Le v Pham

[2022] ACAT 25

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

LE & ANOR v PHAM & ANOR [2022] ACAT 25

XD 1231/2019

Catchwords:               CIVIL DISPUTE – sale and acquisition of a business – where liability between vendor and purchaser subject of previous litigation and determination – where monies for the purchase of the business comprised of a principal sum and supplementary sum under a business agreement – where supplementary sum in the form of a third-party loan – where apportionment of purchase sum now in dispute – where particulars of business arrangement disputed – implied business agreement –implied by conduct – Anshun estoppel and res judicata raised to defend claim – whether cause of action in this matter distinguishable from the liability litigation – implied business arrangement found – Tribunal orders apportionment of purchase sum at agreed rates, adjusted for forgiveness of the third-party loan

Cases cited:Cervo v Kingsley’s Pty Ltd [2018] ACTSC 179

Le v Nguyen [2016] ACAT 74
Le v Nguyen [2017] ACAT 55

Tribunal:  Senior Member K Katavic

Date of Orders:  28 March 2022

Date of Reasons for Decision:      28 March 2022

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1231/2019

BETWEEN:

THI KIM THOA LE

First Applicant

CHINH NGUYEN

Second Applicant

AND:

HANNAH PHAN

FORMERLY KNOWN AS TAN DUY THI LE

First Respondent

MINH PHAN

Second Respondent

TRIBUNAL:Senior Member K Katavic

DATE:28 March 2022

ORDER

The Tribunal orders that:

1.   The first respondent is to pay the sum of $1,146.40 to the first applicant.

2.   The respondents are to pay the second applicant the sum of $4,884.86.

………………………………..

Senior Member K Katavic

REASONS FOR DECISION

Introduction

1.The parties in this matter intended to go into business together. They intended to purchase a nail salon and operate the business under a company, Mimosa Beauty & Nails Salon Pty Ltd (the Company).

2.The expected arrangement under that company was that Ms Le (the first applicant) and Ms Phan (the first respondent)[1] were the directors and Mr Nguyen (the second applicant), Ms Le and Le Consultants Pty Ltd (a company for which Ms Phan was the sole director and shareholder) were its shareholders. This was intended to give all of the interested parties an interest in the business.

[1] Ms Phan was formerly known as Tan Duy Thi Le

3.Mr Phan (the second respondent) had some dealings with the solicitor engaged to facilitate the purchase and purported to arrange a loan from Mr Nguyen for Ms Phan’s portion of the deposit. Mr Nguyen paid a total deposit of $75,000 to purchase the business.

4.The salon operated between January 2015 and March 2015 without the purchase being completed. Issues arising in relation to the purchase were the subject of earlier proceedings in the tribunal and an appeal.[2] In those earlier proceedings a finding was made that Ms Le was the sole purchaser of the business and the business was not purchased in the name of Mimosa Beauty & Nails Salon Pty Ltd. This was affirmed on appeal. The Appeal Tribunal also held that Mr Nguyen did not pay the deposit of $75,000 on behalf of the Company despite what he thought he was doing as Ms Le was the party to the agreement.

[2] Le v Nguyen [2016] ACAT 74; Le v Nguyen [2017] ACAT 55

5.As a consequence of the appeal, Ms Le was ordered to pay an amount of damages to the vendor and for the deposit of $75,000 to be returned to Ms Le less the amount she was ordered to pay the vendor. Ms Le now seeks to recover a portion of this amount from the respondents in these proceedings.

6.The applicants say the deposit comprised a contribution of $45,000 by them and $30,000 by the respondents which was in fact a loan to them by Mr Nguyen. This loan also forms part of their claim in these proceedings together with interest.

The applicants’ claim and the respondents’ position

7.The applicant’s claim is complicated by the relief sought.

8.The Appeal Tribunal ordered, inter alia, that the deposit of $75,000 be repaid to Ms Le, but that the vendor was entitled to damages for breach of the agreement with Ms Le being ordered to pay $29,120 to the vendor. The amount of damages was to be deducted from the deposit and paid to the vendor and the balance of $45,880 from the deposit being paid to Ms Le.

9.The applicants consider the respondents are liable for a portion of what Ms Le was ordered to pay to the vendor on the basis that, although Ms Le was the only signatory to the purchase agreement, every other aspect of the venture was shared between the parties based on a 50/50 agreement despite the shareholdings suggesting the applicants had a 60% interest and the respondents a 40% interest.

10.The applicants say they applied $30,000 of the amount left out of the refund of the deposit to the loan they say the respondents had with Mr Nguyen. They say this discharged the loan, but left interest and other penalties outstanding. They claim these amounts as set out below.

11.The respondents say these proceedings fall foul of the principles of Anshun Estoppel and res judicata on the basis that the respondents:

(a)were not parties to the earlier proceedings in the tribunal;

(b)had no say in the outcome of those proceedings; and

(c)were now being asked to effectively contribute to the amount Ms Le was ordered to pay.

12.They say the conclusions reached by the Appeal Tribunal mean the first applicant cannot now claim against these respondents because the issue of who the purchaser was has been well considered and ventilated. The respondents say if the purchaser was different then it should have, and could have been raised in the earlier proceedings with the respondents and the Company being joined as third parties. The respondents further say that the issue of any shared liability was not raised and the conclusions reached by the Appeal Tribunal[3] are determinative of the relationship.

[3] Le v Nguyen [2017] ACAT 55 at [59] to [69]

13.In relation to the loan, the respondents say that the loan never eventuated or became operable because it was subject to the business being purchased under the intended corporate arrangement. As it was not purchased in that way and Ms Le was the sole purchaser, there was no loan. The joint purchase was abandoned and no deposit was paid on their behalf by Mr Nguyen.

14.The parties were legally represented at the hearing. Ms Le and Mr Nguyen both gave evidence at the hearing and were cross-examined. In addition, the applicants relied upon a series of documents numbered 1-23.[4]

[4] Exhibits A1-A23

15.The respondents did not call any witnesses. Despite filing a witness statement of Mr Phan, it was not relied upon and not tendered. Instead, the respondents relied upon an email from Minh Phan dated 20 July 2015.[5]

[5] Exhibit R1

16.By the end of the hearing the applicants confirmed their position in relation to relief as follows:

(a)If I found there was no implied agreement as to who the true purchasers were and Ms Le was the sole purchaser (this being the primary limb to the Anshun/res judicata argument) then the loan agreement stood by itself and the respondents were liable to repay it according to its terms and had not done so.

(b)The second applicant is the only party relevant to the claim in relation to the loan and abandoned the excess beyond the Tribunal’s jurisdictional limit and sought interest accordingly.

(c)If I concluded that the arrangement for the purchase of the business was 50/50 between them then the amount of the balance of the deposit returned to them ($45,880) was to be split ($22,940 each) with the respondents’ portion being applied to the loan with the obvious shortfall not being claimed by the second applicant.

(d)What would flow from that is also a claim for interest arising from the terms of the loan agreement and the date on which it was considered to be discharged being 1 August 2017. This comprised a claim of a $520 fee (exhibit A16), $266.25 in interest between 14 January 2015 and 15 April 2015, $3,904.75 in interest between 16 April 2015 and 1 August 2017, and interest on the $520 fee from 16 April 2015 calculated up to date of judgment.

The business arrangement

17.The applicants did not argue that the respondents or the Company were liable to the vendor pursuant to the purchase agreement. They submitted that it was for this Tribunal to characterise the relationship between the parties to these proceedings for the purposes of this claim, not liability to the vendor which was the subject of those earlier proceedings. They submitted it was an implied agreement between them as to the operation of the business and their liability to each other. This implied agreement was said to be based on the conduct of the parties.

18.The applicants relied upon the following in support of the claim that the parties had a 50/50 business arrangement amongst themselves:

(a)The salon was operated jointly through the Company.

(b)The earlier proceedings were commenced by the Company, but later changed to be in Ms Le’s name only.

(c)A bank account for the salon was opened by Ms Le and Ms Phan.

(d)Transactions in that bank account showed equal deductions to Ms Le and Ms Phan.

(e)The bank account shows shared expenses.

19.The applicants submitted that this conduct demonstrated the expenses and profits of the business would be shared equally and if one of the parties incurred costs or damages as a result of the purchase of or the operation of the business that the party incurring those costs would be indemnified by the other parties.

20.Ms Le and Ms Phan clearly had some business relationship. Determining the legal nature if any of that relationship is difficult. The terms of the arrangement as between Ms Le and Ms Phan are not in writing. The terms of the arrangement are said to be oral and implied from the conduct of the parties. Ms Le gave evidence of her understanding of the arrangements however, the Tribunal did not hear evidence from the respondents as to what their understanding was.

21.The respondents relied upon an email from Mr Phan to the applicants dated 20 July 2015.[6] This email does not help the respondents divorce themselves from any relationship with the applicants. In fact, the terms of that email detail some of the arrangement and also the conduct of the parties during their interactions with each other regarding the business. I have emphasised some points which are particularly insightful. It states:

[6] Exhibit R1

Dear anh Chinh and Kim Thoa

I would like the four of us to work as a team to fight against Mr Toan Nguyen to get the money back.

I communicated my thoughts to you all very clearly and had plans for you to consider at the time we were still running the shop. I told you that we need to get hectic with the processes in order for us to get the money back. The way to move forward is to lodge an ACAT application, then lodge a court matter and that is how we can get the money back plus some cash to cover expenses.

Due to recent events, I do not want to meet and discuss with you both for this matter any further because I feel it is a waste of our (yours and mine) time. We need resolutions, we had strategies and agreed on what needed to be done however, the plan is not executed causing me deeply upset and frustrated. I feel it goes no where with all the discussions.

On the day that we met in Darren’s office, we discussed and agreed that you will help me to lo[d]ge Magistrate Court and it has been more than 2 weeks but nothing is done. Chinh, you told me that you thought more about it and would like to take the matter one thing at a time. I’m sorry to let you know that this is defeated the purpose of being hectic to Toan Nguyen in the first place. This will not work and you would drag this matter out even longer with no result except escalating legal fees. I get very frustrated and upset when we set out a plan that get the money back from Toan by we don’t do anything else except discuss and meet and more discussion and more meeting but achieve no result.

To date, my executive decision in the past have saved all of us at least $45,000 because if I had listened to your decision at the time by not return the key at the end of March , we would lose another $15,000 each month since then and it is still counting more losses for that nail shop.

I told you and asked you repeatedly not to ask for the invoices from Darren until the end of the matter but you did not listen to me. You asked for the bill and he sent it to you. We could have ben united on this front and achieve a better outcome however, you asked for it, he gave it to you and not us so I think he treats this as your consultation with him on the day that you were in his office. You will need to take care of this invoice yourself.

Resolutions

Option 1: Contact Darren to lodge with the Magistrate Court on Tuesday 21 July 2015 so we can work together as a team please. I would prefer us to move in this direction!

Option 2: if you choose not provide information to Darren and lodge the matter with the Magistrate Court by Tuesday 21 July 2015, then my original plan is completely useless (what’s the point of being hectic when you deal one thing at a time?). Therefore, you can do it your way but you will also have to take responsibility in your actions. Simply put, you are doing it alone. I can’t be held responsible for something that I believe won’t work. Please note that if I do not see any information that Darren requested back from you by Tuesday 21 July 2015 at 5pm then you have decided to choose this option ie work on your own and take responsibility for it.

Interest repayment:

I’m not a penny pincher in any transactions we are working on in the past present or the future, however, you and Kim Thoa may have taken it for granted. I have bought items for the shop that I never claim back from the tilt. Mind you, Shane did the work at the nail shop, I did my part by doing bookkeeping, tax work for him at this office to repay for the efforts that he helped us. I don’t think a bowl of Pho or lunch will repay it commercially. I don’t see any of you did anything for him in return. You actually costed him more of his time and trades. I still hoping that something may come out of it to proof that you actually trying to help.

Darren is the same, I have provided him with new work, brought in new clients for him directly to get the “favour” and mate’s rate for all of us. I also pushing another five transactions for Darren to make money. Again, I don’t see anyone else in this group helping him. As I mentioned, you are leveraging on my relationships with a lot of people here. I don’t mind that, I want to work as a team.

The matter is simple, with interest repayment, the amount that you broke the agreement with ME was not $520. You wanted to change the figure but I told you it wasn’t important, however, you insisted in doing it right. Well, from my memory, that doesn’t look right so if you can show me that was $520 then yes, we move forward.

I have used my business partner’s services to create a company and ABN for you all very quickly. You have to pay a least $1,200 to $1,500 for each company and another $150 for the ABN but I only ask you for the payment of what I paid the agent which was $880. Out of this figure I have to pay the agent a GST of $80. I have never made a big deal out of it because the amount was petty and not worth being a penny pincher but I find that it is ridiculous when the discussion on this amount should be $850 or $800. All these accusations and bullying on Tan was not appreciated. If the paper work wasn’t found… guys, where would you take it to? It is very disappointed to come to this point.

Final note:

I’m currently very busy as I have to travel interstates and doing work. It is very taxing on me and I’m very tired when the process is skewed. I’m not interested in tit for tat. Just laying out my frustrations and letting you know how we all can move forward as a team or individually. It took me half an hour to write this email at this early hour in the morning. Please make your decisions on the option and act accordingly. I shall wait for your decision on Tuesday. Thanks for the Payments Summaries, we have filled them out and sending them off. Also noticed that no signature was signed as responsibility is shifted to someone else to take the role. Oh well, just had to correct the total as the adding did not add up. Another task that we have to do.

Take care

Minh [errors in original]

22.Mr Phan did not give evidence at the hearing and was not cross-examined as to the contents of this email. I am to consider it based on its express terms. The email provides some insight into the behaviour of the parties and their relationship. It also suggests they had a degree of financial responsibility and obligation to each other. The parties had joint access to the business’ bank account[7] and the account shows transactions involving both Ms Le and Ms Phan.[8] The nominated address for the bank statements is Ms Phan’s address at the time in Florey ACT.[9] The registration of the Australian Business Number for the Company was sent to the same address as well as being nominated as its business address.[10] Both Ms Le and Ms Phan are named as associates of that entity. The tax file number for the Company was also sent to the Florey address.[11]

[7] Exhibit A7

[8] Exhibit A8

[9] Exhibit A8, refer to address for the first respondent on Exhibit A14

[10] Exhibit A6

[11] Exhibit A6

23.On 24 July 2015, Ms Phan resigned as a director of the Company.[12] In her resignation letter she set out her reasons for resigning. They may be summarised as:

(a)The applicants making decisions on behalf of the Company against her will and direction.

(b)The applicants complaining to the ACT Law Society about Mr Carden without her knowledge and consent.

(c)The applicants departing from what had been agreed and decided in relation to the dispute ‘on hand’.

(d)Multiple meetings with the applicants regarding plans that the applicants did not follow.

[12] Exhibit A14

24.In the absence of Ms Phan giving evidence and being available for cross-examination, I assume her references to the Company mean decisions about the operation of the business and the dispute that arose with the vendor.

25.I am satisfied from the evidence given by Ms Le and the other documents I have referred to, and particularly the email from Mr Phan that a business arrangement existed between the parties. There was some unification between the parties in recovering money from the vendor as a result of the purchase of the business and ensuring no further financial losses for all of the parties. There appears to have been an expectation that any money that might be recovered from the vendor in any legal proceedings would be shared between them. Mr Phan’s position on this changed as set out in the email. He clearly disagreed with the course that had been adopted by Ms Le in pursuing the vendor for those losses. His disagreement with the course that followed does not necessarily mean there is not some separate liability as between Ms Le and Ms Phan.

26.The applicants submitted the arrangement was a 50/50 split. The only support for that is the bank statements and the oral evidence of Ms Le and Mr Nguyen. There are documents which suggest a different split:

(a)The draft Deed of agreement of Mimosa Beauty & Nail Salon Pty Ltd comprising Ms Le: 35%, Ms Phan: 35% and Thu; 30%.[13]

(b)The Loan Agreement comprising the equivalent of 40% to Mr and Ms Phan.[14]

(c)The Company Extract for Mimosa Beauty & Nails Salon Pty Ltd comprising Mr Nguyen: 36%, Ms Le: 24% and Ms Phan’s company Le Consultants Pty Ltd; 40%.[15]

[13] Exhibit A1

[14] Exhibit A2

[15] Exhibit A3

27.The manner in which the parties went about the purchase and business arrangement is messy and unnecessarily complicated. The involvement of the solicitor, Mr Carden was equally unhelpful given he appeared to act for multiple parties in the same transactions and whatever advice he gave, if any, left things in an unsatisfactory state. As best I am able and in light of the documents referred to above, Ms Phan’s interest was to be 40% with the remaining 60% shared between the applicants. Mr Phan had no documented interest other than the Loan Agreement.

Is Ms Le entitled to relief against the respondents?

28.The earlier tribunal proceedings were complicated. It began as a dispute about vouchers for services. The original civil dispute application was commenced on 31 March 2015 in the name of the Company against the vendor.[16] Ms Le was later joined as an applicant.[17] On 10 August 2015, the tribunal ordered Ms Le was the sole applicant as she was the purchaser of the business under the Agreement.[18] The proceedings then became a broader dispute about the purchase of the business and so a new claim brought by Ms Le against the vendor was born. This claim and the tribunal’s subsequent decision was the subject of the appeal. The vendor also brought a counter claim against Ms Le which was determined by the Appeal Tribunal.

[16] Exhibit A10

[17] Exhibit A12

[18] Le v Nguyen [2017] ACAT 55 at [27]

29.Consistent with Mr Phan’s view, as expressed in his email, and the tribunal proceedings, Ms Le was litigating on her own from 10 August 2015. Had the respondents had any legal entitlement to what might be recovered from the vendor or any legal obligation to pay something to the vendor then there was opportunity for them to be joined as third parties in these proceedings. From Mr Phan’s email, he was clearly aware the tribunal proceedings had been commenced. By not being a party to those proceedings, the respondents effectively abandoned any right to money recovered from the vendor. Equally, had Ms Le regarded the respondents as having some legal obligation to meet any award in favour of the vendor, then arguably they should have been parties. It is only now after the issue of Ms Le’s liability to the vendor has been decided that she seeks contribution from the respondents. She seeks to recover money paid in relation to the maintenance of the Company, namely, annual review fees, tax agent fees, taxes and legal fees. The respondents had contemplated a different litigation strategy which was not followed by the applicants. When this happened, they made it clear they were no longer involved. Ms Le did not take any steps in the earlier proceedings to ensure any liability on their part to her or the vendor was secured.

30.Even if I were to accept the relationship had some legal status which created rights and liabilities between the parties, does it overcome the issue of whether Ms Le can now recovering from the respondents? Ms Le is not asserting the respondents are liable to the vendor. The two earlier tribunal proceedings have found that Ms Le, as the sole purchaser of the business, was liable to the vendor. I do not depart from those findings. The issue is whether the relationship between the parties was such that upon the crystallisation of the loss which was the subject of the Appeal Tribunal decision, the respondents are liable to Ms Le separately.

31.In defence of any entitlement to relief that Ms Le may have, the respondents have raised res judicata and Anshun estoppel as impediments to her recovering anything from them. It is important to set out these general principles. In Cervo v Kingsley’s Pty Ltd[19] the court summarised as follows:

[19] [2018] ACTSC 179 at [39]-[44]

Res judicata

39.Res judicata is concerned with causes of action and judgments (or the equivalent of judgments). Where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action: Jackson v Goldsmith (1950) 81 CLR 446 at 466; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 (Anshun) at 597-598 and the cases there-cited. Res judicata operates as a mandatory bar to further proceedings, on the basis of the non-existence of the cause of action after judgment upon it. The very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence: Blair & Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464 (Blair) at 531532 per Dixon J.

40.Further, where an issue of ultimate fact or of law is raised between parties to a proceeding and is necessarily decided, the parties and their privies are bound by that decision and are precluded in a later proceeding from taking up a position on the issue which is inconsistent with the decision: Anshun at 597-598 and the cases there-cited, which include Blair at 531.

Anshun estoppel

41.By contrast, Anshun estoppel is concerned with causes of action or issues that should have been raised in previous proceedings, but were not: Anshun at 598 per Gibbs CJ, Mason and Aickin JJ.

42.The test for whether the issue ought to have been litigated as part of the earlier proceedings is based on the reasonableness or otherwise of the conduct of a litigant in the earlier proceedings: see Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434; 263 ALR 556 at [60]. The mere fact that the issue could have been raised does not mean it should have been raised (for the principle to operate). Rather, it has to be so relevant as to make it unreasonable not to raise it: Champerslife Pty Ltd v Manojlovski & Anor [2010] NSWCA 33; 75 NSWLR 245 per Allsop P (as his Honour then was) at [4].

43.Contrary to the concession made by Senior Counsel for the guarantor in the court below, recorded by the magistrate at [50] of the Reasons, a further distinguishing feature between res judicata and Anshun estoppel is that Anshun estoppel may even arise where the parties to the second proceeding are not the same as the first: Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 (Habib v Radio 2UE) at [83] per McColl JA (with whom Giles and Campbell JJA agreed); Equuscorp Pty Ltd & Anor v Acehand Pty Ltd & Ors [2010] VSC 89 at [27].

44.In Habib v Radio 2UE, McColl JA went on to state at [84] and [85] (with emphasis added):

A strict approach is necessary in an Anshun estoppel case to the inquiry whether there exists the requisite identity between the proceedings; the mere fact that the proceedings are closely related is insufficient; a technical approach is not helpful, the doctrine being concerned with substance and not form: see Bazos and Anor v Doman and Ors [2001] NSWCA 347 (at [44]) per Stein JA (Priestley and Beazley JJA agreeing) and the authorities to which his Honour refers. In determining whether an Anshun estoppel has been established, the court inquires into realities and not mere technicalities: R v Humphrys [1977] AC 1 (at 41) per Lord Hailsham; cited with approval by Handley JA (Young CJ in Eq agreeing) in Cleary v Jeans [2006] NSWCA 9; (2006) 65 NSWLR 355 (at [19]). The Court can look at “any material that shows what issues were raised and decided”: Rogers v R (at 263) per Brennan J.

In considering whether an Anshun estoppel has been established, it is necessary to bear in mind that “shut[ting] out a claim ... a party wishes to pursue, without determination of its intrinsic merit, on the ground that it ought to have been raised in earlier litigation...is a serious step, [and] a power not to be exercised except ‘after a scrupulous examination of all the circumstances’ ”: Ling v Commonwealth (1996) 68 FCR 180 (at 182) per Wilcox J, approved in Bazos (at [45]) per Stein JA (Priestley and Beazley JJA agreeing); see also Brisbane City Council v Attorney-General (Qld) [1979] AC 411 (at 425) per Lord Wilberforce. [emphasis in original]

32.The respondents argue that Ms Le cannot succeed in her action against them on the basis that liability arising from the purchase of the business was decided by the Appeal Tribunal and Ms Le is effectively asking to revisit those findings in these proceedings. It was framed in terms of the subject matter of these proceedings being so clearly part of the subject of what was happening in the earlier litigation. It was also submitted that if the respondents were partners in the business, then they should have been joined and given a chance to participate in the proceedings because they were privies. Further, it was argued that the applicants were seeking to revisit facts previously determined such that I now make inconsistent findings about the various relationships.

33.It is true the Original Tribunal and the Appeal Tribunal made factual findings as to who the purchaser was. Those previous findings establish the relationship between vendor and purchaser. The applicants do not seek to cavil with that finding. The Appeal Tribunal did not make any findings about the relationship between the parties in these proceedings. The Appeal Tribunal acknowledged the intention of the parties in the context of purchasing the business,[20] and the existence of the Company,[21] but did not make any findings as to the status of the relationship between the parties. The relationship Ms Le had with the vendor is well-settled, the relationship between these parties now was not. I do not regard the applicants as taking up a position on an issue that is inconsistent with the Appeal Tribunal’s decision. The res judicata argument must fail.

[20] Le v Nguyen [2017] ACAT 55 at [52]

[21] Le v Nguyen [2017] ACAT 55 at [61]

34.At best, the respondents may be regarded as third-parties to those earlier proceedings and the issue of what if any liability they had to the applicants in the context of Ms Le’s liability to the vendor. In other words, is this an issue that should have been raised in those earlier proceedings but was not?

35.Ms Le knew from at least 20 July 2015 from Mr Phan’s email, that there was disagreement amongst them about what had transpired and how to proceed. It was made clear to Ms Le that the respondents did not want to have any further involvement. This was reinforced by Ms Phan’s resignation as a director of the Company and also an email dated 22 July 2015 from Ms Phan to Mr Carden and the applicants.[22] While initially Ms Le was seeking to recover from the vendor, the nature of the dispute changed on appeal when the vendor was permitted to lodge a counter claim which was heard first instance as part of the appeal. This was the point at which Ms Le was exposed in terms of any loss, apart from seeking to recover the deposit. Any indemnification from the respondents in respect of that loss was truly live at this point.

[22] Exhibit A23

36.Should it have been raised? Having regard to the authorities cited above, there are several factors relevant to the question of whether liability as between these parties ought to have been raised:

(a)Ms Le has always maintained the respondents had a role in the business and were as accountable for its operation as she was.

(b)Ms Le was legally represented at the hearing of the appeal.

(c)The Appeal Tribunal decided to deal with the counter claim as part of the hearing of Ms Le’s appeal.

(d)Given the procedure adopted by the Appeal Tribunal, it was open to Ms Le to request an adjournment and seek to join the respondents at that point.

(e)The Appeal Tribunal did not make any findings about the nature or legal status of the relationship between the applicants and respondents, only confirming that Ms Le was the purchaser under the Agreement.

(f)Ms Le communicated the outcome of the Original Tribunal proceedings to the respondents.[23]

(g)The issue of liability to the vendor is not the subject of challenge, rather whether Ms Le has a separate cause of action against the respondents.

(h)Ms Le seeks to recover fees incurred in respect of the Company unrelated to the purchase.

[23] Exhibit A20

37.There is unquestionably some identity between the two proceedings. I do not regard the issue to be so relevant that makes it unreasonable for Ms Le not to have raised it in the earlier proceedings. In all of the circumstances I find that the two proceedings are closely related which is insufficient to establish Anshun estoppel. Further, in light of how the Appeal Tribunal conducted the proceedings, and notwithstanding Ms Le was legally represented, Ms Le’s conduct was not unreasonable. While the issue of an adjournment and seeking to join the respondent was open to Ms Le, there does not seem to have been a realistic opportunity to do so. The Appeal Tribunal simply got on with hearing what was in front of it. To say the arrangement and conduct of the parties leading up to the purchase, during the operation of the business and afterwards is complicated is an understatement. In those circumstances, I am reluctant to shut Ms Le’s claim out. As the courts have said, to do so would be a serious step and one which is unwarranted given the conduct of all involved.

38.I therefore allow the claim, in part, as set out below based on Ms Phan’s 40% interest. Ms Le claims a portion of the amount she was ordered to pay the vendor, which was deducted from the amount of the deposit she received. Ms Le accepted that Ms Phan was entitled to her portion of the refunded deposit, however, it was applied to the outstanding loan owed to Mr Nguyen. No further orders are required in relation to Ms Phan’s contribution to the damages awarded to the vendor by the Appeal Tribunal. Ms Le is entitled to retain the amount of the deposit refunded to her.

39.Ms Phan is liable to pay to Ms Le the sum of $1,146.40, being 40% of $2,866, comprised as follows:

(a)$246 Company Annual Review fee.

(b)$110 tax agent fee.

(c)$220 BAS lodgement.

(d)$1,020 payment to ATO for BAS lodgement.

(e)$770 tax agent fee to lodge company tax return.

(f)$213 payment to ATO for company tax return.

(g)$287 payment to ASIC for deregistration.

40.I do not allow the balance of the claim regarding fees incurred in relation to the earlier proceedings. They did not involve the Company.

The loan agreement

41.On 14 January 2015, Mr Nguyen and Mr Phan signed a document entitled “Loan Agreement between Chinh Nguyen and Minh Phan and Tan Duy Thi Le”.[24] It was signed by Mr Nguyen and Mr Phan. It was not signed by Ms Phan. It was witnessed by Mr Darren Carden, a lawyer, purportedly acting for all parties.

[24] Exhibit A2

42.The terms of the loan were simple. The respondents agreed to borrow $30,000 from Mr Nguyen for the deposit of shop 113, Westfield Shopping Centre Benjamin Way Belconnen ACT 2606. It states:

Date of the borrow funds: From the date the deposit cheque drawn or bank transfer to solicitor trust account (Carden & Co Law Practice) with BSB no. XXX and Account no. XXX. It will occur on 14 January 2015 or 15 January 2015.

43.Interest was payable at 3.55% per annum or $1,065 in a year with a repayment date of 15 April 2015. A “Fee to Recover” of $520 was also included.

44.What was the loan agreement for if not to secure an interest in the operation of the business? The respondents say they did not purchase the business and therefore the loan did not eventuate. Was it to secure some interest in the operation of the business? Mr Nguyen accepts that the respondents did not directly receive any of the funds. Mr Nguyen made one single payment of $75,000 into the solicitor’s trust account.

45.The respondents clearly had some role in the operation of the business. Having regard to my findings above at [17] to [27], they were more than mere passengers. They were actively and intrinsically involved in the business until a disagreement arose by July 2015. To deny the loan would suggest that any involvement the respondents had in the business was without monetary contribution. That is simply not the case. The loan reflected the proportionate interest Ms Phan had in the business. It was her contribution to the deposit, notwithstanding she was not the purchaser under the Agreement. It nonetheless secured her interest. I am satisfied this was done by Mr Phan on her behalf. I accept the evidence of Mr Nguyen in the absence of any contrary evidence.

46.It was submitted that Mr Nguyen discharged the loan on 1 August 2017, being the date the Appeal Tribunal made its decision regarding the return of the deposit.[25] Mr Nguyen is not seeking repayment of $30,000 or the difference between the loan and Ms Phan’s portion of the returned deposit, being $11,648.[26] As I understood the submissions made on his behalf, the outstanding balance is forgiven.[27] Mr Nguyen only seeks the fee and interest under the Loan Agreement as follows:

[25] Transcript of proceedings 10 May 2021, pages 44-46

[26] Transcript of proceedings 10 May 2021, pages 44-46

[27] Transcript of proceedings 10 May 2021, pages 44-46

(a)$520 fee to recover.

(b)$266.25 interest under the Loan Agreement from 14 January 2015 to 15 April 2015.

(c)$3,904.75 interest on the loan amount at the Magistrates Court judgment interest rate between 16 April 2015 and 1 August 2017.

(d)Additional interest on $520 to be calculated.

Summary of findings and relief

47.I am satisfied Ms Le is entitled to claim contribution from Ms Phan in relation to Ms Le’s liability to the vendor. The result is that Ms Phan is entitled to $18,352 of the returned deposit, being 40% of $45,880.

48.I am satisfied that while Ms Le was the sole purchaser of the business, there was an arrangement in place between the parties regarding the operation of the business and their respective responsibilities to it. This included income and loss. Mr and Ms Phan were involved in the establishment of the business and its operation. They declined to involve themselves any further following a disagreement as to how to pursue the claim against the vendor. That does not absolve Ms Phan of liability to Ms Le.

49.I also reject the loan from Mr Nguyen was not effective. The respondents were involved in the business and actively participated for some months, to deny there was a contribution of $30,000 on their part to the deposit would have them enjoy that interest without any monetary contribution. The loan secured that interest and they were as I said active participants until things deteriorated.

50.I will make orders based on the calculations explained below.

51.Ms Le entered into the contract to purchase the business. A deposit of $75,000 was paid but the sale did not proceed. The $75,000 deposit was made up of $45,000 from Ms Le and $30,000 from Mr and Ms Phan which Ms Phan borrowed from Mr Nguyen.

52.When the sale fell through and the Appeal Tribunal made its decision, Ms Le was entitled to a refund of the deposit less the amount of damages awarded to the vendor. Those damages were assessed at $29,120 with the balance of $45,880 being paid to Ms Le. As I have said, the respective interests of the parties in the venture was 60% to Ms Le and 40% to Ms Phan. But for the loan, the balance of the deposit returned to Ms Le would be distributed rateably in accordance with their respective interests, namely, $27,528 to Ms Le and $18,352 to Ms Phan.

53.That would leave the $30,000 debt owed by the respondents to Mr Nguyen to be repaid with interest and fees according to the terms of the loan. Crediting the $18,352 against the loan debt would have left the respondents owing Mr Nguyen a balance of $11,648 plus interest and fees.

54.However, upon the balance of the deposit being repaid to Ms Le, Mr Nguyen treated the debt as being discharged. Therefore, Ms Le is entitled to retain the amount of $45,880 and Ms Phan has no further liability in relation to her contribution to damages and the principal amount of the loan. It leaves Mr Nguyen being entitled to claim unpaid interest and fees in respect of the loan.

55.The amount the respondents must pay Mr Nguyen is to be calculated as follows:

(a)Balance of deposit paid to Ms Le:          $45,880

(b)Less Ms Phan’s share of 40%:                $18,352

(c)Less Principal Loan amount:                  $30,000

(d)Amount outstanding on loan:                  ($11,648)[28]

[28] Loan was discharged and forgiven on 1 August 2017

56.However, Mr Nguyen is not seeking the balance of the loan principal and therefore the respondents owe the sum of the following:

(a)Loan fee:[29]  $520

(b)Interest on loan from 15 January 2015 to 15 April 2015[30]: $266.25

(c)Interest on loan from 16 April 2015 to 1 August 2017[31]: $3,904.75

(d)Interest on the Loan Fee from 16 April 2015 to date of decision:[32] $193.86

Conclusion

[29] Fee to recover

[30] Repayment period of loan

[31] Date of Appeal Tribunal decision and calculated pursuant to the Court Procedure Rules 2006

[32] Calculated pursuant to the Court Procedure Rules 2006

57.Ms Phan is to pay the sum of $1,146.40 to Ms Le as calculated in paragraph [39] above.

58.The respondents are to pay Mr Nguyen the sum of $4,884.86 as calculated in paragraph [56] above.

………………………………..

Senior Member K Katavic

Dates of hearing:	10 May 2021
Solicitor for the Applicants:	Mr A Barrett, McInnes Wilson Lawyers
Counsel for the Respondent:	Mr D Robens