Lim v Thien
[2006] WADC 114
•10 AUGUST 2006
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: LIM -v- THIEN [2006] WADC 114
CORAM: MULLER DCJ
HEARD: 23 SEPTEMBER 2005 & 18-19 APRIL 2006
DELIVERED : 10 AUGUST 2006
FILE NO/S: CIV 569 of 2004
BETWEEN: LENG LIM
Plaintiff
AND
WILLIAM THIEN
Defendant
Catchwords:
Contract of loan - Claim for payment of balance outstanding - Dispute as to underlying basis of loan and amounts said to have been repaid - Conflict in documentation relating to loan - Counterclaim for misrepresentation relating to sale of half share in business by plaintiff to defendant
Legislation:
Nil
Result:
Plaintiff's claim dismissed
Defendant's counterclaim dismissed
Representation:
Counsel:
Plaintiff: Mr K E Yin
Defendant: In person, Mr N D C Dillon 18-19 April 2006
Solicitors:
Plaintiff: Rouphael & Associates
Defendant: Summerslegal, Su & Co 18-19 April 2006
Case(s) referred to in judgment(s):
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Case(s) also cited:
Nil
MULLER DCJ: The plaintiff claims that the defendant is indebted to him under two separate agreements of loan one of which is dated 1 August 2001 and the other is undated. The loan agreement (Exhibit 1) dated 1 August 2001 relates to a loan of $88,559.92 in respect of which $55,000 has been repaid and a balance of $33,449.92 is said to be outstanding. The undated agreement was recorded in a handwritten acknowledgment of debt (Exhibit 3) signed by the defendant under which an amount of $7,661.90 is said to be owed by the defendant to the plaintiff. The defendant admits he signed both agreements but denies he owes the plaintiff any amount under either agreement. He maintains that in June 2000 he agreed to purchase a 50 per cent share in a business owned by the plaintiff for $100,000. He said the plaintiff loaned him the money to purchase the business. He claimed he was induced by the plaintiff's misrepresentation to pay an inflated price for the business. He also asserted he made certain payments to the plaintiff and said that part of the proceeds of a house and workshop he sold to the plaintiff's brother were set off against the $100,000 loan. In his counterclaim the defendant pleads that he overpaid the plaintiff the sum of $65,000 and claims payment of that amount from the plaintiff. He maintains that the loan agreement dated 1 August 2001 (Exhibit 1) was not an accurate record of the amount he owed the plaintiff. He said he signed the agreement on the plaintiff's undertaking that the figures would be adjusted to reflect the correct amount he owed.
Evidence of the plaintiff
The plaintiff, who was born in Malaysia on 6 August 1976 and came to Australia in about 1990, purchased a fish and chip shop in Newburn Road, High Wycombe. He had known the defendant since 1994. The defendant was a mechanic and repaired the plaintiff's vehicles. The plaintiff also socialised occasionally with the defendant.
In terms of the loan agreement dated 1 August 2001 (Exhibit 1) the plaintiff agreed to loan to the defendant a sum of $88,559.92 upon which the defendant agreed to pay interest at a rate of 10.8 per cent per annum. The repayment date of the loan was 1 August 2002. The plaintiff said the loan was not made in one lump sum on 1 August 2001 to the defendant as the agreement itself suggests but in cash payments of various amounts in the two years preceding the agreement being signed. The plaintiff was unable to say what amounts were advanced to the defendant, when they were paid or what they were for. He said he believed the money advanced was used by the defendant to purchase shares and renovate his business premises. But it was clear from his evidence that he really did not know what use the defendant had put the money to.
The second loan alleged to have been made by the plaintiff to the defendant was for an amount of $7,661.90. In a handwritten note (Exhibit 3) signed by the defendant it was acknowledged by him that he had borrowed this amount from the plaintiff. The defendant accepted he owed the plaintiff this money but claimed he had repaid it. While agreeing that the defendant had repaid $55,000 under both agreements the plaintiff asserted that the defendant still owed a balance of $33,449.92.
Sale of Newburn Road business
Pursuant to an undated agreement signed by the parties on or about 30 June 2000 the plaintiff sold a half share in a fish and chip shop at 53 Newburn Road, High Wycombe to the defendant. According to the written agreement (Exhibit 7) the price paid by the defendant for his half share was 50 per cent of $60,000 of which $5,000 was to be paid as a deposit upon the agreement being signed and the balance on or before 1 August 2000. The plaintiff claimed he had purchased the business for $100,000 but, for some reason that was never properly explained, the defendant was apparently only required to pay $30,000 to acquire a half share in the business. The plaintiff said the defendant paid the purchase price and acquired a half interest in the business. The settlement statement (Exhibit 4) confirms that this payment was made. I have mentioned the sale of this half share in the plaintiff's business to the defendant at this stage because, as will be seen later in these reasons, this transaction is central to the defence raised by the defendant.
Sale of Leeming property and workshop
In his Defence and Counterclaim the defendant alleged he had sold his house in Leeming to the plaintiff's brother, Hang Chong Lim, subject to a separate agreement with the plaintiff that a substantial portion of the purchase price paid by the plaintiff's brother would be set‑off against the amount the defendant had borrowed to purchase the half share in the plaintiff's business. The defendant also made a counterclaim against the plaintiff alleging he sold the plaintiff a workshop for $130,000 including GST but that due to the conduct of the plaintiff he was required to pay the Australian Taxation Office an amount of $14,500 representing the GST component of the contract. As part of his case the plaintiff led evidence to contradict these allegations made in the defendant's pleadings. The plaintiff's brother, Chong Lim, said he purchased the Leeming property from the defendant for $235,000 of which $95,000 was paid prior to settlement and the balance deposited in the plaintiff's bank. Chong Lim said in evidence the plaintiff played no part in this transaction and received no benefit from it. A settlement statement dated 6 October 2000 (Exhibit 10) was introduced into evidence to confirm the payments of $95,000 and $138,495.75 made by Chong Lim to the defendant at the time of the sale. Chong Lim also gave evidence that it was he, and not the plaintiff, who purchased the Welshpool factory unit from the defendant. A number of documents were introduced into evidence to confirm that the parties to the sale were Chong Lim and the defendant. The plaintiff denied he had anything to do with this transaction or was liable to refund the GST component of the sale to the defendant.
The defence to the plaintiff's claim
In his Defence and Counterclaim the defendant denied that the loan agreement dated 1 August (Exhibit 1) represented the actual agreement made by the parties. The defendant asserted that the loan came into being in an entirely different way. It was pleaded that in or about June 2000 the defendant agreed to purchase from the plaintiff a 50 per cent share in the business referred to earlier for half the price the plaintiff had paid for the business when he acquired it in May 1999. It was alleged that the purchase price he was required to pay was actually $100,000 and not $30,000 as recorded in the agreement (Exhibit 7). In his evidence the defendant described how this came about. He said the plaintiff showed him the agreement between the plaintiff and the original vendor in which the purchase price was said to be $200,000 (Exhibit 17). Relying on this agreement the defendant said he understood he was required to pay $100,000 being 50 per cent of the price paid for the business by the plaintiff. Because he did not have this amount of money available, and was unable to borrow it from other sources, the defendant claimed that the plaintiff agreed to loan him $100,000, repayable within 12 months, in order to purchase a half share in the business. It was only later, in or about July 2001, that, according to the defendant, the plaintiff insisted on the loan agreement (Exhibit 1) being signed. He further claimed that at the time the agreement of loan was signed on 1 August 2001 both he and the plaintiff agreed that the principal amount of $88,559.92 was incorrect and had to be adjusted to reflect certain credits and other payments the plaintiff had already received from the defendant.
In addition to the purchase of a half share in the plaintiff's business the defendant said he also agreed to buy a BMW car from the plaintiff for about $32,000. The agreement reached between the parties required the defendant to pay the plaintiff $5,000 and take over payment of the balance of the plaintiff's loan with the hire purchase company. The $5,000 which the defendant agreed to pay the plaintiff was added to the $100,000 loan for the purchase of the half share in the business. This meant the defendant owed the plaintiff $105,000. He also took over payments under the loan agreement relating to the vehicle and eventually paid the finance company in full.
Having purchased a half share in the plaintiff's business and bought the BMW from him the defendant said he began making payments to the plaintiff. He explained how on about 20 June 2000 his sister‑in‑law purchased a fish and chip shop he owned and paid him a $5,000 deposit. He said he gave this money to the plaintiff in part payment of the loan. On or about 9 October he said he paid the plaintiff $50,000 from the sale of his house to the plaintiff's brother. Further payments of $8,500, $11,500, $5,000 and $30,000 were also made between November/December 2001. In his Reply the plaintiff admitted having received the last four payments from the defendant. The total amount claimed to have been made by the defendant to the plaintiff was $110,000.
The defendant's answer to the loan agreement dated 1 August 2001 (Exhibit 1) is that it was nothing more than a record of his general indebtedness to the plaintiff and that the plaintiff had acknowledged at the time the agreement was signed that the figure of $88,552.92 was not an accurate one and would need to be adjusted. It was on this basis the defendant claimed he signed the agreement.
Prior to being asked by the plaintiff to sign the agreement of loan (Exhibit 1) the defendant had signed an agreement to purchase the business at Newburn Road. This document (Exhibit 7) appears to have been signed by the plaintiff and the defendant in or about June 2000. This agreement (Exhibit 7), which I referred to earlier, clearly stipulated that the gross purchase price was 50 per cent of $60,000 and not $100,000 as the defendant asserted. It may be significant that the original price appears to have been 50 per cent of $80,000. The figure of $80,000 has been deleted and substituted with the figure $60,000. The defendant agreed he initialled this alteration. He also agreed he signed the agreement. But he said he did not read it and did not notice that the purchase price was said to be 50 per cent of $60,000.
As can be seen there were two significant areas of dispute between the plaintiff and the defendant: first, whether the agreement of loan (Exhibit 1) was a correct reflection of the amount owed by the defendant to the plaintiff; and second, whether the defendant purchased a half share in the Newburn business from the plaintiff for $30,000 which he paid or whether he acquired a half interest in the business for $100,000 which he borrowed from the plaintiff.
Sale of defendant's house
The defendant owned a house in Leeming which he put on the market for $240,000. He said he told the plaintiff he intended to use some of the proceeds of the sale to repay his loan to the plaintiff. He said the plaintiff told him his brother, Hang Chong Lim, was looking for a house. After some negotiation the defendant said he offered the property to the plaintiff for $190,000. He said he agreed to reduce the price significantly because no agent was involved. He went on to claim the plaintiff asked him if he could transfer the property to his brother, Hang Chong Lim, because he was unable to obtain a loan in his own name but could manage to raise the money if the sale was made in his brother's name. The defendant said he agreed.
The offer and acceptance relating to this transaction (Exhibit 8) shows that the purchase price for the property was $235,000 and not $190,000 as the defendant claimed. The defendant explained how this came about. He said the original offer and acceptance which he signed reflected the correct purchase price of $190,000. He said the plaintiff then approached him and asked him to sign a second document reflecting a purchase price of $235,000 because he wanted to borrow a larger amount than the price he had to pay for the property. The plaintiff also confirmed that the contract would have to be in his brother's name because he said he would be unable to obtain a loan. The defendant said he agreed to sign the contract containing the inflated price. He said he subsequently received $140,000 for the sale of the house and that the plaintiff retained $50,000 which should have been set off against the amount the defendant still owed under the agreement of loan for the purchase of the business.
Agreement of loan (Exhibit 1)
The loan agreement was only signed by the defendant on 1 August 2001. This was after he had purchased a half share in the Newburn Road business and sold his house in Leeming. On his understanding at the time he still owed the plaintiff $50,000. Although the money he borrowed from the plaintiff to purchase a half share in the business was said to be interest free the defendant claimed the plaintiff later changed his mind and began charging him interest at the rate of eight per cent. When the plaintiff asked the defendant to sign the loan agreement (Exhibit 1) in August 2001 the plaintiff allegedly told him it was simply a formality. On examining the agreement the defendant noticed the amount said to be outstanding was $88,000. He said he told the plaintiff this was not correct because he had already paid the plaintiff $55,000. He claimed the plaintiff told him not to worry and that the figure could be adjusted later to reflect what was actually owed. Having obtained the plaintiff's promise to adjust the figures in the agreement the defendant signed it.
Two other documents associated with the loan agreement were some handwritten notes made by the plaintiff which, the defendant claimed, set out the basic details of what he owed the plaintiff and what he had paid. The first of these handwritten notes was Exhibit 15A. The defendant said the plaintiff gave him this document after he had signed the loan agreement. It is significant that this document refers to a figure of $100,000 as being 50 per cent of the price of the Newburn Road business. I will return to the significance of this entry later. The remainder of the handwritten note was explained by the defendant as representing what the plaintiff claimed was also owed by the defendant for the purchase of the BMW car, legal fees incurred by the defendant and the proposed purchase of an additional 10 per cent share in the business which never eventuated. The handwritten note reflects an outstanding balance of $137,000 on the loan less a payment of $5,000 which the defendant obtained from his sister‑in‑law, Rose, and $50,000 from the sale of the Leeming property. The balance of the loan reflected in Exhibit 15A was $82,000. The note also refers to a figure of $91,749 which includes interest payments in respect of the sale and leaseback of the defendant's workshop which is a matter I will turn to shortly. The defendant said he disputed this figure of $91,749 with the plaintiff.
The other handwritten note said to be in the plaintiff's writing was Exhibit 15B. The defendant said he got this from the plaintiff after he had sold his workshop to the plaintiff. The plaintiff, in his evidence, said Exhibit 15A and B were simply notes he made for his own records and that the figure of $100,000 in Exhibit 15A was not a reference to the purchase price of a half share in his business. I will return to these documents later.
Sale of workshop
Having been placed under pressure by the plaintiff to repay the business loan the defendant said he tried to sell his workshop and had it on the market for about six months. He claimed the plaintiff told him the price was too high and asked him what he would sell the business for. The defendant said he agreed to sell the workshop to the plaintiff for $130,000 plus GST and at the same time agreed to lease it back from the plaintiff at a rental of $800 a month for a period of 12 months. He said he signed the necessary contract with the plaintiff containing these details. On the following day, however, he claimed the plaintiff produced a blank Offer and Acceptance form, and asked him to sign it. The plaintiff told him he had made an error in the first document the defendant had signed. The defendant said he signed the blank form in his workshop and his wife signed as well. He claimed the plaintiff told him he would fill in the details later. He said he agreed to this because he trusted the plaintiff. What happened after this is rather confusing. A document said to be the Offer & Acceptance signed by the defendant relating to the sale of the workshop was produced as part of the defendant's case by a witness from the Bentley office of L J Hooker. This document was introduced into evidence as Exhibit 16. According to this document the purchaser of the workshop was the plaintiff's brother Chong Lim. The purchase price of the workshop was said to be $145,000 and the second of two special conditions contained in the agreement stipulated that the defendant would lease the premises back for a period of 12 months at a rental of $1,200 per month. But Exhibit 16 was not the only Offer & Acceptance form relating to the sale of the workshop. The defendant was shown a second Offer & Acceptance form (Exhibit 12) relating to the same transaction. This Offer & Acceptance was obviously a copy of Exhibit 16 but it differed from Exhibit 16 in two respects. In the first place the purchase price in Exhibit 12 was said to be the $145,000 "inclusive of GST". The words "inclusive of GST" were not part of the Offer & Acceptance introduced as Exhibit 16. An initial appeared after this particular insertion in Exhibit 12. The defendant said this was not his initial. The second significant difference between the two documents was that Exhibit 12 also contained a special condition No 2 which differed from the terms of the special condition No 2 in Exhibit 16. Once again the defendant denied that the initials alongside the special condition No 2 in Exhibit 12 were his. He said he had never seen either Exhibit 12 or Exhibit 16 in its completed form. He assumed at all times that the workshop was being sold to the plaintiff for $130,000 inclusive of GST.
Both Exhibits 12 and 16 relating to the sale of the workshop stipulate that the purchaser is the plaintiff's brother, Chong Lim, and not the plaintiff. But the defendant was unaware of this because he claims he never saw either document in its completed form. These two documents were not the only ones relating to the sale of the workshop which he claimed he had never seen. A document termed a tax invoice, which was prepared by the plaintiff, was sent by him to the defendant and dated 9 December 2001 (Exhibit 14). The significance of this document is that, like Exhibit 12, it stipulated that the purchase price of the workshop was $140,000 "including GST". The defendant's evidence in relation to this document was conflicting. The document bears two signatures purporting to be those of the defendant and his wife. In his evidence the defendant said the signature purporting to be his was a forgery and he believed his wife's signature had also been forged. By resorting to the deception allegedly revealed by these documents the defendant claimed the plaintiff had avoided payment of the GST component on the purchase price and that the responsibility for payment had fallen on the defendant himself. In cross‑examination, however, the defendant gave a different account. He agreed he had signed the document after all but could not recall if it had been completed before he signed it. He conceded he might not have read the document properly at the time he did sign it. He was adamant the document was incorrect in showing that the purchase price of the workshop, including GST, was $145,000. He reiterated his belief that he sold the workshop for $130,000 plus GST.
Another document relating to the sale of the workshop which the defendant claimed to have signed as a blank form was Exhibit 22. This document purported to set out the terms of the lease of the workshop by the defendant from the plaintiff after he had sold the workshop to the plaintiff. Once again the defendant said the terms of the written lease contradicted what he had agreed. The amount of the rental and the term of the lease were contrary to what he had agreed. He said he received $100,000 in his bank account from the sale of the workshop and that the balance of $30,000 was credited to his loan with the plaintiff (Exhibit 23).
Defendant as a witness
The defendant was clearly at a major disadvantage when giving evidence. At the beginning of the trial he was unrepresented and, as will be seen from the transcript of the proceedings, he had great difficulty comprehending the issues and understanding questions that were put to him. When the trial was adjourned and subsequently resumed he was represented by counsel. Even then he had difficulty comprehending questions that were put to him. It was also difficult to understand his answers. What emerged from his testimony was his self‑presentation as a gullible and naive person who put all his trust in the plaintiff. Emphasis was placed in cross‑examination on the incongruity of the defendant having signed a series of agreements which were radically different from what he thought the position was and intended to achieve. The loan agreement itself is one example. There is no reference in this agreement (Exhibit 1) to the amount said to be outstanding being part of the purchase price of the half share in the Newburn Road business. There are numerous other examples of manifest inconsistencies between what the defendant signed and what he now asserts the position to be. The settlement statement reflecting the amount of $30,000 said to have been paid by the defendant for a half share in the business (Exhibit 4), the agreement to purchase the business (Exhibit 7) and the documents I have already referred to relating to the sale of the workshop are all examples along the same lines. When pressed for an explanation for these obvious and glaring inconsistencies the defendant generally replied that he had trusted the plaintiff and had either not read what was put before him to be signed or had received an assurance from the plaintiff that the document was simply a formality and that it could always be corrected or replaced with accurate documentation at a later stage.
Given the importance of the various documents signed by the defendant to the issues in this trial I believe it is necessary to look at his explanations for having signed these documents. Beginning with the documentation relating to the sale of the business I have already referred to the fact that the loan agreement (Exhibit 1) makes no reference at all to the purchase by the defendant of a half share in the Newburn Road business. The other documents relating to this particular transaction are the settlement statement (Exhibit 4) and the agreement to purchase a business (Exhibit 7). The defendant said he signed Exhibit 1 a long time after he had purchased a half share in the business and did so because he was told by the plaintiff that some form of documentation was required to formalise the arrangement that had been reached. His explanation for the settlement statement (Exhibit 4) not reflecting the amount that he said he paid for the business is that he queried the figure of $30,600 in the lawyer's office at the time the document was shown to him but was told by the plaintiff that the correct documentation would be prepared later. He was not really able to give any satisfactory explanation in relation to the purchase price of the business shown in the agreement to purchase a business (Exhibit 7). While agreeing that he must have initialled the alteration showing the purchase price to be 50 per cent of $60,000 he said he did so without reading the document and simply trusted the plaintiff to have included the correct purchase price of $100,000.
Turning to the sale of the Leeming property the defendant agreed that the contract for the sale of the land (Exhibit 8) showed that the purchaser was the plaintiff's brother, Han Chong Lim, but said this was done by arrangement with the plaintiff for the reasons I have referred to elsewhere in this judgment. He denied having dealt at all with the plaintiff's brother in relation to the sale of the property. He also insisted he sold the property to the plaintiff for $190,000. When asked to explain the settlement statement dated 6 October 2000 (Exhibit 10) which showed the purchase price to be $235,000 he said the document was incorrect and went on to deny that he had been paid $95,000 prior to settlement as the document purported to show. He was really unable to give any satisfactory explanation for having signed Exhibit 11. This was the document in the plaintiff's handwriting which the defendant signed acknowledging that he had sold the house to the plaintiff's brother, Chong Lim, for a total of $235,000 and that he had been paid $95,000 by Chong Lim leaving a balance of $140,000 outstanding. This note is consistent with the terms of the settlement statement (Exhibit 10). One explanation the defendant gave is that he might have signed a blank sheet of paper before the terms of the note were written by the plaintiff. This explanation, however, was totally unconvincing and, in any event, does not explain the terms of the settlement statement (Exhibit 10).
In relation to the sale of the house in Leeming the defendant was unable to explain why he prepared a receipt dated 5 July 2000 (Exhibit 28) acknowledging he had received $23,300 from the plaintiff's brother, Lim Han Chong, in relation to the house transaction. It is also significant that the receipt he prepared stipulates that the $23,300 received represented a 10 per cent deposit on the house. If this is correct the defendant's assertion that he sold the house for $190,000 is clearly wrong and the house must have been sold for approximately $230,000 as the plaintiff always asserted it was.
Moving on to the documentation relating to the sale of the workshop I found the defendant's evidence to be inconsistent and confusing. Having said the only document he signed was a blank Offer & Acceptance relating to the sale of the workshop he later conceded that the words "including GST" inserted opposite the purchase price in Exhibit 12 might after all have been inserted by him. He also agreed that the initial next to that insertion could be his. He was also unable to explain how his signature was witnessed by the estate agent's wife if, as he asserted, he signed the blank form in his workshop at the plaintiff's request when the person who witnessed his signature was not present. His explanation in relation to Exhibit 14 was equally unconvincing. Exhibit 14 purported to be a tax invoice addressed to the defendant and his wife relating to the sale of the workshop to the plaintiff's brother. The document was prepared by the plaintiff and signed by the defendant and his wife. The document stated that the price of the workshop including GST was $145,000. The defendant's only explanation for having signed this document was that he did not read it at the time he signed it. He was adamant, however, that he sold the workshop to the plaintiff and had no dealings at all with the plaintiff's brother. He also persisted in his denial that the purchase price for the workshop was $145,000 including GST. Another document the defendant signed in relation to the workshop transaction was Exhibit 22. This document purported to be a lease of the workshop to the defendant. The lessor was the plaintiff's brother, Han Chong Lim, and the period of the lease was said to be five years at a rental of $1,200 per month. Although he agreed he signed this document the defendant continued to insist that he had not leased the workshop from the plaintiff's brother and that he had only agreed to lease it back from the plaintiff for a period of 12 months at a monthly rental of $800. Yet another document the defendant was really unable to explain in relation to the sale of the workshop was Exhibit 27. This was a receipt dated 16 October 2001 written and signed by the defendant acknowledging receipt of the sum of $55,000 from the plaintiff's brother, Chong Lim, as a part deposit on the purchase of the Welshpool unit. Finally the Land Transfer form (Exhibit 13) confirms the purchase price of the workshop was $145,000.
The other significant documents were the handwritten notes of the plaintiff that were introduced as Exhibits 15A and B. In relation to Exhibit 15B it is significant that the total amount said to be outstanding on 8 December 2001 corresponds with the amount said to be owing in a letter dated 29 April 2002 from the plaintiff's solicitors to the defendant. Exhibit 15B appears to reflect details of what the plaintiff claimed the defendant owed him. In relation to Exhibit 15A the most significant notation is in the first line of the document which refers to "$100,000 50 per cent of Newbourn" (sic). Although the defendant asserted the plaintiff gave him this document he agreed that he was never given any explanation by the plaintiff of what this particular entry meant.
I have analysed the documents in some detail to illustrate the stark conflicts between what the defendant said in evidence and what he apparently agreed to in writing. What he asserted in evidence cannot be reconciled with the documentation he signed. There are some inexplicable features in the documents themselves. For example, there is no explanation as to why two separate contracts relating to the sale of the workshop (Exhibits 12 and 16) came into being and why Exhibit 12, which is obviously a copy of Exhibit 16, contains the additions I have already referred to. The other unusual feature is the first entry in Exhibit 15A referring to $100,000 representing 50 per cent of Newbourn" (sic). This entry obviously lends itself to the inference that the defendant did indeed pay $100,000 to the plaintiff for a half share in the Newburn Road business. But apart from these perhaps inexplicable factors all the other documentation is consistent with the plaintiff's evidence and inconsistent with what the defendant says the position was. The loan agreement (Exhibit 1) entirely supports the plaintiff's assertion that the money advanced to the plaintiff was quite unconnected with the sale of the plaintiff's half share in the Newburn Road business. The documentation relating to the sale of the Newburn Road business all points to the plaintiff's half share having been purchased by the defendant for $30,000 and that amount having actually been paid. The documents relating to the sale of the house all point to the purchaser having been the plaintiff's brother, Hang Chong Lim, and the purchase price to have been $235,000. Similarly, the documents relating to the sale of the workshop point overwhelmingly to the purchaser having been the plaintiff's brother Hang Chong Lim, and not the plaintiff.
The loan agreement
The first question I have to decide is whether the loan agreement (Exhibit 1) accurately states the amount owed by the defendant to the plaintiff. I readily accept that the agreement is ambiguous. It purports to reflect that a lump sum payment of $88,559.92 was made by the plaintiff to the defendant on 1 August 2001 by way of a loan. This was certainly not the position. The plaintiff conceded in evidence that the amount of $88,559.92 was made up of earlier advances of unspecified amounts made on unknown dates in the two years preceding the agreement being signed. It is also significant that the plaintiff was quite unable to specify what purposes the loans had been made for. It was submitted by counsel for the defendant that the plaintiff had admitted receiving payments of $110,000 from the defendant. It was argued the receipt of these payments by the plaintiff supported the defendant's contention that the amount specified in the agreement of loan had been paid.
The payments made by the defendant to the plaintiff pursuant to the loan agreement can be established. In his Reply to the Defence and Counterclaim the plaintiff admitted $55,000 had been repaid by the defendant. In his evidence he admitted receiving additional payments. When questioned by the Court about the contents of a note in his own handwriting (Exhibit 15A) – a document I shall refer to in more detail later ‑ the plaintiff gave the following answers (at pp 32‑33 of the transcript):
"Mr Lim, can you explain this document to me, do you think?‑‑‑Yes. This is a document that was always on my hand for a start and this was prepared from my own records.
What does the first statement of that document relate to?‑‑‑The first settlement was ‑ ‑ ‑
The first statement?‑‑‑Yes, your Honour, was the money that he owes me.
What does the first notation relate to? $100,000, 50 per cent of new business. That seems to suggest he was paying a hundred thousand dollars for ‑ ‑ ‑?‑‑‑No, it's not. I can't recall why I put that on there, but it was returned after the shops was settle
9200, BMW?‑‑‑Yes, this was the car that – I think he bought it off me.
$1800 fees?‑‑‑Yes.
What does that relate to?‑‑‑Those are the fees that I've been paying for him and those fees that he needs to transfer. So that is the money that I actually advanced him for.
And $1000 fees?‑‑‑Yes, lease – there was a ‑ ‑ ‑
Lease?‑‑‑ ‑ ‑ ‑ lease agreement, yes.
The final notation is 25,000, 10 per cent share as agreed. What is that a reference to?‑‑‑That $25,000 share was – I think that I was trying to sell him the 10 per cent shares for somewhere.
If you look at the annexed entries, after the total you will see there's a reference to $5,000. What was that a reference to?‑‑‑There is the $5000 – when he actually gave me.
There's a reference to $50,000 in respect of Leeming. What is that a reference to?‑‑‑That is where when actually he paid back a portion of the money of that, and I just want it now from the house when he's sold to my brother.
So are you saying that after he sold the house to your brother and had been paid the purchase price, he actually paid you a lump sum of $50,000 from the sale?‑‑‑Correct.
Is that reflected in your pleadings?‑‑‑No. What does that mean?
That must have been deducted from the overall debt of $88,000 he owed you?‑‑‑No, because this is a sum that – he actually owes up to 137, if you have a look; 137.
I can't understand that. You have claimed that he owes you in total and in accordance with the loan agreement a sum of $88,500 approximately?‑‑‑Yes.
You have claimed that he has paid a proportion of that, leaving an outstanding balance in the region of approximately $30,000?‑‑‑Yes.
Why does this document prepared in your own handwriting reflect an indebtedness on the defendant's part of a $137,000?‑‑‑Because this ‑ ‑ ‑
As opposed to $88,000?‑‑‑No, because this was before the contract was done and it was before the two years of the contract was done. This is all the money that he was owed me. It was way over a hundred thousand dollars. Just say, for example, we're seeing the 137,000 on there, so they deducted some of the portion and he was trying to ask more of me but we coming to agreed that 88,000 on the contract he's going to draw up on that day. So that is way before the contract was ‑ ‑ ‑
So are you saying that you loaned several amounts to the defendant over a period of time ‑ ‑ ‑? ‑‑‑Mm'hm.
‑ ‑ ‑ and that the total amount of the various loans you made him at one stage reached $137,000?‑‑‑Exactly.
And at p 33 of the transcript:
Are you saying that he paid $5000 in respect of a lease arrangement ‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ and $50,000 from the sale of his Leeming property ‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ towards that total debt of 137,000?‑‑‑Yes.
Did that leave a balance of $82,000?‑‑‑That's correct, your Honour.
Was it that balance of $82,000 which formed the subject of the subsequent agreement of loan?‑‑‑Yes."
Because the plaintiff admitted having been paid an amount exceeding what he claimed in Exhibit 1 to have been owed by the defendant I believe it was incumbent on him to establish that the payments he received had not discharged the debt claimed. He could only do that by establishing what cash advances he had made to the defendant in the two years preceding the agreement (Exhibit 1), the dates on which those advances had been made and, if possible, the purpose for which the loans had been made. I presume the plaintiff would have been able to produce some form of documentation, such as bank statements or a personal record of cash payments, to establish particulars of the loans he made during the two years preceding the agreement. But he was unable to do that. The most he could say is that he assumed the defendant used the money for renovations and his business.
Given the admissions made by the plaintiff in his Reply and Defence to the Counterclaim regarding the payments he received from the defendant, and his acknowledgement in evidence that two sums of $500 and $50,000 – the latter being from the sale of the plaintiff's Leeming property – had been apportioned to the loan there is certainly a strong argument that the plaintiff has not discharged the onus of proving that the amount claimed was still owed by the defendant. Before reaching a final decision on this critical issue, however, I would like to deal with the plaintiff's handwritten notes, Exhibits 15A and 15B, which also have a crucial bearing on this issue.
Handwritten notes Exhibits 15A and 15B
I am satisfied that the handwritten notes introduced into evidence as Exhibits 15A and B were given by the plaintiff to the defendant. I am unable to accept the plaintiff's evidence that he did not give these notes to the defendant and that the defendant must have found them and taken them without his consent. I believe these documents are of crucial significance. In my view Exhibit 15A was intended by the plaintiff to be a list of the amounts said to be outstanding by the defendant. There is simply no other way of looking at the document. A comparison of Exhibits 15A and 15B with the letter of account sent by the plaintiff's solicitors to the defendant on 29 April 2002 (Exhibit 2) reveals that most of the figures in both documents correspond. The final figure of $91,749 in Exhibit 15A corresponds with the sub‑total of $91,747.92 in Exhibit 2. That was clearly a reference to the total amount said to be owed by the defendant to the plaintiff at the time. The same figure of $91,747.92 appears in Exhibit 15B as the amount owing. Other figures in Exhibits 15A and 15B correspond with the figures in the letter Exhibit 2. If, as counsel for the defendant has submitted, the final calculation of the defendant's indebtedness was the sum of $91,747.92 as reflected in Exhibit 15A, 15B and Exhibit 2, the next question is how this particular amount was arrived at. The defendant's answer to this question is as follows. The first entry in Exhibit 15A refers to "$100,000 50 per cent of Newbourn" (sic). This entry could only have been a reference to the purchase price paid for the Newburn Road business. When asked to explain this particular notation the plaintiff was quite unable to do so. But he did expressly deny that it was a reference to the purchase price paid by the defendant for the half share in the Newburn Road business. Given the inability of the plaintiff to explain this entry the figure of $100,000 could only have been a reference to the price paid by the defendant for his half share of the business. It is, after all, the central figure in Exhibit 15A. The other calculations in that document flow from it. Most significantly of all the ultimate total of $91,749 referred to in Exhibit 15A corresponds with what is referred to as the "sub‑total" in the letter of account sent by the plaintiff's solicitors to the defendant in April 2002 (Exhibit 2).
Counsel for the defendant submitted that Exhibit 15 A reflected the terms of the loan agreement between the parties. It was argued that the other figures in the agreement referring to the sale of the BMW and the payment of legal fees by the defendant corresponded with other evidence that had been given in the trial. It was also pointed out that the reference to "$25,000 10 per cent share as agreed" was clearly a reference to the proposed purchase by the defendant of an additional 10 per cent share in the business. Furthermore, other figures reflected in Exhibit 15A, for example, "$5,000 Rose" and "$50,000 Leeming", related to the payment of $5,000 the defendant obtained from his sister and put towards the loan and the money from the sale of his property that, as the plaintiff agreed, also went towards payment of the loan.
The defendant argued that the loan agreement (Exhibit 1) was clearly not a true reflection of what the parties had agreed. It was submitted that the agreement (Exhibit 1) was incorrect in its assertion that a lump sum of $88,559.92 had been advanced by the plaintiff to the defendant on 1 August 2001. If, as had been suggested by the plaintiff, the loan agreement reflected a series of payments made by the plaintiff to the defendant in the preceding two years, the defendant said the absence of any evidence to show what amounts were loaned, the dates on which those loans were made and the purpose of those loans showed that the agreement was really a sham.
I am satisfied the more probable inference is that Exhibit 15A, and not Exhibit 1, reflects the true agreement between the parties. I have already explained the deficiencies in Exhibit 1 and, in particular, the plaintiff's inability to prove the amounts said to have been advanced to the defendant to make up the total said to be outstanding. Exhibits 15A, and to a lesser extent Exhibit 15B, are quite clear in their terms. The more probable inference to be drawn from Exhibit 15A is that the initial loan was for $100,000 for the purchase by the defendant of a half share in the business. This inference is reinforced by what I see as the plaintiff's inexplicable failure to explain the relevant entries in that document. When questioned on this issue he said (at pp 43‑44 of the transcript):
"MULLER DCJ: The notation reads, '$100,000, 50 per cent of Newbourn," b‑o‑u‑r‑n (sic)?‑‑‑Yes.
YIN, MR: Why did you put down hundred thousand dollars, Newbourn?‑‑‑Because this is the money that he owes me.
For what?‑‑‑For – I really can't remember.
MULLER DCJ: What does "Newbourn" refer to?
THIEN, MR: That is Newbourn Road Fish and Chip ‑ ‑ ‑
YIN, MR: Anything to do with the purchase price or something else, was it?‑‑‑Any to do ‑ ‑ ‑
Did the hundred thousand dollars have anything to do with the purchase price or did it have anything to do ‑ ‑ ‑?
MULLER DCJ: It must relate to the purchase price of the fish and chip shop because there's a specific reference to Newburn.
YIN, MR: Was it something else, other than the purchase price or what was it for then?‑‑‑Well, it was the money that he lent – that I lended to him, but I just can't remember why I put the Newburn. It must be for some of his renovation or something but I just – it has been that many ‑ ‑ ‑
Renovations? What renovations?‑‑‑Part of the money that going into Newburn, maybe ‑ ‑ ‑
Do you know how much was spent by renovations?‑‑‑I don't know.
MULLER DCJ: Well, it is a large amount of money, $100,000. Surely you can remember why you entered that particular – why you made that particular entry on 1 August 2000, "100,000, 50 per cent of Newburn." It seems to me, looking at the contract, exhibit 1, that it's a reference to the defendant's share of the purchase price?‑‑‑No, it's not. Because I think some of the money was lended to him is because some of the‑ like, going into renovation, part of stocks and all that, so this why I wrote it, "Newburn," underneath. The whole thing of this is my personal record, is not a presentation to anyone.
But, nonetheless, it is part of the money which in the end you maintain is owed to you and which forms the subject of the agreement of loan?‑‑‑No."
I found these answers to be totally unconvincing. Looking at Exhibits 15A and B in conjunction with Exhibit 2 leads me to conclude that the plaintiff did loan the defendant $100,000 to enable the latter to purchase a half share in the Newburn Road business. Having made that finding it follows that the plaintiff's claim based on the agreement of loan (Exhibit 1) cannot succeed. I am satisfied that the amount of the loan and the purpose behind it were quite different from what the plaintiff asserted them to be. This means that Exhibit 1, whatever its purpose might have been, cannot be regarded as a true reflection of what was owed by the defendant. I am satisfied the initial loan was for $100,000 in respect of the purchase of the half share in the business and was later increased to $105,000 to cover the purchase of the BMW. I am also satisfied on the evidence referred to earlier that these amounts have been repaid.
Before leaving this issue I should deal with the plaintiff's submission that the defendant ought to be bound by the terms of the documents he signed. Given my findings that it is impossible to reconcile Exhibits 2, 15A and 15B with the plaintiff's claim it is difficult to decide what weight to attach to the other documents relied upon by the plaintiff that are inconsistent with those exhibits. The law relating to this situation was set out by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165:
"If there is a claim or misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre‑existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document."
Having had the opportunity of observing the defendant give evidence I can readily understand how he might have signed documents with little or no regard for what was in them. At the time he was in partnership with the plaintiff and presumably trusted him. It was apparent to me he had difficulty in understanding English. He also had difficulty reading. Given these factors I can readily understand how he might have signed documents without understanding them properly or even reading them at all. An example of this is his agreement to sign Exhibit 1. If, as I have already found to be the case, the plaintiff loaned him $100,000 to purchase a half share of the business it is inconceivable he would have signed the loan agreement (Exhibit 1) which stated he owed $88,559.92 without any explanation as to how that figure was arrived at unless, as he asserted, he believed the plaintiff's assurance that the figure was simply a loose one and could be adjusted later to reflect the actual amount owed. Other documents he signed that are totally inconsistent with his defence cannot perhaps be explained on grounds of naivety or ignorance. I refer to those other documents elsewhere in these reasons and I need not repeat what I have already said. I accept that his explanation for having signed many of the other documents is open to question. I am not, however, prepared to find that he was being untruthful. He left me with the clear impression of a person who was so confused and obviously out of his depth in the welter of transactions in which he was involved that he simply did not really know what he was being asked to agree to. Perhaps in the end little turns on these other contradictory documents. I have already said I believe Exhibit 15A is crucial in this case. Having made the finding that the plaintiff loaned the defendant $100,000 for the purchase of a half share in the business I can confidently state that the agreement of loan (Exhibit 1) did not accurately state the amount of the loan or the reason for it. I can also confidently find that the defendant paid the plaintiff those amounts acknowledged in the plaintiff's Reply and Defence to Counterclaim and, in addition, two separate amounts of $5,000 and $50,000 from the sale of the Leeming property. That leaves me in the position of having to find that the plaintiff has not proved his claim.
Set‑off and Counterclaim
In his Set‑off and Counterclaim the defendant alleges that he agreed to purchase a half interest in the Newburn Road business for 50 per cent of the purchase price paid by the plaintiff for that business in 1999. It was further alleged that the plaintiff engaged in misrepresentation, misleading and deceptive conduct or fraud in representing that the purchase price paid by the plaintiff for the business in 1999 was $200,000 when the plaintiff knew he had only paid $90,000 for the business when he initially acquired it.
The basis of the defendant's Counterclaim is the agreement relating to the purchase of the Newburn Road business by the plaintiff in May 1999 (Exhibit 17). In this agreement the gross purchase price of the business is said to be $200,000. The witness Cajaglis, who was the agent responsible for the transaction between the original vendor and the plaintiff, was adamant this figure was incorrect and that the purchase price was $95,000 to $100,000. A second document relating to the sale was the business information memorandum (Exhibit 18). This showed the sale price to be $220,000. The defendant said in evidence the plaintiff had shown him Exhibits 17 and 18 at the time that he agreed to purchase a half share in the business. He explained this was why he agreed to pay $100,000 for the business.
I believe Exhibits 17 and 18 have to be viewed with caution. In the first place there is clearly different handwriting in each document. The handwriting has not been identified. The agent Cajaglis agreed a number of the written entries had not been made by him. The documents were sent by the land agent to the settlement agent. It was submitted by the defendant that the plaintiff would have received copies of both documents and was in a position to alter them in order to induce the defendant to pay a higher price for a half share in the Newburn Road business. For this argument to succeed the onus is on the defendant to prove, first, that the plaintiff altered the relevant figures in Exhibits 17 and 18, and second, that he showed these documents to the defendant in order to induce him to pay more for a half share in the business than it was actually worth. I am not satisfied these inferences are more probable than others. Given the uncertainty in the evidence as to whose handwriting appears in the documents I cannot infer that it must have been the plaintiff who inserted the figure of $200,000 in Exhibit 17 or typed the figure $220,000 in Exhibit 18. What is more I am not satisfied that the defendant was actually shown these documents. Given his uncertainty in relation to other documents he signed, and the clear contradictions between many of those documents and the evidence he gave, I am unable to be confident to the required standard that he was either shown or read these documents before he agreed to pay $100,000 for a half share in the business.
In his Counterclaim the defendant also raised a discrete cause of action for the payment by the plaintiff to the defendant of the GST component in respect of the sale of the workshop at Welshpool. Once again there is a significant factual dispute between the parties in relation to this transaction. The defendant says he sold the workshop to the plaintiff but both the plaintiff and his brother contend that the workshop was sold to the plaintiff's brother. Again, there is conflicting documentation relating to this transaction. The defendant alleged that the agreement for the sale of the workshop was for $130,000 plus GST. He gave evidence that he reached an agreement with the plaintiff, who was either acting on his own behalf or on behalf of his brother, that the price would be $130,000 plus GST. Counsel for the defendant submitted that the defendant's evidence as to the agreed price was supported by the plaintiff's handwritten notes (Exhibit 15B) where an entry reading "Agreement Price $130,000" appears. Further support for the defendant's evidence is said to lie in a letter from the defendant's bankers dated 12 December 2001 indicating that the defendant and his wife only received $100,000 from the settlement of the sale of the workshop. But that is where support for the defendant's evidence ends. Chong Lim, the plaintiff's brother, said he had purchased the workshop from the defendant and that the plaintiff had nothing to do with the transaction. The contract of sale (Exhibit 12) confirms Chong Lim was the purchaser. The purchase price in Exhibit 12 is stated to be "$145,000 inclusive GST". Where the problem arises is that there is a second contract (Exhibit 16) which is identical to Exhibit 12 in all respects but one. The purchase price in Exhibit 16 is stated to be $145,000. The handwritten notation "inclusive GST" which appears in Exhibit 12 does not appear in Exhibit 16. It certainly appears that someone has added these words in Exhibit 12. I am unable to reach any conclusion as to who made this alteration in Exhibit 12 or why it was made. What I can say is that the defendant's evidence in relation to the workshop transaction was confused and contradictory. At one stage he suggested his signature to the contract for sale had been forged but later in evidence‑in‑chief said he signed a blank form given to him by the plaintiff on the understanding that the workshop would be sold for $130,000. I am unable to accept his evidence in this regard particularly as it was contradicted by his wife, Mary Kim Fa Thien, who acknowledged having signed Exhibit 16 at the workshop after the details had been inserted. In any event the defendant when cross‑examined became so confused that he conceded he might even have inserted the words "Inclusive of GST" himself. He was simply unable to say. More to the point he was quite unable to explain why he signed a contract in which the purchase price was expressly stated to be $145,000 when, as he now says, the agreed price was $130,000.
Another document which adds weight to the plaintiff's assertion that the workshop was sold to his brother for $145,000 was the tax invoice (Exhibit 14). This document, which is dated 9 December 2001 and addressed to the plaintiff, records the purchase price for the factory being $145,000 including GST. The document appears to have been signed by both the defendant and his wife.
I found the evidence relating to this transaction to be quite confusing. The defendant's evidence was totally unsatisfactory. He blatantly contradicted himself on several occasions and, apart from the handwritten entry in Exhibit 15B, there is no independent documentary evidence to support his assertion that the workshop was sold to the plaintiff for $130,000. All the other documentary exhibits point to the sale having been to the plaintiff's brother at a price of $145,000.
I find that the defendant has failed to prove any of the pleaded causes of action against the plaintiff. His counterclaim must fail.
Conclusion
I would dismiss the plaintiff's claim against the defendant.
I would also dismiss the defendant's counterclaim against the plaintiff.
0
1
1