CONVEYANCING – OPTIONS – where the first plaintiff and the
defendant entered into an agreement by which the defendant
granted the first
plaintiff or it nominee an option to purchase land (the option agreement)
Source
Original judgment source is linked above.
Catchwords
CONVEYANCING – OPTIONS – where the first plaintiff and thedefendant entered into an agreement by which the defendantgranted the firstplaintiff or it nominee an option to purchase land (the option agreement)– where the option agreement provided that the first plaintiff couldexercise the option to purchase within the option period– where theoption period as defined did not specify an end date and therefore did not infact identify a period of time –where the option agreement required thefirst plaintiff to endeavour to obtain development approval within the optionperiod –where meeting minutes were subsequently prepared identifying adate by which the option must be exercised (the variation agreement)– where the variation agreement was eventually signed by both parties– where the second plaintiff as nominee of thefirst plaintiff purportedto exercise the option after the end date specified in the variation agreement– where the plaintiffs
submit that a purchase contract was automatically
formed upon the exercise of the option – whether specific performance of
the execution and performance of the purchase contract should be ordered
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – MATTERS NOT GIVING
RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY
– where the
defendant submits that the option agreement is void for uncertainty by reason of
not specifying an end date for
the option period and by imposing an obligation
to be performed within the option period – where the plaintiffs submit
that
an automatic end date for the exercise of the option was imposed by
operation of the Property Law Act 1974 (Qld) – whether the option
agreement is void for uncertainty – whether the end date of the option
period under the option
agreement is imposed by statute – whether the term
requiring the first plaintiff to endeavour to obtain development approval,
if it
is uncertain, is severable
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSIDERATION
– WHAT AMOUNTS TO CONSIDERATION – GENERAL –
where the
plaintiffs submit that the variation agreement is void because it was not
supported by consideration – where the
defendant submits that the
variation agreement cured uncertainty in the option agreement, detailed
responsibility for costs of obtaining
the development approval, and involved an
exchange of mutual promises, all of which amount to sufficient consideration
– whether
the variation agreement was supported by consideration
EQUITY – GENERAL PRINCPLES – UNDUE INFLUENCE AND DURESS –
GENERALLY – where the variation agreement was signed
by the representative
of the first plaintiff in circumstances where the representative did not sign of
his own free will –
where the plaintiffs submit that the variation
agreement is void because it was infected by undue influence, actual or presumed
–
whether the variation agreement is void for undue influence
Property Law Act 1974 (Qld), s. 218
ASIC v Kobelt (2019)
267 CLR 1, considered
Australian Guarantee Corp Ltd v Balding [1930] HCA 10
(1930)
43 CLR 140, cited
Australian Woollen Mills Pty Ltd v The Commonwealth
[1954] HCA 20
(1954) 92 CLR 424
Bank of Queensland Ltd v Chartis Australia Insurance
Ltd [2013] QCA 183, cited
Briginshaw v Briginshaw [1938] HCA 34
(1938) 60 CLR
336, cited
Currie v Misa [1875] UKLawRpExch 11
(1875) LR 10 Exch 153, cited
Johnson v
Buttress [1936] HCA 41
(1936) 56 CLR 113, cited
Royal Bank of Scotland plc v Etridge
(No 2) [2001] UKHL 44
[2002] 2 AC 773, considered
Stradbroke Waters Co-owners
Co-operative Society Ltd v Taylor [1988] 1 Qd R 595, cited
Townsville
Pharmacy No 4 Pty Ltd v Quattro Pty Ltd [2023] QSC 105, cited
Upper
Hunter County District Council v Australia Chilling & Freezing Co (1968)
111 CLR 429, cited
Whitlock v Brew [1968] HCA 71
(1968) 118 CLR 445, cited
Wu
v Wu (No 2) [2024] ACTCA 29, considered
Wu v Wu [2024] ACTCA 8,
cited
Yerkey v Jones [1939] HCA 3
(1939) 63 CLR 649, cited
York Air Conditioning v Commonwealth [1949] HCA 23
(1949) 80 CLR 11, cited
Judgment (160 paragraphs)
[1]
CONVEYANCING - OPTIONS - where the first plaintiff and the defendant entered into an agreement by which the defendant granted the first plaintiff or it nominee an option to purchase land (the option agreement) - where the option agreement provided that the first plaintiff could exercise the option to purchase within the option period - where the option period as defined did not specify an end date and therefore did not in fact identify a period of time - where the option agreement required the first plaintiff to endeavour to obtain development approval within the option period - where meeting minutes were subsequently prepared identifying a date by which the option must be exercised (the variation agreement) - where the variation agreement was eventually signed by both parties - where the second plaintiff as nominee of the first plaintiff purported to exercise the option after the end date specified in the variation agreement - where the plaintiffs submit that a purchase contract was automatically formed upon the exercise of the option - whether specific performance of the execution and performance of the purchase contract should be ordered
[2]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - MATTERS NOT GIVING RISE TO BINDING CONTRACT - VAGUENESS AND UNCERTAINTY - where the defendant submits that the option agreement is void for uncertainty by reason of not specifying an end date for the option period and by imposing an obligation to be performed within the option period - where the plaintiffs submit that an automatic end date for the exercise of the option was imposed by operation of the Property Law Act 1974 (Qld) - whether the option agreement is void for uncertainty - whether the end date of the option period under the option agreement is imposed by statute - whether the term requiring the first plaintiff to endeavour to obtain development approval, if it is uncertain, is severable
[3]
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSIDERATION - WHAT AMOUNTS TO CONSIDERATION - GENERAL - where the plaintiffs submit that the variation agreement is void because it was not supported by consideration - where the defendant submits that the variation agreement cured uncertainty in the option agreement, detailed responsibility for costs of obtaining the development approval, and involved an exchange of mutual promises, all of which amount to sufficient consideration - whether the variation agreement was supported by consideration
[4]
EQUITY - GENERAL PRINCPLES - UNDUE INFLUENCE AND DURESS - GENERALLY - where the variation agreement was signed by the representative of the first plaintiff in circumstances where the representative did not sign of his own free will - where the plaintiffs submit that the variation agreement is void because it was infected by undue influence, actual or presumed - whether the variation agreement is void for undue influence
[1] By the proceeding the plaintiffs seek specific performance of an REIQ contract for the purchase of land from the defendant. The plaintiffs say the purchase contract was automatically formed upon the exercise by the plaintiffs of an option under an option agreement.
[2] The defendant has refused to execute the purchase contract. It says:
[22]
(a) the option agreement is void for uncertainty by reason of:
(i) not specifying an end date for the exercise of the option (refer clause 1.1(k) definition of Option Period[1]);
(ii) clause 6.1(c) that required the Grantee to endeavour to obtain development approval from the council and other relevant authorities within the option period acting reasonably (noting (i) above), or
(b) the parties varied the option agreement (recorded in signed meeting minutes dated 18 July 2021) (the variation agreement) such that the option had to be exercised by 6 September 2021 and it was not.
[23]
[3] In response, the plaintiffs contend that:
[24]
(a) by operation of s. 218 of the Property Law Act 1974 (Qld) (PLA), an end date for the exercise of the option was imposed on the option agreement - namely 21 years after the date of the grant of the option;
(b) if there is any uncertainty regarding clause 6.1(c) of the option agreement that clause can be severed;
(c) the variation agreement is not enforceable because:
(i) it was not supported by consideration;
(ii) it was infected by undue influence (actual or presumed).[2]
[25]
[4] In the result I have found the option agreement valid, and the variation agreement valid. Alternatively, the option agreement together with the variation agreement constituted a valid agreement. The varied option agreement required the plaintiffs to exercise the option by 6 September 2021 and they did not do so. The plaintiffs' claim fails. Judgment will be entered for the defendant.
[26]
[5] Mr Ming-Te (Ted) Tseng (Mr Tseng) is an immigrant from Taiwan who does not speak English proficiently and does not read English. He is a successful businessman. He employs an English-speaking assistant who has an accountancy degree, Mr Daniel Hsu (Mr Hsu).
[6] Mr Tseng is a long-time friend (over 20 years) of Mr Samuel Lin (Mr Lin) who also has a Taiwanese background. Mr Tseng and Mr Lin play golf together. Their families are friendly with each other. They have adult children around the same ages.
[7] Mr Lin is also a successful businessman. In particular, he has a magnet manufacturing factory in Taiwan and in Australia engages in property development.
[8] Mr Lin has an adult son, Johnson Lin (Johnson).[3] Johnson was born in Taiwan but grew up in Brisbane. He has law and business degrees and qualified as a solicitor in 2008. Soon after obtaining his legal qualification he joined his father's property development business, and a few years later started his own property development business.
[9] The defendant (Forwin) is Mr Tseng's company. Forwin owns a corner block of vacant canal-fronting land, approximately 680m2 in size, at 2 Holborow Close, Surfers Paradise (the land). It purchased the land in about 2007 for $1.95m.
[10] In late 2019 at dinner after a game of golf, Mr Tseng mentioned to Mr Lin and Johnson that he wanted to sell the land or do something with it. Mr Tseng gave Johnson the address, and Johnson did some initial research on the land.
[11] In early 2020 Johnson approached Mr Tseng about him being able to assist in Forwin obtaining a development approval (DA) over the land. Johnson contemplated a DA that would permit the construction of a boutique apartment complex on the land. Mr Tseng was interested. There was a concern at the time that council requirements were going to change that would make developing the land less viable, so there was some urgency to submitting a DA application.
[12] Around 23 April 2020 an agreement was reached between Johnson, Mr Tseng and Mr Lin regarding the development of the land. On that day, having received an estimate of the fees for the DA application from Johnson, Mr Tseng replied by email (translated):
[27]
I have received everything; let's proceed. Thank you.
[28]
[13] Johnson and Mr Tseng are not wholly agreed as to what precisely were the terms of that agreement, although ultimately the resolution of the proceeding does not depend upon that dispute being resolved. However, it at least appeared to be contemplated by the three men that by themselves or their companies:
[29]
(a) Johnson would do work to obtain a DA for the land;
(b) the development of the land contemplated a high-end luxury apartment complex containing eight apartments (one per floor);
(c) Mr Tseng would pay the application fees and consultants' costs in respect of obtaining the DA (because the DA application would be lodged in Forwin's name);
(d) once the DA was obtained, the land would then be purchased from Forwin by Mr Tseng and Mr Lin (prices of $2.25m or $2.5m were apparently mentioned);
(e) construction costs to develop the apartment complex would be split evenly between Mr Tseng and Mr Lin;
(f) upon completion of construction, units would be sold to reimburse Mr Tseng and Mr Lin's construction costs plus interest;
(g) each of Mr Tseng and Mr Lin would receive an apartment in the complex (at a nil or discounted price).[4]
[30]
[14] Mr Tseng says that Johnson was prepared to do work himself to get the DA at no cost because ultimately his father would be involved in the project; and Johnson told him that obtaining the DA should take about 6 months. Mr Tseng says that later Johnson proposed that in return for also managing the development to completion, he also wanted to receive an apartment in the complex, but Mr Tseng says he was against that as it would be overcompensating him for the work required from him. Mr Tseng says he did mention to Johnson that he wanted to pay him for his work.
[15] Johnson says that original agreement actually contemplated a three way joint venture so that he would also receive an apartment in the complex (at a nil or discounted price). In addition to the undertaking the work to obtain the DA, Johnson's further contribution (in lieu of any financial contribution) would be managing the development to completion. He denied that he said the DA would take 6 months to obtain; his estimate was 12 months.
[16] There is no writing evidencing the original agreement. Johnson says he proposed to have a JV agreement prepared, but Mr Tseng indicated that given the relationships involved between the three men, there was no need. Johnson went along with that.
[17] Johnson commenced work pursuant to the original agreement (whatever its terms), and Mr Tseng commencing paying application fees and consultants' costs in respect of obtaining the DA. A DA application for the land was lodged with the council on or about 2 June 2020.
[18] Sometime later, between late June and August 2020, Mr Lin indicated to Mr Tseng and Johnson that he was withdrawing from the original agreement. He was returning to Taiwan to supervise his factory there during COVID. The original agreement would not proceed.
[19] However, Johnson continued work to progress obtaining the DA; Mr Tseng continued paying fees and costs in respect of obtaining the DA.
[20] Mr Tseng says that he asked Johnson to continue with the application and said he would pay Johnson a salary. Mr Tseng says that Johnson's reply was that since it was his father who had pulled out, he would continue with the application (assumedly at no charge).
[21] The position of Johnson at least seemed to be that in order for the development to continue Johnson would have to find a new partner (to stand in the place Mr Lin and Mr Tseng as the silent investor providing capital) or a third-party buyer for the land who would purchase the land at a premium after the DA was obtained. In about September 2020 Johnson approached Mr Tseng and suggested that once the DA had been obtained the land could then be sold (at a premium) to a developer as a ready-to-construct project (the third-party buyer option). Johnson proposed to Mr Tseng that Forwin grant Johnson's company () a call option to purchase the land. A price of $3,300,000 was agreed. Johnson suggested that such an agreement would give him protection in proceeding with the project and attempting to find a new partner (to replace Mr Lin and Mr Tseng). Mr Tseng was agreeable to the new arrangement.
[31]
Uncle Ted requested that I send you this Option for your reference.
[32]
Can you kindly review and advise of any need for amendments.
[33]
I have kept it as straightforward as possible and have tried to limit the time to three months following the DA Approval and Negotiated Decision Notice to allow certainty for Uncle Ted.
[34]
The 3 months is needed so my JV partner can engage his own consultants to review the DA approval and conditions.
[35]
[23] Note, the only reference to three months that is in the option agreement or the attached REIQ purchase contract is in the definition of Option Period in clause 1.1(k) of the option agreement, and that reference did not correspond with what was contained in Johnson's covering email (which suggested that the option period was three months following the DA or negotiated decision notice).
[24] The option agreement was executed by Forwin and returned to Johnson by email on 8 October 2020. The email from Johnson in reply, acknowledging receipt of the signed option agreement provided, inter alia:
[36]
I am eagerly waiting for DA approval so we can proceed with this and get it sold for uncle Ted.
[37]
[25] Under the option agreement the grantor was Forwin; the grantee was Your Realty. The option fee of $5,000 was paid by Your Realty to Forwin on or about 28 October 2020. A copy of the option agreement fully executed was (apparently) emailed by Johnson to Mr Hsu on 28 October 2020. Mr Hsu denies having received same, but nothing ultimately turns on that.
[26] The option agreement relevantly provided in clause 1.1 (Definitions and Interpretations) for the following definitions, unless a contrary intention appeared:
[38]
(a) clause 1.1(c): "Development Application" means any application or applications (as the case may be) for the further development of the Land (either alone or in conjunction with other land) to be prepared to a design and layout as required by the Grantee as it sees fit, including material change of use application and/or a reconfiguration of a lot application and nay (sic) supplementary submissions or applications required.
(b) clause 1.1(k): "Option Period" means the period starting from the date which is three (3) months after the receipt and conclusion of the Development Application approval from Gold Coast City Council and any subsequent Negotiated Decision Notice.
[39]
2.1 The Grantor hereby grants to the Grantee the right to require the Grantor to enter into the Sale Contract for the purchase from the Grantor of the Land on the terms and conditions specified in the Sales Contract ("Call Option").
[40]
2.2 The Grantee may only exercise the Call Option during the Option Period.
[41]
2.3 The Grantee may extend the Option Period beyond the agreed period by written notice to the Grantor. It is at the Grantor's absolute discretion, acting reasonably, whether to grant the Grantee the extension of the Option Period.
[42]
[28] Clause 4 (Exercise of Call Option and Formation of Contract) provided:
[43]
4.1 The Call Option may be exercised only by the Grantee providing a completed Call Option Notice which is delivered, posted by pre-paid mail, faxed or sent via email to the Grantor or to the Grantor's solicitors so that such notice shall be received by the Grantor or the Grantor's solicitors no later than 5:00pm on the last day of the Option Period.
[44]
4.2 If the Call Option Notice is delivered or posted, then the notice must be accompanied by two original copies of the Sale Contract duly executed by the Grantee (with the name including ABN if applicable) and address of the Grantee completed.
[45]
4.3 If the Call Option Notice is faxed or sent via email, then the notice must be accompanied by a copy of the Sale Contract duly executed by the Grantee (with the name (including ABN if applicable) and address of the Grantee completed and the Grantee must deliver or post two original copies of the Sale Contract to the Grantor or the Grantor's solicitors within 5 business days of exercise of the Call Option.
[46]
4.4 On exercise of the Call Option, a Contract of Sale on the terms and conditions of the Sale Contract is automatically formed between the parties.
[47]
4.5 If the Grantee exercises the Call Option the Grantor agrees to execute both copies of the Sale Contract and return one copy to the Grantee after receipt of same from the Grantee within 10 business days. Failure of the Grantor to execute the Sale Contract does not affect the validity or enforceability of the Sale Contract.
[48]
If the Grantee does not exercise the Call Option, the Option Fee shall be refunded to the Grantee within 5 business days.
The Grantee must ... endeavour to obtain Development Approval from Council and other relevant authorities within the Option Period, acting reasonably.
[51]
[31] Clause 11.2 provided that time shall be of the essence of all obligations under the option agreement.
[32] The annexed REIQ contract identified a purchase price of $3.3m for the land and that settlement would occur 30 days from the purchase contract date.
[33] A person carefully reading the option agreement ought to have been able to identify fairly readily that there was a problem with the definition of the Option Period (clause 1.1(k)) in the option agreement. Clause 2.2 required the option to be exercised during the Option Period. The Option Period, as defined, identified a start date but did not identify an end date. And so no period of time was actually identified. By reference to the covering email (see at [22] above) one might readily think that what the parties intended was that the Option Period start on the "receipt and conclusion of Development Application approval from Gold Coast City Council and any subsequent Negotiated Decision Notice" and end on the date three months thereafter. Indeed, Johnson gave evidence that was his intention (which was consistent with the covering email - at [22] above) but a drafting error occurred (in amending from a dif[6]erent option document).6 Johnson said a call option period usually starts as soon as the negotiated decision process is complete and it makes no sense to start the option period three[7]months after that date.7 He said that the option agreement as drafted was simpl[8] a typographical error.8
[34] There was also an apparent problem with the words used in clause 6.1(c). If the Option Period (as defined) did not start until three months after receipt and conclusion of the DA, how could the Grantee endeavour to obtain the DA "within the Option Period"? The literal operation of the clause, if the definition of the Option Period is applied, is illogical.
[35] The DA application process took some time. There were requests by council for further information in late 2020 and early 2021. Johnson attended to those requests; Mr Tseng continued to bear the costs associated with the DA application.
[36] Mr Tseng was frustrated with the delays in obtaining the DA. He was not satisfied with the explanations for the delays that Johnson proffered to him. There is dispute about whether in 2021 Mr Tseng asked Johnson to take back the $5,000 option fee and abandon the option agreement - but it is not necessary to resolve that dispute. Nothing turns on it.
[52]
Discussion surrounding additional amendments to Option Agreement of 2 Holborow Close, SURFERS PARADISE between Forwin and Your Realty ("Agreement")
[53]
- It was agreed between Forwin and Your Realty, that Forwin shall be responsible for all RFI costs leading to the third submission of Development Application of 2 Holborow Close, SURFERS PARADISE. Any additional RFI-related costs incurred after 12th April 2021, shall be borne by Your Realty.
- It was agreed between Forwin and Your Realty, that Your Realty, as grantee of the Agreement, shall exercise the call option no later than 31st August 2021.
- It was agreed between Forwin and Your Realty, that the Agreement would automatically terminate if the Call Option Notice, and the accompanying Sale Contract executed by the grantee is not received by 31st August 2021 COB.
[54]
- Upon receipt of Development Application of 2 Holborow Close, Your Realty is to disclose the all party's involved in this sale, for the purpose of finalizing Buyer's details in the Contract of Sales.
- Upon receipt of Development Application of 2 Holborow Close, Your Realty is required to remit to Forwin the sum of $325,000.00 deposit payable under the Contract of Sales.
- The deposit of $325,000 and option fee of $5,000.00 shall be credited against Purchase Price of $3,300,000.00 (including GST)
- For the avoidance of doubt, if Your Realty does not exercise the call option by 31st August 2021 COB, the deposit of $325,000.00 and option fee of $5,000.00 shall be refunded within 5 business days by Forwin. Your Realty shall provide all Building Applications materials to Forwin within the same time frame (5 business days).
- Settlement Period of Sales contract is for 60 days after contract date (or the day Option Call Notice is executed).
[47] It can be seen that the minutes seek to record clarifications or changes to the option agreement including:
[55]
(a) the first resolution seeks to assign responsibility for certain costs relating to the DA application process that had not been the subject of the option agreement at all (although such costs were dealt with in the original agreement that did not proceed, and Mr Tseng had been paying all those costs up to that time);[10]
(b) in the second and third resolutions, an end date for the exercise of the option was stated - 31 August 2021;
(c) paragraph 3 concerned additional amendments to the option agreement including:
(i) identifying a date by which the balance deposit was required to be paid (which was not identified in the annexed REIQ contract);
(ii) linking the payment of the deposit to the receipt of the "Development Application" (sic), not the exercise of the option that would determine the date of the purchase contract;
(iii) expressly allowing for a return of the deposit in the event the option was not exercised;
(iv) extending the settlement date of the purchase contract from 30 days post contract date to 60 days.
[56]
[48] Johnson replied by email to Mr Tseng and Mr Hsu the next day (14 April 2021). He did not sign the minutes provided, but his correspondence in reply said (translated, inter alia):
[57]
I understand your concern regarding the delay in the Holborow case and the DA approval. Unfortunately, we were requested twice for RFI (Request for Further Information) by the Council, which was not within our initial expectations. This was because we had already had several meetings with the evaluation team of the Council before sending the DA, and had obtained their verbal agreement to give us several flexibility options. So, at that time, I confidently told you that I should be able to obtain DA approval before the end of 2020.
[58]
We were not surprised to receive the first RFI from the Council, as 99% of cases had at least one RFI. We also made corresponding modifications and responses based on this RFI at that time. Unfortunately, after a Christmas holiday, both the urban planner and architect (from the Council) for our project resigned, resulting in us having to be evaluated by a new urban planner and architect who did not agree to fulfill the previously agreed upon flexibility. This resulted in a significant design change for the second RFI.
[59]
I just want to explain the process again, not to make excuses for the team or myself. We did challenge the design standards of the Council in order to achieve the most perfect design. Therefore, there is a relatively higher risk of delaying the approval process, as it requires more time for both parties to reach a consensus.
[60]
To alleviate your concerns and provide you with a guarantee, I am willing to accept your request to execute the Call Option before 31 August 2021.
[61]
Due to the fact that some consultants' Tax Invoices have not yet been issued, using 12 April as the cut-off point may cause misunderstandings. So, I propose that all consultation fees related to the second modification of RFI be paid by you first. If there are any other consultation fees that need to be paid in the future, our company is willing to bear them.
[62]
Urban Planner at Town Planning Alliance
Traffic Engineer at Q Traffic
Horticultural Engineer at Laudink
Architect at Z Architect
Engineer at MPN Consulting Pty Ltd
[63]
Thank you for your understanding and patience. If you agree, please ask Daniel to modify the Meeting Minutes and send them to me for my signature.
[64]
[49] Importantly, Johnson's reply does not suggest that the minutes provided were inaccurate. What was proposed by Johnson was simply some small amendment to the minutes to clarify the agreement about the payment of consultants' fees.
[50] Johnson's explanation for this reply in oral evidence was that it was to give Mr Tseng "some sense of ... security that [he] would ... agree to ...try to and ... bring the ... call option forward."[11] He gave evidence that he thought if the DA could be obtained by 31 May, that would give him 3 months to get a third party involved in the project.[12] However, Johnson did accept in cross-examination that his correspondence of 14 April 2021 was an entirely clear statement that he was agreeable to the option end date of 31 August 2021.[13]
[51] Mr Hsu replied on 16 April 2021 raising other matters, including the possibility of requiring Johnson to exercise the option within 10 days of the DA being obtained, but by his reply of 17 April 2021 Johnson pushed back on that suggestion. Johnson's correspondence stated, inter alia:
Under the Option Agreement, we have 3 months to exercise Call Option so I cannot agree to exercise the Call Option within 10 days of DA. The main reason is that the DA will come with numerous conditions of which some may be reasonable and some unreasonable. Where there are unreasonable conditions imposed by Council, we need to enter into a 'Negotiated Decision Process' with Council to challenge Council on the unreasonable conditions! It is why in the Option Agreement, the 'Option Period' is actually "3 months after the receipt and conclusion of Development Application approval from Gold Coast City Council and any subsequent Negotiation Decision Notice". I was being very reasonable and fair to agree, in good faith, to exercise the Call Option before 31 August 2021 when under the Option, I have 3 months after approval and subsequent Negotiated Decision Notice.
There is no point commencing BA work now without a DA approval. It will commence after the Call Option is exercised. I am sure you are aware once the Call Option is exercised, an unconditional contract as per the one attached with the Option will be executed. The applicable deposit of 10% is also payable. So there is 100% certainty for Mr Tseng that it will proceed to settlement.
[65]
I hope the above responds to your email and clarifies the matter. Can you kindly explain it to Mr Tseng.
[66]
I responded in English because it is much easier for me to communicate in English than Mandarin. You are also fluent in English which is convenient.
[67]
[52] It is noteworthy that Johnson's assertion in the above correspondence about what the option agreement provided is not accordance with its literal terms of the definition of option period applies, but is consistent with what was likely to have been intended. See [33] and [34] above.
[53] There was then a telephone conversation between Johnson and Mr Hsu on 20 April 2021 in the morning.
[54] Following that conversation Mr Hsu emailed Johnson on the evening of 20 April 2021, as follows, inter alia:
[68]
This email is to confirm the additional terms to the call option agreement regarding 2 Holborow Close, reached with you over the phone today:
[69]
The Grantee must exercise the call option no later than 31/08/2021
Failure to exercise call option by 31/08/2021 will result in termination of the option agreement
The settlement duration of sales contract for 2 Holborow Close was agreed to be set at 30 days after exercise of call option.
[70]
Please confirm by reply email that the above is the agreement with you in our telephone conversation today 20th April 2021 at 9.15am.
[71]
[55] The only seemingly new matter raised by Mr Hsu's email was changing the settlement period back to the original 30 days rather than the revised 60 days.
[56] Johnson did not respond to that email. Mr Hsu sent Johnson a follow up email on 23 April 2021 seeking a response from Johnson as follows:
[72]
Just following up on my email earlier regarding our agreement to the additional terms of option contract.
[73]
[57] Mr Hsu sent a further follow up email on 15 July 2021 to Johnson, seeking a response from Johnson as follows:
[74]
Just following up on the following meeting minutes dated 12th April 2021.
[75]
I don't have your executed copy of our discussions to amending the option agreement.
[76]
Can you please check over and sign back at your earliest.
[77]
[58] Johnson gave evidence that at that time, and up to July 2021 he was actively avoiding any contact with Mr Tseng (and assumedly, Mr Hsu). He said he was concerned that if he met with Mr Tseng, Mr Tseng would get his way.[14] He described Mr Tseng as a dominating, proud and intimidating.
[59] However, Mr Tseng and Johnson did end up having further relevant discussions at a meeting on 18 July 2021. The circumstances of that meeting are as follows.
[60] Johnson's mother was holidaying on the Gold Coast and a lunch was arranged with Mr and Mrs Tseng. Johnson and his family (wife and children) were invited. Mr Tseng says he specifically arranged the lunch in order to meet with Johnson to discuss the option agreement. Johnson said he had run out of excuses to avoid Mr Tseng and so he had to attend the lunch.
[61] In advance of the lunch, Mr Hsu alerted Mr Tseng to the fact that the minutes previously provided to Johnson had still not been signed by Johnson.
[62] During the lunch, Mr Tseng asked Johnson to join him at a separate table for some business discussions. Mr Tseng produced the minutes (in their original form) and asked Johnson to sign them. Johnson made some handwritten amendments to the minutes and then signed the minutes.
[63] The parties' accounts of how Johnson's signing of the minutes came about differ.
[64] Johnson says that:
[78]
(a) at the separate table Mr Tseng confronted Johnson and said that he knew Johnson had been avoiding him; Johnson denied that as to admit he had been avoiding Mr Tseng would have been disrespectful;
(b) Mr Tseng pointed out that the previous meeting minutes from April had not been signed by Johnson; Johnson said he could not sign them because it was not known when the DA would be obtained;
(c) Mr Tseng said that the DA was taking too long and the option period needed to end on 31 August 2021;
(d) Johnson protested and said he could not agree to 31 August 2021 because he could not exercise the option by that date; Mr Tseng responded that he did not care; Johnson asked for three more months; Mr Tseng would only agree an additional week;
(e) Mr Tseng produced a copy of the minutes of the meeting of 12 April 2021 for Johnson's signature;
(f) Johnson initially used a number of excuses to avoid signing the minutes including that he did not have the paperwork; that the option could not be exercised by 31 August 2021; that he did not have a pen to sign the minutes;
(g) Mr Tseng produced a pen and placed it on the paperwork; Johnson said words to the effect of "I really can't sign this"; Mr Tseng forced the pen onto Johnson's hand;
(h) Johnson was concerned about the consequences on his family, including his mother and father, and the relationship between Mr Tseng and Mr Lin, if he did not sign as demanded by Mr Tseng;
(i) Mr Tseng ultimately allowed an extension from 31 August 2021 to 6 September 2021 but said that settlement would then need to occur within 30 days;
(j) Johnson made handwritten changes to the minutes;
(k) just before Johnson signed the amended minutes Mr Tseng said to Johnson "if I needed more time, he would - ah - you know, give me more time because he treat me like a son as well and also because of the relationship he has with my father"[15];
(l) Johnson felt he had no option but to sign; he weighed up all possible ramifications - including the option of not signing - and then "sacrificed"[16] himself by signing;
(m) he later told his father that Mr Tseng had "forced" him to sign the variation agreement.
[79]
(a) he invited Johnson to have a conversation with him inside;
(b) he asked Johnson why he had not yet signed the minutes and Johnson said he had been very busy;
(c) he showed Johnson the minutes and Johnson said he could not sign them because he did not have the option agreement on him to read; so Mr Tseng showed Johnson the option agreement on his iPad which Johnson then read;
(d) Johnson told him the settlement should be 30 days, not 60 days and asked for a revision of 31 August 2021 to 6 September 2021 for the end of the option period - Johnson wanted one more week just in case even though 31 August 2021 was not anticipated by Johnson to be a problem; Mr Tseng responded that that was fine;
(e) Johnson made the revisions to the minutes and signed same (with a pen Mr Tseng placed on the table for Johnson to use as Johnson did not have a pen with him); Mr Tseng went to sign but Johnson said he did not need to as his signature was already on the document; but Mr Tseng insisted that he sign the minutes again on that date and with the amendments;
(f) Mr Tseng denies that he placed the pen into or onto Johnson's hand;
(g) after Johnson signed Johnson said words to the effect of "Oh I sign this. I bear a lot of pressure / feel stressful"[18] although Johnson kept smiling;
(h) the interaction was happy and only lasted about ten minutes.
[80]
[66] From the signed minutes the following handwritten amendments are noteworthy:
[81]
(a) two printed dates of 31 August 2021 were altered to 6 September 2021 (it can be safely assumed that the failure to alter the same date in the second dot point under (2) was a mere omission and should be read as if it also said 6 September 2021);
(b) the printed settlement period for the purchase contract was changed from 60 days to 30 days after the purchase contract date;
(c) Mr Tseng dated and signed the amended minutes;
(d) Johnson dated and signed the amended minutes.
[82]
[67] Some limited evidence of the meeting was also given by Johnson's wife, Mrs Yu-Pen Chen. She was not a party to the relevant conversation between Mr Tseng and Johnson but commented upon what she saw of that conversation from the dinner table. She recalled Mr Tseng being cold and not smiling or talking as much as usual upon arrival at the restaurant. After food was ordered, Mr Tseng asked Johnson to move to a different table, which they did. She considered that was unusual and she paid attention to them at the other table - Mr Tseng was facing her; Johnson had his back to her. She described that Mr Tseng looked very serious and unhappy/angry; he sat with his arms crossed. Johnson appeared nervous and was moving about in his seat. When they returned to the dinner table Mrs Chen said Mr Tseng was smiling and talkative. Johnson appeared worried and withdrawn.
[68] Following the meeting, about a month later on 18 August 2021 Johnson emailed Mr Tseng and Mr Hsu requesting that the 6 September 2021 deadline be extended. That email provided, inter alia (translated):
[83]
On last Tuesday (10 August), the Council requested an extension of the review period by 10 working days, which will result in the decision date being postponed from 1 September (Tuesday) to 15 September (Sunday).
[84]
The execution of the Call Option needs to be extended to 14 October (30 days after DA approval). I have made it clear to you that I gave the cooperating builder a 30-day period before because our Option is 3 months.
After our phone call last night, I had further discussions with the developer this morning, and they accepted by proposal. When we execute the Option, we will reimburse you for the actual expenses incurred in this DA (approximately $120,000 - $150,000).
I will personally bear the responsibility for the final modification, and I have already informed the team.
[85]
The DA process this time really encountered many challenges and caused the time to be extended. Our entire team is deeply sorry for this matter, but it was really beyond our expectations. This is the challenge of doing DA work. I have done 20 DAs of all sizes so far, each with RFI and their own challenges.
[86]
Thank you for your support and patience all the way. Looking forward to hearing good news from you soon.
[87]
[69] A letter from Forwin's solicitors on 23 August 2021 in reply advised no extension would be given.
[70] 6 September 2021 passed without the option being exercised. On 7 September 2021 Forwin's solicitors wrote terminating the call option and refunded the call option fee.
[71] The DA was granted on 13 January 2022.
[72] Your Realty, by its appointed nominee the second plaintiff (Holborow), sought to exercise the option by email dated 11 April 2022 (that seemed to have occurred on the assumption that the option had to be exercised within 3 months of the DA having been obtained). Forwin's solicitors wrote on 20 April 2022 maintaining that the option had lapsed on 6 September 2021.
[73] On 18 August 2022 Your Realty, again by its appointed nominee Holborow, sought to exercise the option by email (that seemed to have occurred on the assumption that the option period did not actually commence until 3 months after the DA was granted). Forwin's solicitors again wrote on 22 August 2022 maintaining that the option had lapsed on 6 September 2021.
[74] This proceeding was thereafter commenced.
[88]
[75] Credit findings in this case are important in respect to the dealings between Mr Tseng and Johnson, but particularly in relation to what occurred at the meeting of 18 July 2021 when the variation agreement was signed. Johnson alleges his signing of the variation agreement occurred as a consequence of the undue influence of Mr Tseng; Mr Tseng denies that allegation.
[76] I do not consider either of Mr Tseng or Johnson to have been deliberately dishonest in their evidence as to their recollections of their dealings between each other. But the dynamic between them, their self-interest in the proceeding and their respective personalities has resulted in each of them giving less than reliable evidence in relation to their interactions - particularly in respect of the key meeting of 18 July 2021.
[77] Undoubtedly Mr Tseng is an impressive and intimidating businessman. He is a successful elder who is used to obtaining his own way. In his dealings with Johnson, he considered himself more experienced; he expected Johnson to act respectfully towards him. That is part of the Chinese culture of which both men are a part. Mr Tseng was willing to treat Johnson like a son given his relationship with Mr Lin (again part of Chinese culture) but that did not mean he would comprise his own commercial interests for the benefit of Johnson. He was unhappy with the delays in obtaining the DA. He had lost trust and confidence in Johnson over time. He wanted to ensure that there was certainty about when the option agreement would come to an end. There is nothing unusual about that. He was forceful with Johnson, and I consider that he attempted to downplay that in his evidence. I do not accept that in the meeting of 18 July 2021 Johnson could have been reasonably perceived to be happy or genuinely smiling, or unconcerned about the prospect of the option needing to be exercised by 31 August 2021. Johnson was undoubtedly uncomfortable and fishing for excuses. Mr Tseng would have recognised that.
[78] I consider that Johnson in his evidence exaggerated his inability to exercise his own free will in the face of demands by Mr Tseng, particularly at the meeting of 18 July 2021. The true position generally was not that Johnson had no real choice but to comply with all of Mr Tseng's demands. Indeed, both orally and in writing, Johnson in fact demonstrated an ability to negotiate with Mr Tseng and to resist his demands. It was Johnson who proposed and prepared the option agreement; Johnson successfully pushed back against Mr Tseng's proposal that the option be exercised within 10 days of the DA being granted; Johnson sought to clarify what costs he would be responsible after 12 April 2021. Those are not the actions of a person who did whatever Mr Tseng demanded at all times.
[89]
[81] I accept the evidence of Mrs Chen. I find her a truthful and reliable witness. However, her evidence is of very little assistance in resolving the issues required to be resolved in this proceeding.
[90]
[82] I accept in a general way the evidence of Mr Hsu. He gave his evidence in a forthright and direct manner. He was not seriously shaken in cross-examination. On important issues, Mr Hsu's evidence is supported by the written record. Whilst he was and remains an employee of Mr Tseng, I did not detect in his oral evidence any tendency to skew evidence to favour Mr Tseng. I consider the minutes of the meeting of 12 April 2021 that he prepared to be an accurate summary of what he heard discussed and agreed at that meeting. He plainly did act on instructions given by Mr Tseng in the written and oral communications with Johnson, but there is nothing improper in that.
[91]
[83] Mrs Chen described her father-in-law, Mr Lin, as a traditional man who places great importance on Chinese culture. Mrs Chen described her husband, Johnson, also as a traditional man who had grown up in a traditional Taiwanese family.
[84] The plaintiffs in the proceeding adduced expert evidence by way of an updated expert report of Dr Mona Chung dated 9 November 2024 that dealt with Chinese cultural issues. Dr Chung is a cross-cultural expert in Chinese culture.
[85] Several parts of the report have already been ruled inadmissible. Whilst I am prepared to accept in a general way the remaining evidence of Dr Chung as to cultural considerations that she considers would have been relevant to the interactions between Mr Tseng and Johnson, I am not prepared to conclude based on her evidence alone that in signing the variation agreement Johnson was not acting with free will.
[86] I accept in a general way Dr Chung's evidence that:
[92]
(a) from a cultural and business perspective Mr Tseng held a position of influence and ascendency over Johnson given his age, experience, financial position, and relationship with Johnson's father;
(b) Johnson was expected to show deference and respect to Mr Tseng and keep harmony between the families;
(c) it would be difficult for Johnson to say no to Mr Tseng in any direct way - particularly in front of family;
(d) both Mr Tseng and Johnson were aware of the above.
[93]
[87] But I do not accept that such matters alone rise to the level that Johnson was unduly influenced, pressured or coerced to sign the variation agreement. In that respect, all of the relevant circumstances must be taken into account that include:
[94]
(a) Johnson in an Australian-educated adult, qualified solicitor, and experienced businessperson;
(b) the dealings with Mr Tseng were in essence Australian-based business dealings, entered into by Johnson on a voluntary basis because Johnson perceived the dealings to be financially advantageous to him;
(c) Johnson had demonstrated an ability to avoid discussions with Mr Tseng when he did not wish to participate;
(d) despite Mr Tseng being a confident and forceful man, Johnson had demonstrated his ability and willingness to negotiate with Mr Tseng and push back against his demands.
[95]
[88] There is very little case law dealing with the possible effect of cultural norms on claims of undue influence.
[90] This was a House of Lords decision that consolidated a number of appeals involving undue influence claims. Relevantly, Ms Coleman had consented to a security being put over her matrimonial home to enable her husband to make some "speculative property acquisitions". The bank eventually commenced proceedings for possession and sale of the matrimonial home. Ms Coleman contended that her consent to the security was procured by the undue influence of her husband, of which the bank had constructive notice.
[91] Although Ms Coleman was ultimately unsuccessful, Lords Hobhouse and Scott found that actual undue influence was established, bearing in mind that the couple were members of the Hassidic Jewish community and the particular relationship of trust and subservience present in that culture: at [130] (Lord Hobhouse) and [283] (Lord Scott).
[92] The case provides support for the proposition that cultural factors can make a difference in finding whether a relationship of undue influence exists.[19]
[98]
[93] This decision involved a statutory unconscionable conduct claim. Mr Kobelt was a storekeeper who sold goods to residents of remote communities in rural South Australia, particularly the Anangu peoples. As part of his business, Mr Kobelt provided "book-up" credit facilities to customers, particularly in the sale of motor vehicles. Under these arrangements, customers essentially gave Mr Kobelt their debit card details, and Mr Kobelt withdrew funds from the customers' account in reduction of their debt. Evidence was led that this type of credit arrangement was an accepted part of Anangu culture.[20] Such cultural considerations formed a significant part of the reasoning that led to the majority's conclusion that Mr Kobelt's conduct was not unconscionable.[21]
[94] The minority also took into account these cultural considerations and nonetheless concluded that Mr Kobelt's particular book-up system was unconscionable.[22]
[95] Noteworthy is Nettle and Gordon JJ's observation at [171] that the particular Anangu cultural practice "can give rise to bullying or exploitation".
[96] In this case, Mr Wu (the plaintiff appellant) and his wife Mrs Wu had gifted their daughter Angela (the defendant respondent) a residential property.
[97] The appellant alleged that the transfer of the property was void because it was made under undue influence of or by the unconscionable conduct of Mrs Wu. Angela was a third-party recipient who benefited from the undue influence or unconscionable conduct of Mrs Wu on Mr Wu.
[99] The Court found that there was a relationship of ascendancy between the appellant and Mrs Wu due to the appellant's dependency on Mrs Wu (she could speak English while he could not, between them she was the one who made major life decisions like buying property and relocating to Australia).
[100] Most relevantly, in considering whether the transaction was so improvident that it could not be reasonably explained based on ordinary motives, the Court considered (but did not place much weight on) the respondent daughter's submission that the gift was reasonably explicable in the context of Chinese cultural norms, as she was pregnant with the appellant's first male descendent when the transfer was made.[23] In that sense, Wu v Wu was the inverse of this proceeding, as cultural norms were relied upon to rebut, rather than establish, undue influence.
[101] Ultimately, the Court was not persuaded that the transfer was reasonably accounted for and found that undue influence was established despite the existence of cultural norms that could explain the improvidence of the transaction.
[102] What can be taken away from the above cases I consider ultimately simply accords with common sense when considering equitable remedies for undue influence and unconscionable conduct. Any evidence adduced of cultural norms can be taken into account as a relevant factor, and the extent to which such cultural norms may result in findings of undue influence or unconscionable conduct will turn on the particular facts of the case.
[101]
[103] For a contract to be legally effective it must be sufficiently certain - that is, clear and complete at least in the essentials.[24] If a contract is not sufficiently certain it is void, unless the uncertain part can be severed leaving the rest of the contract intact. Inessential terms that are vague or incomplete can be filled out by a court, ignored or severed.
[104] Whilst it is not for the courts to rewrite parties' agreements, courts generally prefer to uphold agreements if possible, particularly where parties have acted on the basis of the agreement.[25] That will occur through a process of construction - looking to the agreement as a whole, and ascertaining the parties' evident intention.[26]
[102]
[105] The defendant says the option agreement is void for uncertainty by reason of:
[103]
(a) not specifying an end date for the exercise of the option (see clause 1.1(k));
(b) clause 6.1(c) that required the Grantee to endeavour to obtain development approval from the council and other relevant authorities within the option period acting reasonably (noting (a) above).
[104]
[106] In response, the plaintiffs contend that:
[105]
(a) by operation of s. 218 PLA, an end date for the exercise of the option was imposed on the option agreement - namely 21 years after the date of the grant of the option;
(b) if there is any uncertainty about clause 6.1(c) it can be severed.
[106]
The lack of end date in the option agreement as entered into
[107]
[107] The relevant parts of the option agreement are clauses 1.1(k) and 2.2: see [26]-[27] above.
[108] Thus the option agreement, if the definition of Option Period is applied, does not expressly set a time within which the DA has to be obtained, and it is the obtaining of the DA that is the starting point in time from which the option period is to be calculated.
[109] The plaintiffs seek to overcome the lack of an express option end date by reliance on s. 218 PLA (the rule against perpetuities). It provides:
[108]
(1) The rule against perpetuities shall not apply to a disposition consisting of the conferring of an option to acquire for valuable consideration an interest reversionary (whether directly or indirectly) on the term of a lease if -
(a) the option is exercisable only by the lessee or the lessee's successors in title; and
(b) it ceases to be exercisable at or before the expiration of 1 year following the determination of the lease.
[109]
(1A) Subsection (1) applies in relation to an agreement for a lease as it applies in relation to a lease, and lessee shall be construed accordingly.
[110]
(2) An option to acquire an interest in land (not being an option to which subsection (1) applies) or a right of pre-emption in respect of land, which according to its terms is or may be exercisable at a date more than 21 years from the date of its grant shall after the expiration of 21 years from the date of its grant be void and not exercisable by any person and no remedy shall lie in contract or otherwise for giving effect to it or making restitution for its lack of effect, but -
[111]
(a) this subsection shall not apply to an option or right of pre-emption conferred by will; and
(b) nothing in this subsection shall affect an option for renewal or right of pre-emption contained in a lease or an agreement for a lease.
[112]
[110] The plaintiffs say the application of that provision operates to make the end of the option period 21 years after the date of the option agreement - namely October 2041.
[111] I agree with the defendant that such a result is absurd.[27] It could not have been in the contemplation of the parties that the owner of the land (Forwin) might be prevented from dealing with the land for up to 21 years and if the option were exercised many years after the option agreement was entered into, that the purchase price would remain at the price fixed in 2020. That is not the proper construction of the option agreement.
[112] But I am not prepared to conclude that the contract fails for uncertainty absent the applicability of s. 218 PLA. Rarely will contracts, particularly commercial contracts that have been partially performed, be struck down for uncertainty.[28] Vague or ambiguous phrases can be construed to give certainty.[29] Implied terms can sometimes fix uncertainty in contracts. Further, the defined terms in the option agreement do not apply if a contrary intention appears (clause 1.1). Rectification may also be an available remedy.
[113] In this case I am persuaded that Option Period, for the purposes of clauses 2.2, 2.3 and 4.1 of the option agreement should be taken to mean - "the period starting from the receipt and conclusion of the Development Application approval from Gold Coast City Council and any subsequent Negotiated Decision Notice and ending three months thereafter". I think that outcome can be reached by a number of means but at the least I consider it plain that the defined term in the option agreement does not apply as a contrary intention appears from the balance of the option agreement. Resort to the extrinsic evidence (which can then be had because the option agreement is otherwise ambiguous) then supplies the answer to what is the Option Period for the purposes of clauses 2.2, 2.3 and 4.1.
[114] Accordingly, the option agreement is not void for uncertainty.
[115] And in this case, even if I am wrong about the option agreement being sufficiently certain as to be enforceable, the option agreement taken together with the variation agreement is sufficiently certain and is enforceable as a single contract entered into on 18 July 2021 (subject to the other arguments advanced in the case with which I will separately deal).
[113]
[116] Clause 6.1(c) does not practically work if either the definition of Option Period is implemented or the alternate meaning of option period as dealt with above.
[117] However, I do consider that subclause can be readily severed without doing any damage to the option agreement. Severance could occur to the whole of the subclause, or only the words "within the Option Period" without any difficulty - that would better reflect the parties' intention. The clause is not essential to the operation of the option agreement; the option agreement is not conditional on the efficacy of clause 6.1(c). Whilst there is no express severance clause that causes no difficulty; severing a clause is simply a matter of construing the parties' intention.[30] Even if the subclause was severed in its entirety, there would be implied into the option agreement a term requiring Your Realty to act reasonably in obtaining DA from the relevant council as a corollary to the implied obligation for the parties to act reasonably in giving the benefit of the contract to the other party (that is, the implied duty to cooperate). Your Realty obtaining a DA for the land was one of the underlying objects of the option agreement.
[114]
Was there an enforceable variation of the option agreement
[115]
[118] The defendant says the parties varied the option agreement (recorded in signed meeting minutes dated 18 July 2021) such that the option had to be exercised by 6 September 2021 and it was not.
[119] The plaintiffs say the variation agreement is not enforceable because:
[116]
(a) it was not supported by consideration;
(b) it was infected by undue influence (actual or presumed).
[117]
Was the variation agreement supported by consideration
[118]
[120] The parties agree that the variation agreement was required to be supported by sufficient consideration to be valid and enforceable.[31] Valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.[32] The bargain theory of consideration applies.[33]
[121] The plaintiffs say that the variation agreement was invalid as there was no sufficient consideration for the variation agreement.
[122] The defendant relies upon what it says is sufficient consideration for the variation agreement as follows:
[119]
(a) the variation agreement cured uncertainty in the option agreement;
(b) the defendant being responsible for the costs of obtaining the DA between 8 October 2020 and 12 April 2021 when it says the option agreement had placed responsibility for all the costs after 8 October 2020 on Your Realty as part of Your Realty's obligations under clause 6.1 of the option agreement;
(c) an exchange of mutual promises - whilst the variation agreement burdened Your Realty by reducing the time in which the option could be exercised, in return Your Realty obtained the benefit of an earlier release from its obligations to continue to use its best endeavours to obtain the DA.
[120]
[123] I am of the opinion that at least (a) and (c) above were sufficient consideration for the variation agreement and the variation agreement is not void for want of sufficient consideration.
[124] That is because, in respect of (a), there was plainly uncertainty in the option agreement. Whilst I have concluded that such uncertainty does not ultimately lead to a conclusion that the option agreement was void for uncertainty, it does not mean that the option agreement was not uncertain. Each party provided a benefit to the other in removing the uncertainty via the variation agreement.
[125] In respect of (c), it was also of benefit to each party to have a clearly defined end date for the exercise of the option. Without that, Your Realty was left in a state of uncertainty as how long it was required to continue to use its best endeavours to obtain the DA. Whilst it is true that Johnson had spent some 18 months working towards obtaining the DA, including responding to at least two requests for further information from the council, the DA had not by then actually been obtained. There could be no certainty in the circumstances that further work was not going to be required. The submission made by the plaintiffs that the variation agreement only operated to Your Realty's detriment is therefore not accepted.
[126] The variation agreement is not void for want of sufficient consideration.
[121]
Is the variation agreement vitiated by undue influence
[122]
[127] This is the part of the plaintiffs' case where the parties devoted much of their time and attention.
[128] The plaintiffs advanced a case that in respect of the variation agreement it was obtained by:
[123]
(a) actual undue influence;
(b) presumed undue influence.
[124]
[129] A person who is subjected to undue influence at the time of entering in the agreement does not do enter the agreement with an independent will.[34]
[125]
[130] Any person who has entered into an agreement under the actual undue influence of another is entitled to have the agreement set aside.[35]
[131] The plaintiffs point to the following evidence as supporting the conclusion that there was actual undue influence:
[126]
(a) Mr Tseng was an experienced and successful businessman who had operated businesses in Taiwan, China and Australia;
(b) Mr Tseng was born in Taiwan and had a traditional Chinese upbringing;
(c) Mr Tseng was aware of the customary aspects of the Chinese culture, including the need for respect and the hierarchy of elders;
(d) Mr Tseng held a position of influence and ascendency over Johnson from a cultural perspective (as well as a business perspective) as he was senior to Johnson and a close friend of Johnson's father;
(e) Mr Tseng treated Johnson like a son and expected Johnson to behave in the same way as his own son, Gavin;
(f) Johnson did not want to agree to shorten the option period or sign the variation agreement; he stated this at the 12 April meeting and the 18 July meeting;
(g) Mr Tseng represented to Johnson that if Johnson needed more time he would give it to Johnson as he treated Johnson like a son;
(h) Mr Tseng arranged the 18 July meeting to confront Johnson about the 12 April meeting minutes (which at the time were unsigned by Johnson) - he took the meeting minutes and a pen to the meeting;
(i) at the 18 July meeting Mr Tseng forced a pen onto Johnson's hand when Johnson said he did not want to sign the variation agreement.
[127]
[132] The plaintiffs submit in the premises of the above matters, the "only reasonable conclusion is that Johnson did not sign the variation agreement with an independent will. He was not able to. He was unduly influenced by Ted's conduct in the circumstances of the ages of the two men, the Chinese customary norms and Ted's close friendship with Johnson's father, Samuel."
[133] Even if all of the matters premised by the plaintiffs were accepted by me (which they are not), I do not consider that the only reasonable conclusion is that Johnson did not sign the variation agreement with an independent will. In fact, I would still conclude that Johnson signed the variation agreement with an independent will.
[134] I do accept all of the matters premises by the plaintiffs except for the following:
[128]
(a) in relation to (e), I do not accept (as it seems to be implicit) that Johnson acting in the same way as Gavin (Mr Tseng's son) required Johnson to sign the variation agreement;
(b) in relation to (f), whilst I accept that Johnson expressed that he did not wish to change the option period (which at the time he was acting on the basis was 3 months after obtaining the DA or negotiated decision notice), he did agree to the option period ending first (at the 12 April meeting and confirmed in correspondence thereafter) on 31 August 2021, and second (at the 18 July meeting) a week later on 6 September 2021;
(c) in relation to (g) I accept that something of that nature was said by Mr Tseng, but it was clear at that stage that any future agreement to further extend the option was likely to require some good explanation and was not guaranteed;
(d) in relation to (h), a further purpose of the 18 July meeting was to see Johnson's mother;
(e) in relation to (i), at some points during the 18 July meeting Johnson verbally expressed that he did not wish to shorten the option period (from what he understood it at the time to be), and Mr Tseng provided a pen to Johnson to use when Johnson said he did not have one. Mr Tseng likely forcefully pushed the pen towards Johnson. He was undoubtedly intent on having Johnson sign the meeting reflecting in essence what he understood to be the earlier agreement reached. I do not accept that the pen was forced onto Johnson's hand when Johnson expressed that he did not wish to sign. I do not consider it likely for the parties to have conducted their business in any physically aggressive manner as implied.
[129]
[135] I do not consider that there was actual undue influence by Mr Tseng on Johnson that affects the variation agreement. I am mindful that the onus of proof rests with the plaintiffs and that given the nature of the allegations the principles in Briginshaw v Briginshaw[1938] HCA 34; (1938) 60 CLR 336 apply.
[136] Whilst the matters relied upon by the plaintiffs (at [131]) are relevant to the question of actual undue influence, so too are the following matters:
(b) Johnson demonstrated an ability to negotiate with Mr Tseng even in the 18 July meeting (by pushing the sunset date back a week);
(c) I do not accept that the "forcing" of a pen onto Johnson's hand occurred in a way that would contribute to Johnson being deprived of any independent will;
(d) Johnson gave evidence about how he weighed up his options in the moment - including to sign or not to sign - and made a decision.
[131]
[137] I note that the defendant submitted that the most powerful evidence against Johnson's allegedly acting under undue influence was the evidence of what was said after the meeting by Mr Lin to Johnson. That evidence, given by Johnson, was that when he spoke to his father after the meeting Mr Lin told Johnson he should not have signed. I do not consider that evidence of any weight to the question of whether Johnson acted under actual or presumed undue influence. It was no more than an opinion expressed by Mr Lin based on information that had been provided to him by Johnson. It is of no assistance.
[138] In considering all of the factors mentioned above, I am not satisfied that in signing the variation agreement that Johnson did not act of his own free will. I am satisfied that Johnson acted of his own free will in signing the variation agreement - that positive finding is also sufficient to dispose of the claim of presumed undue influence but I will deal with that allegation further below. That is not to conclude that Johnson was happy signing the variation agreement, or considered it in his best interests, or did not plan to attempt further negotiations with Mr Tseng at a future time. But none of that is to the point. Actual undue influence is not proved.
[132]
[139] Any person who has entered into an agreement under presumed undue influence of another which has not been rebutted is entitled to have the agreement set aside.[36]
[140] The relationship that existed between Mr Tseng and Johnson is not one of the established categories where undue influence is presumed. It falls then to the plaintiffs to demonstrate that:
[133]
(a) there was a special relationship of control, confidence, influence or other superiority of Mr Tseng over Johnson;
(b) the variation agreement is out of the ordinary course such that the law presumes that the agreement resulted from an unconscientious use of power.[37]
[134]
[141] If those matters are demonstrated by the plaintiffs, then it will fall to the defendant to prove that agreement did not result from an unconscientious use of power.
[142] I am not satisfied that the plaintiff has demonstrated either of the requirements in [140] above.
[143] There was no special relationship of control, confidence, influence or other superiority of Mr Tseng over Johnson because ultimately these were non-related adults,[38] with no dependence on each other, engaged in business dealings, where both were experienced in business. The cultural considerations between the two men are not sufficient in this case to change that conclusion.
[144] Further, the variation agreement was not out of the ordinary course such that the law would presume that the agreement resulted from an unconscientious use of power in any event. Instead, the variation agreement reflected a sensible and ordinary course for the parties to agree an end date to the option agreement where there was uncertainty in the agreement as to the option period. The date agreed (extended by a week) reflected what the parties had earlier informally agreed at the 12 April meeting, confirmed in correspondence (including from Johnson) thereafter.
[145] Further, as I have concluded above, I have found that in signing the variation agreement Johnson acted of his own free will and accordingly even if there was presumed undue influence, I would have found it rebutted. Even accepting that Mr Tseng was in a more powerful position when it came to dealings between himself and Johnson, the variation agreement did not result from any unconscientious use of such power.
[135]
[146] In the result I have found that the enforceable varied option agreement required the plaintiffs to exercise the option by 6 September 2021. They did not do so. The plaintiffs' claim fails.
[147] Judgment is entered for the defendant on the plaintiffs' claim. In the ordinary course, costs would follow the event, but the parties will be given an opportunity to make submissions in support of a different costs order if they see fit.
[2] Insofar as the plaintiffs had pleaded reliance upon an allegation that the variation agreement is void as a consequence of being procured by unconscionable conduct, that allegation was not advanced in substance in the plaintiffs' written closing submissions and was confirmed as abandoned by the plaintiffs during oral closing submissions - T5-5.
[138]
[3] Johnson will be referred to by his first name, intending no disrespect, in order to readily distinguish him from his father Mr Lin.
[139]
[4] Apparently Mr Tseng wanted the top level; Mr Lin wanted the second.
[140]
[5] Mr Tseng in evidence seemed to think that the option agreement was part of some arrangement whereby Johnson had found a construction company in Sydney who was prepared to be involved in the project. Mr Tseng suggested that the call option deed received from Johnson was some type of authorisation so that Johnson could speak to the construction company for Mr Tseng. See T3-24, 25. Mr Hsu also gave evidence about there being a discussion about an authorisation. See T4-13.
[141]
[10] The minutes recorded an agreement that Forwin would bear all costs in obtaining the DA up to 12 April 2021, Your Realty would bear such costs after that date.
[142]
[19] See Cheshire & Fifoot, Law of Contract at [14.6] and [14.9].
[143]
[20]ASIC v Kobelt (2019) 267 CLR 1 at [32]-[40] per Kiefel CJ and Bell JJ.
[144]
[21] Ibid at [77]-[79] per Kiefel CJ and Bell J, [110]-[112] per Gageler J.
[145]
[22] Ibid at [161], [218], [235], [248] and [261]-[262] per Nettle and Gordon JJ, [301]-[302] and [313] per Edelman J.
[24]Upper Hunter County District Council v Australia Chilling & Freezing Co(1968) 111 CLR 429 at 436-437 per Barwick CJ.
[148]
[25]Upper Hunter County District Council v Australia Chilling & Freezing Co(1968) 111 CLR 429 at 436-437 (Barwick CJ); York Air Conditioning v Commonwealth[1949] HCA 23; (1949) 80 CLR 11 at 26-9 per Williams J.
[149]
[26]Australian Guarantee Corp Ltd v Balding[1930] HCA 10; (1930) 43 CLR 140 at 150-153 per Isaacs J, cited in Stradbroke Waters Co-owners Co-operative Society Ltd v Taylor[1988] 1 Qd R 595 at 598 per Matthews J.
[150]
[27]Bank of Queensland Ltd v Chartis Australia Insurance Ltd[2013] QCA 183 at [36] per Applegarth J, Holmes and Gotterson JJA agreeing.
[37] Or in the language of Dixon J from Yerkey v Jones[1939] HCA 3; (1939) 63 CLR 649 at 675 "the mere existence of an opportunity of obtaining ascendant or confidence and of abusing it" combined with the circumstances that is it not "natural to expect the one party to give property to the other."
[160]
[38] And Johnson was not an adult who had only recently reached the age of majority.
Parties
Applicant/Plaintiff:
Your Realty Pty Ltd
Respondent/Defendant:
Forwin International Investments Pty Ltd [2025] QSC 223
[22] Johnson organised for an option agreement (including as annexure A an REIQ purchase contract) to be sent to Mr Tseng and Mr Hsu by email on 1 October 2020. Johnson gave evidence that he used an option agreement from a different project and then edited it himself as he knew Mr Tseng would not like a lengthy document, preferring short and concise agreements. The covering email provided, inter alia:
[37] What is not disputed is that around April 2021 Mr Tseng asked Mr Hsu to obtain legal advice about the option agreement and Mr Hsu did so, consulting with Mr Greg Mann from Tobin King Lateef. The undisputed evidence is that Mr Mann told Mr Hsu there was a problem with the option agreement in that it had no end date (or sunset date), and an end date should be negotiated and agreed. This is a problem with the option agreement noted at [33] above, which also creates the problem noted at [34] above.
[38] Mr Tseng arranged a meeting with Johnson and Mr Hsu on 12 April 2021 at his apartment. Mrs Anita Tseng, as a representative of Forwin, is recorded in minutes as also being present although Johnson gave evidence that she was moving around, preparing drinks and desserts. She does not appear to have participated in the meeting in substance. She did not give evidence. No complaint about that is made.
[39] Johnson gave evidence that prior to this meeting he had been attempting to avoid Mr Tseng as he was concerned that Mr Tseng wanted to terminate the option agreement and return the option fee. Johnson did not feel able to do that given the time he had devoted to the project up to that point in time. But nor did he feel capable of not attending the planned meeting in circumstances where Mr Tseng was insisting on a meeting and Mr Tseng is Johnson's elder - at the same level as his father Mr Lin in terms of cultural considerations. What then occurred at this meeting is contentious.
[40] Initially the meeting started with a suggestion by Mr Tseng that he had no written agreement with Johnson and so was going to refund the option fee. Mr Tseng said Johnson had never signed the option agreement. Johnson refuted that and said he had sent the signed option agreement back to Mr Hsu and would forward the relevant email to them after the meeting.
[41] Mr Tseng and Mr Hsu say that at the meeting an agreement about an end date for the option was sought by Mr Tseng from Johnson. Mr Tseng asked for 31 July 2021, Johnson responded that he needed until 31 August 2021, and Mr Tseng agreed that end date.
[42] Johnson says no end date of 31 August 2021, or any date, was agreed at the meeting. Johnson says he told Mr Tseng that he would not agree to shorten the option period, that there was no DA yet, and no certainty as to when the DA would be achieved. He did not have the capital himself to exercise the option and would need a third-party buyer or partner, and that would not occur without the DA.
[43] Johnson says that during the meeting Mr Tseng also insisted that Johnson be responsible for DA application costs and fees moving forward from that day, in light of the delays experienced. Johnson says he did not agree to that - the DA application was in the name of Forwin (at the insistence of Mr Tseng from the start) and his view was that Forwin would need to pay all those costs and fees.
[44] Johnson said that the problem with the option agreement identified at [33] was not drawn to his attention at the meeting, and only came to his attention[9]much later.9 Johnson seems to have acted on the basis that the option period expired three months after the DA / negotiated decision notice was obtained (which is not what the option agreement provided if the definition of Option Period applied). Mr Tseng and Mr Hsu seem to accept that they did not specifically tell Johnson that they had legal advice that the option agreement's definition of option period was problematic or that the option agreement did not have an end date, simply that Mr Tseng sought to agree an end date to the option agreement with Johnson.
[45] Following the meeting Johnson forwarded to Mr Hsu the earlier email in which he had sent Mr Tseng the signed option agreement on 1 October 2020.
[46] The following day (13 April 2021) Mr Hsu emailed Johnson purported minutes of the meeting, prepared by Mr Hsu and already signed by Mr Tseng. It was not expressly put to Mr Hsu in cross-examination that the minutes he prepared were not an accurate record of the meeting. Johnson was asked in the email to sign and return same. The substance of the minutes was as follows:
[79] Thus, in relation to the key meeting of 18 July 2021, I do not accept that the meeting was as friendly as suggested by Mr Tseng, nor as obviously fraught as suggested by Johnson. The truth lies somewhere in between.
[80] Ultimately in this case, I consider that the written record, insofar as it exists, provides the best insight into the truth of the nature of the interactions between Mr Tseng and Johnson.