Press Check Pty Ltd v CHS Enterprises Pty Ltd
[2008] NSWSC 1188
•12 November 2008
CITATION: Press Check Pty Ltd v CHS Enterprises Pty Ltd [2008] NSWSC 1188 HEARING DATE(S): 9, 10, 14 October 2008
JUDGMENT DATE :
12 November 2008JURISDICTION: Equity Division JUDGMENT OF: Young CJ in Eq DECISION: Plaintiffs entitled to verdict for money for defendants' failure to carry out contract terminating business relations with equitable charge over property of former business in defendants' possession. CATCHWORDS: EQUITY [38]- Misrepresentation alleged to have effect of avoiding deed dealing with termination of business- Held on facts no misrepresentation. LEGISLATION CITED: Contracts Review Act 1980, s 6 CATEGORY: Principal judgment CASES CITED: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 PARTIES: Press Check Pty Ltd (First Plaintiff/Cross-Defendant)
Agustina Chun (Second Plaintiff)
CHS Enterprises Pty Ltd (First Defendant/First Cross-Claimant)
Robin Hu (Second Defendant/Second Cross-Claimant)
Alice Guo (Third Defendant/Third Cross-Claimant)FILE NUMBER(S): SC 3993/08 COUNSEL: S A Benson (Plaintiffs/First Cross-Defendant)
M Bateman (Defendants/Cross-Claimants)SOLICITORS: Lenehan & Co (Plaintiffs/First Cross-Defendant)
Raymond Lee & Co (Defendants/Cross-Claimants)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG CJ in EQ
Wednesday 12 November 2008
3993/08 – PRESS CHECK PTY LTD v CHS ENTERPRISES PTY LTD
JUDGMENT
1 HIS HONOUR: The first plaintiff is a company that was incorporated on 25 October 2006 to operate a printing and design business.
2 As at 31 March 2008, the shareholders in the first plaintiff were Agustina Chun (the second plaintiff) and Robin Hu (the second defendant). The other defendants are CHS Enterprises Pty Ltd (the first defendant) a company whose sole shareholder is Mr Hu and Weifeng Guo, known in Australia as Alice Guo, Mr Hu’s wife (the third defendant).
3 In the course of operating its business, the first plaintiff took certain valuable equipment and vehicles on hire or lease from finance companies. The principal items were listed in the statement of claim with the following descriptions:
- * Screen CTP + 2 Epson Proofers;
* Lexus IS 250.
4 In addition, the first plaintiff had assets of lesser importance including software, goodwill and consumables.
5 It is common ground that in March 2008, there was a discussion between Fie Chun (the husband of Agustina Chun) and Mr Hu in which they agreed that they needed to terminate their business relationship. Following this discussion, Mr Chun instructed his solicitor to draw up a deed to regulate the termination.
6 Mr Chun said in his affidavit of 8 October 2008, and this was not disputed, that when the terms of the dissolution were being discussed, Mr Chun handed Mr Hu a list of plant, equipment, cars and factory leases and the following conversation took place:
Fie Chun: “I will give you the option to choose which ones that you would like to take over and have refinanced.”
Robin Hu: “I need the CTP, to make plates.”
Alice Guo: “I want to have the Lexus and give back the Honda Accord.”
Robin Hu: “I also want to keep the Heidelberg press.”
7 Mr Chun said that he then instructed his solicitor to draw up a document to deal with the termination on that basis.
8 The solicitor prepared a draft termination deed which bore a typed date 25 March 2008. A copy was given to Mr Hu.
9 Ms Guo says that at lunch time on 26 March 2008, she called at the parties’ office and saw Mr Chun hand a document to Mr Hu. I infer that this was the draft of 25 March 2008. Ms Guo told her husband that he needed to get legal advice on it.
10 The second and third defendants went to see a solicitor, Mr Shu Bo Huang and obtained legal advice on the draft.
11 Ms Guo says that on 31 March 2008, she said to Mr Chun: “Robin got some advice from a solicitor. The solicitor wants some changes to the document.” She gave the draft to Mr Chun who told her that he would call his solicitor and have the changes made. She saw him made a telephone call.
12 About 30 minutes later, Ms Guo saw Mr Chun remove papers from his printer. He gave documents to the second and third defendants and said: “This is a new one, the revised one, with the changes that Robin wants.”
13 Ms Guo checked the amended documents against the notes she had made in hand on the 25 March 2008 draft and saw that those changes had been effected. She did not check the remainder of the document.
14 Ms Guo says that she told Mr Hu that he needed to get legal advice on the new document. However, Mr Chun said that the matter was now urgent as they had reached the end of March when the termination was to take effect. She said Mr Hu asked her whether all the changes requested had been made. She knew that they had been. She says that she felt that there should not be any fuss and advised Mr Hu to sign the document.
15 Ms Guo noticed that her name was at the end of the document. She says she asked why she had to sign and was told by Mr Chun: “Just sign as a witness.”
16 Mr Chun says in para 8 of his affidavit dated 2 October 2008 that the course of the matter was as follows (I have made slight verbal emendations to improve the flow):
“(a) The document relied upon by the Defendants was an earlier draft of the agreement upon which the Plaintiff sues and which this is subject at paragraph 10 of the Statement of Claim.
(b) This was not the final version of the termination agreement. It was only an earlier version.
(c) The writing on the document relied upon by the Defendants in paragraphs 4, 5 and in Schedules 1 and 2 and headed ‘Termination Agreement’, is Alice Guo’s handwriting.
(d) I have seen Alice write by hand on many occasions. I recognise it to be her handwriting.
(e) Further, she handed me that document with her handwritten amendments on it, which is the document relied upon by the Defendants.
(f) A further draft of the termination agreement was prepared by my solicitors, Lenehan & Co and executed by the parties including the Second and Third Defendants.
(g) Prior to executing the agreement in the office in my presence and with other staff present, Alice Guo made a telephone call in the Plaintiff’s office at 311 Trafalgar Street, Petersham in my presence as a result of which a short time later a fax was received at my office with some amendments to the agreement. …
(h) I sent those changes to Lenehan & Co a short time later who prepared a second draft of the agreement. It was the second draft that was agreed. …
(i) I printed this second draft out for the Defendants’ approval. This all happened on the same day. Alice and Robin had a copy of the second draft and Alice left the building with it. She was gone for several hours.
‘ Our solicitors agree with the wording so Robin and I will sign it.’(j) When she returned, Alice Guo said words to the effect:
- Robin Hu and Alice Guo then executed the termination agreement the subject of paragraph 10 of the Statement of Claim in my presence in the Plaintiff’s office and in the presence of other staff, as did my wife who had been waiting several hours for Alice to return.
(k) The staff present were Anabelle Grigor, Lina Espinosa, Iwan Nataprawira, and Henry Welch. The staff members who subscribed to the document as witnesses are Anabelle Grigor and Henry Welch.”
17 Mr Chun also says that Ms Guo asked to be a party to the deed. Ms Guo vehemently denies this.
18 The plaintiffs’ solicitor in the transaction and in these proceedings is Mr Lenehan. Mr Lenehan’s file was produced. The file discloses that an initial draft of the termination deed was prepared on 14 March 2008. The document went through many drafts. The final draft was prepared after Mr Chun had faxed though a series of amendments which he said had been received from the defendants’ solicitors. The final draft was faxed to Mr Chun at 3:21pm on 31 March 2008.
19 At 4:22pm on 31 March 2008, Mr Chun emailed Mr Lenehan: “It’s all good. Thank you. I’m waiting for them to sign now.”
20 Ms Grigor, one of the first plaintiff’s employees says that she was going about her ordinary business in the office in the afternoon of 31 March 2008. She recalls that the natural born parties to these proceedings had meetings during that day and that the women were raising their voices. She was requested to witness the signatures to a document and did so.
21 Ms Espinosa, another employee gave confirmatory evidence.
22 As the witness on the version of the deed that was tendered was Iwan Nataprawira, it is fairly clear that Ms Grigor could not have witnessed the final version of the termination deed. However, no cross-examination was put to her on this point.
23 The document was signed on 31 March 2008 a little before 5pm and was signed sealed and delivered as a deed.
24 I need to set out the operative part of the termination deed in full:
“ TERMINATION AGREEMENT
DEED made 31st March, 2008
BETWEEN: CHS Enterprises Pty Ltd ACN 060 544 130 (‘CHS’) and Robin Hu and Alice Guo (‘RH’) of Unit 18, 285
Trafalgar Street, Petersham (‘CHSR’)
AND: PRESS CHECK PTY LTD ACN 122 372 570 (‘PCP’)
and Agustina Chun (‘AC’) of 21 Tallowood Way,
Frenchs Forest (‘PC’)
WHEREAS:-
A. RH and AC are the shareholders of PCP which was incorporated on 25 October 2006 to assume the business ‘Around the Clock Masterprint’ carried on by CHS and to develop a printing and designing business (‘the business’).
B. In order to develop the business PCP leased new plant and equipment.
C. The parties have decided not to proceed with development of the business of PCP under the present arrangement.
D. CHSR will take up the business formerly carried on by CHS and will take the items of plant and equipment set out in the First Schedule by leasing the items and paying out the existing leases and in the meantime making lease payments applicable to such items and indemnifying PCP and any guarantors of the leases in respect of such payments.
E. PCP will retain the items listed in the Second Schedule and make payments coming due on the leases of such items.
F. The items listed in the Third Schedule shall be sold by the parties and the losses on sale shall be borne equally between the parties.
BY THIS DEED:-
Resignation and Transfer
1. Upon the signing hereof RH will resign as a Director and as an employee of PCP and will hand over a transfer to AC or her nominee of all shares held by him in PCP.
Payment out of Existing Lease
2. CHSR will on or before 1 April 2008 arrange to lease all items set out in the First Schedule and to pay out the existing leases to the finance companies listed in the First Schedule on all such items and will until such pay out of existing leases indemnify PC in respect of all liability for lease payments in respect of such items as detailed in the First Schedule. If refinance is not in place within one month of the date of this agreement then the items in the First Schedule in respect of which refinance has not been arranged will be sold and any shortfall on payment out of the finance company shall be met by CHSR and any payment falling due to the finance company prior to such payment out shall be paid by CHSR to PCP at least 2 clear days prior to the day on which PCP is obliged to pay the finance company.
CHS Business
3. CHSR will continue the business previously carried on by CHS but will not otherwise take up any of the business of PCP.
Lease of Equipment Continuation
4. PCP and AC will continue to lease the items in the Second Schedule and will indemnify RH in respect of any guarantee he may have given in respect of lease payments for those items.
PCP Obligations
5. PCP will assume any liability arising from and indemnify CHSR in respect of liabilities arising from:
(i) Lease of premises 10a Carrington Road, Marrickville
(ii) Current creditors of PCP
(iii) PCP employees pay and entitlements up to 1 April 2008
Mutual Releases
6. Other than as set out in 4 and 5 above CHSR releases PC from all claims debts costs expenses or otherwise which it might have had but for this agreement and acknowledges that CHSR has no right or claim over any of the debtors of PCP.
7. Other than obligations contained in this agreement or arising from non disclosure PC releases all claims it might otherwise have had against CHSR.
Warranties
8. RH warrants that while a director of PC he has not engaged PC in any transactions other than in the ordinary course of business and acknowledges that he shall personally indemnify PC against any loss or damage suffered as a result of any such transaction.
9. AC warrants that PC has not engaged in any transaction including any dealings with Joko Holdings Pty Ltd whereby RH incurs any liability as a director and will personally indemnify RH against any loss or damage suffered as a result of any such transaction.
Whole of Contract
10. This agreement embodies the entire agreement between the parties. All previous agreements if any are superseded and neither party shall assert any basis or condition inconsistent with this agreement. Each party acknowledges that there is no warranty or condition as a basis for entering into this agreement other than set out herein.
Waiver
11. No amendment or modification of this Agreement shall be valid or binding unless in writing and signed by the party to be bound. The waiver of a breach of this agreement shall not operate or be construed as a waiver of any subsequent breach.
Severability
12. If any provision of this Agreement shall be construed as illegal or invalid the legality or validity of any of the other provisions hereof shall not be affected and the illegal or invalid provisions shall be deemed deleted.
Governing Law
13. This Agreement is made and shall be construed in accordance with the laws of the State of New South Wales and the parties hereby accept the jurisdiction of the Courts of the State of New South Wales in any dispute arising out of this Agreement.
Screen CTP + 2 Epson ProofersFIRST SCHEDULE
Heidelberg SM52/4
Lexus IS250
- Leasing entities and terms of Lease
· Screen CTP + 2 Epson Proofers (plates processor payment base on
- plates usage basis)
Term: 60 months
- Monthly repayment: $6,163.09 (periodical direct debit on or before 20th of each month)
· Heidelberg SM52/4
- Westpac business banking
- Monthly repayment: $10,913.54 (periodical direct debit on or before 27th of each month)
· Lexus IS250
- Daimler Chrysler Financial Services Australia Pty Ltd
- Monthly repayment: $891.83 (periodical direct debit on or before 8th of each month)
THIRD SCHEDULE
SECOND SCHEDULE
Xerox 5065
Sheridan Saddle Stitcher
G & K Folding
GBC Delta Celloglaze
Toyota - Forklift
Honda Civic
- Honda Accord”
25 The deed was then executed by the two companies (by Messrs Chun and Hu respectively) and signed sealed and delivered by Mrs Chun, Mr Hu and Ms Guo. Ms Guo signed in the place where the words were printed “SIGNED SEALED AND DELIVERED By the said ALICE GUO in the presence of:”. Iwan Nataprawira, an employee of the first plaintiff witnessed the signatures of the plaintiffs. Henry Welch, another employee of the first plaintiff witnessed the signatures of the defendants. Mr Welch swore an affidavit, he identified his signature as witness, but said he could not recall the circumstances.
26 The plaintiffs sue to enforce the agreement. The vital relief they seek is to have the deed specifically performed so that the defendants are compelled to refinance the leases of the significant printing equipment belonging to the joint venture which they have in their possession after the termination. The plaintiffs seek other subsidiary orders flowing from the deed which I will detail in due course.
27 The defences are rather strange. Doing the best I can in summarising them, the defences of the first and second defendants are essentially as follows:
(1) the termination deed was signed after a misrepresentation and the defendants seek to rescind the document;
(2) the termination deed was signed under a mistake as to its terms as the plaintiffs well knew at the time of signing;
(3) the termination deed must be set aside under the Contracts Review Act 1980 as an unjust contract;
(4) the termination deed must be set aside under the Trade Practices Act 1974 (Cth) because it was induced by misleading or deceptive conduct;
(6) the relief sought is inappropriate as there are not in fact any finance company leases.(5) the plaintiffs are not entitled to equitable relief because they do not have clean hands; and
28 The third defendant also says that she signed the deed only as a witness and that it should also be set aside against her under the Contracts Review Act.
29 The defendants also filed a cross-claim which raised virtually identical issues, but also sought rectification of the termination deed to make it accord with the draft of 25 March 2008 together with Ms Guo’s handwritten additions.
30 It is quite clear that there were differences between the draft of 25 March 2008 plus Ms Guo’s handwritten additions and the final document as signed. However, apart from Ms Guo becoming a party and the reframing of cl 2, the alterations are relatively minor. The minor alterations are the expansion of the mutual releases in cl 6 and the expansion of a warranty given by Mr Hu in cl 8.
31 I have previously set out the terms of cl 2 in the final document. In the draft of 25 March 2008 it simply read:
- “CHSR will on or before 1 April 2008 arrange to lease all items set out in the First Schedule and to pay out the existing leases on all such items and will until such pay out of existing leases indemnify PC in respect of all liability for lease payments in respect of such items.”
32 It can be seen by comparing the two versions that the later included the same obligation of the first defendant to take responsibility for the leases, but the later made it clearer that the first defendant was liable to the first plaintiff for any shortfall.
33 The proceedings came on for expedited hearing before me on 9, 10 and 14 October 2008. Mr S A Benson appeared for the plaintiffs and Ms M Bateman appeared for the defendants. After the end of the proceedings, by leave further final submissions were made in writing.
34 Before dealing in detail with the issues that might be thought to arrive from the pleadings, I should make some preliminary comments about two of the defences.
35 The defence of rescission following an alleged misrepresentation must fail. The pleading alleged that the defendants are entitled to rescind. I pointed out during the final pre-trial and again during the hearing that rescission is the act of the parties and that it is not enough that a person says that he is entitled to rescind, he must actually rescind or affirm the contract.
36 Nothing happened until between the second and third days of hearing, the third defendant swore that she had instructed her solicitor to rescind the deed and the solicitor swore an affidavit annexing a letter to the plaintiffs’ solicitor to the effect that he was instructed to rescind.
37 There is no need to consider whether that letter would have been sufficient to rescind the deed as, despite the point being made that there was no evidence the letter was ever sent, no evidence was presented on the point. Indeed, the plaintiffs’ lawyers informed the court that no such letter had been received.
38 Next, as the first and second defendants were carrying on a business and the contract was made for the purposes of that business, s 6(2) of the Contracts Review Act would prevent the court granting them relief.
39 The questions which arise in this case involve both questions of fact and questions of law arising from those facts. It is logical to deal first with the factual issues as depending on how the facts fall out, some of the issues of law will not need to be considered.
40 The principal focus on the factual issues is what occurred between the parties in the afternoon of Friday 31 March 2008.
41 The essential background seems clear enough. Mr and Mrs Chun were at the business premises all day, except that Mrs Chun left to pick up her children from St Andrew’s school in the city at 2.30pm and returned between 3.30 and 3.50pm. Ms Guo was there from lunchtime. Mr Hu came and went during the afternoon. The final draft of the termination deed arrived by fax at 3:21pm. It was signed by all parties between 4:22pm and 5pm.
42 Mr Benson in his written submissions has presented a detailed account of the events of that afternoon and the background to them from Ms Guo’s evidence. I will set out the principal submissions in the next paragraph.
43 Mr Benson submits that the following flows if Ms Guo’s evidence is accepted (omitting references to affidavits, exhibits and transcripts):
“a. She says that she was involved early on in the pre-deed negotiations. This is confirmed by Fie’s ‘Brief Overview’ he prepared for Lenehan & Co where he says that there were three (3) meetings held in the past month, the very last taking place on 13 March 2008 at Golden Century Chinese Restaurant in Pitt Street, Sydney and Alice was present;
b. She was at the solicitor’s office with Robin when advice was acquired on the 25 March 2008 draft;
c. It was Alice who made the notes on the 25 March 2008 draft of the required changes after legal advice had been acquired about it;
d. Alice was in attendance at the same conference on 25 March 2008 with the solicitor and Robin … . Alice is careful to avoid deposing to having told Fie that she and Robin acquired legal advice; …
e. She was the one who gave the changes to Fie as well as the document Fie faxed to Lenehan & Co even though she is clearly mistaken about dates as Lenehan & Co’s file discloses that Fie sent that firm the changes by email and fax on or about 28 March 2008;
f. It can only have been Mr Lenehan who wrote ‘Alice Guo’ at the foot of Fie’s email to him of 28 March 2008, which was a Friday;
and on 31 March 2008:
g. She was given a copy of the deed by Fie, as was Robin;
h. She read the deed; she says that she checked the modifications to ensure it was consistent with her handwritten notes and she was not satisfied at first that it was;
i. Her husband, Robin, in cross-examination, confirmed that she read it;
j. In his affidavit evidence, Robin said that he ‘observed the Third Defendant to look at the document’ and that ‘After the Third Defendant looked at the document, the Third Defendant said to me words to the effect: “All the changes that you wanted have been made.” ‘;
k. Alice told Robin, after she had read it, that the changes (that the Defendants required) were in the document;
l. She observed that her name was on the last page of the document;
m. Alice, in her affidavit, deposes in terms that she ‘checked’ the deed for consistency with the required amendments;
n. It is significant that Alice deposes to Fie making a telephone call, then collecting documents from a printer and giving one copy to her, and one to Robin, and saying he had a new one, the revised one with the changes that Robin wants;
o. The events that then follow all seem to take place, according to Alice, very quickly and Alice is anxious to give the impression that Fie and Agustina were pressuring them into signing;
i. After Fie gets the revised deed, he speaks once;p. Alice said in cross-examination that the conversation and the events of paragraph 18 of her affidavit sworn 8 October took between around 1.00pm or 1.30pm and concluded before 5.00pm. But her affidavit sworn 8 October 2008 gives the somewhat misleading impression, in paragraph 18, that the meeting, the conversation and the execution of the deed all happened within a very short time frame. The conversation deposed to in paragraph 18 would only take place within a short time as:
- ii. Alice checked the document for what she called ‘modifications’;
iii Then Alice speaks;
iv. Fie speaks again;
v. Robin speaks;
vi. She speaks;
vii. Agustina laughs and says something;
viii. Fie speaks again;
ix. Alice speaks in Mandarin to Robin;
x. Agustina then yells and says something;
xi. Alice signs the document;
xii. She then hands it to Robin who speaks and Alice replies.
q. That is a brief exchange indeed. It is much more likely that the meeting went far longer, and that other things were said and done, as the Chuns contend in their affidavit material, and as Alice ultimately was forced to accept under cross-examination (she obviously decided, in the witness box, that a brief meeting did not suit her case). And, in any event, Press Check’s solicitor’s file discloses a very different picture;
r. The Lenehan & Co file shows that the revised draft was sent to Fie at 3.21pm on 31 March 2008 ‘Further revised draft agreement is attached for your consideration’;
t. There is no suggestion that anyone in Press Check’s camp was dragging the chain – Robin has Agustina ‘screaming’, no less, ‘You waste our time …’ – so perhaps Alice took her time to read through the document after all and there was ample time for the Defendants to, or take the opportunity to, acquire advice from their solicitor anyway (noting that Alice’s evidence in cross-examination that she actually called the solicitor and he said that, as it was a weekend, he was not available must be rejected given that it was never a matter she deposed to, nor did Robin, in any affidavit and, in any event, 31 March 2008 was a Monday, so it is inherently unlikely that the solicitor was mistaken or ever said those words at all).”s. It is not until just over a full hour later at 4.22pm on the same day that Fie emails Lenehan & Co to say ‘It’s all good. Thank you. I’m waiting for them to sign now’;
44 Most witnesses have Mr Hu leaving the premises for a substantial period on the afternoon of 31 March 2008. Mrs Chun estimates that he left at about 2:30pm and did not return until after 4:30pm. I am asked to infer that he left to obtain further legal advice.
45 Mr Benson points also to Ms Guo’s telephone records which disclose that she made seven telephone calls to Mr Hu in the period from 3:41pm (20 minutes after the final text arrived) to 4:33 pm.
46 Mr Benson asks me to infer that Mr Hu was absent for so long because he was out obtaining further legal advice. However, Mr Shu Bo Huang swore an affidavit that he was only consulted on one occasion and there is no reason to think that Mr Hu saw a fresh solicitor. Indeed, in view of the evidence that Mr Hu often absented himself from the business premises for hours at a time, I do not consider that such an inference can safely be drawn.
47 Mr Chun’s evidence of the afternoon is clearly inaccurate in some respects. He has Ms Guo absent from the office for significant times, but the bulk of the acceptable evidence discloses that the absentee was Mr Hu.
48 Further, as I have said, the affidavits of Mesdames Grigor and Espinola must be materially incorrect.
49 However, there is no reason to disbelieve Mrs Chun’s evidence that she left the premises at about 2:30pm and returned at about 3:35-3.50pm. She was then anxious to have the document signed as she wished to take her boys to a swimming lesson.
50 The picture I form from the evidence is that early in the afternoon of 31 March 2008, there was a semi final draft of the document in the first plaintiff’s business premises. This document incorporated all the handwritten alterations that Ms Guo had made to the draft of 25 March 2008. There were discussions on it. Mr Hu left the premises at about 2:30pm probably with a copy of the draft. Shortly after Mrs Chun left to collect her children. She may well have signed the then semi final document with Ms Grigor as a witness. She returned between 3.30 and 3:50pm. At 3:21pm the final document arrived. Copies were distributed. Ms Guo endeavoured to contact her husband, but only succeeded at about 4:35pm. The document was signed shortly afterwards.
51 As I have said, Mr Chun’s evidence could not be fully accepted. However, broadly speaking, what he said was consistent with the objective facts.
52 Mr Hu did not perform well in the witness box. There was some cross-examination as to Mr Hu’s conviction for deceiving customs in being a party to re-labelling Chinese honey as produce of Australia. He pleaded not guilty, but was convicted, though the trial judge made it clear that his ex wife was the principal offender. Because he did not plead guilty, he made no admission. His conviction, casts some doubt, though a small doubt as to his character.
53 However, Mr Hu’s dishonesty was revealed when he clearly collected a debt owing to the plaintiffs from the former business well after dissolution and then tried to conceal that fact by giving a convoluted and incorrect answer to the accusation when taxed with it in cross-examination.
54 Mr Hu gave the appearance that he could not understand some of the questions put to him, even when they were restated in simpler language. He failed to answer about half a dozen questions.
55 I did not have great confidence in Mr Hu’s evidence. However, it was clearly demonstrated that he was not the key player on the defendants’ side of the record.
56 I think Mr Benson put it colourfully and well when he submitted of Ms Guo and Mrs Chun: “These women are not like ‘Lady Macbeths’ constantly pricking their husband’s pride and self esteem, in the shadows to spur them into commercial action. Agustina and Alice are the modern-day small business equivalents of Queen Boadicea.”
57 Mrs Chun impressed me as a sound common sense business woman. Apart from the fact of her signing the document in front of Ms Grigor, her evidence was credible and mostly compatible with objective evidence.
58 Ms Guo was born in China, but came to Sydney and obtained a Master of Economics degree from Sydney University.
59 Needless to say, she was cross-examined on the advantage this gave her in management and the significance of signing documents. She endeavoured to fend off these questions by saying that her course focussed on human resources, industrial relations and corporate finance etc, not law. She even volunteered that she failed corporate finance at her first attempt.
60 It was then put to Ms Guo that she ran a small graphic design and digital business in Quay Street, City. She said she did. However, further cross-examination tended to show that, whilst Ms Guo operated the business, it depended on stock which was abstracted by Mr Hu from the business he was running as a joint venturer with the Chun interests.
61 Ms Guo also admitted that she had signed leases and a contract of sale and had noticed that with legal documents the party signed as did a witness.
62 Although she said that she had an overdraft with her bank for her business, and also she had a Master of Economics degree, Ms Guo said she could not understand questions put to her about signing documents to arrange financial accommodation from her bank.
63 Ms Guo was strongly challenged on her evidence that she signed the termination deed only as a witness.
64 I do not accept her evidence that she believed that she signed the termination deed only as a witness. There are a number of matters which, combined, make me take this view.
65 The first is that Ms Guo came across as a capable business woman, even though she appears in some respects to be acting as Mr Hu’s nominee. Secondly, she was familiar with signing legal documents and having the same witnessed. Thirdly, she has a master’s degree in economics from Sydney University which shows that she has a good appreciation of commercial matters generally. Fourthly, the document plainly states that she is signing as a party. Fifthly, the document was witnessed by Mr Welch in Ms Guo’s presence. Sixthly, the provisions of cl 2 of the deed (probably the most disputed clause) was in accordance with the defendants’ options as to what items they would take and have refinanced. Seventhly, where her evidence differs from that of Mr and Mrs Chun, the latter is more credible.
66 To flesh out the fourth and fifth points, it should be remembered that Ms Guo gave evidence in the witness box (T167) that she asked Mr Welch to sign as witness as well. In view of her previous experience with lawyer’s documents, why would she think there needed to be two witnesses?
67 What I have said is reinforced by other factors. First, it seems clear that Ms Guo was no bystander: she participated on equal footing with Mr Hu and their former joint venturers in discussions.
68 Secondly, I accept Mr Benson’s submission that if the Chuns were involved in some form of trickery or fraud in and about the dissolution, why did they merely confine themselves into slightly fleshing out what was the common agreement rather than endeavour to secure some advantage for themselves?
69 Thirdly, as plaintiffs’ counsel pointed out, it is significant that there were three varying versions of the defence filed by the defendants to the plaintiffs’ claims.
70 Accordingly, I reject the defences that the document was signed by Ms Guo by mistake or misrepresentation.
71 For similar reasons, the other defences based on the versions of the conversations of 31 March 2008 given by Mr Hu and Ms Guo, including the assertions based on the Contracts Review Act (assuming it applies) and the Trade Practices Act also fail as does the cross-claim for rectification.
72 Indeed, I should also note in respect of the cross-claim for rectification that, if there was a mistake by the defendants in or about the termination deed, the evidence does not show that the Chuns were aware of the defendants having made a mistake.
73 I should note at this point the difficulty a person has when she seeks to challenge her liability to fulfil an obligation in a deed which she has signed, sealed and delivered.
74 In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, the High Court made it quite clear that unless there was an available plea of misrepresentation or the like, if a person signs a deed, he or she is bound by it whether or not that person has read or understood it.
75 The defence of unclean hands also fails for the same reason. In any event, it only lay against counts in equity and was no defence against the money claim.
76 Accordingly, the termination deed must be enforced by the appropriate remedy.
77 The question then is, “What is the appropriate remedy?”
78 The plaintiffs say that there is a large amount of plant which is leased from finance companies and on which leases they are liable. However, the plant is in the custody of the defendants and is, or was until an interim injunction was granted, used by the defendants for commercial purposes.
79 The plaintiffs say that damages are not an adequate remedy and that the proper remedy is a mandatory injunction which will virtually specifically perform the defendants’ promise to refinance the leases or sell the equipment.
80 The amended statement of claim seeks that the defendants specifically perform the termination deed and in particular pay out the existing leases of the equipment which they retained, arrange fresh leases of it, indemnify the plaintiffs in respect of lease payments and, failing refinance, sell the plant and equipment and meet any shortfall.
81 There are also two sets of claims for money. First, $141,384.89 made up as to $71,873.84 for lease payments made by the first plaintiff for the equipment lease, $3,000 for rent on the premises and $66,511.05 for amounts wrongly collected by the defendants from debtors to the business.
82 There is a separate and additional claim for $9,247.24 for money had and received, being lease payments on the defendants’ shop in Haymarket wrongly debited to the first plaintiff’s account.
83 Evidence was given and this was not contradicted, that the payout figure under the leases was $927,681 as at 9 October 2008.
84 Ms Bateman says that cl 2 of the termination deed only requires the defendants “to pay out the existing leases to the finance companies listed in the First Schedule”. She says that there are no existing leases to the finance companies listed in the first schedule, therefore the defendants are not liable to judgment.
85 I have already set out the terms of the first schedule in full. Whilst it is true that there is no specification of the legal name of a financier or the number of the transaction, the first schedule to the termination deed clearly sets out the financier concerned, the amount due each month and the item of plant etc involved.
86 In my view, the parties clearly identified the leases that the defendants need to pay out and refinance and there is no merit at all in this submission.
87 Indeed it is significant that not only was there no cross-examination to raise this point, it was never even mooted until it appeared in Ms Bateman’s closing submissions.
88 I do not see any cogent reason put up by Ms Bateman in her final submissions as to why the plaintiffs are not entitled to the primary relief they seek.
89 As to the claims for money, Ms Bateman’s submissions as to the claim for the four payments of $17,968.46 on the leased items made by the plaintiffs instead of the defendants must fail for the same reason as stated above.
90 As to the claim for $3,000 rent, the defendants say that the termination deed is silent on this matter and that in fact the first plaintiff continued in possession of the subject premises itself. I think that this is correct and that there is insufficient material before the court to establish this claim.
91 As to the claim for $66,511.05, Ms Batemen says of each of the elements that there is no cogent evidence to prove the claims.
92 However, the plaintiffs have provided some evidence on each of the claims. In particular, Mr Nataprawira gave detailed evidence in his affidavit and there was no cross-examination directed to this material. Mr Chun also gave some evidence on the matter.
93 Again, the evidence clearly shows that Mr Hu was collecting some debts due to the former business well after it had terminated and without any good proffered reason for so doing. In this (and in some other matters) Mr Hu showed himself to be lacking in probity. Further, the defendants produced no material to counter the allegations.
94 The comment in brackets in the previous paragraph refers to the allegations of the plaintiffs, supported by evidence that both before and after termination of the business, the defendants financed stock for their independent business by charging the cost to the joint business. After termination, although the defendants were not paying even the current lease payments, they were using the machines and the Lexus car. Indeed, it may be the case that they were doing so even after an interlocutory injunction was granted to stop them doing so.
95 Although the onus is on the first plaintiff to prove its case, in the circumstances I have outlined, I consider myself justified to conclude, on the balance of probabilities that the sum claimed is truly owed.
96 Mr Benson acknowledges that as the majority of the evidence as to the quantum of the amount of debts that was collected by Mr Hu is in the defendants’ camp and they have not been forthcoming with it, if the court considers that there is insufficient material, it should order an enquiry.
97 I consider that an enquiry would be costly out of all proportion to its likely outcome. I consider that I must just do the best I can with the material available. On this basis, I allow the claim as submitted.
98 The claim for money had and received is again made out on the evidence without there being contrary evidence. It again shows a manoeuvre by the defendants to make the former business, and subsequent to its termination, the first plaintiff, pay for debts solely referrable to its own independent businesses.
99 Accordingly, apart from the claim for $3,000, the plaintiffs’ claims succeed.
100 In my view the proper orders are as follows:
(1) Verdict for the first plaintiff for the money sum claimed (adjusted for the $3,000 plus interests etc accrued to date of judgment);
(2) Order that there be an equitable charge over the items in the first schedule to the termination deed to secure, in part, that verdict;
(3) Order that the first plaintiff have liberty to sell the items over which it has an equitable charge;
(4) Cross-claim dismissed;
(5) Exhibits to be returned on the usual undertakings;
(7) Liberty to apply.(6) Costs; and
101 Mr Benson has alerted the defendants and the court that he is minded to apply for indemnity costs. This is a case where such an order is a real possibility.
102 The formal order will need to be prepared and the up to date amount included in order (1). I will thus make no order at this stage other than to stand the proceedings over until Tuesday 25 November at 9:30am for short minutes to be brought in. Provided that arrangements are made with my Associate by the end of the previous week, that date can be amended to suit the convenience of counsel.
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