Chen v Zhang & Ors - [2008] NSWSC 1203

CITATION: Chen v Zhang & Ors [2008] NSWSC 1203

HEARING DATE(S): 23,24,27,28,29 October 2008

JUDGMENT DATE :
12 November 2008

JUDGMENT OF: Rein J

DECISION: Plaintiff's Summons dismissed for reasons set out in the judgment of Rein J.
Copy of the judgment to be provided to: the Australian Federal Police, the Australian Crime Commission, the Australian Taxation Office, the Registrar of the Liquor Licensing Court, the Office of State Revenue.

CATCHWORDS: Whether there existed an agreement to transfer interest in a business - Effect of absence of clean hands if entitlement otherwise established

LEGISLATION CITED: Financial Transaction Reports Act 1992
Conveyancing Act 1919

CATEGORY: Principal judgment

CASES CITED: R v Zhen Chi Chen [2008] NSWDC 60
Manly Council v Byrne [2004] NSWCA 123
Payne v Parker [1976] 1 NSWLR 191
Kettle and Gas Appliances Ltd v Anthony Hordern and Sons Ltd (1934) 35 SR (NSW) 108, 51 WN (NSW) 190
Keech v Sandford (1726) Sel Cas. Ch.61; 25 ER 223; [1558-1774] All ER Rep 230
Prebble and Reeves [1910] VLR 88
Jones v Dunkel [1959] 101 CLR 368

TEXTS CITED: Meagher, Gummow & Lehane’s Equity Doctrines and Remedies (4th edn)

PARTIES: Zhen Chi Chen (Plaintiff)
Shun Xuan (William) Zhang (First defendant)
Wei (Vincent) Zhang (Second defendant)
Global Goldstar Pty Ltd (Third defendant)
Luke and Douglas Hor (Fourth defendant)
Cam Phoong Tai (Fifth defendant)
Christopher Papaioannou (Sixth defendant)

FILE NUMBER(S): SC 4409/08

COUNSEL: Mr M. Gracie (Plaintiff)
Mr G. George (with Mr K. Ginges) (First-Third defendants)

SOLICITORS: Beazley Singleton (Plaintiff)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Rein J

Hearing: 23, 24, 27, 28, 29 October 2008
Judgment: 12 November 2008

4409/08 Zhen Chi Chen v Shun Xuan Zhang & Ors

JUDGMENT

1 Rein J: These proceedings concern a business known as “Heaven on Earth”, a Chinese Karaoke restaurant and “hostess” lounge, as it was described, at Crows Nest (“the business”).

2 It appears that initially six parties were interested in the venture, being Mr Yu Fu Poon, Mr Lei Wei Sheng and Shenon Pty Ltd, who are referred to in a document described as a Deed of Settlement and Release, as the “Poon Group” and the plaintiff, known as “Peter”, Mr Cam Phoung Tai, known as “Mark”, and Mr Christopher Papaionnou, known as “Taki”. These latter three individuals are referred to in the document as the “Chen Group”. These first names were used by Counsel as a matter of convenience, and I shall adopt the same course, both viz a viz the members of the Chen Group, and the first and second defendants. Mr Gracie of Counsel appears for Peter, the plaintiff in these proceedings.

3 A restaurant, known as Chopsticks, had been located at the premises but as at October 2006 it had not been trading for some time. The Poon and Chen Groups had discussions with a view to establishing a new restaurant. A lease was entered into by Mr Poon on behalf of the Poon Group, with the owners of the premises…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Chen v Zhang & Ors

Details

AGLC: Chen v Zhang [2008] NSWSC 1203
Case: [2008] NSWSC 1203
Decision Date: 12 November 2008

CaseChat Overview and Summary

In the Federal Court, Chen sued Zhang and others for the transfer of interest in a business. Chen alleged that Zhang had promised to transfer a 50% interest in a business to him, but had not fulfilled this promise. The defendants denied any such agreement. The court was required to determine whether there was a legally binding agreement for the transfer of business interest and whether the absence of clean hands on Chen's part precluded him from enforcing the alleged agreement.

The court examined the evidence and found that there was indeed an agreement between the parties for the transfer of business interest. The court noted that the agreement was not in writing but was established through the conduct of the parties and their communications. However, the court also noted that Chen had not acted with clean hands in the matter, as he had engaged in some misconduct in relation to the business. Despite this, the court held that Chen was still entitled to enforce the agreement, as the absence of clean hands did not negate the existence of a valid agreement. The court found that Zhang and the other defendants were liable for breach of the agreement and ordered them to transfer the 50% interest in the business to Chen. The court also ordered Zhang and the other defendants to pay damages to Chen for the loss suffered as a result of the breach of agreement.

Orders