Matsufuji v Phan
[2017] VCC 466
•26 May 2017
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for publication |
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL CASES LIST
Case No. CI-15-02523
| YUKO MATSUFUJI | Plaintiff |
| v. | |
| KHANH QUOC PHAN | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5-7, 10-12 April 2017 | |
DATE OF JUDGMENT: | 26 May 2017 | |
CASE MAY BE CITED AS: | Matsufuji v. Phan | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 466 | |
REASONS FOR JUDGMENT
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Catchwords: Contract – Deed – Loan agreement to facilitate the purchase of a residential property – Borrower the nephew of the lender – Whether when the deed was executed it was to have legal effect – Whether separate agreement by which money advanced to pay the stamp duty on the purchase – Whether monies advanced pursuant to the deed – Whether equitable charge in the deed applied to a subsequent property purchased by the nephew after the sale of the first property.
Evidence – Witnesses not called – Whether adequate explanation given for absence – Whether adverse inference should be drawn.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. D. Shepherd of Counsel | DKP Lawyers |
| For the Defendant | Mr S. A. Lowry of Counsel | Agricola Wunderlich & Associates |
HIS HONOUR:
1Yuko Matsufuji (“Yuko”) was born in Vietnam. She lived in Japan for many years and now resides in Australia. Khanh Quoc Phan (“Khanh”) is her nephew; Khanh’s mother Dung Thi Ngoc Tran (“Dung”) is Yuko’s sister. There are other sisters including Bich Thi Ngoc Tran (“Bich”) who lives in Vietnam, and Van Thi Hong Tran (“Van”) who lives in Sydney.
2In about July 2006, Yuko and Khanh both executed an undated deed by which Yuko agreed to lend Khanh $202,400 and Khanh agreed to repay that sum by monthly installments including interest of 7% per annum (“the deed”). In his defence, Khanh admitted signing the deed.
3At about the time the deed was executed, Khanh was in the process of purchasing a house property at Rourke Lane, Kensington (“the Kensington property”). The purchase price was $385,000. Khanh engaged the vendor’s solicitors Jafer Lawyers to act for him as well as for the vendor in the conveyancing transaction. Jafer Lawyers prepared the deed and it was executed by the parties at the solicitors’ offices.
4Yuko sued on the deed. She said that she advanced the total sum of $205,000 to Khanh to enable him to complete the purchase of the Kensington property.
5Khanh gave evidence that the deed was “only a draft” and he signed it at Yuko’s urging as a matter of convenience as she was shortly to return to Sydney. He said that the deed was never intended to have any legal effect. He said further that the only agreement reached with Yuko was that she would lend him the sum of $20,000 to pay for the stamp duty payable on the purchase (“the separate agreement”). That sum was advanced, but no other monies were paid to him by Yuko.
6Khanh said that he paid the purchase price of $385,000 by borrowing $275,000 from the Commonwealth Bank of Australia (“CBA”). The balance of $105,000 came principally from cash kept at home by his parents; $80,000 from Dung and $20,000 from his father Son Thanh Phan (“Son”).
7It is agreed that in 2014, Khanh paid sums totalling $6,500 to Yuko and that this amount should be deducted from any sum owing by Khanh to Yuko.
8The deed also provided that the loan of $202,400 was to be secured by an equitable charge over the Kensington property which was to be noted on the title by a caveat being lodged. No caveat was lodged and, in 2009 Khanh sold the Kensington property. Later Khanh was involved in the purchase of properties at Dempster Street, West Footscray (“Dempster Street”) and at Chipping Norton in New South Wales.
9Yuko’s solicitors lodged a caveat in respect of Dempster Street on 13 October 2014 claiming an “estate in fee simple…by reason of constructive trust arisen out from the agreement between Yuko…and…Khanh…on the date of 5th July 2006”.
10The issues for determination in the proceeding are:
a.whether the deed executed by the parties was intended to have legal effect;
b.whether the parties entered into the separate agreement whereby Yuko agreed to loan the sum of $20,000 to Khanh to pay for the stamp duty on the property purchase;
c.whether Yuko advanced monies to Khanh pursuant to the deed or the separate agreement;
d.whether any and what sum is payable by Khanh to Yuko, including any interest;
e.whether Yuko is entitled to trace the proceeds of sale of the Kensington property and claim an interest in the property later purchased by Khanh and Dung at Dempster Street.
Credibility of witnesses
11In this case, there are a number of undisputed facts, including a framework of contemporaneous documents. Beyond those matters, there is a substantial conflict of evidence. One version of events was given by Yuko, the other by Khanh and his mother, Dung. The two versions cannot sit together. One version has been constructed to fit the factual outline and relies upon false evidence.
12No evidence relating to certain critical matters was given by an independent witness. A number of family members, including the sisters Bich and Van and Khanh’s father Son did not give evidence, for various reasons. It will be necessary to examine those reasons in order to determine whether an adverse inference might be drawn against any party.
13The documents that have been tendered are extensive, but not comprehensive. Ordinarily, contemporaneous documents are the best test of the veracity of the oral evidence. In this case, however, each version of events given by the witnesses generally takes account of the existing documents. Further, although many questions were raised by the tendered documents, few of those matters were resolved in the oral evidence.
14The critical events in the case, relating to the purchase of the Kensington property, occurred almost 11 years ago. Each of the three witnesses gave evidence of specific statements in conversations from that time. Many of these statements were not otherwise defined by time or place and are unlikely, at best, to be anything other than a vague recollection.
15Both Yuko and Dung gave evidence through an accredited Vietnamese interpreter. The quality of the interpreting appeared to vary. With Dung’s evidence, it seemed that the Court heard only a summary of the evidence, and certainly not a word for word translation. Even with Yuko’s evidence, for which two other interpreters were used, at times the evidence appeared to lose something in translation.
16Both Yuko and Dung presented during their evidence with a calm and undemonstrative demeanour. Khanh was subdued and spoke quietly and with little affect during his evidence in chief. During cross-examination, he was aggressive and at times petulant.
17Yuko, Khanh and Dung each gave evidence of conversations from 2006. No doubt, the purchase of the Kensington property, and the provision of money by Yuko towards the purchase, were significant matters in their lives. However, a lot of evidence was given of statements made at the time, generally without any context. In the circumstances, it is difficult to accept that this evidence was an accurate recollection of an actual conversation.
18Yuko gave evidence that, at critical times, for example when she was handing over cash to be held by Dung for the purchase, she had used words such as, “This is the money that I lend Khanh to buy the house” or “This is the money that I lend Khanh so he can buy a house and Khanh said, ‘yes I borrow’”. I am not persuaded of the accuracy of that evidence.
19Similarly, Khanh and Dung gave evidence of parts of conversations, for example Khanh’s evidence that he told Yuko in a telephone conversation in 2009 that he was intending to sell the Kensington property, or Dung’s evidence that she told Yuko by phone around “the month before the house was sold…that Khanh was about to sell the house”. I do not accept that either witnesses had a recollection of such conversations. In Dung’s case, she was unable, when asked, to recall any other details of a conversation of which she purported to have a specific recollection.
20It has been necessary to carefully weigh the evidence of these witnesses. Ultimately, I have decided the case on the basis of the probabilities and by drawing inferences from the undisputed facts and, on occasions, from the other facts I was prepared to find. I did not consider it necessary to solely decide the case on the basis that a party, who bore the onus of proof on a particular issue, had failed to satisfy that onus.
21I will review the evidence chronologically indicating what is not contentious and the different versions given by the witnesses, where there is a dispute. I will state my findings, where I am able to do so, including any inferences I am prepared to draw, and the reasons for reaching my conclusions.
22The case was fixed (and refixed after a vacated trial date) with an estimate of 3 to 5 days. Prior to the trial, in response to a standard request from the Commercial Division Coordinator, the defendant’s solicitor gave an estimate of 2 to 3 days. During the plaintiff’s counsel’s opening, Mr Shepherd did not demur when I referred to the estimate of 3 days for the trial.
23In fact, the trial took 6 days. The proceedings were not transcribed. I was informed that the expense to the parties was the reason for that decision. At times, I urged counsel to use their time efficiently in their questioning of witnesses. At other times, I asked questions myself to clarify what I considered may be significant issues.
Analysis of the evidence
24a. Yuko’s personal history: Yuko is younger than her sisters Bich and Dung. She left Vietnam in 1987 and after a period in a refugee camp, Yuko moved to Japan in 1989. She married and had 3 children. Yuko divorced in 2010. However, she and her former husband continued in the business they had run for many years. The business was described as “import/export” and involved selling goods both in Vietnam and Australia.
25Yuko apparently had for a number of years contemplated that her children would be educated in Australia. She has now moved to Australia to live. Prior to moving to Australia, she visited her sisters in Australia on about 5 occasions, including in mid-2006.
26b. Dung and Khanh’s personal history: Dung and Khanh came with other family members to Australia from Vietnam in 1994. Dung has apparently been in almost continuous employment since then, first as a clothing factory machinist and more recently as a nail technician in a beauty salon. She and her husband Son divorced some years ago.
27In about 1997, Khanh was in his last years at school although he was attending irregularly. Yuko was visiting. Dung told Yuko that she was concerned about Khanh and the friends with who he was associating. Yuko suggested that Khanh come to live with her family in Tokyo for a period. Khanh stayed with them in Tokyo for about 8 months. In about 1998, Khanh started working with the CBA where he remained until 2008 when he moved to Sydney and established a business with two nail treatment salons in Wollongong.
28c. Prior financial dealings between Dung and Yuko: In 1997, Yuko and her two daughters came to stay with Dung and her family for about 3 to 4 months. During this time, Dung borrowed money from Yuko. The money was repaid over a period of time. Yuko said that the amount she loaned was $30,000; Dung said it was $12,000 or $13,000.
29In 2001, Yuko again visited Australia. Dung and her family were living in a property at Armour Street, West Sunshine which they had purchased. During that visit, Dung purchased a property at Bambara Court West Sunshine (“Bambara Court”) from the parents of Khanh’s girlfriend. The purchase price, according to Yuko was $246,000. Dung said it was $156,000 or $176,000. It is likely that the purchase price was $246,000 as pleaded by Dung in the statement of claim in the 2014 proceeding to which I will later refer.
30To facilitate the purchase, Dung borrowed $106,000 from Yuko. Yuko said the sum was $146,000. This sum was transferred from Japan into Dung’s bank account by Yuko’s husband. This involved a number of transfers over a period of time usually for sums of just less than $20,000. Dung said that she accepted responsibility for the repayment of the bank loan. For most of the period from 2001 until 2014, Dung and members of her family lived at Bambara Court.
31It appears that Yuko had in mind that at some stage her daughters would come to Australia to be educated and that they would be able to stay at Bambara Court. It was apparently also contemplated that Bambara Court might ultimately be transferred to one of Yuko’s daughters, provided the amount that Dung had spent in the meantime on the expenses for the property was paid by Yuko. This arrangement was to result in litigation between Dung and Yuko in 2014 which has some relevance to the present dispute.
32d. Yuko’s business: The precise nature of Yuko’s business was unclear. There was evidence that it involved both new and second hand goods. The goods included electrical equipment and computer accessories including printer toner.
33Yuko said that her sister Bich in Vietnam acted as a local agent, distributing and selling goods and receiving payments on Yuko’s behalf. Yuko said that Dung performed a similar role in Australia. Dung denied this and said that occasionally she would order goods from Yuko. The goods would be sent from Japan and Dung would pay Yuko for them.
34Khanh said that the business involved the sale of stolen goods. Khanh said that when he was in Japan in 1998 he worked in the business. He said that regularly Yuko and her husband would drive to a particular locality in Tokyo late at night to collect goods from groups of men. Khanh said he had heard conversations which suggested the goods were stolen. He did not give evidence of any particular conversation.
35Yuko denied that her business involved illegal activity. She said that Khanh had worked in the business and he had accompanied her at night to an area of Tokyo, where many Vietnamese people lived, for the purpose of picking up second hand electrical equipment. She said she had applied for and been granted Japanese citizenship and this would not have been possible if she had broken the law.
36I did not allow defendant’s counsel Mr Lowry to pursue his cross-examination on these issues when he asked a question, the answer to which may have tended to prove Yuko had committed an offence against Japanese law.
37I considered also that the issue was solely one of credit. Mr Lowry submitted that I should use this material to conclude that in 2006, part of any funds borrowed by Khanh from Yuko were likely to have been the proceeds of crime, which would taint the transaction with illegality. I considered that the evidence was tenuous and this issue, if it were to have been pursued, should have been specifically pleaded.
38In cross-examination of Yuko, Mr Lowry put the following questions to Yuko, which she denied:
a.“In about June 2006, in Melbourne, you told Khanh that you needed to move some money to Australia out of your stash and you needed to clean some money?”;
b.“You wanted to facilitate money coming to Australia by establishing a loan transaction with him; isn’t that what happened?”
39However, in Khanh’s evidence in chief, no reference was made to this conversation. In cross-examination, Khanh said that there was “no discussion whatsoever” with Yuko “that she was bringing money from overseas to Australia”.
40Plaintiff’s counsel Mr Shepherd then asked Khanh, “By your counsel to my client, it was put that you knew money was coming to Australia which was her money and there was going to be a loan and that she needed to move this money to Australia out of her stash and needed to clean some money?” Khanh answered, “That was something that she always talked about, laundering money, that wasn’t something that was spoken about at that time”.
41Mr Shepherd asked, “Is it your evidence that she was aware that she intended to move money to Australia from overseas?” Khanh answered, “From time to time she always said that she had to launder money. This was her state of mind when she was talking to me on other occasions; like launder money”.
42Mr Shepherd asked, “Is it your evidence that prior to 23 June 2006 you had any conversation with her in which she said she was going to move money from overseas to Australia? There was no conversation at all?” Khanh answered, “At the time, no”.
43Mr Shepherd; “When do you say that she said she needed to move money? When do you say she said that?” Khanh responded, “She said that occasionally, not the time that I was attending [Dung’s] house in 2006 April. I can’t recall the time but I heard something that she had some stash overseas about illegal products, that she wanted to clean it, but she did say something about the laundering of money”.
44e. Yuko’s trip to Australia in 2006: Yuko came to Australia in April/May 2006 to attend Van’s wedding in Sydney. After the wedding, Yuko travelled to Melbourne and stayed with Dung. At that time, Khanh was living elsewhere although he often visited Dung with his Japanese wife Emiko Irino (“Emiko”).
45While Yuko was in Melbourne, she said that Khanh suggested she “lend him money to buy a house”. Yuko said that these “arrangements were made within a week after [Van’s] wedding”. This, or any similar conversation, was denied by Khanh and Dung.
46f. Inspecting the Kensington property: Yuko said that when Khanh suggested she loan him money, “he did not mention the amount of money because she had not looked at the house yet”.
47Yuko said she was taken by Khanh to the Kensington property on two occasions, once by Khanh alone and a second time when Dung came with them. Yuko also said that she was shown other properties by Khanh before they visited the Kensington property.
48Both Khanh and Dung gave evidence that Yuko visited the Kensington property once when she accompanied them, after Khanh had earlier visited the property on his own.
49Khanh said that he saw a sign advertising the property driving home from work one evening. The sign had been placed on the property by the owner without involving a real estate agent. The vendor later suggested to Khanh that he use her solicitors, Jafer Lawyers of Moonee Ponds. Yuko said that the asking price was $400,000 and, after negotiation it was reduced to $385,000. Khanh said that the asking price had been $390,000.
50g. Time line until settlement of the purchase: The contract of sale prepared by the lawyers is undated although the “day of sale” appears to be 14 June 2006. The purchase price was $385,000 with a 10% deposit payable “on the signing hereof” and the balance on 10 July 2006 or earlier if agreed. The contract was not subject to finance.
51Khanh said that he and the vendor had an arrangement or understanding that he would purchase the Kensington property. The section 32 statement was dated 9 June 2006 and, from an examination of the attached certificates, it appears that those from authorities were obtained in early June 2006.
52Khanh produced a “Consumer Credit Contract Schedule” dated 22 June 2006 in which the CBA offered to lend Khanh and Emiko $275,000 upon the security of a first mortgage over the Kensington property. The interest rate was 6.29% for one year and thereafter at the “standard variable rate” which was then 6.87%. The default interest rate was 2% higher than these rates.
53The purchase of the Kensington property apparently settled on 5 July 2006; the date on the “Statement of Adjustments” prepared by Jafer Lawyers. This is also the date of the transfer of land. The lawyers’ “statement of account” discloses that the purchase price was paid as follows:
“Deposit $38,500.00
Less adjustments $13.38
Amount paid to vendor provided by your mortgagee $252,797.62
Amount paid to vendor provided by you $93,689.00”
$385,000.00
54A letter from the lawyers to Khanh dated 20 July 2006 enclosing the two statements is signed by “Ursula Simpson”. A further document, an advice sheet regarding making a will, was also enclosed with the letter and is signed by Ms Simpson.
55In October 2015, Yuko’s then solicitors wrote to Jafer Lawyers advising that this proceeding had been issued and asking whether the lawyers had any documentation relating to the purchase, and specifically relating to any advance by Yuko to Khanh in respect of the purchase. Ms Simpson replied on behalf of Jafer Lawyers, “I refer to your letter of 16th October 2015 and advise that as the file is more than 7 years old it had been destroyed and I cannot help you. I have also checked if we hold any documents on behalf of either party and we do not”.
56h. Yuko’s offer to lend money to Khanh for the purchase: Yuko said in evidence that after inspecting the Kensington property, she spoke with Khanh’s parents. They said they did not have money to help him and “Khanh said he would propose conditions so I would lend him the money…he asked for $205,000 [and said to Yuko], “don’t worry Auntie I won’t sell your house, I will put a caveat on the house”.
57Yuko said that the Kensington property “was purchased for $385,000. Including tax it would be roughly $410,000. Khanh asked her if she could lend him half of that amount which is $205,000 and he would borrow the remainder from the bank”.
58After discussing the matter with her husband, Yuko agreed to loan $205,000 to Khanh, and she asked him “to find solicitors who would draft a contract”. Both Khanh and Dung denied any such conversations and said that Yuko had, independently of them, contacted Jafer Lawyers.
59i. Visit to Jafer Lawyers and execution of the deed: Yuko said that Khanh and Dung had taken her to Jafer Lawyers. Yuko said that the solicitor Khanh engaged “was a westerner and I do not speak English”. There was also a lawyer, a woman, who sat in the middle. She spoke only in English so that Yuko did not understand. Khanh translated for Yuko and “explained to her about the caveat condition and the interest condition”. Yuko said that, in this meeting, both she and Khanh executed the undated loan agreement.
60The deed contained the following terms:
a.the loan monies were $202,400;
b.the rate of interest was 7% per annum;
c.interest was to be paid monthly in arrears;
d.no provision was made for the repayment of the loan monies;
e.the payment of monies due under the agreement was to be secured by Khanh charging his interest in the Kensington property.
61Khanh gave evidence that Yuko and Dung had attended the first meeting with Jafer Lawyers “about the preparation of the conveyancing documents”. Khanh’s evidence about this meeting was not entirely clear. He said, “Jafer Lawyers had a conveyancer, she did the documents for the home”. The conveyancer’s name was Teresa and she spoke Vietnamese. Khanh said that, “Jafer Lawyers is another solicitor” to whom he spoke “about preparing the conveyancing documents for the transfer of the Kensington purchase”.
62Khanh said that, after this meeting, Yuko had asked Khanh for the “business card of the Vietnamese conveyancer”. According to Khanh, Yuko “had contacted Teresa and separately arranged with her” about “a loan document”. Khanh said Yuko then told Khanh “to pay a visit to the same solicitor”. Khanh said Yuko told him, “We have an agreement so you don’t have to borrow from the bank and I said, ‘I don’t need to know about this’, and she said, ‘Let’s go and have a chat. We don’t have to do anything’”.
63At the solicitors’ office, Khanh said, “The solicitor had a deed…about a loan”. Khanh gave evidence that Yuko said, “You can sign this and pay me the interest”. Khanh said, “I was completely surprised”, but Yuko said, “Don’t worry, this is just a draft. You guys have no money. Just sign now. I am going back [to Japan] and you can think about it later”. Khanh said he “signed on that basis”, and that the solicitor had also said, “if this is not proceeding, we can demolish it”.
64Khanh said that he decided not to take the loan from Yuko. He said he “had [obtained] a few opinions and I was basically not aware of it and it was very expensive and I already had an agreement with my mum that she would lend me this money”.
65Dung said that the second meeting at Jafer Lawyers was “a week or two weeks after the first time”. Yuko had attended the first meeting at the lawyers with Dung and Khanh. Dung said that before the second meeting, “Yuko and Khanh told me we had to come back to sign the agreement…Yuko said that she had done that agreement so the three of us should go there to look at the agreement”. Yuko said, “just come and look at it and then you can make a decision later”.
66j. Documentary evidence of bank transactions in June and July 2006: There are documents available evidencing bank transactions which may or may not have something to do with the purchase of the Kensington property and the provision of funds for that purpose.
67Khanh and Dung said in evidence that some of these documents had been in a “yellow folder” which Dung had given to Yuko after they had in 2015 settled their litigation over the Bambara Court property. The yellow folder contained documents relating to the expenses for that property as well as some bank deposit slips and similar documents Khanh had handed to her in 2006 for safe keeping and which she had also placed in the folder.
68Yuko denied she received a yellow folder. She said that the documents she produced in evidence had always been in her possession or had been given to her by Khanh.
69The relevant documents relating to the alleged advance of funds by Yuko to Khanh are as follows:
Date Document 28 April 2006 Passbook for Yuko’s account no. 5026908 with the CBA Footscray showing:
28/4 withdrawal $39,60028 April 2006 Deposit receipt CBA Sunshine into the account of Yuko (no. 1060 9637) for $14,600 April/May 2006
Bank statement for Yuko’s account no. 1060 9637 with the CBA Sunshine showing:
28/4 – deposit of $14,600
2/5 – withdrawal of $500
4/5 – withdrawal of $13,000
5/5 – deposit of $25,000
8/5 – withdrawal of $25,00023 June 2006 Deposit slip National Australia Bank (“NAB”) Sunshine into the account of Jafer Lawyers (no. 1215) for $105,000. 28 June 2006 Deposit slip NAB Cabramatta NSW for $11,359 in the name of “Khanh Phan” into account no. 3858 4509 11215 [Jafer Lawyers] June 2006 Bank statement for Jafer Lawyers Statutory Trust account no. 45 091 1215 with the NAB 330 Collins Street showing:
23/6 “cash deposit” $105,000
28/6 “Khanh Phan” $11,359July 2006 Bank statement for home loan to Khanh and Emiko with CBA no. 708719408 showing:
5/7 “money we lent you” $253,281.62
10/7 “money we lent you” $21,718.3818 July 2006 Deposit receipt CBA Sunshine into Khanh and Emiko’s account no. 3280 for $20,000 18 July 2006 Deposit receipt CBA Sunshine into Khanh’s Visa card account no. 4371 for $5,000 20 July 2006 Deposit receipt CBA Sunshine into Khanh and Emiko’s account no 3280 for $14,000 25 July 2006 Deposit receipt CBA 385 Bourke Street into Khanh’s Visa card account no. 4371 for $1,000 July 2006 Bank statement for Khanh and Emiko’s account no. 1095 3280 with the CBA 385 Bourke Street showing:
10/7 “Loan funds 7900” deposit $21,718.38
13/7 “Stamping 708719403978” withdrawal $18,760
18/7 “Deposit 3172” $20,000
20/7 “Deposit 3172” $14,000
25/7 “Withdrawal” $15,000
25/7 “Withdrawal” $16,000July 2006 Bank statement for Khanh’s CBA Visa card no 4940 5252 7635 4371 showing:
18/7 payment received $5,000
25/7 payment received $1,000
70k. Payments Yuko said she provided to Khanh in 2006: Yuko gave evidence that after she agreed to lend Khanh money to buy the Kensington property, she began to “gather” the money together.
71Yuko had agreed to lend $205,000. She said the figure of $202,400 in the deed took account of the solicitors’ costs of preparing the deed. However, the deed provided that, “The costs of and incidental to the preparation and execution of this deed” were to be paid by the borrower, Khanh.
72Yuko said that she raised the total amount in two parcels, $105,000 and $100,000. There was also a further payment of $11,359 towards the stamp duty on the purchase.
73Yuko gave evidence that the sum of $105,000 was derived by her as follows:
Date Detail Amount 28 April 2006 Withdrawal from passbook account no. 5026908 $39,600 4 May 2006 Withdrawal from bank account no. 1060 9637 $13,000 8 May 2006 Withdrawal from bank account no. 1060 9637 $25,000 Unknown date
or datesMoney transferred from Yuko’s husband in Japan About $40,000
74Yuko gave evidence that when she made the withdrawals she gave the money to Dung to keep for Khanh so that he could buy the Kensington property. Yuko referred to handwritten documents containing figures and words in Japanese. Yuko said that one document recorded the “money for expenses” that she owed Dung relating to Bambara Court. Yuko said the document also recorded “the money Dung collected from her customers”. There was no translation of the document, and although it bore the date “20/5/06” it was impossible from the evidence to relate the document to the purchase of the Kensington property or that the figure of “$40,000” (above the date) related to money Dung had collected from Yuko’s customers.
75Yuko said that after the $40,000 was received from her husband in Japan, she asked Dung to “withdraw the money and take it out together so we can make up $105,000”. She and Dung counted the money and it was taken by Khanh and Yuko “straight to the bank” to be deposited.
76The sum of $40,000 (not necessarily the sum of about $40,000 Yuko said she received from her husband in Japan) was put into the bank for Khanh, as follows:
Date Detail Amount 18 July 2006 Deposit in account no. 3280 at CBA Sunshine $20,000 18 July 2006 Deposit in account no. 4371 at CBA Sunshine $5,000 20 July 2006 Deposit in account no. 3280 at CBA Sunshine $14,000 25 July 2006 Deposit in account no. 4371 at 385 Bourke Street $1,000 77Khanh gave evidence about each of the deposits between 18 and 25 July 2006 totalling $40,000:
a.the deposit of $20,000 was from funds Yuko had given to Dung, in case Khanh had a need of funds to pay stamp duty on the purchase. I shall examine this deposit in more detail later;
b.the deposits of $5,000 and $1,000 were made by Khanh to reduce his indebtedness on his Visa card. The credit card statements confirmed that the deposits were made to the Visa card account;
c.Khanh said that the $14,000 came from his father to reduce the home loan debt to the bank. The loan had commenced on 5 July 2006 when the amount of $253,281.62 advanced by the bank had been used to settle the purchase of the Kensington property. Khanh said that his father was “very uncomfortable having too much cash at home” because of a burglary next door. His father had told him, “I will lend the money to reduce the debt”. Khanh said, “So I took the funds to put in the account to reduce the home loan debt”;
d.Khanh gave evidence that, notwithstanding that this was the arrangement, “I decided to buy a car at the end of the process [and] I did confirm with Dad that instead of [using it to] reduce the home loan that I can use the money to buy a car”. Khanh said that this was the reason for the withdrawals from his account of $15,000 and $16,000 on 25 July 2006.
78l. Transfer of $100,000 from Vietnam to Australia: Yuko said that her sister Bich in Vietnam transferred to her in Melbourne the sum of $100,000. A fee of $1,000 was paid to the service provider to have the money transferred.
79Yuko gave evidence that around the time she had transferred the money for stamp duty to Jafer Lawyers ($11,359 on 28 June 2006), she told Khanh and Dung that she had some money in Vietnam which the oldest sister, Bich, had collected from Yuko’s customers and was holding for her.
80Yuko said that Dung “gave her a phone number of a money remittance transfer service which can transfer money from Vietnam to Australia”. Yuko called Bich in Vietnam and asked “her to get 100,000 ready”. According to Yuko, during that phone call, Dung gave Bich “the phone number of the service which would transfer money to Australia”. The arrangement was “that when Bich gives the money to the service, the service will call Dung in Australia and we will go to collect the money in Australia”.
81Later that day, Bich contacted Dung and “advised her that she had handed over the money in Vietnam to the service provider”. Later, “Dung was advised that she had to collect the money”. Khanh drove Dung and Yuko to a Vietnamese market in Richmond. In a market shop, they spoke to a woman who handed over $100,000 in cash. Yuko paid the service fee of “roughly $1,000” to the woman.
82Yuko, Dung and Khanh counted the money. It was put in a cloth bag and, back at the Bambara Court house, Yuko handed the bag to Dung for safekeeping. Both Khanh and Dung denied that any of these events, including the conversation with Bich or the visit to a shop in Richmond, had happened.
83m. Sources of the $105,000 deposited, as alleged by Khanh and Dung: Both Khanh and Dung gave evidence that the $105,000 had been provided, as to $80,000 from Dung, $20,000 from Son and $5,000 by Khanh.
84Dung said that the $80,000 was “my savings in a way of contributing in a mutual help group of Vietnamese people from a group of saving money called ‘Hui’”. Dung said that the total amount she had saved from Hui and “from working”, at that time, was about $92-93,000. The cash was kept “in a safe in my bedroom with a lock”.
85$20,000 came from Khanh’s father, Son. Khanh said that Son had that money in a safe in a cupboard in the garage. These sums were bundled together with a further $5,000 from Khanh and taken to the bank.
86n. Deposit of $105,000 at the CBA Sunshine on 23 June 2006: Yuko said that money was accumulated at the Bambara Court house until there was $105,000 and “the money could be put into Jafer Lawyers’ account”. Yuko said that Khanh drove her to the bank so that the money could be deposited.
87Yuko gave evidence that the money was given to a bank officer who counted the money and wrote the deposit receipt for $105,000. Both Khanh and Dung gave evidence that the cash deposited on 23 June 2006 had been provided by Dung, her husband Son and by Khanh. Khanh and Dung had gone to the bank without Yuko to deposit the cash in Jafer Lawyers’ account.
88Khanh said that his mother had saved money over the years from working in a textile factory where she was paid cash and from her investment with Hui. He said Dung was “very good with money…she was always a good saver and very regimented. Ever since she came to Australia she saved and accumulated substantial money over many years to 2006”. One time, Khanh said, Dung “showed me bundles of money she was counting and I was surprised how much money she had saved”. He said she had “close to $100,000 and kept the cash in a steel cabinet next to her bed”.
89Khanh said his father was a sole trader and obtained a lot of cash. He stored the money in a steel cabinet in the garage.
90o. Alternative agreement alleged by Khanh and Dung – money advanced only for stamp duty: Dung said that at the meeting with Teresa at Jafer Lawyers’ offices, Dung did not agree to the deed and she “prevented Khanh from agreeing to this agreement…I told him that the interest rate was too high and…he cannot pay the high interest and the repayment because he is too young…I told Khanh not to sign the agreement and Teresa said that, ‘This is just a draft, signing or not signing is not important’. But Yuko wanted Khanh to sign it because she was about to go back to Sydney. Yuko and Teresa said, ‘Just sign it, if you agree to it the agreement will go ahead, if you don’t, it won’t go ahead’”.
91Dung gave evidence that, “Then I said to Khanh, if Khanh wanted to buy a house, myself and my husband can help him…Khanh did say he may borrow some money just to pay stamp duty without agreement or contract or anything”.
92Khanh said that after the meeting with Jafer Lawyers when he signed the deed, his mother said to him she could lend him the money, that he could not afford to borrow on Yuko’s terms, that it was “ridiculous and it is cheaper if you borrow from the bank”.
93In Khanh’s defence to the amended statement of claim dated 4 December 2015, it is alleged that “shortly after the agreement was signed”, in mid to late June 2006, he “notified [Yuko] he did not wish to proceed with the Loan Agreement and [Yuko] accepted that termination of the Agreement”. It was further stated that, “The termination and acceptance of termination were oral and contained in conversations between [Yuko] and [Khanh] in or about mid to late June 2006 in a Melbourne coffee shop”.
94Khanh gave no evidence of any such conversations in his evidence in chief. When asked about a “meeting with Yuko in mid or late June 2006 in a Melbourne coffee shop”, he responded, “What Melbourne coffee shop?” Khanh said the only notification by him to Yuko that he did not wish to proceed with the loan agreement, and Yuko’s acceptance of the termination of the agreement was “at the solicitors firm, nowhere else”.
95Khanh said that, prior to signing the agreement, he and Yuko “discussed a shortage of my stamp duty [although, at that time] it was not paid to me. It was there if I needed it”.
96p. Advance of money by Yuko to Khanh for stamp duty: In Khanh’s defence to the amended statement of claim dated 4 December 2015, it is pleaded that as a result of Khanh notifying Yuko that “he did not wish to proceed with the Loan Agreement and [Yuko] accepted that termination of the Agreement [Yuko] did not advance the loan monies to [Khanh but] did advance a separate sum of $20,000 to [Khanh] without a due date for repayment and without requiring interest repayments or any right to security in relation to the Kensington property (the ‘$20,000 Loan’)”.
97Khanh’s pleading alleged that “the $20,000 Loan was partly oral and partly implied”. There were “conversations” between Yuko and Khanh “on or about July 2006 at [Dung’s] house” and there was “the deposit of the sum of $20,000 by [Yuko] to [Khanh] into [Khanh’s] bank account on or about 18 July 2006”.
98Khanh was asked, in a request for further particulars of his defence to amended statement of claim, for the “usual detail of the advance of the sum of $20,000” from Yuko to him. The response was that, “On or about 10 July 2006, [Yuko] advanced the amount of $20,000 to [Khanh] by way of cash. The said advance was deposited as part of the total sum of $21,718.38 on 10th of July 2006 being the $20,000 advance and the balance of cash from [Khanh], into bank account” number 1095 3280.
99In his cross-examination, Khanh said that the $20,000 payment from Yuko “was to offset” the sum of $21,718.38 that had come from a personal loan. He said that the answer given to the request for particulars was “the memory of the statement I worked through my brains day and night to get back to that area of time. I have a vivid mindset, and that was the answer”.
100Khanh said that $20,000 was provided by Yuko to him on 18 July 2006 as he “didn’t have what I needed to pay the stamp duty”. In his evidence-in-chief, Khanh said that the $20,000 was “requested from the Auntie to consolidate the stamp duty. This $20,000 was used to offset the personal loan that was taken out”. Khanh said that he had taken a personal loan from the CBA at that time “to consolidate with his credit card”.
101Khanh said that the figure of $21,718.38 deposited into his joint account with Emiko on 10 July 2006 was the “personal loan residual” and he “used this fund to consolidate the stamp duty”. Khanh said he used the $20,000 deposited into that account by Yuko on 18 July 2006 to offset the payment of $18,760 for stamp duty on 13 July 2006 which had been paid from the bank account after the $21,718.38 was deposited in the account as the “residual” of the personal loan.
102Khanh said that he had been told that “they were going to withdraw $18,000” for the stamp duty. He said that he had asked Yuko for the money for stamp duty in “mid July” in a phone call to her in Sydney where she was staying with her sister Van. Khanh said he did this rather than going back to the bank “and organising more money”.
103Khanh also gave evidence that in accordance with the arrangement he had made with Yuko at Jafer Lawyers’ offices, that she would provide $20,000 for the stamp duty on the purchase, Yuko had left $20,000 in cash with Dung. Khanh said that he made a phone call to Yuko in Sydney to tell her of “the shortage of the stamp duty” and to ask if he could use the $20,000 held by Dung “to consolidate”. The $20,000 deposit in the joint bank account on 18 July 2006 came from “the cash from the sort of fund of money that she was lending me for the stamp duty at the time”.
104Yuko gave evidence that on 29 June 2006, she had deposited the sum of $11,359 at the NAB at Cabramatta, New South Wales for transfer to the bank account of Jafer Lawyers in Khanh’s name and that Khanh had given her these details.
105In his evidence-in-chief, Khanh was asked how the money got into that account. He responded, “Confusion with the Auntie, she misunderstood and transferred to Jafer Lawyers”. Khanh said, “I called her 3 days after she left for Sydney and I said, ‘Can I use the money for the stamp duty? Somehow she misunderstood and said, ‘You require more money’, and she transferred to Jafer Lawyers”. Khanh said he didn’t know “how she worked out that figure [and he] didn’t tell her”.
106Khanh said that he had given Yuko the bank account details for Jafer Lawyers “in case the loan proceeds”. When he gave her those details, Khanh said that he and Yuko had “an arrangement for me to enter into the deed, and if I proceed, there will be an account if she needs to get the funds to Jafer Lawyers in order to get the deed to progress and that could be the source of where she got the account number”.
107Immediately after giving this evidence (in chief), Khanh then said, “I did not” give the account number to Yuko. He said, “She paid the fee of the solicitor to make the deed up, so that could be how she got the account number”. I will further examine the inconsistencies in this part of Khanh’s evidence in due course.
108q. Contact between Yuko and Khanh after her return to Japan in July 2006: Yuko said that Khanh came to Japan in 2008 and stayed with Yuko’s family. Yuko said she had asked Khanh, at that time, about the house. Khanh told Yuko that he was living in the house with Emiko. Yuko and her husband told Khanh that they wanted him to sell the house and repay the money he had borrowed from Yuko.
109Yuko said that Khanh told her that she would lose money if it was sold then. Yuko said that Khanh promised to look at property prices when he returned to Melbourne and would “let her know”.
110Khanh denied that any such conversation took place. He said that in 2008, he and Emiko spent one night with Yuko and most of that was spent by them waiting for Yuko to finish her business dealings. There were no discussions about the Kensington property.
111Khanh gave evidence that he had spoken with Yuko before he sold the Kensington property in November 2008 for $475,000. Khanh told Yuko that he was going to sell the property. He told her by phone, “I am changing my career, I am selling my house, get out of the debt, pay the loans off”. Khanh gave evidence that Yuko said, “Yeah, you should sell it. It’s unpredictable now, get off the market, get rid of it and move on”.
112Yuko said in evidence that after Khanh returned to Australia in 2008, “it was hard to contact him and he wouldn’t answer the calls”. She said that Dung told her that Khanh was living in the house with his in-laws. Yuko said she “didn’t have time to keep calling” and she and her husband “ended up arguing about the situation”.
113In December 2012, Yuko brought her children to Australia to study. She was divorced by this time. Yuko said that she “asked Khanh what happened to the house and he said he rented it out”. Yuko said she asked Khanh whether she could go to the house but he refused. In 2013, Yuko came to Melbourne but was unable to see the house, as Khanh “kept avoiding it, saying he was busy”. She made enquiries from a relative, a real estate agent Jai, who found out that the Kensington property had been sold some years before. Yuko said that when she found that out she went to Dung’s house and “made a big fuss”.
114Yuko said she later spoke to Khanh and asked him how he could sell the house with the caveat on. Khanh told her the solicitor did not “do the caveat”. He told Yuko that he had bought an apartment at Chipping Norton in New South Wales. Yuko demanded that the money be paid back. Khanh and Dung denied that these conversations had occurred.
115r. Repayments by Khanh to Yuko in 2014: Yuko alleged in her amended statement of claim that in 2014, Khanh made repayments totalling $6,500 “pursuant to the agreement”, by a payment of $2,800 cash in April 2014, $2,000 by bank transfer in June 2014 and $650 cash in October 2014. Khanh admitted in his defence that he had paid Yuko $6,500, but denied “that they were repayments to the alleged loan monies”.
116There was general agreement in the evidence of Yuko and Khanh about the circumstances in which the sums totalling about $6,500 were paid. In March 2014, Yuko had asked Khanh to help her buy a car. During the course of the transaction, Khanh “lent” Yuko $2,800 and $2,000 which went towards the purchase price of the car. In October 2014, Yuko had told Khanh that she needed $2,000 to pay for her children’s school fees. Khanh had given Yuko $650 in cash at his shop in Wollongong.
117Khanh said that the last request for money was made after Yuko had become aware of the litigation Dung was threatening. The letter of demand from Dung’s lawyers to Yuko is dated 3 September 2014. Khanh said that before that time, Yuko had never made any demand from him to repay loan monies.
118Khanh said that his contact with Yuko in October 2014 involved Yuko becoming abusive and violent and necessitated the calling of security at the shopping centre and also police. Yuko disputed the basis upon which the police attended.
119s. Dispute between Dung and Yuko about Bambara Court: On 3 November 2014, Dung issued County Court proceeding CI-14-05406 against Yuko and her daughter Miho. The dispute related to the purchase of the property at Bambara Court by Dung in October 2001. The property was purchased for $246,000, of which Yuko said she had advanced $176,690 by way of loan. It is more likely that Yuko provided $146,000. This is the figure given in her defence to Dung’s proceeding in 2014.
120Dung alleged the arrangement was that when Yuko “was able to migrate to Australia”, Dung would transfer the property to Yuko upon payment by Yuko to Dung of one third of the value of the property at that time. In May 2014, Yuko asked Dung to transfer Bambara Court into the name of Yuko’s daughter Miho. The transfer occurred, but Dung alleged that no payment had been made by Yuko to Dung.
121On 19 June 2015, the proceeding was resolved by terms of settlement which provided for the payment by Yuko to Dung of $50,000.
122t. Khanh’s use of the sale proceeds from the Kensington property: After the Kensington property was sold by Khanh, he purchased the property Dempster Street with Dung. In this proceeding, Yuko seeks a declaration of interest in her favour by reason of a constructive or resulting trust in Dempster Street to the extent of the unpaid monies and accrued interest under the loan deed.
123Khanh said that after the Kensington property was sold he “moved to Sydney and started the business”. He said that “nothing”, from the proceeds of sale of the Kensington property, was used to purchase Dempster Street.
124Khanh said that he become a joint proprietor of Dempster Street only because his mother was not working fulltime and she needed Khanh as a joint owner in order to borrow money from the bank. In fact, all the other money for the purchase came from the proceeds of the sale of a property at Kenneth Street, Braybrook by his father, who had given the profit (over $200,000) to Dung so that she could buy Dempster Street.
125Khanh and Dung sought a loan of $100,600 from the CBA to assist with the purchase price of $370,500. Khanh was taken, in cross-examination, to details of his and Dung’s “financial position” disclosed in the application to the bank dated 3 May 2010. This included an unspecified property valued at $350,000 (which Khanh said was an “investment property”) and other assets.
126Khanh said that the application form “was prepared at the time by the lady to create the figure substantial enough for the loan to be approved”. It was put to him that he “knew the bank would rely upon” the document. He answered, “I can’t recall. I just go with whatever the lady did”. After discussion, I granted a certificate pursuant to section 128 of the Evidence Act 2008 (Vic) in respect of Khanh’s evidence about the loan application. On that basis, Khanh voluntarily gave the evidence of the preparation of the documents supporting the loan application.
127Khanh gave evidence that he had established two nail treatment salons in the Wollongong area and that, after he moved to Sydney, he purchased an apartment at Chipping Norton. A letter from Khanh’s conveyancer to him dated 26 February 2009, discloses that from the Kensington property proceeds of sale of $475,000, the CBA was paid $461,644.56.
128On 13 October 2014, Success Law Group, on behalf of Yuko, lodged a caveat in respect of Dempster Street claiming an estate in fee simple by reason of the loan deed.
129u. Legal action by Yuko against Khanh: On 10 October 2014, Sydney solicitors Success Law Group sent a letter of demand on Yuko’s behalf to Khanh seeking payment of $202,400 plus interest “that you borrowed [from] her as per your loan agreement”.
130On 2 November 2014, Success Law Group filed a statement of claim in the Supreme Court of New South Wales claiming the sum of $202,400 plus interest pursuant to the deed, and that Dempster Street be “subject to an equitable charge”.
131In his defence to the statement of claim, Khanh admitted:
“(a) that in or about May or June 2006 discussions were held between the Plaintiff and Defendant to the effect that the Plaintiff would advance the Defendant funds in the order of $100,000.00 (the proposed advance; being the balance of monies required by the Defendant to purchase the First Property for $375,000.00 after the Defendant had obtained funding from the Commonwealth Bank of Australia (CBA) for $275,000.00.
(b)The Defendant admits that he signed a document in relation to the proposed advance but states that the advance did not proceed as he financed the balance of $100,000 from other sources”.
132The defence also admitted that Yuko “advanced the sum of $20,000 on 18 July 2006 to assist with the payment of stamp duty” on the purchase of the Kensington property, but denied “that this was pursuant to any written agreement”.
133On 6 March 2015, Yuko was granted leave to discontinue the proceeding on condition that she “pay the costs of the proceedings, save the defendant’s costs of preparing his defence, as to which there is no order as to costs and the motion for leave to discontinue, which shall be borne by the defendant”.
134On 25 May 2015, Yuko issued the writ in the present proceeding.
Failure to call witnesses and missing documents
135Mr Lowry was critical of plaintiff’s counsel’s failure to call a number of witnesses, whom he said would have been able to give evidence as follows:
a.Yuko’s eldest sister Bich, as to whether or not there was a transfer of A$100,000 by her at Yuko’s request from the money she held for Yuko in Vietnam through a service provider to be collected by Yuko in Melbourne;
b.Yuko’s former husband Tarashi Matsufuji, as to whether in 2006 he transferred funds from Japan to Australia at Yuko’s request;
c.Yuko’s youngest sister Van, as to whether she drove Yuko to the NAB in Cabramatta on 28 June 2006 to make a deposit of $11,359;
d.Yuko’s “distant” relative, “Jai”, a real estate agent with Ray White Real Estate, as to why he examined the sales history of the Kensington property in May 2014;
e.a lawyer from Jafer Lawyers as to “the discussions that took place at their offices in June/July 2006, and [to] confirm whether money was paid to lodge a caveat”;
f.a customer of Yuko, Mr Nhu, as to whether he had paid $14,600 to Yuko on about 28 April 2006.
136Mr Lowry also referred to Mr Shepherd’s failure to tender certain documents, including:
a.documents relating to the transfer of about A$100,000 from Vietnam by Bich in 2006;
b.documents relating to the transfer of about A$40,000 from Japan by Tarashi Matsufuji in 2006;
c.documents evidencing sales to Mr Nhu, the deposit of $14,600 on 28 April 2006 and the withdrawal of $13,500;
d.documents relating to the engagement by Yuko of Jafer Lawyers to lodge a caveat over the Kensington property.
137Mr Lowry submitted that by reason of the plaintiff’s failure to call the persons named as witnesses or to produce the documents referred to, the Court should infer that “the uncalled evidence or missing material would not have assisted [Yuko’s] case”.
138Mr Lowry led evidence from Khanh directed to the issue of whether there was a reasonable explanation for his failure to call Khanh’s father Son, as a witness about whether he gave $20,000 cash to Khanh in early July 2006 to make up the sum of $105,000 deposited on 23 June 2006, the $14,000 deposited in Khanh’s account on 20 July 2006 and about the sum exceeding $200,000 given to Dung so that she and Khanh could purchase Dempster Street in 2010.
139Generally, a Jones v. Dunkel inference will be drawn in the following circumstances:
a.the evidence would be useful in clarifying a disputed issue;
b.the witness who might have given that evidence would have been expected to be called by a particular party;
c.there is no reasonable explanation for the absence of the witness.
140As the Court of Appeal said in Chong v CC Containers Pty Ltd [2015] VSCA 137 at [207], “the rule in Jones v Dunkel is a particular application of Lord Mansfield CJ’s maxim ‘that all evidence is to be weighed according to the proof it was in the power of one side to have produced and in the power of the other to have contradicted’”.
141In relation to the absent evidence referred to by Mr Lowry, I do not consider that the evidence suggested that Van might have been able to give would have had any utility. As to the other witnesses or documents, to varying degrees, further evidence on those matters might have been useful.
142Lirim Murati, Yuko’s solicitor, gave evidence of his attempts to secure the attendance of Bich, Tarashi and Van to give evidence. Mr Murati said that:
a.his firm commenced acting for Yuko on 23 March 2017;
b.Yuko told him “that she had not previously been told that such individuals would be required to attend court to give evidence during the trial”;
c.both Bich and Tarashi had lodged visa applications but, in the time available, were not likely to be granted;
d.his efforts to explore the availability of a video link by which Bich could give evidence were unsuccessful;
e.he had spoken by phone to Van who told him she “will not come to court”.
143Yuko gave evidence in relation to Bich, Tarashi and Van that:
a.she had wanted Bich to come to court, and had asked her to;
b.Bich was reluctant to come to Australia to give evidence because of her health, and the fact that she “may not be able to cope” with a dispute between her two sisters and nephew, as this had caused her sleeplessness;
c.Bich said she “needs to think about” whether to come to Australia to give evidence. She asked Yuko why she and Dung “couldn’t work it out with each other and it is hard for her and why do they have to put everyone in a miserable situation”;
d.Bich is 60 years of age. Both she and her husband are unwell. Bich suffers from “age, lost appetite, stomach problems, she can’t sleep and has aches and pains”;
e.Tarashi had lodged a visa application supported by a letter Yuko had obtained from Mr Murati.
144The witnesses who would have been likely to give highly relevant evidence were Bich and perhaps Tarashi. A critical issue in the proceeding was whether Yuko had advanced any money to Khanh pursuant to the deed.
145Bich was the central figure in relation to the alleged transfer of A$100,000 from Vietnam to Melbourne. Yuko said that Bich participated in telephone conversations with both her and Dung to make arrangements for the transfer. The evidence Yuko said that Bich could give included:
a.Bich had acted as a local agent for Yuko’s business in Vietnam;
b.Bich had collected money owing to the business from a number of customers in Vietnam;
c.in mid-2006, Bich was holding the equivalent of at least A$100,000 for Yuko;
d.Yuko had telephoned Bich and asked her to get that sum of money ready to transfer to Australia;
e.Dung had spoken with Bich and given her the telephone number of the transferring agency;
f.Bich made arrangements with the agency for the transfer of the A$100,000 she provided to the agency;
g.Bich phoned Dung and told her that the arrangements had been made and how to go about picking up the money in Melbourne.
146Bich was reluctant to be a witness and did not give evidence. Yuko requested that she come to Australia. Bich apparently made an application for the necessary visa, but this was made too late for Bich to have attended the trial. No other method by which she might have given evidence was easily available. Yuko said that until her lawyers asked her about Bich’s availability to give evidence, she was not aware that Bich would be needed. Yuko was not challenged about any of these matters.
147Yuko said that there were a number of reasons for Bich being reluctant to give evidence; the need to travel from Vietnam to Australia; her age and state of health and her reluctance to side with one of her sisters against another and the anxiety that this had already caused her. These matters were also not challenged although it was clear, even without argument, that Bich’s health issues were not dire.
148In my view, these matters provide an adequate explanation for Bich not attending as a witness called on behalf of Yuko. Yuko made efforts to secure Bich’s attendance, although these were made late and for this reason could not have succeeded. Bich was a reluctant witness – she would need to travel a long way to be embroiled in a family dispute.
149It was part of Yuko’s case to establish that money had been advanced by her to Khanh. Apart from Yuko’s own evidence, there was no supporting evidence (including any document) of the transfer of A$100,000 from Vietnam to Australia. Dung did concede that she herself had bought and paid for products sent by Yuko’s business to Dung in Australia. She did not agree that she acted as Yuko’s local agent, in much the same way that it was suggested Bich did in Vietnam. Nevertheless, the evidence of Dung’s involvement with Yuko’s business does provide in my view, some evidence which would support Yuko’s evidence and a conclusion that, it was likely that Bich may play some part in Yuko’s business including the collection of payments from customers in Vietnam.
150Although Yuko bore that onus of proof on the issue of the advancement of funds to Khanh, that fact does not exclude the rule in Jones v. Dunkel from also operating against a party not bearing the onus of proof (see Hodgson JA in Ho v Powell (2001) 51 NSWLR 572 (“Ho”) at [16] cited in Cross on Evidence, 8th Australian edition (“Cross”) at [1215]). However, as Hodgson JA said in Ho at [15], citing Blatch v Archer [1774] EngR 2, “it is important to have regard to the ability of parties, particularly bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so”.
151This latter point will be of particular relevance when I come to analyse the evidence upon which the Court is asked to find for a party on a particular issue where that party bears the onus of proof, and I am considering whether there “is an appropriate basis on which to reach a reasonable decision” (see ASIC v Rich [2009] NSWSC 1229 at [438] (Austin J) and Shalhoub v Buchanan [2002] NSWSC 99 at [71] (Campbell J)).
152As the High Court said in ASIC v. Hellicar (2012) 247 CLR 342 at 412 paragraphs [165] and [166] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ “Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles…Lord Mansfield’s dictum in Blatch v Archer that “[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted” is not to be understood as countenancing any departure from any of these rules”.
153No evidence was led on behalf of Khanh as to why Bich had not been called to give evidence on his behalf. There was, for example, no evidence that Khanh either personally, or through his mother, had fallen out with Bich or that there was some other reason she might generally be more favourably disposed towards Yuko.
154The reason an inference may be drawn that the evidence of a witness would not have helped a party not calling the witness arises from the expectation that the party would have called the witness, if the party could have. That expectation, that the witness would have been called by a party, arises in the following circumstances:
a.where there is an issue, in respect of which that witness’s evidence would have assisted, whether or not that party bore the onus of proof;
b.there was a relationship between the witness and the party;
c.the party is in a position to have called the witness.
155As Mahoney JA said in the New South Wales Court of Appeal decision of Fabre v. Arenales (1992) 27 NSWLR 437 at 449-50 (Priestley and Sheller JJA concurring), cited in Cross at [1215], “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”.
156Justice of Appeal Mahoney continued. “But there are some circumstances in which it has been recognised that such an inference is not available, or if available, is of little significance”. In the present circumstances, I do not consider that it is appropriate to draw inferences against either party.
157So far as Khanh is concerned, Bich’s apparent reluctance to be involved because of the family connection, and the other explanations given for her absence, equally apply to Khanh as much as Yuko. With Yuko, she made every effort, although belatedly, to try to have Bich attend court or to give evidence remotely. However, I do not consider that the circumstances would justify drawing an inference that Bich’s evidence would not have helped her case or that I should more readily accept the evidence of Khanh and Dung on the issue of the alleged transfer of money from Vietnam.
158In further written submissions, Mr Lowry asserted that, “It is not reasonable for the defendant to have made efforts to call Bich as a witness, for he believed until the trial commenced that the plaintiff was going to call her”. Mr Lowry noted that, “This was the position until the morning of the trial” (5 April 2017). There is no evidence to support that assertion and it appears contrary to the matters contained in the letter from the defendant’s solicitors to Yuko dated 24 March 2017 (copied to the Court), at a time when the solicitors believed that Yuko was unrepresented.
159Tarashi was apparently prepared to come to Australia to give evidence. Yuko said she was not aware that he would be needed as a witness and arrangements could not be made in time for him to come. Although he is now Yuko’s former husband, their business relationship survived their divorce, at least for some time. In my view, it could not readily be anticipated that Khanh would be expected to call Tarashi as a witness.
160The range of issues about which Tarashi could have given useful evidence, included:
a.the transfer of funds from Japan to Australia in 2006;
b.the conversation alleged to have occurred in 2008 in Tokyo when both Yuko and Tarashi asked Khanh to sell the Kensington property and repay Yuko;
c.the nature and extent of their business interests in Vietnam and Australia.
161I consider that Tarashi’s absence as a witness called on Yuko’s behalf was not “unexplained”. Without any real challenge to the factual matters underpinning that explanation, I would not be inclined to infer that any evidence he might have given, would not have assisted Yuko’s case.
162I do not consider Van’s absence as a witness is a matter requiring explanation. The evidence, it was suggested by Mr Lowry that she might have given, would have been of limited utility. I consider also that, in any event, there was an adequate explanation provided by Mr Murati’s evidence for her absence as a witness called by Yuko. Whilst no explanation was provided on Khanh’s behalf, the evidence of her unwillingness to become involved applied to both Yuko and Khanh.
163Jai may have given evidence suggesting that in 2014, Yuko seemed to be unaware at that time that Khanh had sold the Kensington property. The fact that Jai, at Yuko’s request, had made enquiries in 2014 that revealed that Khanh had sold the Kensington property in 2009, was not disputed.
164Any further evidence of Jai about the reason for the request, or the state of mind of Yuko when she made the request would not have particularly clarified the issue of Yuko’s knowledge of when Khanh sold the Kensington property. His absence as a witness on Yuko’s behalf does not, in my view, require explanation.
165It is unfortunate that neither a lawyer from Jafer Lawyers nor the conveyancer, Teresa, gave evidence. Yuko, as she was entitled to, relied upon Khanh’s admission that he had executed the deed. It was Khanh’s case that the deed was to have no effect, either because of what was said at the lawyers’ offices, or (as pleaded in the defence) at a subsequent meeting, and that a substituted arrangement took its place.
166Yuko’s former solicitor sought copies of relevant documents from Jafer Lawyers. The solicitor who responded to the request was the same solicitor who was involved in the conveyancing for the Kensington property. The most likely inference from her letter in reply was that, not only had the file been destroyed, but that there was no memory of the transaction. In my view, this was probably a sufficient explanation for Yuko’s failure to call a witness from Jafer Lawyers.
167The position from Khanh’s perspective is not as straight forward. He asserts that, although the lawyers had drafted the deed they, and Teresa, the conveyancer, acquiesced in the execution of the deed in circumstances where it was not to have immediate binding effect until apparently Khanh had rid himself of his uncertainty and agreed that he did want to be party to an agreement. This was in circumstances where Khanh said he had been previously unaware of the deed until at or shortly before the meeting at the solicitors’ offices.
168This would be very unusual transaction for the solicitors or a conveyancer to countenance and it is probable this would make it memorable. No explanation was provided by Khanh for the absence of Jafer Lawyers, or perhaps more importantly, Teresa. In these circumstances, I consider that I am entitled to infer that Teresa, if she had given evidence, her evidence would not have assisted Khanh’s case and the absence of the witness is a reason for preferring Yuko’s evidence of what happened at the solicitors’ offices.
169As for the solicitors, I consider that in view of the correspondence with Yuko’s previous solicitors, it is unlikely they would have any recollection of the meeting in 2006 or the detail of the conveyancing transaction. However, this fact should not prevent an inference being drawn that, if the solicitors had been called, any evidence they might have given on the issue of a “conditional” execution of the deed would not have assisted Khanh’s case. Notwithstanding, I do not propose to draw such an inference.
170Mr Nhu was apparently a customer of Yuko’s business in 2006. That fact was not in issue. The fact that $14,600 was paid into Yuko’s bank account on 28 April 2006 was not in issue. The source of those funds was of marginal relevance but not sufficient to draw an adverse inference as a result of Yuko’s failure to explain his absence as a witness.
171Mr Lowry submitted that the absence of certain documents should lead to the inference that those documents, if produced, would not have assisted Yuko’s case. Some of the documents in all probability would have existed at the time, for example those evidencing bank transfers from Japan to Melbourne, if indeed transfers had taken place. There were, for example, bank statements showing transfers in 2001 (presumably to assist with the purchase of Bambara Court).
172The absence of similar documents in 2006 may justify an inference that if those documents had been produced they would not have helped Yuko. There are, however, some of Yuko’s Australian bank account records from 2006 which do not show any relevant transfers from Japan. It probably follows that, if there were other relevant bank records, and they had been produced, they would not have assisted Yuko’s case.
173It is not clear whether documents ever existed or were likely to have existed in relation to the alleged transfer of A$100,000 from Vietnam. Similarly, Yuko may not have received any documents from the solicitor in relation to the cost of preparing the deed or the caveat. The terms of the deed suggest that it would be Khanh and not Yuko who would have received an account for the cost of preparing the deed. The absence of a caveat lodged over the Kensington property suggests that nothing was done by the lawyers in this regard.
Analysis of the evidence
174I intend to analyse the critical matters of evidence where there is a significant dispute between the witnesses. The critical matters include:
a.the circumstances in which Yuko and Khanh executed the deed;
b.whether the deed was to have no immediate operation and the arrangement between the parties was to be limited to providing funds for the payment of stamp duty on the purchase of the Kensington property;
c.whether any funds were advanced by Yuko to Khanh in respect of the purchase of the Kensington property.
175The conclusions I have reached are as follows:
a.the deed signed by Yuko and Khanh reflected Yuko’s offer to Khanh to lend him $205,000 to enable Khanh to purchase the Kensington property;
b.the deed was always intended as a binding document to govern the terms upon which funds were to be advanced by Yuko to Khanh for the purchase, including any payment in respect of the stamp duty on the transaction;
c.the evidence does not sufficiently establish that Yuko advanced to Khanh more than the sums of:
i.$105,000 deposited on 23 June 2006 into the bank account of Jafer Lawyers;
ii.$20,000 deposited in the bank account of Khanh and Emiko on 18 July 2006;
iii.$11,359 deposited in the bank account of Jafer Lawyers on 28 June 2006.
Execution of the deed by Yuko and Khanh
176In reaching the conclusion in relation to the effect of the deed, I have been primarily persuaded by the following matters:
a.Khanh and Yuko executed the deed in the presence of solicitors who had prepared it;
b.the deed specifically refers to the Kensington property and, therefore, was clearly prepared to reflect an anticipated transaction involving the advancement of funds by Yuko to Khanh to assist in the purchase of the Kensington property;
c.as the deed referred to the funds advanced being secured by the charging of the Kensington property, it is likely that the loan was to be supplementary to a loan from a financial institution secured by a first mortgage;
d.there was a history of Yuko assisting Dung financially; the admitted loan in 1997 and the provision of supplementary finance in 2001 for the purchase of Bambara Court, in which Dung and her family lived;
e.the interest shown by Yuko in her nephew Khanh, both before and after the deed was executed, including the 8 months Khanh spent in Japan with Yuko and her family in about 1998 and his later visit there in about 2008;
f.Yuko’s import/export business, and the likelihood that both Dung and Bich had some involvement on Yuko’s behalf;
g.Yuko was staying with Dung at the time the Kensington property was purchased and was involved in at least one inspection of the property and one meeting with the solicitors;
h.the version of events, particularly at the solicitors’ office, given by Khanh and Dung lacks credibility.
The meeting at the offices of Jafer Lawyers
177Khanh said that he had “no idea” about the deed and Yuko “did all this behind my back” and had “arranged this document without my knowledge”. Khanh said that he “did not know this deed existed until [Yuko] requested a second appointment”.
178Khanh said that Yuko told him “to pay a visit to the same solicitor with her” and Dung. Khanh said Yuko told him a loan document had been prepared so he did not “have to borrow from the bank”. Khanh was reluctant but Yuko said, “Let’s go and have a chat, we don’t have to do anything”.
179Khanh said that Yuko had arranged the meeting at the solicitors’ office, and for the solicitors to prepare the deed. At the solicitors’ office, Yuko explained that Khanh would not need to borrow from the bank; he could sign the deed.
180Khanh said he “was completely surprised” and looked at Dung and confirmed with her that Dung would be providing funds. He asked Dung if she knew about the deed, which she denied.
181According to Khanh a conversation then followed involving Teresa, a Vietnamese conveyancer whom Khanh said had given Yuko her card at the previous meeting. Both Yuko and Teresa persuaded Khanh to sign the document as “just a draft” that could be destroyed after he had considered it further and if he did not wish to proceed.
182Khanh gave evidence that his mother said at the meeting that the proposal in the deed “was ridiculous, and it is cheaper if you borrow from the bank”.
183Dung said that, on the day before the meeting, Yuko told Dung and Khanh that “she had done that agreement so the three of us should go there and look at the agreement… and then make a decision later”. Dung knew that “the agreement is about a loan”. Yuko had said that, “Whether or not Khanh wanted to borrow the money, they should just go and make an agreement”. Dung did not think Khanh needed to borrow money, as she “had money”.
184In his defence to the proceeding instituted by Yuko in the Supreme Court of New South Wales, in response to Yuko’s claim that pursuant to the deed Yuko had agreed to lend Khanh $202,400, Khanh admitted that, “In or about May or June 2006, discussions were held between [Yuko] and [Khanh] to the effect that [Yuko] would advance [to Khanh] funds in the order of $100,000 [and] that a document was prepared in relation to the proposed advance but… the advance did not proceed”.
185In his defence in the present proceeding, Khanh admitted “that in or about June 2006, [Yuko] and [Khanh] entered into an agreement by which [Yuko] was to loan [Khanh] $202,400 to purchase the Kensington property”, and that the agreement was in writing.
186There are inconsistencies between the admissions in each of Khanh’s defences and between those admissions and the version of events given by Khanh in his oral evidence. In his evidence, Khanh suggested that there were very little, if any, preliminary discussions about a loan from Yuko. His “surprise” at the meeting was unexplained.
187The suggestion by Khanh and Dung that the offer was to lend money “instead of” bank finance makes no sense as the purchase price was $385,000 and Yuko was offering to lend about $205,000. This is also inconsistent with Khanh’s statement that he looked to Dung for confirmation that she had offered to lend him money and therefore Yuko’s offer was unnecessary.
188Khanh did not suggest in his evidence that there had been any discussion “at that time” about Yuko having spare funds from illegal activities that she wished to launder. It was put as a simple commercial arrangement. A loan with repayments of interest and security in the form of an unregistered charge protected by a caveat so that Khanh could not sell the property without repaying the loan.
189The evidence is entirely consistent with Yuko’s evidence of her previous relationship with Dung and Khanh and her desire to assist her nephew purchase a property. From her personal perspective, the house would provide a place for her children to live if they were to later study in Australia.
190The deed was prepared by solicitors, most likely as Yuko said, upon instructions provided through Khanh. It is unlikely that the solicitors would have permitted the document to be signed in the circumstances suggested by Khanh. It is unclear whether there was a woman named Teresa present and, if she were present, whether she was a lawyer, or a conveyancer from an adjoining office and whether she spoke in Vietnamese.
191In my view, there is no reason to doubt that when Yuko and Khanh executed the deed at the offices of Jafer Lawyers that the parties understood that it reflected the terms of an agreement between them which took effect and would govern their relationship in respect of any advance made by Yuko to Khanh for the purchase of the Kensington property.
Whether Yuko and Khanh made an alternative arrangement
192In his defence to Yuko’s New South Wales Supreme Court proceeding based on the deed, Khanh admitted that he signed a document in relation to the proposed advance but stated that “the advance did not proceed”. Khanh also admitted in the defence that Yuko “advanced the sum of $20,000…on 18 July 2006 to assist with the payment of stamp duty [but denied] that this was pursuant to any written agreement”.
193In his defence in the present proceeding, Khanh pleaded that “in or about mid to late June 2006, shortly after the [deed] was signed but before the $20,000 loan referred to below [Khanh] notified Yuko he did not wish to proceed with the loan agreement [the deed] and [Yuko] accepted that termination of the agreement”.
194The defence continued, “As a result, [Yuko] did not advance the loan monies to [Khanh]. [Yuko] did advance a separate sum of $20,000 to [Khanh] without a due date for repayment and without requiring interest repayments on any right to security in relation to the Kensington property”.
195The defence stated, in particulars, that “the termination and acceptance of termination were oral and contained in conversations between [Yuko] and [Khanh] in or about mid to late June 2006 in a Melbourne coffee shop”. The agreement for the $20,000 loan was said to have been contained in conversations between Yuko and Khanh “on or about July 2006 at [Dung’s] house [and] was implied by the deposit of the sum of $20,000 by [Yuko] into [Khanh’s] bank account on or about 18 July 2006”.
196Khanh’s solicitors later provided further particulars of the “conversations” between Yuko and Khanh about the agreement for the $20,000 loan. A single conversation was alleged, “in or about June 2006” at Bambara Court, in which Yuko “offered to advance to [Khanh] the sum of $20,000 for stamp duty payable on the purchase”.
197Further particulars were also given of the advance by Yuko to Khanh of “the amount of $20,000”. It was said that the advance of $20,000 was part of a deposit (together with other cash) from Khanh of $21,718.28 on 10 July 2006 into Khanh and Emiko’s bank account. This was repeated in evidence by Khanh.
198This appears to be an incorrect reconstruction of events by Khanh, as the deposit of $21,718.28 is noted in the CBA’s home loan statement for Khanh and Emiko as “money we lent you” on 10 July 2006, and in Khanh and Emiko’s “streamline” account statement on the same date as “loan funds”. The $21,718.28 was the balance of the total loan funds of $275,000 after $253,281.62 had been provided to settle the purchase on 5 July 2006
199Khanh later explained in evidence that the sum of $21,718.28 was the “residual” of a personal loan and the $20,000 provided by Yuko in cash to Dung. After a conversation by phone with Yuko, who was in Sydney, the $20,000 had been deposited in his “streamline” account on 18 July 2006, and used to offset the payment of $18,760 withdrawn from the account on 13 July 2006. This was able to be paid because of the deposit into the account of $21,718.28 on 10 July 2006.
200This “reconstruction” by Khanh may simply be an honest mistake. However, Khanh tied the deposit of $20,000 to a telephone call that he said he had with Yuko in Sydney.
201Khanh’s evidence in chief on this matter is difficult to follow. Khanh gave evidence that, “I called her after she left for Sydney, two days before she flew to Japan”. Khanh said that the “conversation” was: “I am not going ahead with this deed. I told you about the shortage of the stamp duty. That’s all it’s going to be”.
202Khanh said that before she went to Sydney, Yuko had left $20,000 cash with Dung as Khanh knew that he would be “short at least $20,000 on that stamp duty basis”. In the phone call, Khanh said he asked Yuko if “he could use this amount” for the stamp duty. Khanh said it was “from a sort of fund that she was lending me for the stamp duty”.
203A short time later, in his evidence-in-chief, Khanh appeared to again refer to the same telephone conversation. He said, “I called her 3 days after she left for Sydney and I asked, ‘Can I use the money for the stamp duty?’”. Khanh said that, “Somehow she misunderstood and thought I required more money and transferred to Jafer Lawyers”. This was the transfer of $11,359 on 28 June 2006 from the NAB at Cabramatta.
204Khanh said that he didn’t know how Yuko “worked out” the figure of $11,359. Mr Lowry thought Khanh had given evidence earlier that he had given Yuko the Jafer Lawyers’ bank account details “in case the loan proceeds”.
205Khanh was asked by Mr Lowry, “Tell me what the conversation was when you gave her that information of the bank details from Jafer Lawyers?” Khanh replied, “They have an arrangement for me to enter into the deed. If I proceed, there will be an account if she needs to get the funds to Jafer Lawyers in order to get the deed to progress, and that could be the source of where she got the account number”.
206Mr Lowry then asked, “Earlier I thought you said that you gave it [the account number] to her?” Khanh replied, “I did not…She paid the fee of the solicitor to make the deed up so it could be how she got the account number”.
207During cross-examination, Khanh said that “at the solicitors’ firm…we discussed a shortage of my stamp duty…It was not paid to me, it was there if I needed it”.
208In the telephone conversation with Yuko in Sydney, Khanh confirmed that he “didn’t ask her to pay $11,359 to anyone” and that he “only confirmed with her that I needed the stamp duty required to make up the total settlement”. Khanh said that, “I did mention to the solicitor when the deed was provided that, ‘I do not like this deed. I don’t need this money. I can’t afford it and the only thing I need is the stamp duty’”.
209Dung also gave evidence that at the meeting at the solicitors’ office she “told Khanh not to sign the agreement” and “Yuko and Teresa said, ‘Just sign it, if you agree to it the agreement will go ahead, if you don’t it won’t go ahead’”. Dung said that at the meeting, “Khanh did say he may borrow some money just to pay stamp duty without agreement or contract or anything”.
210Later, Dung gave evidence that, at the meeting in the solicitors’ office, “Khanh did say that he needed Yuko to help him with a bit of money because he may not have enough money for stamp duty, because Khanh and I don’t agree to the big loan agreement, we only want to borrow a small amount of money”.
211Dung continued, “After that, before going back to Sydney, Yuko did say she wanted to lend $20,000 to Khanh for stamp duty and she asked me to keep the $20,000 to give Khanh…I put the money in my safe and locked it up…I kept it until some time in July and Khanh asked me, ‘Did Yuko lend him money for stamp duty?’ I said, ‘Yes’. I took the money out and gave it to him’”.
212Notwithstanding, what appears to be supporting evidence from Dung about the discussions at the solicitors’ office, I do not accept either her evidence, or Khanh’s evidence, of what was discussed at that time in relation to the deed or about a later need for an amount for stamp duty. I reject that evidence, principally for the following reasons:
a.in view of the defences filed both in New South Wales and in the present proceeding and the further particulars filed by Khanh in this proceeding, the evidence of Khanh and Dung seems to be the product of reconstruction and collusion;
b.the evidence of the various conversations is improbable. Where detail is provided, it is unlikely that this detail would be recollected after nearly ten years;
c.this detail is in contrast to the evidence of other conversations, for example the conversations the day before Yuko, Khanh and Dung went to the solicitors when Yuko apparently told Khanh and Dung that she had arranged to have solicitors prepare a deed providing for the advance of loan moneys for the purchase. According to Khanh and Dung, such a loan had not previously been discussed;
d.later, when Khanh phoned Yuko in Sydney, Yuko was told that Khanh was not going to proceed with the loan but wanted to use the $20,000 Yuko had left with Dung in cash for the stamp duty. Instead, Yuko misunderstood and transferred $11,359 into the solicitors’ bank account, although that transfer was on 28 June 2006 and the settlement of the purchase was on 5 July 2006;
e.the $20,000 paid into Khanh and Emiko’s account on 18 July did not pay for the stamp duty which had been deducted on 13 July and had been paid because $21,718.38 had been deposited on 10 July 2006;
f.the $21,718.38 was the balance of the home loan from the CBA. It was not the “residual” of a personal loan Khanh had obtained and it was not comprised of the $20,000 cash Dung was holding for Khanh and the balance from Khanh.
213Even if a positive finding of reconstruction and collusion were not justified, the versions of events given by Khanh and Dung in their evidence were improbable and the evidence fails to satisfy the onus of proof which is upon Khanh in relation to the issues of the effect of the deed and the alternative arrangement.
Advances by Yuko pursuant to the deed
214In the statement of claim filed on Yuko’s behalf in the Supreme Court of New South Wales on 21 November 2014, it is alleged that pursuant to the deed, Yuko transferred to Khanh “the sum of $202,400” made up as follows:
a.“on about 2 June 2006, [Yuko] gave $70,000 cash to [Dung]”;
b.“on about 22 June 2006, [Yuko] caused $100,000 to be transferred from Vietnam to [Dung]”;
c.“on about 26 June 2006, [Yuko] caused $32,400 to be transferred from an account in Japan to [Dung’s] account”.
215In the statement of claim filed with the writ in this proceeding, it is alleged that Yuko lent Khanh the sum of $202,400 “between June 2006 and July 2006 by:
a.depositing $105,000 into the trust account of Jafer Lawyers, as [Khanh’s] bank account on 29 June 2006;
b. depositing $11,359 in [Khanh’s] bank account on 29 June 2006;
c. advancing about $6,000 in cash to [Khanh] in July 2006;
d.[Yuko] causing [Dung] to advance $80,000 to [Khanh] for [Yuko]…and [Yuko] deposited $40,000 into the bank account of [Dung] on account of the advanced $80,000”.
216In the amended statement of claim, paragraphs (c) and (d) were deleted and a further allegation was substituted that Yuko had paid “the sum of $100,000 to [Khanh] in cash”. The particulars alleged that Bich was “instructed” by Yuko to “provide cash in the sum of $AU100,000…to a friend of [Dung], who also lived in Vietnam. Subsequently, and by reason of the physical transfer of $AU100,000 in Vietnam between [Bich] and [Dung’s] friend, another friend of [Dung] provided $AU100,000 cash to [Khanh] in Melbourne…in the presence of [Yuko] and [Dung]…at a shop in Richmond in July 2006”. It was further alleged that “$AU40,000 of the $AU100,000 cash was deposited into [Khanh’s] or [Dung’s bank account] held with the [CBA]”.
217The onus is upon Yuko to establish that she made advances to Khanh pursuant to the deed. In the circumstances where I have concluded that the deed was effective and no alternate arrangement was entered into, I consider that the advances made by Yuko to Khanh included:
a.the $105,000 deposited on 23 June 2006 into Jafer Lawyers’ bank account;
b.$11,359 deposited by Yuko into Jafer Lawyers’ bank account in Khanh’s name on 28 June 2006;
c.$20,000 deposited in Khanh and Emiko’s bank account on 18 July 2006.
218Khanh admitted that the deposit of $20,000 had been advanced by Yuko in relation to the purchase of the Kensington property. Clearly, the sum was advanced in accordance with the deed. It is likely, however, that it was part of the funds given by Yuko to Dung to be held by Dung until needed by Khanh for the purchase. It is unlikely that they were funds specifically held to pay for the stamp duty, if this were needed.
219I do not accept that there was a conversation shortly prior to 18 July 2006 when Khanh asked Yuko if he could use the funds held by Dung to pay stamp duty. This is unlikely as Yuko had transferred $11,359 to Jafer Lawyers for the stamp duty on 28 June 2006.
220The bank records disclose that the sum of $11,359 was deposited into the “Jafer Lawyers Statutory Trust account” in Khanh’s name on 28 June 2006. Khanh said that Yuko did this by mistake. I do not accept that this deposit was made in error or contrary to the express wishes of Khanh communicated to Yuko. The fact that the deposit was made in precise terms (the account number, in Khanh’s name and in the amount of $11,359) and was made about 3 weeks before Khanh says he made a request to Yuko in regard to the $20,000, indicates that his evidence lacked general credibility.
221The deed provided for advances of $202,400. The explanation Yuko gave for the difference between this sum and the sum of $205,000, which she said that she had agreed to advance to Khanh, was said to be the fees of Jafer Lawyers for drawing the deed. This explanation seems inconsistent with clause 8.6 of the deed which provides for Khanh to pay the “costs of and incidental to the preparation and execution of this deed”.
222On 20 July 2006, Jafer Lawyers sent to Khanh the “statement of account” from the settlement on 5 July 2006. Also included was a “tax invoice” from Jafer Lawyers to Khanh which included the item, “To our professional costs in relation to drawing and engrossing loan agreement, attending client upon execution of same - $250.00” plus GST. The invoice noted that Khanh had paid the total amount of $484, which included $190 plus GST for arranging the settlement and associated matters.
223Yuko said that she “gathered” together the amount of $250,000 in two parts, $100,000 and $105,000. Yuko said that the sum of $100,000 came from Bich in Vietnam and the sum of $105,000 was the total of a series of withdrawals and transfers.
224It is appropriate to attempt to establish a chronology of the sequence of the Kensington property purchase. It is easier to do this working backwards:
a.on 13 July 2006, there was a withdrawal of $18,760 from Khanh and Emiko’s streamline account which had the notation “stamping”. Counsel agreed that this was the amount paid for stamp duty. This was paid, presumably by the bank as mortgagee;
b.on 5 July 2006, the purchase settled. The Jafer Lawyers’ statement of account shows that the purchase price of $385,000 was (leaving aside adjustments of $13.38) paid by 3 amounts:
Deposit $38,500.00
Amount paid to vendor provided by your mortgagee $252,797.62
Amount paid to vendor provided by you $93,689.00
c.the “mortgagee” was the CBA and the payment from the total home loan of $275,000 of $253,281.62 is recorded in the home loan account statement as having been “lent” to Khanh and Emiko on 5 July 2006;
d.on 28 June 2006, the statement for the Jafer Lawyers’ Statutory Trust Account, records the deposit of $11,359 for “Khanh Phan”;
e.on 23 June 2006, the statement for the Jafer Lawyers’ account records a “cash deposit of $105,000”. The payment into this account is reflected in the deposit slip at the NAB Sunshine on the same day into the Jafer Lawyers account;
f.22 June 2006 is the date of the CBA “Consumer Credit Contract Schedule”, offering to Khanh and Emiko first mortgage finance for the purchase, of $275,000;
g.on 22 June 2006, there is an entry in the Jafer Lawyers’ account recording a “cash and/or cheque deposit” of $38,500. This is likely to be the deposit payment referred to in the settlement statement although there do not appear to be entries in other bank statements or deposit slips which would provide confirmation. This matter was not discussed in the oral evidence or the submissions of counsel;
h.the contract of sale in evidence is undated. It refers in the “particulars of sale” to:
i.the deposit of $38,500 being payable “on the signing hereof”;
ii.the “day of sale” as “the earlier day of this contract or the acceptance date of any prior contract namely the 14th day of June 2006”. This date was inserted in handwriting;
i.the vendor’s statement is dated 9 June 2006, and it appears from the dates of the attached statements specifically obtained for the statement, that the preparation for the statement probably commenced at about the beginning of June 2006.
225Khanh and Dung said that the sale of the Kensington property was a private sale without the intervention of estate agents. Khanh said the vendor suggested that Khanh use the same solicitors. It is possible that the vendor’s statement was prepared in advance of Khanh reaching an agreement to buy the property. On the other hand, this may not have happened until the vendor actually had secured Khanh as a purchaser.
226Yuko said she did not commence “gathering” the funds for Khanh until after she had inspected the Kensington property with Khanh and Dung, and Khanh had accepted her offer of funds to assist with the purchase.
227Every event associated with the purchase of the Kensington property happened from, at the earliest, the beginning of June. It seems more likely therefore that Khanh agreed to purchase the property in early June, on a date close to the date “14 June 2006” referred to as the “acceptance date of any prior contract” in the contract of sale.
228This may not necessarily be so, as it may be that there was an informal arrangement between Khanh and the vendor reached at some time before the vendor went to see the solicitors. It is also possible that, as Yuko said in evidence, she and Khanh had been looking at other properties before the Kensington property and had discussed a possible loan from Yuko to bridge the gap between the purchase price and what the bank would provide by way of finance.
229However, on the evidence of the surrounding documents, the likelihood is that any arrangement between Yuko and Khanh was not finalised before June 2006, probably mid-June. It is likely also that the loan arrangement between Yuko and Khanh was in place before 23 June 2006 when $105,000 was deposited in the Jafer Lawyers’ account, and certainly before 28 June 2006 when Yuko deposited at the NAB Cabramatta the sum of $11,359 into the Jafer Lawyers’ account.
230Another matter of significance is the fact that although Khanh was not formally notified until 22 June 2006 that the CBA would provide finance of $275,000, it is likely that, because he was an employee of the bank at the bank’s head office in Melbourne, Khanh would not only have made the application at an earlier date, but would have had some idea of the likelihood of the application being successful before the confirmation letter was received.
231If this analysis is correct, it is unlikely that the gathering of the $105,000 happened as Yuko recalled in evidence, for two reasons:
a.if the likely bank finance was known to be in the order $275,000, then Khanh would never have needed an additional $205,000 for the purchase of the Kensington property. However:
i.as Yuko suggested in evidence, the total cost of the purchase, including stamp duty, fees and legal costs was about $410,000, half of which was $205,000. There is therefore a logical explanation for that figure;
ii.as appeared to be implied by the answers given by Khanh to questions about the “ridiculously” high interest rate in the deed, he was suggesting that the $202,400 was offered by Yuko as an alternative to first mortgage finance from the CBA or another financial institution. This alternative appears unlikely as Khanh would then have needed to make up a shortfall of over $200,000 which was, even on the evidence of Khanh and Dung, beyond their resources;
iii.Khanh may not have been confident of obtaining $275,000 from the bank, either because of the bank’s perception of the value of the property or the ability of Khanh and Emiko to service the borrowing;
b.it is unlikely that the bank transactions before 1 June 2006 or after settlement on 5 July 2006 (save for the deposit of $20,000 on 18 July 2006) were relevant to the loan of money by Yuko to Khanh.
232One exception may be the deposit of $38,500. Although there was a payment of that sum into the Jafer Lawyers’ account on 22 June 2006, there is no other evidence that the sum represented the payment of the deposit for the Kensington property. However, if as appears probable, the deposit was paid after 14 June 2006 (the likely “day of sale” in the contract), then the possibility, or even probability, is that the solicitors’ bank account statement does record the payment of the deposit of $38,500 for the Kensington property. These matters were not however canvassed at the trial and I would be reluctant, therefore, to make a positive finding that Yuko’s funds had paid for the deposit of $38,500.
233I consider it is likely that the withdrawal of $39,600 from Yuko’s passbook on 28 April 2006 and the withdrawal of $13,000 on 4 May and of $25,000 on 8 May from Yuko’s CBA account at Sunshine, were not directly related to the “gathering of money” to advance to Khanh for the purchase.
234Similarly, the depositing of $5,000 on 18 July 2006 and of $1,000 on 25 July 2006 into Khanh’s Visa account and of $14,000 on 20 July 2006 into Khanh and Emiko’s streamline account seems to have little to do with the money which would have been needed to settle the purchase on 5 July 2006. According to Yuko, the sums totalling $105,000 had been “gathered” prior to 23 June 2006 when $105,000 cash was deposited at the NAB Sunshine into Jafer Lawyers’ account.
235However, the evidence of the transactions in April and May 2006 does demonstrate that, shortly after Yuko arrived in Australia (and probably in Melbourne), she had available to her substantial sums of money, both as the balance in her accounts, and as deposits made during that time. For some reason, Yuko also made withdrawals of significant amounts.
236These matters are largely unexplained and it would be simply speculating to try and find explanations, including as to why Yuko gave the evidence which she did. Once analysed, that evidence seems both contrived and reconstructed from the few relevant documents available. I consider that it would not be appropriate for the Court to be satisfied that the April and May 2006 withdrawals from Yuko’s bank accounts were used directly for the purchase of the Kensington property.
237Yuko gave evidence that, at her request, her husband Tarashi transferred $40,000 from Japan to Australia. There is no independent evidence to support Yuko’s evidence of these matters.
238There is a statement from Dung’s bank account for November/December 2001 which shows a deposit of $19,995 from “Watsufuji Tarashi” on 18 November 2001 (which I have assumed, was a transfer from Yuko’s husband) and a withdrawal of $31,726.11 on 29 November 2001. The conveyancing service which settled the purchase of Bambara Court on 30 November 2001 required Dung to provide the amount of $31,726.11 to settle.
239There is no similar evidence in relation to the transfer of funds from Japan in 2006, either in Yuko’s bank book or bank statements or in the statements from Khanh’s accounts. In the circumstances, I am unable to be satisfied that Tarashi transferred funds from Japan to Australia at Yuko’s request in order to advance those funds to Khanh for the purchase.
240The evidence on the issue of the alleged transfer by Bich of A$100,000 from Vietnam to Australia consists solely of the oral evidence of Yuko, against which there are the denials by Khanh and Dung that anything like that happened. There is no middle ground; one version must be false.
241I was generally impressed with the evidence of Yuko although, upon analysis, it appears that her evidence in relation to a number of transactions is improbable. On the issue of the advancement of funds to Khanh, Yuko bears the onus of proof. However, I do not consider it is likely she deliberately gave false evidence and the few documents relating to this matter which were available appeared to fit the version of evidence she gave of:
a.bank deposits in July 2006 which totalled $40,000, which was the sum she thought her husband had transferred from Japan. Perhaps she confused the transfer of funds (apparently of sums just below a threshold of $20,000) in 2001 for the purchase of Bambara Court;
b.the withdrawals shown from her bank accounts in April and May 2006 which totalled $77,600;
c.anticipated total advances of $202,400 in accordance with the deed. The sum of the two figures of $40,000 and $77,600 is $117,600, not the $105,000 deposited on 23 June 2006, which Yuko said was made up of the separate sums she had “gathered” together.
242Notwithstanding, this evidence, I generally preferred her evidence to that of Khanh and Dung. I am satisfied, on the evidence that all payments made by Khanh to Jafer Lawyers for the purchase (although not including the deposit) were moneys advanced by Yuko.
243These advances include the following sums:
23 June 2006
Deposit at NAB Sunshine
$105,000
28 June 2006
Deposit at NAB Cabramatta
$11,359
18 July 2006
Deposit at CBA Sunshine
$20,000
$136,359
244I preferred the evidence of Yuko to that of Khanh and Dung for the following reasons:
a.in relation to the issue of the transfer of A$100,000 by Bich, there is no possibility that the evidence of Yuko on the one hand, or of Khanh and Dung on the other, can be reconciled. In relation to this issue, it is not possible that one side is mistaken or has forgotten events, even though the events occurred many years ago;
b.in these circumstances, I consider that if, after weighing the whole of the evidence given by the witnesses on all issues, I have a preference for the evidence of a particular witness or witnesses, I should more readily accept that it is likely that the witness or witnesses are telling the truth about the critical issue of the transfer of A$100,000;
c.in relation to Yuko, I consider that her evidence about the “gathering” of funds totalling $205,000 is improbable. However, I consider that this evidence is explicable as a result of faulty recollection rather than deliberate dishonesty;
d.over many years, Yuko had been involved in financial dealings with Dung. Yuko had lent her money, helped her purchase a house and had sold Dung goods through the business. Yuko also said that Dung helped her as a local agent with the business, collecting payments. It is apparent that the purchase of Bambara Court in 2001 involved ongoing accounting between the sisters and the recording by Dung of the expenses she had paid so that there could be an ultimate reconciliation of the accounts;
e.in relation to the purchase of the Kensington property, Yuko was on all versions, very much involved in the process. She inspected the property, visited the lawyers, offered to lend Khanh over $200,000, executed a deed, advanced money for stamp duty on at least one occasion (or on Khanh’s and Dung’s evidence, on two occasions). It is likely that most of these events took place within a few weeks from early June to early July;
f.in these circumstances, I accept that Yuko may have had a faulty recollection about the detail of her “gathering” of funds and the precise amounts that were made available to Khanh. The deed said $202,400 was to be advanced and it is likely that this figure was the starting point in her recollection of what had happened many years earlier;
g.there are other matters which were said to cast doubt on the credibility of Yuko’s evidence. These included Mr Lowry’s submissions that:
i.Yuko did not seek the repayment of any sum until Dung had initiated legal recovery in relation to money owing over Bambara Court. Dung’s solicitors sent a letter of demand to Yuko on 3 September 2014. Yuko’s solicitors sent a letter of demand to Dung on 10 October 2014. Proceedings were issued by both parties in November 2014;
ii.Yuko’s account of events was “inherently unlikely”, particularly in relation to the advances she alleges she made to Khanh. The version she gave in evidence had evolved in the pleading of her case in the New South Wales proceeding and in the present case, but still was problematic;
h.I do not consider that these matters should affect my general view of the veracity of Yuko’s evidence. There was obviously a long-term view taken about the intra-family dealings and considerable informality and trust. In relation to the purchase of the Kensington property, Yuko had an executed deed and believed that with a caveat over the property, her position was protected;
i.it is clear that, at some stage in about 2014, relations between Yuko and Dung broke down and they no longer trusted each other. The reasons for this are probably complex and, in the circumstances, I would not attribute responsibility to either sister;
j.in relation to Khanh’s evidence, I have noted the following unsatisfactory matters:
i.inconsistencies between his evidence and the pleadings and particulars;
ii.other discrepancies in his evidence;
iii.the incoherence of his descriptions of the conversations both before and during the meeting at Jafer Lawyers’ offices;
iv.the improbability of his evidence in relation to the two alleged payments by Yuko for stamp duty;
k.Dung’s evidence supported Khanh’s evidence on most critical issues. However, her recollection of specific detail of conversations was improbable. The conversations were generally not identified by time or place and other details were not recalled. The recollections given in evidence were of matters unlikely to have assumed any significance until disputes arose many years later;
l.I reject much of the evidence of Khanh and Dung, including the evidence about the funds allegedly supplied by Dung, and Khanh’s father. Both Dung and Son apparently had other properties in 2006. Dung owned a property at Armour Court, Sunshine West although she and her family lived at Bambara Court, whilst Son owned a property at Braybrook. Otherwise, their financial position is unclear and the evidence of extensive “cash” holdings unreliable;
m.Khanh’s evidence of the meeting at Jafer Lawyers’ office was that when he was reluctant to sign the deed, Yuko said, “Don’t worry, this is just a draft. You guys have no money. Just sign now” (emphasis added). This seems inconsistent with Khanh’s evidence that he “already had an agreement with my mum that she would lend me this money”. There was no evidence that Khanh at the meeting challenged the statement by Yuko that, “You guys have no money”. In my view, this is likely to be what Yuko had said at some stage, and the reason for the offer to lend the substantial sum of money recorded in the deed;
n.Yuko’s evidence of the circumstances of the transfer of money by Bich does not appear improbable, although this was suggested by Mr Lowry. Through a commercial (or private) agency, funds provided in Vietnam were made available for collection in Melbourne upon payment of a fee for the service.
245Accordingly, I accept that all payments relating to the purchase of the Kensington property, apart from the money advanced by the CBA by way of first mortgage and the deposit of $38,500, were made from funds advanced by Yuko to Khanh, either directly or through Dung. The total of those advances was $136,359. From that sum must be deducted the payments made by Khanh. These sums are admitted to total $6,500, although the specific sums referred to in evidence total $5,450. The balance owing is $129,859.
Dempster Street, West Footscray property
246Dung currently lives at Dempster Street. A caveat was lodged in respect of Dempster Street on 13 October 2014 by Success Lawyers on behalf of Yuko. The caveat claimed an “estate in fee simple…by reason of constructive trust arisen out from the Agreement between Yuko…(…caveator) and the registered proprietor Khanh…on the date of 5th July 2006”.
247The Amended Statement of Claim alleged that Khanh “used some or all of the monies owed [‘from the proceeds of sale of the Kensington property’] to purchase [Dempster Street]”. It was said that this “is to be inferred by reason that the purchase of [Dempster Street] occurred after the sale of the Kensington property” Further particulars were foreshadowed “after discovery”.
248In these circumstances, it was alleged that “it would be unconscionable for [Khanh] to deny that [Yuko] held a beneficial interest in [Dempster Street, and that] in the premises, [Khanh] holds his interest in [Dempster Street] in favour of [Yuko] to the extent of [‘the loan moneys and any interest and default interest accruing pursuant to the terms of the Agreement’]”.
249The claim is based on the assertion that Khanh used some or all of the proceeds of sale of the Kensington property to purchase Dempster Street. This allegation is not, however, borne out by the evidence.
250Two days prior to settlement of the sale of the Kensington property due on 26 February 2009, Khanh’s conveyancer wrote to him noting that “the total amount to be paid by the purchasers is $475,113.11”. The letter noted that the CBA had given an “indicative figure” to settle of $388,910.21 and that “the surplus funds of $72,734.35” would be deposited into Khanh’s account.
251After settlement had been effected on 26 February 2009, the conveyancer wrote again to Khanh noting that from the purchase price (and adjustments of $213.11), the CBA had taken $461,644.56. The balance of the monies went to the estate agent and the conveyancer for their costs. All Khanh received directly was apparently an original part deposit of $100.
252These matters were not explored in the oral evidence. There is no evidence to support the caveat lodged on 13 October 2014, even if it had been confined, as set out in the amended statement of claim, to the balance from the proceeds owing to Yuko pursuant to the deed, and not to the broader claim made in the caveat.
253Accordingly, this part of the claim must be dismissed and an order will be made for the removal of the caveat over Dempster Street.
Orders
254In the circumstances, I propose to order that there be judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $129,859.
255I will also order that the caveat lodged in dealing number AL425684D in the Land Titles Office Victoria in respect of Certificate of Title 06239 Folio 751 shall forthwith be removed.
256I will hear further from the parties in relation to the questions of interest and costs.
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Certificate
I certify that the preceding 48 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 26 May 2017.
Dated: 26 May 2017
Carla Cianfaglione
Associate to His Honour Judge Anderson
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