Esanda Finance Corporation Ltd v Reyes

[2001] NSWSC 234

CITATION:	Esanda Finance Corporation Ltd v Reyes & Ors [2001] NSWSC 234
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 5084/97
HEARING DATE(S):	28/02/00, 29/02/00, 2/03/00, 13/04/00, 14/04/00, 19/04/00, 20/04/00, 26/04/00, 28/04/00, 3/05/00 (Final submissions received 13 September 2000)
JUDGMENT DATE:	12 April 2001
PARTIES :	Esanda Finance Corporation Limited (Plaintiff) Lope Reyes (First Defendant) Buu Phuong Thai (Second Defendant) Teresita Reyes (Third Defendant) Helen Dinh (Fourth Defendant) Virginia Castro Malong (Fifth Defendant) Ita Dinh (Sixth Defendant) Hong Kiet Dinh (Seventh Defendant)
JUDGMENT OF:	Simos J

COUNSEL :	T S Hale SC (Plaintiff) No appearance (1st Defendant) D H Murr SC (2nd, 4th, 6th & 7th Defendants) L J W Aitken (3rd Defendant) B David (Solicitor) (5th Defendant)
SOLICITORS:	Kemp Strang (Plaintiff) No appearance (1st Defendant) W Chan & Co (2nd, 4th, 6th & 7th Defendants) Colbron & Associates (3rd Defendant) B David & Assoc (5th Defendant)
CATCHWORDS:	Constructive trust - Fraudulent misappropriation - Held, fraudulently misappropriated monies were impressed with a constructive trust in favour of true owner of the monies - Breach of trust - knowing assistance in breach of trust - Held, monies received from wrongdoer by defendants in circumstances indicating breach of trust were held by defendants upon a constructive trust for the true owner of the monies.
CASES CITED:	Barnes v Addy (1874) 9 CH App 244 Black v S Freedman & Co (1910) 12 CLR 105 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Gertsch v Atsas & Ors (1999) NSWSC 898 In re Montagu's Settlement Trust (1987) 1 Ch 264 Muschinski v Dodds (1985) 160 CLR 583 Royal Brunei Airlines v Tan (1995) 2 AC 378
DECISION:	Plaintiff's claims against the first, second, fourth, sixth and seventh defendants upheld.

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

SIMOS J

12 APRIL 2001

5084/97 ESANDA FINANCE CORPORATION LIMITED v LOPE REYES & ORS

JUDGMENT

HIS HONOUR:

Introduction

1   These proceedings arise from a series of transactions instigated by Lope Reyes, the first defendant, when employed as Finance Manager of the Southern Cross Hotel, Sydney. The hotel is an 11 storey building with 192 beds situated on the corner of Elizabeth and Goulburn Streets, Sydney. It was purchased in November 1991, and thereafter operated by Kengfu Properties Pte Limited (“Kengfu”) a company incorporated in Singapore and registered in Australia as a foreign company and was valued at around $32M in 1997. The occupancy rate during 1996-97 was 85-95% and the average room rate, or tariff, was $100-$105 per night. The gross weekly turnover was between $100,000-$120,000. Not all these specific facts were know to the seventh defendant. Kengfu was a wholly owned subsidiary of Kengfu Investments Pte Ltd a company incorporated in Singapore which was in turn part of the Kho family group of companies. Another wholly owned subsidiary of Kengfu Investments Pte Ltd was Accord Pacific Holdings Pty Ltd (“APH”) a company incorporated in Australia. Accord Pacific Properties Pty Ltd (“APP”), a company incorporated in Australia, was at all material times a wholly owned subsidiary of APH. Aircord Pty Ltd (“Aircord”) was also a company incorporated in Australia and was also part of the Kho family group of companies.

2   In addition to being Finance Manager of the Southern Cross Hotel, the first defendant was a director and secretary of APH, a secretary of APP and a director and the secretary of Aircord.

3   In a series of transactions, the first of which occurred on 10 January 1997, and the last of which occurred on 5 September 1997, the first defendant fraudulently purported to sell to Esanda Finance Corporation Ltd, the plaintiff, certain goods, chattels and fixtures purportedly owned by Kengfu, APH and the first defendant, but which were not, in fact, owned by those entities, in association with hire purchase agreements between the plaintiff and the purported vendors of those goods, chattels and fixtures pursuant to which the goods, chattels and fixtures were “hired back” by Esanda to those entities.

4   Most of the goods, chattels and fixtures purportedly so sold were in use at the Southern Cross Hotel but not owned by the purported vendors, and included telephone equipment, refrigeration plant and associated equipment, beds, towels and linen. There was also computer equipment allegedly owned by the first defendant.

5   In addition, the defendant purported to sell to the plaintiff two non-existent motor cars in association with hire purchase agreements, in one case “back” to the first defendant, and in another case to one Freddie Guevara.

6   The first defendant received from the plaintiff various cheques in favour of the purported vendors of the said items or otherwise as the first defendant directed. The first defendant fraudulently and without authority purported to endorse those cheques on behalf of the payees of those cheques, and in this way was able to deposit most of the monies paid by the plaintiff into his personal bank account with the ANZ Bank, Haymarket branch.

7   From time to time thereafter, the first defendant and the seventh defendant engaged in various transactions whereby the seventh defendant lent various monies to the Southern Cross Hotel (Kengfu), or others nominated by the first defendant, at the request of the first defendant, sometimes by cheque and sometimes in cash for varying but usually short periods, and usually without any firm arrangements as to payment of interest, and without any formal record of the transactions. When the transactions were made by cheque, the cheque was not always in favour of Kengfu, and on one occasion, at least, a cheque for $31,000 was made out in favour of the fifth defendant, Virginia Castro Malong, another employee of Kengfu. In the same way, and on the same basis, from time to time, the first defendant purportedly repaid these loans on behalf of the Southern Cross Hotel such repayments being sometimes by cash, sometimes by cheque drawn by the first defendant on his personal bank account inter alia. The various loans and alleged repayments, did not always match, even allowing for interest, the precise amount of which was never the subject of specific agreement.

8   The first defendant engaged in these transactions, not only on his own behalf, but on behalf of the second defendant, his wife, and on behalf of the fourth and sixth defendants being his daughters. The seventh defendant also arranged for various loans to be made to the Southern Cross Hotel, for whom the first defendant was purportedly acting, by a number of friends of the seventh defendant, in respect of which transactions the seventh defendant said that he felt personally responsible for the repayment of any monies, so lent, but not repaid.

9   In general terms, the plaintiff in these proceedings sues the first defendant for all monies paid to him on behalf of the purported vendors of the goods the subject of the purported hire purchase agreement which the first defendant fraudulently misappropriated. As will appear later in this judgment, I am of the opinion that the plaintiff is entitled to recover all relevant monies fraudulently obtained by the first defendant from the plaintiff in the relevant circumstances set out in the further amended statement of claim of the plaintiff.

10   In the relevant circumstances, the plaintiff claims that the first defendant is liable to pay to it monies totalling $1,345,000.

11   Again in general terms, the plaintiff in these proceedings sues the second, fourth, sixth and seventh defendants, being wife, husband and two daughters, for monies received by them from the first defendant purportedly acting on behalf of the Southern Cross Hotel, being monies paid to them by the first defendant out of funds misappropriated from the plaintiff by the first defendant, which monies when received by those defendants was impressed with a constructive trust in favour of the plaintiff and which were received by those defendants with knowledge of circumstances which to an honest, reasonable person in the position of the seventh defendant would “indicate” or “tell” that a fraud, or breach of trust, was being committed, with the result that the monies so received by those defendants were also impressed with a constructive trust in favour of the plaintiff, so that those defendants are liable to repay, and/or account to the plaintiff for those monies. The seventh defendant acted in the relevant transactions not only on his own behalf, but on behalf of the second, fourth and sixth defendants, being his wife and two of his daughters respectively. As will appear hereafter, I am of the opinion that the claims of the plaintiff against those defendants are well founded and I propose to grant to the plaintiff the relief it seeks against those defendants in the further amended statement of claim. I note that during the course of appearing in this matter the claims of the plaintiff against the third and fifth defendants were compromised.

12   I also note that it was submitted on behalf of the defendants that the circumstances in which the seventh defendant, on behalf of himself and on behalf of the second, fourth and sixth defendants, engaged in the relevant transactions, were not such as to indicate to or tell an honest and reasonable person in the position of the seventh defendant that a fraud or breach of trust was being committed.

13   I also note that it was submitted on behalf of those defendants that the monies received by the seventh defendant from the first defendant were in payment of bona fide loans made by those defendants to the first defendant, so that the receipt of monies by the seventh defendant on behalf of himself and the other defendants for whom he was acting, was for consideration, bona fide and without notice of any fraud or breach of trust. I note that it was also submitted, on behalf of those defendants, that certain of the monies received by those defendants were monies of Kengfu rather than monies of the plaintiff, with the result that the plaintiff could not recover those monies from those defendants. As will appear hereafter, I have rejected these matters of defence submitted on behalf of the relevant defendants.

14   The plaintiff also made various claims against Teresita Reyes, the third defendant, who was the wife of the first defendant, but in the course of the proceedings, those claims were settled. The plaintiff also made various claims against Virginia Castro Malong, the fifth defendant, but those claims were also compromised during the course of the proceedings.

15   The first defendant did not appear, nor was he represented in the proceedings but Bryson J ordered that service of documents as described by him, should be regarded as proper service subject to the requirement that he should be served with copies of any orders made against him should he return to the jurisdiction. It appears that the first defendant left Australia for the Philippines, and remains in the Philippines, but cannot be found.

16   The proceedings were, however, defended on behalf of Hong Kiet Dinh, the seventh defendant, Buu Phuong Thai, his wife, the second defendant, Helen Dinh, the fourth defendant, a daughter of the seventh defendant and the second defendant, and Ita Dinh, the sixth defendant, also a daughter of the seventh defendant, and the second defendant.

The Pleadings (Issues Arising)

17   By its further amended statement of claim filed 18 June 1998 Esanda Finance Corporation Limited, the plaintiff, alleged against various defendants, including Lope Reyes the first defendant and Hong Kiet Dinh the seventh defendant and others, that between April 1997 and September 1997 the plaintiff “advanced” (more accurately “paid”) certain monies to Kengfu Properties Pte Ltd (“Kengfu”), a Singapore company, pursuant to (more accurately “in association with”) certain “purported” commercial hire purchase agreements between the plaintiff and Kengfu, as particularised, being an agreement dated 10 April 1997 pursuant to (“in association with”) which the sum of $95,000 was “advanced” (“paid”) to Kengfu an agreement dated 26 May 1997 pursuant to (“in association with”) which the sum of $400,000 was “advanced”, (“paid”) and an agreement dated 5 September 1997 pursuant to (“in association with”) which the sum $250,000 was “advanced”, (“paid”) the three amounts so “advanced” (“paid”) totalling $745,000.

18   Each of these purported three hire purchase agreements between the plaintiff and Kengfu followed the purported purchase, by the plaintiff from Kengfu, of various goods, chattels and fixtures used by Kengfu in the course of operating the Southern Cross Hotel in Sydney and which the plaintiff purported to hire “back” to Kengfu, pursuant to the various hire purchase agreements.

19   The goods, chattels and fixtures the subject of the purported hire purchase agreement dated 10 April 1997, comprised a second hand NEC model 12A PABX telephone system which was purportedly sold by Kengfu to the plaintiff for the sum of $95,000. The goods, chattels and fixtures the subject of the hire purchase agreement dated 26 May 1997 comprised new refrigeration plant, smoke control system, ductwork and pipework, 2 x cooling towers, forced draft type of treated galvanised metal and ventilation which were purportedly sold by Kengfu to the plaintiff for the sum of $400,000. The goods and chattels the subject of the hire purchase agreement dated 5 September 1997 comprised inter alia 250 queen size mattresses, 300 king size mattresses, 250 ¾ size mattresses, 250 single sofas and bedspreads, sheets and towels etc. which were purportedly sold by Kengfu to the plaintiff for $250,000.

20   In addition to the goods purportedly sold by Kengfu to the plaintiff and hired “back” by the plaintiff to Kengfu referred to above, APH purportedly sold to the plaintiff a new NEC model 126A multi level PABX telephone system and refrigeration plant, cooling towers etc which were used by Kengfu in the course of operating the Southern Cross Hotel for the sum of $600,000 which goods were also leased “back” to APH pursuant to a hire purchase agreement dated 30 July 1997.

21   In association with the execution of the four purported hire purchase agreements, Kengfu as mortgagor purportedly executed in favour of the plaintiff as mortgagee, a mortgage debenture dated 26 May 1997 registered No. 592802, APH as mortgagor purportedly executed in favour of the plaintiff as mortgagee, a mortgage debenture dated 30 July 1997 registered No. 613585 and the plaintiff, Kengfu, APH and APP, a wholly owned subsidiary of APH and Aircord, purportedly executed a cross guarantee and indemnity in favour of the plaintiff dated 30 July 1997.

22   These four purported hire purchase agreements were the subject of the first count of the further amended statement of claim.

First Count (Against the First Defendant)

23   The first defendant did not appear, and was not represented at the hearing, and evidence was given in the course of the hearing that he had gone to the Philippines.

24   It is alleged in the statement of claim that none of the four hire purchase agreements, and none of the three security documents were executed or delivered, or authorised to be executed or delivered, to the plaintiff by any of Kengfu, APH, APP or Aircord. It is alleged rather that the common seals of the various companies affixed to the said documents, and the various signatures on the said documents, were affixed and signed by the first defendant fraudulently and without authority. As alleged in the statement of claim, the first defendant caused the four purported hire purchase agreements and the three security documents to be purportedly executed by all the parties except the plaintiff and to be delivered in purported executed form to the plaintiff. It is also alleged in the statement of claim that the four purported hire purchase agreements and the three purported security documents were, in fact, not duly executed or delivered or authorised to be executed or delivered to the plaintiff by any of Kengfu, APH, APP or Aircord.

25   It is further alleged in the statement of claim that, to the knowledge of the first defendant, the goods the subject of the four purported hire purchase agreements either did not exist, or to the extent that they did exist, had already been transferred to another financier so that title to those goods was not available to the plaintiff and the plaintiff did not obtain title to any of those goods.

26   It is alleged that the plaintiff was, in this way, defrauded by the first defendant of the total amount paid by it for the purported purchase of the goods the subject of the above four purported hire purchase agreements, and that the first defendant is, accordingly, liable to pay to the plaintiff that total amount of $1,345,000. I note in passing that, to the extent that these monies were received into the personal bank account of the first defendant, they would have been impressed with a constructive trust in favour of the plaintiff: see Black v S Freedman & Co (1910) 12 CLR 105 at 109-110 and cf. Muschinski v Dodds (1985) 160 CLR 583 at 614-615.

27   Counsel for the second, fourth and sixth defendants did not challenge this result nor any of the facts upon which it was based except as appears hereafter.

Third Count

28   It is alleged in the statement of claim that, in circumstances which will appear hereafter, out of the sum of $107,572.12 deposited to the defendant’s personal account on 28 May 1997 the first defendant paid the following amounts inter alia:-

(a) $32,450 to the second defendant on 29 May 1997;
(b) $30,000 to the third defendant on 29 May 1997; and
(c) $523.622, for or on behalf of the second defendant on 16 June 1997.

The plaintiff alleges that the second defendant received the benefit of the sums of $32,450 and $523.62 respectively either with notice that such monies were not those of the first defendant or as a volunteer or otherwise than for valuable consideration and bona fide as a result of which, so it is alleged by the plaintiff, the second defendant received and holds the said sums upon a constructive trust for the plaintiff and/or is otherwise liable to account to the plaintiff for the same.

29   By her defence, the second defendant, who is the wife of the seventh defendant, admits receiving the sum of $32,450 from the first defendant by personal cheque drawn by the first defendant on his personal bank account and denied that she received the money with notice that it was not the first defendant’s money, and further said that she received the sum “as part of a series of advances from the first defendant, advances to or at the request of the first defendant and repayments thereof, particulars which were set out in the schedule below.” The schedule is appended to this judgment as appendix 1.

30   In the same way, and on the same basis, the plaintiff claimed that the third defendant received and holds the said sum of $30,000 upon a constructive trust for the plaintiff and/or is otherwise liable to account to the plaintiff for the same but during the course of the hearing the plaintiff’s claims against the third defendant were compromised.

Fifth Count

31   It appears not to be in dispute that, as alleged in the statement of claim, out of the sum of $300,000 deposited to the first defendant’s personal account on 31 July 1997 the first defendant paid the following amounts:-

(a) $54,000 to the second defendant on 1 August 1997;
(b) $35,000 to the fifth defendant on 5 August 1997.

32   It is alleged that the second defendant and the fifth defendant respectively hold the sums upon a constructive trust for the plaintiff and/or are otherwise liable to account to the plaintiff for those sums. The proceedings as against the fifth defendant have been settled.

33   By her defence in respect of this count, the second defendant admitted receiving the sum of $54,000 on 1 August 1997 from the first defendant, but denies that she received the said sum with notice that it was not the first defendant’s money. The second defendant also says that she received the said sum “as part of a series of advances from the first defendant, advances to or at the request of the first defendant and repayments thereof, particulars of which are set out in the schedule below” being appendix 1 to this judgment.

34   In further answer to the fifth count (and also the sixth count) the second defendant says that the plaintiff delivered the cheques referred to in paragraph 23 of the statement of claim totalling $600,000 and being by way of four bank cheques each in the sum of $100,000 and one bank cheque in the sum of $200,000 each drawn by the plaintiff in favour of Kengfu, “intending to transfer property in them to Kengfu, and that receiving those cheques for Kengfu was within the actual or apparent authority of the first defendant, or alternatively Kengfu, by appointing him to the position of finance officer held him out as having authority to receive those cheques on his behalf, by reason whereof it was alleged that the property and the cheques passed to Kengfu when the plaintiff delivered them to the first defendant, so that if the first defendant converted the cheques or otherwise dealt with them fraudulently, he deprived Kengfu, not the plaintiff, of property in them.” Presumably it would follow if this submission were correct, that the monies the subject of this count received by the second defendant from the first defendant would have been received by the first defendant subject to a constructive trust in favour of Kengfu, rather than a constructive trust in favour of the plaintiff as alleged.

35   In my opinion however, and for reasons as will appear hereafter, this submission should be rejected. It is plain, in my opinion, that whatever the first defendant did with the subject cheques and the monies represented by them, was not done with the actual authority of Kengfu with the result that those monies cannot be treated as having been received by Kengfu but remain the monies of the plaintiff, or more accurately remained in the hands of the first defendant, impressed with a constructive trust in favour of the plaintiff.

36   Even if as between Kengfu and the plaintiff the plaintiff could have established that the first defendant had the actual, or apparent authority of Kengfu to receive the cheques in favour of Kengfu and deal with the monies representing them, that would not, in my opinion, alter the position as between the plaintiff and the first defendant by reason whereof the monies would have been received by the first defendant upon a constructive trust for the plaintiff. In any event, I am of the opinion that it is plain, on the evidence, that the first defendant did not have the actual authority of Kengfu to deal with the money in the manner in which he did, and further, no conduct on behalf of Kengfu held the first defendant out as having such authority. In particular, I am of the opinion that, the business card of the first defendant, describing the first defendant as the Finance Manager of the Southern Cross Hotel, does not have this effect, nor does the letter of 13 March 1997.

Sixth Count

37   It is alleged in the statement of claim that out of the sum of $100,000 deposited to the personal account of the defendant on 8 August 1997 the first defendant paid the following amounts:-

(a) $31,000 to the fifth defendant on 11 August 1997;
(b) $26,800 to the fourth defendant on 11 August 1997;
(c) $804.99 to, for or on behalf of the second defendant on 14 August 1997;
(d) $523.77 to, for or on behalf of the second defendant on 14 August 1997.

38   The plaintiff claims that each of the fifth, fourth and second defendants received each of these sums respectively in circumstances in which they held those sums upon a constructive trust for the plaintiff and were otherwise liable to account to the plaintiff for the same. As stated above, the proceedings against the fifth defendant have been settled.

39   By her defence, the fourth defendant admitted that the first defendant paid her the sum of $26,800 as alleged, but denied that she received the said sum with notice that it was not the first defendant’s money and further alleged that she received the money as a loan from the first defendant and that on, or about, 26 August 1997 she paid the money to the first defendant. The fourth defendant also alleged that the source of these monies was cheques in favour of Kengfu in respect of which the property had passed to Kengfu with the result that if the monies were subject to a constructive trust in the hands of the first defendant, that constructive trust was in favour of Kengfu, and not in favour of the plaintiff as alleged in the further amended statement of claim. As stated above, in another context, this submission has been rejected.

Eighth Count

40   It is alleged that out of the sum of $150,000 deposited by the first defendant to his personal account on 5 September 1997 referred to above the first defendant paid the following amounts:-

(a) $15,400 to, for or on behalf of the sixth defendant on 8 September 1997;
(b) $8,000 to, for or on behalf of the seventh defendant on 11 September 1997;
(c) $17,000 to the second defendant on 22 September 1997.

41   In the relevant circumstances of those payments, the plaintiff claims that each of the sixth defendant, the seventh defendant and the second defendant hold each of those sums in a constructive trust for the plaintiff and/or are otherwise liable to account to the plaintiff for the same.

42   The plaintiff further alleges that the sum of $15,400 was paid to Richardson & Wrench on behalf of the sixth defendant and applied as the deposit on the sixth defendant’s purchase of the property 1/20 Myra Road Dulwich Hill NSW which is allegedly accordingly charged in favour of the plaintiff with the repayment of the said sum of $15,400 and interest.

43   By her defence, the second defendant, inter alia, admitted receiving the said sum of $17,000 but denied that she received the sum with notice that it was not the first defendant’s money and further said that “she received the sums alleged as part of a series of advances from the first defendant, advances as to or at the request of the first defendant and repayments thereof, particulars of which are set out in the schedule below” (being appendix 1 to this judgment).

44   The second defendant also alleged that the source of this payment to her was a cheque in favour of Kengfu allegedly received in circumstances which made the monies held by the first defendant impressed with a constructive trust in favour of Kengfu, and not the plaintiff. As stated above, this submission has been rejected.

45   By her defence the sixth defendant admitted that she received the sum of $15,400 and denied that she received that sum with notice that it was not the first defendant’s money. The sixth defendant further alleged that on or about 6 November 1996 she lent the first defendant $13,000 and says that the subsequent payment to her of the said sum of $15,400 comprised repayment of the sum of $13,000 plus interest and further that, on receipt of the cheque, the sixth defendant paid the first defendant $2,000 cash.

46   By his defence, the seventh defendant admitted payment to him by the first defendant of the sum of $8,000 but denied that he received the said sum with notice that it was not the first defendant’s money. The seventh defendant further said in his statement of defence, that on or about 11 August the fourth defendant, his daughter, received $26,800 as a loan from the first defendant and that on or about 26 August 1997 the fourth defendant repaid the first defendant $35,000 being repayment of the $26,800 and an advance of $8,200. The seventh defendant further said that the first defendant paid him the $8,000 as part repayment of the $8,200 advance.

Ninth Count

47   It is alleged in the statement of claim that, on 7 March 1997 the plaintiff purportedly purchased a Mercedes motor vehicle registration No. AAE-77K from the first defendant and hired the same to the first defendant pursuant to a hire purchase agreement between the plaintiff and the first defendant dated 7 March 1997. The payment by the plaintiff of the said sum of $95,000 was by way of a cheque made out in favour of the first defendant who paid the sum into his personal bank account on 7 March 1997.

48   It is also alleged that to the knowledge of the first defendant, no such motor vehicle existed and by reason thereof, the first defendant defrauded the plaintiff in the sum of $95,000 in respect of which it is claimed by the plaintiff that the defendant held the said sum upon a constructive trust for the plaintiff and/or is otherwise liable to account to the plaintiff for the same.

Tenth Count

49   It is alleged in the statement of claim that, out of the said sum of $95,000 referred to above, the first defendant paid the sum of $40,000 to the second defendant on 7 March 1997 in circumstances in which it is alleged that the second defendant held the said sum of $40,000 upon a constructive trust for the plaintiff and/or is otherwise liable to the plaintiff for the same.

50   By her defence, the second defendant admitted receiving the said sum of $40,000 but denied that she received the said sum with notice that it was not the first defendant’s money. The second defendant further alleged that “she received the sums alleged as part of a series of advances from the first defendant, advances to or at the request of the first defendant and repayments thereof, particulars of which are set out in the schedule below” (being appendix 1 to this judgment).

51   The second defendant also alleges that the source of the sum of $40,000 was a cheque in the sum of $95,000 in favour of Kengfu received by the first defendant in circumstances in which the said cheque for $95,000 became the property of Kengfu and not the plaintiff, by reason whereof, presumably, it is said that the $40,000 was subject to a constructive trust in the hands of the first defendant in favour of Kengfu and not in favour of the plaintiff. As stated above, this submission has been rejected.

Twelfth Count

52   It is alleged that, on 10 January 1997 the plaintiff purportedly paid the sum of $98,500 to Kengfu for the purchase of certain computer equipment owned by Kengfu in association with a hire purchase agreement between the plaintiff and the first defendant dated 10 January 1997 in respect of the computer equipment.

53   It is further alleged that the said payment purportedly made to Kengfu of $98,500 was made by way of cheque drawn in favour of Kengfu which was fraudulently (by the first defendant) purportedly endorsed on behalf of Kengfu by the first defendant and deposited to his personal bank account. To the knowledge of the first defendant the computer equipment did not exist. By reason thereof, it is alleged that the first defendant defrauded the plaintiff of the said sum of $98,500 and holds the same upon a constructive trust for the plaintiff and/or is otherwise liable to account to the plaintiff for the same.

Thirteenth Count

54   In this count the plaintiff claimed that the first defendant had received from the plaintiff, and deposited to his personal account, monies totalling $847,572.12 which are claimed by the plaintiff to be payable by the first defendant to the plaintiff for monies had and received by the first defendant to the use of the plaintiff.

The First Defendant

55   As stated above, the first defendant was not present or represented at the hearing.

The First Transaction

56   The evidence satisfies me that on or about 10 April 1997 Kengfu purported to sell to the plaintiff, and the plaintiff purported to buy from Kengfu, for the sum of $95,000 one second hand NEC model 12A PABX telephone system used in the Southern Cross Hotel. The plaintiff paid the sum of $95,000 by cheque in favour of ‘Southern Cross Sydney’, which it handed to the first defendant in association with the purported execution of a hire purchase agreement dated 10 April 1997 whereby the plaintiff leased back to Kengfu the said telephone system. The first defendant fraudulently endorsed the said cheque on behalf of Kengfu, and paid the same into his personal bank account with the ANZ Bank, Haymarket branch. The purported execution by Kengfu of the hire purchase agreement was a forgery for which the first defendant was fraudulently responsible.

57   In my opinion, in the circumstances the first defendant received the said sum of $95,000 upon a constructive trust for the plaintiff and is liable to account to the plaintiff for the same.

The Second Transaction

58   The evidence satisfies me that on or about 26 May 1997 Kengfu purported to sell, and the plaintiff purported to buy from Kengfu for the sum of $400,000, fixtures and equipment used by Kengfu in its operation of the Southern Cross Hotel, namely, “new refrigeration plant, smoke control system, duct work and pipe work, two cooling towers, forced draft type of treated galvanised metal and ventilation”. On or about 26 May 1997 the plaintiff caused to be delivered to the first defendant, four cheques in favour of Kengfu in the sum of $100,000 each, which the plaintiff fraudulently purported to endorse in his favour and paid the same into his personal bank account. The purported payment by the plaintiff to Kengfu of $400,000 was made in association with a hire purchase agreement between the plaintiff and Kengfu dated 26 May 1997 whereby the plaintiff leased back to Kengfu the said fixtures and equipment.

59   In the relevant circumstances, and for the reasons set out above, I am of the opinion that in the circumstances the first defendant held the sum of $400,000 upon a constructive trust for the plaintiff and is liable to account to the plaintiff for the same.

The Third Transaction

60   The evidence satisfies me that on or about 30 July 1997 APH purported to sell to the plaintiff and the plaintiff purported to buy from APH for the sum of $600,000 certain fixtures and equipment purportedly owned by APH and used in the Southern Cross Hotel, namely, one new NEC model 126A multi level PABX system, air conditioning plant including “refrigeration plant, smoke control system, associated duct work and pipe work, two cooling towers, forced draft type of treated galvanised metal and ventilation”. The plaintiff paid for the said fixtures and equipment by delivering bank cheques to the value of $600,000 to the plaintiff in favour of APH. The first defendant fraudulently purported to endorse the said cheques on behalf of APH and paid the same into his personal bank account. The said purported purchase and sale was made in association with a lease back by the plaintiff to APH of the said fixtures and equipment pursuant to a hire purchase agreement dated 30 July 1997, which the plaintiff fraudulently caused to be purportedly executed by APH.

61   In the relevant circumstances, I am of the opinion that for the reasons set out above in relation to the earlier transactions, mutatis mutandis, the first defendant received the said sum of $600,000 upon a constructive trust for the plaintiff, and is liable to account to the plaintiff for the same.

The Fourth Transaction

62   The evidence satisfies me that on or about 5 September 1997, certain mattresses and linen, including 250 queen mattresses, 300 king mattresses, 250 ¾ mattresses, pillow cases, bedspreads, sheets, towels and 250 single sofas used by Kengfu in its operation of the Southern Cross Hotel were purportedly sold by Kengfu to the plaintiff. The plaintiff paid the sum of $250,000 by way of two cheques, one for $100,000 and another for $150,000 in favour of Kengfu, which it handed to the first defendant. The first defendant fraudulently endorsed the said cheques on behalf of Kengfu and paid the same into his personal bank account. The said purported sale and purchase was in association with a hire purchase agreement between the plaintiff and Kengfu dated 5 September 1997 whereby the plaintiff leased back to Kengfu the said items.

63   In the relevant circumstances, I am of the opinion that for the reasons referred to above in relation to the earlier transaction, mutatis mutandis, the first defendant held the said sum of $250,000 upon a constructive trust for the plaintiff and is liable to account to the plaintiff for the same.

64   There is clear evidence of all the facts alleged against the first defendant in the first, ninth and twelfth counts of the statement of claim, and in those circumstances I am satisfied that the plaintiff should have the appropriate orders it seeks against the first defendant in respect of these counts.

65   I will defer further consideration of the second, fourth, seventh, eleventh and thirteenth counts as they may involve some duplication of the claims of the plaintiff.

The Third and Fifth Defendants

66   As stated above, the plaintiff’s claims against the third and fifth defendants were compromised during the course of the hearing.

The Other Defendants (being the Second, Fourth, Sixth and Seventh Defendants)

67   So far as concerns the second, fourth, sixth and seventh defendants, the evidence establishes, and it is accepted by all parties, that it was the seventh defendant who was the party to the relevant transactions with the first defendant, on their behalf.

The Facts

68   The second and seventh defendants are wife and husband, and are the parents of the fourth and sixth defendants. The money and assets of this family of four are held separately in individual names, but it is accepted on behalf of the second, fourth, sixth and seventh defendants that the seventh defendant “effectively controls them, with little notice or accounting to the other family members.”

69   Hong Kiet Dinh, the seventh defendant, was born on 16 July 1948 and formerly lived in the Republic of Vietnam. He left Vietnam in 1977 and came to Australia. From 10 April 1965 to 1977 he worked in Vietnam for the Cholon Branch of the International Commercial Bank of China. From 1 August 1982 the seventh defendant worked for A & A Commodities (Australia) Pty Limited, a futures trader, as an assistant section head and account executive. From 1 July 1983 he worked for Elders AML Futures Limited (later Elders Drexel Australia Limited) as an account executive and from 1 November 1985 he worked for Romy and Brother Holdings Pty Limited. In about September 1985 the seventh defendant was involved in a car accident and suffered injuries to his neck and back, as a result of which he became dizzy when looking at a computer monitor, and was unable to continue to work for Romy and Brother Holdings Pty Limited.

70   In cross-examination the seventh defendant stated that he held the position of Deputy Chief of a branch office of the International Commercial Bank of China in Vietnam in which more than 200 staff were employed. As part of his duties in this position, the seventh defendant was involved in foreign currency exchanges which usually involved exchanging US currency for local currency. He claims to have been able to identify counterfeit US bank notes. In his capacity as an account executive with A & A Commodities (Australia) Pty Limited, the seventh defendant was involved with trading on the futures exchange, usually for Chinese clients. He stated that his duties included, inter alia, keeping proper and accurate records of transactions undertaken on behalf of clients of the company. Although the company had what he describes as ‘good accountants’, he was still required to furnish details of transactions for the accountants who would keep their own records in addition to those held by the trader.

71   When the seventh defendant moved to Elders Drexel Australia Limited in 1983 and then to Romy & Brother Holdings Pty Ltd in 1985, he continued to work in the futures industry. Romy & Brothers Holdings Pty Ltd was a Hong Kong based company with a branch office in Sydney, of which the seventh defendant was the local manager. His role was to supervise some 10 staff who would undertake trading transactions on the futures market. The cross examination of the seventh defendant included the following:-

“A. When there are buys and sells, it went through the computer. I stood there and supervised or watched over the transactions.
Q. And were those transactions undertaken by other employees in the office?
A. There was an accountant who works there.
Q. As manager did you have to report to the Hong Kong office?
A. My boss was here also.
Q. And your role was to supervise, was it, the transactions that other employees were undertaking within the Sydney office?
A. Yes.”

72   The seventh defendant gave evidence by affidavit, which I accept, that from time to time he had opened bank accounts for members of his family namely his wife, Buu Phuong Thai the second defendant, and his daughters Helen Dinh, the fourth defendant, Ita Dinh, the sixth defendant, and Isa Dinh, who is not a party to the proceedings.

73   The seventh defendant was always a signatory for those accounts and operated them as he thought appropriate.

74   It appears that the seventh defendant met Mr Lope Reyes, the first defendant, in about 1992 at a restaurant in Chinatown in Sydney where the seventh defendant used to eat regularly. Both the first and seventh defendants went to the same acupuncturist and would sometimes meet in the waiting room. They began conversing and found out that they both lived at Dulwich Hill. They became quite friendly and had lunch together at a restaurant in Chinatown many times.

75   Early in the relationship which, as stated above, began in about 1992, the seventh defendant knew or was told that the first defendant worked in a hotel but it was not until 1994 or 1995 that he found out that the first defendant worked for the Southern Cross Hotel. The first defendant gave the seventh defendant at about this time, a business card that referred to the Southern Cross Hotel and described the first defendant as “Finance Manager”.

76   At some time during the early 1990’s, the first defendant began to borrow money from the seventh defendant from time to time. On the first such occasion, according to the seventh defendant, the first defendant asked for “a few thousand dollars” by way of loan saying in effect that he would repay it the following week. When the first defendant began to explain why he wanted the loan, the seventh defendant said to him words to the effect that there was no need to explain what the loan was for, and that the seventh defendant would lend the money. The first defendant then asked the seventh defendant in effect, how much interest the seventh defendant required, to which the seventh defendant replied that as it was a loan to a friend for such a short time there was no need to pay any interest. The loan was made in due course, and repaid as arranged. It does not appear whether or not this initial loan was made or repaid by cheque or with cash (but see below).

77   As stated in the affidavit of the seventh defendant: “After the first occasion, Reyes borrowed similar amounts of money (presumably meaning “a few thousand dollars”) from me many times. He always paid in cash within a week or two after he borrowed the money. He did not pay interest, but sometimes he bought me lunch in return for lending him money and sometimes when we were at the acupuncturist at the same time, he paid my bill.”

78   In 1995 the first defendant asked the seventh defendant, at the first defendant’s home at Dulwich Hill, to lend him $65,000 which he wanted to hold in a term deposit in his name, to provide security for money he was borrowing to build a new house. The first defendant told the seventh defendant that the seventh defendant would get interest on the deposit, and that if ever he ran short of money the first defendant would lend him whatever he needed. A few days later, the first defendant showed the seventh defendant and his wife, a block of land at Earlwood where the first defendant said he was going to build his new house. The seventh defendant says that by this time he trusted the first defendant and agreed to lend him the $65,000 which he withdrew on the 16 November 1995 from the second defendant’s bank account in the form of a bank cheque which he gave to the first defendant.

79   On the same day the first defendant gave the seventh defendant a Commonwealth Bank acknowledgment of term deposit for $65,000 with a commencing date of 15 November 1995. The following day the first defendant told the seventh defendant that this term deposit had been cancelled and replaced by a second one in respect of which he gave the seventh defendant another acknowledgment of term deposit for $65,000 with a commencing date of 17 November 1995. Although the seventh defendant understood that the first defendant was not “supposed” to make any withdrawals from this term deposit he discovered, after the first defendant left the country, that the first defendant had withdrawn the whole amount.

80   According to the seventh defendant, in about 1996 the first defendant said to him words to the following effect:-

“Sometimes the company (meaning the Southern Cross Hotel) has cash flow problems. Business is good, but it is building a new building. Sometimes it needs money to pay wages. If you have any money being idle for nothing to use, let them borrow. They will give it back in 10 days.”

81   In my opinion, in accordance with the principles to be referred to hereafter, this statement in its relevant context would to an honest reasonable person in the position of the seventh defendant have indicated or told of fraud or breach of trust having regard in particular, inter alia¸ to the fact that, in my opinion, it would not have been conceivable that a business entity such as Kengfu operating the Southern Cross Hotel, and undertaking construction and other activities would wish to borrow funds from a private individual in this way, for the stated purpose. Moreover, in my opinion, this perception on the part of such an honest reasonable person would only have been confirmed by the later course of dealings between the relevant parties.

82   According to the seventh defendant, after that conversation he “lent money to the Hotel many times”. On one occasion the first defendant asked him to lend the Hotel $30,000 and asked for two bank cheques: one made out to the Southern Cross Hotel, and one made out to the Office of State Revenue. The first defendant said he wanted the money before 12.00 midday. On 13 March 1997 the seventh defendant withdrew $30,000 from the bank account of the second defendant and obtained a bank cheque for $20,000 in favour of the Office of State Revenue and one for $10,000 in favour of the Southern Cross Hotel. The seventh defendant took the cheques to the Southern Cross Hotel where he gave them to the first defendant, having made photocopies of the cheques prior to that time. The first defendant gave the seventh defendant a document, with the Southern Cross Hotel letterhead, dated 13 March 1997, signed by him, which stated that the $30,000 was to be deposited into the Southern Cross Hotel’s bank payroll account, but it appears that this did not happen. The document dated 13 March 1997 was:-

“13 March 1997

THIS IS TO AGREE THAT:-
1. Southern Cross Hotel, Sydney
2. Southern Cross Hotel, Sydney requests Ms Buu Phuong Thai agrees to advance $30,000 to meet the short-term shortage.
3. Ms Thai will deposit $30,000 by bank cheque into our Sydney Commonwealth Bank, payroll account.
4. Southern Cross Hotel Sydney will repay Ms Thai the principal sum of $30,000 on or before 28 April, 1997 plus $500 being interest.”

83   The form of agreement was signed by the first defendant, described as “Finance Manager”.

84   Thereafter, other loans and repayments were made as described in the following paragraph of the affidavit of the seventh defendant:-

“16. In the paragraphs below, I set out the details of a number of loans that are relevant to these proceedings. Generally, they followed the same procedure. When Reyes requested me to lend money to the Hotel, he would usually ring me and tell me how much he wanted to borrow. Sometimes he would tell me why the Hotel wanted the money, but not always. If the money was needed for the payroll, he would usually ring me on a Thursday. After Reyes rang me, I would then go to the Advance Bank and get a bank cheque for the amount he asked for. I usually took a cheque to the Southern Cross Hotel and gave it to Reyes there. The money was usually repaid within the agreed time. There was usually no formal agreement for the payment of interest but when he repaid the money to me, there was usually a little bit of money on the top. As I was unable to work, I welcomed the opportunity to get some money in this way.

85   In relation to this evidence, the seventh defendant also stated in his affidavit that “when I refer to lending money to Reyes, I am referring to lending money from one or other of the accounts of my wife or daughters and I am referring to lending money as requested by Reyes to him or to one or other of the companies associated with the Southern Cross Hotel or with him”.

86   The seventh defendant also gave evidence which, in general, I accept, that during the time the seventh defendant was lending money to the first defendant, the seventh defendant “kept track” of how much he had lent the first defendant and how much the first defendant repaid, and the seventh defendant usually knew how much the first defendant owed him. The seventh defendant did not ever add up the total amount of all the loans made, and did not ever add up the total amount of all repayments, so he never knew what those figures were.

87   The seventh defendant also gave evidence which, in general, I accept, that during the time he was lending money to the first defendant, he, the seventh defendant, knew that the Southern Cross Hotel was a large hotel, and had been there for some time. The seventh defendant said that it appeared to him to be quite successful, however, he did not know anything about its true financial standing or whether it was running at a profit. The seventh defendant also said that during the time he was lending money to the first defendant, he knew that the Southern Cross Hotel was involved in building two further buildings, and that based upon what the first defendant had said to him (see above) the seventh defendant believed that this was causing the hotel to have cash-flow problems.

88   The seventh defendant said that in relation to the documentation of loans, on one occasion the first defendant signed and gave him the written agreement dated 13 March 1997 (see above) but that he kept his own detailed records of the loans. The seventh defendant said that he did this by photocopying documents, making notes and stapling other documents to the photocopies, and that he also made notes on bank passbooks and statements. The seventh defendant said that he did not know what records the first defendant kept of the loans, but he never had any disagreement with the first defendant about the amounts from time to time, so the seventh defendant assumed that the first defendant had some record of them.

89   The first defendant also gave evidence in one of his affidavits, in the following terms:-

“6. I did not see anything unusual in (the first defendant) requesting the loans from me. I thought that the amounts involved were probably fairly small compared with the overall cash flow of the business and I assumed that it was more convenient for (the first defendant) to obtain advances from me than to go to a bank”

90   The issues relevant to the second, fourth, sixth and seventh defendants as arising from the further amended statement of claim and their respective defences, relate to the third, fifth, sixth, eighth and tenth counts in the further amended statement of claim, the alleged (by the seventh defendant) factual context of which is described later in this judgment

91   In this connection I interpose to state that I accept in general the evidence of the seventh defendant (whose evidence was in any event corroborated by documents) save as appears hereafter, and in particular, I am of the opinion that the evidence of the seventh defendant as to conversations relating to the alleged repayment of loans involved a large measure of reconstruction (save where corroborated by documentary evidence) on the part of the seventh defendant to the extent that I am unable to regard the whole of such evidence as reliable, although I do not mean to suggest, and I do not suggest, that the seventh defendant gave deliberately untrue evidence.

The Plaintiff’s Claims.

92   In respect of all the plaintiff’s claims against each of the second, fourth, sixth and seventh defendants, the plaintiff’s principal case is that all monies paid by the first defendant to these defendants, were sourced in monies which the first defendant held upon a constructive trust for the plaintiff, and that the circumstances in which each of those defendants received those monies, were such as to indicate to or tell an honest, reasonable person in the position of the seventh defendant at relevant times, of fraud or breach of trust with the result that those monies, when received by each of those defendants, remained impressed with a constructive trust in favour of the plaintiff, rendering each of those defendants liable to account to the plaintiff for the same. I acknowledge that many submissions were made on this general subject matter on behalf of the plaintiff, but those submission did include, as I understood them, the submission which I have described and which, as will appear hereafter, is, in my opinion, the correct principle to be applied in the circumstances of the present case.

The Defendants’ Defences

93   As stated above, and as will appear in more detail hereafter, it was submitted on behalf of the second, fourth, sixth and seventh defendants that, even if this was the correct statement of principle, it did not apply in the circumstances of the present case. It was also submitted on behalf of those defendants as stated above that, certain of the monies received by them from the first defendant were impressed with a constructive trust in favour of Kengfu, rather than with a constructive trust in favour of the plaintiff. It was also submitted on behalf of those defendants, in effect, that all relevant monies received by them from the first defendant, were in repayment of loans previously made by them bona fide and without notice to the first defendant or to the companies which the first defendant nominated, so that the receipt by them of monies in repayment of those loans was for consideration, bona fide and without relevant notice, by reason whereof no such monies received by them from the first defendant were, in their hands, impressed with a constructive trust in favour of the plaintiff.

The Relevant Principles

94   The starting point is the following celebrated passage from the judgment of Lord Selborne in Barnes v Addy (1874) 9 CH App 244 at 251-252:

“Now in this case we have to deal with certain persons who are trustees, and with certain other persons who are not trustees. That is a distinction to be borne in mind throughout the case. Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort , or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees ”. (Underlining supplied).

95   Subsequent cases have dealt with the meaning in particular circumstances of the requirement that strangers are not to be made constructive trustees “unless they assist with knowledge” in a dishonest and fraudulent design on the part of the trustee and, in particular, as to the meaning of the word “knowledge” in this context.

96   The most recent case in the High Court of Australia in which these principles were discussed and applied is the case of Consul Development Pty Ltd v D P C Estates Pty Ltd (1975) 132 CLR 373. In that case Gibbs J (as he then was) held (at 397) inter alia, as follows:-

I therefore conclude, on principle, that a person who knowingly participates in a breach of fiduciary duty is liable to account to the person to whom the duty was owed for any benefit he has received as a result of such participation. This conclusion is supported by Selangor United Rubber States Ltd v Cradock (No. 3) Karak Rubber Co Ltd v Burden and the earlier similar case of Gray v Lewis (reversed on other grounds), although it represents a slight extension of those cases, since in all of them the defendant had obtained possession of what was regarded as trust property.” (Underlining supplied)

97   It is apparent from this passage that Gibbs J was citing the Selangor Case with approval as also appears from his reference to that case in the following passage (at 396):-

“Although in this passage Lord Selborne speaks of dishonesty and fraud it is clear that the principle extends to the case ‘where a person received trust property and dealt with it in a manner inconsistent with trusts of which he was cognizant’: Soar v Ashwell; Lee v Sankey; and in In re Blundell; Blundell v Blundell. All of these authorities, however, are dealing with trustees and trust property in the strict sense and the question is whether the principle applies to impose liability on strangers who knowingly participate in a breach of fiduciary duty committed by a person who is not a trustee or is at most a constructive trustee. In Selangor United Rubber Estates Ltd v Cradock (No. 3), Ungoed-Thomas J held that directors of a company should be regarded as holding on trust any monies of the company under their control and that agents of the directors who receive monies of the company in circumstances that showed that they assisted ‘with knowledge in a dishonest and fraudulent design’ on the part of the directors were liable as constructive trustees. He held that what is ‘dishonest and fraudulent’ for this purpose has to be judged according to ‘the plain principles of a Court of Equity’. After an exhaustive discussion of the question of what knowledge is required to satisfy the test stated in Barnes v Addy he expressed his conclusions on that matter as follows:
“The knowledge required to hold a stranger liable as constructive trustee in a dishonest and fraudulent design, is knowledge of circumstances which would indicate to an honest, reasonable man that such a design was being committed or would put him on inquiry, which the stranger failed to make, whether it was being committed . Acts in the circumstances normal in the honest conduct of affairs do not indicate such a misapplication, though compatible with it. And answers to enquiries are prima facie to be presumed to be honest…”.
This decision was followed by Brightman J in Karak Rubber Co Ltd v Burden”.

It might be thought
that this is a clear
example of wilful
blindness.
28	10.1.97	An unauthorised cheque drawn	Kho p 173: see
from Kengfu CBA account in	transaction 12
favour of WJ Sun for $25,500.	above.
29	13.1.97	LR gave HKD Kengfu CBA	Exhibit R.
cheque 249 for $19,000 drawn to
Helen Dinh as payee.
30	24.1.97	An unauthorised cheque drawn	Kho p 173: see
from Kengfu CBA account in	transaction 12
favour of WJ Sun for $25,500.	above.
31	30.1.97	HKD withdrew $18,500 cash from	Exhibit Q. He gave
Helen's passbook.	the cash to LR. LR
said the hotel
needed the cash.
He did not make
any inquiries as to
what he was going
to do with the cash
or whether or not
LR was going to
use it (T287).
32	7.2.97	LR gave HKD a cheque for	Exhibit Q, T288,
$29,000 which he deposited in	Exhibit A CS17.
Helen's account - it bounced.
He also gave HKD a cheque for
$3,000 said to be in reduction of
the Southern Cross debt (Exhibit
Q, T288). It is recorded in the
passbook as "cheque deposit".
33	13.2.97	HKD gave LR a cheque for	Exhibit Q, T290.
$9,000 drawn on Helen's account.
The payee of the cheque is
unclear but HKD says it was for
Southern Cross. Helen's
passbook records it as a bank
cheque. HKD has written "SC
Hotel" against the entry in the
passbook.
34	14.2.97	Transmission from Hong Kong of	T336.
$A42,194 from sale of stamps.
35	19.2.97	LR gave HKD a cheque for	Exhibit Q, T291.
$9,000.	LR's ANZ statement
show that it was not
banked in that
account.

36	24.2.97	HKD withdrew $12,000 from	T291, Exhibit Q.
Helen's account and gave it to
Lope's son. It was a bank
cheque.
37	28.2.97	HKD deposited a cheque for	Exhibit Q, T291.
$12,300 in Helen's account which	The evidence does
was said to be the repayment of	not disclose the
$12,000 Lope Jr plus $300	drawer of the
interest.	cheque.
38	28.2.97	BP Thai purchased 43 Terrace
Road, Dulwich Hill: purchase
price $172,000. Advance Bank
loan $100,000.
39	1.3.97	Alleged loan from Helen to L	HKD para 32.
Reyes of $26,800, in cash, said to
be for Southern Cross. The cash
was withdrawn from Helen's
account.
40	7.3.97	LR gave HKD an ANZ bank
cheque for $40,000. Payee is BP
Thai. Drawn on LR's branch of
the ANZ (1Oth Count).
41	13.3.97	Alleged loan from BP Thai to	HKD para 14.
Southern Cross of $30,000;
$20,000 to OSR, $10,000 to	Exhibit T. The
Southern Cross Hotel. Both	cheque for $10, 000
cheques drawn from BP Thai's	was banked in
Advance Bank account.	Kengfu's account
(Exhibit G). There
is no record of the
cheque to OSR.
The cheques of
$10,000 and
$20,000 were
drawn from the
deposit of $40,000
from LR on 7.3.97
(Exhibit R). Prior to
the deposit of
$40,000 the
balance was
$1,049.
42	14.3.97	Transmission from Hong Kong of	T336.
$A45,183.15 from sale of stamps.
43	26.3.97	LR gave HKD Kengfu CBA	Exhibit R: Kho p
cheque No 293 for $11,200 drawn	173, which sets out
to cash which he used to pay off	bank traces.
Helen's Visa card.
44	27.3.97	LR gave HKD Kengfu CBA	Exhibit R.
cheque No 294 for $11,800 drawn
to cash which he used to pay off
Visa card.
45	27.3.97	HKD gave LR an Advance Bank	Exhibit G. Exhibit
cheque drawn to Southern Cross	T.
Hotels as payee for $28,000 and
drawn from BP Thai's account.
The cheque was received by
Kengfu.
46	14.4.97	HKD withdrew $5,000 from	Exhibit Q. T291-
Helen's account and gave it to LR	292.
who said it was for Southern
Cross. He recorded "Lope"	LR did not say what
against the entry.	the money was for
(T294.05).
47	16.4.97	HKD cashed a cheque of $5,000	Exhibit Q, T294-
from Southern Cross. The	295. Again he
cheque for $5,000 was deposited	made no inquiries.
and there was a corresponding	He said this was a
cash withdrawal on the same day.	"swap exchange”
(T295.25).
48	17.4.97	HKD gave LR an Advance Bank	HKD para 51(1),
cheque for $22,000 drawn to	HKD Annexure Y,
Southern Cross Hotel as payee	Exhibit G.
from BP Thai's account. Cheque
received by Kengfu.
49	24.4.97	HKD withdrew $4,500 cash from	HKD 51(2),
BP Thai's account and given to L	T295.15, Exhibit Q.
Reyes. HKD withdrew $6,000 in
cash from Helen's account and
gave it to Lope for the hotel.
50	28.4.97	LR gave HKD a Kengfu CBA	Exhibit R.
cheque 329 for $14,000. The
payee is BP Thai.
51	5.5.97	LR gave HKD a Kengfu CBA	Exhibit R.
cheque 333 for $16,750. The
payee is HK Dinh.
52	12.5.97	LR gave HKD a Kengfu CBA	Exhibit R.
cheque 338 for $10,000. The
payee is HKD. He used it to
reduce his Visa Card.
53	12.5.97	LR gave HKD a Kengfu CBA
cheque 339 for $8,000. The
payee is HKD (endorsed to JP
Xu).
54	14.5.97	HKD gave LR a cheque for	HKD affidavit para
$31,000 drawn in favour of	20, submissions
Accord Pacific.	para 32(d). This
payment was
associated with the

purchase of Unit
702 Hyde Park
Towers from
Accord.
55	23.5.97	LR gave HKD a Kengfu CBA	Exhibit R.
cheque 350 for $28,500. The
payee is BP Thai.
56	26.5.97	LR gave HKD a Kengfu CBA	Exhibit R, Exhibit Q.
cheque 352 for $12,200 drawn to
cash which was deposited in
Helen Dinh's account.
57	27.5.97	HKD drew two amounts of cash	Exhibit Q. The
from Helen's account of $3,000	passbook also
and $4,000. HKD has written	records a cheque
"Lope" next to these entries in the	deposit of $$7,000
passbook.	on 5.8.97. This
entry has 27/5
written next to it.
58	29.5.97	L Reyes ANZ cheque 1039 for
$32,450. The payee is BP Thai
(3rd count).
59	5.6.97	HKD gave LR - cash of $22,000.	HKD 51(7),
In the passbook next the entry is	Annexure DD.
"Lope borrow cash" written in
Chinese
- bank cheque for
$12,000. The payee is Southern
Cross Hotels drawn from BP
Thai's Advance Bank account
60	6.6.97	LR gave HKD $5,000 in cash	Exhibit Q, T295.
10.6.97	which was deposited in Helen's	Another cash swap
account and LR received a	for a cheque.
cheque for $5,000 drawn from
Helen's account.
61	14.6.97	LR gave HKD Kengfu CBA	Exhibit R.
cheque 364 for $12,800 drawn to
cash which was deposited in BP
Thai's account.
62	26.6.97	Alleged loan of $9,000 to	HKD para 27,
Southern Cross for hotel's payroll	Annexure H.
- HKD gave LR a bank cheque.
The payee is Southern Cross
Hotel. Drawn from BP Thai's
account.
63	27.6.97	LR gave HKD Kengfu CBA	Exhibit R.
cheque 373 for $5,000 drawn to
cash. Deposited to BP Thai's
account
64	30.6.97	LR gave HKD Kengfu CBA	Exhibit R.
cheque 376 for $1,750 drawn to
cash deposited to BP Thai's
account.
65	30.6.97	LR gave HKD Kengfu Advance	Exhibit R.
cheque 100061 for $70,000. The
payee is BP Thai.
66	2.7.97	HKD gave LR $3,000.00 cash	Exhibit Q, T295.
4.7.97	withdrawn from Helen's account	Another cheque
and he gave HKD a cheque for	“swap" of $3,000
$3,000 which he deposited in	from Helen's
Helen's account.	Account.
67	3.7.97	Alleged loan of $34,000 to	HKD Annexure 1,
Southern Cross comprised of:-	HKD para 28,
(a) Cash of $4,000 drawn from	Exhibit R.
BP Thai's account.
(b) An Advance Bank cheque	The payment is said
drawn to Accord Pacific	to be because
Holdings for $30,000 from	Southern Cross
BP Thai's account.	needed cash (para
28). The cheque to
Accord was for LR's
purchase from
Accord of Unit 2803
Hyde Park Towers.
See submissions
para 32(d).
68	7.7.97	Alleged loan to Southern Cross	HKD para 29.
for $5,000 cash. HKD drew the
cash from BP Thai's account and
gave it to LR.
69	7.7.97	Cash withdrawal of $4,000 from	Exhibit Q. There is
Helen's account.	no evidence as to
who received the
cash.
70	10.7.97	Advance Bank payment of
$4,000.00 to Lope Reyes Jnr.
71	15.7.97	Transfer of $21,000.00 to Kengfu
(see p7 of Response to Schedule)
72	22.7.97	LR gave HKD Kengfu CBA	Exhibit R, Kho p
cheque 390 for $10,075 drawn to	174, T237. He
cash. HKD used it to reduce his	knew the cheque
Visa card account.	was drawn on
Kengfu and did not
come out of LR's
personal account:
T237-38.
73	28.7.97	HKD alleged purchase of 130/336
Sussex Street, Sydney purchased
in LR's name.
74	29.7.97	An unauthorised cheque drawn	Kho p 174: see
from Kengfu CBA account in	transaction 12
favour of WJ Sun for $24,000.	above.
75	31.7.97	L Reyes ANZ cheque 1057 for
$54,000 drawn to BP Thai as
payee (5th count).
76	31.7.97	Alleged loan to LR for $2,000	HKD para 39,
cash. HKD withdrew the cash	Exhibit Q, T295.
from Helen's account and gave it
to LR.
77	6.8.97	HKD alleged payment of $15,000	Schedule to BP
to Southern Cross.	Thai's defence.
Exhibit G.
78	6.8.97	HKD gave LR $10,000 cash	HKD para 43.
drawn from BP Thai's account
79	7.8.97	HKD gave LR $7,000 cash from	HKD para 43. “I do
BP Thai's account.	not know what the
amounts were for".
80	7.8.97	Cash withdrawal of $6,000 from	Exhibit Q. The
Helen's account.	evidence does not
show who received
the cash.
81	11.8.97	L Reyes ANZ cheque 1071
$26,800 to Helen Dinh as payee
(6th count).
82	14.8.97	Bank cheque withdrawal of	Exhibit Q - payee
$12,000 from Helen's account.	unknown.
83	18.8.97	Cash withdrawal of $4,000 from	Exhibit Q. The
Helen's account.	evidence does not
show who received
the cash.
84	19.8.97	Cash withdrawal of $10,000 from	Exhibit Q. The
Helen's account.	evidence does not
show who received
the cash.
85	22.8.97	LR gave HKD a cheque for	Exhibit Q, T252.53.
$38,000.	Said to be in
repayment of a
loan
86	26.8.97	HKD drew a cheque for $35,000	Exhibit Q, T251 -
in favour of LR from Helen's	252. He did not say
account.	what it was for.
HKD drew cash of $7,000 from
her account and gave it to LR.
87	27.8.97	LR gave HKD Kengfu Advance	Exhibit Q.
cheque 100104 for $50,000 to
Helen Dinh as payee.
88	28.8.97	LR asked HKD for the $50,000	Exhibit Q, T244-
back - $20,000 in cash and a	247, Exhibit R.
cheque for $30,000 which HKD	HKD made no
paid.	inquiry and did not
think it odd that the
alleged loan of
$50,000.00 would
be required to be
repaid the following
day. He did not
consider whether he
might be using the
cash himself.
89	29.8.97	BP Thai purchased 8/29 Myra
Road, Dulwich Hill: purchase
price $132,500. Advance Bank
loan $98,000.
90	5.9.97	L Reyes ANZ account 1083 for
$17,000 to BP Thai as payee (8th
count).
91	5.9.97	L Reyes ANZ cheque 1082 for	10% deposit on
$15,400 on behalf of Ita Dinh in	purchase of 1/20
favour of Richardson & Wrench	Myra Road: see
(8th count).	transaction 94.
92	11.9.97	L Reyes ANZ cheque 1097 for
$8,000 to HK Dinh (to pay of Visa
Westpac credit card) (8th count).
93	12.9.97	Transmission from Hong Kong of
$A40,214.48 from sale of stamps:
T336
94	14.11.97	Ita purchased 1/20 Myra Road,
Dulwich Hill: purchase price
$154,000. Advance Bank loan
$92,000.

Last Modified: 06/12/2001