Luben Petkovski v Kai Yin Huang

[2018] NSWSC 1667

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Luben Petkovski v Kai Yin Huang [2018] NSWSC 1667

Hearing dates:

15, 21-24, 28-29 August 2017; written submissions completed on 12 September 2017

Date of orders:

30 November 2018

Decision date:

30 November 2018

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Unconscionable conduct, economic duress, and misleading or deceptive conduct found on the Cross Claim. Trespass, nuisance and encroachment findings made. Relief hearing ordered to determine loss and damage suffered by the cross-claimants.

Catchwords:

UNCONSCIONABLE CONDUCT AND ECONOMIC DURESS – the cross-claimants contracted to acquire from a third party an option to purchase a block of subdivisible land – one of the plaintiffs (also a cross-defendant), the agent acting for the vendor on the sale, applied pressure to the cross-claimants to allow him and persons associated with him to take an interest in the land to be purchased and to acquire three of the six lots into which the land was proposed to be subdivided – there was no evidence that this conduct of the first plaintiff/first cross defendant in privately dealing with the purchasers was disclosed to the vendor, for whom he was acting as agent – as a result of the agent’s conduct the cross-claimants were forced to sign deeds of trust of their interest in the pre-subdivided property, committing three of the six proposed lots in the subdivision to be acquired by the plaintiffs, not by the cross-claimants – whether the deeds of trust could be set aside by reason of the agent’s said conduct – whether economic duress is established – whether three of the six properties would have been liable to be reconveyed to the cross-claimants, or in lieu of reconveyance what damages or equitable compensation should be paid to the cross-claimants.

 

MISLEADING OR DECEPTIVE CONDUCT – property conveyed differs in area from property represented to the cross-claimants to be the subject of an agreement – whether misleading or deceptive conduct – whether misleading or deceptive conduct occasioned any loss to the cross-claimants.

  TRESPASS AND NUISANCE – the plaintiffs allege the defendant placed motor vehicles, bricks and other objects on some of their lots in the subdivided land and committed other acts of trespass to the plaintiffs’ lots – the cross-claimants allege that the first cross-defendant interfered with the free passage of vehicles and access to passage along the driveway of one of the cross-claimants’ lots, causing them loss and damage – whether the trespasses alleged occurred and whether any such trespasses sound in damages or other relief.

Legislation Cited:

Australian Consumer Law, ss 18, 20, 22
Conveyancing Act 1919, ss 88B, 88K
Crimes (Sentencing Procedure) Act 1999, s 17
Property Stock and Business Agents Act 2002
Property Stock and Business Agents Regulations 2003
Uniform Civil Procedure Rules 2005, rr 14.28 and 36.15

Cases Cited:

ASIC v Adler [2002] 41 ACSR 72; [2002] NSWSC 171
Australia and New Zealand Banking Group Limited v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344
Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419
Averono v Mbuzi [2005] QSC 61; [2005] ANZ ConvR 315
Barnes v Addy (1874) LR 9 Ch App 244
Begbie v State Bank of New South Wales Limited (1994) ATPR 41-288
Billiet v The Commercial Bank of Australasia Limited [1906] SALR 193
Boed Pty Ltd v Seymour (1989) 15 NSWLR 715
Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311; [2007] VSCA 311
Bringinshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 38
Burge v Commonwealth Bank of Australia (No 3) [2017] FCA 383
Campbell v Backoffice Investments Pty Limited (2009) 238 CLR 304; [2009] HCA 25
Carl Zeiss Stiftung v Herbert Smith & Co [No 2] [1969] 2 Ch 276
Celsteel Ltd v Alton House Holdings Ltd [1985] 2 All ER 562; [1985] 1 WLR 204
City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477; [1961] HCA 53
Clegg v Dearden (1848) 12 QB 575; (1848) 116 ER 986
Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8
Coventry v Lawrence [2014] UKSC 46
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Cubillo v Commonwealth (2000) 103 FCR 1; [2000] FCA 1084
Demagogue Pty Ltd v Ramensky & Anor (1992) 110 ALR 608; [1992] FCA 851
Fabre v Arenales (1992) 27 NSWLR 437
Field Common Ltd v Elmbridge Borough Council [2008] EWHC 2079 Ch
Ford Motor Company of Australia Ltd v Arrowcrest Group Pty Ltd (2003) 134 FCR 522; [2003] FCAFC 313
Fouldes v Willoughby (1841) 8 M & W 540; (1841) 151 ER 1153
Goode v Angland [2017] NSWCA 311
Halliday v Nevill (1984) 155 CLR 1; [1984] HCA 80
Hospitality Group Pty Ltd v Australian Rugby Union Limited (2001) 110 FCR 157; [2001] FCA 1040
Hospital Products Ltd v United States Surgical Corporation, Surgeons Choice (1984) 156 CLR 41; [1984] HCA 64
In the Marriage of Michiels (1991) 103 FLR 1
Inverugie Investments Ltd v Hackett [1995] 3 All ER 841
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kakavas v Crown Melbourne Limited (2013) 250 CLR 392; [2013] HCA 25
Kirk v Gregory (1876) 1 Ex D 55
Konskier v B Goodman Ltd [1928] 1 KB 421
Lagan Navigation Co v Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226
Laris v Lin (No. 2) [2016] NSWSC 560
Laris v Lin [2017] NSWSC 279
Lord v McMahon [2015] NSWSC 1619
Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61
Loxton v Waterhouse (1891) 7 WN (NSW) 98
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31
Mir Bros Trading Co Pty Ltd v Cavasinni Constructions Pty Ltd [2015] NSWSC 421
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 67 ALJR 170; [1992] HCA 66
Nuhic v Rail & Road Excavations [1972] 1 NSWLR 204
Owners Corporation of Strata Plan 42472 v Menala Pty Ltd (1998) 9 BPR 16,337
Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361
Payne v Parker [1976] 1 NSWLR 191
Polly Peck International PLC v Nadir (No. 2) [1992] 4 All ER 769
Pullen v Smedley [2017] NSWSC 1721
Rodrigues v Ufton (1894) 20 VLR 539
Shum Yip Properties Ltd v Chatswood Investment & Development Co Pty Ltd [2002] 40 ACSR 619; [2002] NSWSC 13
Smith v Scott [1973] Ch 314
Stoneman v Lyons (1975) 133 CLR 550; [1975] HCA 59
Tonto Home Loans Australia Pty Ltd v Tavares (2011) ASC 155-107; [2011] NSWCA 389
Thorne v Kennedy (2017) 91 ALJR 1260; [2017] HCA 49
Torette House Pty Ltd v Berkman (1940) 62 CLR 637; [1940] HCA 1
Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366
Wentworth v Lloyd (1864) 11 ER 1154; 33 LJ Ch 688
XR Property Developments Pty Ltd v Denning Real Estate Pty Ltd [2015] NSWSC 1937
Zieleniewski v Scheyd [2012] EWCA Civ 247

Texts Cited:

Halsbury’s Laws of Australia
Sappideen and Vines (eds), Fleming’s The Law of Torts (Thomson Reuters, 10th edition)
JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

Luben Petkovski (first plaintiff, first cross-defendant)
Diana Petkovski (second plaintiff, second cross-defendant)
George Gashovski (third plaintiff, third cross-defendant)
Lence Petkovski (fourth plaintiff, fourth cross-defendant)
Kai Yin Huang (defendant, first cross-claimant)
Xuan Jing Huang (second cross-claimant)

Representation:

Counsel:
D A Moujalli (plaintiffs/cross-defendants)
J S Wheelhouse SC, J E Doyon (defendant /cross-claimants)

  Solicitors:
TurksLegal (plaintiffs/cross-defendants)
Zhang Shijing Lawyers (defendant/cross-claimants)

File Number(s):

2015/308860

Publication restriction:

No

Judgment

1. The parties in these proceedings contest events concerning the sale, the subdivision and then the occupation of six adjoining properties in Watkin Street, Rockdale, during the years 2010 to 2014. These reasons first deal with disputes arising between early 2010 and mid-2012 relating to the purchase and subdivision of these properties, and then they deal with other disputes arising between mid-2012 and 2014 about alleged trespasses and nuisances among adjacent property owners in the subdivision.

2. The six adjoining properties are respectively numbered 47 to 57 Watkin Street. They are situated on the northern side of that street and are Lots 1 to 6 of a single subdivision, registered in April 2012, of a parcel of land that was formerly DP1/536641. Somewhat counter intuitively, the higher lot numbers in the subdivision correspond with the lower street numbers in Watkin Street. So, for example, Lot 1 in the subdivision corresponds with No. 57 Watkin Street and Lot 6 in the subdivision corresponds with No. 47 Watkin Street. For convenience in these reasons, the six lots in question will be referred to both by their lot numbers in the subdivision and their street numbers in Watkin Street. In its pre-subdivided state, the whole parcel of land will be referred to either as DP1/536641 or as “the Watkin Street property”.

3. The plaintiffs/cross-defendants, and the parties related to them (“the Petkovski parties”), are the registered proprietors (in various combinations shortly to be explained) of three of the six lots in the subdivision, namely Lot 1 (No. 57), Lot 3 (No. 53) and Lot 4 (No. 51). The defendant and his wife (who together are the cross-claimants) are both registered proprietors of the other three lots, namely Lot 2 (No. 55), Lot 5 (No. 49) and Lot 6 (No. 47). More detail is required to explain the holdings of each of these groups in the Watkin Street property.

4. The four plaintiffs to these proceedings are: Luben Petkovski (the first plaintiff), Diana Petkovski (the second plaintiff), George Gashovski (the third plaintiff), and Lence Petkovski (the fourth plaintiff). All four plaintiffs are the registered proprietors of Lot 1 (No. 57). Mr Petkovski is the registered proprietor of Lot 4 (No. 51). All these properties, held by the plaintiffs and Petkovski parties, are held either singly or as tenants-in-common. The property Lot 3 (No. 53) is held solely by another Petkovski party, Ms Yanna Elfes, who is not a party to these proceedings. The party referred to most frequently in this judgment is Mr Luben Petkovski. For that reason, he is simply referred to as “Mr Petkovski” in these reasons. All other plaintiffs and Petkovski related parties are described by their full names, including their first names, and collectively as the “Petkovski parties”.

5. Mr Kai Yin Huang, and his wife, Mrs Xuan Jing Huang, are the registered proprietors as joint tenants of each of Lot 2 (No. 55), Lot 5 (No. 49), and Lot 6 (No. 47).

6. The plan of subdivision of the six lots was registered with Land and Property Information New South Wales (“LPI”) on 5 April 2012. The plan indicates the relative location of the six adjacent Lots on Watkin Street and is set out in Figure 1 below:

Figure 1

7. In October 2015, the four plaintiffs initiated proceedings against Mr Huang, as the sole defendant, for damages for alleged trespass upon some of the lots they held in the subdivision. Mr and Mrs Huang Cross Claimed in the proceedings against all four plaintiffs, alleging:

1. Unconscionable conduct and contraventions of ss 18, 20 and 22 of the Australian Consumer Law (“ACL”), in relation to three declarations of trust that Mr and Mrs Huang say that Mr Petkovski pressured them into executing on 10 March 2011, resulting in what the Huangs further allege was their forced sale to the plaintiffs of their interests as purchasers in each of Lots 1 (No. 57), 3 (No. 53) and 4 (No. 51); and

2. Trespass, nuisance and interference with a right of carriageway benefitting Lot 2 (No. 55), one of the three properties held by the Huangs.

8. These reasons first deal with the Huangs’ pleaded allegations against the plaintiffs of unconscionable conduct and contraventions of the ACL, arising from the circumstances in which the six properties came to be sub-divided and held by the parties between 2010 and 2012. These reasons then turn to the allegations by each party of various trespasses upon, and interferences with, each other’s properties between 2012 and 2014.

Overview of the Huang’s Unconscionable Conduct Case

9. The Huang’s unconscionable conduct case may be shortly summarised. Tome Bros Pty Ltd (“Tome Bros”) acted as the real estate agent for the vendor, Pangani Pty Ltd (“Pangani”), on the sale of the Watkin Street property. Mr Petkovski was an employee of Tome Bros.

10. Mr and Mrs Huang say that they agreed in April 2010 with Mr Petkovski, who was at all times acting as Pangani’s agent, to purchase DP1/536641 for $3.05 million. They claim that they simultaneously entered into an informal arrangement with a friend of theirs, Ms Judy Wu, for her to purchase two of the six lots that would result from the subdivision of DP1/536641. Mr and Mrs Huang say they planned to retain the other four lots for themselves.

11. The Huangs allege that, in November 2010, Mr Petkovski told Mr Huang that he wanted to buy two of the six lots himself, and that if Mr Huang did not agree to selling these two lots to parties associated with him, then the sale from Pangani to the Huangs would not proceed. Subsequently, Ms Wu withdrew entirely from the purchase. The Huangs say that, after Ms Wu’s withdrawal, they were prepared to buy the whole parcel of land in DP1/536641 but Mr Petkovski said he and the Petkovski parties insisted on buying three of the six lots.

12. The Huangs contend that, in February 2011, Mr Petkovski told Mr Huang that Mr Huang had to sign a form of trust deed (or trust deeds), under which Mr Huang would declare he held three of the six lots to be subdivided on trust for Mr Petkovski and the Petkovski parties. The Huangs further contend Mr Petkovski threatened that, should the Huangs fail to sign the trust deed/s, the contracts for sale of the land would not proceed and their deposit would not be returned.

13. In March 2011, the Huangs executed three declarations of trust (“the Trust Deeds”). They contend that they did so acting under Mr Petkovski’s threats. Under the Trust Deeds, the Huangs agreed and declared that they:

1. would enter into options to purchase the whole of the land in DP1/536641, or to purchase the six lots into which it was to be subdivided, if it were subdivided by the end of end of the option period;

2. would then exercise the options and would enter into a contract to purchase the whole of the land, or the six lots if the land had been subdivided; and

3. were to hold Lot 1 (No. 57), Lot 3 (No. 53) and Lot 1 (No. 57) on trust for Mr Petkovski and the related parties.

14. Throughout late 2011 and early 2012, steps were taken to register the plan of subdivision of the Watkin Street property. Registration was ultimately achieved on 5 April 2012. The Huangs execution of call options over each of the lots followed a few days later. Then, in May 2012, the Huangs executed three deeds of rescission (“the Rescission Deeds”) in respect of Lot 1 (No. 57), Lot 3 (No. 53) and Lot 4 (No. 51). Pangani then entered into contracts to sell those three lots to the plaintiffs/cross-defendants and to the Petkovski parties.

15. In July 2012, each of the six contracts for the sale of land were completed. Transfers of each of the lots were registered as follows: Lot 1 (No. 57) to the plaintiffs/cross-defendants; Lot 2 (No. 55) to the Huangs; Lot 3 (No. 53) to a Petkovski party, Ms Yanna Elfes; Lot 4 (No. 51) to Mr Goran Petkovski; Lot 5 (No. 49) to the Huangs; and Lot 6 (No. 47) to the Huangs. Lot 4 (No. 51) was subsequently transferred from Mr Goran Petkovski to Mr Petkovski in 2014.

16. The Huangs claim that they were in a position of special disadvantage in relation to Mr Petkovski and that Mr Petkovski acted unconscionably by applying illegitimate pressure to Mr and Mrs Huang to their agreement to the Petkovski parties becoming the purchasers of Lot 1 (No. 57), Lot 3 (No. 53) and Lot 4 (No. 51) by forcing them to execute the Trust Deeds, and then by subsequently taking the benefit of the rescission of three of the contracts with Pangani. The Huangs say that Mr Petkovski took advantage of them, both immigrants from China with a limited understanding of English, and who were highly dependent on Mr Petkovski as an experienced real estate agent for advice and information about the purchase.

17. The Huangs claim that Mr Petkovski’s conduct also contravened ACL, ss 18, 20 and 22 and they seek the following relief:

1. a declaration that Mr Petkovski holds Lot 1 (No. 57) and Lot 4 (No. 51) on constructive trust for the Huangs; and alternatively, equitable, compensation; and

2. equitable compensation in relation to the purchase of Lot 3 (No. 53) by Ms Yanna Elfes.

18. The Huangs also sought damages under ACL, s 236 for conduct by the cross-defendants contravening ss 18 and 20 (and alternatively to s 20, s 22). But, by the time of the hearing, the Huangs had abandoned any relief for revesting these properties in them.

19. The Huangs also raise a subsidiary purchase and subdivision issue. They allege in their Cross Claim that the plan of subdivision Mr Petkovski registered on 5 April 2011 was different to the plan in the contracts attached to the option agreements, under which the Huangs acquired the land from Pangani. The total area of the three lots retained by the Huangs was some 21.5 square metres less than the land area identified in the Pangani contracts. This difference in area is mostly accounted for by reduction in the size of Lot 1 (No. 57).

20. The plaintiffs/cross-defendants answer this part of the claim simply. They disown personal involvement in the decision to subdivide Lot 1 (No. 57) with boundaries different from the plans attached to the option agreements. They allege that the construction manager superintending building works on Lot 1 (No. 57), Mr Harry Fandakis, took it upon himself to lodge an application to modify the subdivision of Lot 1 (No. 57) to avoid a more expensive fire rating treatment of walls. Mr Petkovski says he was not aware of this application.

Procedural History of the Action

21. The plaintiffs commenced these proceedings on 21 October 2015 by Summons, followed on 15 December 2015 by a Statement of Claim.

22. Mr Huang filed his Defence on 27 January 2016, and he and his wife lodged a Cross Claim against all the plaintiffs, as cross-defendants.

23. On 2 March 2016, the Huangs obtained default judgment. But on 24 March, the default judgment was set aside under UCPR, r 36.15(1) on the basis that the entry of judgment had been irregular. The existing Cross Claim was also struck out under UCPR, r 14.28(1). On 18 April 2016, the cross-claimants filed a Further Amended Cross Claim (titled ‘Second Cross Claim’).

24. On 28 July 2016, White J ordered the parties to attend mediation. But the mediation failed. On 6 October 2016, the Huangs filed their Further Amended Second Statement of Cross Claim (referred to as the “Cross Claim” in these reasons), the pleading on which the proceedings were tried. On 4 November 2016, the cross-defendants filed their Defence to the Second Further Amended Statement of Cross Claim.

Pangani, the Vendor of the Watkin Street Properties

25. The statutory regime applying to Mr Petkovski and Mr Cochinas (who shall be introduced later in these reasons) as estate agents may be shortly stated. As a real estate sales person employed by a real estate agency, Mr Petkovski was required neither to obtain, nor be in any way concerned in obtaining (for example, through relatives), a beneficial interest in the property the subject of an agency agreement between a vendor and the sales person’s employer: Property Stock and Business Agents Act 2002 (“PSBA Act”), s 49. Contravention of PSBA Act, s 49 may be avoided if the written consent of the vendor in the prescribed form is obtained: PSBA Act, s 49(3)). Mr Petkovski has not contended that Pangani ever signed a consent in the prescribed form.

25. Pangani has never been a party to these proceedings. At the commencement of the hearing, the Court enquired whether Pangani had been served with notice of the proceedings. It emerged from this enquiry that Pangani had been placed in liquidation and had later been deregistered.

26. The Court expressed concern that, if Mr Huang’s case were made out, and if Pangani was unaware of the arrangements between Mr Huang and its agent, Mr Petkovski, that Pangani may yet wish to bring separate proceedings against Mr Petkovski. Such proceedings would be heard separately from the present proceedings, with the undesirable attendant risk of inconsistent verdicts. So the Court directed notice be given to the persons relevantly interested in Pangani about the issues raised in the Cross Claim.

27. The Court’s directions produced a response. Mr Scott Truman and Mr Michael Truman were identified as the last directors and shareholders of Pangani before deregistration. Mr Scott Truman was overseas when inquiries were made, but he emailed back a reply to the Court’s directions, saying:

“I have read the information provided and am of the opinion that we would be unlikely to take the steps suggested by his Honour to become a party in the action. I would be unable to arrange representation to appear by the specified time and date.”

29. The liquidator of Pangani before its deregistration, Mr Alan John Hayes of Hayes Advisory, indicated that there were no funds available in the liquidation and that there was no foreseeable prospect of the liquidator re-registering the company. On 28 August 2017, Hayes Advisory formally wrote on behalf of the directors of Pangani and the shareholders of the company, thanking the Court for making them aware of the proceedings and advising that “no further future action will be taken by the company, its directors or shareholder at this stage”. The Court will direct that the cross-claimants provide a copy of these reasons, or a reference where they can be found on the Court’s website, to Hayes Advisory within seven days of publication of the reasons.

30. The Court decided the matter should proceed without making further efforts to notify anyone associated with Pangani. It seemed insufficiently likely that Pangani would later seek to initiate proceedings against the parties to these proceedings to warrant further delay to the matter.

31. Before commencing the Court’s narrative of findings in relation to the unconscionable conduct claim, the credibility of the principal witnesses will be now briefly examined.

Mr Huang’s Credibility

32. The Court generally accepts Mr Huang as a credible witness. His evidence can mostly be relied upon as reliable and truthful. But assessing his credibility was a complex task. His difficulties with English and some at times strange evidence added to the puzzle of forming an opinion about him as a witness.

33. Aspects of Mr Huang’s testimony were troubling. One prominent example of this was his persistent refusal to recognise himself in a photograph on page 18 of Exhibit C (a set of photographs taken on Lot 1 (No. 57) and on Lot 3 (No. 53)). Mr Huang continually denied in evidence on Wednesday 23 August 2017 that he could recognise himself in this photograph. This was strange, as it was very obviously a photograph of him, dressed in an identical way to the manner in which he was depicted in other photographs taken at the same time. But he was not prepared to volunteer in cross-examination even that he “might have been” the person in the photograph.

34. But when he was asked further questions on this subject on Thursday, 24 August, he changed tack. He was asked whether if the photograph in Exhibit C was not of him, did he have any view as to who it was that was on the property dressed in the same way that he had been dressed in other photographs that he did recognise as photos of him. He then confessed to an error the day before. He finally said that he did recognise the photograph in Exhibit C as one of himself.

35. In my view, he always recognised the photograph in Exhibit C as a photograph of himself but was reluctant to admit that fact in his initial testimony, because he thought that the admission might disadvantage him in some way. His non-recognition of himself in this photograph does not bear directly upon any fact in issue. But his performance on this issue was damaging to his credit in showing that he was, for no explicable reason, prepared to stubbornly adhere to testimony that he must have known was wrong.

36. Aspects of Mr Huang’s unconscionable conduct case also led to direct challenges to his credibility. It was put to Mr Huang that he should have asked a lawyer about the alleged threats that he says were being made to him by Mr Petkovski. There was force in this cross-examination, as it was difficult to understand at first why he had not done so. He showed, for example, that he was later quite prepared to consult lawyers when he needed to do so. He had access to a number of lawyers at the time. But the Court accepts that he thought that going to lawyers would be useless and that he would lose everything if he did not comply with the pressure being placed upon him by Mr Petkovski. Ultimately, the Court has accepted the nature of this pressure and that his relationship with Mr Petkovski was such that Mr Huang genuinely thought at the time that lawyers could not help him. And his perception of lawyers was clouded by his personal experience: most of the lawyers Mr Huang had used had been introduced to him by Mr Petkovski.

37. Mr Huang paid a substantial deposit well before signing the Trust Deeds or the option agreements. He accepted some risk of the loss of this deposit. He was genuinely keen to proceed with these transactions which he saw as potentially very profitable for himself. He was keen to buy and hold them for profit. It is therefore unlikely that he would seek to share his investment with Mr Petkovski on a voluntary basis.

38. Substantial allowance must be made for Mr Huang’s lack of familiarity with English. Mr Huang felt very beholden to Mr Petkovksi. This was in part because Mr Huang perceived Mr Petkovski to be a well-connected source of future potential property transactions. Mr Huang did not want to miss property investment opportunities that were commonly offered and discussed in English, not Mandarin. Mr Petkovski took the time to explain to these opportunities through Mr Huang’s limited English. Mr Huang did not want to get on the wrong side of Mr Petkovksi. Mr Petkovksi well understood this aspect of Mr Huang’s dependence upon him and took advantage of it. For example, it must have been obvious to Mr Petkovski that Mr Huang had: (1) at any time throughout the subject transactions not obtained legal advice other than from Mr Lee and Mr Ng (who, the evidence will show, were probably also taking some instructions from Mr Petkovski); and (2) was almost entirely dependent upon Mr Petkovski for information about the details of and commercial merits of the transactions being proposed.

39. Mr Huang had demonstrable language difficulties. He had a capacity to understand and speak English in a slow and halting fashion. Quick or colloquial spoken English was beyond him. Mr Petkovski became an important communication gateway for Mr Huang. At one stage, Mr Huang was asked how he remembered a conversation that Mr Petkovski had with him on the telephone. This was indeed a puzzle. It is to be wondered how Mr Huang could converse by telephone with Mr Petkoski: Mr Huang could not clearly speak English and Mr Petkovski could not speak Mandarin. In answer to this question, Mr Huang managed to dramatically mouthe in “baby” English the very simple monosyllabic way that Mr Petkovski spoke to him on the telephone to convey meaning to him in English. Mr Huang’s demonstration of this in the court room was realistic and thoroughly convincing. It well explained how Mr Petkovski’s and Mr Huang’s communications had actually occurred.

40. But this also indirectly showed Mr Petkovski’s degree of control over Mr Huang. Mr Petkovski knew exactly how to speak to Mr Huang in simple English and he took the time to do so. This kind of communication from Mr Petkovski helps to explain the puzzling discontinuity, for example, between Mr Huang’s belief that the deposit was not refundable and the contrasting letter from Tome Bros dated 25 May 2010 that said the opposite. Mr Huang’s evidence was that he was threatened by Mr Petkovski with the prospect that his deposit would not be recoverable if he did not proceed with the purchase upon the terms Mr Petkovski had dictated. This, at first, looks doubtful in light of the letter of 25 May 2010, which clearly offered a refund of the deposit if the matter did not proceed.

41. But I accept Mr Huang heard Mr Petkovski say the deposit was not refundable, even though the letter says the contrary. But the contradiction between what the letter said and what Mr Huang was told never became obvious to Mr Huang. He never had the letter read to him word for word and he cannot read English. He relied on what Mr Petkovski had explained to him about the deposit.

42. The Court now comments on the credibility of the other witnesses, whose evidence was relevant to the unconscionable conduct and the trespass cases.

Credibility of Witnesses Other than the Parties

43. Mr Harry Fandakis, who was the supervising engineer for the subdivision, was a generally reliable witness. He could be forthright. He was concerned about the accuracy of his evidence; so much so that he readily questioned his cross-examiner, when he perceived questions put to him were not clear enough. Mr Fandakis was a witness of substantial truth. His evidence, for example, about altering the boundaries between Lot 1 (No. 57) and Lot 2 (No. 55) and why he undertook that exercise – to reduce the costs of compliance with the BCA for the fire-rated windows – was simple, compelling and logical. The Court accepts it entirely.

44. Mr Stan Tsoutouras was an excellent witness. He was an obviously diligent plumber, who had worked on many different tasks at the subdivision. He was demonstrably proud of the quality of his work and would only take responsibility for work that met his high standards. He had a ready familiarity with the sites of all the six lots to be subdivided from the Watkin Street property. At the Court’s request, he designed and costed a number of possible solutions to the trespass issues in the case. His credibility was not in issue. The Court has adopted aspects of his solutions in the relief ordered in this judgment.

45. Mr James Xu was a dependable witness. He was a longstanding friend of Mr and Mrs Huang. He assisted Mr Huang from time to time, when Mr Huang thought he would be unable to understand a transaction being discussed or conducted in English. Mr Xu attempted to answer all questions completely and truthfully. He was a witness of substantial truth. He gave considered answers reflecting on the questions asked of him, and only answered to the extent that he could reliably speak about the facts. His account of his meetings with Mr Petkovski and with Mr and Mrs Huang, where he acted as a translator, is entirely accepted. Substantial parts of what he said were not challenged in cross-examination.

46. Mrs Judy Wu also was an excellent witness. She had migrated from China in December 1989, barely six months after the Tiananmen Square massacres. For a period, she had a personal financial interest in the acquisition of the Watkin Street property. Therefore, she was very focussed upon the disputed events to which she was a witness. Her memory was sharply concentrated on what was said to her. The Court assesses her as a witness of substantial truth. Again, as with Mr Xu, she was not strongly cross-examined to suggest that her evidence may either be inaccurate or biased.

47. Mrs Huang was a truthful witness. I accept all her evidence. She had poor English and a limited education. She was highly dependent on her husband for communication in English with others. His English, despite its limitations, was still considerably better than hers. She was not in the habit of questioning her husband’s business decisions. She was naturally shy and somewhat overawed by the Court process. It would not occur to her to ask questions of persons who she accepted had authority to make decisions that might affect her financial interests, such as her husband.

48. She appeared to have a natural deference to such authority. She was, for example, cross-examined as to why she did not ask her husband, or their solicitor, about the various transactions in which she was included, about the legal effect of documents she signed, or about having important documents translated so she could better understand them. She looked quite mystified by these suggestions: such ideas had never occurred to her.

49. The protection of her own separate individual interests by asking questions and refusing to proceed further with a transaction, unless satisfied with the answer, was a concept beyond her experience. Her approach to life was straightforward: her husband could decide for her and she accepted his decisions. The Court sees no basis to discredit Mrs Huang’s testimony, as was suggested, because she did not question transactions in which her husband was involved, or seek to assert her own independent financial interests. Her evidence of lack of questioning of transactions is really a badge of her dependence and lack of capacity to protect her own interests.

Evidence of Serious Misconduct and Absent Defendants

50. The Court makes findings against Mr Petkovski in these reasons that amount to serious misconduct as an estate agent on his part. He has chosen not to give evidence. But he and the other plaintiffs/cross-defendants have been represented throughout the proceedings.

51. Such serious findings raise special considerations. In doing so, the Court has applied the principles in Bringinshaw v Briginshaw (1938) 60 CLR 336; HCA 34 (“Briginshaw”) and has had regard to Evidence Act 1995, s 140(2).

52. The strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to be proved; it is a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach is that a Court should not lightly make a finding that on the balance of probabilities a party to civil litigation has been guilty of such conduct: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 67 ALJR 170; [1992] HCA 66 at 170 per Mason CJ, Brennan, Deane and Gaudron JJ; see also Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 and Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361.

53. The plaintiffs/cross-defendants called no oral evidence from any party and did not call any witnesses to give oral evidence in their case. This led to debate on both sides about the application of the rule in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (“Jones v Dunkel”). The doctrine may be shortly stated. The unexplained failure by a party to give evidence, to call witnesses or to tender documents may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party’s case: Jones v Dunkel at CLR 308, 312 and 320-21. The rule also permits the trier of fact to take that into account in deciding whether to accept any evidence relating to a matter on which the absent witness could have spoken. The rule also permits the trier of fact to more readily to draw any inference fairly to be drawn from other evidence by reason of the opposing party being unable to prove the contrary, had the party chosen to call evidence. But the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it and the rule cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into inference: Nuhic v Rail & Road Excavations [1972] 1 NSWLR 204 at 206-7.

54. But the inference is one which will vary depending upon the circumstances. And this case is an example of how subtle those circumstances can be. The appropriate circumstances to call a witness will exist where it was within the power of a party to call the evidence which was not called. The Court of Appeal discussed this in Fabre v Arenales (1992) 27 NSWLR 437 (“Fabre”) at 449-450 (Mahoney JA, Priestley and Sheller JJA):

“The significance to be attributed to the fact that a witness did not give evidence will in the end depend upon whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party expected to call him feared to do so. But there are circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness. He may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him. The reason why the witness is not called may have no relevant relationship to the fact in issue: it may be related to, for example, the fact that the party simply does not know what the witness will say. A party is not, under pain of a detrimental inference, required to call a witness “blind”.

… A Jones v Dunkel inference may not arise if, for example, a witness has a reason for not telling the truth or refusing to assist and the party who may call him is aware of this.”

55. In Fabre, the Court of Appeal gave examples of witnesses whose absence might not support a significant Jones v Dunkel inference as including circumstances where a person would be asked to admit a serious crime. But whether or not the inference can be drawn may depend upon the closeness of the relationship of the absent witness with the party who did not call the witness: Hospitality Group Pty Ltd v Australian Rugby Union Limited (2001) 110 FCR 157; [2001] FCA 1040 at [64].

56. Greater significance will attach if the witness not called is a party to the proceedings, or a senior executive of the party: ASIC v Adler [2002] 41 ACSR 72 at [448]; [2002] NSWSC 171.

57. These principles apply to the position of each of Mr Petkovski and the other plaintiffs and cross-defendants. As the reasoning in this judgment shows, all of their conduct might be able to be criticised, particularly that of Mr Petkovski.

The Unconscionable Conduct Claim

58. The following is a narrative of the relevant history in relation to the Huangs’ unconscionable conduct claim. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded in these reasons. For reasons of economy, this narrative does not include reference to versions of the facts that have been rejected. A separate narrative appears later in these reasons dealing with the trespass claims.

Mr and Mrs Huang

59. Mr Huang was born in China and came to Australia in early 1989 on a student visa. After the Tiananmen Square massacres of June 1989, his student visa was replaced in January 1990 with a protection visa by the Australian Government. His student visa permitted him to study English but his protection visa allowed him to work to support himself and his family back in China. Language difficulties made finding suitable employment difficult for him. He had completed his secondary education in China but had been educated no further. His first language is Mandarin. As these reasons have already indicated, he speaks and understands very simple English but can neither read nor write English.

60. Mrs Huang was also born in China. Mr Huang sponsored her to come to Australia in 1992. She never attended school and has received no formal education. Mrs Huang's first language is also Mandarin but she can only read and write a limited number of Chinese characters. She grasps and can speak only a few English words and cannot read or write English. Mr and Mrs Huang both came from Houyuxiang, a village situated in Fujian Province, near the city of Fuzhou. Fujan Province is a part of coastal China facing northern Taiwan. Mr and Mrs Huang married in 1984 and have two children, who were born in China.

59. Mr Huang found employment alongside other Chinese migrants as a sweeper in a Sydney bread factory. From there he learned to bake. His acquired skills were profitable and his earnings enabled him to purchase his own bread factory in 1994. In November 1994, the Australian Government granted him a permanent visa. Mr Huang says, and the Court accepts, that although he has lived in Australia for nearly 30 years, he rarely socialises or communicates beyond the circle of Mandarin-speaking people in Sydney’s Chinese community, with whom he is most familiar. He has been able to advance in life in Australia without reading or writing English, but by relying on English speakers with whom he has become familiar, and in whom he has trust and confidence.

Mr Petkovski Introduces the Watkin Street Property – 2009

62. Mr Huang and Mr Petkovski first met in 2006. Mr Petkovski was a real estate sales representative, employed by Tome Bros, a real estate agency in Rockdale. They met during an open house inspection for a property in King Edward Street, Rockdale that Mr Petkovski was then marketing for Tome Bros.

63. Mr Petkovski was licensed under the PSBA Act as an employed real estate sales agent. Mr James Cochineas, a director of Tome Bros, held the Tome Bros agency’s licence and was responsible for supervising Mr Petkovski. In their conversations, neither Mr Cochineas nor Mr Petkovski used Mr Huang’s full Chinese name, Kai Hin Huang. For convenience, they preferred to call him “Johnny”, which also for convenience, he accepted.

64. Tome Bros also employed Mr Harry Fandakis as a consultant engineer and project manager. He was the project manager for the subdivision and development of the Watkin Street property. He became an important witness in relation to the trespass issues that are considered later in these reasons.

65. After that first meeting, Mr Petkovski telephoned Mr Huang to assess his interest in various other properties for sale in the local area. Appreciating that Mr Huang’s English was limited and that he found it hard to understand Mr Petkovksi on the telephone, Mr Petkovski often invited Mr Huang to the Tome Bros office to take Mr Huang through details of properties for sale and to explain their prices. In 2007, Mr Huang purchased two properties in King Edward Street, Rockdale, on which Mr Petkovski had acted as selling agent.

66. Mr Huang’s only form of contact with Mr Petkovski during this period was as prospective purchaser to real estate agent. Mr Petkovski initiated phone calls about potential properties to Mr Huang and Mr Huang often went to the Tome Bros office to discuss the properties. They did not otherwise have a social relationship.

67. In 2008, Pangani retained Tome Bros as the exclusive selling agent to sell the Watkin Street property. Mr Petkovski first introduced Mr Huang to the property in May 2009. The Watkin Street property had the unusual feature of six early 20th century style houses constructed on a single block of land. Mr Huang was initially unaware of this single title for the six houses. His early conversations with Mr Petkovski generally referred to the property in terms of “six lots”. Mr Petkovski did not clearly communicate to Mr Huang for some time that the six houses shared the one title.

68. Mr Petkovski sounded out Mr Huang for his potential interest in buying the Watkin Street property. Mr Petkovski opened the discussions, seeking an offer from Mr Huang: “how much would you pay for the property if you are interested?” In response, Mr Huang expressed a willingness to purchase all six lots for $2.5 million. Mr Petkovski promised to consult his principal. A short while later, Mr Petkovski telephoned Mr Huang and asked him to come into the Tome Bros office to discuss the property.

69. At the office, Mr Petkovski said that the vendor wanted “$2.7 million for the six lots”. He wrote the figure down on a sheet of paper and gave it to Mr Huang, who indicated he was prepared to buy it for that higher price. Upon Mr Huang enquiring about the amount of the deposit that was required, Mr Petkovski said to him “5% for each of the lots”.

70. Mr Huang acted quickly. He collected funds amounting to 5% of the $2.7 million proposed purchase price, namely $135,000, to give to Mr Petkovski. He brought a cheque to Mr Petkovski at the Tome Bros office in Rockdale. But when he tried to present it to Mr Petkovski, he was greeted with the surprising response, “the landlord [Pangani] wants $3 million instead of $2.7 million”. Mr Huang was not ready to deal with this further price hike, so he went home to think about what he should do next. Mr Huang nevertheless remained tempted to purchase all six houses.

71. From mid to late 2009, Mr Huang sat on the vendor’s request for $3 million. He needed to be persuaded to buy at this higher figure. Mr Petkovski rang him several times before Christmas 2009 to follow up the vendor’s new price. Mr Huang responded to these queries, saying to Mr Petkovski a few times, “I am not sure; $3 million is quite expensive”.

72. But by April 2010, Mr Huang was prepared to commit. He says, and the Court accepts, that he decided that month to purchase the six lots for $3 million. He went to see Mr Petkovski at the Tome Bros offices in Hurstville and told him of his desire to proceed. The detail of that conversation is referred to below.

73. From this time on, Mr Petkovski gave Mr Huang informal support to promote the purchase of the Watkin Street property. For example, in May 2010, he provided Mr Huang with real estate agent’s letters offering his expert opinion about the probable rental returns from Mr Huang’s existing investment properties in Edward Street to assist him to demonstrate to prospective lenders the reliability of his income for servicing future borrowings to acquire the Watkin Street property.

Subdivision Approval Secured – January to March 2010

74. On 11 January 2010, Mr Fandakis, with Pangani’s consent, lodged a development application with the Rockdale City Council (“Rockdale Council”), the relevant consent authority, to subdivide the Watkin Street property into six separate lots, with one house on each lot. A surveyor, Mr Matthew Cleary, had prepared this plan of subdivision in 2008.

75. Rockdale Council approved the subdivision on 24 March 2010. The general conditions of development approval required various works to be carried out on the property prior to registration of a plan of subdivision. Registration was ultimately not achieved until just over two years later on 5 April 2012.

Mr Huang Confers with Mr Lee – Mid-March to Early April, 2010

76. In early 2010, Mr Petkovski recommended that Mr Huang consult a particular solicitor, Mr Raymond Lee of Raymond Lee & Co, to assist Mr Huang with the conveyancing on the purchase of the Watkin Street property. Mr Huang felt obliged to accept this recommendation. Mr Huang’s acceptance of a lawyer-referral from the agent for the other side of the transaction he was about to enter at first seems surprising. But Mr Huang accepted the recommendation, in part because he had already become dependent on Mr Petkovski’s advice about property transactions and in part because he was not familiar with other solicitors.

77. Mr Huang retained Mr Lee for the conveyancing. Mr Lee acted in that role until December 2010, when a new solicitor was engaged, Mr Alan Ng. Mr Lee did not give evidence at the hearing. But his file notes produced under subpoena allow some limited inferences to be drawn with reasonable confidence about what passed between Mr Huang and Mr Lee at their various meetings.

78. The Court generally accepts Mr Huang’s account of his various communications with Mr Lee. On 16 March 2010, Mr Petkovski initiated Mr Huang’s referral to Mr Lee. He telephoned Mr Lee and organised an appointment for Mr Lee to see Mr Huang. Mr Petkovski also gave Mr Lee’s business card to Mr Huang and told him to go and see Mr Lee. Mr Huang visited Mr Lee the same day in George Street, Haymarket. Mr Lee only spoke Cantonese and English. Mr Lee therefore arranged an interpreter to speak to him in Mandarin on each of the several occasions that they consulted each other. Mr Lee’s notes of their first conference on 16 March 2010 record that there was an interpreter called "Grace" present.

79. The conference on 16 March 2010, between Mr Huang and Mr Lee, was to instruct Mr Lee about putting an offer to Pangani. Mr Huang was exploring his options at this first meeting. Mr Huang wanted a 12 month settlement period under the proposed contract with Pangani. It appears that, as time had gone by, the vendor had by March 2016 again sought to raise the price, this time to $3.15 million.

80. Following up on the instructions given in this 16 March 2010 conference, Mr Lee wrote to Mr Cochineas at Tome Bros on 18 March 2010, formally conveying an offer for the Watkin Street property from Mr Huang for $3.15 million, to proceed by way of an assignable call option exercisable by Mr Huang within 12 months of the date of the call option deed, at a call option fee of $200,000.00, which would be deductable from the purchase price, and on otherwise acceptable terms.

81. On 19 March 2010, Mr Cochineas told Mr Huang that the Watkin Street property could not be subdivided. An application for subdivision was already before Rockdale Council, and faced an obstacle so approval had not yet been granted. That approval was not given until 24 March 2010. Mr Huang accepted what Mr Cochineas told him. Mr Lee and Mr Huang then spoke. Mr Huang was informed that easements needed to be created for each driveway in the subdivision and for Sydney Water in one line. This is probably the obstacle to subdivision to which Mr Cochineas was referring.

82. On 6 April 2010, Mr Cochineas telephoned Mr Lee and told him that Pangani would get immediate approval to subdivide and that the vendor was not keen on the 12 month option period referred to in Mr Lee’s 18 March 2010 letter. But this conversation is also somewhat strange: Pangani already had an approval for a subdivision at the time Mr Cochineas made the phone call.

83. On 8 April 2010, Mr Huang again conferred with Mr Lee. A different interpreter was present. Mr Huang’s instructions relevantly were that Mr Huang was: arranging funds from China for the deposit; wanting Mr Lee to look into the development approval and advise on the possibility of subdividing later; and wishing to on sell separately to different people within 12 months. Mr Lee’s legal costs were discussed and the complexity of the transaction was mutually acknowledged.

84. Mr Lee’s file note of this conference suggests that Mr Huang and Mr Lee had, by this date, become aware of the Rockdale Council development approval to the subdivision which had come through a few days earlier.

Ms Judy Wu Becomes Involved – April 2010

85. In early April 2010, a long-standing acquaintance of Mr Huang, Ms Judy Wu, began to discuss with him the possibility of funding part of the purchase of the Watkin Street property and of her acquiring an interest in two of the lots in the proposed subdivision.

86. Ms Wu had come to Australia from China in 1989. She met Mr Huang here through a mutual friend. Mr Huang and Ms Wu lived in the same flat as housemates and they have remained friends ever since.

87. Mr Huang had a combination of reasons for introducing this commercial opportunity to Ms Wu. He trusted her completely. She had previously retained Mr Lee as her solicitor. Mr Huang thought that Ms Wu would be better able to give instructions to Mr Lee about the details of the transaction than he could himself. He thought her involvement would be useful.

Mr Huang Pays a $15,000 Preliminary Deposit at Tome Bros – 13 April 2010

88. On 13 April 2010, Mr Huang visited the offices of Tome Bros and spoke to Mr Petkovski about purchasing the Watkin Street property. Mr Huang had decided to proceed and said, “I only have $15,000 in my bank account; I can give you the rest of the deposit when I withdraw [the money] from my other bank account”.

89. In response to this, Mr Petkovski made a statement which led to a central controversy in the proceedings. Mr Huang’s account is that Mr Petkovski said to him in reply that Mr Huang would lose his deposit if he did not go ahead. The Court accepts his account that the conversation proceeded with Mr Petkovski saying, “Yes, sure. But one thing you need to make sure is that if you decide not to buy, you will lose the deposit and we will not refund you any money that you put in”.

90. This did not seem initially to be a problem to Mr Huang, who was keen to proceed. He simply said to Mr Petkovski, “Ok. I am sure I want to buy the property”. He was referring to the whole property. The Court infers that he wanted to purchase the whole site, subject to sharing two lots with Ms Wu.

91. On this occasion Mr Petkovski gave an example to Mr Huang to get his point across, "If for instance, the house is $3 million and you don't buy it, you lose deposit [sic]. If, later, we sell the house for $2.5 million, then you will have to compensate us $350,000.00 ($500,000 less $150,000 as deposit) as we will suffer loss”. I accept that, at this early stage, Mr Petkovski did not mention the deposit as being refundable.

92. Mr Huang gave Mr Petkovski a cheque for $15,000 that day, in exchange for a Tome Bros trust account receipt, endorsed as follows, “preliminary deposit property 47 to 57 Watkin Street property”. The cheque was drawn on the account of Xing An Enterprises Pty Ltd, a company jointly owned by Mr Huang and his sister and which operated Mr Huang’s bakery business.

Mr Lee, Mr Huang and Ms Wu – April to May 2010

93. Mr Lee, Mr Huang and Ms Wu met or communicated by telephone several times between April and May 2010 to try and progress the purchase. Mr Lee and Ms Wu spoke by telephone on 29 April 2010. Ms Wu was keen to commit. She wanted to know whether contracts for the purchase had been exchanged.

94. In late April or possibly early May 2010, Mr Petkovski first broached with Mr Huang the topic of the property being split into six titles. In a conversation in the Tome Bros office, Mr Petkovski said, “the property has to be split into six titles”.

95. Mr Huang was surprised. He thought the property already was comprised of six separate titles. But he was unperturbed by this new information. He wanted to buy the six houses and their surrounding land in whatever form they were available.

96. But he did question why there needed to be a split at all. He was unaware how far the subdivision application had proceeded over recent months. So, Mr Huang said to Mr Petkovski, “Why should I split?” I want to buy six lots without subdivision. I don’t need to divide the property. I don’t need the purchase to be messy. Just give me the contract and we can settle on the purchase”.

97. Mr Lee met Ms Wu on 30 April 2010. Ms Wu was then proposing to buy part of the Watkin Street property with its own separate title and to further subdivide it later. Ms Wu’s continued involvement in meetings throughout this period shows her keenness to proceed.

98. Mr Lee’s file note for 30 April includes a notation "3.05m has been accepted". Since mid-April, there had been further negotiations between Pangani and Mr Huang, through Mr Petkovski, which appear to have resulted in this new compromise sale figure of $3.05 million being reached.

99. On 4 May 2010, a further meeting took place between Ms Wu, Mr Huang and Mr Lee in relation to the purchase of the Watkin Street property. At this meeting, Mr Huang and Ms Wu confirmed the new total purchase price of $3.05 million and that this purchase price would be apportioned equally six ways and the property would be divided into six separate and equal lots. Mr Huang and Ms Wu agreed that Mr Huang would receive four houses of the six in the Watkin Street property and that Ms Wu would receive two houses. They both expected each would be divided into its own separate lots.

100. Mr Lee’s notes confirm this and confirm that the total purchase consideration of $3.05 million was going to be divided six ways with Mr Huang being responsible to fund the purchase price of four out of the six lots, namely a total consideration of $2,033,333, and that Ms Wu would be responsible to fund the balance, being a total consideration of $1,016,666.67. As the agent wanted them to pay a 5% deposit as soon as possible, Mr Lee calculated that Mr Huang’s deposit would be $97,343 and Ms Lee’s would be $41,200.50.

101. By early May 2010, Mr Huang was actively looking for finance for the proposed purchase. He had already gone to St George Bank, as had Ms Wu. Mr Petkovski was assisting him in this with written valuations of the two properties Mr Huang owned in King Edwards Street Rockdale and another property in Eastlakes, all of which were to be offered as security for Mr Huang’s borrowings.

102. Mr Lee confirmed with Ms Wu and Mr Huang on 14 May 2010. He advised Ms Wu that she could pay the deposit to the agent but she was not to sign anything and to make sure she obtained a receipt from the agent and mark it “refundable” if the matter did not proceed. This tends to suggest that Ms Wu was aware that the receipt moneys may have be refundable. But her situation on this issue is to be contrasted with Mr Huang’s: given what Mr Petkovski (who he trusted) had said to him, he thought that the deposit would not be refundable.

103. On 17 May 2010, Mr Lee wrote to Mr Cochineas querying a statement Mr Cochineas is alleged to have made: that the Watkin Street property had already been subdivided and each of the six houses on the Watkin Street property had a separate and independent title. Mr Lee said:

"We refer to the above and advise that we had a conference with our clients on Friday the 14th May, 2010. Our clients had advised that at that time you had advised that property had already been sub-divided and each of the six (6) houses on the said property had, at this time, separate and independent Certificates of Title.

We advised that our clients that we were of the view that the sub-division had not as yet taken place. We would be pleased if you would confirm that regard.

We are instructed that our clients wish to proceed with the purchase of the property and now understand that a contract will be issued to our office for our clients in relation to their proposed purchase. We understand that six individual contracts will be issued each subject to and conditional upon the registration of the plan of subdivision. We understand that our clients will have or will pay 5% deposit into you trust account as a holding deposit to be refunded in the event that the matter does not proceed."

104. On 18 May 2010, Mr Cochineas replied to Mr Lee stating "I think there is confusion with Johnny possibly the language barrier".

"We have explained the subdivision not gone through as yet. At the moment we have council approval, land titles office approval and are just waiting for the water board to inspect the properties for the sewer approval. We do not envisage any problems.

Our client agrees to prepare the six contracts with a conditional clause that each property will have its own certificate of title.

We have spoken to Johnny today to pay the 5% deposit which will be held in trust as a holding deposit once we have received the deposit we will instruct the vendor's solicitors to prepare new contracts."

105. Thus the amount of the deposit as 5 per cent of $3,050,000 was agreed in the discussion on 18 May 2010 between Mr Petkovski and Mr Huang.

106. On 19 May 2010, Ms Wu gave Mr Lee a bank cheque drawn in favour of Tome Bros for $137,500.00 ($137,500 plus $15,000, namely $152,500, which is 5% of $3,050,000.00). The cheque for $137,500.00 was drawn by Mr Huang and Mrs Huang on a Home Loan account. A copy was left on Mr Lee’s file.

107. On 20 May 2010, Mr Cochineas wrote to Mr Lee to try and clear a log jam about the purchasers paying the deposit. The letter states in part:

"We refer to your letter dated 14 inst and advise that from first conversations with your client we had explained that the properties are not subdivided and made him aware of such. Due to the fact that on two occasions finance approval had been declined because all six homes were registered on one title. We did though explain to your client that we have commenced with the subdivision on behalf of the vendor.

We are trying to assist your clients in the purchase of the properties, but the matter has been dragging on now for some six weeks, with an initial offer by your clients at $3,150,000 which the matter did not proceed. A further counter offer of $3,050,000 was made and the matter has still yet to proceed further.

Kindly understand the frustrations of the vendor and his thoughts that your clients are not financially stable enough to pay a 5% deposit. Let alone raise the finance on the properties.

In your correspondence you mention that your clients will pay 5% deposit which will be held in trust as a holding deposit pending receiving six contracts on exchange. Furthermore the vendor agrees to instruct his solicitor to prepare contracts, but please understand that the preparation of six contracts is not a cheap exercise and he is reluctant to do so until he receives the 5% deposit.

Raymond please advise you client to pay the deposit and allow us to move along in this matter. Also understand that time is of the essence because the final subdivision approval is not far away and if we do not progress the matter rapidly the vendor may offer to sell them separately on the public market."

108. On about 21 May 2010, Mr Petkovski telephoned Mr Huang and said that the contract was ready and asked for the purchasers to pay the rest of the 5% deposit to Mr Lee. Mr Huang went to Mr Petkovski’s office. Mr Petkovski wrote down the precise amount Mr Huang needed to pay, gave it to him and asked him in turn to give it to Mr Lee.

109. Between 25 May and 1 June 2010 Ms Wu reimbursed Mr Huang for the purchase of her two houses, a total sum of $50,834. She did so in five instalments of $10,000 on each of 25, 26, 27 and 28 May and 1 June 2010, together with a payment of $834 on 31 May 2010.

The Deposit Paid and Contract Delayed – Late May to Late September 2010

110. By 25 May 2010, Mr Huang and Ms Wu had instructed Mr Lee to pay the balance of the deposit. Pangani was refusing to instruct its solicitor to issue a contract unless the 5% deposit was paid. Mr Huang and Ms Wu were keen to pay the deposit but did so subject to conditions set out in an accompanying letter.

111. On 25 May 2010, Mr Lee wrote to Mr Cochineas:

"We refer to the above and have been instructed that our clients wish to proceed with the purchase of the property subject to the following:

1.   Six (6) individual Contracts will be issued, each of such subject to and conditional upon the registration of the plan of subdivision.

2.   The time for registration of the plan of sub-division (sunset date) is 30 November 2010,

3.   Settlement is within 21 days after the purchasers receiving notice of the registration of the plan of subdivision from the vendor.

Please confirm the above in writing.

We understand that our clients have paid $15,000.00 deposit and will pay the balance of 5% deposit upon your confirmation that the vendor will issue to our clients (sic) contracts which include the above conditions. The deposit is to be held in your Trust Account as a holding deposit and is to be refunded to the purchasers in the event that the matter does not proceed.

We look forward to receiving your confirmation of the above and the draft Contracts in due course."

112. Mr Cochineas replied to Mr Lee the same day. His reply became controversial: it contradicts Mr Huang’s claimed belief that he was told that the deposit would not be refunded, if the purchase did not proceed:

"We refer to your email dated 24th instant and confirm that your client wishes to proceed with the purchase of the subject property.

We advise that after discussions with the vendor the following was confirmed:

1.   Six (6) individual Contracts will be issued, each of such subject to and conditional upon the registration of the plan of subdivision. Agreed

2.   The time for the registration of plan of sub-division (sunset date) is 30 November 2010. Agreed

3.   Settlement is within 21 days after the purchasers receiving notice of registration of the plan of subdivision from the vendor. Agreed

Furthermore, we confirm that we are holding in trust $15,000.00 deposit and await the balance of 5% deposit at your clients (sic) earliest convenience. The deposit will be held in our Trust Account and the vendor agrees for it to be refunded to the purchasers in the event that the matter does not proceed".

113. Despite Mr Lee’s letter and Mr Cochineas’ reply, the Court accepts Mr Huang’s evidence that he believed the deposit was not refundable. The reasons for that acceptance have been explained earlier in relation to the assessment of Mr Huang’s credibility: Mr Petkovski had directly represented to Mr Huang that the deposit was not refundable and that was a continuing powerful influence on Mr Huang’s mind.

114. The ultimate delay between receipt of the final amount of the deposit of $152,500 and the execution of the Option Agreements was not necessarily part of a deliberate scheme to place the Huangs in a position of disadvantage to pressure them to sign the later Trust Deeds and Option Agreements. There may have been a legitimate reason for Pangani to ask for and hold a refundable deposit in circumstances where it was originally contemplating itself undertaking the subdivision works. But whatever Pangani’s or Mr Petkovski’s reasoning for asking for the deposit, ultimately does not matter. What does matter is that once the deposit was paid it was represented to Mr Huang as being non-refundable, which became an important pressure point compelling him into signing the subsequent Trust Deeds. The receipts for the deposits did not contain any written conditions and were not a basis for Ms Huang to conclude that the deposits might be refundable.

115. On 25 May 2010, Mr Lee’s office delivered the $137,500 cheque for the balance of the 5% deposit to Tome Bros. Mr Lee requested the contracts for sale at the same time. But they were not yet available.

116. On 2 June 2010, Mr Cochineas advised Mr Lee that the vendor's solicitor would be able to issue contracts "this week". The information provided by Mr Cochineas was relayed through to Ms Wu. This turned out to be an optimistic assessment.

117. The proposed transaction proceeded along reasonably conventional lines in the first half of June 2010. The vendor continued to promise that contracts would be delivered to Mr Lee. Mr Cochineas invited the purchasers to suggest any necessary changes to the contract before exchange. In mid-June, the purchasers instructed Mr Lee that they would need six months to complete and were prepared to accept an 8% penalty for any failure to complete within that time. But the position they were taking was that if they could not complete within six months they were prepared to forfeit their deposit, provided they could continue to buy the property as one title and presumably subdivide it later themselves and take a profit in that way.

118. Up to the middle of June 2010, the parties were negotiating on the basis that the vendor would complete the subdivision. But the vendor lost interest in undertaking that responsibility and decided to shift the task onto the purchasers.

119. The vendor’s decision to shift to responsibility for the subdivision to the purchasers focussed Mr Huang’s and Ms Wu’s minds about which of the six properties each of them was to get and in what proportions and with what co-purchasers. By about 22 or 23 June 2010, they had reached agreement to lodge the subdivision plan themselves and had settled on the title particulars of all six lots post subdivision. They were made aware of the extra cost involved for them in subdividing. But provided they had extra time to complete, they were prepared to subdivide themselves.

120. They agreed that the properties would be held as follows: Lot 1 (No. 57) by Hua Tang (Ms Wu’s son) (95%) and Ms Wu (5%) as tenants in common; Lot 2 (No. 55) by Ms Wu (95%) and Hua Tang (5%) as tenants in common; Lot 3 (No. 53) by Mr and Ms Huang; Lot 4 (No. 51) by Mr and Mrs Huang; Lot 5 (No. 49) by Mr and Ms Huang; and Lot 6 (No. 47) by Mr and Mrs Huang.

121. Subsequent events meant that the Watkin Street property sale did not proceed in this way. But the extent of this agreement reached this early between Mr Huang and Ms Wu shows their mutual commitment to proceed: Mr Huang deciding to purchase with his wife in equal shares, and Ms Wu deciding to purchase with her son in a very specific ratio.

122. Pangani’s solicitors sent draft contracts to Mr Lee in the last week of June 2010. Mr Lee advised his clients, including Mr Tang, by letter on 28 June 2010 about these draft contracts saying that: the purchasers would have the obligation to register the proposed plan of subdivision; the vendor would give no warranty in relation to registration of the subdivision and the purchasers may make no objection, requisition or claim for compensation in relation to the proposed plan of subdivision; and, if the plan of subdivision was not registered within six months of the date of the contract and the six separate folio identifiers were therefore not created, then either party (including the vendor) would be able to rescind the contract.

123. Mr Lee also pointed out in this letter that: the cost of proceeding with the subdivision could be substantial. Mr Lee seemed to be under the misapprehension in giving this advice that a development application had not yet been approved. But his advice nevertheless correctly emphasised the potentially substantial cost of compliance with the development approval to achieve subdivision. He further pointed out that the draft contract did not provide for the vendor to reimburse the purchasers for monies spent in relation to the subdivision, in the event that the contract was rescinded. Mr Lee’s clients confirmed that the total price for the land was agreed at $3.05 million.

124. On 28 June 2010, Mr Lee also wrote to Alfred J Morgan & Son, the solicitors for the vendor, confirming that Mr Lee had the six contracts, listing the purchasers as had been agreed between Mr Huang and Ms Wu, and that the price of each lot was to be $508,333.00 ($3,050,000 ÷ 6).

125. But in early July, price and subdivision disinformation began to emerge. On 5 July 2010, Mr David Morgan, the solicitor with carriage of the transaction for the vendor at Alfred J Morgan & Son, telephoned Mr Lee to say that it was his understanding that Pangani had not accepted the $3.05 million offer to purchase made by Mr Huang and Ms Wu. Ms Wu called Mr Lee the same day to advise that she had been told by someone described as “the agent” that her price for each lot was $550,000.00 and that the agent (as distinct from the vendor) would attend to registration of the plan of subdivision. This was an early sign that the agent was perhaps taking a course independent of his own vendor.

126. On 6 July 2010, at a further conference between Mr Lee, Mr Huang, Ms Wu and Mr Tang, the clients instructed Mr Lee that they wanted to proceed at what they thought was the agreed price of $508,333.00 per lot and that they would arrange to meet the cost of the subdivision between themselves.

127. Despite the letter from Mr Lee to Mr Morgan of 28 June 2010, that provided all the details to go into the six contracts to be issued, no exchange had yet occurred and Pangani had not even issued the six separate contracts.

128. Between August and October, little was heard from the vendor and the purchase arrangements stalled. During September, Ms Wu and Mr Huang made further enquiries about the various costs of carrying out the works to register the plan of subdivision. Mr Cochineas and Mr Petkovski were involved in these discussions, which centred around the vendor’s unwillingness to allow an extended settlement for the purchasers to complete the subdivision and around whether the vendor would agree to bearing any of the costs of subdivision.

129. But the vendor was becoming restive. In October 2010, Mr Cochineas or Mr Petkovski advised Ms Wu that Pangani wished to increase the purchase price to $3.1 million. Conversations concerning the possible increase in the purchase price continued.

130. Later in the same month, on 28 October 2010, Mr Lee’s file notes record that Ms Wu was passing on to her solicitor some disturbing information, “Agent told her the agent is buying the property and is not selling to her and will refund the 5 per cent deposit”. The file note is undoubtedly authentic and is one of the early signs of the agent’s emerging plans. The only agent with whom Ms Wu was dealing on a regular basis was Mr Petkovski, who the Court infers was the agent referred to in this file note.

131. Mr Huang and Ms Wu were ready to purchase the Watkin Street property as one title and arrange between themselves to divide it, as to two-thirds to Mr Huang and Mrs Huang, and as to one-third to Ms Wu and her son. But Mr Petkovski resisted this course. He insisted that Pangani would only agree to sell the Watkin Street property after it had been subdivided.

132. The position Mr Petkovski was taking was a reversal of the vendor’s sentiment expressed only some months earlier: that the purchasers were to take full responsibility for the subdivision. And by October 2016, the agents were themselves curiously becoming more heavily involved in trying to effect the subdivision. This anomaly is explained by the later conduct of the agents. Subsequent events tend to suggest that, between May and October 2010, the agents began to conceive a plan in which they would effect the subdivision and buy some of the lots themselves. That emerging plan is detailed in the next section.

Mr Petkovski Makes a Clear Demand – November 2010

133. The inaction on the vendor’s side has another explanation. Mr Petkovski was developing a proposal which he had first floated to Mr Huang in about June 2010. Mr Huang was indifferent as to whether the property was purchased under the same title, or in six lots. He was quite prepared to split the property between Ms Wu and himself after the purchase if it was only available as one title. He trusted her and was comfortable that they would have little difficulty in making this happen between themselves.

134. But Mr Petkovski began to insist to Mr Huang, “the property has to be split into six titles” before purchase. Mr Huang queried this, saying, “Why should I split?” and again, “I don’t need to divide the property. I don’t need the purchase to be messy. Just give me the contract and we can settle on the purchase”.

135. Ms Wu had had a similar conversation with Mr Petkovski in about May 2010, in which Mr Petkovski insisted, “Only after the property has been subdivided into 6 lots will I be able to exchange contracts with you”.

136. Mr Petkovski’s motives for controlling the timing of the subdivision were revealed more clearly a few weeks later. One day in conversation in his office, he said to Mr Huang, “My boss, James Cochineas said his daughter, Yanna Elfes, wants to purchase one of the lots from you. So it’s better to divide one title into six titles”.

137. Mr Huang immediately refused. In response, Mr Petkovski said, “If you disagree with this subdivision, I cannot give you the contract for the sale of the six lots”. Mr Petkovski persisted in this position, pointing out to Mr Huang that he should take advice from Mr Lee “and agree with the subdivision, and then I can give you the contract”. Mr Huang would not agree to a subdivision before sale. No contract was forthcoming. Given what Mr Petkovski had said, it should be inferred that the two events were connected.

138. The suggestions that the Watkin Street property be subdivided and relatives of the agents take some of the subdivided lots remained an inchoate suggestion until November 2010. Before then, the suggestions were more Mr Petkovski dropping broad hints to Mr Huang. But the proposal became far more concrete during an unusual meeting in November 2010, when Mr Petkovski expressed what he wanted to Mr Huang in the form of a demand.

139. In November 2010, Mr Petkovski called Mr Huang and asked to meet him at Rockdale train station. This strange choice of venue presaged a strange request. When they met there Mr Petkovski said, "My son and I both want two of the six lots from you". Mr Huang did not want to go along with this and replied, “No, I cannot agree with it". Mr Petkovski then said, "If the people I've told you about can't buy it [the Watkin Street property] then you won't be able to purchase the property". This made it quite clear Mr Petkovski was demanding a sale on to Mr Petkovski’s relatives as the price for Mr Huang having any access to purchase. Mr Petkovski’s words also implicitly made clear to Mr Huang that Mr Petkovski was in a position to prevent the sale if Mr Huang did not co-operate with his demand.

140. Mr Huang called Ms Wu and explained to her, “Luben wants two lots, otherwise the property transaction may not go through”. Ms Wu’s evidence confirms this conversation. She says that Mr Huang called her saying, “Luben wants to buy the two lots and if he cannot, there will be a hindrance to the property transaction”. Her recollection reaffirms the essential idea that Mr Petkovski was saying that no part of the transaction would proceed unless Ms Wu and Mr Huang agreed to forego two lots. Their versions are very close and corroborate one another.

141. At the same time, other discussions were taking place between Alfred J Morgan & Son and the agent. For example, in an email of 12 November 2010, Mr Cochineas gave instructions to the vendor’s solicitors about the structure of the contract that needed to be prepared. But it is quite evident from this and their other correspondence at the time that Mr Cochineas does not mention to Pangani’s solicitors that the agents are, by then, planning to purchase some of the Watkin Street property lots for themselves. There is no evidence in this contemporaneous file material that Tome Bros had told Pangani, or had any plans to tell Pangani, of their interest in purchasing lots from the Watkin Street subdivision.

142. Ultimately Ms Wu and Mr Huang compromised to save the purchase. She agreed to forego one lot, and he agreed to forego the other. Mr Huang says, and the Court accepts, he did this because Mr Petkovski’s demand made him feel powerless and that he really had no choice in the matter.

Events During December 2010

143. Mr Huang’s and Ms Wu’s account of their dealings with Mr Petkovski in November 2010 are confirmed by conversations that both Mr Petkovski and Ms Wu had with Mr Lee on 6 December 2010. Mr Petkovski visited Mr Lee’s offices that day and had a conversation with him, in which Mr Petkovski dictated the terms of purchase along the lines of his demand to Mr Huang. Mr Petkovski said to Mr Lee that now Ms Wu was buying Lot 1 (No. 57), Mr Huang was buying Lot 2 (No. 55), Lot 6 (No. 47) and Lot 5 (No. 49) and that other buyers were now purchasing Lot 4 (No. 51) and Lot 3 (No. 53), using other solicitors.

144. Mr Petkovski further explained to Mr Lee that he had suggested that these other buyers come to Mr Lee so that he, Mr Lee, could act for all purchasers and that the buyers had the obligation, under this revised arrangement, to attend to the subdivision of the land, with the subdivision costs equally shared among them. The final element of Mr Petkovski’s communications to Mr Lee was that there would be a proposed settlement period of 4 months, not subject to extension beyond 2 months because of delays in the subdivision. During this extension, the purchaser would have to pay 8% interest per annum to the vendor.

145. Mr Lee’s file notes of 6 December 2017 are revealing. They record that Mr Petkovski visited Mr Lee’s office to tell him there would be new purchasers involved. What Mr Petkovski (described in the file note as “Lou”) says to Mr Lee is consistent with Mr Huang and Ms Wu’s versions of what had happened in November. Mr Petkovski says to Mr Lee that in respect of Lot 3 (No. 53) and Lot 4 (No. 51) that there will be “another buyer” who will be “using another solicitor” for each of those lots. He adds that the buyers, as the file note records, “are related to Lou” and their purchases will take place through a trust. Of course, this contact to Mr Lee from Mr Petkovski raises the question: why is Mr Petkovski saying this to the purchaser’s solicitor at all? One would ordinarily only expect him to be communicating to the purchasers’ solicitor in relation to the vendor’s business. But in this conversation he is clearly rearranging the identity of the purchasers.

553. In their Statement of Claim (at [17], [20]-[21]), the plaintiffs plead that, on about 7 December 2014, Mr Huang wrongfully entered Lot 1 (No. 57) and demolished and removed the stormwater piping which had been installed on that property. The plaintiffs contend that, in doing so, Mr Huang acted with conscious disregard for their rights, and thereby committed a trespass.

Factual Background

555. On 7 December 2014, in the course of undertaking development works on Lot 1, Mr Tsoutsouras attached stormwater piping to the eastern side of the wall of the building erected on Lot 1 (No. 57). The piping is shown in Photographs 5 and 6 (Exhibit C) and is referred to at [15] of Mr Tsousouras’ affidavit, where Mr Tsoutsouras deposes that: the horizontal water pipes were installed by him as stormwater piping work; that the pipes were 100 millimetres in diameter; and, that once installed, they protruded out from the wall by 220 millimetres. His evidence on this can be accepted.

556. The plaintiffs allege that on the next day, 8 December 2014, Mr Huang wrongfully entered Lot 1 (No. 57) and removed the stormwater pipes. Photographs 7 and 8 in Exhibit C are said to depict the removed pipes. That is what the photographs do show. Mr Fandakis said, and the Court accepts, that he observed that the stormwater pipes had been removed from the wall at about this time.

Submissions – The Huangs

557. The Huangs contend that the installation of the stormwater piping to the eastern side of the house on Lot 1 (No. 57) constituted an interference with the right of carriageway benefiting Lot 2 (No. 55).

558. The Huangs submit the right of the carriageway of variable width enjoyed by Lot 2 (No. 55) extends from the wall of the dwelling at Lot 2 (No. 55) to the brick and sandstone wall of the building on Lot 1 (No. 57). At its narrowest, the gap between Lot 1 (No. 57) and Lot 2 (No. 55) is 2.320 metres wide. The right of carriageway over Lot 1 is approximately 1 metre. The Huangs submit that, once the stormwater pipe is added, it narrows the total width between Lot 1 (No. 57) and Lot 2 (No. 55) to 2.205 metres, and that the width of the right of carriageway over Lot 1 (No. 57) is then narrowed to approximately 0.8 metres. The Huangs submit that the narrowing of an already narrow right of carriageway by a further 115 millimetres is significant. They further submit that the intrusion is also unreasonable and unnecessary because the pipe could readily have been placed at a higher point on the eastern wall of the building on Lot 1 or alternatively at the rear of Lot 1 (No. 57).

559. The Huangs submit that Mr Huang utilises the space between the dwellings on Lots 1 (No. 57) and 2 (No. 55) to drive vehicles into the backyard of Lot 2 (No. 55). They submit this necessarily involves his driving along and using the right of carriageway. The expert evidence the Huangs have adduced from a registered land surveyor, Mr Scott Murray, says that the wall-hung stormwater pipe did represent a substantial obstruction, as the driveway was already narrow.

560. The Huangs rightly accept that if their defence of abatement of this alleged nuisance fails, Mr Huang has trespassed on Lot 1 by removing the 2014 stormwater pipe from the eastern side of the dwelling on Lot 1 (No. 57). But they argue that this was always a minor trespass, as there were always alternative places on Lot 1 for Mr Petkovski to locate the pipe.

561. The future management of this issue is resolved. This has come about as a result of the exploration of the issues in the evidence. The Huangs consent to the granting of a licence to enable the stormwater pipe to be affixed upon the residence on Lot 1 (No. 57) and intruding into the right of carriageway, but at a height of not less than 2.4 metres.

Submissions – The Plaintiffs

562. The plaintiffs submit that there is no credible evidence to justify the conclusion that the stormwater piping constitutes a substantial interference with the right of carriageway. They note the experts’ agreement that at its narrowest point, the space between Lots 1 (No. 57) and 2 (No. 55) is narrowed from 2.320 metres to 2.205 metres by the placement of the stormwater piping, that is, by a distance of only 115 millimetres.

563. Moreover, the plaintiffs note that the stormwater piping was laid at least 1.5 metres above the ground (Annexure A to the experts’ joint report); that a vehicle will be at its widest where its rear-vision mirrors are placed; and that the Huangs have not presented any evidence to show that the rear-vision mirrors of vehicles requiring access through the right of carriageway will be 1.5 metres or more above the ground.

Determination

564. There is no dispute the installation of the stormwater pipe narrowed the right of carriageway by 115 millimetres. The narrowing was from a width at its narrowest point of 2.320 metres to a width of 2.205 metres. The point at issue is whether, in the circumstances, that represents a real and substantial interference with the reasonable exercise of the right of way. I am not persuaded that it does.

565. By way of comparison, in the recent decision of Pullen v Smedley [2017] NSWSC 1721, Ward CJ in Eq considered whether the presence of shipping containers on part of a right of way constituted an actionable interference with the easement. Her Honour referred to the decision in Owners Corporation of Strata Plan 42472 v Menala Pty Ltd (1998) 9 BPR 16,337, where Bryson J considered an argument to the effect that it was an unreasonable impediment to allow a five metre opening in which to make a turn in reverse from a strip six metres wide into a strip five metres wide. His Honour said (at 16,340):

“The defendant’s right of way does not entitle the defendant to have the whole of the 6 m strip cleared of any obstruction as if it were a billiard table. The plaintiff continues to be the owner of the plaintiff’s land, and may use it in any way and maintain on it any structure if it does not create a real substantial interference with the enjoyment of the right of way. If enough space is left free for passage without any real substantial interference with the right to pass and re-pass, the defendant cannot insist on more.”

566. In contrast, in Pullen v Smedley, Ward CJ in Eq concluded that there was a real and substantial interference with the right of way, stating at [241]-[242]:

“I accept that the presence of the shipping containers on part of the right of way does not obstruct the road on the right of way in the sense that it remains possible for vehicles to pass along the trafficable surface of the right of way around the corner of the shipping containers. (Indeed Mrs Pullen also accepts that it is the case.) I also accept that if G2 is closed then one would have to stop and open the gate and thus would have an opportunity both to see and hear any oncoming traffic. Nevertheless, as the gate may from time to time be open the safety issue (which I consider to be a reasonable concern on the part of the Pullens) remains. (Had the metal shipping containers been wholly on the land outside the right of way an interesting question might have arisen as to whether obstruction of vision on the right of way caused by an object not on the right of way itself would amount to a real and substantial interference with the reasonable use of the right of way. I see no reason why it could not constitute such an interference but in any event the question does not here arise.)

In circumstances where I find that the metal shipping containers have been placed partially on the right of way and where it was accepted by Robert Smedley that there are probably other places on the Smedley property to which they could be re-located (and it has not been suggested that it would be exorbitantly expensive to do so), I consider that the obstruction of vision occasioned by their presence on part of the right of way does constitute a real and substantial interference with the Pullens’ reasonable use of the right of way and that they should be moved.”

567. These contrasting examples illustrate the range of considerations which may be relevant to determination of whether there is a real and substantial interference with the reasonable use of a right of way.

568. The present case presents a finely balanced issue. As the Huangs submit, the right of way is already quite narrow (for a visual depiction of its width in relation to the width of an average sized car, see, for example, Photographs 23, 24, 25, 26, and 27 of Exhibit C). Some of the considerations to which her Honour referred in Pullen v Smedley would also apply here, in that it does not appear that it would be grossly inconvenient or exorbitantly expensive to move the stormwater pipes.

569. But the Huangs have not adduced sufficient evidence to show that it the stormwater piping precludes or significantly obstructs vehicular passage through the right of carriageway. The photographic evidence adduced by the plaintiffs goes some way towards indicating the narrowness of the right of way. But such photographic evidence is a fragile basis to infer that it is either impossible, or even substantially more difficult, for vehicles now to pass and re-pass through the right of carriageway than they were able to do before the stormwater pipe was hung in this location. This is quite a fine judgment that can only really reliably be made with well crafted “before” and “after” evidence, showing the actual effect of the alleged obstruction on the passage of vehicles. Such evidence is not available here.

570. Moreover, the photographs in evidence may distort the available height and width of passage, depending on the angle from which they were taken. In the absence of more evidence as to the effect of a 115 – millimetre narrowing on the reasonable exercise of the right of way, I cannot conclude that there was an actionable interference with the right, particularly given the plaintiffs’ persuasive submissions as to the height at which the stormwater pipes were placed in relation to rear vision matters.

571. The Huangs accepted that if there was no actionable interference with the right of carriageway, Mr Huang did trespass by entering upon Lot 1 (No. 57) and pulling down the stormwater pipes in December 2014.

572. One matter should be noted, even though it does not now arise. In my view, even if I were persuaded that the stormwater piping constituted an actionable interference with the carriageway, Mr Huang entering onto Lot 1 (No. 57) without permission the day after the pipes were installed, and pulling them down off the building, is not a reasonable act of abatement. Thus a plea of abatement would not excuse the trespass.

573. The plaintiffs are entitled to the reasonable cost of reinstating the stormwater piping which was removed by Mr Huang.

(e) The Plaintiffs’ Claims Relating to the Parking of Vehicles on Lots 1 and 4

574. The plaintiffs allege that from December 2014 until the commencement of these proceedings (the Statement of Claim was filed on 15 December 2015) Mr Huang placed or permitted motor vehicles to be placed on Lot 1 (No. 57) and Lot 4 (No. 51) and within the rights of carriageway available to those properties. The pleaded claim is only for this 12 month period, although the parties advanced evidence and put submissions about a more loosely defined and longer time period as late as the hearing itself.

575. Mr Fandakis’ affidavit evidence refers to vehicles “continuously” parked within the boundary of Lot 4 (No. 51), which have prevented him from carrying out plumbing and stormwater work necessary to complete the development of this lot.

576. Asked about Photographs 25, 26 and 27 in Exhibit C, Mr Fandakis confirmed in oral evidence that he had taken them himself at about 2.05pm on 18 August 2017, while standing at the front of the houses on Lots 1 (No. 57) and 2 (No. 55). But it must be observed this is well after the pleaded period of trespass on Lot 1 (No. 57) and Lot 4 (No. 51).

Submissions

577. The Huangs contended in their final submissions that this respass claim “falls away” because the plaintiffs did not call Mr Petkovski to give evidence to support it. They submit that there is no evidence that Mr Huang parked vehicles between Lots 1 (No. 57) and 2 (No. 55), or between Lots 4 (No. 51) and 5 (No. 49) or that he authorised any person to do so.

578. The plaintiffs answered this submission. They submit the photographs (Photographs 25, 26, and 27 in Exhibit C) speak for themselves and depict that there are cars parked in the relevant locations they claim as a trespass. In closing submissions, the plaintiffs relied both on these photographs and on Mr Huang’s evidence to the effect that he had written a letter to his tenants to inform them that they should not be parking vehicles in these locations. The plaintiffs submitted that this was too limited a responsive action for Mr Huang to take in the circumstances, and that he did not discharge what was said to be his duty as the owner of the properties to prevent a trespass occurring.

579. The plaintiffs referred to my decision in the matter of Laris v Lin (No. 2) [2016] NSWSC 560 in which I made a declaration that the cross-defendant there was not entitled to park vehicles on the rights of carriageway, except as an incident of the use of these rights of carriageway.

Determination

580. There is insufficient evidence to establish trespass by Mr Huang by placing, or permitting to be placed, vehicles upon Lots 1 (No. 57) or 4 (No. 51). One problem for the plaintiffs establishing their case is that the photographs only display vehicles parked at one moment in time, in August 2017. This could perhaps be met by Mr Fandakis’ unchallenged evidence of “continuous” parking. But this is a particular matter on which the Court does not accept the evidence of Mr Fandakis. There may have been occasional parking on these two lots, but who was responsible for it and whether it was any more than fleeting have not been established to the Court’s satisfaction.

581. But one legal issue is more problematic for the plaintiffs’ claim against Mr Huang. There is no clear basis for holding him liable as landlord for vehicles which, as the plaintiffs appeared to accept in closing submissions, were probably parked by his tenants, not by himself.

582. In Laris v Lin [2017] NSWSC 279, White J (as his Honour then was), considered whether the cross-defendant could be held liable for acts of trespass by his tenants who had at various points in time parked vehicles on rights of carriageway. His Honour noted (at [18], [30]) that for Mr Laris to be liable for acts of trespass by his tenant, Mr Lin needed to discharge his onus of showing that Mr Laris authorised, caused or permitted such acts: Smith v Scott [1973] Ch 314; Field Common Ltd v Elmbridge Borough Council [2008] EWHC 2079 Ch; Coventry v Lawrence [2014] UKSC 46. In that case, White J found that there was an express authority given by Mr Laris to his tenants to park their vehicles on the right of carriageway, but which was limited in time (see at [31]-[32]). Mr Laris therefore attracted some, albeit limited, liability for the tenants’ actions. That liability was direct, not derivative, and arose from his acts of authorising the tenant to use the right of carriageway for parking: see Laris v Lin at [34].

583. Comparisons with Laris v Lin are useful here in two respects. First, that case underscores the substantial deficiencies in the plaintiffs’ evidence of parking in this case, once Mr Petkovski was not called to give evidence. In contrast, detailed evidence of this type was adduced in Laris v Lin. Secondly, the plaintiffs’ argument here is that Mr Huang was liable because he had only done “very limited things” to prevent his tenants from parking on the rights of carriageway, namely writing a letter to tell the tenants not to park there. This falls far short of the kind of authority, or permission, required in order to hold Mr Huang directly liable in trespass for his tenants’ actions. Laris v Lin illustrates that much more is required.

584. The plaintiffs relied on the parking claim in order to establish various heads of loss in respect of Lots 1 (No. 57) and 4 (No. 51), including their alleged inability to complete the building works on both these properties, their alleged liability to pay Construction Management Fees to Mr Fandakis in respect of the delayed completion of the building works, and their alleged loss of the rental income, which could have been generated from both properties, but for these alleged trespasses.

585. The parking claims fail. As a result the plaintiffs have no entitlement to any of these claimed heads of loss.

586. As to Lot 1 (No. 57), even without the parking claim, the plaintiffs can possibly establish some consequential loss flowing from Mr Huang’s trespasses in destroying and removing the 2014 sewer pipe and the stormwater piping from Lot 1 (No. 57). But given the present findings dismissing the parking claim, such claimed losses should not include inability to complete building works on Lot 1 (No. 57). Any damages with respect to Lot 1 (No. 57) might encompass loss arising only from minor temporary delay in completion to building work on that property, which could be reasonably inferred to have resulted from Mr Huang’s trespasses.

587. I accept the plaintiffs’ submission that the deprivation of the use of their property (Lot 1 (No. 57)) due to the disconnection and removal of the sewer and stormwater pipes, gives them an entitlement to the reasonable rent which would have been derived from use of their property: Inverugie Investments Ltd v Hackett [1995] 3 All ER 841 at 845. Their damages would ordinarily include a loss of any rent which flowed from a brief delay in completion. But this would appear to be a loss confined to a short period, being the reasonable period of time required to replace and reinstate the damaged plumbing works.

588. But the precise extent of this delay may need to be the subject of supplementary submissions in the damages hearing, as its extent is not clear from the relevant materials to which the Court’s attention has been so far drawn.

Relief

589. In brief, the Court’s findings mean that the plaintiffs must bear the cost of removing the 2011 sewer pipe from Lot 2 (No. 55) and relocating it onto Lot 1 (No. 57). The first plaintiff, Mr Petkovski, is liable for a portion of the Huangs’ lost rent by reason of his trespass in placing bricks upon Lot 2 (No. 55) because he thereby contributed to the departure of the Huangs’ tenant, Ms Chen.

590. Mr Huang is liable to the plaintiffs for his trespasses upon Lot 1 (No. 57) in destroying and removing the 2014 sewer pipe and the stormwater piping attached to the Lot 1 (No. 57) residence. The appropriate relief will include the cost to the plaintiffs of reinstating the damaged plumbing, and any consequential losses which can reasonably be said to have resulted from that trespass, such as costs associated with slightly delayed completion of works and a loss of rent for a brief period.

591. The plaintiffs’ entitlement to relief does not include, however, costs associated with any claimed inability to complete the building works on Lot 1 (No. 57), given the Court’s findings as to the parking claims.

592. All of these various entitlements to damages will need to be assessed and quantified in the damages and relief hearing.

Conclusions and Orders

593. For the reasons given above, the cross-claimants have been substantially successful in establishing their claims for unconscionable conduct, misleading and deceptive conduct and economic duress against the cross-defendants. Any necessary consideration of the cross-claimants’ claim for declarations of constructive trust against the cross-defendants, based on Barnes v Addy principles, has been deferred pending the holding of a relief hearing consequent upon these reasons.

594. The cross-claimants’ claims in trespass and nuisance have been partially successful as have some of the plaintiffs’ similar claims.

595. All the successful claims will require an assessment of damages for which expert evidence may need to be filed in a damages and relief hearing.

593. The Court therefore makes the following orders and directions:

1. Order the parties to bring in Short Minutes of Order to give further effect to these reasons.

2. Order that a further hearing in relation to damages or any other relief to be granted in these proceedings will take place and that such hearing will be fixed at a time and date after the parties have had sufficient opportunity to read the Court’s decision in this judgment and to file supplementary submissions.

3. Appoint 9.30am on 14 December 2018, or such other date as may be arranged by mutual agreement with my Associate, for a directions hearing for the parties to present their draft orders and directions for the conduct of the relief hearing and for the making of other orders consequential on this judgment.

4. Direct the solicitors for the cross claimants to provide a copy of the Court’s reasons for decision published today to Hayes Advisory.

5. Direct that a copy of these reasons be forwarded to the Law Society of New South Wales and to the Real Estate Institute of NSW. This referral will be carried out by my Associate, and need not be undertaken by any party.

6. Grant liberty to apply.

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Amendments

04 December 2018 - [52] "likely" changed to "lightly"

[54] "Priestly" changed to "Priestley"

[232] space between DP and 1 deleted

[286] / inserted between DP and 1

[328] in quoting Mason J at [2], "taken refer" changed to "taken to refer"

[329] "361" changed to "461"

[329] in quoting Mason J, second sentence repeated "the will of" deleted

[330] 15-095 changed to 15-105

[500] "that was ultimately described as DP:1151863" deleted

Decision last updated: 04 December 2018