in May 2017 that the Feasibility Document was annexed to the joint venture agreement when he signed it (T160/5-15).
Tony agreed that the figure of $36.5 million was an estimation provided by Robert as to construction costs (T162/20-30).
Tony agreed after discussions, Robert said he would prepare a draft agreement to reflect what the parties had discussed (T163/30-45).
Tony said what Robert told him was going to be signed was a record of or expression of interest or intention, otherwise every other time he signed an official contract there was a solicitor or lawyer present (T164/4-15).
Tony agreed that on 5 September 2016 the draft joint venture agreement was emailed to his brother in law David who translated the draft to him (T168/5-35).
Tony agreed that the 5 September draft reflected what had been discussed between the parties (T169/1-6).
Tony could not recall in September 2016 that he wanted a legal document recording arrangements between himself and Robert (T169/15-20).
Tony denied that Robert told him that he would not invest unless he had a signed agreement (T169/34-39).
Tony agreed he went to a meeting with the solicitors on 7September but he could not understand what was being discussed at the meeting (T169/45-50).
Tony believed at all times that what was being talked about as needing a signature was a record of intention or expression of interest. From his years of experience of doing business, a two page document could not be taken as a formal document (T170/40-50).
It was put to Tony that the evidence given in paragraph 22 of his 7 July affidavit of handshake deals was untrue (T172/5-15).
It was put to Tony there was nothing in the proposed draft document circulated on 5 September indicating that it was not intended to be legally binding. He said his understanding was that it was merely a record of expression of interest or intention (T173/1-4).
Again it was put to Tony his evidence about the order of the meeting on 7 September 2016 was changed from his evidence in his affidavit of 30 May (T174/25-35).
Tony agreed Mr Pan, the solicitor, was present at the meeting of 7 September and he can speak Mandarin (T174/30-45).
Tony agreed that the bank was very clear that if the money was not repaid by 30 September, they were going to increase the interest rates (T177/30-40).
Tony said that on 19 September 2016 he became aware that Robert had emailed a further version of the joint venture agreement. David explained the document briefly to him (T1678/35-45).
Tony rejected the proposition that he needed the document signed in order to enable him to repay the NAB loan (T179/15-25).
Tony could not recall whether it was explained to him that CLT had been removed as a party (T181/20-35).
Tony knew about the transfer of the 50% of the shares but with a precondition. In order to reach an agreement, Tony said they reduced the amount in the document from $20 million to $10.5 million to avoid tax implications (T181/40-50).
When he went through the document he focussed simply on the amounts of money mentioned (T182/5-15).
Tony could not remember that he had said in his 30 May affidavit that he executed the JVA on 5 September 2016 (T183/25-30).
It was put to Tony that in his 7 July affidavit he asserted he signed the JVA on 19 September and he got advice from lawyers and accountants. Tony said that after he did his own cross referencing, it went through the lawyers but not accountants (T184/30-35).
Tony also agreed that previously he had said that when he signed the agreement Robert said to him "this is only temporary" (T184/45-50).
It was put to Tony that in his most recent affidavit of 15 August, he changed the date he said he signed the agreement again. Tony agreed (T186/10-15). However, he denied that he was being untruthful (T186/25-30).
Tony agreed that the final draft of the document was drafted in his offices on 19 September and emailed by his brother in law David to Robert the next day (T187/25-35).
Tony said he was not on top of the exact detail of the amendment and all he knew about was the relevant figures (T187/40-50).
Tony agreed that his brother in law David showed him a document on the evening of 19 September which had resulted from various discussions (T188/30-35).
Tony would not agree that he received an explanation from David and he stated that he did not get a lot of detail from him by way of explanation (T188/45-50).
Tony was not sure that the contents of the document were explained to him. He only regarded it as a record of intention or expression of interest (T189/15-20).
Tony said he was not sure whether his wife provided a copy of the executed document to NAB (T189/40-45).
Tony agreed that Robert asked to be made a director of SPD but he never asked him to transfer shares (T191/1-5).

[33]

Evidence of Mr Vaughn

Mr Vaughan swore one affidavit on 15 August 2017 (DV) which was read by the Defendants, and a further affidavit of 16 May 2017 (Exhibit P3) tendered by the Plaintiffs.
In his affidavit of 16 May 2017, Mr Vaughn said Tony has limited speaking English but appears to understand a greater amount of English than he is able to speak (P3 [6]). He said Lilian speaks English better than her husband but not to the extent Mr Vaughn could obtain sufficiently fluent instructions from her and he was assisted by Mr Pan in getting instructions from them (P3 [8]).
Mr Vaughn gave evidence about the Feasibility Document dated 2 September 2016 (P3 [14]-[17]).
In his affidavit of 15 August 2017, Mr Vaughan referred to the meeting at his offices on 7 September 2016. Apart from Robert, Tony, Lilian and David, an employed solicitor Mr Pan was also present. Mr Pan speaks Mandarin.
In cross-examination, Mr Vaughan said he obtained instructions from each of Tony, Lilian and David as to their Hotmail inboxes and the contents thereof. Mr Vaughan agreed in his affidavit he denied certain words being used by Robert and that Mr Vaughan was referred to his email of 8 September 2016 (at CB399).
Mr Vaughan was asked to accept in paragraph 2 of the email that he obtained an understanding from Mr Pan that Robert insisted on shares being issued to him in SPD. Mr Vaughan would not accept however that on the basis of that Robert had said at the meeting that he was not willing to invest unless he was issued 50% of the shares in SPD (T201/10-30).
Mr Vaughan explained the reference in his email of 8 September was to a conversation he had with Mr Pan the day after the 7 September meeting, being 8 September (T201/35-50).
Mr Vaughan accepted people were speaking Mandarin at the meeting and he does not understand Mandarin. He also accepted that one of the people speaking at the meeting was Robert and he appeared to be speaking in Mandarin (T202/5-10).
Mr Vaughan did accept however that Robert said at the meeting that if he was to be involved he wished to be a director of SPD (T202/25-30).

[34]

Evidence of David

David (Lu Lin Zhou) is the brother in law of Tony. He affirmed two affidavits, one of 7 July (LLZ1) and the other of 15 August 2017 (LLZ2).
In his first affidavit he indicated that he completed high school in China and then a degree in architecture from Hunan University graduating in 1989 (LLZ1 [10]-[11]).
In the same year he came to Australia on a student visa to study English. He was given permanent residency and subsequently became an Australian citizen (LLZ1 [12]-[113]).
He worked in the clothing industry for over 10 years followed by work in retail and wholesale seafood before returning to work in the clothing business (LLZ1 [14]-[16]).
He said in August or September 2014 Lilian approached him and asked for assistance in relation to the development of the Burwood Property (LLZ1 [18]).
Although he has no legal or accounting experience, he would often translate or explain matters to his brother in law Tony in relation to the development. He had assisted in marketing and sales of off the plan units, and liaised with Council, consultants, and the people in relation to the development as part of his role with CLT (LLZ1 [21]).
When he inspected the land in 2014, there were three separate buildings. The rental income was used to make mortgage payments although there was a shortfall of approximately $7,000 to $8,000 per month. He was aware that his brother in law and sister had to advance monies to SPD to meet the mortgage repayments (LLZ1 [22]).
He first met Robert in the Burwood office in February 2016. Robert introduced himself as a developer and builder indicating that he had a development that he was doing in Wollongong (LLZ1 [27]-[28]).
There was a discussion about selling the land. Robert was shown drawings and plans for the development. The proposed sale to a Singaporean company had not proceeded. During the conversation Robert indicated he was interested in purchasing the whole of the development (LLZ1 [29]-[30]).
In late February 2016, David travelled with his sister and brother in law to Wollongong to meet with Robert and inspect the development there (LLZ1 [31]).
There was a further discussion at Tony's offices between Robert, Tony and others in order to see whether a partnership could be agreed upon. Later in February or early March, Robert in discussions gave an oral estimate of the cost of the building to be $36 - $36.5 million (LLZ1 [32]-[33]).
Negotiations were then pursued as to the possibility of a joint venture. Robert wanted to use his building company to do the construction work and was requiring 51% of the partnership (LLZ1 [35]).
During a conversation in February at which David, his brother in law and sister and Robert were present, Robert indicated he had been a successful builder, was an accountant before he became a builder and a developer and that he would be able to assist in structuring the development project and how to save tax (LLZ1 [36]).
In about August 2016, negotiations with Robert were recommenced. According to David, Robert still wanted 51% of the joint venture company. During a meeting at Wollongong with Robert, his brother in law and sister, Robert indicated he could get construction finance from CBA and he was prepared to accept 50% on the basis it was agreed the Burwood Property was worth $20 million so he would have to put in $10 million. He insisted the mortgage be paid off and they open a joint venture account with each party putting in $3.5 million to start demolition and excavation. Robert said he would prepare the documentation as he was an accountant there was no need to consult a lawyer. That was agreed to by Tony and Lilian and David (LLZ1 [38]-[40]).
Robert sent or gave versions of the draft agreement from time to time to Tony or Lilian who in turn provided them to David (LLZ1 [43]).
In August or September 2016, there were negotiations with NAB to renew the existing loans secured by mortgage over the land (LLZ1 [44]).
On 31 August, he attended a meeting with Tony and Lilian at the offices of HWL. Mr Vaughan indicated at that meeting there would be significant tax implications if there was to be purchase of equity in SPD. At that time a Mr Luke Middleton, accountant at Murchinsons Accountants, was advising SPD and Tony (LLZ1 [47]).
On 5 September 2016, he forwarded his email address to Robert and later that day he received a document attaching a draft JV agreement. He forwarded this to his sister and also to Mr Pan at HWL (LLZ1 [48]).
On 8 September, David said he sent a text message to Robert asking for his lawyer's email address (LLZ1 [51]).
Later on 8 September, David received an email from Mr Vaughn setting out his views on the difficulties in connection with the joint venture (LLZ1 [52]).
Robert came to the Burwood office on a number of occasions during August and early September. There were discussions about what tax may or may not be payable. There were further discussions with Robert about Tony's liability to pay tax (LLZ1 [53]).
Following discussions with Mr Vaughan and Mr Middleton, a meeting was held in September 2016 with Ms Poon. She recommended against the proposed structure which provided for a share sale because if the land was worth over $20 million there would be substantial capital gains tax to pay in relation to the share sale. She suggested that consideration be given to a debt structure but with the right to acquire or share in the equity (LLZ1 [55]).
David believed Robert was arranging, through his lawyers, agreements that would be more tax effective. On 16 September 2016, he sent a text message to Robert in Mandarin asking whether they would be discussing the contract the following day (LLZ1 [56]-[58]).
Early in the morning of 19 September (3.47am) Robert sent a draft joint venture agreement to Tony and David and his then solicitor, Mr Dennis Zhou. It stated the property had an agreed value of $10 million. At or about the same time Robert sent an image of the registration of PSR Burwood (LLZ1 [59]-[60]).
Later on 19 September, Robert came to the Burwood office with a further copy of the Deed of JV Agreement which was the one eventually executed and which David witnessed. David had no idea why the document was dated 5 September. At the meeting Robert provided a hard copy of the document to all concerned. Robert said he needed to get something signed to get the money released. He had worked out a structure which he thought would work. David recalled Robert saying if the structure did not work "we" can work out a more effective structure later. Tony said that he would need to get some advice (LLZ1 [61]-[62]).
All conversations in relation to the various documents written in English were in Mandarin. Following the statement by Robert that there would be another document and a further opportunity to work out the exact structure, David said he did not consider it necessary to translate each word or discuss in detail the contents of the document. He did not believe Tony was being asked to sign a legally enforceable document. Rather he thought it was a description of how the JVA might be structured and when payments were going to be made (LLZ1 [64]-[65]).
When the document was signed, David said that no feasibility study was attached although he did not consider this to be a problem (LLZ1 [67]).
On 28 September, David received a text message with the name and telephone number of a Mr Christopher Miller, accountant. He had a telephone call with Mr Miller who said he was happy to provide tax advice going forward. In his presence he overheard Robert have a discussion with Mr Miller in which it appeared Robert was disagreeing with things Mr Miller had said (LLZ1 [69]).
By 28 November 2016, only $8.5 million had been received from Robert. This was less than the agreed $13.5 million (LLZ1 [73]).
Between October and December 2016, David, along with Tony and Lilian, had a number of meetings with CBA (LLZ1 [74]).
In October 2016, there was a meeting at the Burwood office including David, Tony and Lilian and Robert. There was discussion about the balance of the funds which needed to be paid and Tony said he could not set up an account because the balance of the funds had not been received and a formal agreement prepared by the lawyers was needed and it had to be signed (LLZ1 [78]).
In November 2016, Robert appointed a project manager, Mr Moran, to start reviewing the DA documentation and later in November Oxford Constructions obtained three estimates from demolition contractors. Demolition work commenced in or about November 2016 (LLZ1 [79]).
David said at no time prior to April 2017 did Robert ask for shares to be transferred to him (LLZ1 [83]).
David was aware however that Oxford Constructions had entered into agreement without consultation with Tony and Lilian or himself with demolition contractors, services engineers, and structural engineers (LLZ1 [86]).
David said by mid-January Robert had still not paid the balance of the funds however he did say that he would pay soon (LLZ1 [94]).
In February, David, along with Tony and Lilian attended a meeting at the office of HWL with Mr Vaughan and a Mr Riddington. They were asked to give advice on the form of joint venture that would minimise the tax implications for all parties. Later in February Robert asked a lawyer in Leichardt to prepare a joint venture agreement (LLZ1 [98]-[103]).
In March or April 2017, Robert indicated he wanted to get the project started because he had an investor who had pulled out (LLZ1 [108]).
Discussions then took place in March for the purposes of attempting to agree on a proposed joint venture agreement (LLZ1 [109]-[112]).
In his second affidavit of 15 August David responded to allegations by Robert. He said that after reading Robert's second affidavit he could recall that on 19 September Robert attended the Burwood office of SPD to discuss making changes to the proposed document (LLZ2 [7]).
After a series of discussions and further drafting in the afternoon he recalled having dinner with Robert and Tony and Lilian at a nearby restaurant. After dinner they returned to SPD's offices at approximately 8 or 9pm for further discussions. Robert used David's computer in his office to make amendments that Robert alleged were made by David (LLZ2 [8]-[10]).
He did not recall being present in the same room when Robert was making the amendments. Neither Tony or Lilian or David have the computer skills or English ability to have made the amendments alleged by Robert to have been made (LLZ2 [22]).
In cross-examination, David agreed when he made his first affidavit he understood the critical issue in this case was the circumstances in which the JVA was negotiated and signed in September 2016 (T228/18-21).
David agreed he had regular and lengthy (some for more than 2 hours) meetings with Tony and Lilian and Robert between about 27 August and 3 September 2016, but disagreed they were daily (T228/35-50). He agreed it was very difficult for him to recall what was said during the lengthy meetings (T229/1-4).
David agreed in his first affidavit he said Robert came to the Burwood office on 19 September 2016 with a copy of the JVA which was eventually executed (T229/13-16). David agreed he received by email from Robert a draft JVA at 3.47am, but said he only read it at noon that day. He also agreed he read the attached draft JVA, noted the value of the property was $10 million and that it did not accord with what he had understood the parties had agreed, and he could make that observation because he was familiar with the arrangements of the parties up to that point (T229/18-47).
David said he considered it necessary to translate each word or discuss in detail the contents of the hard copy of the JVA Robert brought with him to the Burwood office and he did that (T229/50-T230/23).
David recalled there were a series of discussions and some drafting of the JV documents, but could not recall whether it was on 18 or 19 September. He recalled going to dinner and returning to the office at approximately 8 or 9pm, and allowing Robert to use his computer to make amendments (T230/245-40).
David agreed he saw there were sometimes some small errors in the drafts Robert produced, but disagreed this was why he checked Robert's amendments (T230/46-50).
David was taken to the email at CB387 and agreed it was typed by him but said it was impossible he typed the document at CB391 (T231/19-30). David said he could not remember if he sent the email to Robert attaching a draft JV agreement, "but if the email says so, then that should be so" (T231/32-37).
David agreed he sent the email at CB385 saying "Please review" and said he could not remember if he was asking Robert to review the document at CB386 but said it would be impossible for him to prepare such a document (T231/50-T232/1). It was put to David he sent the document at CB385 along with a draft deed of JVA to Mr Pan on 5 September 2016, but he said he could not remember (T232/3-6).
David agreed the meetings he was referring to in CB387 should be the meetings which happened between 3 and 4 September (T232/10-25).
David did not agree he knew at the time of asking the agreement to be turned into a legal document that Robert had required it because he had said at the weekend meeting on 3 September he would not invest in the joint venture until there was a signed legal document (T232/27-41).
David agreed he carefully read the document at CB386 before he sent it to Mr Pan and he understood it when he read it (T232/45-50).
David did not agree that Robert never said to him at the meeting on 3 on 4 September that they did not need to engage lawyers because he was an accountant (T233/1-15).
In relation to CB395, David said it was drafted by his accountant and he did not completely understand it. He agreed he wrote the email, but he did not understand the two solutions referred to. He said his accountant Luke Mitchell explained it to him but he could not understand it very well and so he decided to send it to Robert because he was an accountant who could understand it better (T233/16-50).
David agreed he also sent CB395 to his sister for her to keep a copy, but he did not think she could understand the solutions. He said he had a habit of sending a copy of his emails to his sister, even when he believed she could not read them (T234/5-37).
David agreed during meetings with Robert in early September he discussed the document at CB381 which had been provided to him by Robert though he could not remember the exact date (T235/15-25).
David agreed he often translated documents received by Tony and Lilian from English into Mandarin, he did that for Tony and considered it one of his responsibilities to explain those documents to Tony (T236/41-T237/5).
David agreed the transaction in relation to the joint venture was significant for him and Lilian and Tony, but not because they needed to find a significant sum of money by 30 September to meet NAB's obligations (T237/6-15).
David said he did translate and discuss the draft joint venture agreement he received from Robert on 19 September, but not every word (T237/17-20).
He said he observed Robert using his computer to make changes to the JVA on 19 September, and agreed his evidence was he did not supervise the making of those changes but he was sitting next to him while he did so (T237/22-33).
David agreed in his affidavit of 15 August that he said he did not recall being in the same room as Robert when he was making amendments, but also agreed in his cross-examination evidence he said he was in the same room as Robert and that was correct (T237/40-50). He denied he gave evidence he thought would be beneficial to his case (T238/1-5).
David agreed but then disagreed he had a version of the JVA on his computer by the end of 19 September. He agreed on the morning of 20 September he emailed Robert the version he had on his computer and it was the version Robert had been amending in his presence (T238/6-24).
David said he did not explain the final version that was signed on 20 September to Tony at the time it was signed. He said he did not explain the contents of the agreement either on the evening of 19 September or prior to signing on 20 September (T238/30-23). It was put to David this was incorrect and he did explain it, but David maintained he did not explain because he did not know they were going to sign it that day. He did accept it was going to be signed sooner or later (T239/4-23).
David agreed he explained to Tony the change from $10 - $10.5 million and he discussed figures with him in relation to the figures in the final JVA, but said he only explained the total investment return and not in detail (T239/26-46).
David said on the day the JVA was signed they had a 50/50 chance of signing it (T239/47-50), and he did not know Robert was coming to the office to sign it (T240/1-5). David agreed he was present when Robert and Tony signed the JVA (T240/17-20).
David was taken to CB386 and said he was not capable of preparing such a document but when he received it he read it and could understand it (T240/29-45).
In re-examination, David said when he was sitting next to Robert on 19 September they discussed how they would invest in the company and how the investment returns would be taken out of the company on the condition the total investment return would stay the same (T241/4-10).
David also explained when he used the expression 50/50 chance in the context of signing the JVA, it was because he had discussed a few days earlier that he would sign the JVA on behalf of Tony if the investment amount was the same, but he would not do so if there was a change (T241/11-T242/40).
David also said he explained to Tony some key points about the JVA of 20 September and some brief terms about how everybody was going to share the profit at the end (T241/33-45).

[35]

Evidence of Lilian

Lilian (Cheng Lam) is the wife of Tony. She swore one affidavit of 15 August 2017 (CL).
She was born in Macau, completed high school in China and immigrated to Australia in 1988 (CL [6]-[8]).
She received emails from Robert in English at her email address which is an email address she shares with her husband, Tony. During discussions with Robert, Lilian denied saying she was ever looking for a joint venture partner. Rather, she said that she was looking for a builder (CL [10]).
She agreed there were a number of meetings with Robert. She did not specifically recall the meetings but she did recall on a number of occasions there was an agreement as to $20 million valuation for the land. She also recalled Robert requesting the 40% shareholding in SPD (CL [14]).
At no time in her presence did either her husband or her brother tell Robert they needed him to invest so that they could repay the NAB. He simply said he wanted to invest in the project (CL [15]).
On the afternoon of 19 September Robert attended the SPD offices in Burwood. She recalled Robert, her husband and her brother were engaged in discussions regarding the JVA. Either at that time, later that day, or in the evening, Robert sat in her brother's office and made changes using her brother's computer. They then went and had dinner (CL [21]).
She asserted Robert sat at her brother's computer and made changes to what she assumed was the JVA. She did not take any active part in those discussions or the changes that were made (CL [22]).
She asserted she is not capable of typing any email or document in English. All emails from her email address were dictated by her in Mandarin and typed by her assistant. She would not have been able to make amendments to any version of the JVA (CL [23]).
Her son Charly Chen was not present and did not make any changes to the JVA at her request or to her knowledge at all (CL [24]).
Lilian agreed in late August and September 2016 she needed Robert to invest money in the company so she could repay a loan to NAB which expired on 30 September (T210/10-20).
She also agreed that there was no finance or other funds available to repay NAB (T210/20-25).
Lilian agreed she and her husband met with Robert together with her brother in the middle of September (T210/45-50).
She denied at the meeting she said they needed to get the agreement finalised so that they could repay NAB before the end of the month (T211/5-10).
She could not remember Robert indicating he wanted at least a 50% shareholding and directorship nor him saying that he would not invest unless the fundamental terms were agreed in writing (T210/10-40).
She knew persons were engaged in discussions about a joint venture agreement but she was not the person who made the decision (T212/5-15).
She was present when her husband and Robert signed the JVA at the Burwood office (T212/25-30). She denied that she provided a copy of the JVA to Robert. She also denied ever saying that after the JVA was signed they needed the first payment made straight away (T212/35-50).
She also denied having said that they would have a look at the JVA to see if they could improve it from a tax point of view (T213/1-5).
Lilian said that the email to NAB was not sent by her but her assistant and she was not sure what document the assistant sent (T213/40-45).
Lilian agreed that she dictated in Mandarin the contents of the email sent by her assistant on 23 September 2016 (T214/10-25).
Lilian said that NAB did not request an agreement and she knew that what was signed was not the official agreement (T214/25-30).
She supplied the agreement they had which was the only one that existed at the time. It was not a fully executed agreement because it had not been drafted by a solicitor (T214/30-45).
Lilian denied having any conversations with Ms Domingo from NAB. All communications were via email (T215/1-15).
Lilian indicated she had a limited ability to speak English, no ability to read English and she required English words in written documents to be translated in Mandarin (T15/15-30).
She agreed she worked in a convenience store with her husband in which she served customers, dealt with suppliers, and spoke English to the suppliers (T215/30-45).
Lilian agreed that in 1999 she and her husband bought a warehouse in Walsh Bay. They engaged an English speaking lawyer. She was assisted by a friend called Walter in dealing with the lawyer (T216/15-25).
Lilian has been in Australia for 29 years, that is, since 1988 (T126/45-50).
Part of the warehouse development involved her running a restaurant, and talking with suppliers (T217/1-15).
Lilian denied reading an email to her from her brother David on 6 September 2016 at 12.14pm. She denied any ability of being able to read it (T218/15-30).
Lilian said her brother sent her emails every day but she did not sit down and read them. She never complained that he sent her emails in English. She normally simply did not read the emails. Her assistant would read the emails and if there was anything important needed the assistant would let her know (T218/35-50).
She also did not tell Mr Vaughan not to send emails to her in English as she normally did not read them - if there was anything "David will tell me" (T219/10-20).
When her brother David was present she would rely upon him (T219/29-34).
It was suggested to Lilian that she could speak English conversationally as well as in a professional context which she denied (T219/45-50).
She also denied she could read English (T220/1-5).
It was suggested to her that it was untrue of her to suggest she did not speak to Ms Domingo at NAB (T220/15-20).
Lilian agreed she did understand the questions put to her by the cross-examiner in English, however said she only understood "a little bit" (T220/40-45).
It was suggested to Lilian that she in fact wrote the email of 5 April 2016 whilst she was overseas. She denied that (T221/25-45).
She agreed she saw her brother almost every day and she did talk to him about documents in English (T22/35-50).

[44]

David

In the case of David, in my view he deliberately downplayed his ability to both understand and draft legal documents and lengthy emails. For example, David vehemently denied he drafted the document at CB386 (being the Joint Venture Payment Agreement), attached to the email of 5 September 2016 (CB385). David accepted that if the email said it was sent by him, then it was (T231/37), but could not explain who drafted the document. David was also content to pass it on to Mr Pan (CB387), despite allegedly not knowing who authored the attachment. I accept Robert's denials he drafted the document (RH2 [35]) and in my view, the only logical inference is that David drafted the document at CB386.
His attempts to distance himself from the document are understandable in that it undermines his assertion about his lack of understanding of English. This is not a mere email about some social event. It is a serious document prepared for a professional purpose and importantly which contemplates the signing of contracts. It speaks volumes in my view about what clearly must have been discussed between David, Lilian and Tony, and, by the very nature of the document, suggests Tony was intending to sign.
A further example of David trying, unsuccessfully in my view, to disassociate himself from documents in English to downplay his understanding of the JVA is his position he did not understand what he wrote in the email at CB392 which we admitted he sent (T233/24-27), and also sent on to his sister Lilian even though he allegedly did not expect her to understand it either (T234/28-30). In my view, this evidence is bordering on absurd. I am satisfied he understood the words of the email he sent from his account, and sent various documents such as CB392 and CB395 to Lilian not so she had a record or a copy, but because he believed and knew that she could read and understand the draft Joint Venture Agreement and other emails to like effect. It makes no sense for him to be sending documents to her in English if he genuinely could not understand them himself and believed his sister could not either.

[45]

Lilian

Similarly, in my view Lilian fully appreciated it would assist her case and more to the point Tony if it could be thought that they all had limited, if any, ability to speak, write or understand English. I am satisfied however, based on the evidence before me, that Lilian can and does speak and write in English from time to time.
Lilian accepted she spoke in English to her English speaking lawyer in an earlier transaction (T216/19-25), to suppliers and customers in the Kings Cross convenience store (T215/35-45), to suppliers in the Walsh Bay restaurant (T217/7-8), and her project manager Nelson Silva (T217/34-36).
Lilian also received a number of documents in English including the joint Venture agreement (CB414), an email from David on the structure of the deal (CB395), and the aforementioned highly comprehensive email from Mr Vaughn on the various complexities of the deal (CB399). Her evidence was of course she was unable to read emails from her brother and she simply ignored them (T218/29). She suggested for example her assistant would read emails and if there was anything of importance she would let Lilian know (T218/47-50). I simply do not accept that evidence as truthful. I am satisfied in addition to understanding spoken and written English, she was able to write emails in English and did so from time to time. The mere fact she had an assistant does not detract from that at all. Indeed her assistant Ms Pei Wan Jian for example does not refer to receiving a telephone call from Lilian when she was overseas for the purposes of dictating Exhibit P5.
Lilian's attempt to downplay her English abilities was evident in her denial she ever spoke with Ms Domingo of NAB (T215/5-15). In my view, Ms Domingo's email of 16 September 2016 to Lilian making express reference to "our telephone conversation this morning in relation to property valuation" (CB442) suggests otherwise. There is no evidence Ms Domingo spoke Mandarin. Further, if Ms Domingo had spoken with Lilian's assistant I am certain the email would have said so. In my view it is also implausible to suggest the bank would speak to a person's assistant about property valuation, rather than the person involved in the commercial activity.
Lilian's response attaching the JVA of 20 September 2016 further showed she perfectly understood the bank wanted positive proof there was a binding arrangement in place so that the loan would be discharged. Ms Jian did not give any evidence on talking with Ms Domingo, or sending the JVA unbeknownst to Lilian. In addition, Lilian's concluding sentence in her emails to Ms Domingo on 23 and 27 September ("please do not hesitate to contact me") suggests she was comfortable and competent to converse with Ms Domingo. This is supported by Tony's remarks "it was my wife who was dealing with the bank in terms of getting the loans mainly" (T143/36-38).
Lilian's attempt to distance herself from her exchange with NAB speaks more broadly, in my view, to how far she was prepared to go to procure a favourable result in this case.

[46]

(b) Tony's understanding of the JVA

In my view, I do not accept Tony did not comprehend the various documents relating to the JVA, including the final JVA itself, because they were in English. It is clear over the years Tony has signed agreements in English. It is also plain from his evidence that when signing contracts in English he has had people proficient in both English and Mandarin explain the document to him before signing (T135/40-44).
Tony was, it seems to me, capable of understanding a contractual document written in English if necessary explained to him in Mandarin. In relation to the documents relating to the JVA, not only in my view did David (T139/9-11) and Lilian (T137/46-49) explain relevant documents to him, but he had a Mandarin speaking lawyer at HWL if he chose to take that course as well.
I do not accept his portrayal of David and Lilian as incapable of comprehending written English well enough to give him an adequate explanation. According to Tony in cross-examination, Lilian could only tell him "the brief content" of the English written documents (T138/40-46), while David could not "understand professional terminologies" (T139/9-11). In light of my findings above (see [452]-[464]), I am simply unable to accept Tony's characterisations of Lilian and David's comprehension of English.
Further, I am quite certain, as an experienced and highly successful businessman, Tony would require an understanding of the detail of important transactional documents, not just the brief content of such documents. In my view, this would particularly be the case in relation to an agreement he was being asked to sign, such as the JVA he executed on 20 September 2016. Consistent with his commercial background, Tony knew signing a contract was an important step in that it may result in binding legal relations (T136/27-30), and I am certain he had every clause of the JVA he executed explained to him by David. I do not accept Tony's evidence to the contrary (DC2 [92]-[93]). The terms of the JVA are neither complex nor prolix. In my view it would have been extraordinarily careless of Tony not to request an explanation of the document before he signed it. Although that is open as a theoretical possibility, Tony did not impress me as a savvy entrepreneur who lurched from deal to deal achieving success by default.
While David denied ever explaining to Tony the terms of the JVA executed on 20 September 2016 (T238/25-27), in my view I cannot accept this evidence. David, I am satisfied, was familiar with the various iterations of the JVA, having sat alongside Robert on 19 September 2016 while Robert made amendments to the JVA, by the end of the evening had the JVA on his computer, and on the morning of 20 September emailed Robert the JVA (T237/22-T238/24).
In my view, David's apparent excuse in cross-examination for not explaining the JVA of 20 September to Tony is a falsehood. David's response to being asked whether he explained the final version of the JVA to Tony was that he did not know it was going to be signed on that day (T2397-11), and later stated there was a 50/50 chance it would be signed (T239/47-50). While this uncertainty may to some extent explain why David did not initially describe the contents of the JVA of 20 September to Tony, it does not explain why, upon realising it was in fact going to be signed, he did not then describe the contents to Tony. As a witness, David was present when the JVA was executed (T24-18-20), and in my view, having implicitly acknowledged he would explain the JVA to Tony when he knew he was going to sign it, it does not make sense for David to not do just that.
Further, David accepted he considered it necessary to translate each word and discuss the detail of the contents of the draft JVA with Tony (T230/13-19) (though partially resiled from this at T237/17-20), and he was the person who gave Lilian and Tony advice (T242/25). He also accepted it was part of his role to tell them what he thought of the deal (T242/34-36), and the joint venture transaction was significant for him, Lilian and Tony (T237/8-9). He explained in relation to the JVA executed on 20 September not only the change from $10 million to $10.5 million but also key points about the investment amount and how everyone was going to share in the profit at the end (T239/27-29, T241/38 and T242/43-44).
In my view, it is more likely than not David did in fact talk Tony through the terms of the JVA before he executed the document. This is consistent with what he considered was his responsibility to translate documents for Tony (T236/40-50), and with my findings on what Tony would have required before executing an agreement such as the JVA on 20 September 2016.
On these grounds, in my view Tony's continued efforts in cross-examination to appear ignorant of the English written documents circulating between the parties from September 2016 (T173/14-21; T173/30-35; T174/30-35), is a falsehood. I am satisfied he was not only kept informed of the negotiations and drafts of the JVA throughout September 2016, but understood the meaning, contents and terms of various versions of the JVA, including the JVA he executed on 20 September 2016.

[47]

As I have said already, on balance I found Robert's evidence both plausible and corroborated by a number of contemporaneous documents.
In particular, I am satisfied the conversation recalled by Robert that took place at a meeting on the weekend of 17 or 18 September 2016 with Tony, Lilian and David (RH2 [44]) did take place. In recalling this conversation, Robert asserted Lilian indicated the agreement needed to be finalised so that NAB could be repaid before the end of the month. Robert made the point that he was not willing to invest unless he got a 50% shareholding and directorship of SPD as well as the ability to make decisions on the construction. Indeed it was during this meeting that Robert was requested to simply pay the money over and sort out the agreement later - a proposition he rejected.
David and Tony did not challenge the conversations in their affidavits, despite responding to other aspects of Robert's second affidavit. Further in cross-examination, Tony, rather than denying, simply could not recall whether Robert said he was only willing to invest in the project if they entered into a written agreement (T210/30-40).
Lilian denied the conversation (CL [19]), but accepted in cross-examination she and Tony emphasised to Robert the need for him to make a large payment before 30 September so they could discharge the NAB loan (T210/26-29) - a statement entirely consistent with Robert's recollection of his discussions with Tony and Lilian on that weekend.
Tony's recollections in his affidavit evidence of him or Lilian telling Tony the need for Robert to pay the money to discharge the interest and mortgage (DC2 [74]; DC2 [72]) also sits consistently with Robert's account of Lilian again asserting this need in the meeting on 17-18 September 2016. In my view, Tony's vigorous denial of ever having told Robert in discussions that he needed to repay the NAB mortgage (T153/35-50) was a low point in his evidence. He gave a somewhat incoherent answer when he was confronted with his affidavit evidence which said precisely that (T154/37-39). I am satisfied he and Lilian did tell Robert about his perceived need to repay the money during their negotiations, including on 17-18 September 2016, and I reject as untruthful any suggestion to the contrary.
It is true there are no contemporaneous records to support Robert's account of this conversation. However, without any credible challenges to Robert's account, together with Lilian and Tony both giving evidence which is consistent with Robert's account, I am satisfied such a conversation did take place, with the Defendants making clear they wanted payment from Robert before 30 September 2016, and Robert making clear he would not provide this payment unless there was a signed written agreement.

[49]

Intention to be bound by the JVA

In order to come to a view about whether the parties intended to be bound by the terms of the JVA, it is plain an objective assessment of the situation is required. Beginning with the document itself, in my view the fact both Robert and Tony signed the JVA document in the presence of David as a witness conveys a representation each was binding their respective corporate entities to the terms of the JVA.
I am satisfied this representation is consistent with the evidence disclosing the reasons why the parties wanted to execute a legally binding agreement, even if they contemplated later amending the agreement to proceed in a more efficient way forward.
In respect of the Defendants, I am satisfied they were time pressured to reach an agreement with Robert so they could discharge their $4.7 million loan with NAB by 30 September 2016 (which they did following Robert's payment of $4.7 million to SPD on 29 September 2016), as acknowledged by Lilian (T210/26-29) and Tony (DC1 [74]; DC2 [72]) (but denied in cross-examination, see T153/35-50), and recalled by Robert in an account I accept (RH2 [44]).
Further, execution of the JVA meant the Defendants were not just obtaining monies to pay out NAB; they were obtaining effectively a partner in the joint venture that could undertake the construction work. The Defendants' desire to enter into binding contractual relations with the Plaintiffs is further evidenced in David's email to Mr Pan on 5 September 2016 which attached the draft JVA and requested he "turn this agreement to legal document soon" (CB387).
The Plaintiffs on the other hand clearly wanted to engage in the development for profit, but more to the point Robert appreciated that PSR Burwood could not responsively part with any funds without a legal binding arrangement. Commercial common sense, as well as Robert's conversation with Tony and Lilian on 17-18 September which I have accepted took place, makes this clear.
It is true after the JVA was signed the parties intended and did in fact work towards the production of a different agreement. Indeed there was no doubt discussion that in due course the parties may enter a new more tax effective agreement. In my view however, that does not detract from the JVA being binding according to its terms. It seems to me on balance that objectively both sides required a binding agreement. Nothing less was going to be acceptable to NAB and/or the Plaintiffs' investors, and both parties were aware of that.
In my view, the fact the parties signed the JVA several days after these discussions is a strong objective indication the parties understood, intended and indeed were eager for the JVA to be agreed upon and bind them to contractual relations.
The parties' conduct following the execution of the JVA is also consistent with both parties having entered legally binding relations. There was no complaint by the Defendants that the signed JVA did not in fact accord with their understanding of the terms they agreed to (at least until the Plaintiffs commenced these proceedings). Instead, the parties conducted themselves entirely consistent with the terms of the executed JVA. As agreed to in the JVA, Robert caused PSR Burwood to make the first payment of $300,000 on the afternoon of 20 September 2016 (CB429), the very afternoon the JVA was signed. On 23 September, replying to NAB's request to provide them with a "copy of full executed agreement," Lilian emailed NAB an attachment of the "JV agreement," with no suggestion it was not in fact the final executed agreement (CB441-442).
On 29 September 2016, following an email from NAB forwarded by Lilian to Robert regarding the 'NAB Loan payout' (CCB440), Robert caused PSR Burwood to pay a further $4.7 million to SPD, again consistent with the terms of the JVA (CB446-447). Further payments were made by Robert on 6 October, 27 October and 28 November 2016 pursuant to the JVA. In addition, Oxford Constructions commenced demolition work on the site on 19 October 2016 and Robert was appointed as an SPD director on 2 December 2016.
Further, the letter from the Defendants' solicitors to the Plaintiffs on 21 April 2017 stated that despite breaches of essential terms which the Defendants regarded as repudiatory, SPD "remains ready, willing and able to perform its obligations under the agreement (a copy of which is attached to this letter)" (CB560-561). The attachment was the signed JVA of 20 September 2016, and the letter went on to call for the Plaintiffs to perform that agreement.
In my view, this conduct and contemporaneous material is further evidence the parties objectively intended to enter into legally binding relations by executing the JVA on 20 September 2016.
On these grounds, I am satisfied that while the parties contemplated working towards the production of a different agreement, the evidence as a whole objectively shows the JVA executed by the parties on 20 September 2016 was intended to legally bind them to contractual relations.

[53]

The alleged breaches

With both sides asserting the other has breached the JVA, it is necessary to first turn to the relevant terms of the JVA.
Clause 2 of the JVA contemplated the payment of $5.25 million by PSR Burwood to SPD for the purchase of 5.2 million shares in SPD. The money was then to be utilised by SPD to pay off all existing mortgages on or before September 2016.
Clause 3 of the JVA required PSR Burwood to lend $8.25 million to SPD which was to be paid back at the end of the development. By clause 7 of the JVA, the final instalment of the $8.25 million described in clause 3 (that is the 5 million) was to be paid into a jointly managed SPD bank account by 30 November 2016.
In my view the correct construction of the JVA would require the transfer of the shares before the obligation arose to make the payment. The reason for that would simply be that otherwise PSR Burwood would agree to make a payment of $5 million in a company in which it held no shares, had no directorship and had no charge or other form of security. It is clear from the agreement it was intended PSR Burwood and Tony would, by the completion of the purchase under clause 2, have equal shares in SPD which I consider also informs the timing of the payment of the $5 million.
It is common ground that by 30 November 2016 the Defendants had not transferred the 50% shareholding in SPD to PSR Burwood or established a jointly managed bank account. No occasion has therefore arisen for PSR Burwood to pay the $5 million, indeed it has been prevented from doing so by these breaches by the Defendants. Although there is no express term in the agreement, PSR Burwood's obligations would be to make the final payment of $5 million within a reasonable time after the Defendants have transferred the 50% shareholding in SPD to PSR Burwood and established the jointly managed bank account. On that analysis it seems to me PSR Burwood has not breached the JVA by failing to pay the final $5 million.
Insofar as it alleged the Plaintiffs have failed to cause Oxford Constructions to enter into a building contract with SPD for a maximum price of $36.5 million, I am of the view there is no such term in the JVA. Discussions have taken place about increased construction costs resulting from delay, but in my mind none of that amounts to any breach of the JVA by Oxford Constructions.
However, it seems to me a different situation arises in relation to the Defendants. In my view, they have breached the JVA in two obvious and fundamental respects; they have failed to issue the additional shares in SPD and transfer 50% of them to PSR Burwood despite receiving the monies for them, and have failed to establish a joint bank account. The payment by PSR Burwood of the $5 million into the jointly managed bank account of course was dependent on the establishment of such an account. Further breaches include a failure to pay the $2 million of the third capital contribution into a jointly managed SPD account and the removal of Robert as a director prior to the termination of the JVA.

[55]

Relief

In my view, I am not satisfied specific performance is an appropriate order in this case.
The mere fact Tony, Robert and others have been engaged for some little time now in confrontation manifesting itself as it has in this case is not in and of itself a reason why specific performance should be refused. It is rightly pointed out that questions of degree rather than absolute restrictions upon the scope of curial relief are involved. However, here the parties are seriously at loggerheads on a number of issues. With allegations of misleading and unconscionable conduct, it is apparent they do not trust each other and yet the kind of arrangement going forward if specific performance were ordered may well enforce fiduciary obligations of one sort or another.
Both sides have instructed their respective representatives to accuse the other side of mendacity. Again, in and of itself that may not be a bar to specific performance, but the atmosphere both prior to and during the conduct of the litigation is such that forcing people to work together who dislike, let alone distrust, each other is a recipe for commercial disaster. Independently of the position taken now by PSR Burwood under its new management, there are significant risks in my view in requiring the parties to cooperate reasonably and sensibly with each other in the current environment.
In a development of this size and complexity there will be numerous construction and design issues going forward that are bound to arise. Neither side in this litigation, it seems to me, respects each other. Robert regards himself as an expert both it seems to me in financial issues, and in construction issues. The Defendants on the other hand would no doubt defer to his expertise on the construction side but regard him as having betrayed them (wrongly as I have found) in terms of assisting them to achieve a more advantageous arrangement for tax purposes.
On the balance of what I have said above and as a matter of discretion leaving aside whether Robert or PSR Burwood is now ready willing and able to complete this transaction (and I will assume he or they are), it seems to me given the atmosphere of this case it would be untenable in the extreme to require these people to work together.
In addition to my views just expressed, the intrusion of new directors and shareholders of PSR Burwood into what is clearly a very troubled context will only add, in my view, to the uncertainty of sensible commercial decision making going forward. Mr de Robillard for the new entrants in the litigation seeks apparently to agitate some Cross-Claim against Robert. As set out, the separate representation has not simply been brought about by some technical conflict - it has been brought about by a desire on behalf of his clients to litigate against Robert, no doubt covering the circumstances in which they parted with monies PSR Burwood used in part, or in whole, to contribute to the JVA. In my view this raises real questions as to how the JVA may be enforced where the parties who seem to seek to enforce it themselves are not in agreement.
Further, the JVA was forged in circumstances where Robert was the sole director and shareholder of PSR Burwood, meaning it made sense for him to be made (as he was) a director of SPD and, as the Defendants note receive a distribution of the profit pursuant to clause 10 of the JVA (T208/6-14; Transcript dated 3 November 2016, T22/30-35). With the internal management of PSR Burwood now altered and Robert finding himself a minority shareholder of PSR Burwood, the structure of the agreement is also altered. In my view this added complication is a further reason why specific performance is not an appropriate form of relief.
For the above reasons although I am of the view the Defendants are in breach of this Agreement and that it is at least theoretically open to the Plaintiffs to require specific performance, in the exercise of my discretion in this case I do not regard it as an appropriate form of relief.
There is little doubt Oxford Constructions, on one view of the factual material, has engaged in certain construction and other works associated with the development of the Burwood Property. Oxford Construction alleges it has incurred substantial costs for which it is entitled to be compensated. It may have as well, at least theoretically, a lost opportunity case. However, in my view this is an issue to be determined subsequently, and is not, contrary to the Plaintiffs' submissions (see First and Third Plaintiffs' closing submissions [157]-[158]; Transcript dated 3 November 2016, T9/45-T10/5), relevant in my determination of the appropriateness of specific performance.
I would therefore decline to make orders in paragraph 10 of the summons. However, based on my findings, I would otherwise make orders for the appropriate declaratory relief. In my view the declarations do not lack practical utility and the conduct of the First and Third Plaintiffs has not disqualified themselves from that relief.
That has the following consequence. There is no doubt the $8.5 million paid by PSR Burwood together with interest should be repaid by the Defendants to PSR Burwood. This is purely on the basis the monies were paid for a consideration that has failed. The Plaintiffs therefore are entitled to recover those monies as monies had and received. Alternatively there would be an entitlement to the repayment of those monies because they were paid impliedly upon the condition that they be recovered by a defaulting purchaser when the vendor elected to terminate the contract. It would follow that the Plaintiffs are entitled to interest under a Section 100 of the Civil Procedure Act on those monies from the date they were paid to the Defendant.
A further consequence is that either a constructive trust or a charge in favour of PSR Burwood should be ordered to secure the repayment to PSR Burwood of the monies.

Robert Huang and Others v Dong Chen and Anor

At a glance

Court

Decision date

Before

Source

Judgment (56 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (25)

Cited By (1)