Mei Ling Wong v Robert Millen Smyth
[2020] VCC 75
•6 April 2020
BR
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-18-04193
| MEI LING WONG | Plaintiff |
| v | |
| ROBERT MILLEN SMYTH | Defendant |
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JUDGE: | LEWITAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4, 5, 6 and 12 February 2020 | |
DATE OF JUDGMENT: | 6 April 2020 | |
CASE MAY BE CITED AS: | Mei Ling Wong v Robert Millen Smyth | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 75 | |
REASONS FOR JUDGMENT
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Subject: Lenders Contract; oral agreement
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D McAloon | Tisher Liner FC Law |
| For the Defendant | Mr M Hoyne | Pointon Partners |
HER HONOUR:
1 Mei Ling Wong (Wong) and Andrew Allen Hall (Hall) entered into an agreement to lend the sum of $122,540 to Robert Millen Smyth (Smyth). Smyth agreed to pay interest at the rate of 8.5% on the loan. Wong and Smyth had the right to set the date for full repayment of the loan amounts including any interest, with 30 days written notice. On 6 August 2018 Wong and Hall demanded full repayment of the remainder of the loan amount plus interest. On 5 September 2018 Hall assigned his interest in the agreement to Wong.
2 Smyth denies that Wong is entitled to repayment. Smyth claims that he entered into an overarching agreement with Wong in March 2005 (the alleged overarching agreement) and that Wong would only be entitled to repayment of the principal sum of $122,540 plus interest if Wong was not paid one third of the proceeds of the sale of shares held by Wong, Hall and Smyth in BR Boxhill Pty Ltd. BR Boxhill Pty Ltd was formerly known as Blue Reef Pty Ltd (Blue Reef Number One). A liquidator was appointed over Blue Reef Number One on 12 June 2012. Blue Reef Number One had a large ATO debt which it could not meet and the business was struggling. The sales manager of Blue Reef Number One had recently left the business and had taken the customer base with him.[1]
[1] Transcript p 74.
Background
3 Wong is an outreach charity officer. Wong started going out with Hall at High School and they were romantically linked until 1993 or 1994.[2] Wong met Smyth while Smyth was working as a casual gym instructor and pool attendant. At that time Wong was working as a swimming teacher. Not long after meeting Smyth, Wong introduced Smyth to Hall.[3]
[2] Transcript p 217.
[3] Transcript p 92-93.
4 After that introduction, there were a series of business enterprises in which Smyth, Hall and Wong were involved. Each of them had a hands-on role in those businesses. Smyth’s role was CEO. Hall had an IT role. Wong had a general administrative role and dealt with accounts and reception. At times, Hall and Wong did not take a salary for working in the businesses. The operation of those businesses from time to time required funding to meet their cash flow requirements.[4]
[4] Transcript p 93.
5 As at February 2004 Wong, Smyth and Hall were working at Blue Reef Number One. Smyth was the owner of 3 properties: Denman Street Mitcham, Selby Court Berwick and Stoda Street Heathmont. Smyth accepted that he had “over-committed” in relation to these property acquisitions because he had borrowed money to finance the purchase of at least some of them.[5] Smyth agreed that owning these three properties was a source of personal financial pressure.[6] Smyth had insufficient funds to meet his personal liabilities. Smyth’s will, prepared in September 2004, suggested that he was balance sheet insolvent at that time.[7]
[5] Transcript p 106.
[6] Transcript p 106.
[7] Exhibit J.
6 Smyth was a director of Blue Reef Number One. Smyth agreed that had he filed for bankruptcy, it would have had an adverse impact on Blue Reef Number 1.[8] Wong and Hall were concerned that if Smyth went bankrupt, it would affect the Blue Reef Number One business. This was conceded by Smyth in cross-examination:
Q And the evidence of Ms Wong will be that she and Mr Hall were concerned to have you avoid the risk of bankruptcy, including because their understanding was that they owned a share of the Blue Reef business, so they didn’t wish to put that at risk. You agree that she could have reached that understanding?...
A I agree she could have reached that understanding, yes.[9]
[8] Transcript p 107.
[9] Transcript p 107.
7 I accept Wong’s evidence that she and Hall agreed to lend money to Smyth after he spoke of the possibility of his going bankrupt. Wong stated that Smyth:
…was a director of, Blue Reef at the time and we thought that that was a bad idea that he would be bankrupt, so we suggested that we took some money out of a home loan to help him out. I have no idea what the money was for. I just knew he had issues with financial status, and we suggested that we would do that to help him out. So we were friends as well, and also he was the director of the company.[10]
[10] Transcript pp 193 -194.
8 Wong and Smyth were joint proprietors of a property at 25 Stringybark Close, Forest Hill in the state of Victoria. In order to help Smyth, Wong and Hall agreed to take some money out of a registered mortgage over their jointly-owned property.[11]
[11] Transcript p 193.
9 The following payments were made by Hall and Wong to Smyth:
Date Payee Amount Payment
Method
Account Exhibit 2.2.2004 Robert Smyth $ 4664.00 EFT “Stoda Street” Hall & Wong BOM 1 19.2.2004 Robert Smyth $ 8046.45 Cheque Hall & Wong BOM 3 25.2.2004 Colin Adams[12] $ 4800.00 Cheque Hall & Wong BOM 4 3.3. 2004 Robert Smyth $20,000.00 Cheque Hall & Wong BOM 8 18.3.2004 Robert Smyth $20,000,00 Cheque Hall & Wong BOM 5 4.5.2004 Robert Smyth $10,000.00 Cheque Hall & Wong Citibank 6 28.5.2004 Robert Smyth $15,000.00 Cheque Hall & Wong Citibank 7 27.8.2004 Colin Adams $40,000.00[13] Cheque Hall & Wong BOM 9 Total $122,510.45 [12] Mr Adams was a creditor of the defendant on account of providing services in connection with the redevelopment of the Stoda Street Property.
[13] Exhibit 9.
following 30 March 2005 Advances to the defendant
31 May 2005 Mandorahl Pty Ltd $20,000 Cheque Hall & Wong BOM D
10 Smyth admits that funds totalling approximately $122,540 were provided to him or his creditors.[14] To the extent that the moneys were paid to his creditors, that was in accordance with his request or direction.[15] Smyth denies that he made any repayment of the money advanced to him.[16]
[14] Transcript p 103.
[15] Transcript p 103.
[16] Transcript p 157.
11 A written contract was entered into between Smyth as borrower and Hall and Wong as Lender.[17] (Lenders Contract) The start date of the contract is 1 February 2004. The contract was signed by all parties on 30 March 2005.
[17] Exhibit 10.
12 The Lenders Contract provides:
Lenders Contract
A formal agreement between:
Robert Millen Smyth (Borrower)
And
Andrew Allen Hall & Mei Ling Wong (Lender)
Start date of Contract: 1st February, 2004
Due date of Contract: Open
This document constitutes a formal and legally binding contract between the lender and borrower.
The constraints of this contract are:
1. The lender has issued A$122,540 to the borrower by way of loan;
2. The borrower agrees to repay the lender the full amount owing (principle);
3. The borrower agrees to pay the lender an amount being for Interest payable on the loan (currently 8.5% p.a.);
4. The lender reserves the right to vary the Interest rate in accordance with the rate prescribed by the lender’s own financier.
5. The lender has the right to set the date for full repayment of the loan amounts including any interest owing, with 30 days written notice.
13 Smyth filed a defence on 5 November 2018 (the first defence). On the first day of the trial, Smyth sought leave to amend his defence and filed an amended defence dated 4 February 2020 (the second defence). In both the first and second defences, Smyth agreed that the terms of the Lenders Contract were set out in paragraph 4 of the Statement of Claim filed by the plaintiff on 21 September 2018 (the Statement of Claim).
14 On 6 August 2018 the solicitors for the lenders (Wong and Hall) forwarded a demand for repayment (the written demand) of the loan in the following terms:
Re: Our clients Andrew Hall and Mei Wong
Loan Agreement between Robert Millen Smyth and our clients
We act on behalf of Andrew Hall and Mei Wong (our clients). We note you act for Robert Smyth.
We are instructed as follows:
1. On 30 March 2005 our respective clients entered into a Loan Agreement (Agreement) pursuant to which our clients advanced the sum of $122,540 (Loan Amount) to your client Robert Smyth by way of loan. We attach a copy of the Agreement for your reference.
2. Clause 5 of the Agreement provides that your client has the right to set the date for full repayment of the Loan Amount including any interest owing with thirty (30) days written notice. Interest was payable on the Loan Amount at 8.5% per annum.
3. In early 2005, your client paid $6,000 to our clients as part-payment of the Loan Amount. Since then no repayments have been made.
4. Our clients have never previously made any formal demand for payment in accordance with Clause 5 of the Agreement.
Accordingly our clients hereby demand full repayment of the Loan Amount being $116,540.00 (Remaining Balance) within thirty (30) days of the date of this letter plus interest of $139,051.70 (Interest). (emphasis mine)
15 Smyth admits that the written demand was made.[18] He does not allege that the claim is subject to a Statute of Limitations defence.[19]
[18] Second Defence, paragraph 7.
[19] Paragraph 5, Defendant’s Outline of Submissions dated 10 February 2020 (the defendant’s submissions); transcript pp 28-29.
16 The rights of Hall in respect of the loan the subject of the Lenders Contract were assigned to Wong by way of Deed of Assignment dated 5 September 2018.[20] On 20 September 2018 the Deed of Assignment was served on Smyth. The defendant concedes that the assignment was effective.[21]
[20] Exhibit O.
[21] Transcript p 51.
17 The defendant submitted that as “no demand in accordance with clause 5 of the Lenders Contract has been served, the debt is not yet owed.”[22] The defendant submitted that the Lenders Contract provides that the lender had the right to set the date for full repayment of the loan amounts. The defendant submitted that the reference to “loan amounts” must mean amounts loaned from time to time. If part payments were demanded and made, the lender would only have the right to make demand for the amount outstanding. The defendant submitted that the court is unable to find that the letter of 6 August 2018 set a date for repayment of the “loan amounts” since the “loan amounts” are unknown.
[22] Paragraph 53, the defendant’s submissions.
18 In the defendant’s outline of submissions dated 13 February 2020 (the defendant’s supplementary submissions), the defendant submitted that this case is not a “repayable on demand” case.[23] The defendant submitted that “it may have been the case that the plaintiff did not have to specify the actual quantum of the “loan amount” [sic] but the plaintiff did have to set the date for full payment of the “loan amount” [sic]”.[24]
[23] Paragraph 5, the defendant’s supplementary submissions.
[24] Paragraph 10, the defendant’s supplementary submissions.
19 I do not accept the defendant’s submissions. Clause 5 of the Lenders Contract does not prescribe the form of the notice, save that it is to be in writing and that a period of 30 days is to be provided. Clause 5 does not stipulate that the quantum of the “loan amounts” must be specified.
20 In this case the written demand satisfied the requirements of clause 5 of the Lenders Contract. The written demand set a date for payment; it did so in writing and the date that was set was no less than 30 days from the date of the notice. The reference in the written demand to an amount other than the amount now sought to be recovered (being a lesser sum of $116,540 rather than $122,540) does not render the written demand ineffective.
21 In Bunbury Foods Pty Ltd v National Bank of Australasia Ltd [25] (Bunbury Foods) the High Court held unanimously:
It is of some materiality to note that it is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt. Even a notice given to the mortgagor by the mortgagee as a condition precedent of a power of sale is not rendered invalid because it demands payment of more than is due…
[25] [1984] 153 CLR 491, 503-504.
22 In Barns v Queensland National Bank Ltd [26] (Barns) the High Court unanimously held:
In our opinion, however, a demand is sufficient if it sufficiently identifies the debt of which payment is demanded, notwithstanding any error or omission in the description.
[26] (1906) 3 CLR 925, 935.
23 In Indrisie v General Credits Ltd [27] the Court of Appeal referred to Barns and stated that “[i]t is the identification of the debt rather than the money sum which is required.” In Whild v GE Mortgage Solutions Ltd [28] Croft J observed that there are “many other authorities to similar effect”. In this case the debt was identified. The solicitors for the plaintiff forwarded to the defendant a copy of the Lenders Contract together with the written demand.
The defendant sought to distinguish the authorities referred to above from the present case. The defendant referred to Equuscorp Pty Ltd v Rigert [29] (Rigert) and Equuscorp Pty Ltd v Olsen[30]. However those cases turned upon the construction of the particular requirements of s107 of the Credit Act 1984 (Vic). In this case the defendant submits that the Court should adopt an overly technical approach. That was rejected by the High Court in Bunbury Foods.[31]
[27] [1985] VR 251, 254.
[28] [2012] VSC 212, [41].
[29] [2003] VSC 343, [44].
[30] [2004] VSC 454, [20] – [21].
[31] This technical approach was also rejected by the House of Lords in Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] AC 749.
Quantum
24 The defendant submitted that it is entirely unclear what amount is owed based on the plaintiff’s evidence. The defendant submitted that the plaintiff’s evidence was that an amount was paid in 2006 but she was unable to say what the amount was. The defendant submitted that the onus is on the plaintiff to prove not only that an amount is owed but the quantum of that amount. The defendant submitted that the plaintiff has failed to meet that onus.
25 The defendant referred to the following evidence given by Wong:
QAnd as best you recall, did Mr Smyth at any time after 30 March 2005 make any repayments of amounts referred to in the lender’s contract?...
A I believe so, yes.
Q And what do you believe about that? …
AI think around 2006 he made several payments, um, a few thousand dollars here and there.[32]
[32] Transcript p 205.
26 The plaintiff gave evidence as to her belief that some repayments may have been made. She put it no higher than that. Wong said that she did not have official records of those payments.[33] There was no evidence before the court from either party that served to confirm that belief.
[33] Transcript p 206.
27 On the other hand, the evidence is that the amount of $122,540 issued to the borrower [Smyth] by way of loan has not been repaid. Smyth repeatedly said that he has made no repayment. Smyth gave the following evidence when cross-examined:
Q Her best recollection, sir, is that you did make some modest repayments to her in respect of moneys that she had advanced to you personally. Do you say you did or didn’t make any repayments?...
A No. I didn’t make any repayments…. I may have… advanced money to her, ah, from time to time, but it wouldn’t have been in relation to this.
Q You never made any repayment in respect of these loan moneys?...
A Not that I recall. No. [34]
[34] Transcript pp 157- 158.
28 The defendant’s firm position is that he never made any repayments.
Q In 2004 and 2005, in excess of $122,500 was paid to you or your creditors by Ms Wong and Mr Hall; you agree with that, don’t you?...
A Yes.
Q And that included an amount of $20,000 that was paid after the date of the lenders’ contract, being the amount paid to Mandorahl?...
A Yes
Q And you agree that you – your evidence is you haven’t repaid any of that money?...
A Ah, yes.[35]
[35] Transcript p 174.
29 The Lenders Contract is a clearly expressed document. There is no suggestion that it is the subject of any ambiguity. It records Wong and Hall as the lender. It records Smyth as the borrower. It is signed by all relevant parties. It is described as a formal and legally binding contract between the lender and the borrower. Having considered the whole of the evidence, I am satisfied that as at the date of the agreement the lender issued $122,540 to the borrower by way loan. I am also satisfied on a balance of probabilities that this amount has not been repaid. I accept the plaintiff’s submission that the plaintiff is entitled to judgment for that sum.
The evidence
30 Each of the parties gave evidence. I found Wong to be a straightforward and truthful witness. She answered questions directly and frankly. She was prepared to make concessions. Her evidence is largely consistent with the cheques and the written documents.
31 On the other hand, Smyth’s evidence was unsatisfactory. While his pleaded case is based upon oral conversations that he contends happened almost 15 years ago, he was unable to provide details of those alleged conversations beyond what he described as the “general concept”.[36]
[36] Transcript pp 70 – 71.
32 Having considered the whole of the evidence, I have formed the view that Smyth was a witness who in effect, would say what he thought would assist the defendant’s case as opposed to a witness who was endeavouring at all times to give a truthful and accurate account of the facts. For example he professed to have no knowledge or recollection of matters that had the potential to impair his credit or damage his case, such as the plaintiff’s provision of funding to Blue Reef Number One. Under cross-examination, Smyth stated:
Q Now, when Blue Reef No. 1 came around, Mr Smyth, it pursued an aspect of Impaq’s former business, didn’t it? Being cyber security for educational institutions?
A That is correct, yes.
Q And certainly in relation to that entity, you, rather than Ms Wong, were responsible for the corporate governance, in terms of recording ownership of shares and the like; you agree with that?
A I agree, yes.
Q And you also agree that the ASIC records did not always faithfully record who the beneficial owner of the shares were; agree with that?
A I do, yes.
Q So to go to the ASIC register at any point in time wouldn’t necessarily tell you who was the beneficial owner of that company, would it?
A I agree, yes.
Q Thank you. And Ms Wong provided services to what your barrister’s been calling Blue Reef No. 1, didn’t she?
A She did, yes.
Q And?
A Well, she was an employee, yes.
Q She was an employee. And the effect of your discussions – the discussions you had with Mr Hall and Ms Wong – you were friends at the time, weren’t you, the three of you?
A We were, yes.
Q And you were all working in the business?
A We were.
Q And you were all putting funds into the business at various times?
A Um, again, I actually don’t have a recollection of Mei, certainly or Andrew, for that matter. Other than the initial funds that Andrew put in, I don’t have a recollection of, um – of funds being injected into the business by Mei. (emphasis mine)
Q So it may have happened, you just don’t recall?
A I – I don’t recall.
Q And the position at that time, though, Mr Smyth, was no relevant distinction was drawn between Ms Wong’s finances and Mr Hall’s finances; you agree with that?
A Their personal finances?
Q Yes?
A I would assume so, yeah.
Q No, no. I’m asking you – perhaps you didn’t understand the question. What I’m putting to you – agree or disagree – is that at that time…
MR HOYNE: What time?
Q At the time that Blue Reef No. 1 was established and operational, no relevant distinction was being drawn between the finances of Ms Wong and Mr Hall?
A I can’t answer that.
Q Well, they shared a bank account, didn’t they?
A If you say so.[37]
[37] Transcript pp 96 – 97.
33 When questioned about the domestic telegraphic transfer receipt dated 2 August 2010 by Wong to Blue Reef Technologies Pty Ltd (tendered as exhibit H), Smyth accepted that Wong had provided funding to Blue Reef Number One.
Q And what this document suggests is that Ms Wong transferred a sum of $92,000 to Blue Reef in August 2010?
A Yes.
Q And that’s consistent with her having provided funding to Blue Reef No. 1 in 2010?
A Yes. That’s correct.[38]
[38] Transcript p 142.
34 In addition Smyth professed to have no knowledge or recollection of the reference in his signed Statement of Affairs regarding BR Box Hill Pty Ltd (in Liquidation)[39] to a creditor named “Blue Reef” being owed in excess of $1 million.[40] Smyth signed the Statement of Affairs as director on 7 June 2012.[41] Smyth gave the following evidenced under cross-examination.
[39] Exhibit K.
[40] Exhibit K, p 227.
[41] Exhibit K, p 224.
Q And if you go over the page, sir, I want you to look at the next page, which is Schedule H, which is unsecured creditors. Go to p 227?
A Yes.
Q And, again, as a director, did you sign off at this time that these were the unsecured creditors of the company? Do you see you put yourself in at the bottom?
A Yes.
Q $53,112?
A Yes.
Q And do you see the second creditor is something called Blue Reef, said to be owed $1m – in excess of $1m? Do you see that, sir?
A Yes.
Q Can you tell Her Honour what that creditor is?
A Um, I’m assuming that’s, um – no, I can’t.
Q Well, come on, sir. You need to try a bit better. You were the director of this company. We heard yesterday about all the efforts you made – or are making to pay creditors of Blue Reef No. 2?
A Yes
Q When Blue Reef No. 1 goes into liquidation, you signed a document, lodged it with ASIC, saying that the creditors are over $1m, and one of them which counts for in excess of $1m is an entity called Blue Reef?
A Yes.
Q Resident at 14 Ellingworth Parade, Box Hill; do you see that?
A Yes
Q Was that your address at the time, sir?
A No
Q Well, go to the bottom entry on the table, sir. Do you see your name, Robert Smyth?
A Yes.
Q What address is there, please, sir?
A Ah, 14 Ellingworth Parade.
Q Was that your address at the time, sir?
A No
Q Why did you give that address on this form?
A Um, it would have been an error.
Q So you have a false address?
A Ah, it was an error. Ah…
Q What was that address, sir?
A That was the business address. That was Blue Reef’s business address.
Q So are you able to assist the court in understanding who Blue Reef was, the creditor that was owed by Blue Reef No. 1 in excess of $1m as at the time that this company was put into liquidation?
A Um, it was a very – it was a very complicated corporate structure. Um, I actually – I – I don’t know. I’m sorry that’s not the answer you want, but I actually don’t know. I’d need to speak to advisers and accountants to understand that.
Q These creditors weren’t paid, were they, Mr Smyth?
A Um, I don’t believe so.
Q You didn’t sell a house to pay these creditors?...Ah, possibly I did.
Q Well?
A I
Q Come on sir. You can’t remember whether or not you sold a house to pay these creditors. Is that a serious answer?
A Um, I – I don’t remember. I honestly don’t remember.[42]
[42] Transcript pp 161 – 162.
Failure to call witnesses
35 The defendant submitted that there were two additional witnesses, Hall and Robinson, who were firmly in the camp of the plaintiff and who one would have expected to give relevant evidence. The defendant submitted that neither of those witnesses was called in circumstances where no good excuse was presented for failing to call either of them. The defendant submitted that in those circumstances a Jones v Dunkel [43] inference should be drawn that their evidence would not have assisted the plaintiff’s case.
[43] (1959) 101 CLR 298.
36 I turn first to the plaintiff’s claim. The plaintiff’s claim is based upon the Lenders Contract. There is no dispute that each of the parties executed that document. In those circumstances it was not necessary to call Hall or Robinson. In O’Meara v Dominican Fathers (O’Meara)[44] Gyles and Weinberg JJ stated:
The rule only applies where a party is “required to explain or contradict something: Jones v Dunkel at 321. What a party is required to explain or contradict depends on the issues raised by the pleadings, and by the course of evidence in the case.
[44] [2003] ACTCA 24, [69].
37 The defendant submitted that Robinson witnessed the signature to the Lenders Contract. As I have stated, the signature by the plaintiff, Hall and the defendant to the Lenders Contract has been admitted. As stated in O’Meara[45], the rule does not require a party to give merely cumulative evidence.
[45] [2003] ACTCA 24, [69].
38 Turning next to the defendant’s counterclaim, the defendant submitted that Hall was plainly in the plaintiff’s camp and that although there had been a falling out between Hall and the plaintiff, the plaintiff’s solicitors had acted for Hall in August 2018 when the original demand was made.[46] The defendant submitted that Hall spoke with friends of the plaintiff.
[46] Exhibit 22.
39 The plaintiff referred to Wong’s evidence that she had not spoken, or had direct contact, with Hall for approximately ten years.[47] The plaintiff submitted that Hall cannot be characterised as being in the plaintiff’s “camp” as is necessary for the Court to draw a Jones v Dunkel inference in respect of the plaintiff. By contrast, the defendant volunteered during cross-examination that he had spoken with Hall following the defendant’s receipt of the formal demand in August 2018.[48]
[47] Transcript p 215.
[48] Transcript p 152.
40 In Shum Yip Properties v Chatswood Investment & Development [49] Austin J observed:
The making of a Jones v Dunkel inference depends upon the closeness of the relationship of the absent witness with the party who did not call him (Hospitality Group Pty Ltd v Australian Rugby Union Ltd[50]) and it appears from the evidence that after 8 August 1997, at the latest, the relationship between Shum Yip and Mr Lin had come to an end.
[49] [2002] NSWSC 13, 64.
[50] (2001) ATPR 41-831, [64] per Hill and Finkelstein JJ.
41 Nevertheless I accept the defendant’s submission that Hall would more readily fall within the plaintiff’s camp. The defendant’s case is that Hall was directly involved in the discussions relating to the Overarching Agreement. I accept the defendant’s submission that Hall’s evidence, if adduced, would not have assisted the plaintiff’s case. On the other hand, it cannot be inferred that the evidence would have been unfavourable to the defendant’s case. The failure by the plaintiff to call Hall cannot fill an evidentiary gap in the defendant’s case. Further, the failure cannot be used to discount the probative value of evidence that has been called by the plaintiff in support of the plaintiff’s case.[51]
[51] Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345, French CJ., Gummow, Hayne, Crennan, Kiefel and Bell JJ at 413 -414; Heydon J at 442.
42 I do not accept the defendant’s submission that an adverse inference should be drawn against the plaintiff for failing to call Robinson. There is no evidence that Robinson was present at discussions with the defendant about the overarching agreement. As stated by Glass JA in Payne v Parker[52]:
I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him.
[52] [1976] 1 NSWLR 191, 202.
Delay
43 The defendant submits that no demand was made under the Lenders Contract until 6 August 2018 and that Wong did not give a satisfactory explanation for the long delay in making any claim for the debt owed.
44 In Nurisvan Investment Ltd & Anor v Anyoption Holdings [53] the Court of Appeal held:
The authorities make it plain that post-contractual conduct is not admissible on the question of the meaning of a contract, and for the purpose of construing a contract. On the other hand, it is recognised that, where no formal contract exists, post-contractual conduct is admissible on the question as to whether a contract was in fact formed.
[53] [2017] VSCA 141, [77].
45 I accept the plaintiff’s submission that the defendant’s obligations under the Lenders Contract were discussed between March 2005 and the sending of the written demand. I accept the plaintiff’s evidence that she asked the defendant about the repayment of the loaned amount on a number of occasions as well as during a particular meeting in 2005. Wong gave the following evidence:
Q And had you – I’ll put it another way – between the date of that document, which I’ll remind you is 30 March 2005, and the date of this demand, which is dated 6 August 2018, had you discussed with Mr Smyth the repayment of the funds referred to in the lender’s contract?
A Yes.
Q And when did that occur?
A Several times over the last – since 2005.
Q And are you able to recall what – well, what did you say when that was discussed? What did you say?
A I asked if my loan was ever going to get repaid and when.
Q And what did Mr Smyth say?
A Originally he said that he didn’t have the funds and obviously I would get the money as soon as he had funds. There was no time given.
Q And are you able to be specific about the date or place of any of those discussions?
A The last conversation I had with him about the loan was the day I spoke to him in the boardroom at Blue Reef, which is the day I – we decided that we could not work together ever again…
Q And?
A And I asked then.
Q Sorry, I interrupted. So you say you were in the boardroom, and you were going to say something about the content of that discussion?
A The last thing I asked was, “Will I be paid the personal loan”.
Q And what did Mr Smyth say?
A No.
Q And as best you can, do you recall when that conversation occurred?
A 2015, probably early 2015.[54]
[54] Transcript pp 204 – 205.
46 The defendant conceded that save for the conversation in 2015, he could not recall such discussions but he could not say definitely that they did not happen.[55]
[55] Transcript p 156.
47 Wong said that the reason for the delay in issuing the formal demand was that she believed that she had lost her copy of the Lenders Contract and further that Mr Flanigan, the accountant that she understood had retained a separate copy, was unwilling or unable to produce a copy.[56]
[56] Transcript p 206.
48 Wong said that she filed a copy of the Lenders Contract at home:
Q And do you recall when it was that you next saw that copy of the lender’s contract?
A When – I would have, um, collated all those cheques, um, put them all in a folder, um, and put them away somewhere safe, and I thought I lost it until I found it in 2018.
Q So when you say you thought you had lost ‘it’?
A Yep.
Q Is that a reference to the folder that you – you?
A Yes, the folder with all the cheques and the – the contract.
Q And you didn’t – you didn’t locate that until 2018; is that – have I understood that correctly?
A Yes.[57]
[57] Transcript p 198.
49 The defendant submitted that the plaintiff gave no explanation for the reason why there was any difficulty in finding the Lenders Contract or why Wong was suddenly able to find it in August 2018. The defence submits that on that basis an adverse inference ought to be drawn against Wong. The defendant’s counsel referred to Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd. (Ferrcom). [58]
[58] (1991) 22 NSWLR 389.
50 In Ferrcom Handley JA (with whom Kirby P agreed) held that the Court should not draw inferences on a relevant issue favourable to a party whose counsel refrains from asking crucial questions of a witness who could have answered them. In Ferrcom, the insured ‘made no attempt to prove’ an issue that was fundamental to its case.[59]
[59]
51 In this case, the plaintiff’s counsel asked the plaintiff in her evidence in chief “[a]re you able to explain to Your Honour why a formal written demand of that nature was not made at a date prior to August 2018?” The plaintiff gave the following evidence in her evidence-in-chief:
A I could not find the contract. I thought I’d lost it. Um, we asked the – Stuart for the copy that we knew was with him. He said it’s filed somewhere but he doesn’t know where it is, and he never found it. He never tried looking for it, I guess.
Q And when you say Stuart, can I trouble you to be a bit clearer about who that’s a reference to?
A Ah, Stuart Flanigan, the, um, business accountant and my personal accountant at the time.
Q And that’s the gentleman who signed the letter that I showed you earlier?
A Yes.
52 The facts in this case are different from Ferrcom. In this case the crucial question was asked of the plaintiff. Wong provided a credible explanation for the delay in issuing the Written Demand.
Did the parties enter into the alleged overarching agreement?
53 As stated in the above paragraph 2, the defendant contends that Hall’s obligations under the Lenders Contract were rendered conditional by the terms of the alleged overarching agreement.
54 The defendant submits that the Lenders Contract was not a standalone agreement. The defendant referred to a Share Sale Proceeds Agreement signed by Smyth, Hall and Wong on 30 March 2005 (the Share Sale Proceeds Agreement).[60] In his written submissions, the defendant contends that the parties agreed that the Lenders Contract would only be enforceable in circumstances where there was a sale of the Blue Reef Number One shares or business (whether that be Blue Reef Number One or Blue Reef Number Two) and the plaintiff did not receive her entitlement to the proceeds under the Share Sale Proceeds Agreement. The defendant referred to Smyth’s evidence and submitted that if the plaintiff received her equity in the Blue Reef shares, then she did not get to claim under the Lenders Contract.[61] The defendant bears the onus of proof.
[60] Exhibit 11.
[61] Transcript p 151.
55 Smyth owned a property at 42 Stoda Street Heathmont. The defendant referred to an agreement dated 2 February 2004 between Smyth, Wong and Hall (the Stoda Street agreement). The agreement provided that Smyth intended to develop the property, that the parties agreed to contribute funds toward the project and that each party would be entitled to sale proceeds that are commensurate with the percentage they contributed to the total cost of the project.
56 Wong stated that she did not remember signing the Stoda Street agreement. She said that she signed a lot of documents that Smyth made her sign. She said that she was a receptionist at the office and that she witnessed and signed many documents.[62]
[62] Transcript p 227.
57 The defendant submitted that payments of approximately $122,000 were made under this Agreement between February 2004 and August 2004. The defendant submits that in March 2005 Hall, Smyth and Wong agreed “that those moneys would be paid back as per the loan agreement or Wong would get equity in the Blue Reef business by the Share Sale Proceeds Agreement.”[63]
[63] Transcript p 70.
58 Wong denied any discussion of the alleged overarching agreement or that an overarching agreement in the terms alleged was entered into by the parties.[64]
[64] Transcript p 199.
59 The defendant’s submission is contrary to paragraph 3d (iv) and (vi) of the first defence that the plaintiff agreed to make a payment of $122,540 to enable Blue Reef Number One to pay its debts by drawing down on a registered mortgage held by Hall and Wong over the property at 25 Stringybark Close, Forest Hill, Victoria.
60 It was only on the first day of the trial that the defendant sought to amend the first defence to plead that the contribution of Wong and Hall under the Stoda Street Agreement would be converted to represent Wong’s contribution to equity in Blue Reef Number One. The Stoda Street Agreement had not been referred to or pleaded in the first defence.
61 The alleged overarching agreement involved the transfer of Hall’s entitlement to be repaid under the Lenders Contract to the plaintiff. No rational explanation was advanced as to why the contributions of Wong and Hall would be converted to represent Wong’s contribution to equity in Blue Reef Number One as alleged in paragraph 3(e)(i) of the second defence. The defendant does not explain why the payments by Hall and Wong would be a form of “security” for Wong and not a form of “security” for Hall as alleged in the particulars to paragraph 3(e)(iii) of the second defence.
62 Smyth said that the Lenders Contract and the Share Sale Proceeds Agreement were signed on 30 March 2005.[65] When asked to explain the circumstances in which those contracts came to be signed, Smyth gave the following evidence:
[65] Transcript p 69.
Q And can you explain the circumstances in which those contracts came to be signed?
A Yes. So Mei had, um, put some money into the Stoda Street investment. Um, we had come to when I say we Andrew…
HER HONOUR: Into the – I beg your pardon, what investment? I didn’t catch that?...Into Stoda Street.
Q Stoda Street, yes?...Into the Stoda Street property development.
Q Yes, thank you?...
A Um, and we had agreed that, um – when I say we it’s, ah, Andrew Mei and myself – agreed that those moneys would be paid back as per the loan agreement or, um, Mei would get equity in the Blue Reef business by this, um, share sale proceeds agreement.
MR HOYNE: Now, when you say ‘or’, was it – whose election was it?
A Um, it wasn’t at anyone’s election. The idea was that we were going to sell Blue Reef, um, and when Blue Reef was sold then Mei would get one-third of the proceeds of the sale of Blue Reef. That was – that was the idea behind the proceeds sale agreement.
Q And why in that circumstance did you need the lender’s contract?
A Um, to give Mei some protection around, um, the loan that she’d made.
Q And how would it give her that protection?
A Well, if the company wasn’t sold, if the business wasn’t sold, then the loan would be repaid.
Q And can you – do you recall the words used or where you – sorry, let me do it step by step. Do you recall the conversation that led to this?...I don’t recall the conversation word for word. We’re going back 15 something years.
Q Yes?
A Um, but I recall that it was at Mei’s house, um, in Stringybark Close in Forest Hill and I recall the – the general concept of the – the conversations.
Q Yes. And who was present at that conversation?
A Um, Andrew Hall, Mei, myself. Um, Marc Robinson may have been present. I don’t remember Marc being there, but I – he is a witness to the document. He may have signed it later.
Q Yes. And at the point of the conversation did – was that – when was that conversation taken relative to the signing of the agreement?
A Um, well, the conversation would have been around the time of the signing of the agreement.
Q Yes. Do you recall whether it was before or after?
A Ah, it would have been before the signing of the agreement.
Q Okay. And do you recall anything else about the agreement – about the discussions that you had at that point in time relating to that agreement?
A Um, no, I don’t.[66] (emphasis mine)
[66] Transcript pp 70 – 71.
63 The position prior to the morning of the trial was that Blue Reef Number One had received the money, not Smyth.
Q And so what you told the court when you filed your defence in this proceeding – looking at the second page for a moment, the defence said, “Prior to 1 February 2004” – you see those words are struck out; do you see that?
A Um, yes.
Q It now has (d) beside it but it looks like it has – it has the letter A struck out; do you see that?
A Yes.
Q So you originally said, “Prior to 1 February 2004”?
A Yes.
Q Certain things happened and they’re listed at (i) down to what was number 7, it appears. Do you see that?
A Yes.
Q And one of the things you said which you now no longer wish to say is that what was (vi) , you said the plaintiff – that’s Ms Wong – agreed to make a payment of $122,540 to enable BR Box Hill – sorry, BR Box Hill to pay its debts by drawing down on the mortgage, to which Hall agreed. Do you see that?
A Ah, yes.
Q So what this defence didn’t say was that the money was being paid to you?
A Yes.
Q But you now accept the money was paid to you, don’t you, sir?
A Yes.
Q And can you explain to Her Honour how you got it so wrong when you first gave instructions to have this defence filed with the court?
A Um, I actually seen the cheques. I hadn’t seen, ah, all of the cheques until a couple of days ago.
Q So your recollection – your honest recollection until a couple of days ago when you saw the copy cheques…?...
A Yes.
Q Was that the money was actually provided to the company?
A Correct. That’s right, yes. [67]
[67] Transcript pp 108 – 109.
64 The plaintiff discovered the copy cheques in January 2019.
65 The Court must be satisfied that the defendant has proved that the parties entered into the alleged collateral agreement on the balance of probabilities.[68] The Court must feel “an actual persuasion of the occurrence or existence of the fact in issue before it can be found”.[69] For the reasons set out below, I am not satisfied on a balance of probabilities that Smyth, Hall and Wong entered into the alleged overarching agreement.
(a) The defendant’s account of events is inconsistent with contemporaneous documents.
[68]Evidence Act 2008 (Vic), s 140 (1).
[69]NOM v DPP (2012) 38 VR 618, 655-656.
66 On 30 March 2005, Wong Smyth and Hall executed two documents: the Lenders Contract and a document titled “Share Sale Proceeds Agreement”. [70] The Share Sale Proceeds Agreement was executed by Smyth and Hall on behalf of companies that they controlled.
[70] Exhibit 11.
67 Each of those agreements served to confirm separate legal entitlements of the plaintiff: namely, an entitlement (along with Hall) to be repaid money advanced to the defendant and her entitlement to receive an equal share (with Hall and the defendant) of the proceeds of the sale of shares in Blue Reef Number One. I accept Wong’s evidence that the Lenders Contract was prepared because she “wanted to make sure it was official, that it was recorded how much I had paid and that it was going to be refunded at some point.”[71]
[71] Transcript p 196.
68 Neither the Lenders Contract nor the Share Sale Proceeds Agreement made any reference to an agreement or arrangement in the terms of the alleged overarching agreement. This is despite the defendant’s allegation that the alleged overarching agreement was entered into at the same time and where the defendant conceded that its terms could have “very easily” been included in the Lenders Contract.[72] I do not accept Smyth’s evidence that it was not recorded because he, Wong and Hall were “very good friends”[73] and that there was a “handshake between friends.”[74] The same friends thought it necessary and appropriate in March 2005 to record the terms of the Lenders Contract and the Share Sale Proceeds Agreement in documents that were formally executed and witnessed.
[72] Transcript p 121.
[73] Transcript p 72.
[74] Transcript p 116.
69 The Stoda Street Agreement provides that Wong and Hall would be entitled to a percentage of the sale proceeds of 42 Stoda Street Heathmont as set out in Schedule 1(d) of the Agreement. Schedule 1 provides that each party would be entitled to “Sale proceeds that are commensurate with the percentage they contributed to the total cost of the project.”[75] Smyth agreed that he subdivided the property and sold off the two subdivided lots. Smyth agreed that he did not remit any of the proceeds to Wong.[76]
(b) The commercial plausibility of the alleged overarching agreement
[75] Exhibit 2, Court Book p 23.
[76] Transcript pp 169 and 172.
70 The plaintiff submits that the alleged collateral agreement is commercially implausible. The defendant contends that despite the existence and terms of the Lenders Contract and the Share Sale Proceeds Agreement, the plaintiff was never actually entitled to the rights recognized or conferred upon her by both of them.
71 I accept the plaintiff’s submission that the lack of commerciality of the alleged overarching agreement is highlighted by the consequences that would flow if it operates in the manner contended by the defendant. The plaintiff has not received any funds from the sale of any shares in Blue Reef Number One. As the defendant acknowledged during cross-examination:
Q I just want to summarise, Mr Smyth, my understanding of the position, and perhaps you can let me know where I have got this wrong. So I was just going to give you a series of propositions. In 2004 and 2005, in excess of $122,500 was paid to you or your creditors by Ms Wong and Mr Hall; you agree with that, don’t you?
A Yes.
Q And that included an amount of $20,000 that was paid after the date of the lenders’ contract, being the amount paid to Mandorahl?...Yes.
A And you agree that you – your evidence is you haven’t repaid any of that money?...Ah, yes.
Q And you agree that you used that money to develop Stoda Street in Heathmont?...Yes.
A And you agree that you later subdivided and sold that property?...Yes.
Q And you agree that none of those sale proceeds have been paid to Ms Wong?
A Not directly, no.
Q And you agree that Ms Wong – your evidence, you say that Ms Wong had an equity share in Blue Reef No.1?
A Yes.
Q But you agree that that company was deregistered, don’t you, sir?
A Yes.
Q And you agree that the shares in that company were never sold?
A Yes.
Q And you agree, don’t you, that Ms Wong – it must follow that she never received any proceeds from the sale of any shares in Blue Reef No. 1?
A Ah, yes.[77]
(c) Smyth’s evidence of the agreement is generalised and imprecise
[77] Transcript pp 173 – 174.
72 The only evidence of the parties having entered into the alleged overarching agreement is the defendant’s recollection of conversations that he claims constituted the alleged overarching agreement. He said that he could not recall the conversation word for word because it was 15 years ago.[78]
[78] Transcript p 70.
73 Smyth’s evidence is generalised and imprecise. Smyth’s recollection is so poor that until a day or two prior to the trial, he did not recall why the money had been paid or who it had been paid to.
(d) The uncertainty and shifting nature of the terms of the alleged overarching agreement
74 The terms of the alleged overarching agreement have been articulated in a number of different ways. The defendant changed his pleaded case on the morning of the trial. That was not the final word because the alleged terms of the oral agreement evolved as the trial continued and remain elusive. This is because there appears to be a constant shift; not only before the amendment of the defence but also during the two days of the trial. The terms of the alleged agreement were then expressed differently in the defendant’s final submissions.
(1) When opening the defendant’s case and shortly after amending the first defence, the defendant’s counsel described the alleged overarching agreement in the following terms:
Either she’d got the proceeds of sale of a company then known as Blue Reef. But if she didn’t get those proceeds of the sale of that company, then she was entitled to rely upon the lenders contract.[79]
[79] Transcript p 2.
(2)When questioned about the Share Sale Proceeds Agreement, the defendant’s counsel stated:
HER HONOUR: All right. And so you say that in March 2005 the parties entered into a share sale proceeds agreement.
MR HOYNE: Yes. Which, again, is not in dispute, in a sense, because there’s a document that bears that out and the question is – the plaintiff’s position is, well, the plaintiff had a right to one-third of the proceeds. The plaintiff also had a right to the repayment of the debt. Our position is no, the parties entered into an oral agreement pursuant to which she was entitled to only one and at the first port of call what she’s entitled to was the payment under the share sale proceeds agreement and only if she didn’t get paid that in the event of a sale was she entitled to the – rely upon the lender’s agreement.[80]
[80] Transcript p 11.
(3)In paragraph 2 of the defendant’s written submissions the defendant states:
The first issue for determination in this case is – did the parties agree (as the defendant asserts) that the Lender’s Contract would only be enforceable in circumstances where the plaintiff (Wong) did not receive her entitlement (initially 33.3%, later 40%) upon any sale of the Blue Reef business or shares. (emphasis added)
(4)This submission is contrary to the way the case was opened and is contrary to the case that was pleaded. Paragraph 3 (e) (ii) and (iii) of the amended defence provides:
(ii) the plaintiff would be entitled to the proceeds of the sale of any shares in BR Box Hill by Smyth Nominees Pty Ltd (ACN 078 760 264) or Hall Projects Pty Ltd (ACN 078 760 246) in equal share with those two entities:
(iii)if (and only if) the plaintiff was not paid one third of the proceeds of the shares held by the plaintiff, Hall and the defendant in BR Box Hill upon the sale of those shares in BR Box Hill as set out in the previous sub-paragraph, the plaintiff would be entitlement to re-payment of $122,450 plus interest as though it was a loan to the defendant. (emphasis added)
75 The reference to the sale of shares is very specific. Both the first and second defence refers to the sale of shares in a particular company (BR Box Hill formerly Blue Reef Number One). There is no reference to the “Blue Reef business”.
76 The defendant alleges in paragraph 3A of the second defence:
a. a liquidator was appointed to BR Box Hill on or about 13 June 2012 and BR Box Hill was deregistered on 2 December 2013
b. on or about 7 November 2012, PBCF Investments Pty Ltd ACN 61 132 403 (PBCF) (then also known as Blue Reef Pty Ltd) was incorporated and 40% of the shares in that company was held by the defendant, or his interests, on trust for the plaintiff;
Particulars
The holding of the shares on trust is referred to in a letter from the defendant to the plaintiff and Marc Robinson dated 16 April 2015, a copy of which the plaintiff has.
c. PBCF conducted a similar business to that of BR Box Hill and the shares were held on trust in accordance with the preceding sub-paragraph on the basis that the shareholdings of the plaintiff and the defendant in the “Blue Reef businesses” (whether they be operated by BR Box Hill or PBCF) would be held 40-40-20 as between the plaintiff, the defendant and Marc Robinson but, again, this was not reflected in the formal documents (being the company search and the Trust Deed) but the arrangement would otherwise be as set out in the Overarching Agreement. (emphasis added)
77 Smyth gave evidence that the ownership structure of PBCF was 40% Wong, 40% Hall and 20% Marc Robinson.[81] The shares in PBCF are held by BR Ventures Pty Ltd.[82] The majority of shares in BR Ventures Pty Ltd are held by Holly 3 Pty Ltd as trustee of the Unit Trust Deed for Holly 3 Trust.[83] The Holly 3 Unit Trust was established on 22 December 2009. The first unit holders were Globeconnect Telecomm Pty Ltd, Wong and Marc Croydon Robinson.
[81] Transcript p 75.
[82] Exhibit 24.
[83] Transcript p 78; Exhibit 13.
78 The defendant submits that the plaintiff was offered all of the shares or value in the PBCF company by email dated 16 May 2018.[84] The defendant submits that the plaintiff declined or did not respond to the offer.[85] The defendant submits that the nature of the alleged Overarching Agreement did not entitle the plaintiff the right to choose between the Lenders Contract and equity. If she was offered the proceeds then she was required to take them. The defendant submits that the plaintiff was offered more than her share of the proceeds but refused to take them.
[84] Exhibit 19, Court Book pp 113 -114.
[85] Transcript p 88.
79 I do not accept the defendant’s submission. The second defence refers to the purported conversion of the payments made by the plaintiff and Hall “to represent the plaintiff’s contribution to equity in the BR Box Hill.” The defendant now submits that the plaintiff’s interest in Blue Reef Number One was transferred to, or was interchangeable with, an interest in a different corporate entity, namely PBFC. While counsel for the defendant stated that, “on my case, it doesn’t matter which Blue Reef,”[86] that is not consistent with the pleaded terms of the alleged Overarching Agreement and indicates the shifting nature of the terms of the alleged Overarching Agreement.
[86] Transcript p 250.
Conclusion
80 I am not satisfied that the defendant has proved to the court on the balance of probabilities that the parties entered into and are bound by the alleged Overarching Agreement.
81 As I am not satisfied that the parties entered into the alleged Overarching Agreement, it is not necessary to consider the second question in issue between the parties. In case I am wrong about that, I propose to consider the following second question:
2 If the parties entered into and are bound by the alleged Overarching Agreement, have the conditions set out in the alleged Overarching Agreement been satisfied such that:
(a)the defendant is not required to make repayment to the plaintiff of the amount of $122,540 plus interest referred to in the agreement described as the “Lenders Contract” at paragraph 3(c)(ii) of the Defence (Lenders Contract); and/or
(b)the plaintiff is not entitled to enforce the Lenders Contract or is not entitled to rely upon the terms of the Lenders Contract?
82 The defendant would need to satisfy the court that the circumstances that would render the loan non-recoverable under the lender’s contract actually occurred. The defendant has the burden of proof.
83 The defendant submitted that under the alleged Overarching Agreement, Wong’s entitlement was to equity or debt but not both. The defendant submitted that if that equity proved worthless, that was unfortunate but she did not get the right to recover the debt. The defendant submitted that the plaintiff received the equity in Blue Reef Number One and Blue Reef Number Two and that the plaintiff continued to hold an equitable stake in the “Blue Reef business” even after Blue Reef Number One “became” Blue Reef Number two.
84 The defendant’s submission is contrary to the case pleaded in the second defence. According to paragraph 3(e)(iii) of the second defence, the alleged Overarching Agreement operated such that:
…if (and only if) the plaintiff was not paid one third of the proceeds of the shares held by the plaintiff, Hall and the defendant in BR Box Hill upon the sale of those shares in BR Box Hill…the plaintiff would be entitled to repayment of $122,540 plus interest as though it was a loan to the defendant.
85 Paragraph 3B of the second defence alleges that as “there has been no failure to pay the plaintiff one third of the proceeds of the sale of the shares in BR Box Hill or PBCF (emphasis added), the plaintiff “is not entitled to rely upon the terms of the Lenders Contract”.
86 The defendant submitted that the condition in the alleged Overarching Agreement has been satisfied on account of the plaintiff having an interest in a different entity (namely PBCF). However that eventuality was not provided for in the alleged Overarching Agreement as pleaded.
87 The plaintiff was not paid one third of the proceeds of the shares in Blue Reef Number One being the shares registered as being held by the plaintiff and entities controlled by the defendant and Hall respectively.
88 The plaintiff will never be paid those proceeds because Blue Reef Number One was wound up in June 2012 and de-registered in 2013.[87] I accept the plaintiff’s submission that while the alleged Overarching Agreement does not expressly provide for the prospect of Blue Reef Number One ceasing to exist before any sale of the shares occurred, It cannot have been intended to operate such that a non-sale would prevent the plaintiff from enforcing the Lenders Contract. Such an outcome would result in the plaintiff being denied all of her entitlements arising under both of the agreements executed in March 2005. I accept the plaintiff’s submission that the defendant acknowledged this during his evidence in chief:
And how would it give her that protection?...Well, if the company wasn’t sold, if the business wasn’t sold, then the loan would be repaid.[88]
[87] Exhibit 26.
[88] Transcript p 70.
89 Accordingly if the parties entered into the Alleged Overarching Agreement, it does not operate to prevent the plaintiff from enforcing the Lenders Contract, given the absence of any sale of the shares in Blue Reef Number
Conclusion
90 For the reasons I have stated, the plaintiff is entitled to judgment in the sum of $122,540 together with interest.
91 I direct the parties to submit a form of the order in writing together with any submissions on costs within 7 days.
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