Bui v Luong and Hollywood Nails Services Ii Pty Ltd
[2013] VCC 1
•21 January 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05694
| HIEP TO BUI | Plaintiff |
| v | |
| TRAC THANH NGOC LUONG | First Defendant |
| and | |
| HOLLYWOOD NAILS SERVICES II PTY LTD (ACN 095 381 428) | Second Defendant |
---
JUDGE: | HIS HONOUR JUDGE CARMODY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14, 15, 18-22, 25-29 July and 1-5 August 2012 | |
DATE OF JUDGMENT: | 21 January 2013 | |
CASE MAY BE CITED AS: | Bui v Luong & Hollywood Nails Services II Pty Ltd | |
| MEDIUM NEUTRAL CITATION: [First Revision 30 January 2013] | [2013] VCC 1 | |
REASONS FOR JUDGMENT
---
Subject: TRUST
Catchwords: Express trust – implied trust – resulting trust – constructive trust – failure to call witness
Cases Cited:Calverley v Green (1984) 56 ALR 483; Russell v Scott (1936) 55 CLR 440; Rasmussen v Rasmussen [1995] 1 VR 613; O’Donnell v Reichard [1975] VR 916
Judgment: For the defendants
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M J Corrigan | Asia Pacific Lawyers |
| For the Defendants | Mr M T Lapirow | Willcocks Lawyers |
HIS HONOUR:
1 The proceeding was commenced by a generally endorsed writ dated 30 November 2009. The plaintiff, Hiep To Bui (“Bui”), filed and served a Statement of Claim dated 18 February 2010. There have been Further and Better Particulars provided to that Statement of Claim.
2 The matter was listed for trial on 14 July 2011. Prior to that listed hearing date, his Honour Judge Anderson of the County Court made an order in respect of this proceeding on 30 June 2011. His Honour ordered:
“1 At the hearing on 14 July 2011, the Court shall first determine as preliminary questions:
a. whether after November 2001, the first defendant has held both issued shares in Hollywood Nails Services II Pty Ltd [(“HN2”)] on trust for the plaintiff as beneficial owner;
b.whether since November 2001, Hollywood Nails Services II Pty Ltd has held the various businesses conducted by it and other assets as trustee for the plaintiff as beneficial owner.
… .”
3 In this trial, the above questions were referred to as the liability issues between the parties.
4 Mr Corrigan, counsel for the plaintiff, in his opening, which extended over some four days prior to commencing the evidence, submitted the plaintiff relied on:
(a)an express or implied trust by the first defendant in respect of the shares in HN2;[1] and
[1]Transcript (“T”) 170
(b)the resulting trust derived from the plaintiff, Bui, investing or spending $400,000 to $500,000 in setting up and running the businesses at The Glen and Eastland;[2] or
[2]T 173
(c)a constructive trust.
5 These three forms of trust were to establish either that the first defendant, Trac Thanh Ngoc Luong (“Trac”), or HN2 conducted the nail salons at The Glen and Eastland for the benefit of Bui.
The law of trust as applicable to this case
(a) Express trust
6 The pleadings and opening by the plaintiff referred to an express trust in respect of Trac holding the shares in HN2 on trust for the benefit of Bui. It was alleged by the plaintiff that at the time of the transfer of the shares (17 November 2001) in HN2 from Bui and Thanh to Trac, that Trac agreed to hold the shares for the benefit of Bui.
7 The evidence from Bui, Trinh Hung Quang Trinh (“Trinh”) (the accountant), Thanh and Trac does not support this allegation. What is clear from each of these witnesses is that Bui, Thanh and Trac attended the office of Trinh, the accountant, at separate times around 17 November 2001 and signed the necessary documentation to transfer the shares and directorships of HN2 to Trac.
8 There is no evidence of a trust deed between Bui and Trac to set out the arrangements concerning the share transfer in HN2 and the ongoing obligations of each party. Bui is a very experienced and well advised businessman and no such document or deed was ever entered into by he and Trac. I concluded that, based on the evidence in this case, there was no express trust between Bui and Trac in respect of the shares in HN2, and the beneficial ownership of them was transferred to Trac at that time.
(b) Resulting or implied trust
9 In this case, Bui alleges that a resulting trust arises in respect of the beneficial ownership of the shares in HN2. The two shares in HN2 were transferred to Trac on 17 November 2001. The legal title of those shares was transferred to Trac on or about that date. Bui alleges that the legal title to the shares is held by Trac, but that the beneficial interest in the shares is retained by Bui. The plaintiff relies on the authority of Calverley v Green (1984) 56 ALR 483 at page 485, where Gibbs CJ stated:
“Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, ie, a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. … .”
10 Bui relies on the concept of a presumed resulting trust. Bui alleges that there has been a transfer of the property, i.e., shares, for no consideration. There is no evidence in this case that the $2 nominal value of the two shares was paid by Trac to Bui or Thanh.
11 Bui needs to establish two factors to raise a resulting trust in respect of the shares in HN2:
(a)The voluntary transfer of the shares (in his case, one share) previously held by him. Bui alleges the share held by Thanh was on trust for Bui so both shares are voluntarily transferred by Bui.
(b)That Bui did not intend to transfer the beneficial interest in the shares in HN2 to Trac.
12 A resulting trust is created at the time of transfer of the property. In this case, that is at the time of the transfer of the shares on 17 November 2001. A resulting trust can arise in respect of personal property (Russell v Scott (1936) 55 CLR 440). It is open to create a resulting trust in company shares.
13 The rebuttal of the presumption of a resulting trust is a matter for Trac to prove on the balance of probabilities. Trac has submitted that the consideration has been provided for the transaction of the transfer of the two shares. It was submitted that non-payment of the purchase price, i.e., $2, does not alter the fact that the transaction was for consideration, be it executed or executory consideration.
14 At the time of the transfer of the shares, Trinh warned Trac about taking on the HN2 liabilities. The forbearance of past debts of HN2 is a form of consideration that is applicable in this case. However, the overall facts of this case at the time of the transfer to Trac is that HN2 had not prepared any taxation returns or books of account between its incorporation in December 2000 and the time of the transfer in November 2001. The two shops that Bui stated were operated by HN2 at The Glen and Eastland were in fact operated by his partner, Dung Trung Le (“Dung”), and the leases were in the name of the company that Bui and Dung conducted, i.e., Hollywood Nails Services Pty Ltd (“HN1”). There is no evidence that at the time of the transfer of the shares that HN2 had any value or ongoing operations. I do not accept Bui’s evidence established that the beneficial interest in the shares of HN2 was not transferred to Trac. The only documentation produced at the time records the legal and beneficial interests in the shares in HN2 was transferred to Trac. The evidence of Trinh supports this proposition:
“I’m just interested in the fact that Trac was the legal owner of Hollywood Nails II from the legal point of view.”[3]
[3]T965
15 I conclude that Trac did not hold the shares in HN2 on the basis of a resulting trust. A full analysis and reasoning for this conclusion follows in the Reasons for Judgment.
(c) Constructive trust
16 The plaintiff (Bui) submits that a constructive trust should be imposed over the shares in HN2 and the businesses of the company. The elements of a common intention constructive trust as submitted to apply in this case by the plaintiff are:
(a)There needs to be a “common intention” regarding the beneficial ownership of the property in question. In this case, that would mean both the shares and business conducted by HN2; and
(b)That Bui (the person seeking to establish the constructive trust) has suffered a material disadvantage or detriment in reliance upon the purported common intention; and
(c)It would be unconscionable for the legal owner (Trac or HN2) to assert ownership over the beneficial title in the shares in the company or ownership of the businesses.
17 The onus of proof in this respect is upon Bui, the party seeking to establish the constructive trust. The common intention of the parties may arise at the time of the transfer (i.e., transfer of the shares on 17 November 2001) or after the time of “acquisition” of the businesses. A court can impose a constructive trust regardless of the intentions of the parties.[4]
[4]Rasmussen v Rasmussen [1995] 1 VR 613
18 I conclude that there was no common intention between Bui or Trac about the transfer of the shares to Trac from Bui and Thanh. I conclude, based on the totality of the evidence, that there was no common intention proven by Bui that Bui and Trac had agreed about the conduct of the businesses by HN2. The full reasoning for these conclusions is set out in a review of the evidence.
I am not satisfied that Bui has proven he has suffered a material disadvantage or detriment. This is different from a concept of disappointed expectation (i.e., Rasmussen[5]). Bui claims to have paid considerable sums of money to fit out the two shops at Eastland and one shop at The Glen. These shops were leased by entities other than Trac or HN2. Bui had his own dealings with these other entities and received money and a settlement from Dung in respect of HN1. In short, Bui’s financial dealings were complex and secretive and the Court was not satisfied by his evidence that he had suffered a material disadvantage or detriment as a result of his transfer of his shares in HN2 to Trac or HN2’s business operations. The final element Bui needs to establish is that it would be unconscionable for Trac or HN2 to renege on the alleged common intention. I do not accept that Bui has established a common intention between himself and Trac and HN2. The business conducted by HN2 has been at the expense and efforts of Trac. The fact that HN2 has operated at premises either leased by HN1 or Odyssey Nails Pty Ltd (“ONS”) is a result of Dung, a director of both companies, allowing Trac and HN2 to do so. Dung was Bui’s partner in HN1 until 2008.
I conclude that Bui has failed to establish the requisite elements to establish a constructive trust either in respect of the shares in HN2 or the businesses conducted by HN2.
History of the entities and shops in this case
(a) Hollywood Nails Services Pty Ltd (“HN1”)
[5]supra
21 HN1 was incorporated on 14 September 1998. The directors and shareholders at that time were Bui and Dung.
22 The plaintiff resigned as a shareholder and director of this company on 15 July 2009. This followed a settlement between Dung and Bui in respect of HN1. On 15 July 2009, Dung became sole shareholder and director of HN1. According to Bui’s evidence, the settlement payment by Dung to Bui was $200,000.[6]
[6]T669
(b) Hollywood Nails Services II Pty Ltd (“HN2”)
23 This company was incorporated on 13 December 2000.[7] The original shareholders and directors were Bui (the plaintiff) and Van Thanh Nguyen (“Thanh”). On or about 17 November 2001, the directorships and shareholdings of both these parties were transferred to Trac. Trac has subsequently conducted the company and businesses for himself through the entity of HN2.[8]
[7]Court Book (“CB”) 574
[8]CB 253
(c) Hollywood Nails Services III Pty Ltd (“HN3”)
24 Bui has incorporated this company to renovate his shop at The Glen.[9] This has happened prior to May 2011.[10] The shop at The Glen conducted by HN3 is a different shop to any of the ones considered in this case. The incorporation of this company and the conduct of a separate business under HN3 clearly indicates that Bui can operate a business in Australia and does so in a very direct way.
[9]T708
[10]T695
(d) Odyssey Nails Pty Ltd (“ONS”)
25 This company was incorporated on 10 March 2004. The sole director and shareholder was Thu Anh Thi Le (“Anh”). Anh is the daughter of Dung. ONS conducted a large number of nail salons. It also leased the shops at Eastland and The Glen.
(e) Diem Ha Pty Ltd (“Diem Ha”)
26 This company was incorporated on 28 July 2005. The company was dissolved on 18 June 2008.[11]
[11]CB 426 and T647
27 The original shareholder and director of Diem Ha was Ba Thinh Ngo (“Thinh”). Thinh resigned as a director on 1 February 2007.[12] After he had resigned and was no longer a director of the company, on 9 April 2008, Thinh authorised the deregistration of the company that took effect on 18 June 2008.[13]
[12]CB 427
[13]CB 442
28 Thanh was a director and shareholder of Diem Ha from 1 February 2007 until 18 June 2008.[14] The plaintiff, Bui, gave instructions to the accountant, Trinh, to incorporate Diem Ha.[15] Bui was the owner of Diem Ha but was not a shareholder or director of the company. Bui maintained that Thanh, and subsequently Thinh, held the shares and beneficial interest in Diem Ha on behalf of Bui.
[14]CB 427
[15]T 863
(x) Eastland – Shop GO61
29 This shop was leased by HN1 from 1 October 2000 to 30 September 2005.[16] Dung signed this Lease on behalf of the company in his own name and, under the power of attorney from Bui, on behalf of Bui.
[16]CB 443
30 On 30 January 2006, a further lease for this shop was entered into by HN1 to expire on 30 September 2010. This shop was fitted out by Dung for HN1.
31 Trac’s evidence was that this shop was closed in February 2011 on the instruction of Dung.[17] In the process of closing the shop, Trac gave evidence that he paid $17,000 for the removal and repair of fixtures and fittings in that shop.[18] From the beginning to the end, HN1 was the lessee of this shop.
[17]T 1079
[18]T 1080
(y) The Glen – Shop 2.91
32 Hollywood Nails leased this shop from 3 July 2000 to 2 July 2006.[19] ONS leased this shop from 3 July 2006 until 2 July 2011.[20]
[19]CB 453
[20]CB 458
33 Dung and his daughter, Anh, were the guarantors for this latter lease. The evidence is that Dung managed this shop until 30 June 2003 and Trac managed it from that time onwards. There is no evidence of any assignment of this lease to HN2 either by HN1 or ONS.
34 In the period of 3 July 2006 to 2 July 2011, no legal entity related to Bui had any entitlement at this shop. Trac’s evidence is that this shop was closed on 30 June 2011. Trac stated that Dung had instructed him to close that shop and Dung paid for the reinstatement of The Glen shop at that time.[21]
[21]T 1079
(z) Eastland – Odyssey Nails Shop – Shop LO46A
35 This shop was leased by ONS from 15 June 2005 until 14 June 2011. The landlord is QIC. ONS at the time of the trial was still in possession of the shop. At the time of the trial, HN2 ran the shop and Trac’s evidence is that Dung, in his capacity as director of ONS, has told him to keep doing business until Dung gives him notice.[22] HN2 has paid all outgoings and expenses relating to conduct of the business at that shop. In this case, the parties referred to this shop as “The Odyssey Nails shop”.
[22]T 1081
36 On the evidence in this case, Bui has no legal interest or right in relation to this shop. Diem Ha had run the shop from approximately July 2005 until that company ceased to exist in 2008. Bui alleges that the shares in Diem Ha and the interest in the business at Odyssey Nails Services conducted at this shop were held on trust for him personally. I reject that submission.
Failure to call witnesses
37 The undisputed evidence in this proceeding was that HN1 ran Eastland and The Glen shops under the banner of “Hollywood Nails” until 13 June 2003. Dung, who was a 50/50 partner with Bui in the company HN1, was the manager of the two shops. Dung was also the power of attorney for Bui[23] between 1 December 1998 and when Bui revoked the power of attorney on 6 November 2008.[24] Trac’s evidence is that Dung directed him about the use of all premises at Eastland and The Glen. The plaintiff (Bui) opened his case on the basis that he was going to call evidence from Dung and Dung’s daughter, Anh. Anh is the director of ONS. From 2005 to 2006 onwards, ONS was the lessee of the shop (LO46A) at Eastland and The Glen.
[23]CB 412 and 413
[24]CB 410 and 411
38 The plaintiff (Bui) opened his case on the basis that evidence was to be called from Anh about the second shop at Eastland (LO46A).
39 In the course of the hearing, reference was made by counsel for the plaintiff about difficulties in organising a convenient time to call Dung. At the close of the plaintiff’s case, neither Dung nor Anh had been called to give evidence. There was no explanation by the plaintiff for not calling either Dung or Anh. This is despite the allegations set out in the opening and the obvious connection both of these witnesses had with the dealings of the plaintiff and both defendants in the conduct of the nail salons both at Eastland and The Glen.
40 It is appropriate in this case to draw an inference that the evidence of either Dung or Anh would not have assisted Bui. The authority of O’Donnell v Reichard [1975] VR 916 supports this proposition.
Evidence in this case
Hiep To Bui (“Bui”)
41 Bui stated that he first came to Australia for Trac’s wedding in 1997.[25] At the wedding he met Dung.[26] Dung and Trac are brothers-in-law, having married sisters.
[25]T 357
[26]T 358
42 Bui stated that he incorporated HN1 on 14 September 1998.[27] Bui stated that Dung owed him $182,000 in 2005.[28] Bui stated that by 2000, HN1 had five operating nail salons. Bui stated that he and Dung had signed leases for Eastland and The Glen.[29] This evidence is contrary to the written documentation at the time.
[27]T360
[28]T363
[29]T364
43 Bui stated that he had given power of attorney to Dung on 1 December 1998.[30] Bui stated that he had revoked that power of attorney on 6 November 2008.[31]
[30]T366 and CB 231-232
[31]T365, CB 229-230
44 Bui stated that in respect of the leases at Eastland and The Glen, he said as follows:
“I said to Dung that I want the two shop[s] belong to me and then I put the money in.”[32]
(sic)
[32]T371
45 Bui then gave evidence that his niece, Anh Quynh Le, and his wife paid $60,000 into the Trac account referred to in Exhibit B. Bui stated that most of the $209,000 in the joint account comes from his niece in the Philippines, Vo Thi Thuong.[33] He stated that Dung paid $85,000 into the account held in the name of Trac and that this money was paid for the Odyssey Nails Shop at Eastland. Bui stated that he repaid Dung.[34] There was no evidence to support the repayment of the money alleged to have been received from Dung.
[33]T374 to T378
[34]T379 to T380
46 Bui stated that the sum of $92,215 referred to in Exhibit C3 is payment for the Odyssey Nails Shop at Eastland and the renovation of the two shops conducted by HN2.[35] Bui agreed that Dung arranged for the fit-out of the Eastland and The Glen shops which were ultimately managed by HN2.
[35]T386
47 When Bui incorporated HN2, The Glen shop had already been opened. He stated that he had told Thanh, his friend, about being a director of HN2 but was not sure about the issue of a share.[36] I find that this statement by Bui is unbelievable in the context of these commercial dealings.
[36]T390
48 Bui then stated that he had told Dung that he had opened the shops which belonged to him, but that Dung was to run the businesses for him.[37] Bui stated that he was in agreement with Dung that the lease which was held by HN1 was to be given to HN2.[38] I do not accept this evidence, given the fact that at this time Trac had been operating HN2 and its businesses, and that would have been well known to Dung.
[37]T390
[38]T413
49 Bui then gave evidence that he had opened the joint account and had later put in Trac’s name to that joint account.[39] His explanation for that process was that if he, Bui, was not in the country, then Trac could access that account. I find that Bui’s explanation for the various transactions in the two bank accounts referred to in this case is unsatisfactory. He denied that he had any problems with the Australian Taxation Office.[40] I do not accept that evidence.
[39]T414
[40]T415
50 Bui stated that he did not get any advice from his accountant, Trinh, in relation to the shareholding in respect of HN2. The only advice he got was relating to the directorship.[41] I do not accept this evidence, as Trinh has given evidence about being told to incorporate the company and who were the directors and shareholders. These instructions came from Bui. Bui went on to say that he did not understand the difference between a director and a shareholder of a company.[42] I find that that this evidence is simply unbelievable in the setting where Bui, a well experienced businessman, did not understand the difference between a director and a shareholder.
[41]T416
[42]T418
51 Bui stated that Trac’s role in the conduct of Hollywood Nails salons was that he was helping Bui. He said that he was the manager of the two shops. He stated that Dung managed the shops for the first few years. Bui stated that Dung had the right to look after the money and Trac was to go to the shops and look at all the books.[43] This is a clear statement that support’s Trac’s evidence that Bui wanted Trac to monitor and report on the operations of HN1 that were being conducted by Dung in Australia for both Dung and Bui.
[43]T419
52 Bui went to Trinh’s office separately to sign the transfer of shares document. In Bui’s evidence there is no evidence to support an allegation of an express trust either being made orally or in writing. He stated as follows:
“Q: When you say ‘us’, whom do you mean?---
A: We go there separately. I come there first to sign it because Mr Thanh was busy, so he came later and signed the paperwork.
Q: When you were there was anyone else there apart from the accountant?---
A: No, nobody else.”[44]
[44]T421, L12-16
53 This evidence is at complete odds to the manner in which the opening of the case was made in respect to the issue of an express trust.
54 Bui was shown Exhibit D which is the transfer document for the shares in HN2. He stated that he did not understand the document.[45] I do not accept Bui’s evidence in this regard.
[45]T433
55 Bui confirmed that the arrangement for Trac in respect of HN1 was to watch over the activities of Dung. In evidence, he stated, when being asked about cash money in the envelopes:
HIS HONOUR:
“Q: What money?---
A: The money from the shops sent back there and that is written out, recorded.”
MR CORRIGAN:
“Q: Which of the other shops?---
A: The shop – from Hollywood I.
Q: Had you asked Trac to do that?---
A: Yes.
Q: Why had you asked him to do that?---
A: Because I would not let Dung Le do it by himself.
Q: Can you explain why that was?---
A: Because I want two people to control the money so there can be a witness.”[46]
[46]T443, L 22-31
56 This is clear evidence of Trac’s role in monitoring the activities of HN1 on behalf of Bui. Trac’s evidence confirms this is the case.
57 Bui stated that in June 2003, Dung transferred the shop at Eastland and The Glen to him. He said that this occurred because Dung could not afford to pay the rent totalling $6,000. Bui stated that he paid the rent of $6,000 for those two shops. Bui later gave evidence that he had paid the $6,000 for the rent but Dung had then returned the money to him, which was the rent.[47] This piece of evidence clearly indicates that Bui was not paying the expenses for the conduct of the shops by HN2 at that time.
[47]T451
58 Bui agreed that the lease for Shop 46A at Eastland was taken out by ONS. The business traded at that address was Odyssey Nails.[48] He stated that the shareholder and director of ONS was his uncle, who he referred to as “Thinh”. It was then pointed out to him by his own counsel that ONS’s director was Anh, not Trinh. Bui stated that he received the lease from Anh and then got all the contracts for the electricians and water and the equipment for the nails’ business. He went on to say:
“I will say that I spent all the money to set the shop up.”[49]
[48]T473
[49]T474, L 27-28
59 There was no documentary evidence of an assignment of lease from ONS to Bui.
60 The accounting documentation and expenditure set out in Exhibits B and C do not support this proposition. Bui then went on to say that Trac had set up the shop on his behalf. This is a clear example of the plaintiff, Bui, mixing up who are the legal entities and parties exercising property rights over the shops and management of them. Bui finished this segment of his evidence by stating that:
“… when I migrated to Australia, all the shop must be transferred into my name.”[50]
(sic)
[50]T476, L 16-17
61 Bui agreed that the company, Diem Ha, was dissolved or brought to an end on 18 June 2008.[51] Bui gave little evidence about the conduct of the business of Diem Ha, other than to say that he had substitute directors involved in that company. He gave evidence that Trac had been operating the business of Diem Ha at the second shop in Eastland for him.
[51]T647
62 There was no evidence given by Bui in respect to payment to Trac for the conduct of that business. Bui did, however, give evidence that he had paid Trac for his work in managing HN2 and HN1 for the periods 2000 to 2008. The alleged payment was approximately $22,000 per year.[52] There was no documentary evidence to substantiate those payments to Trac. Trac was not cross-examined about it.
[52]T655
63 Bui gave evidence that he had a dispute with Dung in 2008. He said that he came to a settlement with Dung over his interest in HN1. The sum of the settlement was $200,000. He denied that a sum of approximately $1 million was the true settlement figure.[53] There was no evidence about the settlement with Dung. At that stage in the trial, all indications were that Dung was going to give evidence and potentially he could have been cross-examined about the settlement and the terms of the settlement with Bui over the dealings of HN1 and the shops at Eastland and The Glen.
[53]T669
64 Bui agreed that the accounts presented in Court did not show that HN2 owed loans to Bui. Bui was then asked this question, and gave the following evidence.
“Q: When you gave money, you say to Hollywood Nails II, for shop fitting expenses, why didn’t your accountant show that Hollywood Nails II owed you that money?---
A: Because at that time Dung Le was looking after those two shops and he also did the tax returns and bookkeeping for them.”
65 I find that this answer is an example of the plaintiff (Bui) confusing the operations of HN2 and HN1.
66 Bui, in his evidence, stated that it was Dung who did not want the income to show up in the books of account for Hollywood Nails shops. He denied that he had asked Trac to collect cash money from Dung.[54] Bui denied that he was dealing in cash money so that he did not have to pay tax.[55] I accept the evidence of Trac in this regard, that he moved or transferred large sums of money on behalf of Bui to Vietnam after he had collected the cash from Dung on behalf of Bui.
[54]T687
[55]T688
67 Bui gave evidence that he commenced the company, Hollywood Nails Services III Pty Ltd, on 24 May 2011.[56] Bui’s evidence was that he conducted a different shop at The Glen under the name of Hollywood Nails. This is a clear example that Bui knows how to look after his own commercial interests by his direct involvement. This is a contrary way of acting compared to the allegations he has made in respect of the conduct of the HN2 shops. Bui did not give convincing evidence in relation to his taxation liability here in Australia. He confirmed in his evidence that when asked whether he had a tax problem in Australia, he stated:
“At that time I was asked if I had any personal tax problems and I said ‘no’. And I did say in 2005, tax people audited Hollywood Nails I.”[57]
[56]T696 and T708
[57]T720
68 He then went on to say:
“Q: Yes, because you’re telling this court that you were Hollywood Nails I?---
A: Because I and Dung Le are co-directors of Hollywood Nails I but I made [a] power of attorney authorising Dung to have the full power of running the business over here.
Q: You knew enough in 2005 to be concerned because you were a director of the company, didn’t you?---
A: Yes.
Q: You knew at that time that being a director could make you personally liable for tax problems, didn’t you?---
A: I myself did not have tax problems in – did not have a tax problem in 2005 because the person in reality running [the] business was Dung. He ran the business Hollywood Nails I in Australia.”[58]
[58]T724, L12-24
69 This is an example of Bui clearly differentiating between the role of director and a company. He clearly differentiates between personal liability and that of a director of a company. I do not accept Bui’s evidence on this issue of tax as he has been deliberately obscure about answering questions directly.
70 Bui denied that he was regularly paid large sums of money in cash by Dung. He was asked this question:
“Q: The point is, I put it to you, that you directed far more than $30,000 to be paid from Australia to various people in 2006. What do you say about that?---
A: That one I don’t remember. It was beyond my capacity to recall.”[59]
[59]T769, L25-28
71 This answer by Bui is unbelievable. The concept that he does not have the capacity to recall the detail of financial transactions in a setting where he maintains that there is a trust between himself and Trac in respect of the conduct of businesses of HN2 is not believable.
72 Bui gave evidence that he never received any money or reports from Trac on HN2 for the period from 2001 to the present time.[60] This evidence clearly indicates that Bui understood that HN2 and Trac’s operations through it were separate and independent of anything to do with Bui or his corporate entities. All the evidence in this case and the method of operation by Bui of his businesses and business dealings, in particular with Dung and HN1, show that Bui would insist on payment of money and accounting by Trac or HN2 for the conduct of HN2’s business. Bui’s inaction on HN2 is contrary to his alleged proprietary rights in HN2 businesses.
[60]T789
73 Bui explained why he was seeking to conceal things from Trac’s aunty, as follows:
“I mean the business in Australia did not make a profit – sorry, the business in Australia operated at a loss and I hid it from my wife, so at the time Trac informed that he has spent the money and I told him in this that the business in Australia I had hidden it or concealed it from my wife, because I had invested a lot to my nail business in Australia but did not earn much in return. That is why there were arguments between my wife and me. That is why I explain it.”[61]
[61]T822, L21-30
74 This explanation does not assist Bui because it clearly indicates that he was prepared to hide his business dealings from his wife over a long period of time. It does not accord with the moving of cash from HN1 to a destination in Vietnam through the agency of Trac. Near the end of Bui’s evidence, he gave an explanation that Dung was taking cash out of the business in order to pay his debt to Bui. Bui denied that the cash had not been accounted for in taxation. This evidence is contradictory to his earlier evidence where he said he did not receive cash from Trac.
75 I found that Bui was an unsatisfactory witness and did not give full and frank answers when afforded the opportunity. Bui was in Court when the order for witnesses out of Court was made and he subsequently contacted witnesses that were not referred to in the opening to come along and give evidence. This was another indication that he did not properly respect the Court process and the need for openness and transparency in his behaviour, particularly in a case where he was seeking equitable relief.
Van Thanh Nguyen (“Thanh”)
76 Thanh has known Bui for thirty years.[62] Bui is a really professional businessman, according to Thanh.[63] Thanh put his name on Hollywood Nails to help Bui.[64] Thanh knew nothing about HN2’s business. Thanh gave evidence that he transferred his share in HN2 and the directorship to Trac on about 17 November 2001.[65] Thanh could not remember where or when he signed the transfer of the share in HN2 to Trac.[66] He first met Trac in February 2007.[67] Thanh gave evidence that he met Trac in a noodle shop in Richmond and at the Commonwealth Bank in Richmond to sign some papers to do with Diem Ha.[68] It was not clear from the evidence of Thanh precisely what papers were signed by him at the time.
[62]T893
[63]T893
[64]T894
[65]CB 561
[66]T899
[67]T900
[68]T902-903
77 Thanh’s evidence was vague and he had little or no recollection of dates or details about the two companies that he had been a director and shareholder in. The two companies were HN2 and Diem Ha. Thanh gave no evidence about the conduct of the businesses at Eastland or The Glen. He was not cross-examined.
78 Thanh then volunteered the following statement at the end of his evidence:
“Everything which belong to Caesar must be sent back to Caesar.”[69]
[69]T908, L15-16
79 Thanh is a long-term and trusted friend of Bui. His evidence, despite his best efforts, did not support the plaintiff’s claim. His final statement at the end of his evidence clearly shows a bias and respect for Bui.
Le Kan Loan (“Loan”)
80 Ms Loan was called to give evidence in support of the plaintiff’s claim. She met the plaintiff at the wedding of Trac to Doan.[70] Loan started work at HN1 in the Eastland Ringwood shop in 2000. She stated that Dung and Bui were the operators of the business known as HN1. In 2000 to 2002, Trac did not give her directions at those shops. She then moved to Northland after 2002 and worked for HN1, which was then being conducted by Dung.
[70]T913
81 In 2005, Loan was contacted by Bui[71] and employed at Odyssey Nails in Eastland. Loan stated that Trac had made contact with her for this work. The agreed rate to be paid to Loan was $14 per hour. In 2005, Loan did not know who ran the upstairs shop at Eastland. She stated that she was paid to work in both the upstairs shop in Eastland and the downstairs shop in Eastland. The payment was one payment.[72] Loan said that Trac stated he just ran the shops and if there was any problem he would ring Bui.[73] Loan asked for a set table, as in a regular place to work, and stated that she then remained at the Odyssey Nails shop, which was the downstairs shop at Eastland.
[71]T918
[72]T919
[73]T920
82 Loan gave evidence of Trac showing her pornography at work as a reason for leaving the Odyssey Nails shop.[74] The last time she saw Bui was two years before giving evidence in this case. Since she left the Odyssey Nails shop, she had worked for Diamond Nails, which is conducted now by Dung.
[74]T924
83 About one month before giving evidence, Loan says she was contacted by Bui. When she was at the Odyssey Nails shop, she was paid in cash.[75] Loan, at the end of her evidence after she had been excused, asked if she could say one more thing. She said:
“Your Honour, honestly speaking, I’m very grateful to Uncle Hiep Bui because without him bringing the nail industry to Melbourne here, even these days I don’t know what I can do to bring the bread home for my children, or child, and I really think that he has brought the nail profession, the nail career, to the Vietnamese community here in Melbourne and I am very grateful to him.”[76]
[75]T927
[76]T927, L10-17
84 This was an unsolicited and extraordinary endorsement of Bui by Loan.
85 Loan’s evidence does not assist the plaintiff in determining whether there was a resulting trust created by Bui at the time he sold his shares in Hollywood Nails 2 to Trac. Her evidence does not support the proposition that there was a constructive trust in respect of either the Hollywood Nails shop conducted at Eastland or the Odyssey Nails Shop conducted at Eastland by HN2. It is clear that she had no direct knowledge about the financial operations of either of the businesses where she worked.
86 The last part of her evidence quoted above is the clearest example of bias that one could imagine. The evidence of her reason for leaving the Odyssey Nails shop in the light of it never being mentioned before, was a poor attempt to smear the credibility and reputation of Trac. Loan’s evidence adds no support to Bui’s claim against the defendants. It does indicate the lengths the plaintiff was prepared to go to try and discredit Trac, his nephew.
Thi May Le Dang (“Dang”)
87 Ms Dang worked as a nail technician for “Hollywood Nails” between 2001 and 2005. She worked at The Glen and Southland stores. Dung was her trainer at The Glen. Dung was the employer. She was employed at the end of 2001. The person she identified as “David” was the manager of the shop whilst Bui and Dung were the partners at The Glen.
88 Dang stated that there were two periods of management at The Glen. The first period was Dung and Bui. The second period was after they separated and Trac was acting on behalf of Bui.[77] Dung had nothing to do with ownership of The Glen shop, according to Dang.
[77]T1007
89 Dang gave evidence that when the Dung and Bui partnership agreement finished, that Dung said that the two shops in The Glen and Eastland were now under Trac, who had asked to act to look after them.[78] She regarded Bui as her boss.[79] She based this on Trac saying he would refer queries to Bui. She gave evidence that she thought Bui was the owner of The Glen and Eastland shops.[80] Dang stopped working at The Glen in 2005 and moved to the Southland store where Dung was in charge of HN1.
[78]T1009
[79]T1010
[80]T1017
90 Bui asked her to give evidence on the Friday before she did give evidence.[81] Bui met her downstairs at Court at 9.00am and took her upstairs to a room outside this court room.[82] Dang said she had never spoken to the plaintiff’s lawyers before she gave evidence. I do not accept the evidence of Dang. It would be highly unlikely that a witness would be called by the plaintiff in this case without a conference with legal representatives before she gave evidence. The evidence of Dang saying she remembered specific conversations six years previous to giving evidence is just not credible. Dang had been contacted by and spoken to by Bui a couple of days before she gave evidence. Dang said that Bui had given her a general explanation of the dispute between Trac and himself.[83] Dang would not have been in a position to know who owned either of the businesses at The Glen or Eastland. All she would know was the stores were “Hollywood Nails”, the same as her workplace at Southland. Dang’s evidence does not assist the plaintiff’s case. Dang was acting on behalf of Bui when she rang Pham on Bui’s phone to organise a conversation with Bui.[84]
[81]T1024
[82]T1028
[83]T1025
[84]T1051
91 Finally, Mr Corrigan, on behalf of the plaintiff, advised the Court that Dang gave false evidence when she said that she did not provide any instructions to the legal advisers before she gave evidence.[85] This revelation further impeaches her evidence, and I reject it.
[85]T1121
Phuong Quynh Pham (“Pham”)
92 Ms Pham worked at “Hollywood Nails” at The Glen between 2001 and 2005.[86] She stated that Dung collected the takings between 2001 and 2003.[87] In 2003, Trac started looking after The Glen shop.[88] Trac told staff:
“I am now helping uncle running the shop.”[89]
[86]T1030
[87]T1039
[88]T1041
[89]T1043
93 Trac worked at The Glen shop from 2003 to 2005 as a technician and looking after the shop.[90] Pham saw Trac distributing envelopes to the staff every week. These envelopes were meant to be the pay slips and payments for staff. Pham did not have any discussion with Trac about the role of Bui.[91]
[90]T1044
[91]T1046
94 Pham had met with Bui and Bui’s lawyers, a Mr Vu, at a Chadstone coffee shop on the weekend before she gave evidence.[92] The contact between Pham and Bui was organised by Dang.[93] Pham had spoken to Dang in the Court building the next day; that is, 1 August 2011, but not about this Court case.[94] Pham said that she had been told by Mr Vu (the plaintiff’s lawyer) that the Court would pay her for giving her evidence at Court.[95]
[92]T1052
[93]T1051
[94]T1054
[95]T1054
95 Pham was a nail technician at The Glen shop between 2001 and 2005. Her evidence about Trac’s “admission” of “running the shop for the uncle” is given almost eight years after the alleged conversation. Her evidence is very similar to the evidence of Dang. I note that Pham was contacted by Dang on behalf of Bui to organise a meeting and conference with Bui and Mr Vu the day before she was appointed to give evidence. Pham was not referred to in the opening of the plaintiff’s case. It is obvious that Pham and her evidence were brought into this proceeding at the last moment. Her evidence is given after she has been spoken to by Bui and Dang.
96 I do not accept that Pham has an accurate recollection of the events occurring in the period 2001 to 2005 as an employee at The Glen. Pham was not in a position of knowledge to be able to give any meaningful evidence, either on the ownership or the management of the “Hollywood Nails” business conducted at that venue during the time of her employment. Pham’s evidence does not assist the plaintiff’s claim in this case.
Hung Quang Trinh (“Trinh”)
97 Mr Trinh was an accountant for the plaintiff and his corporate entities in 2000 and onwards. Trinh incorporated HN2, the second defendant, on 13 December 2000.[96] He did not incorporate HN1. Bui told him to register HN2.[97] The directors and shareholders of the HN2 company were to be Bui and Thanh.[98] Trinh first met Thanh when he came to Trinh’s office to sign papers for HN2.[99] Trinh believed that Bui was the real owner of HN2.[100] Trinh gave the HN2 company folder to Trac on 18 November 2006.[101] Trac gave Trinh bank statements for HN2 in the period 2001 to 2002 up until 2006.[102] Trinh stated that he never prepared a taxation return or financial statements for HN2 for the year ending 30 June 2001.[103] This is the year that Bui was a director of HN2. Trinh prepared the accounts for Trac relating to HN2 between 2002 and 2006. These documents were Exhibit G in the proceeding.
[96]T836
[97]T838
[98]T839
[99]T840
[100]T842
[101]T847
[102]T849
[103]T850
98 Trinh says he was given instructions by Bui to transfer the directorship and shareholdings from Bui and Thanh to Trac. His evidence was:
“Mr Bui just tell me now Mr Nguyen, one of the director, doesn’t want to be the director of the company any more and Mr Bui has his own privacy matter. He doesn’t want to have his name in the company too. That’s why he want the share and the director’s duties transferred to Mr Luong because Mr Luong is his nephew and Luong agrees to help him to have his name as a director and shareholder in the company.”[104]
(sic)
[104]T857, L17-24
99 Trinh then gave evidence of three directors, Bui, Thanh and Trac, attending his office to sign over the directorship of the shares to Trac. He stated:
“To my knowledge on the date when they came to my office to sign I give them all the paper to sign and Mr Nguyen tell me that now he doesn’t want to be a director any more and Mr Luong told me that he wanted to help Mr Bui to – that’s why he agreed to act as director and shareholder for the company, in order to help Mr Bui to run the business only.”[105]
(sic)
[105]T858, L13-19
100 Trinh sought to clarify his evidence on this issue as follows:
“Q: You’ve mentioned directorships. Was there any discussion in relation to shareholdings?---
A: No discussion because we received the advice from Mr Bui to make the transfer of share and transfer of directorship duty. I just finished the paperwork and advised them come to sign. When signing Mr Nguyen advised me he didn’t want to act as director any more. Mr Luong advised me he only – to be a director of the company to help Mr Bui to run the business. I just heard they say like that, and between no us no direct conversation.”[106]
(sic)
[106]T859, L6-15
101 Trinh stated that at times when preparing the BAS (Business Activity Statement) for HN2, Trac told him that he asked Bui for his opinion about the management of the business. This contact between Bui and Trac was by email or telephone.[107]
[107]T861
102 Trinh stated that Bui gave him instructions to incorporate another company, Diem Ha Pty Ltd, to run another business.[108] Diem Ha Pty Ltd was incorporated on 28 July 2005.[109] At the time Bui was getting advice about incorporating Diem Ha Pty Ltd, Trinh was advising Trac about the Odyssey Nails shop business at Ringwood.[110] Trac sought advice about managing the two businesses of HN2 and the Odyssey Nails Shop at Ringwood. The correspondence was by email between Trac and Trinh.
[108]T863
[109]T864
[110]T870
103 On 12 July 2005, Trac wrote to Trinh. (This was Mail 11). I quote:
“Dear Uncle Hung,
Let me consult with you if there would be a problem with Tax about my management of two businesses HN2 and ONS Ringwood simultaneously?
I need your best advice.
Thank you very much. I am looking forward to your opinion.”
104 In response to that email, Trinh, who is known as “Uncle Hung”, responded as follows: (This was Mail 10 in the proceeding and it was forwarded on the same day, 12 July 2005).
“Dear Trac,
Thank you for trusting Uncle Hung.
I think Trac should not put your name in the ONS Ringwood in this time, because the Taxation Office has been watching HN1.
The Taxation Office thought there would be a relationship between HN1 and HN2.
Regards, Hung.”
105 It is clear from this email exchange that Trac is operating the two businesses of HN2 on his own behalf and is enquiring if there would be a problem if he was to be involved with the Odyssey Nails shop at Ringwood. Trinh advises Trac not to get involved with the Odyssey Nails shop at Ringwood because the Taxation Office may suspect a relationship between HN2 and HN1. Trinh, by virtue of his position as accountant, knew that Bui was the common person that was involved in the ownership of Diem Ha and the ownership and directorship of HN1 at that time. The conclusion is that Trinh, the accountant, was of the opinion HN2 and HN1 were separately operated and owned businesses.[111]
[111]T871
106 Trinh, during the course of his evidence, referred to Bui keeping business “outside” and interventions and audits from the Australian Taxation Office. The Court gave Trinh the opportunity to obtain independent legal advice in relation to his right against self incrimination. His evidence was suspended to allow Trinh to obtain independent legal advice on 28 July 2011. He returned with his solicitor, Mr Singh, on 1 August 2011 to continue his evidence. He also sought the assistance of an interpreter from that time onwards.
107 Trinh was asked about his discussions with Trac about the ownership of “Hollywood Nails” shops at Eastland and The Glen. Trinh stated:
“First of all, as a matter of fact, I don’t remember and I don’t know clearly which shop was trading under the name Hollywood Nails and which was trading under the name Odyssey Nails; that is the first thing. Secondly, in terms of the paperwork, they were all done – prepared by my staff. I did not do it directly. I just – I'm just interested in the fact that Trac was the legal owner of Hollywood Nails II from the legal point of view. Regarding all other matters and things I'm not interested and I did not ask him about that. It is his family business.”[112]
[112]T965, L20-31
108 Trinh then stated that Trac had told him that a few times he contacted Bui by email and telephone regarding business operations and management.[113] In 2005, Trinh advised Trac not to establish another business.[114] This advice was in relation to Bui’s establishment of Diem Ha and the Odyssey Nails Shop at Ringwood. Trinh stated:
“Because they two shops and that’s why I don’t know if HN II or ONS is the trading name of the second shop; that is the first thing. Because I noticed that there’s much similarity between Hollywood Nails I and Hollywood Nails II in their names, so I thought that it was likely Tax Office may audit and that’s why I advise Trac that the better way was to keep clear records, documents, everything sufficiently instead of establishing or opening another business. Regard ONS, Odyssey Nails, I don’t know if it belongs to the third company. I'm not sure, I don’t remember if – I don’t remember its trading name. I just know the third company name is Diem Ha.”[115]
(sic)
[113]T967
[114]T967
[115]T971, L21 – T 972, L2
109 The conclusion on this evidence is that Trinh was clear that HN2 ran some businesses and that they were separate from HN1 operations. Trinh advised Trac to have no involvement in Diem Ha running ONS Ringwood because Bui was the real owner of Diem Ha. If Trac was involved in it, Diem Ha operations, it would link him with HN1 businesses in the eyes of the Australian Taxation Office, because Bui was a director of HN1 and in effect the owner of Diem Ha, which had been incorporated at the instruction of Bui.
110 I note that the directors and shareholders of Diem Ha at the time of the incorporation was Ba Thinh Ngo.[116] Ba Thinh Ngo authorised the voluntary deregistration of Diem Ha on 9 April 2008.[117] Ba Thinh Ngo had resigned as a director of the company Diem Ha on 1 February 2007.[118] Trinh had no contact with Trac over the business of Diem Ha.[119] Trinh could not remember who instructed him about the change of Diem Ha shareholding or directorship in February 2007. He thought it could have been Thinh, Thanh, or Bui.[120]
[116]CB 427
[117]CB 442
[118]T973
[119]T974
[120]T977
111 Trinh’s evidence on Trac’s attendance at his office to sign for the transfer of shares and directorship of HN2 was vague and inconclusive. Trinh accepted that Trac attended the office alone. Trac was quiet and did not say much.[121]
[121]T999 - T1000
112 I conclude that a fair finding on the basis of all of Trinh’s evidence is that the legal ownership of the shares in HN2 was transferred to Trac on 17 November 2001. Trinh was directed to the ASIC document at Court Book page 253, which noted that Trac held the shares beneficially. Trinh had prepared taxation returns from 2002 to 2006 for HN2 at the direction of Trac. No reference or instructions for these accounting procedures came from Bui.
113 I conclude that the evidence of Trinh supports the proposition that Trac was the legal and beneficial owner of HN2. Trinh’s evidence supports the fact that Trac ran the businesses of HN2 after November 2001 on his own account and not for Bui on trust, or on any other basis.
Trac Ngoc Thanh Luong (“Trac”)
114 Trac is the first defendant and director and shareholder of the second defendant, HN2. Trac gave evidence that he met Bui at his own wedding in May of 1998.[122] Trac stated that he was originally offered a job by Bui as a nail technician in the Highpoint salon of “Hollywood Nails”.[123] Trac stated that Bui had given him HN2 and that he accepted that gift.[124]
[122]T1072
[123]T1073
[124]T1074
115 Trac gave evidence that he had received a warning from Trinh, the accountant, when he was signing for the directorship and shareholding of HN2. Trac stated:
“First we – we greeting first and then he asked me the reason I came to his office today and I answer ‘yes’. He asked me if I know I will take a lot of risk when I sign the document when I take over the business (indistinct) and is my – then is my future, my properties. I just smile and I said, ‘No problem’. He asked me about the relationship between Uncle Hiep and Brother Dung. Something not good. I just smile and say, ‘I don’t know’.”[125]
(sic)
[125]T1075, L25 – T1076, L2
116 Trac stated that there were ten shops altogether conducted by HN1 and HN2. He said that the Eastland shop and The Glen shop were his, in the sense that they were conducted by HN2.[126]
[126]T1077
117 Trac stated that he knew that HN1 held the lease for the shops at Eastland and The Glen originally.[127] Trac stated that between 2001 and 2005, “we”, referring to his company HN2 and himself, “did not own anything”.[128] Trac stated, in respect of The Glen shop, that it was closed up on 30 June 2011. This was done at the instruction of Dung.[129] He stated that Dung paid the carpenter to shut down that shop and the costs of doing so at The Glen.[130] Trac stated that on 1 February 2011, he closed down the Eastland shop, which was the original HN2 shop. He stated that the instructions for closure came from Dung and that Trac had paid the carpenter for the closing down costs, the sum of $17,000.[131]
[127]T1078
[128]T1078
[129]T1079
[130]T1079
[131]T1080
118 Trac stated that he still operated the Odyssey Nails shop at Eastland which is conducted under the corporate entity of HN2. He stated that HN2 paid for all of the costs relating to the conduct of that business.[132]
[132]T1080
119 Trac stated that HN2 had paid for everything to do with the businesses that were conducted in all of its three shops, which included The Glen and the two Eastland shops.
120 Trac gave evidence that he collected cash for Bui and Dung in the HN1 shops.[133] He said that he would take the cash to Dung’s house and that Bui had given him the job to collect the envelopes for HN1.[134] He stated that Dung gave him “big cash” – $30,000 to $20,000 – many times for Bui.[135] Trac stated that Dung was paying all of the bills for “Hollywood Nails” up until 30 June 2003.[136] After 30 June 2003, Trac still collected envelopes for HN1 from other stores.
[133]T1084
[134]T1085
[135]T1086
[136]T1087
121 Trac stated that he paid the cash to Bui’s brother in Vietnam by transferring through the Richmond transfer agents.[137] He stated in the course of his activities for Bui, he transferred money to Vietnam and received money from the Philippines.[138] Trac gave evidence that he had been told by Dung that the settlement between Bui and Dung over the HN1 business was a payment of approximately $1 million.[139]
[137]T1088
[138]T1089
[139]T1093
122 Trac was then cross-examined. Trac stated that he did not know about HN2 until Bui asked him to become the director and transferred the shares to him.[140] At that time, he had been working at the Eastland shop of HN1. Trac stated that he had started work at The Glen shop in 2002 to 2003.[141] Trac stated that Bui had said to him that he would give the Eastland and The Glen shops to him to run.[142] Trac acknowledged that he knew of the joint bank account between himself and Bui in 2000 and was aware of the movement of the money through that account but did not know what it was all for.[143] Trac stated that Bui did not tell him about the leases on Eastland or The Glen shops.[144]
[140]T1095
[141]T1096
[142]T1099
[143]T1104
[144]T1106
123 Trac, when being advised by Bui that he was going to transfer the shares in HN2 to him, simply told him, “I will transfer the company to you”.[145]
[145]T1111
124 Trac stated that he did not tell Trinh he wanted to help Bui run the business.[146] Trac stated that he did ask advice from Bui about the conduct of HN2. He stated that Bui did give him directions about the conduct of the Odyssey Nails Shop at Eastland.[147]
[146]T1111
[147]T1117
125 Trac’s evidence was that in the years 2000 to 2002, his brother-in-law, Bao, was the manager of the original Eastland shop.[148]
[148]T1123
126 Trac described Pham as his employee at The Glen.[149] He stated that Dang would hand him the envelopes at The Glen shop.[150] Trac stated that Dung helped him to manage The Glen shop after the transfer of the shares in HN2.[151] Trac was challenged in respect of a conversation where Dang referred to Bui as the boss or “oh boss” in the company of Trac. Trac stated, by way of explanation, as follows:
“At that time I understand two meaning; the first meaning is ‘oh boss’ – ‘old boss’ – and the second meaning is, like, ‘Boss somewhere,’ because Vietnamese sometime know someone is the boss, just say, ‘Hello, boss,’ and I wanted to keep the face for someone there and I don’t do – I didn’t do anything, just smiled.”[152]
(sic)
[149]T1130
[150]T1132
[151]T1133
[152]T1145, L15-20
127 Trac gave evidence in respect of the transfer of the Odyssey Nails Shop at Eastland to HN2. Trac said that he had met with Uncle Thanh and was told as follows:
“Uncle Thanh asked me to advise the lawyer to prepare the document for him to transfer the company Diem Ha to Hollywood Nails II to become a new owner of the third shop, and I went to a lawyer to arrange the document and I brought the document to see Uncle Thanh for him to sign.”[153]
[153]T1173, L 23-28
128 This document was not produced in Court. Trac was given a short amount of time to recover the document and was unable to do so. I make no finding about whether such a document existed or not. I accept Trac’s evidence that he did not know that there was any alleged trust between Thanh or Thinh and Bui in respect of the shareholding in Diem Ha.[154] In respect of Diem Ha, Trac agreed that Bui wanted Thanh to play the same role as Thinh.[155]
[154]T1173
[155]T1202
129 Trac says that in Mail 167,[156] that the six years he is referring to in that email relates to the work that he had done for HN1 with brother Dung and on behalf of Bui.[157] The second part of the email refers to, according to Trac, the management of the Odyssey Nails Shop at Eastland on behalf of Bui.
[156]CB 406
[157]T1204
130 Trac was cross-examined in respect of payments made out of the account in his name, which is part of Exhibit C, stating that he made those payments at the direction of either Bui or Dung and does not know what they were for in the year 2000.[158] Trac gave evidence that he borrowed money to pay for the renovation of the upstairs “Hollywood Nails” shop in Eastland, which was conducted by HN2.[159]
[158]T1237
[159]T1318
131 Trac was asked questions in relation to the preparation of the “settlement document” produced at Court Book 311. The parties agreed that neither of them relied upon that document or the preparation of it in the conduct of this case.
132 I found that Trac was a reliable witness as far as his memory extended. Trac was prepared to make the relevant concessions in respect of evidence that may not necessarily have assisted his version of events. This adds to his credibility. It was clear from my observation that he was very respectful and deferential towards his Uncle Bui. It was clear, when looking at Trac’s evidence on the whole, that he was someone who had conducted the “Hollywood Nails” salons at the upstairs Eastland shop and The Glen through the entity of HN2. All the independent evidence points to the fact that it was legally and beneficially conducted in that manner. I accept Trac is a witness of truth.
Credibility of Bui
133 The plaintiff, Bui, is a very experienced and accomplished businessman. He says so himself. His very good friend and fellow director of HN2, Thanh, also says he is a very professional businessman. Loan paid tribute to Bui at the end of her evidence for bringing the nails business to Australia, and to Melbourne in particular.
134 Bui was present in Court at the commencement of the trial in this case, where an order for witnesses out of Court was made. In the opening of the case, Mr Corrigan did not announce the calling of Loan, Dang or Pham. It became clear, when each of these witnesses were called to give evidence, that Bui had contacted them and asked them to come to Court to give evidence to support his claim. It is not clear from the evidence the extent of the discussions Bui had with any of these witnesses prior to them giving evidence. In the end, I have concluded the evidence of each of these witnesses did not assist Bui’s claim. However, this course of conduct by Bui in circumstances where he was legally represented by a barrister and an instructing solicitor, indicates that he has scant regard for the process of the Court hearing. It is also consistent with his approach of attempting to influence people to act to his advantage without regard to their own position.
135 Bui gave evidence of obtaining money from his niece, Anh Quynh Le, from the Philippines.[160] Bui said he borrowed the money. There is no evidence, either documentary or oral, to support his evidence in this matter. He also gave evidence of his wife transferring $60,000 to him in a bank account in May-June 2000. Again, there is no evidence, either documentary or oral, to support the source or the basis for the money transferred. Bui then says in evidence that he had concealed the business from his wife.[161] The contradiction in saying the money was transferred by his wife to run the nails business and then hiding the outcome of the business from his wife does not assist Bui in forming a conclusion of consistency in his evidence.
[160]T374
[161]T822
136 Bui said in evidence that he agreed he had no personal taxation problems in Australia.[162] In the Court Book at page 114, an email dated 11 May 2005 authored by Bui sets out in detail his knowledge of a tax problem relating to HN1 and Dung and himself as a director of HN1. Bui has authored further emails – example Mail 12 dated 14 July 2005 – which clearly sets out his knowledge of the Australian Taxation Office investigation into the affairs of HN1. It is unsatisfactory for a party, Bui, to seek equitable redress when he is deliberately trying to separate himself personally from the taxation problems of a company of which he says he is a director and part owner. Bui was prepared to blame it all on Dung.[163]
[162]T720
[163]T724
137 Bui denied that he asked Trac to collect cash form Dung on his behalf.[164] Trac gave evidence he transferred sums of money for Bui to Vietnam many times.[165] Trac stated that the amounts of money were $30,000 to $20,000. I accept Trac’s evidence on this issue. Bui was not prepared to admit he was taking cash out of the HN1 business and sending it to Vietnam. This action was clearly avoiding the tax liabilities of HN1 in Australia. This is an example of Bui’s unreliability as a witness.
[164]T687
[165]T1086
138 Bui was not open and honest in his evidence on the issue of his settlement with Dung over the split up of Hollywood Nails, its assets and liabilities. It was clearly in Bui’s capacity to provide evidence of the final settlement between Dung and himself in regards to HN1. Both he and Dung were legally represented. There would have been a deed of settlement agreement signed by both parties.[166] Dung was not called as a witness. Trac gave evidence that Dung told him the total settlement was $1 million. Bui says settlement was $200,000. The relevance of the HN1 settlement is that the company was the lessee of the two shops and businesses in dispute. Bui has not provided easy and ready evidence of the settlement with Dung relating to HN1. This is consistent with the secretive manner in which Bui conducts his business affairs.
[166]T670
139 Bui gave evidence that he did not understand the difference between a director and a shareholder of a company.[167] This evidence is unbelievable. Bui was a very experienced businessman who conducted his affairs in a manner that was not transparent. He would know the difference between a director and a shareholder and this evidence is a further example of Bui not telling the truth in this case.
[167]T418
140 In conclusion, I found Bui to be an unsatisfactory and unreliable witness. On occasions, he has told untruths in his evidence. I find that unless his evidence is corroborated by other sources, either written or oral, that is not dependent upon him as the source, it would be unsafe to accept his evidence in any relevant finding in this case.
141 Further, it was clear that Bui had a much more sophisticated understanding of the English language than he was prepared to admit to. On several occasions he answered questions directly in circumstances where the concepts and language were difficult. This is a further example of Bui’s general approach to this case, which has not been transparent and open.
Analysis of the plaintiff’s case
142 The plaintiff relies upon what he characterises as admissions made by Trac, either orally or through his conduct. I have had the advantage of seeing and hearing Trac give his evidence during the trial. I find that he is polite, respectful and deferential in his attitude to his uncle, Bui. This does not mean that he agrees with what Bui says on issues. Trac clearly understands that Bui is a powerful person within his industry, family and community. Trac does not affront Bui and has gone to some lengths to preserve Bui’s “position” in the community. I have taken this attitude or approach by Trac into account when assessing the so-called “admissions by Trac”.
143 Where the evidence of Bui and Trac is in direct conflict, I prefer the evidence of Trac. I do not accept that Trac has admitted that Bui owned HN2 after the transfer of the directorship and shares to Trac. All of the evidence is to the contrary. Trinh’s evidence on the admissions of ownership “to help Bui to run the business” is at best vague and ultimately was not supported when the whole of Trinh’s evidence is taken into account. The statements attributed to Trac by Loan, Dang and Pham do not amount to an admission by Trac that Bui was the owner of the Eastland and The Glen businesses. One interpretation of that evidence is that Trac was invoking the “authority” of Bui to assist himself in the conduct of his businesses at those nail salons. I do not conclude this is the case, but make the point that the memories of witnesses many years after the alleged conversations have been prompted by a meeting with Bui shortly prior to the evidence being given by those respective witnesses.
144 The plaintiff relies on admissions by Trac to Thanh about running “the third” shop for Diem Ha on behalf of Bui. The evidence is clear that at the time in 2007, Trac was still checking and monitoring Dung on behalf of Bui in the conduct of HN1. Trac had assisted in the original setup and fit-out of the Odyssey Nails Shop (“the third shop”) at Eastland. Diem Ha just ceased to operate ONS, and Trac, through HN2, was authorised to take it over by the lessee, ONS, through the authority of Dung. This arrangement obviously suited ONS, Anh and Dung, because HN2 took over the lease liabilities and other expenses for the conduct of that shop. Thanh knew nothing of the lease arrangements or the running of the Odyssey Nails shop at Eastland. Further, Trac knew nothing about the alleged trust between Diem Ha and Thinh and Thanh and Bui. I reject the submission by Bui that Trac conducted the nail salon, Odyssey Nails shop, at Eastland on trust for Bui.
145 It was submitted by Bui that his requests for summary accounting reports from Trac proves the first shop at Eastland and The Glen were owned by Bui. Bui had used Trac’s services and loyalty to monitor the financial dealings of his partner, Dung, in the conduct of their joint enterprise, HN1. HN1 had up to ten nail salons that Bui and Dung were operating. Bui never requested or received money directly from the proceeds of HN2 businesses in the entire time Trac operated HN2. This is consistent with Trac being the owner and operator of HN2.
146 Bui, in Mail 99, asserts ownership of the business at Odyssey Nails shop by saying:
“… This business should be considered as yours, despite it’s mine.”[168]
This statement by Bui is not an unequivocal claim of ownership.
[168]CB 387
147 Bui’s explanation of trying harder for Hiep, set out at Transcript 637, is not credible. I conclude and do not accept that this statement is a definitive claim of ownership by Bui, as it was asserted in this case. In any event, in 2008, Diem Ha is deregistered and no longer conducted that business or any other business.
148 The employment of the accountant who was different to Trinh was an independent decision made by Trac. The change of bookkeeper, Dai, was for the purposes of HN1, not HN2. Trinh remained the accountant for Diem Ha because his office was convenient to Thinh, the then director and shareholder of Diem Ha. This leads to the conclusion that Trac was making decisions about the appointment of accountants independently of Bui for the operations of HN2.
149 The lease of the shops at Eastland and the lease at The Glen are controlled by either HN1 or ONS. Dung, or his daughter, Anh, were the witnesses that could have explained how HN2 occupied and operated from each of those premises controlled by those companies. Bui chose not to call either of those witnesses. Trac has given evidence that Dung has allowed him to conduct HN2 from those three premises over time and assume all the liabilities and expenses of doing so. I find the lease arrangements for these shops do not support Bui’s allegation that either Trac or HN2 held or operated the businesses on trust for Bui. Bui could easily have had the leases assigned to a company that he operated and owned. He never took that course to secure what he alleges is his business.
150 Bui alleges that he has spent large sums of money renovating and fitting out all three shops the subject of this case. The shops at Eastland and The Glen were originally opened by HN1 before HN2 was incorporated. The alleged expenditure for those shops was done for HN1. Bui was a part owner and director of HN1 at that time. These expenditures had nothing to do with HN2 and were not made on its behalf.
151 The expenditures alleged to be made on the Odyssey Nails Shop at Eastland are payments made for Diem Ha or HN1. ONS had the lease for that shop. The expenditures were not made for Trac or HN2. Bui argued that because he “paid for the fit out of the Odyssey Nails Shop”, that HN2 now runs that shop on trust for him. Trac has given evidence that he has also paid money for some items in that shop. The true position is that Diem Ha ceased to operate the shop at Eastland and HN2 stepped in to continue the business with the permission of Dung on behalf of ONS, the lessee of that shop. This alleviated the legal liabilities between the lessee of the shop, ONS, and the landlord. In effect, Bui and any party loyal to him, Thinh or Thanh, and Diem, Ha had abandoned the business at the Odyssey Nails shop in Eastland.
152 The plaintiff relied upon various emails between himself and Trac to support his allegations of ownership of both businesses at Eastland and the one business at The Glen. I have previously referred to Mail 99[169] and will not repeat my conclusions here. Mail 105[170] and Mail 128[171] are relied upon by the plaintiff. Mail 105 is a short email from Trac to Bui, saying for Bui and his wife not to worry and “I will work out again and transfer to Uncle Thao in VN”. This is clearly a reference to transfer of money to Vietnam on behalf of Bui by Trac. This email is sent when HN1 is still ongoing between Dung and Bui. The source of the money is not clear from the evidence.
[169]CB 387
[170]CB 392
[171]CB 399
153 Mail 128 is clearly an email where Bui is seeking to impose his authority on Trac. Bui seeks to invoke the “serious problem” between he and his wife to convince Trac to make a summary report (accounting). This email is a reference to Bui concealing payments to and from the bank account held jointly in Bui and Trac’s names. The concealment is from Bui’s wife. The contents of this email and Bui’s explanation do not support a conclusion that Trac or HN2 conducted businesses on trust for Bui.
154 Mail 109[172] is an email from Trac to Bui. It is an email responding to an email from Bui’s wife which was not in evidence or the Court Book. Trac refers to transferring the Odyssey Nails Shop because it is making a loss. This email is in October 2006. Trac is trying to manage this shop at the same time as conducting his own businesses through HN2. Trac also confirms he will send $30,000 to Vietnam on behalf of Bui. This money can only come from HN1, conducted by Dung. This email can be properly summarised as a plea by Trac to his uncle, Bui, to come to Australia and sort out business at the Odyssey Nails Shop at Eastland. Bui does not do so until after Diem Ha has been deregistered and it has abandoned the business. This email supports Trac’s version of events in respect of the Odyssey Nails Shop at Eastland.
[172]CB 595
155 Mail 167[173] is an email dated 27 March 2007 from Trac to Bui. It reads:
[173]CB 406
“Dear Uncle,
Reading you email does not make laugh, but to be correct, I am laughing ‘ha ha’. Exactly for the last over 6 years, my thinking has not come to an answer, but because of mistake, I have put my name in the titles of the two shops for you. Now I, Uncle Thinh and Uncle Thanh have suffered headache of the game you are playing here! During the last several days, I have called Uncle Thanh without answer, then nothing I can base on in order to go through. I think you should come over her so that you can take care of everything by yourself. It would be the best solution. You said Uncle Thanh, who is an outsider, has been willing to help you. This is the same of my involvement taken ‘place 6 years ago, helping you because of the way that you used the rightness’. This now having become a game playing with the Tax Department! What do you think about this?
I am informing you that tomorrow I will make a last call to Uncle Thanh in preparation for opening the bank account on Monday. If Uncle Thanh refused then it would be the end. I will totally withdraw, giving way to the Shopping Management to take back the shop. Thereafter, (Uncle Thanh and Uncle Thinh have to deal with the Tax Department.
In the mean time I will stop all my commitments with brother Dung, waiting for you to come over to sort it out.
Goodbye.”
(sic)
156 This email is the high point of the support for Bui’s allegation of a trust. The statement “I have put my name in the titles of the two shops for you” is relied upon by the plaintiff. In his evidence, Trac says that this statement refers to:
“It means to work for Odyssey Nails first and then for HN1 with brother Dung on behalf of Uncle Hiep.”[174]
[174]T1204
157 In effect, Trac’s explanation is that he was upset because he had done two different jobs for Bui. Bui was complaining because Trac had not sorted out the directorship of Thinh and Thanh in respect to Diem Ha, which was conducting the Odyssey Nails shop.
158 I accept Trac’s explanation about this email, 167, particularly when considered in the context of the emails between he and Bui at the time. Trac was advising Bui that the Odyssey Nails shop at Eastland was struggling and Bui had to do something about it, i.e. close it or sell it. Bui did nothing but to instruct Trac to get another director in for Diem Ha. The evidence shows that neither Thinh nor Thanh wanted to be involved with the business of Diem Ha or the liabilities it might create for them.
159 Mail 166 is sent by Bui to Trac on 25 March 2007. It is in this email that Bui “asserts” a form of control over “three shops”. This assertion may have prompted Trac to reply in Mail 167 to respond in terms of shops. The allegation by Bui about three shops is not credible in the circumstances where no request was made by him from 2001 to 2007 about the HN2 shops.
160 Trac sent Bui an email dated 8 June 2008 concerning the Odyssey Nails shop at Eastland.[175] Trac sets out three solutions in that email by dealing with the failing business at Odyssey Nails at Eastland. Trac had also given evidence[176] that HN2 had become the owner of the Odyssey Nails shop at Eastland in approximately April 2007. Trac did not produce a copy of the document relied upon for the transfer of the business of the Odyssey Nails shop at Eastland from Diem Ha to HN2. Trac did not have to prove the sale of Odyssey Nails business to HN2. Bui had to establish that the Odyssey Nails shop at Eastland business was held and operated on trust by Trac or HN2 for him. Bui has not done so on the evidence in this case.
[175]CB 488
[176]T1262 – T1265
161 Bui relies upon financial contributions for the set up or the renovation for each of the shops at Eastland and the shop at The Glen to establish that Trac or HN2 held those businesses on trust for Bui. The evidence as summarised in Exhibits B1, B2 and B3 do not, of themselves, prove where the funds were spent. It goes to prove that Bui used Trac to provide Bui with a method of moving money through bank accounts. Bui could say he had nothing to do with such payments if asked by authorities such as the Taxation Office. An example of this is in Exhibit B3 headed “Contributions from Hiep” [Bui] from Other Sources”. In Exhibits C1, C2 and C3, Bui relies on payments made from the joint account to establish ownership of the Eastland and The Glen shops. From these entries, there is no independent evidence to support the proposition that these payments to shopfitters et cetera even related to these particular shops. There is an absence of evidence to tie the payments to any particular shop.
162 HN1 set up the first two shops at Eastland and The Glen. The payments set out in Exhibits C1 and C2 refer to Dung, and Southland, where HN1 also operated shops. These payments are mainly made before the 2 October 2000 and can have nothing to do with HN2. The “alleged” payments set out in Exhibit C3 that are said to be made by Trac between 3 July 2003 and 23 October 2006 do not assist in drawing any conclusions without evidence to support what the alleged payments were made for and to whose benefit. In the whole of that period, Trac was still assisting Bui in the management and control of HN1.
163 In Exhibit C4, there is an entry that Dung contributed a total of $38,415 for the fit out of the Odyssey Nails shop at Eastland, Ringwood in 2005. Dung is the person who, with his daughter, Anh, controlled the lease for that shop. He is the person who authorised Trac to conduct the “Hollywood Nails” business at that shop. This evidence does not support Bui’s allegation of ownership or a trust to be held over the business conducted at the second shop at Eastland after Diem Ha in effect abandoned it or ceased to be a legal entity itself.
164 The plaintiff relies on the email correspondence concerning Loan’s hourly rate of pay to prove that Bui owned the Eastland shops. Loan only worked at the Eastland shops and never at The Glen. In 2005, when Loan was at Eastland, Bui still had an interest in the second shop through Diem Ha and his directors. The increase in the hourly rate for one worker, Loan, could reasonably affect what other workers would be paid and hence the cost of conducting what is obviously a labour intensive industry.
165 The rate of pay could affect Trac’s business as well as Bui’s (Diem Ha) business in 2005. The suggestion by Bui about preferential treatment by Trac of Loan is an example of his controlling approach to Trac.[177] I conclude that the discussion about Loan’s hourly rate between Trac and Bui is not supportive of any submission that in 2005, Trac has indicated he or HN2 conducted the nail salons at Eastland and The Glen on trust for Bui.
[177]Mail 24, CB 367
166 Finally, neither the plaintiff nor the defendants rely upon the evidence that was called or referred to as “the settlement meeting” between Bui, Dung and Trac. Translated versions of those three documents appeared at Court Book page 311. Trac prepared the document. Mr Corrigan submitted that neither party would rely on this document.[178] I will not make any findings in respect of that document.
[178]T1328
Conclusion
167 The plaintiff has the overall onus to prove his case. He has failed to satisfy that onus of proof on the balance of probabilities.
168 The plaintiff is a very experienced and successful businessman who has operated businesses in Vietnam, the Philippines and various jurisdictions in the United States of America, and also in Australia. The legal structure he had in place to conduct his business in HN1 is completely different from his non-legal structure of HN2 or Diem Ha.
169 Bui has directed (and not paid) Trac to monitor and check on Dung in the operations conducted by HN1. Bui has not done the same with HN2 from the time he transferred his share and directorship in HN2 to Trac until 2008, when the dispute with Dung was commenced over HN1. The leases for the shops conducted by Trac or HN2 at Eastland and The Glen were in the names of HN1 or ONS. Dung or his daughter, Anh, controlled those companies and leases. HN2 was permitted to conduct its businesses at those shops by the entities with control of the premises. Trac prepared and submitted all taxation returns and BAS statements for HN2 without any input from Bui. In fact, for the one year Bui was in control of HN2, he did not put in a taxation return for that company; that is, the year ending 30 June 2001.
170 I find, based on the totality of the evidence in this case, that Trac did not hold the shares issued in HN2 on trust for Bui as the beneficial owner. Bui has not established that a trust, either express, implied or resulting or constructive, existed in respect of the shares in HN2. Trac is and was the legal and beneficial owner of the shares in HN2 from 17 November 2001.
171 I find, based on the totality of the evidence in this case, that neither Trac nor HN2 conducted the businesses at The Glen or either businesses at Eastland on trust for Bui as the beneficial owner of the businesses. Bui has not established either an express, implied or resulting or constructive trust existed in respect of any of these three businesses. I order as follows:
172 There be judgment for the first and second defendants.
173 I will hear the parties on the question of costs.
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