Pitak v Sudtipatudom

[2025] NSWSC 1088

Supreme Court

New South Wales

Medium Neutral Citation:

Pitak v Sudtipatudom [2025] NSWSC 1088

Hearing dates:

30 June, 1-3 July, 25-27 August 2025; 15 September 2025 (final written submissions)

Date of orders:

23 September 2025

Decision date:

23 September 2025

Jurisdiction:

Equity

Before:

Kunc J

Decision:

Contractual claim dismissed; no opposition to transfer of share in defendant company in liquidation

Catchwords:

CONTRACTS — Implied terms — Terms implied in fact — No issue of principle

COURTS AND JUDGES — Jurisdiction — District Court — Desirability of expanding power of Supreme Court to transfer cases to District Court where equitable claim secondary or spurious to claim within District Court’s jurisdiction

Legislation Cited:

District Court Act 1973 (NSW)

Civil Procedure Act 2005 (NSW)

Cases Cited:

Watson v Foxman (1995) 49 NSWLR 315

Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers appointed) (in liq) (No 2) [2011] FCA 1123; (2011) 297 ALR 56

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Category:

Principal judgment

Parties:

Korkhwan Pitak (First Plaintiff)
Chotipat Suchatlamphong (Second Plaintiff)
Autchariya Sudtipatudom (First Defendant)
Sai Lam Taan Pty Ltd (in liq) (Second Defendant)

Representation:

Counsel: A Rogers (Plaintiffs)
JR Young (First Defendant)

Solicitors: Mitry Lawyers (Plaintiffs)
Stephen Lu Lawyers (First Defendant)

File Number(s):

2021/00364559

Publication restriction:

Nil

JUDGMENT

Summary

1. These proceedings should have been a relatively straightforward matter concerning a dispute between two couples over the contract between them for the operation of a café in Loftus Lane near Circular Quay through the vehicle of the second defendant (now in liquidation). The references to two “couples” in these reasons is informal, because the first defendant’s wife, while involved in keeping the accounts for the café, was not a party to the contract.

2. Unfortunately, a series of procedural, factual and legal distractions meant that it was far from straightforward, including a three to four day hearing escalating to a six day hearing in two parts separated by several weeks with further written submissions. One, but only one, of the reasons for the extra time being required was the regrettable underestimation by the parties of the time that would be required to take the evidence of three of the four witnesses with the assistance of interpreters from the Thai language.

3. Once the legal and factual distractions were cleared away, the issues in dispute reduced to two, the most important being the existence of a particular term of the contract. It was common ground that each couple would contribute to 50% of the expenses of the café. The plaintiffs also contended for a term that “moneys and profits generated by the café would be divided between the two couples equally” (emphasis added). The first defendant admitted that the contract provided for profits to be divided equally. There was no dispute that the café never generated a profit. However, the plaintiffs pressed a claim for half of “moneys” (not profits) said to have been distributed to the first defendant or his wife on his behalf.

4. The second dispute was a factual one concerning the alleged payment of funds by the plaintiffs towards the operation of the café (the operating expenses claim).

5. For the reasons which follow, the Court accepts the first defendant’s submissions as to the relevant contractual term. The café never having generated any profits, the plaintiffs’ claim for damages fails. Similarly, the plaintiffs have failed to prove that they paid the funds which were the subject of the operating expenses claim.

6. With no disrespect intended, in these reasons the Court will refer to the parties by the anglicised names that they use in Australia. The first and second plaintiffs are Nat and her husband Sean respectively. The first defendant is Archie. Archie’s wife, who was not a party to the proceedings, is Mindy. The second defendant is Sai Lam Tan Pty Ltd (ACN 615 713 856) (in liq) (SLT).

7. Mr A Rogers of Counsel appeared for Nat and Sean. Mr J R Young of Counsel appeared for Archie. There was no appearance for SLT.

Some general background

8. One of the large factual distractions in this case was the background to the incorporation of SLT and the motivation for Nat, Sean and Archie to enter into the contract. Much time was devoted to the proposition that Archie had agreed to sponsor Nat and Sean for visa purposes (Nat and Sean originally being in the country on student visas, but they are now permanent residents). All of this proved irrelevant.

9. There was no dispute that, in broad terms, Nat, Sean and Archie agreed that SLT would be incorporated with Archie as its sole shareholder and director, but with no active responsibilities, for the purpose of SLT being the legal owner of a café operated by Nat and Sean at Annandale (Annandale café).

10. Archie was not to have, and did not have, any involvement in the Annandale café. He received no payment or reward of any kind for his role in relation to SLT as the operator of the Annandale café. However, the fact that SLT was in law the owner and operator of the Annandale café later became part of the disagreement between Nat and Sean on the one hand, and Archie and Mindy on the other.

11. In 2018, the parties agreed they would undertake a new venture with SLT as the vehicle to run the café. In the events which happened, SLT took out a lease for the café, undertook the fit out and operated the café.

12. There is no dispute between Nat, Sean and Archie that they had agreed that Nat and Sean (of the one part) and Archie (of the other part) would each contribute to SLT 50% of the operating expenses for the café. Nor was there any dispute that any profits would be divided equally between those same parties. Mindy (a nurse by profession) undertook the role of bookkeeper for the café.

13. There was a subsidiary dispute between the parties as to whether Nat and Sean’s entitlement to receive 50% of the profits subsisted only so long as they were contributing 50% of the expenses. It was not necessary for me to decide this point. Were it necessary, I would have reached the conclusion that the agreement between the parties was to that effect.

14. The main issue was whether the terms of the contract included an entitlement in the plaintiffs to receive fifty percent of “moneys generated by the business operations of the” café (emphasis added).

15. In accordance with the contract, the parties did make contributions to the expenses of running the café. The café operated from 2019.

16. Unfortunately, relations between the parties deteriorated. At some time (about which there was a dispute that it is unnecessary to resolve), Nat and Sean ceased to make contributions to the running expenses of the café. They alleged that Archie had told them they were no longer to be part of the café and that he would not return the Annandale café to them, which was also under his legal control as the sole director and shareholder of SLT.

17. These proceedings were commenced in December 2021. At the time of the commencement of the proceedings, SLT remained in operation. However, in May 2023, the company was wound up.

18. On 11 August 2023, the Court made orders including:

1   Pursuant to section 500(2) of the Corporations Act grants leave to the plaintiff to proceed with these proceedings against the second defendant upon the terms set out in order 2.

2   The plaintiff is not to seek to enforce any order made in these proceedings for the payment of money or the transfer of property from the second defendant to the plaintiff without further leave of the Court.

19. At the final hearing, no relief was pressed against SLT and, as I have already recorded, no one appeared on its behalf.

20. In the events which happened, a company related to Mindy purchased the café’s assets from the liquidator of SLT. Accordingly, the café continues to trade under the ownership of Mindy’s company.

The plaintiffs’ case

21. Subject to some refinements and concessions at the hearing, the plaintiffs’ case proceeded by reference to an amended statement of claim filed on 13 September 2024 (ASOC). Given the winding up of SLT, a substantial and obvious purpose of the amendments was an attempt to fix Archie with personal liability in lieu of SLT.

22. The ASOC sought relief including (underlining in original to show amendments):

“RELIEF CLAIMED

1.   Declaration that the First Defendant holds his share in the Second Defendant in trust for the First Plaintiff and the Second Plaintiff as tenants in common in equal shares.

2.   Order that the First Defendant transfer the legal interest in the Second Defendant to the First Plaintiff and the Second Plaintiff as tenants in common in equal shares.

3.   Declaration that the First and Second Defendants hold all monies received, and profits generated by, the First Defendant and/or the Second Defendant in respect of the business known as Loftus Lane by Claire (ABN 54 615 713 856) ("Loftus Lane Cafe") in trust as to 50% for the First Plaintiff and the Second Plaintiff as tenants-in­ common.

4.   Order that the First Defendant and the Second Defendant account to the First Plaintiff and to the Second Plaintiff for all monies received by the First Defendant on behalf of the Second Defendant in respect of Loftus Lane Cafe and/or received by the Second Defendant in respect of Loftus Lane Cafe.

5.   Order that the First Defendant and the Second Defendant remit to the First Plaintiff entered and/or the Second Plaintiff such monies as are held in trust on behalf of the First Plaintiff and the Second Plaintiff as referred to in prayer 3 hereof.

Further or in the alternative to paragraphs 3, 4 and 5:

6.    Declaration that the First Defendant and/or the Second Defendant hold on trust for the Plaintiffs such monies as the Plaintiffs have invested in Lotus Loftus Lane Café.

7.   Order that the First Defendant and the Second Defendant remit to the plaintiffs all monies referred to in prayer 6 hereof. …

9.   Damages including equitable damages. …”

23. By the conclusion of the hearing, Archie did not resist an order that he transfer his share in SLT to the plaintiffs. However, I do not regard that as a substantial concession, given that relief was not the focus of attention during the hearing and relates to a company in liquidation.

24. The terms of the contract pleaded by the plaintiffs in the ASOC were:

“6   In or about 2018 the Plaintiffs, the First Defendant and the Second Defendant entered into an agreement whereby:

(i)   The Second Defendant would enter into a lease of premises at XXXXX Bridge Street Sydney (Land Title Reference XXXX) ("the Bridge Street Premises");

(ii)   The Second Defendant would fit out and thereafter operate a cafe at the Bridge Street Premises;

(iii)   Moneys and profits generated by the business operations of the said cafe referred to in (ii) above would be distributed by the Second Defendant to the divided between the First Plaintiff and m the Second Plaintiff on the one hand as to 50% and to the First Defendant on the other hand as to 50%.”

25. There were no particulars appended to paragraph 6 of the ASOC and no other terms of any agreement between the parties were pleaded.

26. Paragraph 6 of the ASOC was responded to in Archie’s defence (numbering as in original, emphasis added):

“0.   In answer to paragraph 6 of the Amended Statement of Claim, the First Defendant says that on or about 2018, the Plaintiffs, the First Defendant and the Second Defendant entered into an agreement whereby:

a.   The First Plaintiff would work in the café operated by the Second Defendant at the premises at XXX Bridge Street Sydney styled Loftus Lane.

a.   The First and Second Plaintiffs would pay the operating costs and outgoings of the Loftus Lane café including the rent as to 50% and the First Defendant would pay the operating costs and outgoings including rent of the Loftus Lane café as to 50%.

a.   The net profits generated by the Loftus Lane café would be distributed by the Second Defendant to the First and Second Plaintiffs as to 50% and to the First Defendant as to 50%.

The First Plaintiff otherwise denies paragraph 6 of the Amended Statement of Claim.”

27. In their reply to the defence, the plaintiffs pleaded to this paragraph of the defence by repeating paragraph 6 of the ASOC and saying “that there was no contractual term that [Nat] would work in the café”.

28. As I have already recorded, notwithstanding its absence from the ASOC, the parties conducted the case on the basis that there was a term to the effect of that I have emphasised in Archie’s defence in [26] above.

29. However, the plaintiffs sued for half of what were described as “moneys” (not profits) that had been “distributed” to Archie (or to Mindy on behalf of Archie) from the “business operations of the café”. To succeed in that claim, the plaintiffs had to establish that the contract included the term alleged in paragraph 6(iii) of the ASOC (see [24] above).

30. When I asked Mr Rogers what the alleged term that, in addition to profits, the plaintiffs would receive 50% of “moneys generated by the business operations of the” café (emphasis added) actually meant, he explained that it referred to “Moneys which are available in the accounts, whether bank accounts or otherwise, of the business, available to be distributed to, as it turns out, Archie in the circumstances, as we say they are, quite independently of profits” (Tcpt, 27 August 2024, p 356(43) – (46)). He later submitted “The fact that the moneys were distributed, we say, means that by definition they were available, and the allocation ought to have been fifty-fifty, not 100% to Archie and nil to Nat and Sean” (Tcpt, 27 August 2024, p 357(12) – (14)).

31. I gave Mr Rogers an opportunity to formulate the term, which was to be implied, that he submitted would entitle his clients to half of the amounts paid out of the café business to Archie. In a further written submission this implied term was formulated as:

“As between each of Archie, Sean and Nat, all monies paid for the benefit or use of any of Archie, Sean and Nat shall be paid equally as between Archie on the one hand and Sean and Nat on the other hand.”

32. The submission continued “It can be conceded that there was also an implied term that the parties would share the costs of outgoings equally”. As I have already noted, whether express or implied, a term to this effect was common ground.

33. Mr Young did not require the formality of an amendment in response to Mr Rogers’ submission, on the basis the Court gave Mr Young an opportunity to make further written submissions. He did so, to which there was also a short final reply from Mr Rogers.

The terms of the contract

34. The primary evidence on both sides in relation to the contract was, to say the least, thin.

35. Nat’s affidavit evidence was:

“3.   Prior to the identification of and opening of Loftus Lane there was a discussion between Sean, myself, the First Defendant, Archie and Archie's wife Mindy.

4.   The discussion occurred at the home of Sean and myself.

5.   Archie having approached us concerning a cafe we were discussing the way in which we could operate it.

6.   There was no suggestion that Mindy would be involved in the running of the business as a person in control. There was only ever discussion of Sean, myself and Archie taking that role.

7.   Because there were to be three of us either Sean or myself said to Archie words to the effect of

"We will have two-thirds and you will have one-third".

8.   Archie replied:

"That will be confusing for the future".

9.   Mindy said:

"50:50 would be easier."

10.   There was no further discussion on the topic.”

36. Mindy replied to Nat’s evidence:

“5   I refer to paragraphs 3 to 9 of the same affidavit. To the best of my knowledge, I said words to the effect of:

"I am not going to be running the business but I am happy to help. I can do all the book keeping. I can also help if you are short of staff in the cafe (Loftus Lane)."

6   I did not suggest any figures or percentage split. As Nat states in paragraph 6 of her affidavit of 1 July 2025, I was not going to be involved as a person with any control of the business. I was happy to help to try to make the business a success.”

37. Sean’s affidavit evidence was:

“24.   After Café Claire [the Annandale café] had gained a name for itself and become successful to a point, Archie told me that he also wanted to open a cafe but that he needed help from myself and my wife. The three of us commenced looking for another café, which became Loftus Lane.

25.   When we decided to open Loftus Lane, Archie suggested 50:50 ownership and 50:50 split of expenses and profits.

26.   All expenses were paid half by Archie and his wife, and half by me and my wife, including the fitout that was done by Kayts Constructions Pty Ltd (ACN 616729849) ("Kayts"),”

38. Archie’s affidavit evidence was:

“22.   Around the end of 2018 my wife and I had a further discussion with [Sean] and [Nat]. My wife's parents were also present. [Sean] said words to the following effect:

[Sean]:   "We would like to be part of this café with you. We don't have the money to invest in a new café, but you could get a bank business loan for us, and we will pay the interest. "

I said:   "I'm not sure we can do that we will need to look at it. If we do this, Sai Lam Taan will own and operate the cafe. We all work equal hours, and each contribute 50/50 to the fit-out costs and the expenses and we divide the profit and the cash equally. Are you happy with that? "

[Sean]:    "Yes that sounds good. We'll get Siri Accounting Services to do the accounts like with Café Claire. Why don't we call it Loftus Lane by Claire?"

I said:      “Yes that sounds good”.”

39. Sean’s affidavit in reply denied Archie’s version reproduced in the preceding paragraph.

40. The cross-examination of the witnesses did not take matters any further in assisting the Court to determine what was said that would evidence the terms of the contract.

41. In approaching the parties’ evidence about the contract, I have taken the following into account:

1. The parties and Mindy were attempting to recall what were obviously relatively informal conversations conducted between them in Thai in late 2018 or early 2019 and render them into English, noting that each of the three parties (but not Mindy) gave their evidence in Thai with the assistance of an interpreter;

2. There is no written record (contemporaneous or otherwise) of their discussions about how the café would operate; and

3. The oft-repeated caution of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 – 319:

“In many cases (but not all) the question whether spoken words were misleading may depend on what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or what could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, often subconsciously, constructed. All this is a matter of ordinary human experience.”

42. Having seen the parties and Mindy give their evidence and taking into account their various affidavit evidence, the Court finds that the contract between Nat, Sean, Archie and SLT was to the effect that while operated by SLT, the café would be run on the basis that Nat and Sean, of the one part, and Archie, of the other part, would each be liable for 50% of the expenses required by SLT to set up and run the café in return for 50% of the net profits generated by the café. The simplicity and obvious logic of this arrangement as to expense and profit sharing makes it, in my opinion, the most plausible between parties who, with no disrespect intended, were not commercially sophisticated people but (then) friends going into business with each other.

42. The term proposed in paragraph 6(iii) of the ASOC insofar as it refers to “moneys” is vague and impractical. Turning to Mr Rogers’ explanation (see [30] above), the question becomes what is the difference between profits and moneys available for distribution? The term is not reflected in the primary evidence. The Court rejects the suggestion that something different from and in addition to net profits was agreed between the parties to be distributed between them.

43. Similarly, I accept Mr Young’s submission that the implied term is “a quite convoluted way to reformulate [6(iii)]” of the ASOC and that it does not satisfy the test for implication of a term set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24. In particular, the contract is effective without it; it is not so obvious that it goes without saying; and, with no disrespect to Mr Rogers, it is not capable of clear expression. There is much rhetorical force in Mr Young’s submission that “it cannot seriously be suggested that persons such as Sean, Nat and Archie would have dreamed of such a term”. Despite that force, insofar as the submission departs from the objective theory of contract, it plays no part in the Court’s conclusion.

44. There are two further matters to be noted.

45. First, in reaching the conclusion in [42] above, I have not overlooked the reference in Archie’s evidence (see [38] above) to “cash”. However, that account is denied by Sean. In any event, I accept Mr Young’s submission that even if the parties shared the cash in the café’s till at the end of a day’s trading (and there is evidence they did), no complaint is made in the proceedings by the plaintiffs about that cash. There is no evidence about how that cash was treated in the accounts of the café, so no more can be said about it.

46. Second, in his final submissions in reply, while accepting there was sharing of cash, Mr Rogers sought to overcome the difficulties in his case by eliding “moneys” with “profits”:

“2.   As recognised in Archie's Submissions it is observed that the original Statement of Claim pleads relief in respect of "moneys and profits".

3.   As is also correctly recognised in Archie's Submissions in exchange at the commencement of the proceedings there was an acknowledgment by counsel for the Plaintiffs that the argument was in large measure about "profits".

4.   However, that was with the prescient rider, identified by his Honour, "whatever that means". (Transcript page 5 line 40).

5.   It can be taken as a given that the parties intended that there be a 50:50 split of moneys.

There needs also to be borne in mind several other important matters:

(i)   That the First Defendant ("Archie”) had control of the Second Defendant, a company in which it is now acknowledged the shares are and were beneficially held for the Plaintiffs;

(ii)   It could never in those circumstances have been envisaged by any of the parties, and certainly not the Plaintiffs, that Archie would be receiving monies from the Company which Archie did not have to share with the Plaintiffs. The equal sharing of monies was in the nature of the arrangement.

7.   Archie, however, did not share monies with the Plaintiffs other than "cash monies". Rather, he appropriated to monies to himself which he did not share with the Plaintiffs.”

48. The Court rejects that submission. The Court’s task is to determine the terms of the contract, and for the reasons already given, the relevant term was for a sharing of net profits and nothing more. Archie tendered an expert accounting report which was the basis for the common position that the café did not make a profit at any relevant time. Nat and Sean’s claim for half of the other “moneys” fails. Whatever those “moneys” were, they have not demonstrated a contractual or other right to half of them, or at all.

The operating expenses claim

49. Nat and Sean’s other claim that was pressed was for operating expenses of $77,745.32 in cash described in the ASOC as “operating expenses – cash payments to [Mindy]”. This was part of a larger claim for $392,073.19. However, in closing submissions, Mr Rogers quite fairly and properly conceded that $314,327.87 of the claim could not be maintained against Archie for reasons it is unnecessary to record.

50. The balance of the claim was pressed under the allegation in [8] of the ASOC that “In pursuance of the agreement referred to in [6] hereof [set out in [24] above] the Plaintiffs in and/or after 2018 made payments totalling [$77,745.32] at the direction of the First Defendant for and on behalf of the First Defendant and the Second Defendant…”. Insofar as the operating expenses had been paid to Mindy, Mr Rogers also accepted (correctly in my respectful opinion) that in circumstances where Mindy was not a defendant, Nat and Sean could only succeed against Archie if she received the funds as agent for Archie in his personal capacity.

51. As Mr Rogers himself acknowledged, this claim was “counterintuitive”. The operating expenses were said to have been paid by Nat and Sean to Mindy in accordance with their obligation to pay half the expenses of the café. Therefore, it was acknowledged that there would be no claim if Archie admitted that the money had been received. However, Archie (and Mindy) denied the operating expenses had been received. Mr Rogers submitted that this meant that if the Court found the operating expenses had been paid, it followed that the operating expenses had not been applied to the café but for other purposes and was repayable to Nat and Sean accordingly.

52. Mr Young’s primary attack on this claim, and which the Court accepts, is that the plaintiffs fail at the outset because they have not proved that the operating expenses were paid.

53. There were two pieces of evidence in support of the claim.

54. The first was this bare statement in [63] of Nat’s affidavit of 1 June 2022, “I made the following cash payments to [Mindy] on the dates set out below” followed by a list of precise dates and payments between 4 July 2019 and 9 March 2021 totalling $77,745.32.

55. The second was this evidence from Nat in her supplementary affidavit of 1 July 2025:

“11.   I refer to paragraph 63 of my first affidavit.

12.   On each of the dates appearing in paragraph 63 I gave the amounts of money referred to in the table in that paragraph in cash to Archie's wife, Mindy.

13.   Mindy would say to me words to the effect of "we need [an amount of money] for [something associated with the running of the business]"

14.   For example, she might say something like "we need $2500 to pay the rent".

15.   I would then give her the sum requested in cash.

16.   That was true in relation to each of the transactions referred to in the table in paragraph 63.”

56. Archie’s defence denied the allegation of these payments, and in his affidavit evidence he said he was not aware of any such payments being made to Mindy. In her affidavit of 2 July 2025, Mindy denied ever receiving the operating expenses.

57. Three criticisms of Nat’s evidence were made by Mr Young (and which the Court accepts):

1. Notwithstanding the apparent precision as to the date and amounts claimed, there was no corroborating evidence of any kind, whether contemporaneous financial records or otherwise;

2. The list included amounts ending in 16 and 46 cents, when 1 and 2 cent coins had been withdrawn from circulation in 1992. This made those payments implausible; and

3. Nat gave evidence in the witness box that Mindy would text her requests to Nat for payments for the café. While some such texts were in evidence, there were no such texts for the operating expenses.

58. While Mr Rogers contended that the evidence was not strong, he submitted that it was enough to move the evidentiary onus onto Archie. I disagree. The onus was on the plaintiffs to satisfy the Court on the balance of probabilities that the operating expenses had been paid to Mindy in cash and on the dates alleged. That requires the Court to reach a state of actual persuasion of the existence of the fact alleged. The concept of actual persuasion was elucidated by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers appointed) (in liq) (No 2) [2011] FCA 1123; (2011) 297 ALR 56:

“48. Under s 140(2) of the Evidence Act 1995 (Cth) (the Evidence Act), the Court must, in deciding whether it is satisfied that a case has been proved to the requisite standard, take into account:

●   the nature of the cause of action or defence;

●   the nature of the subject matter of the proceeding; and

●   the gravity of the matters alleged.

When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-2).”

59. Without more, a bare assertion by a plaintiff of a cash payment to a defendant who denies receipt will generally be insufficient to satisfy the Court such a payment was made. Taking into account the criticisms advanced by Mr Young, in particular the plaintiffs’ inability to provide any independent documentary or other corroboration for any of the 56 payments said to comprise the operating expenses (and ranging from $20.45 to $5,000), I am unable to reach the requisite state of actual persuasion on the evidence such as it is that the operating expenses were ever paid. The claim for operating expenses therefore also fails.

60. For completeness, there were at least four other reasons why this claim would not have succeeded.

61. First, my overall impression of Mindy was that she was meticulous in her account keeping. This adds weight to her denial that the operating expenses were ever received and it was not put to her that they had been received and applied to something other than the café.

62. Second, and related to the preceding point, the allegation (see [49] above) was that the operating expenses were paid to Mindy at Archie’s direction. Archie worked in the café as a barista. I accept he worked diligently in that role. However, having seen Archie give his evidence, it became clear beyond serious dispute that Archie had no real idea about, or responsibility for, the finances of the café. He left that to Mindy and I accept his repeated evidence that Mindy, rather than him, was the repository of all knowledge about financial matters. In those circumstances, I do not accept the suggestion, to the extent it was advanced by the plaintiffs, that Archie would have been the one directing Mindy to ask for the operating expenses to be paid to her. Were it necessary to make a finding, it would be that Mindy was, in effect, the financial controller of the venture operated by SLT.

63. Third, and again following from the preceding point, if a finding of agency was required, it would be that Mindy was acting on behalf of SLT in obtaining funds for the café, given that SLT was the vehicle for the operation of the café. In the unlikely event that Archie may have given Mindy any direction about the finances of the café, I would (if necessary) have found he did so in his capacity as the director of SLT.

64. Fourth, the further case advanced by Mr Rogers (that the operating expenses, if received, had not been applied for the café and should be repaid accordingly) was not pleaded.

65. Finally, it is necessary to record two other matters in relation to the operating expenses claim.

66. First, Nat gave inconsistent evidence in her 1 July 2025 affidavit about how the operating expenses were alleged to have been paid. I have set out her first explanation in [55] above. Later in her affidavit, referring to many of the same payments, she contended that, owing to a Thai cultural custom, she gave the money to Sean to pay to Mindy. I do not accept that evidence because it is inconsistent with her first evidence on the topic and there is no admissible evidence of the existence of such a custom.

67. Second, Mindy suggested in cross-examination that the plaintiffs had reconstructed the operating expenses claim by claiming to have contributed half of certain payments evidenced in SLT’s bank records. It is not necessary to decide whether it is a reconstruction. It is enough to conclude, as I do, that it is insufficient proof to point to what were said to be expense payments made from SLT’s account and assert, without more, “we provided half of that in cash”.

Conclusion

68. There will be an order, not ultimately opposed by Archie, for the transfer by Archie of his share in SLT to the plaintiffs. The proceedings will otherwise be dismissed. The parties will be given an opportunity to address as to costs. My preliminary view is that costs should follow the event so that the plaintiffs should pay Archie’s costs of the proceedings.

Postscript on law reform

69. As finally calculated, the plaintiffs’ claim was for just over $800,000 in damages, of which some $300,000 was abandoned in closing submissions. As a contract claim in that amount, it was well within the jurisdiction of the District Court. However, as the Court has found to be increasingly common, the matter was commenced in this Court because a declaration and consequential relief was sought in relation to the share Archie held in SLT. It must be observed, with no disrespect intended, that the equitable claim was not complex.

70. The jurisdictional limit of the District Court in common law actions such as an action for contract damages is currently $1,250,000 (District Court Act 1973 NSW, s 4(1)). In relation to equity proceedings, the District Court’s jurisdiction is set out in s 134 of the Act:

134 Jurisdiction in equity proceedings

(1) The Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in proceedings for-

(a) the foreclosure or redemption of a mortgage or the enforcing of any charge or lien where the amount owing in respect of the mortgage, charge or lien does not exceed $100,000, as determined by the Court,

(b) the specific performance, rectification, delivery up or cancellation of any agreement for-

(i) the sale or purchase of any property at a price not exceeding $100,000, or

(ii) the lease of any property the value of which does not exceed $100,000, as determined by the Court,

(c) an order under section 3 of the Testator's Family Maintenance and Guardianship of Infants Act 1916 (as in force immediately before that Act was amended by the Succession Amendment (Intestacy) Act 2009) or a family provision order under Chapter 3 of the Succession Act 2006,

(d) relief against fraud or mistake where the damage sustained or the estate or fund in respect of which relief is sought does not exceed $100,000 in amount or value, as determined by the Court,

(e) the execution of a trust or a declaration that a trust subsists, where the estate or fund subject or alleged to be subject to the trust does not exceed $100,000 in amount or value, as determined by the Court, or

(f) the administration of the estate of a deceased person, where the estate does not exceed $100,000 in amount or value, as determined by the Court, or

(g) any application under the Property (Relationships) Act 1984 , or

(h) any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding the Court's jurisdictional limit.

(2) In any proceedings pursuant to subsection (1) (c), the Court shall not have power to make an order for provision under the Testator's Family Maintenance and Guardianship of Infants Act 1916 (as in force immediately before that Act was amended by the Succession Amendment (Intestacy) Act 2009 ) or Chapter 3 of the Succession Act 2006 that will or may result in the amount of provision so made exceeding $250,000.

(3) In any proceedings pursuant to subsection (1) (g), the Court has no power to make an order for financial adjustment under Part 3 of the Property (Relationships) Act 1984 that will or may result in the amount of the adjustment so made exceeding $250,000.

71. In the present case, in my respectful opinion, it is likely that the District Court would have had jurisdiction to make the declaration sought by the plaintiffs under s 134(1)(e) of the Act. Nevertheless, it is well understood that many in the profession are of the view that the equitable jurisdiction of the District Court is not always clear in a given case, such that prudence dictates proceedings should be commenced in this Court. Alternatively, there are also many cases where what would otherwise be an unremarkable money claim within the jurisdictional limit of the District Court has added to it a superfluous, if not spurious, equitable claim to justify commencement of proceedings in this Court.

72. Section 149 of the Civil Procedure Act 2005 (CPA) specifies the jurisdiction of a lower court in relation to a matter which has been transferred from a higher court:

149 Jurisdiction of lower court

The lower court has, and may exercise, all of the jurisdiction of the higher court in relation to any proceedings to which a transfer order relates, including jurisdiction to determine any question arising in any such proceedings.

73. There are many cases in this Court which, but for doubt about the District Court’s equitable jurisdiction, could and should be commenced in the District Court. However, a frequently encountered problem is the terms of s 146 of the CPA:

146 Transfer of proceedings to lower court

(cf Act No 9 1973, section 143; Act No 11 1970, section 21F)

(1) If the Supreme Court is satisfied, in relation to proceedings before it--

(a) that the proceedings could properly have been commenced in the District Court or the Local Court, and

(b) that any cross-claim in the proceedings could properly have been brought as a cross-claim in the District Court or the Local Court,

the Supreme Court may order that the proceedings, including any such cross-claim, be transferred to the District Court or to the Local Court, as the case requires.

74. The problem is the requirement for the Supreme Court to be satisfied that the proceedings “could properly have been commenced in the District Court”. This often invites an excessively technical enquiry where equitable relief is claimed that ends in uncertainty as to whether the proceedings “could properly have been commenced in the District Court”.

75. In my respectful opinion, the Court should have a broader power to transfer proceedings to the District Court to overcome the oft-expressed doubts about the scope of the District Court’s equitable jurisdiction. To that end, I suggest consideration be given to introducing an additional ground for transfer as an alternative to the “could properly have been commenced” test. That alternative ground would be that the Court was otherwise satisfied that the transfer of the proceedings would advance the overriding purpose set out in s 56 of the CPA. Had such a power existed, this case would have been an appropriate one to be transferred to the District Court.

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Decision last updated: 23 September 2025