Cheung v Aust Landing Group Pty Ltd

[2024] FedCFamC2G 278

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Cheung v Aust Landing Group Pty Ltd [2024] FedCFamC2G 278

File number:

MLG 2683 of 2022

Judgment of:

JUDGE CHAMPION

Date of judgment:

28 March 2024

Catchwords:

FAIR WORK – Whether the Applicant was an employee – Where because the Applicant was not an employee there was no contravention of s. 323(1) of the Fair Work Act2009 or s. 44 and s. 117 of the FW Act – Where primary contravention accessorial liability pursuant to s. 550 not proved – No contravention of the FW Act

INDUSTRIAL LAW – EMPLOYMENT – Where there was no term of any employment agreement that the Applicant be paid an annual salary of $150,000 – Whether the Applicant was an employee on terms other than those pleaded – Where the Board of the First Respondent resolved to pay the Applicant a nominal salary to cover all expenses – Where payment made to the Applicant as a director and not as an employee – Where proving employment was a necessary premise of proving reasonable notice claim – No breach of any employment contract

PRACTICE AND PROCEDURE – JURSIDICTION – Whether the Court had jurisdiction as to a non-federal claim as to a Loan Agreement because together with the federal claims it comprised a single justiciable controversy – Where the Loan Agreement was a separate and distinct claim Court did not have jurisdiction as to the Loan Agreement claim

INDUSTRIAL LAW – LOAN CONTRACT – Whether Applicant proved oral Loan Agreement – Where the Court found there was no Loan Agreement – Application dismissed

Legislation:

Corporations Act 2001 (Cth) s 202A(2)(c)

Fair Work Act 2009 (Cth) ss 44, 117, 119, 323, 545, 550, 566

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 134

Limitation of Actions Act 1958 (Vic) s 5

Cases cited:

ACE Insurance Limited v Trifunovski (2013) 209 FCR 146; [2013] FCAFC 3

Australian Securities and Investments Commission (ASIC) v Hellicar (2012) 247 CLR 345; [2012] HCA 17

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435

Blatch v Archer (1774) 98 ER 969

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153

Cheung v Hu [2022] VCC 291

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298

Fair Work Ombudsman v Contracting Solutions Australia Pty Ltd [2013] FCA 7

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365

Fencott v Muller (1983) 152 CLR 570

Hawcroft v Jamieson [2017] NSWSC 1478

In re Judiciary and Navigation Acts (1923) 32 CLR 455

JMC Pty Ltd v Commissioner of Taxation (2022) 114 ATR 795; [2022] FCA 750

John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Maritime, Mining and Energy Union (CFMMEU) v Personnel Contracting Pty Ltd (2022) 275 CLR 165

Ogilvie v Adams [1981] VR 1041

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7

Re Wakim; Ex parte McNally (1999) 198 CLR 511

Thorby v Goldberg (1964) 112 CLR 597

Austin R. P and Black A. J, Austin & Black's annotations to the Corporations Act (LexisNexis, 2010)

Donaghey T and Goodwin E, General Protections Under Fair Work Act (LexisNexis, 2019)

Leeming M, Authority to Decide, The Law of Jurisdiction in Australia (2nd edition, Federation Press, 2020)

Neil I, Chin D and Parkin C, The Modern Contract of Employment (3rd edition, Thomson Reuters, 2023)

Division:

Division 2 General Federal Law

Number of paragraphs:

235

Date of last submissions:

23 February 2024

Date of hearing:

12 – 14, 16, 23 February 2024

Place:

Melbourne

Counsel for the Applicant:

Mr White

Solicitor for the Applicant:

Jewell Hancock Employment Lawyers

Counsel for the Respondents:

Mr Sams

Solicitor for the Respondents:

Jiangty Law

ORDERS

MLG 2683 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

ANDREW CHEUNG

Applicant

AND:

AUST LANDING GROUP PTY LIMITED

First Respondent

ZIAO YONG HU

Second Respondent

XIANGMAO LIU

Third Respondent

ORDER MADE BY:	JUDGE CHAMPION
DATE OF ORDER:	28 MARCH 2024

THE COURT ORDERS THAT:

1.The application is dismissed.

2.The Respondents file any submissions in support of any application for costs (not exceeding 5 pages) and any affidavit in support on or before 11 April 2024.

3.The Applicant file any submissions as to costs (not exceeding 5 pages) and any affidavit on or before 26 April 2024.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE CHAMPION:

INTRODUCTION

1. Mr Andrew Cheung (Applicant), Mr Xiaoyong Hu (Second Respondent) and Mr Xiangmao Liu (Third Respondent) were together involved in property development through their company Aust Landing Group Pty Ltd (ALG) (First Respondent). Each of Mr Cheung, Mr Hu and Mr Liu was a director and shareholder of ALG. Together, they were ALG’s only directors and shareholders. Although this dispute directly concerns Mr Cheung’s alleged employment entitlements and an alleged loan under a loan agreement, it arises in the broader commercial context of ALG’s property development of a project at Adderley Street, West Melbourne purchased in April 2016 which did not proceed as the parties hoped.

   Employment claims

2. In this court, Mr Cheung claims that ALG breached its obligations under an employment agreement (Employment Agreement) and under the Fair Work Act 2009 (Cth) (FW Act). He says that, pursuant to the terms of the Employment Agreement, ALG agreed to pay him an annual salary of $150,000 plus superannuation and he worked full-time as project director for ALG from December 2015 until May 2021. He says that, in breach of its obligations, ALG has paid to him an annual salary of only $53,076 gross. He sues for the salary shortfall ($150,000 less the annual $53,076 payment). As a result, he claims $479,715.12 comprised of salary shortfall of $438,096 plus superannuation of $41,619.12.

3. Because he was not paid salary payable “in full” he claims ALG contravened s. 323(1) of the FW Act for which he seeks statutory compensation for underpayment of salary under s. 545(2) of the FW Act. Alternatively, he claims contractual damages of the same amount for breach of the Employment Agreement.

4. He makes further claims that there was an implied term of his Employment Agreement that his employment could be terminated on reasonable notice. He says that at the time of the termination of the Employment Agreement reasonable notice was 12 months and that ALG breached that term by terminating his employment without notice. Alternatively, he claims that ALG contravened ss. 44 and 117(1) of the FW Act by not providing him with the minimum of 5 weeks’ statutory notice (or payment in lieu) on the termination of his employment.

5. As to his FW Act claims, he also brings accessorial liability claims against Mr Hu and Mr Liu (the other directors of ALG) on the basis that they were persons “involved” within the meaning of s. 550 of the FW Act in contraventions of the FW Act.

6. Mr Cheung did not press claims as to a redundancy payment under s. 119 of the FW Act, or under an “Expenses Agreement”. I treat those claims as abandoned.

7. The Respondents say that Mr Cheung was never an employee of ALG and that ALG paid him a “nominal salary” ($3,600 net monthly) to cover his expenses. ALG says that it paid this amount to Mr Cheung as a director because he was the company’s only Melbourne-based director and not as an employee.

8. I have found that Mr Cheung was not an employee on the terms he alleged.

9. Although an issue arose as to whether he was an employee on terms other than those pleaded, I have held him to his pleaded case that he was employed on the basis that he would be paid an annual salary of $150,000. It would be procedurally unfair to the Respondents to permit him to pursue an unpleaded case that he was an employee on a salary of $53,076 annually. In any event, I have accepted the Respondents’ case that ALG paid Mr Cheung a monthly amount of $3,600 (net) (apparently $53,076 gross) to Mr Cheung as a director “to cover all his expenses” and did not pay that amount to him as an employee.

10. Because Mr Cheung has not proved he was an employee entitled to an annual $150,000 salary plus superannuation his statutory and contractual underpayment claims have failed. His accessorial claims cannot succeed given the failure of his claim against the principal wrongdoer. It also follows that because he has not proved the necessary threshold issue of employment, his notice claims (contractual and statutory) will also be dismissed.

    The Loan Agreement

11. Mr Cheung also seeks repayment of a loan of $396,214.46 he says he advanced to ALG between 15 March 2018 to 29 June 2020 pursuant to a “Loan Agreement” (Loan Agreement). Mr Cheung says that in February 2018 he made an oral agreement with the other directors (Messrs Hu and Liu) at the Riversdale Golf Course that “I agreed to loan ALG funds on the condition that any amount be repaid upon demand by me” (Mr Cheung, [20], (CB38)).

12. The Loan Agreement is a separate and distinct claim. The Court does not have jurisdiction as to the Loan Agreement claim because it is not part of a single justiciable controversy with the employment claims.

13. If I am wrong on the jurisdictional point, in any event, Mr Cheung has not proved the terms of the Loan Agreement. He has not proved that the $396,214.46 he advanced to ALG after February 2018 was a loan to ALG repayable on demand.

14. His application will be dismissed.

    STRUCTURE OF THESE REASONS

15. As to the structure of the balance of these reasons, I have first identified the material before the Court. I have then set out, in summary form, the relevant facts and a brief chronology. I have then identified 9 issues for decision which arise as to the Employment Claims and the Loan Agreement claims. I have sequentially dealt with those issues.

    MATERIAL BEFORE THE COURT

16. The parties jointly prepared a Court Book (CB1–526).

17. Mr Cheung was the only witness in his own cause. He relied on two affidavits: an affidavit made on 4 October 2023 (CB35–43) and its annexures (AC-1–AC-13; CB44-133; AC-33–AC-35; CB206-327) and an affidavit in reply (CB448–451) and its annexures (AC-36–AC-37; CB452-482). There were certain deletions to Mr Cheung’s affidavit and certain annexures were not admitted into evidence on the basis of successful objections. There were further deletions because Mr Cheung did not press certain claims which meant some of the evidence in those affidavits and some annexures ceased to be relevant to the facts in issue.

18. The Respondents relied on an affidavit of Mr Xiaoyong Hu (CB328–341) and its annexures (XH 1–XH 7; CB342–368) and an affidavit of Mr Xiangmao Liu (CB369–381) and its annexures (XL 1–XL 6; CB382–447).

19. Each of the witnesses was cross-examined.

20. The parties filed some additional exhibits to which I have referred as necessary in the course of these reasons (A1-A5 and R1–R10).

21. Further, the parties provided certain other documents including written outlines of final submissions (MFI-1–MFI-8).

    A BRIEF CHRONOLOGY AND RELEVANT FACTS

22. This dispute spans events between February 2014 (when there was a shareholders’ meeting at Mr Liu’s Balwyn home) attended by the three men and May 2021 when ALG made its final $3,600 net monthly payment to Mr Cheung.

23. It is first necessary to set out something as to ALG.

    Aust Landing Group Pty Ltd

24. On 30 May 2011 ALG was registered.

25. Before ALG’s registration, Mr Cheung and Mr Liu were friends. Together, they registered ALG. The plan was that ALG would buy and develop residential and commercial property (Mr Liu, [9] (CB372)). Their “plan was to start working on large project developments once we have found another partner” (Mr Liu, [11], (CB371); Mr Cheung, [6], (CB35)).

26. In due course, Mr Hu became that other partner.

27. In 2013, Mr Hu’s evidence was that he first met Mr Cheung and Mr Liu (Mr Hu, [8], (CB331)). Between 2013 and May 2019 he held a Business Innovation and Investment (Provisional) Visa (Visa) a condition of which was that he invest $5,000,000 in Australia and live in Australia for about 40 days a year (Mr Hu, [7], (CB331)).

28. For nearly all of the relevant period Messrs Cheung, Hu and Liu formed ALG’s Board. From 30 May 2011 until 20 April 2021, when he was removed by a resolution of a shareholders meeting, Mr Cheung was a director of ALG. From 30 May 2011 until 16 August 2022, Mr Liu was a director of ALG.  On 19 June 2014 Mr Hu was appointed a director and remains a director of ALG.

29. The three men were, and remain, ALG’s principal shareholders. Mr Cheung and Mr Liu were ALG’s initial shareholders. On 19 February 2014, Mr Hu first became a shareholder.

30. The ratios in which each of the 3 men held the issued shares in ALG changed over time.

31. Mr Hu’s evidence was that for most (if not all of the critical period) the share structure was that he held 42% of the issued shares in ALG. Mr Liu and Mr Cheung each held 29% of the issued shares (Mr Hu, [13], (CB331)).

32. A relatively recent ASIC search records that Mr Hu’s shareholding has increased and the shareholdings of Mr Cheung and Mr Liu have decreased. Mr Hu now owns approximately 80% of the issued shares in ALG. Each of Mr Cheung and Mr Liu now own approximately 10% of the issued shares: (XL 2; ASIC Company Search, 28 November 2022, (CB410–416)).

33. As they comprised the board and were the only shareholders, Messrs Cheung, Hu and Liu agreed on ALG’s operations. As to some dealings there are no documents. As to other matters, there are Board minutes and minutes of shareholder meetings. Outside formal forums, discussions often took place by WeChat message (Mr Liu, [42], (CB376)).

    The chronology

34. I have set out in broad outline the relevant chronology below which shapes the issues to be decided. It will be necessary to return to a number of these events in my discussion of the issues.

    26 February 2014 – The shareholders meeting at Mr Liu’s Balwyn home

35. On 26 February 2014, Mr Cheung alleges that at a shareholders’ meeting at Mr Liu’s Balwyn home ALG agreed to employ him as a project director on an annual salary of $150,000 plus superannuation. The Respondents dispute any such Employment Agreement was then made.

36. After February 2014, there was a pause of more than 18 months, until November 2015, before there was any further activity within ALG, because Mr Liu had some difficulty leaving China and coming to Australia. Mr Cheung does not allege that he took up employment with ALG in the February 2014 – November 2015 period.

    November 2015 – Messrs Cheung, Hu and Liu meet at Star Hotel, Sydney

37. On or about 1 November 2015, Mr Cheung says that ALG renewed and reaffirmed the offer to employ him as a project director on an annual salary of $150,000 plus superannuation. He says that the offer of employment, and his acceptance of the offer, was agreed in a conversation between Mr Cheung and Messrs Hu and Mr Liu at the Star Hotel, Sydney. He says that the terms of the Employment Agreement were oral.

38. Mr Hu and Mr Liu denied that the Employment Agreement was made at the Star Hotel, Sydney in November 2015. They also denied that any employment agreement was subsequently made. Mr Hu and Mr Liu characterised the meeting at the Star Hotel as a social occasion when nothing as to ALG’s operations was discussed in detail, let alone agreed. There is no written record of the discussions at the Star Hotel, Sydney.

    1 December 2015 to 31 May 2021 – Payment of $53,076 annually

39. From 1 December 2015 until 31 May 2021, ALG paid Mr Cheung paid $3,600.00 net (monthly).

40. As noted, Mr Cheung characterised the payment of $53,076 gross ($3,600 net monthly) as part-payment of his annual salary entitlement of $150,000 and sues for the shortfall between $53,086 paid and $150,000 annually.

41. Mr Cheung’s evidence was that after that meeting at the Star Hotel, Sydney from 1 December 2015 until 31 May 2021 he worked full-time in ALG’s business.

42. Messrs Hu and Liu denied that Mr Cheung worked full-time for ALG as project director.

43. They acknowledged that as ALG’s only director who was principally based in Melbourne, Mr Cheung assumed relatively greater operational responsibility for the Adderley Street project than they did. The only financial agreement as to that greater operational responsibility was that ALG pay him a “nominal salary” of $3600 monthly “to cover all his expenses”.

    April 2016 – The purchase of Adderley Street, West Melbourne

44. As of November 2015, the date of the meeting at the Star Hotel, Sydney, ALG did not have any property under development.

45. In April 2016, ALG purchased a property to develop in Adderley Street, West Melbourne, for $9.4 million (Adderley Street) (Mr Hu, [32], (CB333); Mr Liu, [27], (CB374)). This was the only property that ALG sought to develop.

46. On 27 June 2016, Westpac Bank provided a loan for Adderley Street with a redraw limit of $4,700,000 (Mr Hu, [33], (CB333)).

47. On 8 July 2016, the sale of Adderley Street to ALG settled.

48. From July 2016 until May 2021, little progress was made in the development of Adderley Street. ALG did not ever commence any building work at Adderley Street. From 2019 onwards ALG sought to sell, rather than develop, the project. Mr Cheung’s own evidence was that it was not until March 2021 that an amended planning permit was approved (Mr Cheung, [18(i)], (CB 38)).

    18 February 2017 – Board minutes

49. On 18 February 2017 there was an ALG Board meeting.

50. The Respondents emphasise the Board minutes as the only “independent” evidence of the characterisation and purpose of $3,600 net monthly paid to Mr Cheung. Importantly, the Board minutes characterise payments to Mr Cheung as “nominal salary [that] would be paid from 30 June 2016 to 31 December 2017 to cover all his expenses” (CB 420). Messrs Hu and Mr Liu both characterised the monthly payments as an “allowance”.

    February 2018 – Riversdale Golf Club – Loan Agreement

51. As noted, in addition to his employment claims, Mr Cheung makes a claim for payment of the repayment of $396,214.46 under the “Loan Agreement”.

52. On or about 1 February 2018 Messrs Cheung, Hu and Liu met at the Riversdale Golf Course (Mr Cheung, [20], (CB38); Mr Hu, [45], (CB336); Mr Liu, [43], (CB376). It was at this meeting that Mr Cheung contends (and the Respondents deny) that the parties made the “Loan Agreement”. The purported Loan Agreement was an oral agreement. Even on Mr Cheung’s case, the parties did not agree the amount of the loan or its timing: that is, how much Mr Cheung would advance and when he would advance it.

    15 March 2018 to 29 June 2020 – Mr Cheung’s advance of $396,214.46 to ALG

53. It was common ground that after the meeting at the Riversdale Golf Course in February 2018 – between 15 March 2018 and 29 June 2020 – Mr Cheung by a series of 12 payments of different amounts (ranging between $5,000 and $174,000 and as set out in the Amended Statement of Claim, [5B], (CB10)) transferred funds to ALG which totalled $396,214.46 (Ex. MFI-1; Particulars of Loss). Mr Liu also made substantial transfers of funds to ALG in this period.

54. Mr Cheung says the payments totalling $396,214.46 was a loan repayable on demand. The Respondents say the payments were in the nature of shareholder capital contributions.

    23 December 2020 – Mr Liu’s demand for repayment of the loan pursuant to the Loan Agreement

55. As noted, in June 2016, Westpac had loaned funds to ALG for Adderley Street.

56. By 2020, ALG was in substantial arrears as to its Westpac loan.

57. In late 2020, Westpac’s account manager sent an uncompromising email to Mr Cheung as to the loan requiring ALG to “make a bulk reduction of $2.5m by 31/12/20, no exceptions … with further reductions thereafter”.

1. On 23 December 2020, Mr Cheung sent a WeChat text to Messrs Hu and Liu in which, for the first time, on one interpretation of the message, he demanded repayment of the loan pursuant to the terms of the Loan Agreement (CB352). The Respondents denied that any such payment was due to Mr Cheung. It was that WeChat message of 23 December 2020 that crystallised the dispute as to the Adderley Street project between the parties.

   Early 2021 – The breakdown of the relationship between the parties

2. By early 2021, it was apparent that the parties’ relationship had broken down. In February 2021, there was an exchange of lawyers’ letters on both sides with each side making various legal claims against the other (Ex. R5, R6 and R7).

   15 April 2021 – Revised financial reports for the financial year ending 30 June 2020 (FY2020)

3. On 15 April 2021, Mr Cheung (but not Mr Hu or Mr Liu) signed revised Financial Statements for ALG for FY2020. For the first time there was a reference to an outstanding salary due to Mr Cheung, referable to the terms of the alleged Employment Agreement, in the sum of $444,235 (Ex. A3, note 9, p. 11 of 14).

4. On 16 April 2021, Mr Cheung’s then lawyers made a formal demand for repayment of a loan of $499,570 and unpaid wages of $444,235 (CB 327).

   20 April 2021 – Mr Cheung is removed as a director of ALG

5. On 20 April 2021, there was an ALG shareholders’ meeting. Mr Cheung was given notice of, but did not attend, the shareholders’ meeting. At the shareholders’ meeting, Messrs Hu and Liu voted to remove Mr Cheung as a director of ALG (XH 6, Minutes of Meeting of Shareholders held on 20 April 2021 (CB362–363)). By further resolution Mr Cheung was removed as a signatory to ALG’s bank accounts. Mr Liu’s evidence as to the reason for the removal of Mr Cheung as a director of ALG was that Mr Hu had told him that Mr Cheung had transferred monies to his personal accounts without authorisation (Mr Liu, [56]–[57], (CB378)).

   May 2021 – ALG made last monthly payment of $3,600 to Mr Cheung

6. On 15 May 2021, ALG made its final payment of $3,600 monthly to Mr Cheung, which payment covered the period up to 31 May 2021.

7. Mr Cheung’s evidence was that he remained an employee of ALG up until 31 May 2021 and that the end of the payments from ALG to him marked ALG’s termination of his employment at its initiative – triggering a contractual entitlement to reasonable notice or statutory notice.

   THE ISSUES FOR DECISION

8. It is in the context of that chronology 9 issues arise for decision as follows:

   (1)Did Mr Cheung and ALG make the Employment Agreement a term of which was that ALG pay Mr Cheung an annual salary of $150,000 plus superannuation?

   (2)If he does not make out that primary case, should Mr Cheung be permitted to pursue an unpleaded alternative case that he and ALG made an employment agreement that ALG would employ Mr Cheung on an annual salary of $53,076? Has he made out such a case?

   (3)Did ALG underpay Mr Cheung in the period 24 November 2016 to 31 May 2021 in the amount of $438,096 plus superannuation being the shortfall between $150,000 annually plus superannuation and the amount ALG paid to him?

   (4)Did ALG terminate Mr Cheung’s employment effective on 31 May 2021?

   (5)If ALG terminated Mr Cheung’s employment effective on 31 May 2021, is Mr Cheung entitled to reasonable notice as to the termination of his employment? If so, how long was reasonable notice? Alternatively, is he entitled to statutory notice under s. 117(1) of the FW Act?

   (6)Was Mr Hu “involved” within the meaning of s. 550 of the FW Act in any contraventions of the FW Act?

   (7)Was Mr Liu “involved” within the meaning of s. 550 of the FW Act in any contraventions of the FW Act?

   (8)Does the Court have jurisdiction to decide whether Mr Cheung and ALG made a Loan Agreement on the basis that the Loan Agreement and the employment claims comprise a “single justiciable controversy?

   (9)Did Mr Cheung and ALG make a Loan Agreement? If so, does ALG owe a debt to Mr Cheung of $396,214.46 as to monies he advanced to ALG between 15 March 2018 and 29 June 2020?

   ISSUE 1: DID MR CHEUNG AND ALG MAKE AN EMPLOYMENT AGREEMENT? IF SO, WAS A TERM OF THE EMPLOYMENT AGREEMENT THAT ALG PAY MR CHEUNG AN ANNUAL SALARY OF $150,000 PLUS SUPERANNUATION?

9. There is a fundamental dispute between the parties as to whether Mr Cheung and ALG made the Employment Agreement.

10. Mr Cheung, who has the onus to prove his case, has not proved that he and ALG entered into an employment agreement a term of which was that ALG agreed to pay him an annual salary of $150,000 plus superannuation as a full-time employee in the position of Project Director.

    Limitations issues

11. Mr Cheung does not pursue his salary before 24 November 2016 because of limitations issues. As to his statutory claims, there is a statutory time bar in s. 545(5) of the FW Act. As to his contractual claims, s. 5 of the Limitation of Actions Act 1958 (Vic) bars pursuit of the contractual claim before 24 November 2016. As a result, after 24 November 2016 until 31 May 2021 he says he has been underpaid a total amount of $438,096 (4.52 years x $96,924 ($150,000 less $53,076) annually) plus superannuation of $41,619.12 (9.5% x $438,096): Ex. MFI-1; Amended Statement of Claim, [12], (CB12).

    A statutory and a contractual claim

12. The same monetary claim for unpaid salary and superannuation has a statutory basis and a contractual basis. Mr Cheung makes his statutory claim under s. 323(1)(a) of the FW Act which mandates that an employer must pay an employee amounts payable to the employee in relation to the performance of work “in full”. Alternatively, he claims the same monetary loss as damages for an alleged breach of his employment agreement.

    The evidence

13. In reaching my conclusion, I have considered most particularly the evidence as to the shareholders’ meeting on 26 February 2014 at Mr Liu’s Balwyn home, the evidence as to the meeting at the Star Hotel, Sydney in November 2015, the evidence as to the parties’ post-contractual conduct including the ALG Board minutes signed by all directors on 18 February 2017 and whether the evidence as to the work Mr Cheung performed for ALG in the period December 2015 – May 2021 proves he was a full-time employee. I traverse that evidence below.

    26 February 2014 – Shareholders’ meeting at Mr Liu’s Balwyn Home

14. On 26 February 2014, Messrs Cheung, Hu and Mr Liu attended a shareholders’ meeting at Mr Liu’s Balwyn home. There were signed minutes of that meeting (AC-1, (CB47-49)).

15. Mr Cheung says the terms of the Employment Agreement were oral. Mr Cheung confronted the difficulty of any applicant who relies on an oral contract in discharging his onus of proof. As noted in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451, [94] a party who seeks to rely on spoken words as the foundation for cause of action “in the absence of some reliable contemporaneous record or other satisfactory corroboration…may face serious difficulties of proof.” Mr Cheung’s difficulty was increased in circumstances in which all other evidence from those present at the meeting - namely, Messrs Hu and Liu - was that no such agreement was reached.

16. At the February 2014 meeting, Mr Cheung’s evidence was that Mr Hu and Mr Liu offered that Mr Cheung be employed by ALG as “Project Director” on a salary of $150,000 plus superannuation and that he accepted that offer (Mr Cheung, [11], (CB36)). Mr Cheung at that time had his own company “Auburn Land Group”. In September 2014, he sold a project of the Auburn Land Group, in Kew, Victoria. The sale met an obligation set out in the minutes restraining the directors from property development other than under ALG’s auspices. Mr Cheung’s evidence was that employment did not commence, however, because of Mr Liu’s issues in departing China. He said that “everything was paused at that point in time”: Mr Cheung, [13], (CB36).

17. The Respondents deny that any such agreement was reached at the shareholders meeting on 26 February 2014 (or subsequently). Mr Hu’s evidence was: “we did not speak about engaging Mr Cheung as a Project Manager. Had we spoken about that, I believe it would have been recorded in the minutes” (Mr Hu, [18], (CB332)). Mr Liu’s evidence was ([18], (CB373)):

    We did not discuss anything beyond what was recorded in the minutes, such as employing Mr Cheung as Project Director. Making Mr Cheung Project Director would have been a serious decision, and we would have recorded discussing it, like we did in the minutes of our meeting on 18 February 2017.

    No employment agreement made on 26 February 2014

18. For several reasons, Mr Cheung has not proved on the balance of probabilities there was an agreement reached on 26 February 2014 for ALG to employ him as a Project Director on an annual salary of $150,000 plus superannuation.

    Minutes do not record an agreement

19. First, the parties’ signed contemporaneous minutes of the shareholders meeting on 26 February 2014 do not record the Employment Agreement Mr Cheung alleges. Each of Messrs Cheung, Hu and Liu signed the minutes (AC-1, (CB47–49)). The signed minutes are detailed but are confined to issues as to the “list of shareholders and investment percentages” and requirements for capital contributions particularly if the company should succeed in its bid for the North Melbourne project (a property in Canning Street, North Melbourne) which ultimately ALG did not purchase.

20. In circumstances in which there are minutes, it is to be expected that if the Employment Agreement were made it would have been recorded in the minutes. The parties had troubled to prepare a formal document recording their arrangements.

21. Not only are the minutes silent as to the Employment Agreement, to some extent, the minutes are inconsistent with the alleged Employment Agreement. The minutes refer to ALG having a general manager “after the company has started a project” (CB49). As of 26 February 2014, and the shareholders’ meeting at Mr Liu’s Balwyn home, ALG had not started a project triggering the need for a general manager. ALG had not started a project as of February 2014. It did not start a project until July 2016 and the settlement of Adderley Street.

22. I do not accept Mr Cheung’s evidence that the discussion in which the Employment Agreement was made occurred “after the meeting minutes were finalised and signed” (Mr Cheung in Reply, [5], (CB450)). That is, Mr Cheung’s evidence was that the minutes were signed only part way through the meeting and, for that reason, did not record ALG’s agreement to employ him which agreement was only subsequently made. I agree with the Respondents’ characterisation of this part of Mr Cheung’s evidence as “self-serving”. I find that the written record of the minutes accurately records what was agreed. Mr Cheung was an experienced businessman. It is unlikely that he would append his signature to inaccurate business records which omitted a matter of such commercial significance to him. Equally, it is unlikely that Messrs Hu and Liu would append their signatures to inaccurate minutes.

    The agreement is inherently unlikely

23. Secondly, it strikes me as inherently unlikely that ALG would assume the substantial financial commitment of agreeing to employ a Project Director at a fixed annual salary $150,000 plus superannuation at a time at which it had not committed to, let alone commenced, any project which led to a present need for a project director. In a related point, it had no cash flow to pay a salary to a full-time project director.

    Parties’ subsequent conduct

24. I may assess the evidence as to the parties’ subsequent conduct on the question of whether a contract was formed (Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, [25]; Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) v Personnel Contracting Pty Ltd (2022) 275 CLR 165, [190]).

25. The third reason for not accepting Mr Cheung’s contention is that the parties’ subsequent conduct is inconsistent with the Employment Agreement Mr Cheung alleges was made on 26 February 2014. Because, on Mr Cheung’s own case, there was a pause in the parties acting on the agreement he says they made in February 2014 because of Mr Liu’s difficulties in departing China, I have deferred a consideration of the parties’ subsequent conduct to events after November 2015 when Mr Cheung alleges that the Employment Agreement was renewed and reaffirmed at the Star Hotel, Sydney. There is no relevant subsequent conduct as to the Employment Agreement between February 2014 and November 2015.

    November 2015 – Meeting at the Star Hotel, Sydney

26. By mid-2015, Mr Liu had sorted out his issues with leaving China.

27. In November 2015, Messrs Cheung, Hu and Liu met at the Star Hotel, Sydney. Mr Cheung says (and Messrs Hu and Liu dispute) that at the meeting the parties agreed that Mr Cheung would be appointed as a full-time employee as a Project Director of ALG.

28. Mr Cheung alleges that there were terms of the employment agreement that ALG would pay him an annual salary of $150,000 plus superannuation (Mr Cheung, [15(d)], (CB37). In effect, Mr Cheung’s case was that, in November 2015, the February 2014 deal was renewed and reaffirmed. Messrs Hu and Liu deny that they authorised ALG to employ, or agreed for ALG to employ, Mr Cheung in any capacity at this November 2015 meeting and specifically deny that there was  any the Employment Agreement that ALG would pay Mr Cheung an annual salary of $150,000 plus superannuation. Messrs Hu and Liu described the Star Hotel meeting as a social occasion (Mr Hu, [26], (CB333); Mr Liu, [25], (CB373)). There is no written record of the meeting in November 2015.

29. Mr Hu’s evidence was that ([27], CB333):

    During that time, we spent around 10 or 15 minutes discussing the general running of Aust Landing Group. But we did not make any agreements, or discuss anything in detail. We would have those conversations during shareholder meetings, where the meetings would be recorded, or in WeChat messages to each other.

30. Mr Liu’s evidence was that: “we did not discuss employing Mr Cheung, or make any agreements” ([26], CB373).

31. For the reasons below, Mr Cheung has not proved that an employment agreement was reached at the Star Hotel, Sydney in November 2015 the terms of which were that ALG agreed to employ Mr Cheung as a project director and pay him an annual salary of $150,000 plus superannuation.

    Absence of any contemporaneous written record

32. First, I note the absence of any reliable contemporaneous record that an agreement of this kind was reached in November 2015. Mr Cheung therefore confronts difficulties of proof in discharging his onus to prove an agreement: John Holland, [94] (above). This difficulty is compounded by the fact that all the other evidence - Messrs Hu and Liu - is against him.

    An inherent unlikelihood

33. Secondly, the contended for Employment Agreement is inherently unlikely. As was the situation in February 2014, as of November 2015, ALG had no property under development and no present need for a full-time employee. ALG had no cash flow to meet the salary of a full-time employee. Each of the witnesses was a businessperson. It is unlikely that ALG would make a legally enforceable promise to an outlay a substantial annual salary in the absence of access to funds to pay that salary. It was also an uncommercial way in which to structure any payments to Mr Cheung. Because he was a director and shareholder, under the Employment Agreement for which he contends, he was in effect having to advance funds to ALG to be recycled and repaid to him to fund his own employment.

    Parties’ subsequent conduct

34. Thirdly, as I have noted, I am entitled to look to the parties’ subsequent conduct as to whether an agreement was reached: Brambles, [25]; Personnel Contracting, [190] (above).

35. There are several aspects of the parties’ subsequent conduct that weigh against a conclusion that the parties made an agreement in November 2015 that ALG would pay Mr Cheung an annual salary of $150,000 in employment as a full-time Project Director.

    A pattern of payments other than $150,000 annually

36. Shortly after the alleged agreement from 1 December 2015, ALG commenced paying Mr Cheung a monthly amount of $3,600 pursuant to a bank authorisation Mr Liu and Mr Cheung signed on 27 November 2015 (CB453), not $150,000 annually. This subsequent conduct and pattern of payments was inconsistent with an Employment Agreement a term of which was that ALG had a present obligation to pay Mr Cheung an annual salary of $150,000 plus superannuation. Mr Cheung never raised an objection to this pattern of payments until April 2021.

    The Board minutes – 18 February 2017 - Board minutes record arrangements other than annual salary of $150,000

37. On 18 February 2017 there was an ALG Board meeting. The minutes of this ALG Board meeting constituted the most important evidence of subsequent conduct that weighs Mr Cheung’s claims.

38. There was a Chinese language version of the minutes and a certified English translation of the minutes dated 18 February 2017 (Mr Liu, (XL 3, (CB418–420)). The parties signed the Chinese language version of the minutes. During trial, no party took any issue as to the accuracy of the certified English translation.

39. The February 2017 Board minutes are inconsistent with a contention that there was an agreement that ALG would pay Mr Cheung an annual salary of $150,000 made in February 2014 (at Mr Liu’s Balwyn Home) renewed and reaffirmed 2015 at the Star Hotel in November 2015.

40. Item 3 of the 18 February 2017 Board minutes records that it was agreed that (CB420):

    […]

    Mr Zhang Weiyang’s [the Applicant] nominal salary would be paid from 30 June 2016 to 31 December 2017 to cover all his expenses. If the current project would be completed ahead of schedule, the company would hold a separate meeting to discuss this matter. The nominal salary paid prior to 30 June 2016 would be offset from the distributable profit to Mr Zhang Weiyang.

41. Mr Hu’s evidence was that it was expected, as of 18 February 2017, that the Adderley Street project would be completed by 31 December 2017. As it happened, in February 2024, as of the date of the hearing, ALG had not conducted any building work at the Adderley Street site and ALG continues to own that site.

42. Items 5 and 6 of the Board minutes (CB420) were as follows:

    5. In order to clarify management responsibilities and set up a reward and supervision system, the Board has decided that:

    1) Mr Zhang Weiyang [the Applicant] would be fully responsible for the operation of the current project of the company.

    2) In the settlement of the current project, subject to the 25% guaranteed annualised after-tax return on total investment by shareholders, Mr Zhang Weiyang would receive 20% of the excess profit as a reward.

    3) The Board would create a dedicated business group. Mr Zhang Weiyang would keep close contact with other Board members to communicate work progress. Important decisions would be reported to the Chairman for approval.

    6. Where any previous resolution of the company conflicts with the resolutions of this board meeting, the resolutions of this board meeting shall prevail.

43. The Board minutes of 18 February 2017 make no mention of an Employment Agreement the terms of which required ALG to pay Mr Cheung $150,000 salary plus superannuation as a full-time project director. I do not accept the Applicant’s submission that it was unnecessary for the Board minutes to refer to the $150,000 annual salary “given it had been agreed more than 12 months before” (Applicant’s Closing Submissions, [15]). If such an agreement existed, made in February 2014 or November 2015, it was likely that it would be recorded in the Board minutes. Further, it would appear to have been more (not less) necessary to record such an agreement in circumstances in which what actually happened from December 2015 onwards was that ALG had paid a “nominal salary” of $3,600 net monthly, not $150,000 annually plus superannuation.

1. In addition, not only do the Board minutes not record an agreement for $150,000 annual salary, they record an arrangement inconsistent with the contention that in February 2014 or November 2015 ALG agreed to pay Mr Cheung $150,000 plus superannuation to be a full-time employee as a project director.

2. An arrangement that ALG would pay Mr Cheung a “nominal salary … from 30 June 2016 to 31 December 2017 to cover all his expenses” is inconsistent with an agreement that ALG pay him $150,000 annual salary plus superannuation. As of February 2017, all parties knew that Mr Cheung had for some time (for about 14 months since December 2015) been receiving a net monthly payment of $3,600.00, an amount which meets the description of a “nominal salary … to cover all his expenses”.

3. Mr Cheung signed the minutes which recorded his agreement that he would “offset” amounts he had received before 30 June 2016 against his distributable profit (item 3). If Mr Cheung ‘s pre-30 June 2016 “nominal salary” was “offset” against distributable profit, he would not receive an annual salary of $150,000 plus superannuation from 1 December 2015 to 30 June 2016 as he alleged. His signed agreement to “offset” that salary is inconsistent with the agreement he now alleges that he was entitled to receive $150,000 annual salary from 1 December 2015. His signing of the Board meetings attested to the fact that he was, in effect, agreeing to an “offset” arrangement that would serve to increase the quantum of the annual salary shortfall of which he now complains. Had a $150,000 salary been agreed, it is to be expected that Mr Cheung would have declined to sign a document which recorded an agreement markedly inconsistent with the Employment Agreement for which he now contends.

4. Moreover, item 6 of the minutes expressly provides that the resolutions made on 18 February 2017 prevail over any previous conflicting resolutions. Even if that resolution only operates prospectively, the prevailing operation of item 6 means that any claim of Mr Cheung to $150,000 salary after 18 February 2017 appears unsustainable.

5. Mr Cheung submitted that the requirement for the project to deliver an annualised 25% return to shareholders before Mr Cheung would receive 20% of the “excess profit” in return for his personal work on the Adderley Street development set such a high profit hurdle that it was self-evident that he would never receive that “excess profit” payment.  Therefore, it was reasoned, it must have been that he had an underlying and unaffected entitlement to the $150,000 annual salary because of the required level of his personal work at Adderley Street. He submitted that he would not have agreed to perform as much “hands-on” work as he did at Adderley Street in the absence of the promise of a $150,000 annual salary payment. In circumstances in which Mr Cheung advances a claim that pursuant to express oral agreement ALG agreed to pay him an annual salary of $150,000 plus superannuation the court is not an arbiter of whether he made a good or imprudent commercial deal. The high hurdle of any “excess profit” entitlement is a weak foundation on which I might infer that there was a pre-existing agreement for an annual salary of $150,000 plus superannuation when the minutes record a different and inconsistent arrangement. I draw no such inference.

6. In terms of assessing the parties’ subsequent conduct to ascertain whether they made a deal in February 2014 (renewed and reaffirmed) in November 2015, the signed minutes of February 2017 are the most reliable indicator of the arrangements the parties made. The minutes are cogent evidence that that there was not any agreement made in February 2014 or November 2015 that ALG would pay Mr Cheung an annual salary of $150,000 plus superannuation. The minutes are strong evidence that the parties made different arrangements.

7. Mr Cheung signed the subsequent 18 February 2017 ALG Board minutes which record an arrangement inconsistent with the agreement for which he now contends. His signature attested to the accuracy of the minutes. I rely on Mr Cheung’s signature, and his knowledge of the importance of his signature as an experienced businessperson, as reasons not to accept his account that an oral agreement was reached that he would be paid an annual salary of $150,000 plus superannuation in February 2014 or November 2015 when such an agreement is inconsistent with the written Board minutes of the company.

   Work product

8. Other evidence of the parties’ subsequent conduct which might bear upon an assessment of whether ALG and Mr Cheung made an agreement in November 2015 that ALG would employ Mr Cheung on an annual salary of $150,000 plus superannuation includes the quality of the evidence as to the work Mr Cheung says he performed at Adderley Street.

9. The evidence Mr Cheung adduced as to his performance of work in connection with the Adderley Street project did not prove he was a full-time employee. The evidence that Mr Cheung adduced as to the work he actually performed was at a very high level of generality.

10. Mr Cheung says he commenced employment on 1 December 2015. He says that he performed the duties of a Project Director full-time from that date (Mr Cheung, [17], (CB37-38)). His case was that he performed full-time work.

11. Between 1 December 2015 and March 2016, he said that undertook market research and project tenders (Mr Cheung, [17], (CB37-38); Mr Hu, [30], (CB333)). ALG then had no project under development. Mr Cheung produced no documents as to that work on prospective projects between December 2015 and March 2016.

12. From April 2016 (the date of the purchase of Adderley Street although the purchase only settled in July 2016) his evidence was that he undertook the overall operation and management of the project at Adderley Street (Mr Cheung, [17]–[19], (CB37–38); Mr Hu, [42(b)], (CB335); Mr Liu, [35(a)], (CB375)).

13. Mr Cheung said that he was the primary point of contact for third parties for the Adderley Street project and he reported to Messrs Hu and Liu as to the project’s progress. He says his work involved a significant degree of responsibility and dedication and was not merely administrative (Cf. Mr Liu, [41], (CB375)).

14. He gave evidence of the project’s timeline. He noted that in May 2017 there was the application for a planning permit, in August 2018 ALG signed a short-term lease, in April 2019 ALG conducted a marketing campaign and that in March 2021 an amended planning permit was approved (Mr Cheung, [18], (CB 38)).

15. Mr Cheung performed more “hands-on” work and spent more time (relatively) on the Adderley Street project than Messrs Hu and Liu. I accept that he performed some work in the nature of consulting and liaising with third-party professional service providers such as architects, traffic consultants, environmental consultants, lawyers and accountants as to the project (Mr Cheung, [17]–[18], (CB37–38)).

16. Nonetheless, “all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted” (Blatch v Archer (1774) 98 ER 969, 970; approved in Australian Securities and Investments Commission (ASIC) v Hellicar (2012) 247 CLR 345; [2012] HCA 17, [144], [166], [250]).

17. Mr Cheung made no attempt to put before the court evidence of what might be termed “work product” which might have persuaded me that he was performing full-time work for ALG over this extended period. He produced no documents as to his work over more than 5 years. There was no evidence of emails or correspondence he sent for ALG. He called no corroborative evidence of full-time work.  Although the forensic purpose or need for such evidence will vary from case to case, the evidence before me was that there was a single project which only progressed as far as the grant of an amended planning permit in the nearly 5 years and 5 months in which Mr Cheung said he was a full-time employee. 

18. From December 2015 to July 2016 when Adderley Street settled ALG had no project under development which necessitated the employment of a full-time employee. From April 2019 onwards Mr Cheung agreed that the plan was to sell Adderley Street, not to conduct any works which must had reduced the need for “hands-on” work.

19. From late 2020 until his final payment in May 2021, and in particular from 23 December 2020, it is unlikely that Mr Cheung was performing full-time work for ALG in circumstances in which the relationship between the parties had broken down. Challenged in cross-examination that he had not in fact been working in early 2021, when the parties’ relationship had so clearly broken down by reference to the cross-claims exchanged between lawyers, Mr Cheung had said that he had “been in the status of standby all the time”: Transcript, 13 February 2024, P109:L21-22. Notwithstanding the breakdown of relations between the parties Mr Cheung contended that he remained entitled to salary as a full-time employee in the early months of 2021 on the basis that he remained ready, willing and able to work on the basis that “he also serves who only stands and waits” (Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, 466).

20. Because the evidence was limited and very general as to how much work Mr Cheung performed between December 2015 and May 2021, that evidence does not change my view of the pre-eminent importance of the Board minutes of February 2017 as the most accurate contemporaneous record of the parties’ arrangements where the parties recorded an arrangement for the payment of a nominal salary to Mr Cheung to cover all his expenses in recognition that he was performing more work than the other directors because he was Melbourne-based.

21. Having heard the evidence, I was not left with the impression that Mr Cheung worked full time for ALG for 5 years and has not been properly paid. The absence of any documents as to the work he performed leads me to conclude that he has significantly overstated the amount of work he performed for ALG.  Suffice to say, he has not proved that he was performing full-time work either by reference to the work he has identified that he did or that such a conclusion could be confidently drawn from the intrinsic nature of the Adderley Street project. I do not infer that a project such as Adderley Street - which progressed at the very limited rate it did between July 2016 and May 2021 - necessarily required the work of a full-time project director.

22. In any event, even if Mr Cheung had produced compelling “work product” (which he did not) his productivity tells me nothing one way or another as to whether there was an agreed salary term of $150,000 annually plus superannuation.

    Mr Cheung was subject to the control of the other directors

23. I do not accept the submission that various “hands-on’ work whereby Mr Cheung engaged with third parties - such as architects, traffic consultants, etc at Adderley Street - was more than “a director would ordinarily be expected to perform” or work of a different type than a director would be expected to perform (Cf. Applicant’s Closing Submissions, [12] (CB495)). Mr Cheung may have performed more work than the directors of some enterprises would perform but not others. The context was that Messrs Cheung, Hu and Liu were 3 entrepreneurial businessmen jointly engaged in property development. I find that Mr Cheung was prepared to do “hands-on” work as an entrepreneur in anticipation of a deferred benefit on the (hoped for) profitable completion of the Adderley Street project rather than performing such hands-on work as an employee.

24. The fact that Mr Cheung had to report important decisions to the Chairman (Mr Hu) (cl. 5(3) of the Board minutes (CB 420)) was consistent with him being one of three directors in a joint enterprise. That reporting obligation did not mark him as an employee subject to the control of his employer as contrasted with holding the office of director as one of three directors of ALG.

    TFN Declaration

25. By a document dated 20 November 2015 Mr Cheung filed a Tax File Number declaration form with the Australian Taxation Office (Mr Cheung, [16], (CB37); AC-3, TFN Declaration, (CB53)). It recorded that Mr Cheung was paid on the basis of “full-time employment”. Mr Cheung unilaterally filed the form (without reference to the other directors) and signed as both payer and payee. He recorded that he was a full-time employee (AC-3, TFN Declaration, (CB53)).

26. ALG paid Mr Cheung gross payments of $53,076 annually (net payments of $43,200 annually: $3,600 x 12). Mr Hu’s evidence was that he was unsure whether ALG was paying an amount greater than $3,600 to Mr Cheung because he did not know “how the accountant handled this payment” (Transcript, 16 February 2024, P218:L5-6). Mr Liu did not know if ALG was withholding tax from payments to Mr Cheung and remitting PAYG tax to the ATO (Transcript, 23 February 2024, P271:L1).

27. Although the TFN document was dated 20 November 2015 it was left unexplained as to why ALG’s business address was listed at 137 Adderley Street, West Melbourne which was not in fact purchased until some months later in April 2016. This suggested that in fact the document was filed after the date it bore but the evidence did not explore that issue.

28. I do not put much independent weight on the tax arrangements as tending to prove that Mr Cheung was an employee. First, Mr Cheung unilaterally filed the TFN document. Secondly, he did not prove that the other directors had any knowledge of the document. It amounts to a unilateral declaration by Mr Cheung that he was an employee but tells me little about the genuine character of the relationship between him and ALG (i.e. ACE Insurance Limited v. Trifunovski (2013) 209 FCR 146; [2013] FCAFC 3, [37]). I do not find that there was anything improper about Mr Cheung taking this step, but I repeat I do not place much independent weight can be put on the fact that he did so. Equally, I do not put any weight on the fact that ALG maintained workers compensation insurance in the 2019 financial year as illuminating the true character of the relationship between Mr Cheung and ALG (CB325).

29. In the same way as his work product, the TFN declaration and workers compensation arrangements do not establish one way or another that Mr Cheung did or did not have an entitlement to an agreed annual salary of $150,000 plus superannuation.  That is, the TFN and the workers compensation arrangements tell me nothing (one way or the other) as to any agreed salary rate.

    A belated claim

30. Other post-contractual events also weigh against a contention that there was an agreement made in November 2015 to employ Mr Cheung on an annual salary of $150,000 plus superannuation.

31. In particular, Mr Cheung only made a very belated claim for this salary. The first written reference to the entitlement of $150,000 salary appears in the revised FY2020 financial reports, signed by him on 15 April 2021, more than 5 years after alleged the agreement was made, at a time at which the relationship between the 3 directors had broken down. Mr Cheung made his first written demand for salary arrears by a lawyer’s letter on 16 April 2021 (CB 327). The fact that the claim was so belated, in and of itself, weighs against a conclusion that Mr Cheung genuinely believed he was entitled to payment of salary of $150,000 annually from December 2015 when there is no written reference to it for such an extended period and in circumstances in which 5 and half years elapsed before any written document adverts to such an entitlement.

    A claim to a “market salary”

32. Further, even in early 2021, when the claim for a very substantial salary arrears is first made the documents are not consistent with a pre-existing contractual agreement entitlement for Mr Cheung to be paid an annual salary of $150,000 plus superannuation.

33. The tax invoice of the accountants (Gerald Lau & Associates), who prepared the revised financial reports on Mr Cheung’s sole instructions dated 15 March 2021, was in evidence.

34. There is a line item in the accountants’ invoice as to Mr Cheung “taking up accrual of outstanding market wage payment as requested” (Ex. R8; emphasis added). At a date at which the commercial relationship between the directors had broken down, after the event, this reference to a “market wage” supports a finding that Mr Cheung was - after the event - pursuing a claim for what he considered to be a fair “market wage” for the past work he had done, as contrasted with enforcing an express term as to a $150,000 annual salary.

    No persuasive reason to accept Mr Cheung’s evidence over and above that of Messrs Hu and Liu

35. Finally, there was no persuasive reason for me to prefer the evidence of Mr Cheung over that of his fellow directors.

36. I intend to refrain from making any global credit finding. I did, however, have concerns about the satisfactoriness of Mr Cheung’s narrative.

37. A standout example was that on the morning of the first day of trial he abandoned his claim to payment for expenses of $112,794.73 pursuant to an Expenses Agreement (Amended Statement of Claim, [6A], (CB11)). In his trial affidavit, he had supported such a claim on the basis that he had “not received any payment” as to these expenses (Mr Cheung, [26], (CB42)). Cross-examined as to this issue and why he had abandoned this claim on the first day of trial, Mr Cheung said he had been paid all of these amounts by March 2021 (Transcript, 13 February 2024, P97:L24–30). That is, there was an inconsistency between his affidavit evidence and a claim he maintained until the first morning of the trial and his oral sworn evidence.

38. There was nothing inherently compelling about Mr Cheung’s narrative which modifies my judgment that the available contemporaneous documents were the best guide to the arrangements the parties had actually made.

    Conclusion as to the employment agreement and the claim for $150,000 annual salary

39. For the reasons set out above, Mr Cheung has not proved that there was a term of any employment agreement that ALG would pay him $150,000 plus superannuation as remuneration for full-time work as a project director.

    ISSUE 2: SHOULD THE COURT CONSIDER AN UNPLEADED, ALTERNATIVE CASE THAT MR CHEUNG AND ALG MADE AN EMPLOYMENT AGREEMENT THAT MR CHEUNG WOULD BE EMPLOYED ON AN ANNUAL SALARY OF $53,076?

40. As the evidence emerged a potential issue emerged as to whether - if Mr Cheung did not prove that he was employed on an annual salary of $150,000 plus superannuation - whether he had proved an alternative case that he was employed on an annual salary of $53,076.

    ALG “nominal salary” payments to Mr Cheung

41. As I have noted, from 15 December 2015 until 31 May 2021 ALG made payments to Mr Cheung of $3,600 net monthly (Mr Cheung in Reply, [8], (CB450)). Adjusted for PAYG tax, those payments totalled $53,076 (gross) annually (Mr Cheung, [21]; (CB38)). ALG did not provide Mr Cheung with payslips. Tax was remitted as a PAYG employee. Mr Cheung signed the annual payment summaries for ALG as payer: AC-3A (CB55–59).

42. On 27 November 2015 Mr Cheung and Mr Liu jointly signed an authorisation with the Commonwealth Bank for $3600 net monthly to be paid to Mr Cheung from ALG’s account from 15 December 2015 until 15 December 2017 (AC-36, Commonwealth Bank, Automated Funds Transfer, (CB 453). In fact, the monthly payments continued after December 2017 until May 2021. Mr Hu’s evidence was that “the nominal wages should [have] stopped at the end of 2017” and that Mr Cheung “used a company cheque for his own benefit” and that any payments after December 2017 were “unlawful” or “illegitimate” (Transcript, 16 February 2024, P226:L1-7). Mr Liu’s evidence was that following December 2017, Mr Cheung continued to pay himself $3,600 a month. When questioned as to whether  he had authorised the payment to Mr Cheung beyond 15 December 2017, Mr Liu replied “yes” (Transcript, 23 February 2024, P271:L10-P272:L1).

43. The alternative case was given some potential life by reference to the Board minutes dated 18 February 2017 and their reference to the fact that Mr Cheung would be paid a “nominal salary” taken together with the actual events that ALG paid to Mr Cheung $53,076 gross annually between December 2015 and May 2021.

    Should Mr Cheung be permitted to pursue an alternative case?

1. If Mr Cheung were permitted to advance such an alternative case that he was employee entitled to payment of $53,076 annually, and it was ultimately successful, the underpayment claims (statutory and contractual) would be unsuccessful because those claims relied on the proof of the $150,000 salary claim. The notice claims (contractual and statutory) would remain to be determined albeit that the quantum of any remedy would be calculated by reference to an annual salary of $53,076; not $150,000. Civil penalties both against ALG and against Mr Hu and Mr Liu as accessories would remain a live issue.

2. Mr Cheung did not plead any alternative case that he was employee on an annual salary of $53,076.

3. The Applicant should be held to his pleaded case.

4. First, he never pleaded an alternative case that he was employed on an annual salary of $53,076. No application to amend the pleadings was made. I raised the issue myself with the parties at the end of Day 4 of the trial.

5. Secondly, now to consider such an alternative case would be procedurally unfair to the Respondents (Cf. Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298, [63]-[65]). If the Applicant wished to pursue an alternative case that he was employed pursuant to an employment agreement a term of which was that he would be paid $53,076 annually, he did not put the Respondents on sufficient notice that they had to meet that case. Mr Cheung never set out particulars as to who made that agreement, or how or when it was made. Because the Applicant seeks civil penalties that reinforces the importance of the Respondents knowing the case they had to meet. Had the Applicant put forward an alternative case that he was an employee on an annual salary of $53,076, I accept that the Respondents may have differently focused and framed their evidence. Notwithstanding that on a creative analysis of the evidence - particularly the Board minutes of 18 February 2017 - an alternative case may possibly be identified it is procedurally unfair if the Applicant is permitted now to pursue a case he never pleaded.

6. In a related point, because the Applicant has not set out particulars of who made the alternative agreement or how or when it was made, if the Court now has to decide whether Mr Cheung was an employee it is unclear how the court is to apply the relevant principles “to construe and characterise the contract made between the parties at the time it was entered into” (Personnel Contracting, above, [174]; applied in JMC Pty Ltd v Commissioner of Taxation (2022) 114 ATR 795; [2022] FCA 750, [17]–[27]).

7. I have engaged in an assessment of whether the parties made a contract for $150,000. It seems to me I ought not to engage in a creative exercise as to whether an alternative case could be made that the parties - at some unidentified point in time in some an unidentified way - entered into an employment agreement that the Applicant would be paid a salary of $53,076 annually solely on the basis of the fact that it emerged from the evidence that Mr Cheung was paid that amount and the content of the minutes made on 18 February 2017.

   Payment of nominal salary paid to Mr Cheung as a director in any event

8. On the evidence before me, to the extent that it is necessary to express a view, I have concluded that ALG paid Mr Cheung $53,076 annually as a “nominal salary …to cover all his expenses” as a director, not as an employee.

9. Although “salary” usually connotes a payment made to an employee, the relevant composite phrase that appears in the Board minutes dated 18 February 2017 as to payments to Mr Cheung is “nominal salary…to cover all his expenses”.

10. There is no doubt that a person may have relations with a company that comprises distinct dual capacities - as a director and also as an employee (Neil I, Chin D and Parkin C, The Modern Contract of Employment (3rd edition, Thomson Reuters, 2023), [1.093]).

11. Company directors are not entitled to receive remuneration for their services as directors unless their entitlement is specifically provided for in the company’s constitution or their remuneration is approved by shareholders (Hawcroft v Jamieson [2017] NSWSC 1478; [138]–[139]; see also Austin and Black, Austin & Black's annotations to the Corporations Act (LexisNexis, 2010), Division 2, Remuneration of Directors, ss. 202A-202C). The ALG shareholders did not approve any directors’ fees in this case. It was nonetheless open to ALG pursuant to s. 202A(2)(c) of the Corporations Act2001(Cth) to pay a director’s expenses properly incurred “in connection with the company’s business”.

12. Although payment for expenses to Mr Cheung of $53,076 annually may perhaps appear excessive, the issues in the case, as defined by the pleadings, means that this is not a case in which the Court is called upon to assess whether or not the expenses were properly incurred. In addition, the evidence was not clear as to the extent to which Messrs Hu and Liu knew that in fact ALG was paying gross payments of $53,076 annually as contrasted with nett payments of $43,200 annually ($3,600 x 12).

13. Although the description in the Board minutes of  payments to Mr Cheung of a “nominal salary …to cover all his expenses” (CB420) is ambiguous as to whether payments were made to Mr Cheung as an employee or as a director, each of Mr Hu and Liu in their evidence referred to the “nominal salary… to cover all his expenses” as having the character of an “allowance” (Mr Hu, Transcript, 16 February 2024, P216:L40-46; Mr Liu, Transcript 23 February 2024, P272:L23-43).

14. It was the reality that because he was ALG’s Melbourne-based director Mr Cheung did more “hands-on” work - and incurred more expenses – than did the other ALG directors. The parties resolved in the 18 February 2017 Board minutes that Mr Cheung “would be fully responsible for the operation of the current project of the company” (cl. 5(1), CB420). As ALG’s only Melbourne-based director, it fell to Mr Cheung to take the “hands-on” lead on required work. I find that ALG agreed to pay the “nominal salary” to Mr Cheung and not pay this amount to the other directors because - as a result - he was going to incur greater expenses than the other directors as to the Adderley Street Project.

15. Further, the Board context of this resolution  as to the payments to Mr Cheung - the minutes record what the directors had agreed as between themselves - is an additional (if relatively minor) factor which weighs in favour of a conclusion that ALG paid the “nominal salary” to Mr Cheung as a director, not as an employee.

16. In conclusion, the better view is that ALG paid the nominal salary to Mr Cheung as a director to cover his expenses and not by way of remuneration to him as an employee. Mr Cheung has not proved that he was employee on terms other than those he pleaded.

    ISSUE 3: DID ALG UNDERPAY MR CHEUNG IN THE PERIOD 1 DECEMBER 2015 TO 31 MAY 2021

17. As to Issue 1 above, I set out my reasons for not accepting Mr Cheung’s foundational claim that there was an employment agreement a term of which was that ALG would pay him an annual salary of $150,000 plus superannuation. Because I have rejected that foundational claim, it follows that Mr Cheung has not proved his underpayment claims. The same analysis applies both to the contractual claim and the statutory claim under s. 323(1) of the FW Act.

18. The underpayment claims will be dismissed.

    Does Mr Cheung contend that he had a present entitlement $150,000 annually or was his entitlement contingent on ALG having available finances?

19. I only wish to add that there was an inherent ambiguity in Mr Cheung’s case as to whether he had a present or deferred entitlement to a $150,000 annual salary.

20. Mr Cheung’s case under s. 323(1) was necessarily premised on a contention that during the currency of his employment he had a present entitlement to be paid “in full” $150,000 annually and that there was a breach of the statutory obligation each month in which his salary was not paid “in full”. His affidavit evidence suggested that his entitlement during the currency of his employment was more limited - perhaps an entitlement to the $53,076 annually he received - and that his entitlement to the shortfall up to $150,000 annually was contingent on ALG having finances available. Mr Cheung gave evidence that “Mr Hu said to me that if there were any cash flow difficulties and the payment of my salary was delayed, my salary would be paid in full once the finances were available” (Mr Cheung, [15(f)], (CB37)).

21. If his present entitlement was only to $53,076 during the currency of his employment, it must follow that there was no breach of s. 323(1) of the FW Act because Mr Cheung had been paid “in full” his present entitlements as and when they arose.

22. If his case was that an entitlement to $150,000 annual salary only crystallised upon ALG having sufficient cash flow, a further conceptual difficulty arises as to the point in time at which he alleges his contract was breached. If his entitlement to the full $150,000 salary was contingent on finances being available, Mr Cheung did not pinpoint when ALG had an available cashflow such that his entitlement crystallised. ALG was never profit-making and in circumstances in which Adderley Street has not been sold, it still has no cash flow. It appears that the timing of his demand for payment (his solicitor’s letter dated 16 April 2021) (CB 327) was dictated by the fact that the relationship between directors had by then broken down, and not shaped by any event which meant that finances previously unavailable to ALG had in fact become available, crystallising his contractual entitlement to the $150,000 annual salary.

23. I say no more because the point is moot because I do not accept that ALG ever agreed to pay Mr Cheung salary of $150,000 either absolutely or conditionally upon it having available finances to do so.

    ISSUE 4: DID AUST LANDING GROUP TERMINATE MR CHEUNG’S EMPLOYMENT ON 31 MAY 2021?

24. The reasonable notice claim and the alternative claim for breach of statutory notice under s. 117 of the FW Act are both premised on Mr Cheung first proving that he was an employee. The claims also depend on him proving that ALG terminated his employment.

25. Mr Cheung has not proved that he was an employee. I have found that the “nominal salary… to cover all his expenses” was paid to him as a director and not as an employee. As a result, he has not proved the threshold issue of employment on which his notice claims (contractual or statutory) depend. “Downstream” issues of whether ALG terminated his employment and consequential notice entitlements, whether by way of reasonable notice and/or statutory notice under s. 117 of the FW Act, simply do not arise in the absence of Mr Cheung having proved the gateway issue of employment.

26. In April 2021 a shareholders’ meeting of ALG passed a resolution to remove Mr Cheung as a director of ALG (CB362–363). Mr Cheung’s removal as a director is not synonymous with the termination of employment relationship. There is no pleaded case that any monetary entitlement arose for Mr Cheung as a result of his removal as an ALG director.

27. Because Mr Cheung has not proved he was employee, notice claims have not been made out.

    ISSUE 5: IS MR CHEUNG ENTITLED TO REASONABLE NOTICE AS TO THE TERMINATION OF HIS EMPLOYMENT AND, IF SO, HOW LONG WAS REASONABLE NOTICE?

28. The termination of employment notice claim is premised on Mr Cheung proving the threshold issue that he was an employee. It necessarily follows that if the threshold issue of employment is not proved, it is not possible to prove termination of employment. Because the threshold issue of employment has not been proved, the reasonable notice claim has not been made out.

29. Issues of whether there was a reasonable notice term implied into any employment agreement, or the applicable period of reasonable notice, do not arise because I have not reached that point to the analysis.

30. For the same reasons, because the threshold issue of employment was not proved, no issue of statutory notice under s. 117 of the FW Act arises.

    ISSUE 6: WAS MR HU INVOLVED IN ANY CONTRAVENTIONS OF THE FW ACT?

31. Mr Cheung alleges that Mr Hu was “involved” within the meaning of s. 550 of the FW Act in each of the alleged contraventions of the FW Act:

    (a)the underpayment and contravention of s. 323(1)(a) of the FW Act; and

    (b)the non-provision of notice and contravention of s. 117 of the FW Act.

32. Mr Cheung has not proved an underpayment contravention or a notice contravention against the primary contravener, ALG. It follows that neither the accessories (Mr Hu nor Mr Liu) can have been “involved” in any contravention of the principal.

33. In Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [175] White J proceeded on the basis that the allegations of accessorial liability “need be considered only in relation to the contraventions which I have found established”.

34. As Mr Donaghey notes in his book General Protections Under Fair Work Act (LexisNexis, 2019), at [8.72]:

    Accessorial liability created by s 550 of the FW Act is pendant liability, in the sense that it is dependent upon, and contingent upon, the successful finding of contravention against the primary wrongdoer. As a matter of principle, if the primary wrongdoer is not found liable then the question of the pendant liability and whether the accessory can be found to be liable cannot proceed.

35. This principle coexists with the fact that liability under s. 550 can be separate from and not conditional upon establishing a contravention against the “primary” contravener. From time to time, for example where a principal employer is insolvent, an applicant may still proceed independently against an accessory. Analytically, such a claim still relies on evidential proof of the primary wrongdoer’s contraventions (Fair Work Ombudsman v Contracting Solutions Australia Pty Ltd [2013] FCA 7, [3]).

    ISSUE 7: WAS MR LIU INVOLVED IN ANY CONTRAVENTIONS OF THE FW ACT?

36. The accessorial liability claim that Mr Liu was involved in contraventions fails for the same reason as the claim against Mr Hu fails, namely that Mr Cheung has not proved the contraventions against the primary contravener, ALG.

37. The accessorial liability claims have not been made out.

    ISSUE 8: DOES THE COURT HAVE JURISDICTION AS TO THE LOAN AGREEMENT CLAIM?

38. The Respondents contend that as a non-federal claim, the “Loan Agreement” dispute is outside the Court’s jurisdiction because it is not part of a single justiciable controversy. In circumstances in which the court’s jurisdiction is regularly invoked as to a federal matter, its jurisdiction encompasses other non-federal matters within the scope of the “single justiciable controversy”.

    Legal principles

39. An authoritative statement of the meaning of a “single justiciable controversy” is the judgment of Gummow and Hayne JJ in ReWakim; Ex parte McNally (1999) 198 CLR 511, [140] where Their Honours said:

    What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.

40. A justiciable controversy is identifiable independently of proceedings brought for its determination. It is the “subject matter for determination in a legal proceeding”(In re Judiciary and Navigation Acts (1923) 32 CLR 455, 465–6). Although the assessment of the matter involves questions of impression and practical judgment, that is not the statement of the test (Re Wakim, above, [140]).

41. Further, Justice Leeming writing extra-judicially in Authority to Decide, The Law of Jurisdiction in Australia (2nd edition, Federation Press, 2020) (with apparent reference to Counsel’s submissions in the High Court in Fencott v Muller (1983) 152 CLR 570) wrote that the search was as to the nature of the dispute between the parties:

    Like many other aspects of law, much depends on identifying the correct level of abstraction – something for which there are no rules.  What is a “matter” is defined practically, not legalistically  As their counsel put it: “We apply a dispute oriented test – [what is] the bone of contention between the parties, what is the dispute about?  The dispute is about the misrepresentation and the purchase price and any outstanding debts, and they are all related one to the other”

    (Emphasis added)

    Application of the legal principles

42. As to the FW Act claims, the Court has jurisdiction “in relation to any civil matter arising under this Act” (FW Act s. 566). Even though Mr Cheung’s FW Act claims have been unsuccessful he regularly invoked the Court’s jurisdiction as to them. His contractual employment claims arose out of a common substratum of facts. The contractual employment claims and the FW Act claims comprise a single justiciable controversy. Those different claims are so inter-related that the determination of one is essential to the determination of the other (Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7, 512).

43. The issue is whether the dispute as to the “Loan Agreement” also forms part of the same single justiciable controversy.

44. The Applicant submitted that (Applicant’s Closing Submissions, [39]):

    It is sufficient in this case that the controversy involves common parties arising out of a common enterprise and involves disputes about what was said and done in the course of that enterprise. The loan claims and the employment claims arise from a common substratum of facts and should be regarded as comprising a single justiciable controversy.

45. The Applicant in effect identified the single justiciable controversy as encompassing all aspects of the controversy between the “common parties” about ALG’s “common enterprise” at  Adderley Street. In my view, such a conception of the controversy is too wide and at too high a level of abstraction.

46. The controversy in which the Court’s jurisdiction has been regularly invoked concerns the dispute as to whether ALG met its legal employment obligations to Mr Cheung and matters arising out of that common substratum of facts. There may be any number of other matters involving these “common parties” and/or their “common enterprise” at Adderley Street outside the scope of the single justiciable controversy in which the jurisdiction of this Court has been regularly invoked. There was passing reference to other disputes between these parties involving statutory demands and a shareholder oppression action. No party contended that these matters, although they involved the same parties and the Adderley Street project, were within the scope of the single justiciable controversy in respect of which this Court’s jurisdiction was regularly invoked.

47. The “Loan Agreement” is a “separate and distinct” dispute from the employment controversy. The determination of the employment claims does not depend upon findings as to the Loan Agreement, or vice-versa, such that there could be conflicting findings as to them if the two matters were decided in different courts. Whatever the Court’s decision as to the employment matters, decisions as to the “Loan Agreement” require a separate inquiry as to what happened at the Riversdale Golf Course in February 2018. The Loan Agreement claim is pleaded as a standalone agreement. It is insufficient that the same parties are involved sand the context is the Adderley Street project.

1. The Loan Agreement claim may properly be characterised as “completely separate and distinct” and “distinct and unrelated” from the employment controversy (Wakim, above, [140]). The fact that it may be convenient to determine the Loan Agreement dispute in this Court does not alter that analysis.

2. The correct conception of the single justiciable controversy as to which the jurisdiction of the court is regularly invoked is the employment dispute between Mr Cheung and ALG. That conception of the single controversy encompasses his FW Act claims and the Employment Agreement claims. Because the Loan Agreement is a separate and distinct dispute, it is outside the outer limit of the Court’s jurisdiction.

3. Notwithstanding that conclusion, in circumstances in which I had heard the evidence as to the matter, lest this matter go further and I am wrong, the Respondents submitted that it was appropriate for me to make findings as to the Loan Agreement even if I concluded (as I have done) that the Court does not have jurisdiction as to it.

4. I have therefore set out my findings as to the Loan Agreement below.

   ISSUE 9: DID MR CHEUNG AND ALG ENTER INTO A LOAN AGREEMENT? IF SO, ON WHAT TERMS?

5. If, contrary to my reasons above, the Court has jurisdiction as to the “Loan Agreement”, there is a dispute whether Mr Cheung has proved that the $396,214.46 he transferred to ALG was a loan made under a Loan Agreement a term of which was that the $396,214.46 was repayable on demand.

6. It was common ground that Mr Cheung transferred amounts totalling $396,214.46 to ALG between 15 March 2018 and 29 June 2020 by a series of 12 payments of varying amounts (Mr Cheung, [23(a)-(l)], (CB39–40)). There was no fixed pattern as to either the amount or the timing of his transfers.

   The competing positions

7. Mr Cheung said these amounts were loans. The Respondents said they had the character of capital injections from a shareholder.

8. Mr Cheung’s evidence was that at the Riversdale Golf Club in February 2018 he “agreed to loan ALG funds on the condition that any amount be repaid upon demand by me”(Mr Cheung, [20], (CB38)). There is no written record of the meeting at the Riversdale Golf Course in 2018. It was common ground that as of early 2018 ALG was struggling to meet its loan repayment obligations to Westpac (Mr Cheung, [20], (CB38); Mr Hu, [46], (CB336); Mr Liu, [44]-[45], (CB376)). It was also common ground that there was an agreement that the shareholders would transfer funds to ALG to enable it to meet its loan obligations.

9. Messrs Hu and Liu characterised the arrangement as follows. They said the parties anticipated that the Adderley Street project would be completed by 31 December 2017 but that had not occurred. In those circumstances, in February 2018, the shareholders agreed that each shareholder would make further capital injections to ALG in proportion to the ratios in which he then held shares in ALG. Mr Hu’s evidence was that it was agreed that the shareholders “should make contributions in accordance with our shareholding split” (Mr Hu, [46], (CB336)). Mr Liu’s evidence was that the agreement was to “split the amounts we were transferring to match the shareholder ratio 42%/29%/29%” (Mr Liu, [45], (CB376)). Mr Liu also gave evidence that “there was no agreement that those amounts would be loaned to the company, nor was there any agreement for them to be repaid”: Mr Liu, [49], (CB376).

   An unenforceable contract?

10. I have put to one side whether, if I accepted Mr Cheung’s version of events, the Loan Agreement  would be unenforceable in any event because of uncertainty: “the first principle of the law of contract is that there can be no binding and enforceable obligation unless the terms of the bargain, or at least essential terms, have been agreed upon” (Thorby v Goldberg (1964) 112 CLR 597, 607). Mr Cheung asserts that there was an enforceable agreement despite the absence of any agreed loan amount or any agreement as to the time at which he would advance the monies. Although they pleaded that the Loan Agreement did not exist (Defence, [8], (CB27), it was not clear to me that the Respondents expressly pleaded, in the alternative, that the alleged Loan Agreement was unenforceable for uncertainty.

    Mr Cheung has not proved the Loan Agreement

11. Assuming that any agreement (if made) would have had the character of a binding and enforceable obligation, I do not accept Mr Cheung’s claim as to Loan Agreement for the following reasons.

    Mr Cheung’s version is inherently implausible

12. The agreement for which Mr Cheung contends is inherently implausible. Mr Cheung contended that Mr Hu and Liu agreed that ALG would repay on demand monies even though the loan amount and the time when any funds would be advanced to ALG were not agreed. On Mr Cheung’s case, he did not assume any obligation to advance any fixed amount at any fixed time. It is inherently implausible that ALG agreed to repay on demand an unspecified amount to be advanced at an unspecified time.

13. I also do not accept that Mr Hu and Mr Liu, experienced businessman, would agree that ALG would repay an unquantified amount on demand when ALG had no available cash flow to make any repayments.

14. I find that the arrangements made at the Riversdale Golf Course were far more limited. ALG needed funds to stay afloat because the Adderley Street project had not been completed. A Westpac loan, with accruing interest, had to be serviced until Adderley Street was sold. The parties arranged that the parties would advance required funds to ALG in proportion to their shareholdings to keep ALG afloat and to service the Westpac loan. I find that the evidence did not establish one way or the other as to whether the funds advanced had the character of a capital contribution or a loan.

15. Suffice to say that he be repaid $396,214.46. Mr Cheung has not proved that there was a binding Loan Agreement that monies he advanced would be repayable on demand as he alleges.

16. There are certain other matters to which I also refer to below as fortifying me in my conclusion that Mr Cheung has not proved that there was a loan repayable on demand as he alleges.

    Mr Cheung had an unfulfilled obligation to make a further capital contribution

17. Before February 2018, and the meeting at the Riversdale Golf Course, the shareholders had agreed that it would be necessary for Mr Cheung and Mr Liu to transfer additional funds by way of a capital injection. The Board resolutions made on 18 February 2017 - about a year before the discussions at the Riversdale Golf Course - included as part of item 1 (CB419) :

    […]

    Mr Zhang Weiyang [the Applicant] and Mr Liu Xiangmao, both being shareholders of the company, agreed to make additional equity contribution by 31 August 2017 to match Mr Hu Xiaoying’ s investment of AU $5 m and their respective shareholding ratios, i.e., Mr Zhang Weiyang and Mr Liu Xiangmao would each make an additional equity contribution of AU$2.8523m.

    (Emphasis added)

18. Mr Cheung conceded in cross-examination that by February 2018 (about a year later and the date of the meeting at the Riversdale Golf course) he had not made this additional equity contribution to match his shareholding ratio in accordance with the 18 February 2017 resolution (Transcript, 13 February 2024, P118-121).

19. It is unlikely that ALG would enter into the Loan Agreement in circumstances in which Mr Cheung had an unmet obligation to make an additional equity capital contribution to ALG. 

    Documentary evidence that Mr Cheung himself recognised he had to share in losses before he could recover funds advanced 

20. I also accept the Respondents’ contention that Mr Cheung himself recognised in a document he wrote that if ALG made losses, as in fact it did at all relevant times between 2016 and 2020, at the very least he had to bear a share of those losses in proportion to his shareholding before he had any immediate entitlement to be repaid monies he advanced to ALG between 15 March 2018 and 29 June 2020.

21. In his WeChat message dated 23 December 2020 Mr Cheung wrote (CB352):

    “Good afternoon! Time flies. We’ve been together for seven years. I think we can go further together in the future. I want to clarify the following things: 1) GM Hu’s shares are five million (80.64%), and brother Mao and I are six hundred thousand (9.67%) respectively.

    [….]

    Based on the company’s annual loss of $550000 and four and a half years, a total of $247500[0]. My share is $239332. The excess is $237667. The bank loan due on December 31 is $2500000. My share is $241750. The difference is $4083. In this part, Mao Ge and I are basically the same. President Hu should pay $2491834 to the bank before 31/12/20. President Hu should pay me $868830 before 31/12/20. The above calculation is reasonable and legal.”

    (Emphasis added)

22. The parties have litigated related matters in the County Court of Victoria (Cheung v. Hu [2022] VCC 291). In that case, McNamara J drew an inference at [45] as to the timing of Mr Cheung’s WeChat message on 23 December 2020: “it is reasonable to infer that Mr Cheung’s demands were prompted by the demands for the bank”. I draw the same inference on the evidence before me.

23. The content of Mr Cheung’s WeChat message does not support the existence of the Loan Agreement. In his own message Mr Cheung accepts that he had a financial obligation to bear his share of ALG’s losses over 4½ years in proportion to his 9.67% shareholding in the approximate amount of $239,332 ($550,000 x 4.5 x 9.67%) (MFI-7). That acceptance of an obligation to share in losses is inconsistent with the Loan Agreement. His calculations that Mr Hu should pay down nearly all of the Westpac loan is predicated on an acknowledgement that Mr Cheung as a shareholder had to share in ALG’s losses. Sharing in losses is inconsistent with the position that he now advances that he was quarantined from ALG’s losses by the Loan Agreement that ALG had a legal obligation to repay $396,214.46 regardless of ALG’s losses.

24. There are also documents which support the contention that the quantum Mr Cheung and Mr Liu transferred to ALG between March 2018 -June 2020 was calculated to match their shareholding ratios. The Respondents submitted that the fact that each man transferred funds to ALG to match their shareholding ratio suggested that the transfers were capital contributions not loans. There is force to this proposition. I accept, however the fact that funds were transferred in proportion to shareholdings is not determinative (in and of itself) of whether the $396,214.46 had the character of a loan or a capital contribution. Loans could be made to match relative equity holdings.

    A belated claim as to a loan

25. The sequence of events also weighs against Mr Cheung’s claim. Mr Cheung’s first possible written assertion of a loan agreement - was by way of the WeChat message - this was a belated claim and came nearly 3 years after he says the oral agreement was made (December 2020 versus February 2018). With the possible exception of Mr Liu’s labels on certain bank transfers, there was no reference to any alleged Loan Agreement in the period February 2018 – December 2020. The delay in the assertion of the Loan Agreement weighs against the fact of its existence.

    A claim motivated by Westpac’s demands and what is reasonable

26. The fact that Westpac was bearing down on ALG provided an extraneous motivation for Mr Cheung to assert there was a Loan Agreement. Mr Cheung first made a demand only in the shadow of Westpac’s uncompromising demand for repayment of its loan to ALG. Mr Cheung agreed that by 2020 the Westpac loan as to the Adderley Street development was overdue. By late 2020 Westpac had sent an email to Mr Cheung requiring ALG to make a bulk reduction of $2.5 million on the outstanding loan by 31 December 2020 “no exceptions”. Each of the men was a guarantor as to the loan and was therefore financially exposed because of Westpac’s demand. It was only on 23 December 2020 (CB352) that Mr Cheung sent a WeChat message to Messrs Hu and Liu in which (depending how the WeChat message is interpreted) he first asserted in writing that there was a loan even though - inconsistently with the agreement for which he now contends - he qualified his demand by acknowledging that his right to recover funds was conditional upon him accepting his share of ALG’s prior losses proportionate to his shareholding before recovery.

27. Finally, Mr Cheung also then framed his demand as a “reasonable and legal” rather than framing his demand with reference to a pre-existing binding Loan Agreement.

28. The sequence of events supports a finding that on 23 December 2020 Mr Cheung was a man trying to shore up his financial position - or negotiate with his fellow directors the parameters what he perceived to be a reasonable compromise - after the event - rather than merely calling in a prior loan agreed to be repayable on demand.  The WeChat message dated 23 December 2020 does not assist his claim.

    Countervailing evidence

    Mr Cheung would not advance money other than by way of a loan because of ALG’s tenuous financial position

29. Mr Cheung contended that because ALG’s financial position was “tenuous at best” it was inherently unlikely that after February 2018 “Mr Cheung would have agreed to make capital contributions to the company as distinct from loans.”

30. The Respondents contended the opposite. They contended that it was inherently unlikely that experienced businessmen would agree to a loan repayable on demand when an existing Board resolution (February 2017) required a further capital contribution from Mr Cheung and Mr Cheung had not met that obligation under the resolution. Further, the Respondents contended that it was inherently unlikely for experienced business people to agree to repay any loan “on demand” when ALG had no cash flow to meet any repayment demand and the availability of any cash flow depended on ALG first realising proceeds from the Adderley Street development. 

31. Mr Cheung’s case was that it was an express term of the Loan Agreement that the loan was repayable on demand rather than a case framed on the basis of the common law principle that the detention of his money made it repayable “instanter” in the absence of some other agreement having been made by the parties (Ogilvie v Adams [1981] VR 1041, 1043).

32. I have set out above that it is my view that there is an inherent unlikelihood in Mr Cheung’s case as to the Loan Agreement which arises from contentions that ALG would agree to repay on demand a loan of an unspecified amount in circumstances in which Mr Cheung had not assumed any obligation as to the quantum of the loan or its timing.

33. In early 2018 three experienced businessmen had committed to a property development project which had been delayed. The project’s completion required the injection of new funds and if new funds were not provided the project would fail. Doubtless, in early 2018 Mr Cheung was under pressure to contribute new funds to see the project through. I do not accept Mr Cheung’s submissions that it was inherently unlikely for him to make further capital contributions to ALG from 2018 because it was in a tenuous financial position or that the tenuousness of ALG’s financial position provides a foundation from which to draw an inference that the parties made the Loan Agreement as contrasted with Mr Cheung making a further capital payment.

    Countervailing evidence - Mr Liu records on the face of the bank statements his contributions as “loans”

34. Evidence recorded in ALG’s bank statements (with CBA) disclosed that Mr Liu had on several occasions recorded funds he advanced to ALG in this same 2018 – 2020 period as “loans” (Ex. A5, ALG’s CBA Bank records, pp. 34, 42). The argument proceeded on the basis that if Mr Liu had made “loans’ to ALG, inferentially, that supported an argument that Mr Cheung too had made loans.

35. Mr Liu’s evidence was that the “loan” labels he recorded on bank statements was merely for his “family record” (Transcript, 12 February 2024, P292:L21). Mr Liu’s evidence (which I accept) was that details as to whether the funds advanced would be charactersied as a loan to the ALG or as a capital injection would depend on professional accounting advice in due course (Transcript, 12 February 2024 P294:L23). His labels did not purport to record the fact of an agreed loan-debt owed by ALG to him.

36. Because the three shareholders were close friends, I find that they decided first to act by advancing funds because ALG needed them. It was Mr Cheung and Mr Liu who needed to make capital contributions to match contributions Mr Hu had already made as set out in the 18 February 2017 board resolutions. How funds advanced would be dealt with, as loans or capital injections, was a matter to be nailed down in due course on accounting advice.

37. In any event, even if Mr Liu’s bank statement “labels” establish loans and establish inferentially that Mr Cheung also made loans (and, in my view, the labels are too flimsy a foundation for such a conclusion) the “labels’ do not assist as to when ALG had an enforceable obligation to repay these “loans”. In particular, they do not establish that any loan was repayable on demand.

    Conclusion as to the Loan Agreement

38. In conclusion, the evidence is simply not strong enough such that I have reached a state of actual satisfaction that there the parties made the Loan Agreement that the $396,214.46 was repayable to Mr Cheung on demand.

39. There is an absence of writing and Mr Cheung has not overcome his serious difficulties of proof (John Holland, above, [93]).

40. Although there was evidence of the parties making some important decisions without a written record (notably payment of the $9.6 million purchase price of Adderley Street), it remains unlikely that the parties would have agreed to make the “Loan Agreement” without a written record. The informality in the parties’ dealings supports a finding that the parties anticipated that they would work out arrangements later as to how to characterise funds advanced rather than supporting a finding that there was a binding and enforceable “Loan Agreement” made in February 2018.

41. Finally, Mr Cheung seeks to prove a “loan” solely on the basis of his own oral evidence. He asks the Court to reject the evidence of each of Mr Hu and Mr Liu that there was no enforceable Loan Agreement. I am not persuaded that I should do so. Mr Liu’s own evidence as to the distinction between a loan and a capital contribution was not reliable. On certain issues, Mr Cheung had reconstructed dealings, after the event, to align with what he thought was fair and reasonable. I have already referred to the content of his WeChat message on 23 December 2020. As to monies he provided to ALG at an earlier point in time in 2015 he deposed that “I loaned $800,000 from Auburn to ALG on 18 September 2015” (Mr Cheung, [14], (CB36)). In is oral evidence he conceded that this amount was a capital “contribution”, not a loan (Transcript, 13 February 2024, P6:L16).

42. Suffice to say, Mr Cheung has not proved on the balance of probabilities that there was an enforceable and binding Loan Agreement made at the Riversdale Golf Course in February 2018 that ALG would repay him on demand any subsequent funds he advanced such that the $396,214.46 he duly transferred to ALG between March 2018 and June 2020 became repayable on demand.

43. The claim as to the Loan Agreement has not been made out.

    CONCLUSION

44. Mr Cheung has not made good his claims. The application will be dismissed.

45. The Respondents seek to be heard on costs. If the Respondents seek any costs order they should within 14 days file submissions (not exceeding 5 pages) and any affidavit in support. The Applicant should respond within 14 days thereafter. I will list an oral hearing on the request of either party. If neither party requests an oral hearing in documents they file with the court, I will determine any costs application on the papers.

I certify that the preceding two hundred and thirty-five (235) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Champion.

Associate:

Dated:       28 March 2024