Goo v Sim

[2022] NSWSC 420

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Goo v Sim [2022] NSWSC 420

Hearing dates:

8, 9 and 10 February 2021. Further submissions 17 and 25 February and 2 March 2021.

Date of orders:

8 April 2022

Decision date:

08 April 2022

Jurisdiction:

Equity

Before:

Henry J

Decision:

(1) Dismiss the Further Amended Statement of Claim.

(2) Unless any party makes an application for a different cost order within 21 days, the defendant’s costs of these proceedings be paid by the plaintiffs on an ordinary basis as agreed or assessed.

Catchwords:

EQUITY – Trusts and trustees – whether a Quistclose trust arose – where funds provided for the establishment of a company and its ordinary business operations

EQUITY – Trusts and trustees – Black v Freedman trust – Misappropriation of funds – where funds were not the plaintiff’s property but were the property of another company

EQUITY – Fiduciary duties – claimed to arise by virtue of position as senior employee, director and as party to a joint venture – where funds were not the plaintiff’s property but were the property of another company

RESTITUTION – Money had and received – whether total failure of consideration – where money was transferred into and out of company bank account – where money not used for company purposes – whether unjust enrichment

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Corporations Act 2001 (Cth)

Evidence Act 1995 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

ACI Operations Pty Ltd v Tallant [2013] NSWSC 367

Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335

Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd [2017] NSWCA 99

Baltic Shipping Company v Dillon (1993) 176 CLR 344

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567

Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393

Black v S Freedman & Co (1910) 12 CLR 105; [1910] HCA 58

BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd; BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd; Harpro Group Pty Ltd v BM Sydney Building Materials Pty Ltd [2019] NSWSC 421

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373

CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353

Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd (2012) 246 CLR 498; [2012] HCA 7

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21

Gibson Motor Sport Merchandise [2005] FCA 749

Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6

Heperu Pty Ltd v Belle [2009] NSWCA 252

Houghton v Immer (No 155) (1997) 44 NSWLR 46

Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Juul v Northey [2010] NSWCA 211

Perry v Perry [2021] NSWSC 1669

Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27

Raulfs v Fishy Bite [2011] NSWSC 105

Raulfs v Fishy Bite [2012] NSWCA 135

Re Courtenay House Capital Trading Group Pty Limited (in liq) and Courtenay House Pty Limited (in liq) [2018] NSWSC 404; (2018) 125 ACSR 149

Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68

Sagacious Legal Pty Ltd v Westfarmers General Insurance Ltd [2011] FCAFC 53

Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121; [2000] HCA 18

Warner v Hung, In the matter of Bellpac Pty Limited (Receivers and Managers appointed) (In Liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123

Watson v Foxman (1995) 49 NSWLR 31

Westpac Banking Corporation v Lee [2013] NSWCA 375

Texts Cited:

Young, Croft and Smith, On Equity (2009, LawBook Co)

Mason & Carter, Restitution Law in Australia (4th ed, 2021, LexisNexis)

Category:

Principal judgment

Parties:

Jin Seoung Goo (First Plaintiff)
Tokorea Pty Limited (Second Plaintiff)
Oakwood Sydney Pty Limited (Third Plaintiff)
Sun Sick Sim (Defendant)

Representation:

Counsel:
M Hall with C Palmer (Plaintiffs)
D Eardley (Defendant)

Solicitors:
Origin Lawyers (Plaintiffs)
Praxis Lawyers (Defendant)

File Number(s):

2017/300411

Publication restriction:

Nil

Judgment

1. In these proceedings, the plaintiffs seek to recover money that they claim was paid to the defendant, Mr Sun Sick Sim (Mr Sim), in connection with a business venture to create an online remittance portal (or website) for the real-time transfer of money between individuals in Australia and South Korea.

2. Mr Sim was a director of the second plaintiff, Tokorea Pty Limited (Tokorea), and an employee of the third plaintiff, Oakwood Sydney Pty Limited (Oakwood), an entity that was controlled by the first plaintiff, Mr Seoung Jin Goo (Mr Goo).

3. There are two amounts of money that are the subject of the plaintiffs’ claim. The first is an amount of $110,000 that was given (mostly in cash) to Mr Sim by Oakwood in October 2014. The second is an amount of $50,000 which Mr Goo alleges he gave to Mr Sim in cash in early December 2014.

4. The plaintiffs’ case is, in essence, that Mr Sim has misappropriated the funds by using them for his own benefit rather than for the purposes of the online remittance business. Their case is formulated in several alternative ways and includes claims of monies had and received, breach of trust, and breach of fiduciary, equitable and/or statutory duties owed to Oakwood and Mr Goo as a joint venture partner, as an employee of Oakwood and/or as a director of Tokorea.

5. Mr Sim does not dispute receiving the $110,000 but denies liability on the basis that the money became the property of Global HR and Trading Co Limited (Global HR) (a South Korean company he set up for the new business) and has been spent on business expenses and his salary. Global HR is not a party to these proceedings and was dissolved in late 2020. Mr Sim denies that he ever received the second amount of $50,000 from Mr Goo.

6. As will appear, most of the facts are in dispute and there are significant conflicts in the evidence given by Mr Goo and Mr Sim. Submissions were made concerning their credit, with each seeking findings that the other was a dishonest witness. Determining what happened has also been impacted by the informal arrangements between the parties and a lack of documents, including the absence of any bank records and other documents relating to Global HR and the payment of its business expenses.

The evidence and witnesses

7. The plaintiffs’ relied upon the affidavits of Mr Goo affirmed on 28 August 2019 (Goo 1) and 19 March 2020 (Goo 2) and the affidavit of Mr Junghoon Back affirmed on 4 June 2020.

8. They also relied on the bundle of documents annexed to an affidavit of Lisa Cox (a solicitor in the employ of the solicitors for the plaintiffs) sworn on 3 February 2021 (Ex C) relating to a notice to produce for inspection served on Mr Sim and subpoenas issued by the plaintiffs to Westpac Banking Corporation and KEB Hana Bank (KE Bank; also referred to in the documents as the Korean Exchange Bank).

9. Mr Sim relied on his affidavit sworn on 14 October 2019 and the affidavits of Dae Young Kim dated 22 November 2019 and Deok Kon Kim dated 25 November 2019, who are both Korean translators and annexed English translations of documents written in Korean.

10. Mr Goo, Mr Sim and Mr Back were each cross-examined. Mr Goo and Mr Back gave evidence through Korean translators.

Background facts and summary of the evidence

11. Unless indicated otherwise, I am satisfied of the following matters. Where reference is made to a document that was written in Korean, I have referred to the English translation of that document.

The parties

12. Mr Goo is a management consultant who has experience in the currency exchange and money transfer industry.

13. Oakwood was incorporated in July 2008 by Mr Goo. Mr Goo was appointed a director but resigned on 10 February 2012 due to a change in his visa status. Oakwood’s current sole director and secretary is Mr Junghwan Kim, a friend and business associate of Mr Goo.

14. Oakwood has 125 ordinary shares on issue. 20 shares are held by Mr Jun Won You and 105 by Mr Kim, who holds them on trust for Mr Goo.

15. Oakwood was initially run by Mr Goo as a Sydney-based investment company. In January 2012, it changed its business to run a currency exchange and money transfer service for Australian-based customers seeking to transfer money to Korea and operated on a cash basis.

16. Tokorea was incorporated in March 2013 by Mr Goo. Mr Goo is currently the sole director and secretary, having been appointed to both positions on 23 November 2018. On Tokorea’s incorporation, Oakwood held all 100 shares on issue. As at the hearing, Oakwood held 75 shares and Mr Sim held 25.

17. Mr Sim is an information technology engineer. Throughout the relevant period, he was employed as a Senior IT Support Engineer Sydney Architect with ACM Group and Collection House, a credit management company.

18. Mr Goo and Mr Sim met through their respective wives. There is a dispute between Mr Goo and Mr Sim as to when that occurred which is not necessary to resolve. Mr Goo says they met in December 2007. Mr Sim says it was in October 2013. Mr Goo’s evidence, which I accept, is that he and Mr Sim became friends, frequently talked about business when they met (such as when they had dinner with their wives) and that Mr Goo understood that Mr Sim was employed as a project manager at an information technology company.

Late 2013/early 2014: Mr Goo and Mr Sim discuss online remittance business and working with Oakwood

19. Mr Goo’s evidence is that in late 2013, he first floated his idea of an online exchange business with Mr Sim. He gives evidence of a discussion with Mr Sim in which Mr Goo referred to “an idea to turn the Oakwood business into an online exchange business” and wanting to make a “website” but not being able to because of his “lack of… English [skills] and resources”. Mr Goo says that Mr Sim said he thought it was a “good idea”, mentioned that he was an “IT professional” who works in technology as a project manager, and “could help with this”.

20. Mr Goo gives evidence that, in March 2014, Mr Sim told Mr Goo that he wanted to be involved in Mr Goo’s “new business venture”. Mr Goo says that he told Mr Sim he would be happy for Mr Sim to “join my company” as “[w]e need someone with IT specialisation who has the ability to build the website”. Mr Goo says that, at the time, he trusted Mr Sim, they were close friends and had met frequently to discuss Mr Goo’s business.

21. Mr Goo’s evidence is that they agreed that Mr Sim would invest $50,000 into Oakwood, which would subsequently be invested in Tokorea, Oakwood would pay Mr Sim $2,000 per month and Mr Sim would be allowed to have a stake in the company. According to Mr Goo, they had a conversation in the following terms:

“Mr Sim:    I want to be paid $2,000 per month as payment for my work on the Tokorea Website. Once Tokorea is fully established, I want 25% of the shares as I’ve invested $50,000 in Oakwood. Until Tokorea is fully setup, I want to have shares in Oakwood.

Mr Goo:    Ok, that sounds reasonable.

Mr Sim:    I do not want to have to pay too much tax. Could you please pay the $2000 each month to my wife rather than me.

Mr Goo:    That’s fine – I can organise that.”

22. Mr Sim does not accept Mr Goo’s evidence about the conversations referred to at [19]-[21] above. He denies asking to be involved in Mr Goo’s business and says that Mr Goo approached Mr Sim to join. Mr Sim deposes to a conversation in which Mr Goo said he was intending to set up a bank using the Oakwood name to run a stable remittance business, if Mr Sim invested into Oakwood he would make a good return, that Mr Goo intended on buying a city office, a café, a remittance website and other businesses through Oakwood, and asked Mr Sim if he would like to invest in Oakwood and “come on board as a manager”. According to Mr Sim, he said he would like to invest and work with Mr Goo, he would need a suitable salary and return on his investment, asked for $2,000 per month, and if the business did well, they could discuss sharing the profit later.

23. There is no reference in Mr Sim’s account of the conversation to Tokorea, to his working on the website or to the $2,000 per month being paid to his wife, Ms Eun Jin Lee (Ms Lee). Mr Sim’s appointment as a director of Tokorea (at [24] below), Mr Sim’s IT background and the fact that payments were made by Oakwood to Ms Lee for the period 1 July to 31 December 2014 support Mr Goo’s evidence that they discussed those matters and agreed that Mr Sim would become involved in Tokorea and the online part of the business, and that the $2,000 payments would be made to Mr Sim’s wife.

April 2014: Mr Sim appointed director of Tokorea and signs Management Contract with Mr Sim

24. On 14 April 2014, Mr Sim was appointed as a director and secretary of Tokorea. Mr Goo explains that he agreed to Mr Sim becoming the director because he believed that his own visa status at the beginning of 2014 prevented him from being a director.

25. According to Mr Goo, soon after Mr Sim was appointed as the director of Tokorea, Mr Sim proposed bringing in an external software company to build the website for the online remittance business, with Mr Sim to oversee the project and the costs being Oakwood’s responsibility. Mr Goo’s evidence is that he raised with Mr Sim the possibility of both of them investing $200,000. According to Mr Goo, Mr Sim said he only had $50,000 available to invest and agreed to take on the full responsibility for the development of the online exchange platform.

26. Mr Sim recalls a conversation around that time. While it is to a different effect, namely that Mr Goo asked Mr Sim to find out how another entity did real-time remittance through their website, Mr Sim agrees that he offered to introduce Mr Goo to someone who might be able to do the work on the website.

27. In or around April 2014, Mr Sim introduced Mr Goo to Mr Sam Yoon, a director of Vivito Communications. According to Mr Goo’s evidence, at the meeting, Mr Sim indicated that Vivito would build the website and “everything will probably be done by August 2014”. It is common ground that Vivito were retained by Oakwood to construct the Tokorea website, although Mr Sim denies that he or Mr Yoon indicated that it would be completed by August 2014.

28. On 28 April 2014, Mr Goo and Mr Sim executed a document written in Korean titled ‘Oakwood Pty Ltd and Tokorea Pty Ltd Management Contract’ (Management Contract) (TB49-52). The Management Contract refers to Mr Goo as “Managing Director”, Mr Sim as “Independent Director”, and Oakwood and Tokorea as consisting of Mr Goo and Mr Sim as the management, as well as several shareholders and branch managers. It provides for Mr Goo to be paid an additional 30% when total sales exceed $100,000, that Mr Sim will be paid up to half of Mr Sim’s salary when the total sales exceed $100,000 and refers to Mr Joon Won Yoo [1] as a “Company Shareholder” in addition to Mr Goo and Mr Sim. It also states the following:

    1. I infer from the spelling and the context that Mr Joon Won Yoo is Mr Jun Won You, who is recorded as a shareholder of Oakwood in 2014.

"Strategy

The company based on Strathfield Remittance company makes it a goal to expand its business to City, Chatswood, Brisbane branches and other location [sic] and pursue stability by diversifying its business (including banks and cafes).

Leadership and Team

…

Mr … Goo, as the CEO of Oakwood will concentrate on creating a business model and making profit offline and be in charge of sales, customer relationship etc of all branches.

Mr …Sim will focus on effective management of the business and making profit online and be in charge of internal management and marketing of all branches

Business strategy decision

All internal decisions can only be made by 100% agreement of Messrs. … Goo and … Sim”

29. Mr Sim deposes that he entered into this agreement with Mr Goo concerning the management of the Oakwood and Tokorea business (Sim at [10]), although in cross-examination he gave evidence that (at T115.26-27):

“This is a draft and [sic] what Mr Goo and I agree, but never actually made it”

30. In cross-examination, Mr Sim accepted that he was friends with and trusted Mr Goo when he signed the Management Contract (T115.40-50).

May 2014: Partnership Agreement prepared

31. Mr Goo deposes that, fifteen months after Tokorea was incorporated (namely, May 2014), he decided that Tokorea would run a business providing currency exchange and money transfer services for Australian and Korean based customers seeking to transfer money to Korea and Australia, respectively. He envisaged that the business would be conducted online by a specially designed website for Tokorea that would enable real-time money transfers to be made, with a pool of funds to be maintained by Tokorea in banking institutions in each of Australia and Korea for the purpose of carrying on the business which he understood would need to comply with the relevant legal requirements in Australia and Korea for sending and receiving money internationally.

32. According to the minutes of a meeting of the shareholders and directors of Oakwood convened on 8 May 2014 (TB104), at which Mr Goo was appointed chairman, a resolution was passed that acknowledged Mr Sim and Mr Jun Won You as new investors in and members of Oakwood. The minutes record that the company would pay a cash dividend of 1% of the total investment made by each investor each month and that Mr Sim was responsible for managing the “online business of the company” and was entitled to 50% of the net profit of the company, which might be adjusted down to 30% by the passing of a general resolution at a shareholders meeting.

33. On 9 May 2014, Mr Sim invested $50,000 in Oakwood and was allocated five shares in Oakwood (TB108). Mr You was allocated 20 shares based on his investment of $200,000 (TB109). According to Mr Goo, the allocation of shares to Mr Sim in Oakwood was a temporary measure until the online business to be run through Tokorea was established (Goo 1 at [39]).

34. In evidence is a document titled ‘Details of KoreaSongGum Partnership Agreement’ that is signed by Mr Goo, Mr Sim and Mr You but is undated (Partnership Agreement) (Goo 1 at [48], [59] and [60], TB 53-58). In cross-examination, Mr Sim gave evidence that “SongGum” means “remittance” (T113.1-8).

35. The Partnership Agreement refers to investment amounts of $50,000 by Mr Sim and $200,000 by Mr You, and “the directorship” of Mr Ahn (Mr Ahn was a director of Oakwood between 11 December 2013 and 28 September 2018 and of Tokorea between 8 August 2013 and 11 April 2014). It contains sections which refer to the following: “Division of roles for each partner”, with Mr Goo’s role described as “President - clients, HR and exchange rate (business)”, Mr Sim as “IT, accounting and auditing” and Mr You as “Apprenticeship, shareholder”; “Earnings Distribution”, with each of Mr Goo, Mr You and Mr Sim to obtain a 1% dividend and salary of 10,000, 2,200 and 1,000 respectively, and 50% of the earnings to be distributed at the end of the year; and “Partnership Break (if a partner leaves the partnership)”, which identifies the earnings and property distribution and dividends to Mr Goo, Mr You and Mr Sim in the event of profit remaining or not.

36. According to Mr Goo, Mr Sim wanted to create a partnership agreement and prepared the document referred to at [34]. Mr Goo says that Mr Sim wanted the agreement because he was concerned that Mr You’s investment would affect his interest in Oakwood, Mr Goo said he agreed to support Mr Sim to “make it happen” but if Mr Sim made the contract, he had to include Mr You as Mr Goo was not the sole owner of Oakwood.

31. Also in May 2014, a property located in the Sydney CBD was purchased by Tokorea as an office for Oakwood and the Tokorea business. It is common ground that Mr Sim assisted Mr Goo in locating the property and it was held by Tokorea as trustee for the KS Unit Trust. Documents in evidence record that, on around 7 May 2014, Mr Sim was allocated five units in the KS Unit Trust (valued at $10,000 per unit) and Mr Goo was allocated 20 units, with Mr Goo’s units allocated to his wife, Ms Jahyoung Youn, in mid-June 2014 who holds them on trust for him (TB59–103, Goo 2 at [35] and [36], T116.10).

32. Mr Sim exhibits a copy of a schedule to a Deed of Guarantee and Indemnity with Suncorp Bank which he says relates to the purchase of the City Office. The schedule in evidence is only one page, undated and unsigned, and refers to Mr Sim and Ms Jahyoung Youn as the guarantors, Tokorea as trustee for the KS Trust as the borrower, and the amount of the loan/facility limit as $379,000 (TB48).

33. Mr Goo gives evidence that the five units in the KS Unit Trust were given to Mr Sim prior to the purchase of the property and the loan application, which Mr Goo says was submitted on around 23 May 2014. He also gives evidence that they were given to Mr Sim after a conversation (which is denied by Mr Sim) in which Mr Sim asked for some “ownership in the city office” (which was held on trust for the KS Unit Trust) and because of his work in relation to the property deal and his assurance that he would do his best for the Tokorea business.

34. On 14 May 2014, in his capacity as a director of Tokorea, Mr Sim opened two Westpac Bank accounts in Tokorea’s name (account numbers ending in 7991 and 8003) with deposits of $50 (Ex B, pages 38 and 76). Mr Sim was granted full online and telephone access to those accounts. He gave evidence in cross-examination that he was the signatory to the accounts and he, alone, had control of them (T119.25-44).

35. Mr Sim also deposes that in about May 2014, he started work with Oakwood and was employed as a “Manager”. His evidence is that, as part of his employment, he was required to, amongst other tasks, help manage the process of constructing the Tokorea website and understand how money remittance businesses work, including the regulatory framework that existed between Australia and South Korea.

36. Mr Goo’s evidence is that, at no time was Mr Sim considered an employee of Oakwood (Goo 2 at [9] and [17]). He says that Mr Sim was always an investor of Oakwood/Tokorea by way of his $50,000 investment in Oakwood/Tokorea. Mr Goo’s affidavit evidence that Mr Sim was not an Oakwood employee is inconsistent with the pleadings and his closing submissions in which the plaintiffs assert that Mr Sim was a senior employee of Oakwood (FASOC at [18], PCS at [100], [120]).

37. On 5 June 2014, Mr Sim sent an email to Mr Goo and to another email address in relation to the “Korean Songgum Partnership”. The email refers to a draft “of what we talked about yesterday”. The “Draft Detail” refer to a Partnership Relationship (50 and 50), Bank Accounts in Australia and Korea, and investments by each member with Korea Songgum providing the electronic system to manage remittance.

38. According to Mr Goo, the 5 June 2014 email was sent to him and Mr You as a draft overview of what the partnership agreement was to include. Mr Goo also gives evidence that at the time they entered into the Partnership Agreement, he had a discussion with Mr Sim during which they agreed to use Tokorea as the entity for the online exchange business (Goo 1 [64]).

39. Mr Sim denies having the discussions deposed to by Mr Goo, referred to at [36]. Mr Sim’s evidence is that the 5 June email was addressed to an unidentified investor and there was no reason for him to enter into a partnership agreement with Mr Goo. He also denies entering into a partnership agreement.

Late June to Sept 2014: Preparation for business in Korea

46. On 30 June and 1 July 2014, Mr Goo and Mr Sim exchanged a number of emails while Mr Sim was travelling overseas about the Korean end of the proposed online remittance business (TB117ff). The emails record the following.

47. On 3 June, Mr Goo requested Mr Sim to research the laws about firm banking with the bank “we are going to deal with” to find out whether any of “this infringes Korean Foreign Exchange laws”. Mr Goo’s email also states that if further research was not necessary, Mr Sim needed to go to Korea and make a “corporate company without delay, form a firm banking contract… and start the work on activating the online transactions immediately”.

48. In response, Mr Sim indicated that he had “checked everything out” and that if Mr Goo wanted to do it immediately, it should be possible if he spent more than $30,000, to which Mr Goo asked why it would cost that much, but if it allowed continuous transactions without infringing regulations, he would be willing to pay “even $50,000”. Mr Sim sent a further email on 1 July 2014, saying he could explain it later.

49. Mr Sim gives evidence that, after discussions with Mr Goo, he sent an email to L & C Legal Agency on 14 August 2014 to seek assistance with the formation of a Korean company and to advise on the law that applies to money remittance businesses in Korea. According to Mr Sim’s evidence, the reason why a Korean company needed to be formed was to allow electronic transfer of funds to and from Korea (Sim at [24]). The email from Mr Sim (TB125) refers to wanting to establish a “firm banking arrangement in Korea”, that the work involved is “payment” and that “[w]e are… trying to radically switch to a fast and accurate real-time payment system”, and requests a quotation. It also describes the profile of their company, called “Global HR & Trading”, which “has set up a system to send workers or students needed in Australia” and other countries.

50. On 18 August 2014, Mr Sim received an email from L&C (TB127) referring to what was to be done prior to setting up a company, that states the following:

“Since your main areas of business, according to what you have sent me, is supply of workforce and outsourcing, I think you need at least 100 million won as capital to set up a company”.

51. Pausing here, at the time 100 million Korean Won equated to approximately AUD $100,000 (T83.20-45).

52. It is common ground that the website for the online remittance business was not completed by mid-August 2014. According to Mr Goo, other Oakwood shareholders, namely Mr You and Mr Back, were becoming frustrated with the delay of the launch of the Tokorea website and Mr Goo had asked Mr Sim on a number of occasions when it would be completed, including at a meeting that included Mr Back and Mr You in early September.

53. Mr Sim says that he told Mr Goo that the website was being built to “Vivito’s schedule” and that he and Mr Yoon had contacted many Korean companies to set up the site. According to Mr Sim, Mr Goo asked how much they needed to invest in the Korean company, and Mr Sim told him that it would not be cheap, as a Korean firm was needed to set up the company, its systems, hardware and software needed to be bought in Korea and the legal agency had said they would need at least 100 million Korean won for capital.

54. On 20 August 2014, Mr Sim’s five shares in Oakwood were removed from him. According to Mr Sim, he did not know (at the time) nor consent to that. Sometime during in 2014, Mr Sim received 25 shares in Tokorea. It is not clear from the evidence when that happened, but it was by no later than 2 December 2014 based on the fact that Oakwood’s shareholding in Tokorea had reduced from 100 shares to 75 by 2 December 2014 (TB6).

55. On 25 August 2014, Mr Sim sent an email about “Current Korean matters” that referred to a “few things that are currently progressing” and requested that Mr Goo “read them when he had time”.

56. Mr Sim’s 25 August email attaches six other emails, two of which were the emails between Mr Sim and L & C Legal Agency (referred to at [49] and [50] above). The other emails included the following: an email dated 18 August 2014 from KSNet Co Ltd that referred to a firm banking fund transfer service quote for a dedicated line (physical closed network) between businesses; an email dated 20 August 2014 headed “Real time firm banking - Australia”, and quotes for Option 1 (involving a check whether VPN equipment is compatible in Australia) and Option 2 (which refers to expenses for sharing work and managing the system); an email dated 20 August 2018 headed “Setting up a company” which refers to a power of attorney form; and an email dated 25 August 2018 from TrustMate Co Ltd providing a quotation for systems management to operate firm banking in Korea for “Global Hr”, including telecommunications systems, security firewall, hardware and maintenance costs.

57. On 2 September 2014, Mr Sim sent an email to Mr Goo attaching copies of further correspondence relating to the purchase of technical equipment and services and attached a quotation from TrustMate for 9,160,000 Korean Won and SNT Korea for 1,960,000.

58. Also on 2 September 2014, Mr Sim received an email from L&C headed “capital to set up the company” which attached a document “on the remittance of the capital” which Mr Sim emailed to Mr Goo later that day. The document relating to remittance is headed “Remittance Instruction” from the Korea Exchange Bank (KE Bank), is dated 2 September 2014 (TB146), and states the following:

“REMITTER: SUN SICK SIM

BENEFICIARY: SUN SICK SIM;

ACCOUNT NO: XXXXX 1913

AMOUNT: USD 100,000 (EQUIVALENT OF KRW 100,000,000)

BENEFICIARY BANK: KOREA EXCHANGE BANK

…

REFERENCE: THIS FUND IS FOR INVESTMENT IN GLOBAL HR & TRADING

*IMPORTANT REQUIREMENT

In order to be accepted as legitimate investment fund, the remittance must be sent by the investor’s name (remitter). If not, the remittance should bear an additional remark that reads “Sent on behalf of SUN SICK SIM for the investment in GLOBAL HR & TRADING”.

The account listed above is a temporary account provided to the investor for the bank to efficiently check/confirm the remittance in time…”

59. Mr Goo deposes that, in late September 2014, he had a conversation with Mr Sim in words to the following effect:

“Mr Sim:    Brother, you know that you need $101,837,900 million Korean Won (the equivalent of $109,000AUD in Korean currency) in a bank in Seoul to start the business. We will need a pool of funds at each end – in both Australia and Korea – to perform instant transfers.

Mr Goo:    Ok, I will arrange to give you $109,000 in currency tomorrow so that it can be used for the testing and remain in Korea as money for Tokorea.”

60. Mr Sim denies that conversation (referred to at [59] above). He relies on the emails referred to at [46]-[50] and [55]-[58] and deposes to receiving a call from Mr Goo on 1 October 2014 to the effect that Mr Goo had left $109,000 in cash in the city office for Mr Sim to transfer to Korea.

October 2014: Mr Sim receives the $110,000 and Global HR established

61. On 1 October 2014, Mr Sim attended the city office and was given $109,000 in cash. It is common ground that Mr You and Mr Back were in attendance when Mr Sim was given the cash and it was Oakwood’s money. There is a dispute as to whether Mr Goo was also present.

62. Mr Goo gives evidence that he obtained the cash from the Oakwood Strathfield office, then met Mr Back, Mr You and Mr Sim in the city where a “loan agreement” was entered into, after which he gave the cash to Mr Sim. Mr Back also gives evidence that Mr Goo was at the office when Mr Sim was given the $109,000 cash.

63. Mr Sim denies that Mr Goo was at the city office when he received the cash and signed the loan agreement.

64. The “loan agreement” that Mr Sim signed was a one page proforma document in Korean headed “Loan Transaction Bond Certificate” [2] (Loan Document) (TB154) with handwriting that identifies Tokorea as the Borrower, Mr Sim as the Borrower’s representative, and Oakwood as the Lender, and is signed by Mr Sim. It does not include any details in the section headed “Loan Transaction Details” other than the amount of AUD109,000; there is no length of period of the loan, the interest rate or calculation method or repayment date.

    2. I note that another English version of the document in evidence translates the heading as “Letter of Confirmation of Loan Bond” (TB156).

65. Mr Sim gives evidence that Mr You said that Mr Goo had wanted Mr Sim to sign the Loan Document, that it would only apply until the funds were deposited in the Korean account and that once they were deposited, the document would be destroyed. When asked in cross-examination why the Loan Document was to be destroyed, Mr Sim’s gave evidence (T133.23-34) that:

“…this money is not borrowing money: this one is own invest money to Korea … Mr Goo promised me this - I - I - I asked Mr Yu why I have to sign on this form, and then Mr Yu told me, ‘This is only for the confirmation, I’m not taking money and then going out, because this is our cash in Australia.’”

66. Mr Goo’s evidence is that it was not agreed or contemplated that the Loan Document would be destroyed and it was intended to be retained for record keeping purposes. He deposes that the Loan Agreement was entered into to reflect Oakwood lending money to Tokorea and that Mr Back and Mr You had insisted on a loan agreement to be drawn up to reflect that Tokorea was borrowing $109,000. He also gave evidence in cross-examination that he asked for the Loan Document to be signed by Mr Sim because the other shareholders had told him that they would need the document to protect their money (T98.39-41).

67. After the meeting, Mr Sim attended a Westpac Bank branch and arranged for the AUD $109,000 cash and an additional amount of AUD $1,000 to be exchanged and deposited with the KE Bank in accordance with the Remittance Instruction, and also paid an AUD $32 transfer fee. The additional AUD $1,032 was paid by Mr Sim from his and his wife’s Westpac bank account (number ending 6898).

68. At 3:24 pm on 1 October 2014, Mr Sim sent an email to Mr Goo which attached a copy of a Westpac Overseas Telegraphic Transfer Receipt (Transfer Receipt) that identified that AUD $110,000 had been transferred to the Korean Exchange Bank and the $32 transfer fee had been paid. Consistent with the Remittance Instruction, the Transfer Receipt identifies the Beneficiary as Mr Sim (with account number ending 1913) and that “the Fund was for investment in Global HR and Trading”. Mr Sim’s email also advised Mr Goo that Mr Sim had remitted the extra $1032 and asked for that amount be transferred to his account. According to bank statements in evidence (Ex B), the amount of $1032 was deposited into Mr Sim and Ms Lee’s Westpac bank account the following day.

69. On 7 October 2014, Mr Sim emailed Mr Goo documents received from L&C Judicial Scriveners which attached:

1. an expense claim relating to the registration license tax and fees to incorporate Global HR for 2,584,000 Korean Won; and

2. a document headed “Things to decide before setting up a company” that refers to the following: “Business Name” suggestions that included Global HR & Trading; “Purpose”, which identified “Supply and manage overseas workforce, outsourcing, payroll tax, [p]rocurement and management of products for overseas online shopping mall”; “Capital” of W50000000; and Mr Sim as the “Shareholder” with 100% of the shares.

70. On 8 October 2014, Global HR was incorporated in South Korea. Mr Goo gives evidence that he assisted Mr Sim to set up the company by connecting him to the sister of an associate who allowed her business address to be used as the registered address of the company.

71. According to Mr Sim’s affidavit evidence, he paid the $109,000 in accordance with Mr Goo’s instructions, the 100 million Korean won was transferred to Korea and paid into an account of Global HR.

72. On 21 November 2014, Mr Sim became the sole director and shareholder of Global HR and was registered as such on 3 December 2014. The Korean “Comprehensive Register Entries Certificate” in relation to Global HR records that it has capital of 100 million Korean Won, 20,000 shares issued at 5,000 Korean Won per share, and it had a range of purposes, including “Manpower supply home and abroad”, but makes no mention of online remittance or money transfer between countries (TB35).

Oral evidence about the $110,000

73. In cross-examination, Mr Sim gave evidence that he deposited the 100 million Won directly into a bank account held by Global HR (T139.43-45) and that the Transfer Receipt recorded this (T142.0-3). When asked how he could have deposited the funds into a bank account of a company that did not yet exist, he gave the following evidence (T143.47-144.14):

“A. Okay. Just allow me to explain. At the time only Korean Exchange Bank, KE Bank, Hana Bank she mention - only allowed to receive the investment from the Korean account, Tokorea. So if anyone want to invest into Korean - set up the company in Korea and invest the money in Korea, they have to go through to the Korean Exchange Bank. So everything - we have to - instructed by the Korean Exchange Bank. So we have to provide all the identification. They have someone to process and then we have to contact the KEB bank, and then they going to instruct who is going to send the money, how they going to send the money, how much is going to send the money, from where. So this 161 document, the telegraph; and then initially I would instructed by the Hana Bank, they want extra given by the legal agents, Korean legal agency, and then see what he's saying, if just following the instruction by the bank. If we sending the money to Korea, and then they going to holding the Global HR Trading money, and then after we set up the bank account, need to transfer the money to there. This is how work either invest money in Korea.

Q. So it wasn’t directly transferred into a bank account of Global HR?

A. That's right.”

74. Later in cross-examination, Mr Sim gave evidence that he understood that the KE Bank “would hold the 100 million won until the Global HR bank accounts were established” (T146.47–T147.3) and sought to explain the fact that he had not referred to that in his affidavit because it was “too complex” (T147.8-31).

75. During cross-examination, Mr Sim gave evidence that the $110,000 was “all spent” in Korea and was no longer held by Global HR (T151.28-T152.41). When asked what the money was spent on, his evidence was that:

1. approximately 50 million Korean Won was spent on a personal salary he decided to pay to himself in April 2015 without consulting Mr Goo or a director at Oakwood (T153.37-41, T188.41-50, T189.5-7, T189.26-28);

2. approximately 20 million Korean Won was paid to Vivito (T154.3-5);

3. approximately 10 million Korean Won was spent on hardware (T154.27-29);

4. approximately 10 million Korean Won was paid for software (T154.42-43); and

5. 10 million Korean Won was spent on accounting fees and Mr Goo’s mother (T155.30-32).

76. According to Mr Sim, the $109,000 was spent from 2014 and through 2015 but he could not recall precisely when (T152.20-T153.10, T157.31-37).

77. Mr Sim accepted that he made no reference to the above payments in his affidavit (T159.13-15) and said that there were documents that existed to show the expenses that were not put into evidence (T160.4-11, T160.17-21). He also said (T159.41-44):

“I [sic] already mentioned this is the property of the Korean company, the Global HR and Trading. I’m the sole director, and I’m the 100 per shareholder. So. I have power to managing [sic] this kind of money and the business, too”.

78. In relation to the $110,000, Mr Goo gave evidence during cross-examination that:

1. the $110,000 was needed as capital for the purposes of setting up the business in Korea (T83.14-18; T96.1-3) and knew it would be used for the payment of business expenses for the business in Korea (T82.21-23);

2. he paid Mr Sim separately for expenses to set up the business in South Korea, such as IT expenses (T82.25-28, T83.8-11);

1. apart from “accounting costs”, there were no other expenses that needed to be paid by Mr Sim because there was another company that was managing Global HR (T82.37-39);

2. he never authorised Mr Sim to pay wages to himself from money held in Global HR in Korea (T91.5-8);

3. the $110,000 was transferred to a Global HR company account (T35.40) and he understood that it had happened (T82.8-10; T82.17-19; T85.14-15); and

4. capital and operating costs are the same thing, as capital was used “to test, to operate and make money”, and rejected that he knew that the $110,000 was not to be used as “test funds” (T96.47-49).

December 2014: Return of Units and alleged $50,000 cash payment

79. Mr Goo gives evidence that on or around 1 December 2014, he had a meeting with Mr Back and Mr You during which Mr Back expressed concern that Mr Sim was given units in the “city office” when they had invested more than Mr Sim. According to Mr Goo, he said he might return Mr Sim’s investment in Oakwood in return for getting Mr Sim’s units back.

80. Mr Goo deposes that, on or around 5 December 2014, Mr Sim came to Mr Goo’s house on which occasion Mr Goo gave Mr Sim $50,000 in cash from his own money. According to Mr Goo, they had a conversation to the following effect:

“Mr Goo:    The investors are complaining you are not doing what you’re supposed to do. Because of that, I need to remove you from the KS Unit Trust. I’ll give you $50,000.

Mr Sim:    Ok, I agree. But please let me continue with Tokorea – let me finish this.

Mr Goo:    Invest the $50,000 in Tokorea to finish the website and start the business – do what you’re supposed to do.”

81. In cross-examination, Mr Goo gave evidence that the $50,000 was taken from his safe at home, had not been withdrawn from a bank account, and that he gave the money to Mr Sim while they were in the garage (T49.8-9; T49.47-49; T51.50-52.5). Mr Goo accepted that the date of 5 December “maybe is likely incorrect” but said he had a reason to believe that it was on 1 December 2014 (T46.17). Later in cross-examination, Mr Goo gave evidence that he gave Mr Sim $50,000 in the evening of 1 December but “I received something in return, a document, his signature on it” (T51.42-43).

82. On 5 December 2014 at 11.14 am, Mr Goo sent a text message to Mr Sim that referred to the “real estate documents” that were in the city office, that “All of the ownership is being changed to Oakwood Sydney”, and that Mr Sim just needed to “come in and sign when he had time” (TB170). Mr Goo’s evidence is that the text message related to the signing of “the KS Unit Trust paperwork”.

83. Mr Sim denies meeting with Mr Goo at his house and receiving $50,000 while they were in Mr Goo’s garage, and denies the conversation referred to at [80]. According to Mr Sim, sometime in December 2014, he had a conversation with Mr Goo during which he told Mr Goo that Tokorea would need capital funds of at least $100,000 and a balance sheet to apply for an Australian Financial Services Licence (AFSL). He says that Mr Goo instructed Mr Sim that Oakwood would remit approximately $125,000 to Tokorea, that Mr Sim should get a bank statement that shows that balance and give it to the solicitor, and also instructed Mr Sim to then transfer $75,000 back to Oakwood and withdraw $50,000 cash and give it to Mr You.

84. On 9 December 2014, $125,000 was deposited into Tokorea’s bank account (Ex B). On that day and the next, Mr Sim caused the funds to be transferred and withdrawn in accordance with Mr Sim’s instructions. Mr Sim’s evidence is that he did not otherwise receive $50,000 cash from Mr Goo.

85. Mr Goo deposes that he has a “vague recollection” of a discussion with Mr Sim to the effect of that referred to at [83]. He cannot recall the specifics but believes that he may have directed Mr Sim to withdraw funds for Tokorea to obtain an AFSL and says that was a separate transaction to the $50,000 investment by Mr Sim in May 2014 (Goo 2 at [23]).

86. The Westpac bank records (Ex B) identify that the last $2,000 payment by Oakwood to Mr Lee was made on 31 December 2014, which is consistent with the PAYG records in evidence. Mr Goo and Mr Sim do not give evidence as to why the monthly payment ceased at that time and were not asked about it in cross-examination.

87. On 5 January 2015, Mr Sim sent a text to Mr Goo which asked Mr Sim to “bring the original documents you signed” when you come to Strathfield (TB172). Mr Goo says this text was also about signing the KS Unit Trust paperwork, as was a text he sent to Mr Sim on 2 February 2015 that refers to a missing signature and to “please come tomorrow to sign”, to which Mr Sim responded that he would.

88. In cross-examination, Mr Sim accepted that he ceased having units in the KS Unit Trust sometime in 2015 without receiving any money in return although they were of value. He said that he gave the units up because Mr Go asked him to because, “...at the time, Mr Goo told me, "Your money is in Korea””, and rejected that he gave them up because Mr Goo had given him $50,000 in cash in the garage (T203.34-204.8).

February 2015: Website demonstration

89. Sometime between 20 February 2015 and 23 February 2015, Mr Back, Mr You, Mr Goo, Mr Jung and Mr Sim attended the city office to view a demonstration by Mr Sim of the Tokorea business website.

90. According to Mr Goo’s evidence, when Mr Sim demonstrated the website it appeared basic, presentable and capable of performing the function of transferring money from Australia to Korea and back again. He also gives evidence that Mr Sim “used the Korea-based [Global HR] … bank account when he transferred money from Australia to Korea”. However, Mr Goo says the website was not fit-for-purpose as it was unable to verify identification, could not report on the sending of funds to AUSTRAC, and did not incorporate any reporting or analytical tools and could only send money (Goo 1 at [101]).

91. Mr Sim gives evidence that Mr Goo said the website looked good and asked for some additional functions, such as automatic reporting to AUSTRAC, to which Mr Sim said he had already mentioned that to Mr Yoon who said it would cost more as it was not in the contract. Mr Sim also gives evidence that the website was completed sometime in or around February 2015 (Sim at [65]-[67]).

92. On 27 February 2015, Mr Sim caused 75 shares in Tokorea to be transferred from Oakwood to himself. Mr Sim does not give evidence about why or in what circumstances this occurred and was not asked about it in cross-examination.

93. Mr Goo’s evidence (which was unchallenged by Mr Sim) is that he became aware of the transfer around this time and that, shortly after, he raised the issue with Mr Sim who said he would “fix it”. According to the ASIC Historical Extract in relation to Tokorea, the 75 shares were transferred from Mr Sim to Oakwood on 6 May 2015 (TB6).

94. Sometime in March 2015, Mr Goo was told by Ms Huh (who appears may have been an Oakwood employee) that Mr Sim had come into the Oakwood office at Strathfield and wrote “something that said all his debts are repaid on a loan agreement document”.

95. In evidence are two other versions of the Loan Document (referred to at [64]) that contain additional handwriting in Korean and English that was inserted on the documents by Mr Sim. One version (TB155) includes Korean characters which translate to “Repayment of whole amount is confirmed” and are followed by the words “(No Debt)” in English. Mr Sim accepts that he wrote those words and deposed that the version at (TB155) was the “final version of the document” and the version annexed to Mr Goo’s affidavit (referred to at [64] above) is not final. The other version of the document (the provenance of which is not clear from the evidence) (TB157) includes the words “Copy” at the top of the page and “Tokorea has no debt fully returned (money back)” in English.

96. Mr Sim was asked about the two other versions of the Loan Document (referred to at [64] and [95] above). He accepted that he had written the words “fully returned” on the Loan Document when he attended the Strathfield office in March 2015 and that the $109,000 had not been returned to Oakwood. He gave evidence at (T210.45-T212.30) as follows:

“Q. So when you wrote the words, "Fully returned," that was not correct, was it?

A. This is not what that mean. In my affidavit, saying, "There - this one is only for the confirmation letter to sending money from Australia to Korean entity," and the first - the first one, after I flew back from Korea to setting up Korean company, Mr Goo promise me to written, and then I just receive this document, and then I sign, and then I got that one. And then I doubt whether Mr Goo keep this document with separately, and when I go to Strathfield, that office, I ask Ms Hyu whether you have another document; you keep this one in secret. And then she said she just take from drawer, "Yes, we have another document." And then she - she gave me this one, and then Mr Goo turn up, and then, "Why you have this one? Because you promise me this is only for the purpose." So that's why I sign back and I keep it. I - I just left this one into Strathfield.

Q. Mr Sim, you just made all of that up, didn’t you?

A. No, that's hundred per cent sure.

…

Q. When you wrote the words, "Fully returned," that was incorrect, because at that point in time, $109,000 had not been returned to Oakwood. That's correct, isn't it?

A. That's not correct. That’s what that mean.

Q. Do you say that when you wrote the words, "Fully returned," $109,000 had been returned to Oakwood?

A. No, doesn't have to.

…

Q. You wrote the words, "Tokorea has no debt, fully returned," because you were worried you were going to get into trouble because you had personally spent the $109,000.

A. That's not true.”

April/May 2015: Breakdown of relationship with Mr Sim

97. Mr Goo gives evidence that, by around April 2015, Mr Sim had ceased coming to the weekly Monday meetings and he began to have concerns about “Tokorea’s money banked in Korea”. Mr Goo says he had several conversations with Mr Sim during which he asked whether the money had been moved from the Korean bank account and Mr Sim told him that:

“…I haven’t touched the money except for a few small transactions related to the business.”

98. Mr Sim denies that conversation ever occurred.

99. Mr Goo deposes that, in late April 2015, Mr Sim showed him a copy of a bank statement for the Global HR bank account.

100. A translated version of the April 2015 bank statement Mr Goo refers to is in evidence. Mr Goo says he did not know who translated it and was trying to locate the original Korean document. The Korean version was not made available to the court. According to the document, it was translated by Deok Kon Kim on 19 December 2016. I note that it is referred to at [9] of Mr Kim’s affidavit as a document he translated.

101. The translated April 2015 statement is a document headed “Recent Transactions Statement” (Transaction Statement) that appears to record transactions in Global HR’s bank account with the Woori Bank in Korea during early 2014. It refers to the “Accountholder” as “Global H”, an “Account No” ending in 7292, a period of enquiry as 17 October 2014 to 17 April 2015, a printout date of 17 April 2015, a “Withdrawable balance” of 56,567,696 Korean Won, and “Woori Bank”. It contains details of the transaction time and date, amount paid or deposited (and to or by whom), and a running balance in respect of 22 transactions, including the following:

1. a payment on 7 January 2015 to “Shinhan Judicial Scrivener” in the amount of 616,940, leaving a balance of 98,138,899;

2. payments made to “Accounting firm Oneul” in the amount of 110,000 on each of 26 January, 25 February and 25 March 2014;

3. payments to “Sirex Pay Co Ltd” of 10,000,000 on 9 March 2015 and 1,000,000 on 10 March 2015;

4. a payment to “Goo” on 2 March 2015 for 854,000;

5. a deposit of 130,000 in respect of a transfer to national treasury “Geumcheon Tax Office” on 13 February 2015; and

6. eight payments, in respect of which the payee is unidentified (and signified by “???”) in various amounts, including three payments of 1,500,000, 4,275,000 and 17,100,000 on 15 and 16 April 2014.

102. Mr Goo had deposed that, at the time he was shown the Transaction Statement, the transfers on the statement “appeared to be legitimate” and that the $110,000 (which Mr Goo refers to as the “Test Funds”) “remained mostly intact”.

103. During his oral evidence in chief, Mr Goo corrected his affidavit evidence as he did not think his “statement was clear enough”. He gave evidence that what he meant by this was, “when the amount was transferred … from the Korean bank account, that means that same amount should have been transferred to Australian bank account” (T35.14-18). Later, during cross-examination, Mr Goo gave evidence that he had not finished explaining and said, “[s]o if any money is debited - debited from the Global HR account in Korea, the money will be sent to the - to the Korea [sic] account in Australia” (T88.21-26). He also gave evidence that he was not saying that it was legitimate but that he did see the transactions and they existed on paper (T89.10-12).

104. Mr Sim was cross-examined about the Transaction Statement. He gave evidence that the document “is not mine” (T161.17) and agreed that he did not rely on the document (T161.37). He also gave evidence that he saw the Transaction Statement in Korean in 2015 from “online banking”, explaining that he had obtained a transaction summary of Global HR when he was in Sydney at that time (T163.27-T164.11).

105. Mr Sim said that the Transaction Statement was “not a real bank statement” and “someone had changed the figures”, describing it as “the transaction record by Excel spreadsheet” from the online banking that could be changed and accessible by anyone (T164.36-T165.38). This evidence was given when he was asked why the Transaction Statement did not record payments that Mr Sim had earlier asserted in cross-examination had been made from the $110,000, such as to Vivito in the amount of 20 million Korean won and by way of salary to himself in the amount of 50 million Korean won.

Meeting at the PappaRoti cafe

106. Sometime in April or May 2015 (Mr Goo asserts it was May), Mr Sim and Mr Goo met at the PappaRoti café in Strathfield. Mr Goo says that, on that occasion, he asked Mr Sim to return the $110,000 as soon as possible as there was no need for them to be sitting in a bank in Korea without an operational website. According to Mr Goo, Mr Sim said the following:

“Mr Sim:    I don’t have the money. I don’t want any legal issues so please don’t sue me. Brother, I do not wish to continue working with you or to continue the project so, if you want to continue this project, sign this contract saying that you will not charge me criminally or sue in the civil court and I will hand over the work-in-progress material and source codes for the project. As for the $110,000 that was in Korea – I had personal debt and credit card debt that needed clearing so I have nothing to give you.

Mr Goo:    You cannot do this. You are obligated to return the funds and hand over the work done so far for the website.

Mr Sim:    I spent the money so do not talk about the money anymore. I will not hand over the work done so far if you refuse to sign the agreement that you will not pursue me with criminal charges or in the civil court.

Mr Goo:    You must return the funds. You are responsible for this.

Mr Sim:    (As he leaves) If you want the source codes sign the agreement and don’t contact me anymore.”

107. Mr Goo says that he “refused to sign the contract”.

108. Mr Sim denies that the conversation referred to at [104] occurred and gave evidence in cross-examination that they met at the PappaRoti café in April 2015 (T213.31). Mr Sim deposes that Mr Goo did not ask him to return the $110,000 he described as the “Test Funds”. He also says that he never told Mr Goo about any personal debt or credit card debt in Korea or that he had spent Oakwood’s money on such debt and did not ever threaten to keep source codes from Mr Goo, Tokorea or Oakwood, arguing they were with Vivito who was building the website (Sim 1 at [68]).

109. Mr Goo and Mr Sim were both challenged in cross-examination about the meeting and what was discussed. Mr Goo did not accept that what he had said was incorrect (T90.35-38). Nor did Mr Sim (T214.7-9).

Deposits into Mr Sim’s Westpac account

110. On 16 April 2015, two deposits of AUD $5,000 and $20,000 were made into Mr Sim and his wife’s Westpac bank account. The following day $25,000 was deposited into the account and two withdrawals were made by way of payments to Citibank and ANZ Cards totalling $13,116.12 (Ex B at 303).

111. In cross-examination, Mr Sim accepted that the withdrawals made from his Westpac bank account involved payments to his personal credit cards (T205.5-12), rejected that the deposits (which totalled $50,000) was the $50,000 that Mr Goo says he gave Mr Sim in his garage for the Tokorea business (T205.19-21), and said he did not receive any cash from Mr Goo (T205.40-46). Mr Sim’s explanation in cross-examination for why he had $50,000 cash landing in his personal bank account was that it was “the salary I received from Korea” (T207.5-7, T207.43-46). When asked why he did not refer to this in his affidavit, he gave evidence that it was “[n]ot necessary to add it” (T207.13, T207.49).

May 2015: Tokorea Shareholder Letter

112. On 15 May 2015, Mr Ahn (in his capacity as the sole director of Oakwood) issued a Notice of General Meeting of Tokorea to Tokorea’s shareholders to move a resolution at a meeting on 5 June 2015 that Mr Sim be removed as a director effective immediately. The shareholders statement attached to the Notice refers to concerns about the direction of Tokorea under Mr Sim’s directorship in light of the following:

1. internal auditing that Mr Sim withdrew the capital fund of $110,000 held in Woo Ri Bank in Korea under the name Global HR without consultation with the company;

2. the fund of $110,000 that was raised with the loan from Oakwood as the working capital for the intended remittance service through the website:

3. a conversation between Mr Sim and Mr Goo in April 2015 in Korean in the following terms:

“Mr SIM:    Mr. Goo, I don’t want to do this business with you anymore.

I used the capital fund held at Woo Ri Bank in Korea to pay off my credit card debt.

Please take the balance of the capital fund left at Woo Ri Bank and the website developed for the company until today.

Mr GOO:    Please note that the fund held at Woo Ri Bank is not your personal asset. It is the company’s working capital. Please pay back the funds misused by you to the company.”

4. Oakwood continually requesting Mr Sim to return the money;

5. Mr Sim’s absence from the office since mid-April 2015; and,

6. a suspicion that Mr Sim has embezzled or misused the money.

113. Mr Sim did not attend the 6 June shareholders meeting (T215.24). On 12 June 2015, Mr Sim was removed as director and secretary of Tokorea. There is no evidence that Mr Sim had any further dealings with Mr Sim, Oakwood or Tokorea after this, other than as a defendant in these proceedings.

114. Mr Sim accepted that he did nothing in response to the shareholder letter (referred to at [112]). He did not tell Mr Goo to stop saying that Mr Sim had embezzled money, did not start defamation proceedings or issue a cease and desist letter (T215.39-T216.5, T215.39-40), which he explained by reference to legal advice not having much money (T216.18-20, T216.39 and T217.17).

Later events

115. According to Mr Goo, Tokorea has never traded. On 27 June 2016, AUSTRAC cancelled Tokorea’s registration as an independent remittance dealer on the Remittance Sector Register (TB115).

116. In June 2016, Mr Goo established an online remittance business using a website through a company called Hoju Jobs Pty Ltd.

117. The plaintiffs commenced these proceedings on 6 May 2019.

Attempts to obtain documents in these proceedings

273. The deposits into Mr Sim’s Westpac bank account that add up to $50,000 also provide some objective support for the payment, albeit some five months later. Mr Goo was also clear and firm that he gave the money to Mr Sim.

274. On balance and having weighed up the evidence of Mr Goo and Mr Sim against the other matters and the logic of events, I am persuaded to accept Mr Goo’s evidence that he gave Mr Sim $50,00 in cash in early December 2014. However, for the following reasons, I have concluded that Mr Goo’s claims for the return of that money must fail.

275. In this case, Mr Goo’s causes of action in relation to the $50,000 are based on a finding that Mr Goo gave the $50,000 to Mr Sim to use for the Tokorea business and to complete the website, and that he did not use it for that purpose. The evidence relied on by the plaintiffs is Mr Goo’s evidence of his conversation with Mr Sim (at [80]), and the contention that Mr Sim received the money on the understanding that it was to be used by him for the purpose of finishing building the website.

276. In BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd; BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd; Harpro Group Pty Ltd v BM Sydney Building Materials Pty Ltd [2019] NSWSC 421, Hammerschlag J (as His Honour then was) said, at [51]:

“Where a party seeks to rely upon spoken words as a foundation for a cause of action the conversation must be proved to the reasonable satisfaction of the Court. This means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent likelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court”: 

279. In addition, the observations by McLelland CJ in Eq  in Watson v Foxman (1995) 49 NSWLR 315 at 319 about the fallibility of memory are apt in this case, given what Mr Goo conceded during cross-examination and the evidence he gave of his “vague recollections” of discussions regarding large sums of money at around the same time (Goo 2 at [23]).

280. Leaving aside that I feel no actual persuasion that Mr Goo said the words deposed to, even if I were to assume the words were said, I cannot accept the plaintiff’s formulation of the purpose for which the funds were given.

281. To my mind, the conversation deposed to by Mr Goo and objective facts indicates that the purpose for giving $50,000 to Mr Sim was as a payment for his removal from the KS Unit Trust. According to Mr Goo’s evidence, Mr Goo asked Mr Sim to hand back his units in return for the $50,000, to which Sim agreed. He then asked to remain involved in Tokorea, to which Mr Goo said, “invest it in Tokorea” and “complete the website”, akin to a request rather than a command or condition. Put another way, based on the terms of Mr Goo’s evidence, irrespective of whether Mr Sim agreed to continue to work for Tokorea and complete the website, Mr Sim was going to receive the $50,000.

282. It is also entirely unclear what Mr Goo meant when he said to Mr Sim “invest the $50,000 in Tokorea to finish the website and start the business”. Does it mean that Mr Sim is to use the $50,000 to pay for the completion of the website (i.e., expenses relating to that), that Mr Sim was given the $50,000 as reward for his continuing work on the website, or that Mr Goo was giving his money to Mr Sim to invest, and if so, how was Mr Sim to do that? It is also difficult to understand why Mr Goo would give $50,000 of his own money to Mr Sim to “invest” in a company which Mr Goo controls.

283. Significantly, the conversations Mr Goo deposes to having had with Mr Sim in April 2015 (at [97] and [106]) do not refer to any expectation on the part of Mr Goo that the $50,000 should have been invested by Mr Sim into the Tokorea business and used to complete the website, or that Mr Goo expected the money to be returned to him as the website wasn’t completed. If the payment of the $50,000 was linked to the completion of the website (which according to Mr Goo was not completed by Mr Sim in February 2015), why didn’t Mr Goo demand repayment of the $50,000 at the meeting with Mr Sim in April 2015 or refer to it in any of his discussions with Mr Sim around that time? The only funds that Mr Goo refers to in his discussions with Mr Sim at that time are the “Test Funds”, being the $110,000 in Korea.

284. In addition, and to the extent it is relevant to this issue, based on the limited evidence before the Court, I can make no finding of fact regarding the precise requirements, performance and status of the website that was being developed for Tokorea between late February and April 2015. For example, I am unable to conclude whether Global HR was required to be or was in fact capable of facilitating two-way transfers of money between Australia and South Korea. The pleadings and evidence are inconsistent on this aspect. Mr Sim gave evidence that Global HR could only legally facilitate transfers from Australia to South Korea (T124.9-42) but Mr Goo’s evidence at [90] above suggests otherwise, and the FASOC refers to the transfer of money from Australia to South Korea (FASOC at 16(b)).

285. Thus, the factual finding sought by the plaintiffs that the $50,000 was given to Mr Sim for the purpose of Mr Sim completing the website is not corroborated by any contemporaneous documents or any evidence of other conversations between Mr Goo and Mr Sim, or Mr Goo and others. It also seems to me to be unsupported by the logic of events.

286. For these reasons, I do not feel an actual persuasion that Mr Goo and Mr Sim understood or agreed that Mr Goo gave $50,000 cash to Mr Sim on or around 1 December 2014 for Mr Sim to use for the purpose of the Tokorea business or for the purpose of completing the website required for that business, or that the $50,000 given to Mr Sim by Mr Goo represents an investment by Mr Goo into the Tokorea Business (FASOC at 37]). Rather, I have concluded that, on the balance of probabilities, the $50,000 was given to Mr Sim as consideration for the return of his units in the KS Unit Trust and was given to Mr Sim in his personal capacity, and not as a director of Tokorea.

287. It is common ground that Mr Sim returned his units in the KS Unit Trust to Mr Goo sometime in early 2014.

288. Accordingly, and while I am satisfied that the $50,000 was given by Mr Goo to Mr Sim (and Mr Sim has retained the money for his own benefit), I find that Mr Sim has not used the $50,000 contrary to the purpose for which it was given to him, as pleaded: FASOC at [30].

Conclusion, costs and orders

289. In summary, I am not satisfied that the plaintiffs have established any of their claims against Mr Sim and refuse their application for the relief claimed in the FASOC. It follows that I will order that the FASOC be dismissed.

290. I see no reason why the usual order that costs follow the event should not apply and propose to make an order for the plaintiffs to pay Mr Sim’s costs of these proceedings. However, as the parties have not addressed the issue of costs and the plaintiffs indicated they wished to be heard on that issue, I have deferred entry of the proposed costs order for 21 days to enable the parties to make an application if they consider a different order should be made. In that event, the party seeking a different costs order should confer with the other parties and, before the orders take effect, notify my Associate by email of such together with their written submissions on that issue (of no more than three pages) and an agreed date for submissions in response, with a view to the issue of costs being determined on the papers.

291. For these reasons, I make the following orders:

1. Dismiss the Further Amended Statement of Claim.

2. Unless any party makes an application for a different cost order within 21 days, the defendant’s costs of these proceedings be paid by the plaintiffs on an ordinary basis as agreed or assessed.

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Endnotes

Amendments

11 April 2022 - 11/04/22 - deletion of heading above paragraph [86] and "on" corrected to "of" in heading above paragraph [97]

Decision last updated: 11 April 2022