Jang v Trustees of the Property of Lee (bankrupt)
[2022] FCA 99
FEDERAL COURT OF AUSTRALIA
Jang v Trustees of the Property of Lee (bankrupt) [2022] FCA 99
File number: ACD 33 of 2020 Judgment of: MARKOVIC J Date of judgment: 16 February 2022 Catchwords: BANKRUPTCY AND INSOLVENCY – application seeking declaration that applicant entitled to half interest in land at 51A Strayleaf Crescent, Gungahlin ACT 2912 (Property) and rectification of title to the Property – where half interest in Property previously registered in the name of applicant’s daughter in law – where applicant’s daughter in law bankrupt –where half interest in Property vested in respondents under s 58 of the Bankruptcy Act 1966 (Cth) – whether applicant’s daughter’s half interest in Property held on resulting trust for applicant – application dismissed Legislation: Bankruptcy Act 1966 (Cth)
Evidence Act 1995 (Cth)
Civil Law (Property) Act 2006 (ACT)
Cases cited: Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495
Australian Securities and Investments Commission v Big Star Energy Limited (No 3) [2020] FCA 1442; 148 ACSR 334
Banque Commerciale SA en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Betfair Pty Ltd v Racing New South Wales and Anor [2010] FCAFC 133; (2010) 189 FCR 356
Calverley v Green (1984) 155 CLR 242
El-Debel v Micheletto (Trustee) [2021] FCAFC 117
Ethicon Sarl v Gill [2021] FCAFC 29; (2021) 387 ALR 494
Linfield Developments Pty Ltd v Shuangxing Development Pty Ltd [2016] NSWSC 68
Thomas v SMP (International) Pty Ltd [2010] NSWSC 822
Watson v Foxman (1995) 49 NSWLR 315
Division: General Division Registry: Australian Capital Territory National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 218 Date of last submissions 25 June 2021 Date of hearing: 12-16 April 2021 Counsel for the Applicant: Mr W D B Buckland Solicitor for the Applicant: O’Connor Harris & Co Solicitors Counsel for the Respondent: Mr M Maconachie Solicitor for the Respondent: McInnes Wilson Lawyers ORDERS
ACD 33 of 2020 BETWEEN: SOON JA JANG
Applicant
AND: THE TRUSTEES OF THE PROPERTY OF SARAH EUNJU LEE ALSO KNOWN AS EUN JU LEE, A BANKRUPT
Respondent
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
16 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The amended originating application filed on 11 September 2020 and the amended statement of claim filed on 11 September 2020 be dismissed.
2.Subject to Orders 3, 4 and 5 below, the applicant is to pay the respondents’ costs of the proceeding.
3.Any party wishing to vary Order 2 is to file and serve any application setting out the orders which she or they seek, together with submissions, not exceeding three pages in length, on or before 2 March 2022.
4.In the event that an application and submissions are filed by either party pursuant to Order 3 above then the other party is to file and serve her or their submissions in response, not exceeding three pages in length, on or before 16 March 2022.
5.Unless either party requests an oral hearing, the question of any variation of Order 2 will be dealt with on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MARKOVIC J
Soon Ja Jang, the applicant, was, at the time of the events the subject of this proceeding, the mother in law of Sarah Eunju Lee (also known as Eun Ju Lee). Sarah Eunju Lee was married to Mrs Jang’s son, Ji Soo Jang (also known as Kyle Jang). For ease and without intending any disrespect I will refer to Sarah Eunju Lee and Ji Soo Jang as Sarah and Kyle respectively.
By order made on 19 April 2018 in the Federal Circuit Court of Australia (as it then was) Sarah was made a bankrupt and the respondents were appointed as her trustees in bankruptcy (Trustees).
This proceeding concerns a property (Gungahlin Property) situated at 51A Strayleaf Crescent, Gungahlin in the Australian Capital Territory (ACT) which was purchased on 8 March 2017 by Sarah as to 50% and Kan Kwai and Seung Jun Lee (who again, without intending disrespect and for ease, I will refer to as Seung) as to 25% each. Kan Kwai and Seung are married. Upon Sarah being made a bankrupt her share in the Gungahlin Property vested in the Trustees pursuant to s 58 of the Bankruptcy Act 1966 (Cth). However, Mrs Jang claims an equitable interest by way of resulting trust over Sarah’s 50% interest in that property and seeks declarations, in effect, to establish her entitlement and to have her registered on the title of the Gungahlin Property as a tenant in common in relation to her claimed 50% share in lieu of the Trustees.
MRS JANG’S CLAIM
This proceeding was originally commenced in the Supreme Court of the Australian Capital Territory (ACT Supreme Court) on 5 April 2019 and was transferred to this Court by order made on 22 July 2020. When the proceeding was commenced Mrs Jang sought the extension of a caveat that she had lodged on the title of the Gungahlin Property.
Before proceeding further it is convenient to outline Mrs Jang’s claim as now pleaded in her amended statement of claim filed on 11 September 2020.
As described at [3] above, Mrs Jang seeks a declaration that she is entitled to a half interest in the Gungahlin Property and an order directing the Registrar General Land Titles of the ACT to rectify the title to the Gungahlin Property by removing the Trustees’ names and entering her name as a tenant in common in the proportion of one half interest in the land with the two other registered proprietors, Kan Kwai and Seung.
Mrs Jang alleges that:
(1)in or about late November 2016 she entered into an oral agreement (Agreement) with Kan Kwai and Seung to purchase the Gungahlin Property, that it was a term of the Agreement that the purchasers of that property were to be her, Kan Kwai and Seung and that it was a further term of the Agreement that her share in the Gungahlin Property would be one half and that Kan Kwai and Seung would purchase the other one half interest;
(2)upon entering into the Agreement Mrs Jang then entered into an agreement with her daughter in law, Sarah, (Second Agreement) for Sarah to act as her agent to purchase her one half interest in the Gungahlin Property using funds to be supplied to her by Mrs Jang;
(3)it was a term of the Second Agreement that Sarah was to be registered with Kan Kwai and Seung as the registered proprietors of the Gungahlin Property and that Sarah was to hold her interest on trust for Mrs Jang;
(4)contracts for the purchase of the Gungahlin Property were exchanged on 16 December 2016;
(5)it was a further term of the Agreement that the full deposit for the purchase would be paid by Kan Kwai;
(6)between January 2017 and March 2017 Mrs Jang obtained loan monies of $225,000 as follows:
January 2017 - $65,000 from Aeja Kim;
January 2017 - $50,000 from Yong Ja Lee;
January 2017 - $30,000 from Maroot Shin;
February 2017 - $30,000 from Hak Boon Choi;
February 2017 - $30,000 from Sun Lee;
March 2017 - $20,000 from Chun Soon Oh;
(7)during the period from January 2017 to March 2017 Mrs Jang provided funds to Sarah in accordance with the Second Agreement to be used for the purchase of her one half interest in the Gungahlin Property as follows:
January 2017 - $65,000;
January 2017 - $20,000;
January 2017 - $25,000;
20th February 2018 - $30,000;
23rd February 2018 - $40,000;
Late February 2017 - $40,000;
Late February 2017 - $35,000;
6th March 2018 - $20,000; and
7th March 2018 - $25,000;
(8)in addition to the monies referred to at (6) above Mrs Jang provided an additional sum of $75,000 to Sarah from her own resources;
(9)Sarah applied the monies provided to her to purchase a one half interest in the Gungahlin Property in accordance with the Second Agreement and the purchase of the one half interest in the Gungahlin Property by Sarah was for and on behalf of Mrs Jang;
(10)the balance of the purchase price for the Gungahlin Property was paid by Kan Kwai and Seung with some additional funds provided by Mrs Jang;
(11)on 4 October 2017 Mrs Jang obtained loan monies from Secure Funding Pty Limited which she used to refinance her loan of $225,000;
(12)on 21 August 2017 Mrs Jang registered caveat no 2107211 on the title of the Gungahlin Property (Caveat);
(13)Sarah’s name has been removed from the title of the Gungahlin Property as a result of her bankruptcy and the names of the Trustees have been entered in her place; and
(14)by reason of the matters set out above Sarah held her interest in the Gungahlin Property on a resulting trust in favour of Mrs Jang and the removal of her name from the register of titles was wrongful. Mrs Jang enjoys a one half interest in the Gungahlin Property and her name should be entered on the title as a tenant in common with Kan Kwai and Seung, holding a one half interest in the Gungahlin Property and the Trustees’ names should be removed from the title to that property.
On 14 May 2019 the Trustees filed a detailed defence, albeit to the statement of claim dated 25 April 2019 which was filed in the ACT Supreme Court, in which they deny all but the allegation that Mrs Jang registered the Caveat on the title of the Gungahlin Property (see [7(12)] above), which they admit. But in doing so they rely on the terms of the Caveat insofar as Mrs Jang’s alleged interest in the Gungahlin Property is concerned.
THE EVIDENCE
The events which led to this proceeding and the dispute which now arises for resolution are described below.
The applicant’s witnesses
In addition to Mrs Jang, the following witnesses gave evidence for her:
(1)Sarah;
(2)Young Ja Lee;
(3)Hak Boon Choi Doo;
(4)Chun Soon Oh;
(5)Yun-Jong Jang, Mrs Jang’s daughter;
(6)Marissa Lee, a principal solicitor of M Legal, who acted for Mrs Jang in relation to her claim against Sarah’s bankrupt estate from mid-June 2018 to December 2018; and
(7)Dr Steven Strach, a consultant forensic document and handwriting examiner and director of Strach Forensic Pty Ltd, who was instructed to consider whether four particular signatures in the name of Eun Ju Lee are the result of a signature image transfer process. While Dr Strach’s affidavit was read and his report tendered, I was not taken to any aspect of it during submissions and Mrs Jang did not rely on any particular aspect of it in support of her claim that there was a resulting trust in her favour, nor to meet any of the Trustee’s submissions. Accordingly I do not intend to set out or address Dr Strach’s reasoning or his conclusions.
The applicant’s witnesses, other than Yun-Jong Jang, Marissa Lee and Dr Strach, were cross-examined. They each gave evidence through a Korean interpreter. That observation is not made by way of criticism of those witnesses but simply to explain the circumstances in which their evidence was given. However, it is necessary to make some particular observations about both the applicant and Sarah as witnesses.
I turn first to Mrs Jang who swore three affidavits on 2 April 2019 (April 2019 Affidavit), 3 May 2019 (May 2019 Affidavit) and 28 June 2019 respectively and who, as noted above, was cross-examined.
Mrs Jang did not strike me as naïve. On the contrary, the impression she left was that of a capable person able to manage her own affairs. She has owned various properties over the years, has traded in and out of property and obtained finance. However, Mrs Jang was not an impressive witness.
At times when Mrs Jang gave evidence about important matters she resiled from the evidence included in her affidavits, stating that it was incorrect. On more than one occasion she blamed her solicitor at the time for misunderstanding her instructions, both as to evidence included in her affidavits and as to matters of some import included in documents or correspondence completed or sent on her behalf. Mrs Jang maintained her position that aspects of her affidavits were incorrect despite the fact that, at the time of swearing each of them, they were translated for her, they were again translated for her on the first day of the hearing prior to her giving evidence and she confirmed at the time she gave evidence at the hearing that each of her affidavits was correct.
It became apparent that Mrs Jang’s attempts to distance herself from evidence given in her affidavits and to change her evidence were deployed in order to improve her position where she perceived potential inconsistencies either in her evidence or as between her evidence and that of other witnesses. That did not reflect well on her as a witness.
Mrs Jang was also evasive at times, failing to respond directly to questions put to her in cross-examination. Mrs Jang submitted that the fact that she gave evidence through an interpreter caused some confusion in her evidence, and that she is of advanced age which may also have added an element of confusion. But Mrs Jang’s approach to her cross-examination was not the product of confusion. Based on my observation, it was apparent that she understood the questions, indeed it was apparent at times that Mrs Jang had a relatively good comprehension of English; and neither she nor those acting for her made any complaint about the translation provided nor was any evidence tendered that her age affected her cognitive abilities or her ability to cope with the cross-examination. Based on my observation of Mrs Jang as a witness, her evasiveness or refusal to address a question put to her was borne of a perception by her that a direct answer would not assist her case.
Sarah equally struck me as a capable person. She had run her business which eventually failed in the circumstances described below. She clearly understood sophisticated concepts. However, Sarah too was evasive in cross-examination. On a number of questions she avoided answering the question posed. Sometimes she suggested she had not understood. But, accounting for some apprehension on her part, it was clear that she understood the issues and the questions put and that she had a good comprehension of English. As to the latter on a number of occasions Sarah answered questions before the interpretation was complete. It was apparent that Sarah’s evasiveness was borne of a perception that a direct response may not have assisted Mrs Jang’s case.
Respondents’ witnesses
The following witnesses gave evidence for the respondents:
(1)Louisa Meng Li Sijabat who is one of the Trustees;
(2)Kan Kwai who is a chartered accountant, a certified practising accountant, a fellow of CPA Australia and one of the registered proprietors of the Gungahlin Property. As at the time of affirming her affidavits in 2020 Kan Kwai had been practising as an accountant for about 11 years; and
(3)Seung who is also a registered proprietor of the Gungahlin Property.
Only Ms Sijabat and Kan Kwai were cross examined.
Mrs Jang’s background
Mrs Jang was born in Korea. She came to Australia in 1987. Mrs Jang has three children, all of whom were born in Korea: two sons, Kyle born in 1967 and Kerry born in 1972; and a daughter, Yun-Jong, born in 1969.
Mrs Jang has purchased and sold properties over the years:
(1)she has owned eight properties located in Sydney;
(2)in November 2012 she purchased a property at 69 Sunninghill Avenue, Burradoo, New South Wales (Burradoo Property) with Yun-Jong which they then sold in about May 2018 for $1,635,000; and
(3)she then purchased a property at 3 Skewes Street, Casey in the ACT which she sold in about December 2020 for $950,000.
Sarah’s background
Sarah was born in Korea in 1972 and came to Australia in 1996 where she has lived since that time.
When she first came to Australia Sarah undertook language courses and a course in hotel management, which she did not complete. As set out above, Sarah is married to Kyle.
Sarah and Kyle were directors of Ciani Innovation Pty Ltd and Sarah was Ciani’s secretary and its sole shareholder. Ciani was a supplier of building materials, in particular windows, window covering and security screens.
Events leading up to the purchase of the Gungahlin Property
Each of Mrs Jang, Sarah and Kan Kwai gave evidence about how they came to learn about the sale of the Gungahlin Property and the events leading up to the entry into the contract for sale. I set out their evidence in turn.
Mrs Jang’s evidence
Mrs Jang visited the Gungahlin Property in late October 2016. As recounted by Mrs Jang in the April 2019 Affidavit she liked it. She was not sure that she would be able to get a loan to purchase it but she said that she would be able to provide the deposit. She intended to buy the property for herself.
In light of successful objection taken to parts of the April 2019 Affidavit, leave was granted to examine Mrs Jang in relation to the subject matter of those paragraphs. Mrs Jang’s evidence was as follows:
Mr Buckland: … Mrs Jang, did you have a conversation with your daughter-in-law about the property in December 2016? And by daughter-in-law, I mean, Sarah Eunju Lee.
The Interpreter: Yes.
Mr Buckland: What did you say to Sarah? Please try to use as much as you can remember the exact words that you said to Sarah.
The Interpreter: She knew that I was interested in the property. Our – sorry, can I ask her to repeat that.
Mr Buckland: Yes.
The Interpreter: Because Sarah and her husband was – has been in Canberra by then a short period of time. They were not aware of many people in Canberra, but they said they know a person who is an accountant. And that she – they got information from her – from the accountant about the property. And they were short of money, so they were asking me whether I was interested into the property. So I said I do not have money in my hand at the moment. So they asked the accountant about the situation and I was told that she – that accountant would be responsible for the full deposit on the property. If that is the case, then I will see what I can come up with – the money. So I said it would take some time for getting some loan so in – I can borrow some money from my friends. But because I cannot get the loan because – under my name, I asked her to do it on her name and she agreed. So she made a contract on 13 December 2016 with a deposit so I later give some money to her by the end of December 2016.
Mr Buckland: Just to clarify, when you say, I later gave some money to her by the end of 2016, who is the her you are talking about.
The Interpreter: Kan Kwai. Because it was a half and half deal with Kan Kwai.
Mr Buckland: Did you give money to anyone else to fund the purchase of property?
The Interpreter: I borrowed the money. Yes.
Mr Buckland: Sorry, I think we might be – I will just state the question again, did you give money to anyone else to fund the purchase of the property?
[At this stage an objection was raised and addressed]
Mr Buckland: Thank you. Ms Ko, do you understand the question that has been asked?
The Interpreter: I do.
Mr Buckland: Do you need me to repeat it.
The Interpreter: I think I can put it to her because I remember the question.
Mr Buckland: You - - -
The Interpreter: I do. I borrowed the money from other friends.
Mr Buckland: Mrs Jang, you said you gave the money to Kan Kwai, how did you give the money to Kan Kwai?
The Interpreter: Because I – because my daughter-in-law has been acting on my behalf. I gave the money to my daughter-in-law. We made a joint named account and we both put the money in – deposited our money into that account.
Mr Buckland: When you gave money to your daughter-in-law did you say anything to her about the money?
The Interpreter: I asked her how she’s going to handle the money and she suggested to have a joint account to deal with the matter.
Mr Buckland: Do you recall how much money you gave to your daughter-in-law?
The Interpreter: I put in $265,000 in total. The total amount of the property that I was to put in was 215,000 but I put in $50,000 on top for renovating the property.
In the May 2019 Affidavit Mrs Jang said that in November 2016 she had a conversation with Sarah in which she said words to the following effect:
I want to buy the property 50-50 with the Kan Kwai couple, but I don’t have the money now. Can you ask them to pay the deposit?
Sarah agreed to do so and a short time later they had a further conversation in which Sarah said words to the following effect:
I talked to the Kan Kwai couple. They agree to buy it with you and they will pay the deposit, but you must be sure that you have the money later.
Later Mrs Jang had another conversation with Sarah to the following effect:
Mrs Jang:I was going to get a loan, but I am too old so I need to use your name to buy the property. You will buy it for me and I will give you the money.
Sarah:I will buy the property on your behalf.
I pause to observe that, despite Mrs Jang's evidence that she could not get a loan, there was objective evidence before me (see [99] below) that she had, both prior to and after the purchase of the Gungahlin Property, been able to obtain loans secured against the Burradoo Property.
Sarah’s evidence
According to Sarah she learnt that the Gungahlin Property was for sale in November 2016 from Kan Kwai and Seung. Kan Kwai was Sarah’s accountant. She and Kyle did not have the money to purchase the property. Sarah recalls that she had a conversation to the following effect with Kan Kwai and Seung, although she cannot recall who of the two said what:
Kan Kwai/Seung: We don’t have the money to buy the property. Do you know of anyone who would want to buy it with us?
Sarah:I will ask my mother in law. She might be interested.
Sarah then had a telephone conversation with Mrs Jang who, at the time, was in Sydney. She told Mrs Jang that “she [had] heard of a good investment property” and asked her to come to view it. Mrs Jang agreed to do so.
Sarah recalls that after inspecting the Gungahlin Property Mrs Jang said words to the following effect to her:
I saw the property. It is a good investment and I am happy to buy a half interest in it. Can you go and talk to the Kan Kwai couple to see if they will buy it with me 50-50? They will need to pay the full deposit first as I am too old to get a loan and I will have to get the money together.
Sarah then had a conversation with Kan Kwai and Seung to the following effect:
Sarah:My mother in law wants to buy the property with you 50-50. Is that agreed?
Kan Kwai/Seung: Yes.
Later Sarah had a conversation with Mrs Jang to the following effect:
Sarah: The seller wants to sell it urgently. Do you have the money now?
Mrs Jang:I don’t have the money at the moment, but I can get it for sure, so go and talk to the Kan Kwai couple and see if they can pay the deposit.
Sarah said that she then had the following conversations:
First she spoke with Kan Kwai and Seung and, although she cannot now recall who said what, she recalls that one or the other of them said words to the following effect:
Yes. We will pay the deposit, but she must make sure she has the money.
She then had another conversation with Mrs Jang to the following effect:
Mrs Jang:Can you go and buy the property for me?
Sarah:Yes I can, but you have to make sure you have the money.
Mrs Jang:I am giving you the money and your name will be on the title but you are doing it for me. It is my property.
Sarah:Okay.
Sarah recalls that she had several conversations with Mrs Jang to the following affect:
Mrs Jang: I am giving you the money to buy the property for me.
Sarah: Yes I’ll do that.
Mrs Jang:That’s my property remember. You know that. Your name is just there to protect me. It’s my property.
Sarah: Of course, I know that.
Kan Kwai’s evidence
On about 15 December 2016 Kan Kwai saw an advertisement on allhomes.com.au for the sale of the Gungahlin Property at a purchase price of $1.2 million. Having seen the Gungahlin Property offered for sale a few years earlier for $1.7 million, Kan Kwai thought it was being offered at a very good price. Kan Kwai had a conversation with Seung to the following effect:
Kan Kwai:The [Gungahlin Property] is for sale for $1,200,000. It is a very good price. We could operate a restaurant from the commercial space at the front and maybe rent out the townhouse at the back.
Seung:It sounds like a good opportunity, but I don’t think we can afford it seeing as we just bought another property a month ago.
Kan Kwai:Do you know anyone who might be interested in purchasing it with us and running the restaurant?
Seung:I’ll ask my friend Kyle. I think he and his wife, Sarah, might be looking for a new business endeavour.
Kan Kwai:Okay. You talk to Kyle. In the meantime, I’ll call the agent and make sure the property is still available.
That afternoon, Kan Kwai contacted the real estate agent who informed her that the Gungahlin Property was under offer and that contracts were due to be exchanged the next day. This caused Kan Kwai to contact the owner of the Gungahlin Property and arrange an inspection. According to Kan Kwai, that evening she, Seung and Kyle inspected the commercial space at the front of the Gungahlin Property. They were unable to inspect the townhouse as it was tenanted.
After their inspection Kan Kwai, Seung and Kyle decided to make an offer of $1.28 million to purchase the Gungahlin Property. They had a conversation with one of the owners, Shuk Han Lau, who indicated that, as their offer was higher, they could have the property if they could pay the deposit the following day. Mrs Lau referred them to her husband who was overseas at the time. That night Kan Kwai and Mr Lau exchanged text messages, the effect of which was that Kan Kwai, Seung, Kyle and Sarah would sign the contract for purchase of the Gungahlin Property on 16 December 2016 at 11.30 am. As set out at [39] below, and as confirmed in the text messages, that was what occurred.
The purchase of the Gungahlin Property
Contracts are exchanged
On 16 December 2016 contracts for sale of the Gungahlin Property were exchanged. The purchase price was $1.28 million. Originally the purchasers were to be Sarah, Kyle, Kan Kwai and Seung each holding a 25% interest but, at some point prior to signing the contract for sale, Sarah and Kyle informed Kan Kwai that Kyle would not be on the title of the Gungahlin Property and instead Sarah would hold a 50% interest. According to Kan Kwai, at no time prior to or upon the signing of the contract, or at all, was she informed that Sarah was purchasing the Gungahlin Property on behalf of Mrs Jang. Rather, all of Kan Kwai’s interactions with Sarah led her to believe that they were each purchasing the property in their own right, with the intention that they would operate a restaurant from it.
After signing the contract for sale Kan Kwai provided a cheque for $128,000 drawn from funds in her bank account to the vendors’ solicitor in payment of the deposit for the Gungahlin Property. On 9 January 2017 Sarah and Kyle transferred $30,000 and $34,000 respectively to Kan Kwai as payment towards the deposit.
Sarah said that in about late December 2016 or early January 2017 Mrs Jang gave her $64,000 in cash for payment of her share of the deposit and that, in turn, she deposited $34,000 into her account and $30,000 into Kyle’s account. Thereafter on 9 January she transferred the total amount of $64,000 to Kan Kwai’s account to pay Mrs Jang’s share of the deposit.
Payment of the deposit for the Gungahlin Property was a matter that attracted some attention because of Mrs Jang’s differing evidence on that topic. It is convenient to address that now. As set out at [25] above, in her April 2019 Affidavit Mrs Jang gave evidence that she would be able to pay the deposit. However, in her May 2019 Affidavit she gave contradictory evidence (see [27] above).
In cross-examination Mrs Jang again gave differing evidence from the evidence she gave in her April 2019 Affidavit. She said that Kan Kwai and Seung agreed to pay the deposit because she did not have the money; that Kan Kwai told her if the deposit was not paid they “would lose the chance”, I infer, of buying the Gungahlin Property; and that Kan Kwai said that they would pay the deposit and that Mrs Jang could pay later when the money was available.
In cross-examination Mrs Jang also said that she did not have money for the deposit because she does not save money and she needed to borrow the money because Kan Kwai had told her that they needed to proceed with urgency. It seems that despite not having any money she was prepared to enter into an agreement to purchase the Gungahlin Property because she had the Burradoo Property which she subsequently sold for $1.65 million.
Mrs Jang explained that the evidence in her April 2019 Affidavit about payment of the deposit was incorrect, that she did not understand English properly and that her lawyer at the time, about whom she said she had complained, had prepared the affidavit and had not understood what she had told him. Laying blame at the feet of her solicitors became a recurring theme for Mrs Jang.
It is difficult to accept Mrs Jang’s explanation for changing her evidence on this issue in face of the fact that the April 2019 Affidavit includes a certification by her lawyer at the time that prior to Mrs Jang swearing it he “explained the legal effect of the document to her in her native language Korean and translated the document for her from English into her native language of Korean”, the April 2019 Affidavit was again translated to Mrs Jang on the first morning of the hearing and, when she gave evidence at the hearing, Mrs Jang stated without any reservation that her April 2019 Affidavit was correct.
Subsequent inspection of the Gungahlin Property
At the time Sarah entered into the contract for purchase of the Gungahlin Property she had only inspected the restaurant premises. Shortly after the deposit was paid, Kan Kwai recalls that she and Sarah had a conversation to the following effect:
Sarah:We want to inspect the property with Kyle’s mother. She is a very good business woman and has a sharp eye. She will be able to give us advice about the restaurant.
Kan Kwai: Okay. Sounds good.
Sarah denies that this conversation took place.
On 6 January 2017 Kan Kwai, Seung, Kyle, Sarah and Mrs Jang inspected the Gungahlin Property. This was the first time that Kan Kwai and Seung met Mrs Jang and the first time that any of them had inspected the townhouse. Upon doing so they found that it did not have a kitchen or laundry. Kan Kwai recalls Mrs Jang suggesting that they should ask for a reduction in the purchase price because of the state of the townhouse.
According to Kan Kwai, during the inspection Sarah did not suggest that she was purchasing the Gungahlin Property on behalf of Mrs Jang and Mrs Jang did not suggest that she had any interest in the Gungahlin Property. Nor did Kan Kwai and Seung enter into any agreement with Mrs Jang in relation to the Gungahlin Property. They barely spoke to her during the inspection.
Kan Kwai recalls that later Sarah and Kyle said words to the following effect to her and Seung:
Sarah:Kyle’s mother doesn’t know that we already paid the deposit. Please don’t tell her.
Kyle:Please don’t let her know that we already paid the deposit. She won’t be happy if she finds out.
Sarah denies that this conversation took place.
Financing of the purchase
In early January 2017 Kyle informed Kan Kwai that the bank was only willing to lend 70% of the purchase price for the Gungahlin Property.
By letter dated 27 January 2017 Suncorp Bank approved a loan to Kan Kwai, Seung and Sarah for $896,000, being 70% of the purchase price of the Gungahlin Property, on a preliminary basis and subject to valuation.
Settlement of the sale of the Gungahlin Property was scheduled to take place on 17 February 2017. However, as at 15 February 2017, Kan Kwai, Seung and Sarah were still awaiting completion of the valuation for the purpose of final approval of the loan from Suncorp. At about this time Kan Kwai recalls Kyle informing her that Suncorp was “only willing to loan [them] an initial amount of 60% because of the condition of the townhouse” and that Suncorp would not “provide [them] with the final 10% until [they did] some renovations and [made] the house compliant”.
Further negotiations with the vendors
On or about 16 January 2017 Kan Kwai, Seung and Sarah first met with Rod Badgery, a solicitor with Badgery & Rafferty who they retained to act on their behalf on the purchase of the Gungahlin Property.
On 16 February 2017 Kan Kwai and Sarah approached Ms Lau, one of the vendors, to negotiate payment of 10% of the purchase price two months after settlement with renovation of the townhouse to take place in the meantime. Despite Kan Kwai’s understanding that the vendors had agreed to this request, on 20 February 2017 they issued a notice to complete the contract for sale of the Gungahlin Property.
By letter dated 20 February 2017 Kan Kwai, Seung and Sarah were informed by their mortgage broker that Suncorp had approved a loan in the sum of $768,000 to be secured by way of mortgage over the Gungahlin Property and that once the sale had settled and the kitchen had been added to the townhouse they could reapply for a loan of up to 70% of the value of the Gungahlin Property.
On 21 February 2017 Sarah sent an email to Ashlea Archer of Badgery & Rafferty which included:
According to our loan process, the loan has been pre-approved, but it is only 60% of the purchasing price due to condition of the residential property. The financier has been reported from the valuer that the residential property is the condition of unable to live. The financier is happy to increase LVR to 70% once we renovate the house as condition to live.
Last Friday, Kan and me met the owner and explained about the situation now. The owner has agreed and accepted with settlement by 90% purchase price now and they get the 10% payment once completion of renovation and bank approval within next two months after the settlement.
I am expecting to get the formal letter from the seller’s solicitor about this agreement from the seller. Once you receive the letter from her, I will issue the bank cheque for stamp duty immediately.
Ultimately the vendors did not agree to vary the contract for sale by deferring payment of 10% of the purchase price but did agree, by way of deed of variation dated 7 March 2017, among other things to extend the date for settlement of the contract for sale to 8 March 2017 and to withdraw the notice to complete.
Sarah, Kan Kwai and Seung open bank accounts
In the meantime, on 23 February 2017, Kan Kwai, Seung and Sarah attended a branch of Westpac Banking Corporation and opened account no 83-6873 in their joint names (Joint Account). Kan Kwai understood that the purpose of the account was to manage the income and expenses of the partnership which she, Seung and Sarah had formed (see [63]-[73] below). On 23 February 2017 Kan Kwai paid $30,905 and $200 into the Joint Account and recalls that Sarah also paid $30,905 into the Joint Account. Later that day, Kan Kwai arranged for $68,810 to be withdrawn from that account in payment of the stamp duty on the Gungahlin Property.
Sarah said that she understood the purpose of the Joint Account was to pay stamp duty. She said that Mrs Jang had already given her the money for that purpose so she paid $30,905 in cash into the Joint Account.
On 28 February 2017 Kan Kwai, Seung and Sarah returned to Westpac and opened a business account, account no 59-1055, in their joint names (Business Account). Kan Kwai understood that they were required to open this second account because the Joint Account was not linked to the partnership.
A statement for the Joint Account for the period from 23 August 2017 to 23 February 2018 showed that Sarah deposited the sum of $1,821 into it at approximately monthly intervals on 9 October 2017, 8 November 2017, 11 December 2017 and 8 January 2018 and the sum of $1,810 on 9 February 2018.
Kan Kwai, Seung and Sarah form a partnership
Kan Kwai recalls that at the time of exchange of contracts for the Gungahlin Property she, Seung, Sarah and Kyle were informed by the vendors’ solicitor, Pierre Johannensen, that the price included GST because of the commercial component of the property i.e. the restaurant premises. Based on her experience as an accountant Kan Kwai knew that they could claim back the GST but they would need to be registered for GST to do so which, in turn, required an Australian Business Number (ABN).
After meeting with Mr Johannensen, Sarah, Kyle, Seung and Kan Kwai returned to Kan Kwai and Seung’s home and discussed claiming back the GST. Kan Kwai thought that as they were planning to operate a restaurant together it made sense to form a partnership. She recalls saying words to the following effect:
In order to claim the GST, we need to form a partnership. We have already signed the contract in the three of our names, so a partnership is the best option, rather than company. The partnership is also entitled to CGT concession when we sell the property in the future.
Kan Kwai recalls that Sarah and Seung agreed to form a partnership and that she agreed to act as the partnership’s accountant. Sarah said that she never agreed to form and register a partnership and she never authorised Kan Kwai or Seung to do so.
As was her practice, before undertaking any work, Kan Kwai prepared an authority form authorising her to form the partnership and to lodge tax returns on its behalf for signature by Sarah, Seung and herself (Authority Form), which they each signed at Kan Kwai’s house on 18 December 2016. Kan Kwai recalls that was the date on which they signed because it was the same day that Kyle emailed Sarah’s contact details to her.
Kan Kwai applied for an ABN for the partnership. On 6 March she informed Mr Badgery that she, Sarah and Seung had obtained an ABN which was effective as of 10 December 2016.
Kan Kwai prepared quarterly activity statements for the partnership which she recalls she, Seung and Sarah signed at the restaurant. This was easily done because they saw each other there most days. Although Kan Kwai was authorised to lodge the activity statements on behalf of the partnership she had all three partners sign them because it was good practice to do so and provided additional protection for her.
Kan Kwai also prepared tax returns for the partnership for the financial years ended 30 June 2017 and 30 June 2018. As best as Kan Kwai can recall she and Sarah also signed these documents at the restaurant. Again, although she was authorised to sign the tax returns on behalf of the partnership, she arranged for all three partners to sign them because it is good practice and added protection for her. After they were signed, Kan Kwai lodged the tax returns for the partnership on the Australian Taxation Office’s portal.
After commencement of this proceeding, Kan Kwai prepared the tax return for the partnership for the financial year ended 30 June 2019. Sarah refused to sign that tax return and disavowed any knowledge of the partnership’s existence. Sarah said that Kan Kwai never told her about the partnership.
Sarah also said that she did not sign the Authority Form, the partnership tax returns for the financial years ended 30 June 2017 and 30 June 2018 or the activity statement for the period ended 31 March 2017.
Kan Kwai retained the original Authority Form, quarterly statements and tax returns for the years ended 30 June 2017 and 30 June 2018 until a date in 2019 when Sarah asked her to provide those documents to her. Sarah told Kan Kwai that her solicitor needed all of the original signed documents containing her signature relating to the partnership. Although Kan Kwai subsequently asked Sarah to return the original documents she had provided to her, that did not occur. Instead, at some point in 2019, Sarah provided copies of the documents to Seung.
Although I found Sarah’s evidence to be somewhat disingenuous, and despite the volume of evidence led, the questions of the process by which the partnership was formed, whether Sarah was aware of it and the execution of documents by Sarah in relation to it are not issues which I need to resolve. Ultimately they were not relevant to the issues which arose for resolution.
A shortfall in funds
Shortly prior to 8 March 2017, Sarah and Kan Kwai had a conversation to the following effect:
Sarah:I don’t have enough money to settle because the bank is not loaning us enough money. I have borrowed money from Kyle’s mother but I am still short. Can I borrow money from you to fund that balance of my share?
Kan Kwai:How much do you need?
Sarah:I only have $105,000, so I’ll need to borrow the rest from you.
After speaking with Seung, Kan Kwai informed Sarah that they were willing to fund the balance provided she paid them back with 10% interest.
Sarah denies that the conversation set out in the preceding paragraph occurred. She says that she never agreed with Kan Kwai that she and her husband would fund the balance. Rather Sarah said that about one week before settlement was scheduled to take place Kan Kwai and she had a conversation to the following effect:
Kan Kwai:I don’t have enough money and I have to borrow money from someone.
Sarah:We don’t have enough money either. What do you want me to do?
Kan Kwai:We have to make a settlement so do you want me to borrow some money from someone?
Sarah:Can you do for us?
Kan Kwai:I can ask them and I'll let you know.
Sarah said that about one day later Kan Kwai confirmed that “they can do for you but you need to pay 10% interest”. They then discussed how the money would be repaid and Sarah said “once we do the renovations the bank will advance us the money so that’s when we pay it back”.
A loan agreement dated 7 March 2017 (Loan Agreement) between Sarah as borrower and Kan Kwai as lender was in evidence. It records that Sarah agrees to repay the amount of $106,580.35 comprising a loan amount of $88,816.96 and interest of $17,763.39 calculated at an annual rate of 10%. The term of the loan was two years and the security was described as (as written):
Borrower agreed to assigns to the lender 6.94% rights title and interest in and to the property of 51 & 51a Strayleaf Crescent Gungahlin ACT 2912
Contrary to the evidence set out at [75] above, Sarah accepted that she had loaned money from Kan Kwai and that she paid interest on the funds she had loaned but said that the Loan Agreement was not contemporaneous and had been presented to her by Kan Kwai at a time after the funds had been advanced and after she became a bankrupt. Sarah could not remember the exact date on which she signed the document but recalled that the weather was cold and that at the time of signing she did not meet the person whose signature appears as witness. She recalled that his name and signature appeared at the bottom of the document and that Kan Kwai had already signed the document.
In cross-examination Kan Kwai accepted that she did not respond in her evidence in chief to the assertion by Sarah that the Loan Agreement was entered into at a later date than it bears but said that she had been busy and stressed at the time of preparing her evidence and did not respond to everything. Kan Kwai said that the fact that she did not respond did not mean that what Sarah asserted was correct. She disagreed with Sarah’s version of events.
Despite the initial evidence given by Sarah, there was no dispute that Kan Kwai had loaned Sarah the sum of $88,816.96 at the time of settlement of the purchase of the Gungahlin Property at an interest rate of 10% per annum because Sarah did not have sufficient funds to meet her half share of the purchase price. The only dispute that arose was in relation to the date of execution of the Loan Agreement. Ultimately the acceptance of either Sarah’s evidence or Kan Kwai’s denial given in cross-examination may go to credit. But, given that the issue of timing of execution of the Loan Agreement does not arise for determination, it is not necessary for me to make a finding and I do not intend to do so.
Settlement of the purchase of the Gungahlin Property
On or about 7 March 2017 two bank cheques were provided to Mr Badgery for settlement of the sale of the Gungahlin Property: one from Westpac for $313,233.92; and one from the Australia and New Zealand Banking Group Limited (ANZ) for $105,000. The evidence before me establishes that the former cheque came from funds in an account held by Kan Kwai with Westpac and that the latter was provided by Sarah.
On 8 March 2017 the purchase of the Gungahlin Property settled. The settlement sheet for the Gungahlin Property shows that the amount due on settlement after deduction of the deposit and adjustments was $1,185,036.92. A spreadsheet prepared by Kan Kwai at about the time of settlement showing her, Seung’s and Sarah’s respective contributions to the purchase price of the Gungahlin Property provides as follows (as written):
On 29 March 2017 the transfer for the Gungahlin Property, nominating as transferees Kan Kwai and Seung as to 25% each and Sarah as to 50% as tenants in common, was registered. The Gungahlin Property is the subject of a mortgage granted by Kan Kwai, Seung and Sarah in favour of Suncorp dated 24 February 2017 which was also registered on 29 March 2017.
According to Kan Kwai, she was never informed that Sarah was purchasing the Gungahlin Property on behalf of Mrs Jang. All of Kan Kwai’s interactions with Sarah led her to believe that they were each purchasing the Gungahlin Property in their own right, with the intention that they would operate a restaurant from it.
Sarah denies that she ever told Kan Kwai that she would hold a 50% share in the Gungahlin Property and maintains that she told Kan Kwai and Seung that Mrs Jang was purchasing the property and that she was using Sarah’s name.
Mrs Jang provides funds to Sarah
In her April 2019 Affidavit Mrs Jang gave the following evidence about funds that she claimed she gave to Sarah, on her understanding, for the purchase of the Gungahlin Property:
(1)in January 2017 she gave $65,000, $20,000 and $25,000 to Sarah. She understood that the sum of $65,000 was to be paid by Sarah to Kan Kwai for the deposit. That latter evidence is contrary to the objective evidence which shows that two payments of $30,000 and $34,000 were made to Kan Kwai in January 2017;
(2)on 20 February 2017 she gave $30,000 to Sarah;
(3)on 23 February 2017 she deposited $40,000 into Sarah’s bank account;
(4)in late February 2017 she gave Sarah $75,000 in cash in two amounts of $40,000 and $35,000;
(5)on or about 6 March 2017 she deposited $10,000 into Sarah’s bank account and she gave her daughter $10,000 for her to transfer to Sarah’s account; and
(6)on 7 March 2017 she gave $15,000 in cash to Sarah and later deposited $10,000 into Sarah’s bank account.
Yun-Jong recalls that in early 2017 Mrs Jang gave her some money and said to her words to the effect of “this is for the property. Make sure you give to [Sarah]”. Yun-Jong says that on or about 20 February 2017 she transferred $30,000 to Sarah in four separate transfers of $5,000, $5,000, $10,000 and $10,000; and on or about 6 March 2017 she transferred $10,000 to Sarah.
Sarah recalls that on a number of occasions Mrs Jang gave her money to pay for the Gungahlin Property but cannot recall the exact amounts or dates on which the money was provided. However, having refreshed her memory from the April 2019 Affidavit, she said that the amounts referred to there (see [85] above) appear to her to be the amounts of money given to her by Mrs Jang to purchase Mrs Jang’s half interest in the Gungahlin Property which she used for that purpose.
Mrs Jang’s borrowings
According to Mrs Jang she borrowed $225,000 between January and March 2017 for the purchase of the Gungahlin Property and gave those moneys to Sarah. This included moneys borrowed from her friends Young Ja Lee, Hak Boon Choi Doo and Chun Soon Oh. Mrs Jang and these women were members of a “Kye”, a private Korean rotating savings and credit association used by members of the Korean community in Australia.
Each of Young Ja Lee, Mrs Doo and Mrs Oh gave evidence about the circumstances in which they loaned money to Mrs Jang in January 2017, the effect of which was as follows:
(1)Mrs Jang, Young Ja Lee, Mrs Doo and Mrs Oh were members of a Kye which commenced in August 2016;
(2)there was a Kye meeting on the first Thursday of each month;
(3)at the January 2017 Kye meeting or in early January Mrs Jang had a conversation with each of Young Ja Lee, Mrs Doo and Mrs Oh in which she informed each of them that she needed to borrow money;
(4)Young Ja Lee and Mrs Jang had a conversation to the following effect:
Mrs Jang:I am buying a property in ACT. I urgently need money to settle. Do you have about $50,000 to lend me?
Young Ja Lee: That is a big money. Make sure you will repay me
Mrs Jang: I am getting a loan later. I will repay you.
(5)Mrs Doo and Mrs Jang had a conversation to the following effect:
Mrs Jang:I urgently need money to buy a property in ACT. Can I borrow $30,000 from you?
Mrs Doo:I have $30,000, but that is my son’s money I am keeping. That money must be repaid to me for sure if I lend you.
Mrs Jang:No worries. I will repay if my loan gets approved later. I will try to repay you in about 6 months.
(6)Mrs Oh and Mrs Jang had a conversation to the following effect:
Mrs Jang: I need to borrow some money. I am short about $20,000.
Mrs Oh:O.K No problem. I will give when you come to visit me next time.
Mrs Jang: Thank you. I will see you in next month.
(7)in or about January 2017 Young Ja Lee loaned $50,000 in cash to Mrs Jang and in or about February 2017 Mrs Doo loaned $30,000 in cash to Mrs Jang and Mrs Oh loaned $20,000 in cash to Mrs Jang;
(8)in or about October 2017 Mrs Jang repaid the loans referred to in the preceding sub paragraph in cash with interest; and
(9)Mrs Oh said that Mrs Jang made a handwritten note as a loan document which she kept until the moneys she loaned Mrs Jang were repaid at which time she tore it up in front of Mrs Jang.
The Trustees served subpoenas on each of Young Ja Lee, Mrs Doo and Mrs Oh. Those subpoenas were not in evidence. But the circumstances which led to the service of the subpoenas were agreed between Mrs Jang and the Trustees. They were photographs of certain documents taken on 8 and/or 9 March 2021 and provided to Mrs Jang’s husband; those documents were then translated on behalf of Mrs Jang by a Korean interpreter; and they were then served on the Trustees on 12 March 2021 by way of ongoing discovery. At the time no formal affidavit of discovery was provided. Thereafter subpoenas were served on each of Young Ja Lee, Mrs Doo and Mrs Oh seeking production of the originals of the documents provided to the Trustees on 12 March 2021. In answer to those subpoenas:
(1)Young Ja Lee produced a handwritten note in the Korean language dated 28 January 2017 (Lee Note). She said that on 28 January 2017, at the time she loaned the moneys to Mrs Jang, she made the Lee Note in Korean in a notebook she maintained at the time. Young Ja Lee did not refer to or include the Lee Note in her evidence in chief. The Lee Note and an English translation of it appear respectively as follows:
Lee Note
English translations of Lee Note
28 January 2017
Soonja hyungim borrowed $50,000, which she requested because she has bought a building in Canberra but there was going to be a delay in the loan.
She promised to repay it the moment she received the loan.
*T/N: hyungnim is a term used to refer to an older male or husband’s older brother’s wife.
(2)Mrs Doo produced a handwritten note which she said she wrote out on 23 February 2017 as a formal receipt when Mrs Jang “asked to borrow some money” and that she made “the record as evidence” (Doo Note). The Doo Note was not referred to or included in Mrs Doo’s evidence in chief. The Doo Note and an English translation of it appear respectively as follows:
Doo Note
English translation of Doo Note
I declare that Hyungnim from Canberra requested to borrow money to buy a building, and because we were close and I could not refuse, I loaned her $30,000 on 23 February 2017, to be repaid within three months.
Name: Hakbum Choi [T/N: handwriting illegible]
/signature affixed/
(3)Mrs Oh produced a notebook in which she writes prayers each day and important notes that she needs to remember and identified a particular page from it written in the Korean language (Oh Note). The Oh Note and an English translation of it appear respectively as follows:
Oh Note
English translation of Oh Note
Mrs Oh said that she wrote the bottom part of the Oh Note on 15 February 2017 when she gave the money to Mrs Jang. However, the Oh Note was not referred to or included in Mrs Oh’s evidence in chief.
Young Ja Lee’s notebook referred to at [90(1)] above only included one page with writing on it, namely the page containing the Lee Note which recorded the loan to Mrs Jang. Despite that Young Ja Lee maintained that she made the Lee Note when she loaned the money and that she found the diary and brought it with her to Court having learnt that it was required a few days prior. Young Ja Lee said that she had moved two or three months ago to her daughter’s house, having lived at her previous address for over 30 years. She looked for the notebook at her new residence. It was not easy to find. First she said she found the notebook containing the Lee Note in a drawer, then she said she found it in a bag and finally she said that she found it in a black handbag which was in a drawer.
Mrs Doo said that she wrote out the Doo Note before 6 June 2019, which is the date on which she swore her affidavit for the purpose of this proceeding. The Doo Note was written on the back of a page taken from a calendar which Mrs Doo used as memo paper. The reverse of the Doo Note is as follows:
In cross-examination Mrs Doo accepted that the reverse of the Doo Note included under the numeral “12” the Korean words for “Lunar New Year day” and that in 2021 the Lunar New Year day was celebrated on Friday, 12 February 2021. Despite that evidence, Mrs Doo did not accept that she wrote the Doo Note after 12 February 2021. She said she uses calendars “which have already passed” as a notebook and maintained that she made the Doo Note in 2017. I reject Mrs Doo’s evidence in that regard. Accepting that her practice was to use old calendars as note paper, it would not be possible for her to have created the Doo Note in 2017. It appeared on the reverse of a page which she acknowledged came from a 2021 calendar which, self-evidently, could not have been an old calendar in 2017.
Mrs Doo did not accept that she had been asked to fabricate the Doo Note in about March 2021. She tried to explain why the Doo Note appeared on the reverse of a page from a 2021 calendar. She said she transferred it from a thick book to the particular piece of paper and that her children came and went through the book. Mrs Doo also said that she was told to give the note and so she transferred it to the reverse of the calendar page. Because the notebook was very thick she got rid of it at the end of the year. She said that “at the end of the year I get rid of all the notes as the era ends and I use the calendars and make a note”.
I do not accept Mrs Doo’s explanation. If the Doo Note was originally included in a notebook, that notebook should have been produced to the Court in answer to the subpoena. If, as Mrs Doo said, the notebook was destroyed, given her evidence that she was “told to give the note” (presumably in answer to the subpoena) that must have occurred after the commencement of this proceeding. Indeed, given Mrs Doo’s practice of using old calendars as note paper, the Doo Note, which was written on the back of a February 2021 calendar, could not have been written before February 2021. These matters, taken together with the proximity of February 2021 to the hearing which commenced on 12 April 2021, do not reflect well on Mrs Doo as a witness and cast doubt on her evidence. I cannot accept the Doo Note as contemporaneous evidence of a loan to Mrs Jang for the purpose of buying “a building”, nor her explanation that it was not fabricated. Rather the irresistible inference in light of Mrs Doo’s evidence as a whole is that the Doo Note was not transcribed from a notebook but was created for the first time by Mrs Doo on a date after February 2021.
In cross-examination Mrs Oh first said that she wrote the Oh Note to remind herself of the transaction with Mrs Jang after she tore up the handwritten note referred to at [90(3)] above but accepted that the Oh Note existed at the time she swore her affidavit in June 2019 for the purpose of this proceeding, which she understood to be an important document. But Mrs Oh said that it was a personal note and she was not asked at the time she prepared her affidavit whether she had a personal note. Hence she only referred to Mrs Jang’s note in her affidavit. Given Mrs Oh’s evidence in her affidavit about Mrs Jang’s note, which she said she retained until the loan was repaid, I find it difficult to accept that, had the Oh Note existed at the time Mrs Oh prepared her affidavit, she would not have referred to it. Accordingly, and given the difficulties with reconciling some of Mrs Oh’s evidence given in cross-examination (see [211] below), I give little weight to Mrs Oh’s evidence that she did not refer to the Oh Note because it was a personal note and no one asked her about it. Rather I would infer that the Oh Note was not a contemporaneous record and was created at a time after Mrs Oh prepared her affidavit.
Mrs Jang kept a diary entry of the money she borrowed from her friends (Jang Note). An English translation of the Jang Note appears as follows:
In cross-examination Mrs Jang explained that the “the top 3” lines of the Jang Note recorded the “money she gave” which I understand to be loans she made to the persons named, and “below is the money that [she] borrowed”. She also said that the last two lines in the Jang Note referring to the interest for June and July as “not paid” was interest that “she wrote down” that “she could not pay to the bank”. Notwithstanding the reference to the months of June and July and her description of the Jang Note as a record of her borrowings, Mrs Jang said that she created the Jang Note when she gave the money to Sarah.
According to Mrs Jang, as she had to pay a high interest rate on the money she borrowed from her friends she approached Secure Funding to obtain a loan. A loan agreement schedule dated 4 October 2017 was in evidence. It provided for a loan by Secure Funding as lender to Mrs Jang and Yun-Jong as borrowers in an amount of $400,000 to be secured by way of a mortgage over the Burradoo Property. Of the $400,000 loaned by Secure Funding to Mrs Jang and Yun-Jong, $200,000 was applied towards the discharge of a loan from the National Australia Bank which was secured over the Burradoo Property.
Rental of the townhouse at the Gungahlin Property
In about May 2017 Sarah informed Kan Kwai that she and Kyle wished to rent the townhouse at the Gungahlin Property and proposed a rental of $600 per week. Kan Kwai accepted the offer and asked Sarah to pay the rental into the Business Account from which she informed Sarah the mortgage repayments would be direct debited.
Sarah and Kyle moved into the townhouse in May 2017 but only commenced paying rent on 10 July 2017, paying $2,400 per month rather than $600 per week.
Mrs Jang lodges the Caveat
In August 2017 Mrs Jang sought advice from a lawyer, Jacob Jang, about asset protection. Jacob Jang lodged the Caveat on the title of the Gungahlin Property on Mrs Jang’s behalf. Mrs Jang met with Jacob Jang twice. It was on the second occasion that she signed the form for lodgement of the Caveat. According to Mrs Jang, apart from telling her where to sign the form, Jacob Jang did not explain it to her and she relied on him to complete it correctly. She said that at the time she signed the Caveat, the words describing the nature of the interest she claimed were not translated to her. At the time Mrs Jang did not live in the ACT and Jacob Jang informed her that he would post the Caveat to Sarah to be lodged.
As set out above, Mrs Jang also relies on the evidence of three members of her Kye, Yong Ja Lee, Mrs Doo and Mrs Oh, as corroborative of her claim that Sarah holds her interest in the Gungahlin Property on resulting trust for her. Their evidence is set out at [90(1)] and [91] (Young Ja Lee), [90(2)] and [92]-[94] (Mrs Doo) and [90(3)] and [96] (Mrs Oh) above. In summary I found their evidence to be of limited use. It was at best peripheral and capable of providing only circumstantial support for Mrs Jang’s case. But, in any event it was significantly undermined by the evidence given by each of Young Ja Lee, Mrs Doo and Mrs Oh about the allegedly corroborative notes each of them conveniently produced initially in March 2021 and subsequently in answer to the subpoenas served by the Trustees.
As set out at [90]-[96] above, in answer to subpoenas served on them Young Ja Lee, Mrs Doo and Mrs Oh each produced the originals of documents, copies of which were provided by way of ongoing discovery in the days leading up to the commencement of the hearing to the Trustees. Those documents were the Lee Note, the Doo Note and the Oh Note.
The Lee Note, Doo Note and Oh Note were said to be corroborative of the evidence given by each of Young Ja Lee, Mrs Doo and Mrs Oh. However, neither Young Ja Lee, Mrs Doo or Mrs Oh referred to the existence of, in the case of Young Ja Lee, the Lee Note, in the case of Mrs Doo, the Doo Note and, in the case of Mrs Oh, the Oh Note in their respective affidavits. It is instructive to set out a summary of the evidence given by each of Young Ja Lee, Mrs Doo and Mrs Oh in relation to the production of their respective notes which they said recorded the loans made by them to Mrs Jang.
Young Ja Lee said that she recorded her loan to Mrs Jang in a notebook on 28 January 2017, the relevant page of which is the Lee Note. She said that she had moved home within the two or three months prior to the trial and that she had lived in her prior home for approximately 30 years. She said that she found the notebook containing the Lee Note “a few days ago”. That is, a few days before giving evidence on 14 April 2021. However, a photograph of the Lee Note had been taken on 8 or 9 March 2021, some five weeks prior. The objective timeline of first provision of a copy of the Lee Note to the Trustees casts considerable doubt on Young Ja Lee’s evidence as to the timing of the location of the Lee Note.
Added to that was Young Ja Lee’s evolving evidence in relation to where she located the notebook which contained the Lee Note. First she said she found it in a drawer in her new home, then she said she found it in a handbag and, finally, she said she found it in a handbag which was in a drawer. She managed to do so days before giving evidence having moved only a few months earlier from the home she had lived in for 30 years where, as must have been the case, the notebook containing the Lee Note had been stored.
Given the nature of Young Ja Lee’s evidence about the Lee Note, I would not give any weight to it or rely on it as corroborative either of Young Ja Lee’s evidence or of the assertion that Young Ja Lee loaned moneys to Mrs Jang.
Mrs Doo’s evidence was that she wrote the Doo Note on 23 February 2017 and that it was in existence on 6 June 2019 when she swore her affidavit. But that evidence was proved to be wrong. Mrs Doo admitted that the Doo Note was written on the back of a portion of a calendar which marked the Lunar New Year day as Friday, 12 February 2021. When it was pointed out to her that the Doo Note could not have possibly been created in February 2017 Mrs Doo said she transferred the Doo Note from a thick diary to the back of the calendar page. She then apparently disposed of the diary.
I do not accept Mrs Doo’s evidence about the way in which the Doo Note was created. It cannot be relied on as an accurate record of what Mrs Doo says was originally recorded in her notebook or as corroborative of her evidence that she loaned money to Mrs Jang. The irresistible inference is that the Doo Note was fabricated for the purposes of this proceeding. This of course serves to undermine not only the Doo Note itself but the whole of Mrs Doo’s evidence.
In her affidavit Mrs Oh said that Mrs Jang made a handwritten note recording her loan which she tore up upon being repaid. She also said that she wrote the Oh Note in her diary on 15 February 2017. However, in cross-examination Mrs Oh said that “because I got repaid, I tore up the paper, and afterwards for my memory I wrote it down in my diary”. But it seems somewhat counterintuitive to re-create a note of a loan once it has been repaid and certainly there would be no need to create the Oh Note prior to repayment because, on her evidence, she had the note provided to her by Mrs Jang. In any event, when counsel for the Trustees pointed out the inconsistency in her evidence Mrs Oh gave the following evidence: “this note was made at the time I lent the money, but in October, later, when I got paid, that’s when I got it – I – I tore it up”. That evidence is difficult to understand or indeed to reconcile with Mrs Oh’s earlier evidence. If Mrs Oh tore up the Oh Note, a copy of it could not have been provided to the Trustees on 11 March 2021 and the original could not have been produced in answer to the subpoena.
Mrs Oh’s changing evidence about the genesis of the Oh Note undermines the reliability of the Oh Note and her evidence as a whole. It is impossible to know when the Oh Note was created. The effect of her changing story is to lead me to conclude that the Oh Note was created well after February 2017, a conclusion that is reinforced by the fact that Mrs Oh did not refer to it in her affidavit which was sworn in June 2019. I do not accept Mrs Oh’s explanation that the reason why she did not produce the Oh Note at that time was because it was a personal record.
In any event, as the Trustees submitted, Young Ja Lee’s, Mrs Doo’s and Mrs Oh’s evidence was only peripheral and at best capable of providing only circumstantial support for Mrs Jang’s case. That was, until they produced their respective notes or receipts in relation to moneys provided to Mrs Jang. However, in light of the matters set out above I place no weight on the Lee Note, the Doo Note or the Oh Note. The views I have come to about those notes considerably undermines the evidence otherwise given by Yong Ja Lee, Mrs Doo and Mrs Oh but, in any event, their evidence does not serve to establish the alleged agreement between Mrs Jang and Sarah. At its highest, if accepted, it establishes only that these three woman loaned moneys to Mrs Jang on the basis that it would later be repaid.
In light of the sparse evidence given by Mrs Jang and Sarah about the circumstances in which the alleged agreement was struck and its terms or, put in the way in which Mrs Jang contended, the intention to create an express trust, and the lack of any contemporaneous documents in support of the alleged agreement or intention or other reliable corroborative evidence, Mrs Jang has failed to establish her claim. I am not satisfied that there was any such agreement as alleged or intention to create a trust such that Sarah holds her half share in the Gungahlin Property on a resulting trust in Mrs Jang’s favour.
I turn then to the pleaded case. To the extent it has not been abandoned, for the same reasons Mrs Jang has not established it. The only additional observation I would make is that there is no evidence relied on by Mrs Jang to support the Agreement as pleaded. Mrs Jang gives no evidence of any discussion with Kan Kwai or of any such alleged agreement. Kan Kwai was not cross-examined about the Agreement and the effect of her evidence in chief was that she was never told prior to entering into the contract for sale of the Gungahlin Property that Sarah was purchasing the property on behalf of Mrs Jang. Indeed, in cross-examination it was put to Kan Kwai that she knew nothing of the financial arrangements between Sarah and Mrs Jang, a proposition which she accepted.
CONCLUSION
Mrs Jang has failed to make out her case and to establish that Sarah holds her 50% interest in the Gungahlin Property on a resulting trust for her benefit. It follows that Mrs Jang’s amended originating application and amended statement of claim should be dismissed.
As Mrs Jang has been unsuccessful she should pay the Trustees’ costs of the proceeding. That is the order that I intend to make. If any party wishes to seek a variation of that order they may do so by filing an application together with submissions, not exceeding three pages in length, within 14 days of the date of publication of these reasons. If such an application and accompanying submissions are filed by one of the parties then the other party may file any submissions in response, not exceeding three pages in length, within 14 days thereafter. Unless a party requests an oral hearing, any question of the variation of the proposed costs order will be dealt with on the papers.
I will make orders accordingly.
I certify that the preceding two hundred and eighteen (218) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate:
Dated: 16 February 2022
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