Nunis v Phung Tran Do as trustee for TC Do Trust

[2023] WASC 244

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

CITATION:   NUNIS -v- PHUNG TRAN DO as trustee for TC DO TRUST [2023] WASC 244

CORAM:   VANDONGEN J

HEARD:   21, 22 & 24 MARCH 2023

DELIVERED          :   4 JULY 2023

PUBLISHED           :   4 JULY 2023

FILE NO/S:   CIV 1599 of 2020

BETWEEN:   RALPH MARCEL NUNIS

Plaintiff

AND

PHUNG TRAN DO as trustee for TC DO TRUST

TUYET CHAU HUYNH as trustee for TC DO TRUST

Defendants

Catchwords:

Restitution - Unjust enrichment - Whether defendants enriched at plaintiff's expense - Total failure of consideration - Whether s 60(1) and s 64(4) of the Real Estate and Business Agents Act 1978 (WA) contravened

Practice and Procedure - Application to re-open - Whether documents not tendered at trial but relied on in written outline of submissions should be admitted in evidence

Legislation:

Evidence Act 1906 (WA)
Real Estate and Business Agents Act 1979 (WA)

Result:

Defendant's application to re-open allowed
Plaintiff's claim dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	L Hager
Defendants	:	T J Porter

Solicitors:

Plaintiff	:	Tudori Hager Grubb
Defendants	:	HWL Ebsworth Lawyers

Case(s) referred to in decision(s):

Access West Development Pty Ltd v Grand International Pty Ltd [2006] WADC 174

Anderson v McPherson [No 2] [2012] WASC 19; (2012) 8 ASTLR 321

Australian Financial Services and Leasing Pty Ltd v Hills [2014] HCA 14; (2014) 253 CLR 560

Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51

David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353

Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Farrell v Bannister (1952) 52 SR (NSW) 73

Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83; (2005) 63 NSWLR 203

Gray v Lavan (a firm) [2022] WASC 417

Guan v Lui [2021] NSWCA 65

Ha v New South Wales [1997] HCA 34; (1997) 189 CLR 465

Huat v Rintag Pty Ltd [2000] ANZ ConvR 2

Jensen v Nationwide News Pty Limited [No 12] [2019] WASC 250

Merrey v The State of Western Australia [2010] WASCA 62

Osborne v Landpower Developments Pty Ltd [2003] WASCA 117

R v Hillier [2007] HCA 13; (2007) 228 CLR 618

Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516

Simpson v Donnybrook Properties Pty Ltd [2010] NSWCA 229

VANDONGEN J:

Introduction

1. The plaintiff brings these proceedings in his capacity as trustee, and as a beneficiary, of a discretionary trust known as the Bateman Road Trust. 

2. On behalf of the Bateman Road Trust, the plaintiff seeks restitution of an amount of $488,038.28 that he contends was paid to the defendants in April 2016, in their capacity as trustees of the discretionary trust known as the TC Do Trust, by a former trustee of the Bateman Road Trust, Roseway Investments Pty Ltd (Roseway) (Impugned Payment). 

3. Although the Impugned Payment is said to have been made by Roseway, and is said to have unjustly enriched the defendants, much of the focus of the plaintiff's case is on a transaction between two other parties: Hotel Development Pty Ltd (Hotel Development)[1] and Mr Huirong Sun (Mr Sun). 

   [1] On many occasions, both in the documentary evidence and in documents filed with the court, Hotel Development was referred to as 'Hotel Developments Pty Ltd'.  Where that has occurred, I have assumed that the references were intended to be to Hotel Development. 

4. At all relevant times Hotel Development was a trustee company of a unit trust called the 257 Adelaide Terrace Trust (257 Trust).  The purpose of the 257 Trust was to develop and sell land at 257 Adelaide Terrace, Perth.  In 2015 and 2016 Hotel Development made efforts to sell the land, and engaged Mr Sun to assist in finding potential purchasers in China for a fixed fee of $3 million.

5. The land at 257 Adelaide Terrace was eventually sold in early 2016.  However, after it was sold, issues emerged between the parties to this action about whether Mr Sun should be paid the agreed fee.  The parties ultimately agreed that as they were the major unit holders of the 257 Unit Trust, they should pay Mr Sun's fee on behalf of Hotel Development, and should do so in shares that reflected their respective unit holdings. 

6. Ultimately, the defendants paid the whole of the fee directly to Mr Sun.  The Bateman Road Trust did not pay anything directly to Mr Sun.  Instead, the plaintiff caused the Impugned Payment, which was in an amount corresponding to the Bateman Road Trust's share of the fee, to be paid to the defendants.  The plaintiff's case is that by their receipt of the Impugned Payment, the defendants were enriched at the expense of the Bateman Road Trust, and that the enrichment was unjust because it occurred in circumstances in which there was a total failure of consideration.

7. The principal issues that are raised for the Court's determination are:

   (1)Were the defendants enriched?

   (2)Was the enrichment at the expense of the Bateman Road Trust?

   (3)Was the enrichment by reason of a total failure of consideration? 

8. The plaintiff says that all of those questions should be answered in the affirmative.  On that basis the plaintiff's case is that he has, on behalf of the Bateman Road Trust, made out a claim in restitution.  The defendants' position, on the other hand, is that the plaintiff has fallen well short of discharging his onus of proving the elements of a restitution claim.  The defendants' case is that this action should be dismissed with costs. 

9. For the following reasons I have concluded that the plaintiff has failed to establish the claim in restitution.  It follows that this action must be dismissed.

Application to re-open

1. Shortly after the trial of this action was completed, the defendants filed a chamber summons seeking an order that they be permitted to re-open the defence case to tender three documents that were not tendered at the trial (Application).  For various reasons the plaintiff opposed the Application.  Before setting out my reasons for dismissing the plaintiff's claim it is convenient to first deal with the Application. 

2. In support of the Application the defendants relied on an affidavit affirmed by Peter Mariotto, the solicitor with the day‑to‑day conduct of this matter.  In response, the plaintiff filed an affidavit sworn by Luke Hager, counsel who appeared for the plaintiff at the trial.  None of the parties raised any objections to the affidavit evidence. 

3. The defendants also relied on a written outline of submissions. 

4. The parties agreed that it was appropriate for me to deal with the Application on the papers.  Given the confined nature of the evidence that would be adduced if the defendants were given leave to re‑open their case, I agreed to determine the Application without the need for a hearing.

5. In Osborne v Landpower Developments Pty Ltd [2003] WASCA 117 [12] ‑ [14], McClure J, as her Honour then was, noted that although there is some uncertainty about the test to be applied in the exercise of a court's discretion to allow a party to re-open before orders have been made, it is now accepted that the primary consideration is the extent to which, if at all, the opposing side will be embarrassed or prejudiced.[2]  Other relevant factors include the materiality of the evidence, whether the interests of justice would be advanced by its admission, the need for the court to manage litigation efficiently, and the need to take into account the strain that litigation can have on personal litigants.[3]

   [2] Osborne v Landpower Developments Pty Ltd [2003] WASCA 117 [14].

   [3] Jensen v Nationwide News Pty Limited [No 12] [2019] WASC 250 [9] ‑ [13] (Quinlan CJ).

6. The documents that are the subject of the Application are three emails.  The first is an email dated 26 May 2015, sent by the plaintiff to a person called Ethan (first email).  In his evidence at trial the plaintiff said that Ethan was Mr Sun's grandson.  Attached to the first email was a draft consultancy agreement.  The second document is an email dated 26 May 2015, from the plaintiff to Ethan (second email).  Attached to that email was a draft invoice to 'Hotel Developments Pty Ltd'.  The third is an email dated 24 May 2015, from the plaintiff to Sam Santoro (third email).  The plaintiff gave evidence at trial that Mr Santoro was the accountant for the defendant and for the 257 Trust.  Attached to that email was another draft consultancy agreement, although it was in a different form to the one attached to the first email.

7. According to Mr Mariotto, very shortly after the trial had concluded he attended to the preparation of a version of the defendants' written opening submissions that was to be annotated with references to exhibits that had been tendered at the trial.  The provision of annotated opening submissions was foreshadowed in the defendants' original opening submissions filed on 17 March 2023, and was raised by the defendants' counsel during his closing argument. 

8. Mr Mariotto says that while he was preparing the annotated submissions, he discovered three errors in the trial bundles and exhibits.  Firstly, he says that although the first email was referred to in the plaintiff's trial bundle index, by description and by reference to a discovery document number ('DD‑2'), it was not actually included in the plaintiff's trial bundle.  Instead, a different document was included in the bundle.  What appears to have happened is that discovery document 'DD‑22' was included in the plaintiff's trial bundle instead of 'DD‑2'.  By chance, some of 'DD‑2' (the cover email) is in evidence as it forms part of exhibit 2.11.  Secondly, he says that although the second email is in evidence, the draft invoice that was attached to that email is not in evidence despite the fact that the attachment is expressly referred to in the plaintiff's trial bundle index.  Thirdly, he says that although the defendants always intended to tender the third email as part of the defendants' trial bundle it was inadvertently omitted.

9. I accept Mr Mariotto's unchallenged evidence.  That evidence establishes that the defendants always intended to rely on the documents at the trial.  In that regard it is significant that all the documents that are the subject of the Application were referred to in the defendants' written opening submissions.    

10. I also accept Mr Mariotto's evidence that the Application was diligently advanced.  Mr Mariotto identified the fact that the documents had not been tendered very shortly after the conclusion of the trial, and then took appropriate steps to confer with the plaintiff's counsel in an effort to avoid the need to make a formal application to re-open.  When conferral failed to produce an agreed approach, the Application was made promptly.

11. As I have already mentioned, the plaintiff opposed the Application, and relied on Mr Hager's affidavit.  In that affidavit Mr Hager says that he made deliberate forensic choices to include certain documents in the plaintiff's trial bundle.  He says that he identified those documents that he decided were required to prove the plaintiff's claim and omitted those that he considered may have been unhelpful.  To the extent that there may have been any errors in the plaintiff's trial bundle index, he says that this should have become apparent to the defendants during the trial and that it is too late to try to tender documents.

12. In relation to each email, Mr Hager asserts that if they were now tendered, then their 'inclusion would require the plaintiff to give evidence as to the facts, matters and circumstances' relating to the emails.  He says that 'the inclusion of the … documents now, after the plaintiff has given evidence and closed its [sic] case, will cause the plaintiff prejudice.  The plaintiff no longer has an opportunity to call further evidence to deal with the documents or materials which, if allowed, are new or fresh'. 

13. Mr Hager also says that he is of the view that the plaintiff will suffer what he describes as 'general prejudice' because of delay and increased costs if leave to re-open were granted.  He says that he believes that there will be no miscarriage of justice if the application is refused, pointing out that if the documents were central or important to the defendants' case then their lawyers would have sought to tender the documents at the trial.

14. In my view the defendants' application must be allowed.  The clear effect of Mr Mariotto's unchallenged evidence is that the three emails (and attachments) the subject of the Application were not tendered by the defendants because of inadvertence.  That this is so can readily be accepted as all those documents were referred to by the defendants' counsel in his written outline of opening submissions.  In those circumstances it is beside the point that the plaintiff's counsel made forensic decisions not to tender the documents as part of the plaintiff's case.  The defendants intended to rely on those documents, and it was only because of inadvertence that the documents were not actually tendered.  Further, Mr Hager does not suggest that had the defendants sought to tender the documents during the trial that he would, or could, have raised any objections. 

15. I do not accept Mr Hager's assertions that prejudice would be visited on the plaintiff if the defendants were given leave to tender the three emails and their attachments.  Mr Hager has not provided any detail about the evidence the plaintiff would be 'required' to give if the emails were tendered, and how the need to give that evidence that would occasion any material prejudice.  In any event, the plaintiff was on notice by the defendants' opening submissions that the defendants intended to rely on the three emails.  It is therefore not possible to conclude that the plaintiff would be materially prejudiced or embarrassed if leave were given to re-open.  The plaintiff had ample opportunity to give evidence about those documents at the trial if he had chosen to do so.

16. I allow the Application.

The facts

1. As the evidence adduced during the trial was unchallenged, I have not been required to resolve any controversial matters of fact. 

Agreed facts

1. The parties have agreed the following facts:

   1.Mr Huirong Sun has never held a real estate and business agent's licence, triennial certificate or certificate of registration under the Real Estate and Business Agents Act 1978 (WA) (REBA Act); and

   2.Mr Huirong Sun and Mr Xiaoxing Sun are related as father and son: Mr Huirong Sun (father) and Mr Xiaoxing Sun (son).

Documentary evidence

1. The following facts are established by the documents tendered at the trial, including the documents the subject of the defendants' application to re-open.

2. On or about 13 September 2007, the 257 Trust was established. The purpose of the 257 Trust was to develop and sell land situated at 257 Adelaide Terrace.

3. Initially, the trustee of the 257 Trust was a person named George Papamihail.  However, on 30 November 2007, the first named defendant, Phung Tran Do, was appointed as a joint trustee with Mr Papamihail.  Then, on 2 November 2011, Hotel Development was incorporated and on the following day it was appointed as trustee of the 257 Trust upon the resignation of Mr Papamihail and the first named plaintiff.

4. Mr Papamihail and the first named plaintiff were the first directors of Hotel Development.  Then, from 3 February 2012 until 3 August 2016, the directors were the defendants, together with their daughter, Lee Lee Do.  At all relevant times the plaintiff was married to Ms Lee Lee Do, and they had three children together. 

5. The plaintiff also became a director of Hotel Development.  He was appointed on 21 August 2014 and ceased acting in that capacity on 3 August 2016.

6. The majority unit holders of the 257 Trust were the defendants, in their capacity as trustees of the TC Do Trust, and Roseway in its capacity as trustee of the Bateman Road Trust.

7. The Bateman Road Trust was established on 1 August 2008.  The primary beneficiaries of that trust were the children of the plaintiff and Ms Lee Lee Do.  The general beneficiaries included the plaintiff and Ms Lee Lee Do.

8. Between 14 August 2006 and 10 August 2017, and again from 22 January 2018, Ms Do was a director of Roseway.  The plaintiff was also a director of Roseway from 12 January 2015 to 22 January 2018.[4]

   [4] These dates are different to the dates referred to in the statement of claim, and have been sourced from the information contained in Ex 42, an Australian Securities and Investment Commission search for Roseway Investments Pty Ltd.

9. It is the plaintiff's case that by 23 January 2018 he had become the appointor and guardian of the Bateman Road Trust and that, on that date, he removed Roseway as trustee and appointed himself in that position.  Although in their defence the defendants did not admit that these changes had occurred, or that the plaintiff had appointed himself as the trustee of the Bateman Road Trust, ultimately nothing turned on those issues

10. By 2015 the board of the 257 Trust had decided to sell the property at 257 Adelaide Terrace.  However, the initial attempts to secure a buyer for that property were unsuccessful.  As a result, arrangements were made with Mr Sun to seek Chinese buyers for the property and on 20 November 2015, Hotel Development entered into a written 'Consultant Agreement' with Mr Sun (November 2015 Consultant Agreement).  That agreement was signed by the second named defendant in her capacity as a director of Hotel Development, and by Mr Sun.  A copy of that agreement is annexed to these reasons as 'Annexure A'. 

11. The plaintiff pleads that the November 2015 Consultant Agreement relevantly provided that Mr Sun would perform the role of a 'selling agent' for the sale of 257 Adelaide Terrace and, in consideration for those services, Hotel Development would pay Mr Sun $3 million upon settlement of the sale of that property.  The defendants admit that plea.  However, they also plead that the consultancy agreement was not exclusively for the sale of 257 Adelaide Terrace and that it also provided for Mr Sun to source and recommend a joint venture partner.  Further, the defendants allege that any consultation or brokerage fee was payable upon settlement of the purchase of 257 Adelaide Terrace or a joint venture share in the development of that property. 

12. Before moving on to deal with events that occurred after the execution of the November 2015 Consultancy Agreement, I will pause here to observe that the documentary evidence reveals that the topic of a consultant agreement had already been the subject of discussion between the parties in the months leading up to November 2015. 

13. On 24 May 2015, the plaintiff sent an email to Mr Santoro, attached to which was an unsigned document that was similar to, but not identical to, the November 2015 Consultant Agreement.  Unlike the November 2015 Consultant Agreement, this document did not refer to Mr Sun, and there some minor differences in the wording used to describe the scope of services.

14. On 26 May 2015 the plaintiff sent an email to Mr Sun's grandson, Ethan.  Attached to that email was a different draft consultant agreement.  Unlike the November 2015 Consultant Agreement, this document was five pages in length, and it contained operative clauses.  In the email the plaintiff asked Ethan to provide 'the agreement, that has the name, address details of the consultant and signed by both parties.' 

15. Later that same day the plaintiff sent a further email to Ethan in which he said that '[p]rior to the settlement of 257 Adelaide Terrace we will require an invoice from the consultant that has sourced the purchaser.'  Attached to the email was a draft invoice that had been partially completed.  It identified the payer as 'Hotel Developments', referred to the services rendered, and specified the fee payable.  In the email the plaintiff requested the consultant's bank details and international bank codes to make the transfer.

1. Later, on 26 May 2015, Ethan sent an email to the defendants, which was carbon copied to the plaintiff.  Attached to that email was a copy of the five-page consultant agreement that the plaintiff had sent to Ethan earlier that day.  However, in this version of the agreement Mr Sun's name and address had been included, it was dated 6 April 2015, and it had been signed by Mr Sun (April 2015 Consultant Agreement).

2. The terms of the April 2015 Consultant Agreement do not need to be referred to, at this stage at least.  However, it is convenient to refer to one of the two recitals that appeared in that document, namely, recital '(B)', which read:

   The Consultant in China is a company which carries on the business of sale of real estate property, has extensive real estate marketing experience internationally, and is willing to act as the consultant for 257 Adelaide Terrace Perth Western Australia for the International territory (Excluding Australia).

3. I will return to the significance of that recital in due course.

4. Returning to the narrative that is revealed by the documentary evidence, on 30 November 2015 Hotel Development executed an agreement to sell 257 Adelaide Terrace to a company called Sunny Mile Pty Ltd (Sunny Mile), for a purchase price of $19.5 million.  Settlement of the sale of the property pursuant to that agreement eventually took place on 1 March 2016.

5. One of the shareholders of Sunny Mile is a company called Reliab Pty Ltd, and one of the shareholders of that company is Xiaoxing Sun, who the parties have agreed is the son of Mr Sun.

6. On 24 February 2016, shortly before the settlement took place, the plaintiff exchanged several emails with Mr Santoro.  In one of those emails the plaintiff expressed the opinion that although there had been an agreement in place with 'the purchaser agent', that agreement had expired and there was no valid agreement currently in place.  He also expressed the view that although the 'agent' was entitled to a fee, the fee that had previously been agreed was excessive and inconsistent with market rates.

7. On 26 February 2016, Mr Santoro sent an email to the defendants and to the plaintiff, attached to which was what he described as

   the only Consultant agreements that I have on file that related to the consultant and 257.  None seem to be executed.  I cannot see any expiry dates … but I have cc'd Ralph into the email so that he can advise if this is the relevant agreement.

8. The document that was attached to Mr Santoro's email was the same five-page draft consultant agreement that the plaintiff had sent to Ethan on 26 May 2015.

9. A meeting of the board of directors of the 257 Trust was scheduled to take place on 3 March 2016, after settlement had taken place, and an agenda for that meeting was produced.  One of the agenda items for that meeting related to the '[r]atification of commission payment to consultant who assisted with the sale of the project.'

10. On 15 March 2016 the plaintiff forwarded draft minutes of that meeting to the other directors of the 257 Trust.  Amongst other things, the minutes recorded that the plaintiff and the defendants had attended the meeting.  Further, the minutes record the following:

    Ralph proposed the coverage of costs by two main entities in the project.  He referred to a draft structure of costs that could be borne by TC Do Trust and Roseway Pty Ltd to help break-even the shortfall from the sale to minimise losses to minor unit holders.  Sam further explained to Lee and Linda [the second defendant] that the level of fund-injection would be in direct proportion to the percentage of unit holdings.  It was noted that 95% of the project is owned by the two entities.

11. On 5 March 2016, and before the plaintiff had forwarded his draft minutes, Mr Sun issued an invoice to Hotel Development for a fee of $3 million.  The invoice was in substantially the same form as the draft invoice that the plaintiff had forwarded to Ethan in his email of 26 May 2015.  The description of services provided that was set out in the invoice referred to attendance and negotiation relating to the sale of 257 Adelaide Terrace.  It also referred to the review of documents supplied, attendance at meetings, and the provision of executive summaries to various overseas investors.  The invoice provided payment details, which included details relating to the Bank of China.

12. On 24 March 2016, the plaintiff sent an email to the defendants in which he referred to the board meeting that had taken place on 3 March 2016.  The plaintiff referred to discussions that had taken place at that meeting concerning 'a proposed payment of $3mil [sic] to a selling consultant for the sale of 257'.  The plaintiff said that he did not believe that there was a binding agreement in place that required this payment to be made, and he requested a meeting so that decisions could be made moving forward. 

13. At or about this time the defendants had engaged solicitors, Hotchkin Hanly, to act on their behalf.  On 30 March 2016, Hotchkin Hanly wrote to the directors of Hotel Development in response to the plaintiff's queries about whether the commission was lawful and whether it should be paid (Hotchkin Hanly letter).

14. In that letter Hotchkin Hanly referred to the plaintiff's concerns about the payment of the commission to Mr Sun in the following terms:

    We are instructed that Mr Nunis' concerns about the payment of the Commission relate to an assertion that he initially agreed to a limited term agreement in respect of the payment of the Commission (in respect of a sale arranged in the first half of 2015), and that he did not formally authorise an extension of that agreement.  He has also raised concerns that he considers the level of the Commission to be greater than that normally agreed to in transactions of this sort (despite having agreed to it in respect of the first sale).

15. Hotchkin Hanly also expressed an opinion that there were no written laws or regulations that would make the agreement to pay the commission to Mr Sun unlawful on the basis of the facts that had been disclosed to them.  However, this opinion was provided on the express understanding, based on instructions, that Mr Sun had not acted in Western Australia as a real estate agent in relation to the sale.  This would appear to be the first occasion on which a question was raised about whether the lawfulness of the commission might depend upon whether Mr Sun was a real estate agent.

16. On 2 April 2016, the plaintiff sent an email to the defendants.  This email was sent in response to an earlier email he had received from Mr Santoro on 30 March 2016 in which a directors meeting for Hotel Development was proposed for the purposes of discussing the Hotchkin Hanly letter.

17. In his email, the plaintiff noted that Hotchkin Hanly letter raised several areas of concern.  Consequently, the plaintiff suggested that Hotel Development had a number of options, one of which must take effect immediately.  One of those options was expressed in the following way:

    Do not pay the $3mil and distribute to the unit holders.  Then the major unit holders can agree to meet the $3mil from their proceeds.

18. The plaintiff said that if the trustee agreed to accept this option, then it would remove all of the concerns that he had raised earlier in his email.

19. On 11 April 2012 the proceeds of the sale of 257 Adelaide Terrace were distributed amongst the unit holders of the 257 Trust.  A total of about $8.2 million was distributed to the defendants in their capacity as trustees of the TC Do Trust.  An amount of approximately $1.5 million was distributed to Roseway as trustee for the Bateman Road Trust.  Of that amount, approximately $1.3 million was deposited into an account held at the Commonwealth Bank in the name of Sunfire Asset Pty Ltd (Sunfire).

20. Shortly after the distribution had occurred, on 13 April 2016 the plaintiff sent an email to Mr Santoro and the defendants.  Attached to the email was a copy of the invoice that had been issued to Hotel Development by Mr Sun on 5 March 2016 in an amount of $3 million.  The text of the email was as follows:

    Please see attached form given to me by Mr Sun.  As you know the proposed fee is to be paid direct to an international bank account.

    The attached forms are for the transfer to go to another company name and an Australian bank account.  This seems complicated and I don't want to be at risk for any tax or money-laundering implications!

    I therefore request that Roseway transfer funds to TCDo trust as agreed.  Roseway will require an invoice from TC Do prior to transfer.  Then TC Do Trust can send the total payment to Mr Sun once an agreed account is reached.

21. The plaintiff was concerned about being required to make a payment directly to an international bank account.  Further, although the plaintiff referred to other documents attached to the email which are not in evidence, the content of the email suggests that Mr Sun required payment to be made to a corporate entity and an Australian bank account.  In his words,'[t]his seems complicated and I don't want to be at risk for any tax or money laundering implications!'

22. To avoid those perceived risks, the plaintiff proposed that Roseway transfer the Bateman Road Trust's share of the $3 million fee, and the risks that the plaintiff saw might be associated with making that payment, to the TC Do Trust. 

23. On 14 April 2016 the defendants, as trustees for the TC Do Trust, entered into a Deed of Acknowledgement with Mr Sun and others (Deed of Acknowledgement).  The recitals in the deed are as follows:

    •This deed relates to the payment of $3,000,000 (AUD) being the Consultant Payment as final performance and completion of executed document between Mr Huirong Sun and the Trustee of the 257 Adelaide Terrace Trust.

    •This Consultant Agreement was signed and executed in April 2015.

    •The responsibility of this agreement and the payment obligations contained within, has been placed with the trustees of the TC Do Trust.

    •Mr Xiaoxin Sun and Mr Shaocong Sun have requested that the funds be transferred by an agency being; Rongqiao Investments Pty Ltd t/a Money Chain Foreign Exchange.  This agency is based at 55/188 Newcastle Street, Northbridge WA 6003.

    •The ABN of Money Chain Foreign Exchange is 14 139 997 032.

    •The Austrac Registration Number for Rongqiao Investments Pty Ltd is IND 100228861-001.

    •The trustees of the TC Do Trust are concerned that the payment of $3,000,000 will not reach the intended recipient (Mr Hirong Sun) [sic] directly and that if this occurs, the trustees will be asked to pay the funds again.

24. Pursuant to the Deed of Acknowledgement, it was agreed that the defendants would transfer the $3 million in two separate instalments, which was designed to provide to the defendants with confidence that the money would in fact be paid to Mr Sun.

25. On the same day that the Deed of Acknowledgement was executed, the defendants paid $500,000 to a company called Unichain Pty Ltd, a wholly owned subsidiary of Rongqiao Investments Pty Ltd.  Two further instalments $500,000 were paid to Unichain on 19 and 20 April 2016.  A final amount of $1.5 million was paid to a company called RSHQ Australia Pty Ltd, which was a wholly owned subsidiary of Rongqiao Investments Pty Ltd.  The amount was paid in three instalments of $500,000 on 24, 25 and 26 April 2016.

26. On 18 April 2016, the TC Do Trust issued an invoice to Roseway, as trustee for the Bateman Road Trust, for an amount of $488,038.28 (TC Do Trust Invoice).  According to the description in the invoice, that amount was in relation to:

    Being for share commission relating to Sale of Hotel site situated at 257 Adelaide Terrace Perth, Western Australia

27. On 20 April 2016 an amount of $488,038.28 was paid out of a Commonwealth Bank account named 'Sunfire Asset Pty Ltd Trust Account' and into a Commonwealth Bank account in the name 'Phung Tran Do and Tuyet Chau Huynh as trustee for the TC Do Trust'.  It is apparent from a letter that the plaintiff sent to the defendants on 30 August 2019 that this payment was effected by the plaintiff.

28. It follows from this that by 26 April 2016, the plaintiff had effected a payment of $488,038.28 to the defendants in their capacity as trustees of the TC Do Trust, and the TC Do Trust had paid $3 million to Mr Sun in accordance with the Deed of Acknowledgement.

The plaintiff's evidence

1. The plaintiff was called to give evidence at the trial.  However, he was not cross-examined.

2. The plaintiff gave evidence that he was married to Ms Lee Lee Do, the defendants' daughter, but that they had separated sometime in 2018.

3. He was taken to several documents in the plaintiff's trial bundle during his evidence in chief.  Much of that evidence comprised explanations from the plaintiff about the effect of those documents, which was evident from their content.

4. He explained the purpose of the 257 Trust, which was to develop and sell the property situated at that address.  He also gave evidence about the identity of the various unit holders of that trust, noting that the major unit holders were the defendants, in their capacity as trustees of the TC Do Trust, and Roseway, as trustee for the Bateman Road Trust.

5. The plaintiff gave some evidence about Mr Sun.  He said that he was notified of Mr Sun's existence in April 2015.  Initially he was informed of Mr Sun's existence by one of the defendants.  However, he said that he subsequently received an email from Mr Sun's grandson, Ethan, on 26 May 2015, in his capacity as a director of Hotel Development.  Attached to the email from Ethan was the April 2015 Consultant Agreement was signed by Mr Sun.  The plaintiff's attention was drawn to recital (B) in that agreement, set out in full above.

6. The plaintiff later gave evidence that a copy of the April 2015 Consultant Agreement signed by all parties to that agreement has never been discovered, and that he does not have a copy of such a document. 

7. He also gave evidence that Mr Sun provided services to Hotel Development, namely, putting forward a potential buyer of 257 Adelaide Terrace in or about April 2015, and putting forward a further offer to purchase that property on 30 November 2015.

8. In relation to the offer that was made to purchase the property in November 2015, the plaintiff said that the offer came from Sunny Mile.

9. The plaintiff was taken to the Deed of Acknowledgement, and he gave evidence that he first had knowledge of that document upon being provided with discovery in the course of these proceedings.

10. The plaintiff's counsel asked his client questions about the November 2015 Consultant Agreement.  He said that he had been provided with a copy of that document by Hotchkin Hanly, the lawyers who were representing the defendants at that time.

11. The plaintiff then gave evidence in relation to the Hotchkin Hanly letter.[5]  He was taken to various paragraphs in that letter and asked whether he agreed with what had been written in those paragraphs.

    [5] Referred to above at [55] - [57].

12. The second paragraph of the letter from Hotchkin Hanly reads:

    For this reason, the board sought overseas buyers, and Mrs Linda Do made arrangements with Mr Sun to seek Chinese buyers for the Property.  Mr Sun introduced a buyer in about April 2015, which did not proceed, and subsequently introduced the backers of Sunny Mile in about November 2015.

1. The plaintiff said that this paragraph was correct.

2. He also said that he agreed with what was contained in the following paragraph in the Hotchkin Hanly letter:

   We are instructed that Mr Nunis' concerns about the payment of the Commission relate to an assertion that he initially agreed to a limited term agreement in respect of the payment of the Commission (in respect of a sale arranged in the first half of 2015), and that he did not formally authorise an extension of that agreement.  He has also raised concerns that he considers the level of the Commission to be greater than that normally agreed to in transactions of this sort (despite having agreed to it in respect of the first sale).

1. The plaintiff was asked to read a number of other paragraphs set out in the Hotchkin Hanly letter, and to give evidence about whether he disagreed with anything said in those paragraphs.  The plaintiff said that he did not disagree with the following paragraph in that letter:

   We are instructed that the April Agreement was entered into in the context of Mr Sun having introduced a buyer in or about April 2015, and there in November 2015 Agreement entered into in the context of him having introduced the backers of Sunny Mile to the Property, and the subsequent entry into of the Sunny Mile Contract.

2. He also said that he did not disagree with the following paragraphs:

   We are instructed that in April 2015, prior to Mrs Linda Do executing the April Agreement, and the Trustee executing the first contract of sale for the Property, all of the directors of the trustee (Mr Do, Mrs Linda Do, Mr Ralph Nunis and Mrs Lee Le Do) agreed to the payment of the Commission to Mr Sun in respect of that transaction.

   However, that sale agreement fell through, and Mrs Linda Do therefore resumed her efforts to arrange a sale of the Property, and the engagement of Mr Sun was continued.  We are instructed that Mr Nunis and Mrs Lee Lee Do were aware that Mr Sun continued to seek a buyer for the Property, and that he would expect to be paid for those efforts.

3. When asked about the next paragraph in the Hotchkin Hanly letter, which read

   [n]either Mr Nunis or Mrs Lee Lee Do required that Mr Sun's services be terminated (or that Mrs Linda Do cease using him) or that Mr Sun's commission arrangements be renegotiated,

   the plaintiff said that his understanding was that the April 2015 Consultant Agreement operated for three months.

4. The plaintiff was asked about one final paragraph in the letter from Hotchkin Hanly, which was in the following terms:

   Further, we are instructed that at the time Mr Nunis and Mrs Lee Lee do were informed that Sunny Mile was prepared to purchase the Property for $19.5M (plus GST), prior to the Sunny Mile Contract being entered into, they were informed that Mr Sun was brokering the deal, and that he would expect to be paid the Commission in return for doing so.  Neither of them took issue with this, and they did not tell Mrs Linda Do that they did not approve the deal going forward on this basis.  Rather, they approved the entry into of the Sunny Mile Contract one of the consequences of which was that Mr Sun would become entitled to be paid the Commission.

5. The plaintiff gave evidence that he disagreed with what was set out in this paragraph because he was of the view that the consultant agreement had expired and that he was unaware of the existence of any other agreement at that time.  On that basis he did not see why the commission would be payable to Mr Sun.

6. He said that he agreed that approval was given to enter into the Sunny Mile contract, and that Mr Sun was entitled to a commission.  However, he disagreed that Mr Sun was entitled to a commission in the sum of $3 million.

7. The plaintiff gave evidence about an email dated 26 February 2016 from Mr Santoro, addressed to the defendants.  In that email Mr Santoro referred to 'the only Consultant agreements that I have on file that related to the consultant and 257' [sic].  When he sent that email Mr Santoro forwarded an earlier email he had received from the plaintiff dated 26 May 2015, which was addressed to Ethan, attached to which was a draft of a consultant agreement.[6] As I have already noted, the plaintiff gave evidence that Mr Santoro was the accountant for the 257 Adelaide Terrace Trust, and also for the defendants.

   [6] The 26 May 2015 email (and attached draft consultant agreement) is the 'first email' referred to at [15] above.

8. The plaintiff was taken to a National Australia Bank statement for an account named 'The 257 Adelaide Terrace Trust'.  According to the plaintiff, the bank statement showed that on 11 April 2016, the 257 Trust had received approximately $12.5 million, representing the net proceeds from the sale of 257 Adelaide Terrace.  He also explained that various debits from that account that took place on 12 April 2016 were distributions to the unit holders of the 257 Trust.

1. In relation to one of those debits, in the sum of $1,295,557.92, the plaintiff said that this amount was paid into the 'Sunfire Asset' trust account on 12 April 2016 under instructions from Roseway as the trustee of the Bateman Road Trust.  The plaintiff also said, by reference to a Commonwealth Bank statement for an account named 'Sunfire Asset Pty Ltd Trust Account' for the period 1 April 2016 to 30 June 2016, that the money that was paid into this account was the Bateman Road Trust's money, and that immediately before the deposit was made the balance of the account was $3,882.50.

2. The plaintiff was taken to several documents which demonstrated that from 24 February 2016 he had been expressing concerns about whether there was a valid consultant agreement in place, and about the size of the fee that was being sought by Mr Sun.  The plaintiff's counsel also asked the plaintiff questions about an email that he sent to the defendants and to Mr Santoro on 2 April 2016, a document to which I have already referred.

3. The plaintiff's attention was directed to a specific part of that email, which was in the following terms:

   8) The trustee should do one of the following to take effect immediately;

   i) Given all the issues raised in .6 remove itself as trustee and have a new trustee appointed.

   ii) Appoint an independent firm to provide advice to the trustee concerning the payment of the $3mil.

   iii) Point (ii) and set aside the $3mil and distribute the remainder of the funds to the unit holders.

   iv) Do not pay the $3mil and distribute to the unit holders.  Then the major unit holders can agree to meet the $3mil from their proceeds.

4. When asked whether those options occurred, the plaintiff gave evidence that only the final option occurred, which involved the major unit holders agreeing to pay the $3 million commission from their own proceeds.

5. As has already been referred to above, on 13 April 2016 the plaintiff sent an email to Mr Santoro, a copy of which was sent to the defendants.  The plaintiff was asked about the final paragraph of that email, which read

   I therefore request that Roseway transfer funds to TC Do trust as agreed.  Roseway will require an invoice from TC Do prior to transfer.  Then TC Do trust can send the total payment to Mr Sun once an agreed account is reached.

6. The plaintiff explained that he had been involved in a lot of discussions with the second named defendant before that email was sent.  In telephone conversations, the second named defendant had said that $3 million had to be paid and that he needed to make a payment.  The plaintiff stated that Ms Huynh said if he did not make a payment then it would 'make [her] go broke'.  He also said that he had his former partner (Ms Lee Lee Do) at home saying to him that 'this is family.  Just make a payment and we will deal with it later.'

7. The plaintiff gave evidence that on or about 18 April 2016 he received an invoice from the TC Do Trust.  The invoice was addressed to Roseway as trustee for the Bateman Road Trust.  He confirmed that the description given in the invoice was as I have set out earlier in these reasons.  The plaintiff explained that he had been provided with this invoice because it was being put forward as the Bateman Road Trust's share of the commission payable to Mr Sun.  He said that the invoice was 'acceptable', and that he paid it.

8. He was then asked questions about the fact that the amount of the invoice, $488,038.28, had been paid from a Commonwealth bank account in the name of 'Sunfire Asset Pty Ltd Trust Account'.  When he was asked whose money was it, counsel for the defendants raised an objection.  When the objection was overruled, the plaintiff said that it was the Bateman Road Trust's funds.

9. The plaintiff's counsel then sought to further explore this issue by asking the plaintiff about the proposition that the money was in fact Sunfire's money.  It was at this point that counsel for the defendants raised a further objection.

10. It is unnecessary for me to set out in these reasons how that objection was ultimately dealt with, or the reasons for my decision in allowing the objection.  After entertaining a lengthy argument about the objection, I ultimately ruled that the objection should be allowed, and gave ex tempore reasons.

11. After the objection had been dealt with, the plaintiff gave evidence that he caused the Bateman Road Trust to pay the invoice that had been raised by the TC Do Trust. 

12. Finally, the plaintiff said that he did not know whether the defendants had ever paid the commission of $3 million to Mr Sun.  However, in a letter dated 30 August 2019 he made a demand on behalf of the Bateman Road Trust that the defendants, as trustees of the TC Do Trust pay the sum of $488,038.28.

13. The plaintiff was not cross-examined.  Accordingly, although it is ultimately a matter for me to decide which evidence I accept, and although most of his evidence amounted to commentary on the contents of self-explanatory documents, none of his evidence was the subject of any challenge. 

14. Subject to any specific adverse findings that I may make in relation to any aspect of the plaintiff's evidence later in these reasons, I accept the plaintiff's evidence.

The plaintiff's claim

1. The plaintiff commenced these proceedings on 22 May 2022 and appears to have acted on his own behalf from that time up until 13 March 2023, some eight days before the listed commencement of the trial.  A firm of solicitors then began acting for the plaintiff and they represented him at the trial.  Mr Hager, who is a partner of that firm of solicitors, appeared as counsel.

2. A statement of claim was indorsed on the writ.  That statement of claim was amended on several occasions up until 19 May 2022, and was also amended during the trial.

3. At the heart of the plaintiff's claim is a payment of $488,038.28 that was made on 20 April 2016 from a Commonwealth Bank account styled 'Sunfire Asset Pty Ltd Trust Account' to a Commonwealth Bank account in the name 'Phung Tran Do and Tuyet Chau Huynh as trustee for the TC Do Trust'. 

4. Initially, the plaintiff claimed that the amount of $488,038.28 is recoverable by the Bateman Road Trust from the defendants, in their capacity as trustees of the TC Do Trust, as a debt due by operation of various provisions in the REBA Act. However, the plaintiff abandoned that claim and, instead, relied on his alternative claim that this amount was recoverable as 'money had or received or as restitution for unjust enrichment as there has been a total failure of consideration and illegality as there has been a payment of an unlawful claim.'

5. Although the plaintiff's argument is not entirely clear, the contention that appears to be at the centre of what is left of the plaintiff's pleaded case is that Mr Sun was not entitled to demand or receive any commission under the November 2015 Consultancy Agreement because that agreement, and any demand or receipt made under that agreement, contravened certain provisions in the REBA Act. The plaintiff's case is that because the November 2015 Consultancy Agreement, and Mr Sun's demand and receipt of the $3 million fee, contravened the REBA Act, there was a total failure of consideration. As a result, the plaintiff contends that the Impugned Payment is recoverable by the plaintiff.

The defence

1. The defendants' case is that they were not enriched.  They submit that they received the sum of $488,038.28 having taken responsibility for, and then paying, the whole of the $3 million fee to Mr Sun on behalf of Hotel Development. 

2. They also say that they were not enriched at the plaintiff's expense.  In that regard they point to the fact that the sum of $488,038.28 was not paid by the plaintiff, Roseway or the Bateman Road Trust.  Instead, the uncontroverted evidence establishes that this payment was made by Sunfire, without any plea or evidence explaining how this payment was at the plaintiff's expense.

3. Finally, the defendants argue that there has been no failure of consideration.  They say that if they were enriched at the plaintiff's expense then this occurred when the sum of $488,038.28 was paid to the TC Do Trust.  However, the basis of that transaction did not fail.  The purpose of the transaction was to ensure that the defendants were provided with what the parties agreed would be the Bateman Road Trust's contribution to the $3 million commission that was payable by Hotel Development to Mr Sun.  It was necessary to provide the defendants with the Bateman Road Trust's contribution for several reasons, including because the defendants had assumed Hotel Development's obligation to pay the whole of the commission to Mr Sun. 

4. Insofar as the plaintiff's claim is concerned with the enforceability of the November 2015 Consultancy Agreement, or about the lawfulness of his demand for and receipt of the $3 million fee, the defendants submit that any conclusion about those issues cannot assist the plaintiff's unjust enrichment claim. 

5. Firstly, the defendants submit that any finding that I might make about those issues cannot affect the rights of Mr Sun or Hotel Development, as they are not parties to these proceedings and cannot be bound by any such finding.

6. Secondly, the defendants submit that the plaintiff's case in relation to these issues turns on whether Mr Sun was a 'real estate agent' at the relevant time, and whether he received a 'commission, reward or other valuable consideration in respect of his services in that capacity', for the purposes of s 60(1) of the REBA Act. In that regard, the defendants' case is that the plaintiff has failed to prove that Mr Sun was a 'real estate agent' at the relevant time.

7. Thirdly, the defendants submit that s 64(1) of the REBA Act has no application to Mr Sun because, even if he was a real estate agent at the relevant time, he had no direct or indirect interest in the sale of the hotel. The fact that his son may have had an interest in the purchase of 257 Adelaide Terrace does not mean that Mr Sun had an indirect interest in that transaction.

Relevant legal principles

1. There was no dispute between the parties about the relevant legal principles to be applied in this case.  The defendants referred to a very helpful and succinct summary of those principles in Gray v Lavan (a firm)[2022] WASC 417 [28] ‑ [31] (Curthoys J), which is in the following terms:

   A restitutionary claim for unjust enrichment requires some 'injustice', in the form of a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust.[7]  Unjust enrichment so identified gives rise to a prima facie obligation to make restitution.  The prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust.[8]

   A failure of consideration or basis has been recognised as a factor entitling a plaintiff to recovery.[9] The term 'consideration' in this context is not to be understood according to its modern contractual meaning.  Rather, the term is used in a broader sense to refer to the value received by a plaintiff and the value provided by the defendant.  In other words, it refers to the basis, specifically, the reason, purpose or condition, for the transfer of the money from the plaintiff to the defendant.

   A failure of consideration 'is not limited to non-performance of a contractual obligation' but 'embraces payment for a purpose which has failed as, for example, where a condition has not been fulfilled, or a contemplated state of affairs has disappeared'.[10] Similarly, in Equuscorp Pty Ltd v Haxton,[11] French CJ, Crennan and Kiefel JJ said:

   'This Court has, on more than one occasion, described failure of consideration in terms set out by the late Professor Birks: 'Failure of the consideration for a payment ...  means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself'.'

   In cases involving bilateral transactions, such as this case, the assessment of the basis for a payment is objective; the focus is upon failure of an (objectively) manifested condition or basis.[12]

   [7] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [150]; Australian Financial Services and Leasing Pty Ltd v Hills [2014] HCA 14; (2014) 253 CLR 560 [20], [73], [141]; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 379 (Mason CJ, Deane, Toohey, Gaudron & McHugh JJ).

   [8] Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498 [30].

   [9] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [14] ‑ [15] (Gleeson CJ, Gaudron & Hayne JJ), [62] ‑ [63], [75], [93], [100] (Gummow J); Equuscorp[31] (French CJ, Crennan & Kiefel JJ), [134] (Heydon J).

   [10] Roxborough [16] (Gleeson CJ, Gaudron & Hayne JJ).

   [11] Equuscorp [31].

   [12] Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83; (2005) 63 NSWLR 203 [239] ‑ [240] (Mason P); Anderson v McPherson [No 2] [2012] WASC 19; (2012) 8 ASTLR 321 [236].

2. At the conclusion of the evidence, and with those principles in mind, I asked the parties to confer with a view to reaching agreement, if possible, about the issues that I would need to consider in determining the plaintiff's claim.  I also asked the parties to structure their written and oral closing submissions to reflect those issues.

3. Consequently, counsel for both parties addressed the following issues in their respective written outlines of closing submissions, and in their oral submissions:

   (1)Were the defendants enriched?

   (2)Were the defendants enriched at the expense of the plaintiff?

   (3)Was there a total failure of consideration?

   (4)Can a finding in these proceedings affect the rights and obligations of the parties to the November 2015 Consultant Agreement in a way that assists the plaintiff's case?

   (5)Was Mr Sun a 'real estate agent' and did he receive a 'commission, reward or other valuable consideration in respect of his services in that capacity' within the meaning of s 60(1) of the REBA Act?

   (6)Did Mr Sun contravene s 64(1) of the REBA Act?

4. Other issues were also addressed in the defendants' outline of submissions.[13]  However, I do not need to determine any of those issues because the plaintiff's counsel informed me that they were no longer pressed.[14]

   [13] Defendants' outline of closing submissions [7] - [9].

   [14] Transcript 24 March 2023, 235 - 236.

5. I am of the view that the issues identified by the parties adequately address the parties' respective cases and that the answers to the questions posed will properly determine whether the plaintiff is entitled to the relief sought.

6. I propose to deal with the issues relating to the REBA Act first. This is because the plaintiff's entire case hinges on a contention that Mr Sun contravened either or both s 60(1) and s 64(4) of the REBA Act. If the plaintiff does not discharge his onus of proving that Mr Sun contravened either of those provisions then, as his counsel accepts,[15] his claim must be dismissed. As will be seen, in order to prove that Mr Sun contravened s 60(1) or s 64(4) the plaintiff must prove that Mr Sun was a 'real estate agent' for the purposes of the REBA Act.

   [15] Transcript 24 March 2023, 168, 187.

7. After dealing with the issues relating to the REBA Act, I will then deal with the issues that concern the plaintiff's claim in restitution on the basis that there has been a total failure of consideration.

The REBA Act Issues

1. The plaintiff's claim depends on whether Mr Sun was entitled to demand or receive the $3 million fee. An essential premise of the plaintiff's case that the defendants were unjustly enriched is that Mr Sun's demand for or receipt of the $3 million fee contravened s 60(1) and s 64(4) of the REBA Act.

2. The demand for or receipt of the $3 million fee will only have contravened the relevant provisions of the REBA Act if Mr Sun was a 'real estate agent', for the purposes of that Act. Accordingly, and as I have already observed, if I am not satisfied that Mr Sun was a real estate agent then the plaintiff's claim must be dismissed.

Was Mr Sun a 'real estate agent' for the purposes of the REBA Act?

1. Section 60 of the REBA Act is in the following terms:

   60.     Agent not entitled to commission etc unless licensed and validly appointed

   (1)An agent is not entitled to receive any commission, reward, or other valuable consideration in respect of his services in that capacity unless -

   (a)he is licensed in that capacity and he holds a current triennial certificate in respect of his licence when he renders the services; and

   (b)he has a valid appointment to act in that capacity which is in writing signed by the person for whom the services are or are to be rendered or by some other person lawfully authorised to sign on behalf of the person for whom the services are or are to be rendered.

   (2)An appointment to act as an agent is not valid unless -

   (a)it is contained in a document which -

   (i)clearly sets out the services that are or are to be rendered; and

   (ii)where specific property is to be the subject of those services, clearly identifies the property; and

   (iia)clearly sets out the method by which the amount of any commission, reward or other valuable consideration to be received for those services is to be calculated; and

   (iii)contains such other information, if any, as is prescribed;

   and

   (b)the document is not an offer or acceptance or a contract, or a document purporting to be an offer or acceptance or a contract, binding or purporting to bind a party thereto to a transaction; and

   (c)the person obtaining the signature to the document gives a true copy thereof to the signatory immediately after the signing thereof (the onus of proof of which is upon the person obtaining the signature).

   (3)A person shall not demand or receive any commission, reward, or other valuable consideration in contravention of subsection (1) or (2), or both.

   Penalty: $5 000.

   (4)Any commission, reward, or other valuable consideration received in contravention of subsection (1) or (2), or both, may be recovered as a civil debt recoverable summarily in any court of competent jurisdiction.

2. Section 64 of the REBA Act is in the following terms:

   64.Conflicts of interest of agents etc

   (1)An agent shall not have, directly or indirectly, any interest, otherwise than in his capacity as an agent, in any transaction in which he acts or purports to act as agent, unless his principal has given prior written consent thereto.

   Penalty: $5 000.

   (2)A sales representative or other person in the employment of an agent shall not have, directly or indirectly, any interest, other than an interest that exists by virtue only of his employment, in any transaction in which the agent acts or purports to act unless the agent's principal has given prior written consent thereto.

   Penalty: $5 000.

   (3)A court before which any person is convicted of an offence under this section may order that person to pay over to the agent's principal any profit that that person has made, or is, in the opinion of the court, likely to make from the transaction.

   (4)An agent shall not, whether directly or indirectly, demand, receive, or hold any reward or other valuable consideration for or in relation to any transaction in respect of which the agent or an employee of the agent has an interest in contravention of this section.

   (5)Any reward or other valuable consideration received or held in contravention of this section may be recovered as a civil debt recoverable summarily in any court of competent jurisdiction.

3. It is an admitted fact that Mr Sun has never held a real estate and business agent's licence, triennial certificate or certificate of registration under the REBA Act. Accordingly, the exception covered by s 60(1)(a) and (b) does not apply and need not be considered further.

1. As can be seen, s 60(1) of the REBA Act operates to disentitle an 'agent' from receiving 'any commission, reward, or other valuable consideration in respect of his [or her] services in that capacity'.[16] Further, s 60(3) creates an offence punishable by a fine of $5,000 if a person demands or receives any commission, reward, or other valuable consideration in contravention, relevantly, of s 60(1). Section 60(4) operates as a statutory right of recovery, such that any commission, reward or other valuable consideration received in contravention of s 60(1) may be recovered summarily in any court of competent jurisdiction.'

   [16] Subject to the exception in s 60(1).

2. Section 64(1) prohibits an 'agent' from having any direct or indirect interest in a transaction in which they purport to act as agent unless the principal has given prior written consent. A similar prohibition is provided for in s 64(2) in relation to a 'sales representative or other person in the employment of an agent'. A contravention of either s 64(1) or s 64(2) constitutes an offence punishable by a fine of $5,000.

3. Section 64(3) operates to enable a court before which a person is convicted of an offence under s 64 to make an order that the offender effectively disgorge any profits earned due to the offending transaction. Further, s 64(4) operates to prohibit an agent from demanding, receiving, or holding any reward or other valuable consideration in circumstances that involve a contravention of s 64, and s 64(5) provides for a statutory right of recovery that operates in a similar manner to s 60(4).

4. The word 'agent', which is central to the operation of all these provisions, is defined in s 4 of the REBA Act as 'a person who is a real estate agent or a business agent, or both a real estate agent and a business agent'. The plaintiff does not suggest that Mr Sun was a 'business agent'. His case is that the Mr Sun was a 'real estate agent'.

5. The phrase 'real estate agent' is defined in s 4 of the REBA Act as, relevantly:

   a person whose business either alone or as part of or in connection with any other business, is to act as agent for consideration in money or money's worth, as commission, reward or remuneration, in respect of a real estate transaction as defined by this section.[17]

   [17] The definition of 'real estate agent' includes some exceptions.  These are not relevant to the issues raised in this matter.

6. The word 'business' is defined in s 4 of the REBA Act to mean the business of an agent. The definition of a 'transaction' in s 4 means, relevantly, a 'real estate transaction'. The phrase 'real estate' is also defined in s 4 to mean 'land within or outside the State and includes land of any tenure and buildings or parts of buildings within or outside the State'. A 'real estate transaction' includes a sale of real estate.

7. Against the background of this statutory framework, the starting point for considering whether the plaintiff has proved that Mr Sun was a 'real estate agent' is to note that the plaintiff pleads, and the defendants admit, that on or about 20 November 2015 the second defendant, as a director of Hotel Development, purported to enter into a written consultant agreement with Mr Sun.[18]  Further, the plaintiff pleads, and the defendants admit, that the consultant agreement relevantly provided that Mr Sun would effectively 'perform the role of a selling agent for the sale of 257 Adelaide Terrace',[19] and that Hotel Development would pay Mr Sun $3 million upon settlement.[20]  The defendants also plead that the consultant agreement was not exclusively for the sale of 257 Adelaide Terrace but alternatively provided for Mr Sun to source and recommend a joint venture partner, and that any fee was payable upon settlement of a purchase of the property or a joint venture share in a development.[21]

   [18] Further amended statement of claim [18]; defence [17]. The agreement is the November 2015 Consultancy Agreement.

   [19] Emphasis added.

   [20] Further amended statement of claim [19]; defence [18].

   [21] Further amended statement of claim [19]; defence [18].

8. Accordingly, on the pleadings, the November 2015 Consultant Agreement provided, in effect, that Mr Sun would perform the role of 'selling agent' for the sale of 257 Adelaide Terrace.  However, the pleadings do not provide any greater clarification.  There is also nothing in the one-page November 2015 Consultant Agreement[22] that is of any assistance in reaching an understanding of what the phrase 'selling agent', where is used in the pleadings, means.  In any event, the plaintiff does not suggest that the pleadings, or the terms of the November 2015 Consultant Agreement, is a sufficient basis on which to conclude that Mr Sun was a 'real estate agent' at the relevant time, even when considered in combination. 

   [22] See Annexure A.

9. The plaintiff relies on three pieces of evidence, in particular, in support of his case that Mr Sun was, at the relevant time, a 'real estate agent' for the purposes of the REBA Act.

10. Firstly, and principally, he relies on the April 2015 Consultant Agreement.[23]  In particular, the plaintiff relies on one of the recitals in that agreement, which reads as follows:

    The Consultant in China is a company which carries on the business of sale of real estate property, has extensive real estate marketing experience internationally, and is willing to act as the consultant for 257 Adelaide Terrace Perth Western Australia for the international territory (Excluding Australia).  (emphasis in original)

    [23] There was no evidence that this agreement was signed by Mr Sun other than the existence of what appeared to be handwritten Chinese characters on a signature panel for 'Huirong Sun (Principal)'.  However, the defendants did not object to the tender of this document and had not previously indicated that any issue was taken with its authenticity.

1. Secondly, the plaintiff relies on the Hotchkin Hanly letter, which records the defendants' instructions in relation to a number of matters, including Mr Sun's commission. 

2. Thirdly, the plaintiff says that his own evidence, together with the contents of the Hotchkin Hanly letter, supports a finding that Mr Sun continuously provided real estate services to Hotel Development from May 2015, when he first introduced a prospective buyer, to 10 March 2016, when the sale was effected. 

3. At the trial the plaintiff's counsel was initially unclear about the basis on which he contended that the recital in the April 2015 Consultant Agreement was admissible as evidence of the truth of its various statements of fact.  This was somewhat surprising given its significance to the plaintiff's case.

4. Because the recital amounted to an out of court assertion, and was therefore prima facie inadmissible hearsay, it was necessary for the plaintiff to rely on an exception to the rule against hearsay to rely on it as evidence of the truth of what it asserted. When it was suggested that s 79C of the Evidence Act 1906 (WA) might be relevant, the plaintiff's counsel embraced that suggestion and submitted, in effect, that the recital, being a statement in a document, was admissible pursuant to s 79C(2a) to prove the truth of what it asserted as it was a genuine business record.

5. I also raised with the defendants' counsel whether there was any room for the application of s 79C(1) of the Evidence Act. If the recital in the April 2015 Consultant Agreement constituted a statement made by Mr Sun, which tended to establish the facts asserted in that statement, and if he was a 'qualified person' for the purposes of s 79B, then the recital may be admissible as evidence of its truth pursuant to s 79C(1). Given it was common ground that Mr Sun was deceased then, by operation of s 79C(2), the plaintiff may have been relieved from the need to call a witness.

6. For reasons that will become clear it is unnecessary for me to determine whether the recital in the April 2015 Consultant Agreement is admissible as evidence of the truth of the various matters that are the subject of that statement, whether in accordance with s 79C of the Evidence Act or otherwise. For the purposes of dealing with the issues under the REBA Act I will assume, favourably to the plaintiff, that the recital to the 2015 April Consultant Agreement is admissible as a statement that was made by Mr Sun, and that it is capable of proving the truth of the assertions made in that statement.

7. Two issues arise. Firstly, what weight should be given to the statement having regard to s 79D of the Evidence Act? Secondly, does the statement establish that Mr Sun was a 'real estate agent' for the purposes of the REBA Act in any event?

8. Section 79D of the Evidence Act is in the following terms:

   79D. Evidence admitted under s. 79C, weight and effect of

   (1)In estimating the weight, if any, to be attached to a statement rendered admissible as evidence by section 79C regard shall be had to all the circumstances from which any inference can reasonably be drawn as to the accuracy or otherwise of the statement, and, in particular -

   (a)to the question of whether or not the statement was made contemporaneously with the occurrence or existence of the facts stated; and

   (b)to the question of whether or not the qualified person or any person concerned with making or keeping the document containing the statement, had any incentive to conceal or misrepresent the facts; and

   (c)to the question of whether or not the information in the statement was of a kind which was collected systematically; and

   (d)to the question of whether or not the information in the statement was collected pursuant to a duty to do so; and

   (e)where the statement wholly or in part reproduces or is derived from information from one or more devices, to the reliability of the device or devices; and

   (f)where the statement reproduces or is derived from any information, to the reliability of the means of reproduction or derivation.

   (2)For the purpose of any rule of law or practice requiring evidence to be corroborated or regulating the manner in which uncorroborated evidence is to be treated, a statement rendered admissible as evidence by virtue of section 79C shall not be treated as corroboration of the evidence given by the qualified person.

9. As can be seen, in estimating the weight to be attached to statements admitted as evidence by operation of s 79C, regard is to be had to all the circumstances from which any inference can reasonably be drawn as to the accuracy or otherwise of the statement. However, s 79D(1)(a) ‑ (f) list several circumstances to which regard shall, in particular, be had. In that regard, I accept that the recital was made contemporaneously with the existence of the facts stated in the recital (s 79D(1)(a)), and there is no evidence or suggestion that Mr Sun had any incentive to conceal or misrepresent the facts (s 79D(1)(b)).

10. I do not think that I need to consider the other listed circumstances in s 79D(1) as none of them are applicable. The statement in the recital contains information that was not of a kind that was collected systematically (s 79D(1)(c)), was not collected pursuant to a duty (s 79D(1)(d)), was not derived from a device (s 79D(1)(e)), and does not reproduce, nor is it derived from, information (s 79D(1)(f)).

11. However, the listed circumstances in s 79D(1) are not exhaustive. The court is required to have regard to 'all of the circumstance from which any inference can reasonably be drawn as to the accuracy or otherwise of the statement'. In my view there are other circumstances that are relevant in this case, and from which an inference can reasonably be drawn as to the accuracy or otherwise of the statement relied on by the plaintiff.

12. On its face, the five-page April 2105 Consultant Agreement appears to be a bespoke agreement, drawn for the specific purpose of enabling Hotel Development and Mr Sun to record the terms of his engagement as a consultant.  On that basis, and without more, it might be inferred that by signing the April 2015 Consultant Agreement Mr Sun was making a representation that the recital relied on by the plaintiff accurately describes the nature of Mr Sun's business.

13. However, I am of the view that other evidence demonstrates that the recital cannot be relied on as constituting an accurate representation about the nature of Mr Sun's business.

14. As I have already recounted earlier in these reasons, when dealing with the documentary evidence, on 26 May 2015 the plaintiff sent an email to Mr Sun's grandson, Ethan.  Attached to the email was a document that was described by the plaintiff in the email as a 'draft Consultant Agreement', which the plaintiff said he had 'on file'.  In the email the plaintiff, in effect, asked Ethan to include the name and address details of the consultant in the agreement, and to arrange for it to be signed by both parties. 

15. The draft consultant agreement that was attached to the plaintiff's email is in identical terms to the five-page April 2015 Consultant Agreement, except that the spaces for the name and address details of the consultant were left blank.  Importantly, however, the recital that the plaintiff relies on to prove that Mr Sun was a real estate agent was in identical terms when compared to the recital that was used in the draft agreement that the plaintiff had emailed to Ethan. 

16. In my view, this evidence very clearly demonstrates that it was not Mr Sun who was the original source of the words used in the April 2015 Consultant Agreement.  It was the plaintiff.  This raises real questions about whether I could draw an inference that by signing the April 2016 Consultant Agreement, Mr Sun was making an accurate representation about the nature of his business.

17. This email also demonstrates that the plaintiff did not at that time know the name or address details of the consultant.  It follows that it is highly unlikely that he used the words in the recital based on his own knowledge of the nature of Mr Sun's business.  That conclusion is supported by two other emails that were sent by the plaintiff on 24 and 26 May 2015, which also demonstrate that the plaintiff had little or no knowledge of either Mr Sun or his business at or about the same time the recital was first used in a document. 

18. In the first email the plaintiff sent a draft of a consultant agreement to Mr Santoro.  With some relatively minor differences, this document was substantially the same as the November 2015 Consultant Agreement.  In the second email, that was sent on 26 May 2015, the plaintiff told Ethan that before the settlement of 257 Adelaide Terrace an invoice 'from the consultant' was required, and he attached an example of such an invoice.  The example invoice was addressed to 'Hotel Developments Pty Ltd' and included a description of the work that had been done together with the fee of $3 million.  What is significant about both emails, and the documents that were attached to them, is that there is absolutely no mention of Mr Sun, or of his other details. 

19. There is a further matter emerging from the terms of the recital itself that reinforces my conclusion that the recital cannot be taken to be an accurate representation of the nature of Mr Sun's business.  In that regard, it can be seen from the words used in the recital that the 'consultant' is described as 'a company'.  This is an obvious error.  However, it cannot be explained away on the basis that it is just a typographical error.  The fact that the plaintiff was the original source of the words used in the recital, and not Mr Sun, coupled with the obvious nature of the error, confirms that the statement made in the recital cannot be relied on as accurate representations of fact. 

20. Later, at about 7.02 pm on the same day, Ethan emailed a copy of a consultant agreement to the defendants, and a carbon copy was emailed to the plaintiff.  The agreement had by now been amended to include Mr Sun's name and address details, and it had been signed by Mr Sun.  Ethan asked that the defendants check the agreement, sign it and then pass it on to 'Ralph', who I infer is the plaintiff.  Apart from the insertion of Mr Sun's name and address details, this version of the consultant agreement, including the recital, was otherwise in identical terms to the draft that the plaintiff had emailed to Ethan earlier that day. 

21. The mere fact that Mr Sun signed the agreement does not alter my conclusion that the recital cannot be relied on as an accurate statement of fact.  Instead, it suggests that either Mr Sun did not properly read or understand the recital, or that he did not care what it actually said.    

22. In the end I am not prepared to infer that the representations in the recital to the April 2015 Consultant Agreement accurately describe the nature of Mr Sun's business. Accordingly, I cannot give any weight to what is recorded in the recital in deciding whether Mr Sun was a 'real estate agent'. This means that, even if the statements in the recital are admissible pursuant to s 79C of the Evidence Act, they do not assist the plaintiff. 

23. However, even if I am wrong in reaching that conclusion, and the statements made in the recital are both admissible and properly carry weight, I am of the view that, in any event, the recital falls short of establishing that Mr Sun was a 'real estate agent'. 

24. As I have noted above, a person is a 'real estate agent' for the purposes of s 4 of the REBA Act if, relevantly, their 'business … is to act as agent for consideration in money or money's worth, as commission, reward of remuneration, in respect of a real estate transaction'. Accordingly, the question of whether a person is a 'real estate agent' requires consideration to be given to the nature of the person's business and, in particular, to whether their business is to 'act as agent'.

25. In my opinion the words used in the recital are not capable of proving that Mr Sun's business was to act as agent at the time Mr Sun sent his invoice for payment of $3 million to Hotel Development, or when that payment was later made by the defendants.

26. Even on the assumption most favourable to the plaintiff that the reference to 'a company' is a typographical error and that the recital should actually be read as referring to Mr Sun the individual, the recital only suggests that he was carrying on 'the business of sale of real estate property'[24] and that he 'has extensive real estate marketing experience internationally'.  Those words are not capable of establishing, even by inference, that Mr Sun's business was to act as agent when he demanded and the received the Impugned Payment.  If, as the recital suggests, Mr Sun 'carries on the business of sale of real estate property', and that he had 'extensive real estate marketing experience internationally', it does not follow that his business was one in which he was acting as an agent.

    [24] Emphasis added.

27. Further, the definition of 'real estate agent' not only requires that a person's business is to act as agent, but also that they act in that capacity 'for consideration in money or money's worth, as commission, reward or remuneration'.  There is however no express or implied reference in the recital to the receipt by Mr Sun of any commission, reward or remuneration in the course of such a business. 

28. As I have already noted, the defendants have admitted that the April consultancy agreement provided, in effect, that Mr Sun would 'perform the role of a selling agent for the sale of 257 Adelaide Terrace'.  However, at its highest, all that this might establish is that Mr Sun was acting as a 'selling agent' for the sale of that property. Even when this admission is considered in combination with the statements made in the recital, I am of the view that it is insufficient to prove that Mr Sun was a 'real estate agent' at the relevant time. It is not capable of proving that his business was to act as agent for consideration in respect of a real estate transaction, as required by the definition of 'real estate agent' in s 4 of the REBA Act.

1. On the other hand, the defendants submit that the purpose of the Impugned Payment, objectively ascertained, was for the defendants to take on the liability for discharging Hotel Development's obligation to Mr Sun, or to pay on the Impugned Payment to Mr Sun, both of which purposes were achieved.  In the alternative, the defendants submit that a contract was formed between the plaintiff and the defendants pursuant to which they agreed that in consideration of the defendants agreeing to receive payment of the Bateman Road Trust's share, they would then make payment of the whole of the fee to Mr Sun.  The defendants submit that in circumstances in which a contract was formed and performed there is no room for a claim of restitution based on there having been a total failure of consideration. 

2. In my view the state of affairs contemplated as the basis or reason for the Impugned Payment, objectively ascertained, is revealed by an examination of the contemporaneous documents. 

3. As the summary of the documentary evidence set out earlier in these reasons demonstrates, prior to and at about the time settlement of the sale of 257 Adelaide Terrace was due to be effected, issues had been raised by the plaintiff about the basis upon which Hotel Development was liable to pay a fee to Mr Sun, and whether an amount of $3 million was excessive.

4. After settlement had been effected, a meeting (described as being a meeting of the Board of Directors of the 257 Trust) was held on 3 March 2016.  According to the minutes of that meeting issues were discussed with a view to minimising 'a shortfall from the sale.' In that context, the minutes record that the plaintiff made a proposal that involved a cost sharing arrangement between the two major unit holders, the TC Do Trust and the Bateman Road Trust, to 'help break‑even the shortfall from the sale to minimise losses to minor unit holders.' In effect what was proposed by the plaintiff was that the two major unit holders would cover the costs of the 257 Adelaide Terrace project in direct proportion to the percentage of their unit holdings, in order to avoid losses being incurred by minor unit holders.

5. Although the agenda to that meeting signed by the defendants on 1 March 2016 includes an item concerning the ratification of a commission payment to the consultant who assisted with the sale of the project, it is not clear from the minutes of that meeting whether that issue was discussed.

6. Emails that the plaintiff sent shortly after the meeting suggest that his relationship with the defendants was at least unsettled.  However, the parties did not produce any evidence to explain what occurred after the meeting, or to provide any context necessary to understand the true nature of their relationship at that time.

7. In an email sent on 24 March 2016 to the defendants and Mr Santoro, the plaintiff referred to the meeting on 3 March 2016 and to discussions that he said had taken place concerning a proposed payment of $3 million to a selling consultant for the sale of 257 Adelaide Terrace.  In that email the plaintiff said the following:

   As you know I do not believe that their [sic] is a binding agreement for this payment.  I trust that you have not to date made this payment.  If you have done so, it was without my knowledge and acceptance.  I therefore request that the directors meet so that there is proper governance in making decisions moving forward.  Please advise your availability.  These matters have been outstanding for almost one month now without resolution, this is not suitable for unit holders and you are causing us to fail in our duties as directors and exposing Lee Lee and I to be sued by unit holders due to your unilateral decisions.

1. This email may have resulted in the defendants instructing Hotchkin Hanly to write the Hotchkin Hanly letter, addressed to the directors of Hotel Development.[33]  In that letter, Hotchkin Hanly asserted that the agreements to pay Mr Sun a $3 million commission were binding on Hotel Development.  Alternatively, it was said that even if those agreements were not binding, Hotel Development would be required to indemnify the second defendant in the event that she was found to be personally liable to pay the commission to Mr Sun.  On the following day, 31 March 2016, a partner at Hotchkin Hanly provided the plaintiff with a copy of the November 2015 Consultant Agreement that had been signed by Mr Sun and the second defendant.

   [33] The Hotchkin Hanly letter is referred to in these reasons at [55] - [57].

2. Against this background, on 2 April 2016 the plaintiff sent an email to the defendants and others, in reply to an email from Mr Santoro, that is critical to reaching an objective understanding of the purpose of the Impugned Payment.[34]  It is apparent from that document that a meeting of the directors of Hotel Development had been scheduled to take place on 4 April 2016.  The purpose of the plaintiff's email was to propose certain agenda items for that meeting.

   [34] Trial bundle 223.

3. Amongst the various proposed agenda items was the Hotchkin Hanly letter.  The relevant part of the plaintiff's email was in the following terms:

   6) The directors of Hotel Developments [sic] P/L received a letter from Hotchkin Hanly dated 30 March 2016.  Please note that these lawyers represent Lee and Linda and not the trustee.  The letter is written in respect to the lawful basis of paying a commission of $3,000,000 for the sale of the trust asset.  The letter establishes many areas of concern:

   a.Mr Sun did not act within his territory, being outside of Australia.  The purchaser was a company registered in Australia.

   b.The letter contemplates that Mr Sun requires a real estate licence

   c.The letter discloses a November Agreement with Mr Sun, which raises many questions;

   (i) Why is it that not all directors of Hotel Developments [sic] were aware of this agreement?

   (ii) There has been no board meetings, resolutions, minutes, emails, discussions or any other communication concerning this agreement.

   (iii) The agreement was only first seen by Ralph Nunis (Director) on the 31 March 2016 and prior to this letter had no knowledge of the agreement.

   (iv) The agreement is a copy of a 'scope of works' not a bona fide agreement required for such a payment.  It is noted that it is a previously emailed scope of works o a consultant May last year [sic].  It is not a replica of the previous agreement passed in April 2015.

   (v) The November agreement contemplates that the agreement is with a Company, however no company as mentioned, nor is a any party mentioned as a consultant other than a signature [sic].

   d.The letter (para 17) contemplates that Mr Nunis and Mrs Lee Lee Do remain silent in respect to the November agreement.  When in fact it was because neither party were aware of such an agreement.

   e.The letter contemplates that should the Trustee pay the $3mil commission that the trustee should set aside funds to cover potential litigation.  Therefore the letter contemplates potential litigation.

   f.The letter contemplates that each unit holder should sign a release prior to receiving distribution.  This is alarming!!!! (emphasis in original)

   7) One unit holder has called for a unit holders meeting.  This has not been responded to.  The unit holders having been waiting on a distribution now for over one month and are calling asking when this is going to occur?

   8) The trustee should do one of the following to take effect immediately;

   i) Given all the issues raised in point 6 remove itself as trustee and have a new trustee appointed.

   ii) Appoint an independent firm to provide advice to the trustee concerning the payment of the $3mil.

   iii) Point (ii) and set aside the $3mil and distribute the remainder of the funds to the unit holders.

   iv) Do not pay the $3mil and distribute to the unit holders.  Then the major unit holders can agree to meet the $3mil from their proceeds.

   For example:

   •TCDo hold 176 units of 225.84 or (78%).  Therefore TCDo would receive $2,340,000 of the unpaid $3mil commission through its distribution.

   •Roseway hold 34 units of 225.84 or (15.1%).  Therefore Roseway would receive $453,000 of the unpaid $3mil commission through its distribution.

   •If both parties were to pay these amounts to Mr Sun, this totals $2,793,000 leaving a shortfall of $207,000.

   •The shortfall would need to be negotiated between TCDo, Roseway and possibly Mr Sun.

   It must be noted that if the trustee agrees to accept 8 (iv) then this removes all the concerns raised in Point 6 (emphasis in original)

4. It is apparent from this email that when the plaintiff received the Hotchkin Hanly letter and was then provided with a copy of the November 2015 Consultant Agreement, he expressed concerns about whether Hotel Development was obliged to pay a commission of $3 million to Mr Sun.  The plaintiff suggested that Hotel Development needed to take immediate steps to deal with those concerns, and proposed a number of available options.

5. In my view it is important to note that one of those options involved the major unit holders, namely the TC Do Trust and the Bateman Road Trust, meeting the cost of the commission from the distributions they expected to receive as a consequence of the sale of 257 Adelaide Terrace.  Further, although the plaintiff had raised a number of concerns about the lawful basis of the commission said to be payable to Mr Sun, he recognised that if the major unit holders paid that commission from their distributions then all of those concerns would be alleviated.

6. According to the documentary record in evidence before me what occurred thereafter is consistent with a decision having been made by the directors of Hotel Development to adopt the plaintiff's option of making distributions to the unit holders and leaving the obligation to pay Mr Sun to be met by the TC Do Trust and the Bateman Road Trust.

7. So, on 12 April 2016, the 257 Trust made various distributions to its unit holders, including to the TC Do Trust and to the Bateman Road Trust.  Almost immediately after that had occurred, the plaintiff took steps to arrange for the Bateman Road Trust to contribute to the $3 million commission that Mr Sun sought from Hotel Development.

8. The option originally proposed by the plaintiff envisaged that both the TC Do Trust and the Bateman Road Trust would pay their share of the $3 million commission to Mr Sun.  However, an email that the plaintiff sent to Mr Santoro on 13 April 2016 shows that he did not want to expose the Bateman Road Trust to various risks that he perceived might arise from making a payment directly to an international bank account.  To avoid being exposed to those risks, the plaintiff proposed that Roseway as trustee for the Bateman Road Trust would pay its share to the TC Do Trust, which would then send the total payment to Mr Sun once an agreed account is reached.

9. The text of the 13 April 2016 email is set out at [62] above.

10. Attached to the 13 April 2016 email from the plaintiff was a copy of an invoice from Mr Sun dated 5 March 2016, seeking payment of $3 million from 'Hotel Developments Pty Ltd'.

11. The defendants appear to have agreed with the plaintiff's request that the TC Do Trust pay Mr Sun the full amount of the commission, as they entered into the Deed on 14 April 2016.  It is common ground that pursuant to the Deed the defendants assumed responsibility for making payment of the $3 million commission to Mr Sun.

12. The defendants then started paying the commission to Mr Sun in instalments.  The first two instalments, in the amount of $500,000 each, were paid on 14 and 19 April 2016 respectively.  The balance of the commission was paid in further instalments, the last of which was paid in late April 2016.

13. On 20 April 2016, while the defendants were in the process of paying the instalments to Mr Sun, the defendants received the Impugned Payment via a transfer from the Sunfire account.

14. In my view the documentary evidence to which I have just referred demonstrates quite clearly that the defendants as trustees of the TC Do Trust, and Roseway as the trustee of the Bateman Road Trust, both of whom were the major unit holders of the 257 Trust, agreed that they would discharge what they accepted was Hotel Development's liability to pay a $3 million commission to Mr Sun.  Further, they agreed that they would discharge that liability by each contributing a portion of the commission that reflected the proportion of their respective unit holdings in the 257 Trust. 

15. Based on the above documentary evidence I find that the objective purpose of the Impugned Payment was to provide the defendants with the Bateman Road Trust's share of the $3 million commission so that the TC Do Trust could then discharge Hotel Development's liability to Mr Sun in full.  The state of affairs contemplated as the basis or reason for the Impugned Payment was that the TC Do Trust and the Bateman Road Trust, as unit holders of the 274 Trust who had an interest in discharging its liabilities, would jointly contribute enough money so that Mr Sun could be paid in full.  However, in order to avoid Roseway being exposed to the risks that the plaintiff believed might be associated with making a payment directly to Mr Sun, the Bateman Road Trust share was paid to the TC Do Trust with the intention that it would then discharge Hotel Development's liability to Mr Sun.

16. The documentary evidence overwhelmingly demonstrates that the purpose of the Impugned Payment was achieved, and that the state of affairs contemplated as the basis or reason for that payment did not fail to materialise.  The bank statements tendered in evidence very clearly demonstrate that the defendants received the Impugned Payment.  In any event, the fact that the defendants received that payment was not in dispute. 

17. Further, and consistently with the plaintiff's own wishes, the defendants took responsibility for paying, and did pay,[35] the whole of the $3 million commission claimed by Mr Sun, thereby discharging Hotel Development's liability to Mr Sun. 

    [35] Attached to these reasons as 'Annexure B' is a copy of a schedule prepared by the defendants which summarises the payments that were made to Mr Sun, by reference to the relevant exhibits.

18. The net result of the Impugned Payment was that the TC Do Trust and Bateman Road Trust both contributed amounts to the total that Hotel Development owed to Mr Sun, which reflected the relative proportion of the units they each held in the 257 Trust, as they originally intended. 

19. Although the plaintiff pleaded in his further amended statement of claim that the defendants never, in effect, passed on the amount of the Impugned Payment to Mr Sun, and never paid Mr Sun's invoice,[36] those pleas were wholly inconsistent with the evidence that was adduced.  In any event by the end of the trial the plaintiff did not pursue those allegations.  In that regard, the plaintiff's counsel did not at any time suggest in his closing submissions that the defendants had not paid Mr Sun.

    [36] Further amended statement of claim [27] & [29.3].

20. The plaintiff's counsel did submit in closing that I should accept the plaintiff's evidence regarding the purpose of the Impugned Payment, particularly as it was not challenged under cross‑examination.[37]  However, it was not clear to me what point counsel was seeking to make.  The only evidence that the plaintiff gave about the purpose of the Impugned Payment was to read out part of what was written in the invoice from the TC Do Trust demanding Bateman Road Trust pay a share of the commission relating to the sale of 257 Adelaide Terrace.[38]  Quite apart from the fact that the purpose of the Impugned Payment must be ascertained objectively,[39] for the reasons I have already given I do not agree that the purpose of the Impugned Transaction is limited to what was set out in the TC Do Trust Invoice. 

    [37] Plaintiff's closing submissions [6].

    [38] Transcript 22 March 2023, 115.

    [39] Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [238] - [240] (Mason P).

21. I accept that the plaintiff was not cross-examined.  However, it does not follow that I must accept his evidence.[40]  In any event his evidence about this topic, such as it was, did not affect my objective assessment of the basis or reason for the Impugned Payment.

    [40] Merrey v The State of Western Australia [2010] WASCA 62 [9].

22. I would also observe that even if the purpose of the Impugned Payment was limited to what was recorded in the TC Do Trust Invoice, I would have also concluded that this purpose did not fail to materialise.  The Impugned Payment was made, and the defendants did receive it as the Bateman Road Trust's share for the commission that related to the sale of 257 Adelaide Terrace, which they paid to Mr Sun.  It necessarily follows that if the purpose of the Impugned Payment was limited to what was recorded in the TC Do Trust Invoice then that purpose was achieved, and there was no failure of consideration. 

23. A central focus of the plaintiff's case that there had been a total failure of consideration was on the lawfulness, or enforceability, of Mr Sun's demand for, and receipt of, the $3 million fee.[41]  It is, however, not easy to understand how a finding that Mr Sun's demand for or receipt of the fee was illegal or unenforceable could lead to a conclusion that the defendants were enriched as a result of a total failure of consideration.

    [41] Further amended statement of claim [20A], [22E], [24] & [29.2].

24. The plaintiff's case that Mr Sun's demand for or receipt of the $3 million fee was illegal or unenforceable is based on a contention that Mr Sun contravened either or both of s 60(1) and s 64(4) of the REBA Act. As I have already explained, the plaintiff has failed to prove that Mr Sun was a 'real estate agent' for the purposes of the REBA Act. Accordingly, it is not open to find that Mr Sun contravened either of those provisions.

25. Even if I were to find that Mr Sun contravened either s 60(1) or s 64(4) of the REBA Act, and that his demand for or receipt of the $3 million fee was illegal or unenforceable, it would not follow that the defendants have been unjustly enriched by reason of a total failure of consideration.

26. As I have already explained, the objective purpose of the Impugned Payment was achieved. That conclusion is unaffected by any illegality on the part of Mr Sun, or any conclusion about the enforceability of his demand for or receipt of the $3 million fee. The state of affairs contemplated as the reason for the Impugned Payment to the defendants did not fail to materialise by reason of any contravention of the REBA Act by Mr Sun. The Impugned Payment was not made under a contract that was unenforceable because of illegality or for any other reason.[42]  Further, it was paid to the defendants and not to Mr Sun.  It follows that it was not paid in circumstances in which Mr Sun had demanded it or received it from the plaintiff in contravention of the REBA Act. The Impugned Payment was paid to the defendants for the purpose of enabling them to pay Mr Sun the $3 million fee on behalf of Hotel Development.    

    [42] Equuscorp Pty Ltd v Haxton [33].

27. At a superficial level, the plaintiff's claim may appear to have some similarities to the facts in Roxborough.  In that case the appellants were retailers of tobacco products and the holders of a retailer's license granted pursuant to a New South Wales statute.  The respondent was a wholesaler of tobacco products and the holder of a wholesaler's license issued under the same statute.  The respondent supplied tobacco products to the respondents.  The New South Wales statute imposed a licence fee on the retail and wholesale of tobacco.  This fee was identified separately in the respondent's invoices sent to the appellants.  In Ha v New South Wales [1997] HCA 34; (1997) 189 CLR 465, the High Court held that the New Wales statute was invalid, with the result that the licence fee was unlawful. However, the appellants had paid amounts identified in the respondent's invoices as relating to the tobacco licence fee over a period of time. The respondents retained those amounts once judgment in Ha was pronounced, and the appellants sued the respondents seeking to recover the retained amounts. 

1. An important issue before the High Court was whether it could be concluded that there had been a total failure of consideration in relation to the payments that had been made for the licence fee in circumstances in which the performance of the contracts between the parties had not been prevented.  The majority of the High Court ultimately ruled that the payments made for the licence fee were a distinct and severable part of the total consideration for the purchase of the goods and that there had been a total failure of that consideration.

2. There are several important points of distinction between the circumstances of this case, and the facts in Roxborough.

3. As I have already mentioned, in Roxborough (because of the decision in Ha) the respondent retained the amounts that it had received from the appellants in that case, which it would otherwise have paid on under the relevant New South Wales legislation.  Accordingly, it was open to conclude that the respondents had been enriched at the expense of the applicants.  The circumstances of this case are very different.

4. Firstly, there is no evidence that the defendants retained the Impugned Payment, such that it could be said that they were enriched by reason of any illegality or unenforceability of Mr Sun's demand for or receipt of the $3 million fee.  Secondly, unlike in Roxborough, where the ruling in Ha had a binding effect on the rights and obligations of the parties to that litigation, in this case even if I were to conclude that Mr Sun's demand for and receipt of the $3 million fee was unlawful and unenforceable, it could not have any effect on his rights and obligations. Mr Sun, or his estate, is not a party to these proceedings. Putting to one side the fact that in any event it would be inappropriate for me to make serious findings that Mr Sun contravened provisions in the REBA Act in his absence, any finding that I made could not alter the fact that the defendants have paid him the full amount of $3 million.

5. In the end, and for the reasons that I have set out above, I find that the plaintiff has failed to establish that the defendants were enriched by their receipt of the Impugned Payment by reason of a total failure of consideration.  The defendants were therefore not unjustly enriched, and the plaintiff's claim in restitution must be dismissed.

6. In those circumstances it is unnecessary to decide whether I should also accept the defendants' submission that the plaintiff's case that there was a total failure of consideration must fail because the Impugned Payment was paid pursuant to a contract that was formed between the parties.

Conclusion

1. The plaintiff's claim against the defendants should be dismissed.

2. I will hear the parties as to the appropriate orders that should be made to reflect my reasons.

Annexure A

Annexure B

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

KB

Associate to the Hon Justice Vandongen

4 JULY 2023