Robert Huang v Dong Chen

[2017] NSWSC 1699

Supreme Court

New South Wales

Medium Neutral Citation:	Robert Huang and Others v Dong Chen and Anor [2017] NSWSC 1699
Hearing dates:	21, 22, 23, 24 August, 23 October & 3 November 2017
Decision date:	07 December 2017
Jurisdiction:	Equity - Expedition List
Before:	Sackar J
Decision:	See Paras [525]-[526]
Catchwords:	CONTRACTS – general contractual principles – intention to enter legally binding relations CONTRACTS – general contractual principles – breach and defences to action for breach – non est factum EQUITY – equitable remedies – specific performance
Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) Home Building Act 1989 (NSW)
Cases Cited:	Attorney-General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 G Scammell and Nephew Ltd v Ouston [1941] AC 251 Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 Hurley v McDonalds Aust Pty Ltd [1999] FCA 1728 J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 L’Estrange v Graucob [1934] 2 KB 394 Maiden v Maiden (1909) 7 CLR 727 Meehan v Jones (1982) 149 CLR 571 Newtown Management Pty Ltd v Owners of Strata Plan 67219 [2009] NSWSC 150 Patrick Stevedores v MUA (1998) 195 CLR CH Giles & Co Ltd v Morris [1972] 1 WLR 307 Petelin v Cullen (1975) 132 CLR 355 The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Tonto Home Loans Australia P/L v Tavares [2011] NSWCA 389 Watson v Foxman (1995) 49 NSWLR 315 Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279
Texts Cited:	n/a
Category:	Principal judgment
Parties:	Robert Huang (First Plaintiff) PSR Burwood Investment Pty Limited (ACN 614 879 033) Second Plaintiff) Oxford Construction Pty Limited (ACN 165 882 388) (Third Plaintiff) Dong Chen (First Defendant) Sky Profits Properties Development Pty Limited (ACN 142 329 262) (Second Defendant)
Representation:	Counsel: N Kidd SC, B Le Plastrier (First, Second and Third Plaintiffs until 23 October) B Le Plastrier, EBS Ball (First and Third Plaintiffs from 23 October) R de Robillard (Second Plaintiff) B De Buse (Defendants)   Solicitors: Mills Oakley (Plaintiffs until 11 October 2017, First and Third Plaintiffs thereafter) Diligence Lawyers & Migration Agents (Second Plaintiff from 11 October 2017) HWL Ebsworth Lawyers (Defendants)
File Number(s):	2017/143264
Publication restriction:	n/a

Judgment

The proceedings

The parties

Background facts

Conduct of the litigation

Legal Principles

Intention to create legally binding relations

Non est factum

Misleading statements

Unconscionability

Uncertainty

Specific performance

Parties’ submissions

Overview

Credibility

Plaintiffs’ submissions

Defendants’ submissions

Is the JVA legally binding?

Plaintiffs’ submissions

Defendants’ submissions

Non est factum

Defendants’ submissions

Plaintiffs’ submissions

Misrepresentation and/or unconscionability

Defendants’ submissions

Plaintiffs’ submissions

Uncertainty and the Home Building Act

Defendants’ submissions

Plaintiffs’ submissions

Was the agreement lawfully terminated?

Plaintiffs’ submissions

Defendants’ submissions

Consequences of PSR’s payment of agreed purchase price for the shares

Relief

First and Third Plaintiffs’ submissions

Declarations

Specific performance

Restitution

Second Plaintiff’s submissions

Defendants’ submissions

The Evidence

Evidence of Robert

Evidence of Tony

Evidence of Mr Vaughn

Evidence of David

Evidence of Lilian

Evidence of Peiwen Jian

Credibility – general observations

Robert

Tony

David

Lilian

Factual consideration

(a) Witnesses’ proficiencies at English

David

Lilian

(b) Tony’s understanding of the JVA

(c) Robert’s conversation with Lilian and Tony on 17-18 September 2016

(d) Robert’s alleged representations to Tony, Lilian and David regarding the JVA

Legal consideration

Intention to be bound by the JVA

Non est factum

Misrepresentations or unconscionable conduct

Uncertainty and unenforceability under the Home Building Act

Breaches of the JVA

The alleged breaches

Consequences of findings on breach

Relief

Conclusion

Judgment

The proceedings

1. These proceedings concern a dispute arising from a document entitled ‘Deed of JV Agreement’ which the parties executed on 20 September 2016 (JVA), relating to the redevelopment of properties in Burwood. The Plaintiffs have paid $8.5 million to the Defendants pursuant, they say, to the JVA, with a remaining $5 million owing.

2. The Plaintiffs contend the JVA document is a legally binding document which should be performed. The Plaintiffs maintain the Defendants have failed to perform their obligations under the JVA, and had no grounds to purport to terminate the JVA on 28 April 2017.

3. The Defendants maintain the JVA document was not intended to be legally binding, and/or it is unenforceable on the grounds of non est factum, misrepresentation, unconscionable conduct on the part of the Plaintiffs or uncertainty. The Defendants contend the $8.5 million was paid to them pursuant to a binding oral contract made in early September 2016 before the parties signed the JVA, and they lawfully terminated the agreement after the Plaintiffs repudiated by, among other breaches, failing to pay the remaining $5 million.

4. By way of relief, the Plaintiffs seek declaratory relief to the effect the JVA remains on foot, and mandatory injunctions requiring the Defendants to perform specified obligations under the JVA. In a Cross-Claim the Defendants seek declaratory relief to the effect the JVA was validly terminated, or in the alternative is unenforceable or void.

The parties

5. The First Plaintiff (Robert Huang) owns and controls the Third Plaintiff (Oxford Constructions), a licensed building company.

6. The Second Plaintiff, PSR Burwood Investments Pty Ltd (PSR Burwood) was a special purpose vehicle incorporated for the purposes of redeveloping 1-3 Marmaduke Street and 7 Deane St in Burwood (the Burwood Property).

7. The First Defendant (Tony Chen) is a director and sole shareholder of the Second Defendant, Sky Profit Properties Development (SPD). SPD is the owner of the Burwood Property to which Development Approval has been given for a substantial mixed commercial and residential development. Tony’s wife and brother in law help him in the day to day running of SPD and development of the Burwood Property.

8. Without intending any disrespect, consistent with the parties’ submissions I will adopt the following nomenclature:

1. Robert Huang, the First Plaintiff (Robert)

2. Dong Chen, the First Defendant (Tony)

3. Cheng Lam, Tony’s wife (Lilian)

4. Bai An Charly Chen, Tony and Lilian’s son (Charly)

5. David Chao or Lu Lin Zhou, Lilian’s brother/Tony’s brother in law (David)

9. I also note reference to the document entitled ‘Deed of JV Agreement’ as the ‘JVA’ is not indicative of whether or not it is legally binding.

Background facts

10. SPD was incorporated on 1 March 2010 for the purpose of acting as a potential investor or partner in the development of the Burwood Property. In 2011 SPD purchased the Burwood Property for a purchase price of $4.3 million which SPD had wholly borrowed from the National Australia Bank (NAB).

11. By August 2016 SPD was indebted to NAB for $4.7 in respect of the purchase of the Burwood Property. Tony, through himself and a family company CLT Development Pty Ltd (CLT), had also advanced to SPD the sum of approximately $2 million for costs associated with the early stages of the development of the Burwood Property.

12. In early 2016, Robert and Tony commenced discussions about the possibilities of Robert becoming involved in the development of the Burwood Property, including as a purchaser of the Burwood Property, as a partner in the development and as a builder through his company Oxford Constructions.

13. In late August or early September the Defendants contend that these discussions advanced to the stage of an oral agreement which both Robert and Tony sought to document in a revenue advantageous manner.

14. In early September 2016, Robert prepared a ‘Feasibility & break even analysis schedule for Property Finance’ (Feasibility Document) which recorded, among other things, the value of the Burwood Property as $20 million and the costs of construction as $36.5 million (CB381).

15. On or around 3 September 2016, Robert prepared the first iteration of the document which is referred to as the ‘Deed of JV Agreement,’ reflecting what Robert believed had been discussed in meetings with Tony, Lilian and David in the days prior (RH2 [34]).

16. On 5 September 2016 at 12.28pm, Robert emailed this draft ‘Deed of JV Agreement’ to David (CB382). At this point it was proposed that CLT and an entity owned and controlled by Robert (PSR Crown Investments Pty Ltd) (PSR Crown) be parties (CB382-384). Pursuant to this draft, SPD was to issue a further 48 shares to CLT and a further 50 shares to PSR Crown. It was proposed also that Tony and Robert were to be the only two directors of SPD. PSR Crown “was to lend” a total of $13.5 million to SPD. There were then a series of terms dealing with the circumstances in which various monies would be paid by PSR Crown to SPD and the times at which those payments would be made. It was also proposed that Oxford Constructions would build the development on a costs plus 7% basis. Further it was proposed that in the event of any disagreement on construction Robert was to be given authority to make any final decision.

17. On 5 September at 1.01pm, David replied to Robert’s 12.28pm email saying “Please review,” attaching a document labelled ‘Joint Venture Payment Agreement’ (CB386). This gave a revised time line for the payments of various monies by PSR Crown.

18. Paragraph 1 of the document contained the following statement:

After sign the Joint Venture contract, Dong Chen and Robert Huang will open a new Joint Venture with two signatures authority bank account for Sky Profit Properties Development Pty Ltd.

19. At 1.10pm that same day on 5 September, David sent Mr Fei Pan, a solicitor working under a partner, Mr David Vaughn, at HWL Ebsworth (HWL) an email (in English), attaching a copy of the draft ‘Deed of JV Agreement’ and the ‘Joint Venture Payment Agreement’ (CB387-391). As attachments, the ‘Deed of JV Agreement’ appears to have been saved as ‘B-POINT JV Agreement – draft 2019 09 05.docx (19.2KB)’ and the ‘Joint Venture Payment Agreement’ appears to have been saved as ‘Joint Venture Agreement.pdf (189.9KB),’ as reflected at CB388 (see also Transcript dated 3 November 2017, T2/34-T3/15).

20. David’s email to Mr Pan read (CB387):

Hi Fei:

Please see JV agreement and process payment. These condition agreed by both party at last weekend meeting. Now need David and you advice to turn this agreement to legal document soon.

If you have any question, please do not hesitate to contact me anytime.

Thank you.

21. On 6 September 2016 at 12.14pm, David sent to the email address of Tony and Lilian an email (in English) proposing what he described as “two possible solutions”. One solution was described as a “loan note and profit share agreement” and the other was described as a “joint venture agreement” dealing with certain issues. David also forwarded that email to Robert at 12.26pm that same day (CB395/396).

22. At 3.38pm that same day, 6 September 2016, David sent an email to Mr Pan which included some advice he had received from the accountant, Ms Peggy Poon, who the Defendants had retained (CB397).

23. On 7 September Robert, Tony, Lilian and David attended a conference at HWL. The next day, on 8 September at 9.10pm, Mr Vaughn sent a detailed email to Tony, Lilian and David reporting on the meeting and the issues discussed. Mr Pan and Mr Mitchell were copied into the email (CB399-400). Mr Mitchell is an accountant who gave advice to Tony.

24. On 16 September 2016 at 12.18pm, Ms Alma Domingo, Business Banking Manager at NAB, sent an email to Lilian (CB442). She referred to “our telephone conversation this morning” and then said:

As per your advice we can expect response from you by next week in relation the pending sale agreement and provide us copy of full executed agreement.

25. At 3.47am on 19 September 2016, Robert sent to Tony, Lilian and David a further draft of the JVA (CB414). There were numerous changes which had been implemented by this draft. First PSR Burwood was substituted for PSR Burwood Crown as party B. A new clause 6 provided that a further two shares would be issued to PSR Burwood. A new paragraph 1 was inserted providing that the value of the Property was to be agreed at $10 million. Further changes were made to the amounts and the timing of various payments. Clause 9 provided that Tony was to charge SPD a $5 million management fee at the end of the development.

26. PSR Burwood was also incorporated on 19 September 2016.

27. At 2.39pm on 19 September, Lilian sent an email to Robert (in English) asking “Please add your builder licence no. into the agreement”.

28. Later on in the afternoon of 19 September, Tony, Lilian, David and Robert met at the offices of Tony where further discussions took place before and after dinner. The final version of the JVA was drafted on Tony’s computer some time on the evening of 19 September. There is a dispute about who drafted the final version of the JVA but no dispute that it was drafted on Tony’s computer.

29. Certain amendments were made to the JVA that evening. There is also a dispute as to who proposed the amendments.

30. At 9.41am on 20 September 2016, David sent the final version of the JVA to Robert (CB416-419). The amendments included requiring SPD to issue a further 10,499,998 shares to Tony under clause 6, and Tony to sell 5,250,000 shares to PSR Burwood under clause 7. Tony and PSR Burwood would also have equal shareholding in SPD, and Tony and Robert were to be the only directors of SPD and no additional shares were to be issued unless it was agreed by both persons.

31. In addition, the Burwood Property was now proposed to have an agreed value of $10,500,000. PSR Burwood was to pay $5,250,000 for the purchase of 5,250,000 shares by 30 September 2016, and Tony was to lend $5,250,000 to SPD to pay off all existing mortgages and any expenses incurred by SPD on or before 30 September 2016. Again there were further provisions about the payment of monies and the timing of those payments.

32. Clause 10 was also amended to provide that Tony was to charge SPD a $3,000,000 management fee at the end of the development.

33. The parties executed the JVA on 20 September. Although some typographical errors were corrected the signed agreement still bore the date 5 September 2016 (CB421-423).

34. Further on the afternoon of 20 September, Robert caused PSR Burwood to make the first payment of $300,000 pursuant to the JVA (CB429).

35. On 23 September at 12.31pm, Lilian sent an email to Ms Domingo at NAB in the following terms (CB441-442):

Please see attached JV agreement of Sky Profit as per your request.

36. On 27 September at 12.10pm, Lilian forwarded to Ms Domingo by email a signed discharge form as requested.

37. On 29 September at 2.31pm, Ms Domingo informed Lilian and Tony by email that the total payout figure for the NAB loan was $4,725,138.50 and the facility was due to expire on 30 September 2016 (CB440).

38. On 29 September 2016, Robert caused PSR Burwood to pay a further $4.7 million to SPD. The NAB mortgage was discharged on 30 September 2016 (CB446-447).

39. On 6 October 2016, Robert caused PSR Burwood to make a payment of $1.1 million to CLT (CB448).

40. On 19 October 2016, Oxford Constructions commenced demolition work on the site.

41. On 27 October 2016, Robert caused PSR Burwood to pay a fee of $400,000 to CLT (CB462).

42. On 28 November 2016, Robert caused another $2 million payment to PSR Burwood (CB463).

43. On 2 December 2016, Robert was appointed a director of SPD (CB464).

44. On 1 February 2017 at 3.16pm, Robert sent an email to Ms Katerina Mihail, solicitor at Mihail Legal, which said amongst other things (CB474-475):

The previously drafted Burwood JV Agreement by me as per attached would trigger the CGT and Stamp Duty immediately.

PLEASE TAKE NOTE THAT we should enter a practical equivalent agreement to avoid the CGT and stamp duty burden at this early stage.

45. On 8 February 2017, Tony, Lilian and David had a meeting with Mr Pan. As a result of this meeting, on 13 February 2017 Mr Pan sent an email to Tony, Lilian and David setting out the instructions received which included the drafting of a development management agreement between SPD and PSR Crown (CB481-482). Mr Pan advised the relevant persons he would be obtaining advice on the tax implication of the various arrangements.

46. On 14 February 2017 at 10.36am, Lilian forwarded a copy of Mr Pan’s email to Robert (CB483-485).

47. On 24 February 2017 at 2.53pm, Robert sent an email to Lilian with reference to the 14 February email of Mr Pan (CB489). He said among other things:

The draft structure forwarded to me on 14/02/27 is different from what we agreed before.

48. On 24 February at 3.52pm, Robert sent a further email to Tony, Lilian and David (CB494). It raised the need to sign a formal agreement for Oxford Constructions to build the project. It pointed out that Oxford Constructions was only currently engaged on actual costs plus 7% margin to modify and/or improve the existing DA plans and attend to other matters. He suggested that if the agreement which “we had signed/agreed before” was not observed he reserved his right to “proceed or pull out of the deal and recover our costs immediately”.

49. On 28 February 2017 at 12.21pm, Mr Pan sent an email to Lilian indicating certain amendments made to his draft by Robert (CB495-498).

50. On 31 March 2016, Mr Mark Riddington, solicitor at HWL, sent an email to Mr Peter Meades, solicitor for the Plaintiffs at Mills Oakley, attaching a number of documents including a summary of the amendments made by Robert and the differences between the two positions (CB547-548).

51. On 6 April 2017 at 8.08pm Mr Meades replied to Mr Riddington indicating his client wished to proceed with the joint venture “replicating the provisions set out in 5 September 2016 agreement” (CB547-549). Mr Meades pointed out that the documents which had previously been forwarded created a different position. Mr Meades pointed out that his clients primary concern was security over tax. He also pointed out that the Plaintiffs had paid to SPD $5,250,000 to purchase 5,250,000 shares in the company, but no shares had yet been issued.

52. He further pointed out that his clients requested a JV bank account be opened as soon as possible. He further pointed out his client had entered the JVA on the understanding that as builder and under the subsequent construction contract, the contract sum would be based on the actual construction cost plus 7%. A meeting was scheduled for the next day.

53. On 7 April 2017 at 6.25pm, Mr Riddington replied to Mr Meades’ email by setting out his client’s preferred position for the entry into a development management agreement (CB552-553). Mr Riddington suggested if the structure proposed was unacceptable then a shareholders agreement should contain certain provisions.

54. Mr Meades replied on 18 April 2017 at 2.07pm indicating that he was instructed his client’s “final position” was that the structure of the deal must be based upon the terms set out in the parties’ written agreement of September 2016.

55. On 21 April 2017, Mr Riddington wrote to Mr Meades alleging the Plaintiffs had breached a number of essential terms (CB560-561).

56. Mr Meades replied on 24 April 2017 at 2.45pm, noting his clients wanted the immediate transfer of the shares and the creation of a jointly managed bank account as per the terms of the agreement, and refuting the allegations of essential terms and their breach (CB566-568.

48. On 28 April at 5.03pm, Tony emailed Robert attachments of letters indicating that as alleged breaches of the “Agreement” had not been remedied by 27 April as requested, the “Agreement” is terminated effective immediately (CB569-570). On the same day, he wrote again to Robert indicating that he, Robert, had been removed as a director of SPD (CB571).

Conduct of the litigation

58. At the outset of the proceedings, the Plaintiffs were represented by Mr Kidd SC and Mr Le Plastrier of counsel.

59. However, on 11 October 2017 (after four days of hearing from 21-24 August) PSR Burwood filed a Notice of Change of Solicitor, and upon the resumption of proceedings on 23 October Mr de Robillard of counsel (who had been present in Court on the previous four days of proceedings) announced his appearance for PSR Burwood. Mr Le Plastrier with Mr Ball (but not Mr Kidd SC) appeared for Robert and Oxford Constructions, being the First and Third Plaintiffs.

60. The change in representation came from a change in the structure of PSR Burwood. Robert was the sole director and shareholder of PSR Burwood at the commencement of proceedings. However, prior to the resumption of the hearing on 23 October 2017, additional directors and shareholders had been appointed, making Robert a minority shareholder in PSR Burwood with 36 shares (Transcript of 3 November 2017, T5/39-45).

61. Not only did Mr de Robillard, on behalf of PSR Burwood, indicate he wished to reserve an application to bring a Cross-Claim against Robert, but as will appear later in this judgment, sought relief of a different kind to Robert and Oxford Constructions. As will also appear later in this judgment, this intervention and change in strategy had a profound impact on the determination of relief.

Legal Principles

Intention to create legally binding relations

62. The question of whether parties intended to enter into legally binding relations is to be determined objectively, taking into account the totality of the evidence including the state of affairs between the parties. The High Court (Gaudron, McHugh, Hayne and Callinan JJ) elaborated on the appropriate test in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 (Ermogenous) at 105 – 106:

It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.” (Australian Woollen Mills Pty Ltd v Commonwealth(1954) 92 CLR 424 at 457 per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ) To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts” (South Australia v Commonwealth(1962) 108 CLR 130 at 154 per Windeyer J).

Because the inquiry about this last aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances (South Australia v Commonwealth(1962) 108 CLR 130 at 154; Placer Development Ltd v Commonwealth(1969) 121 CLR 353 at 367 per Windeyer J), not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (Masters v Cameron(1954) 91 CLR 353 at 362 per Dixon CJ, McTiernan and Kitto JJ; ABC v XIVth Commonwealth Games Ltd(1988) 18 NSWLR 540 at 548–549 per Gleeson CJ) (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (Codelfa Construction Pty Ltd v State Rail Authority (NSW)(1982) 149 CLR 337 at 348–353 per Mason J; Royal Botanic Gardens and Domain Trust v South Sydney City Council(2002) 76 ALJR 436 ; 186 ALR 289). It is not a search for the uncommunicated subjective motives or intentions of the parties.

63. These principles were reiterated by the High Court unanimously in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]:

References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction[7].

(footnotes omitted).

64. In determining the existence of an agreement, it is further permissible to take into account the parties post-contractual conduct; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [23]–[27] and [85] per Heydon JA (as his Honour then was).

65. Ordinarily, parties are bound by written contracts they sign. As Scrutton LJ stated in L’Estrange v Graucob [1934] 2 KB 394 at 403:

[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.

Non est factum

66. The doctrine of non est factum may be invoked by a limited class of person who, through no carelessness on their part, are unable to have any understanding of the meaning of a particular document and sign the document in the belief that it was radically different from what was in fact signed. Given its limited application, the party who seeks to rely on the defence bears the “heavy onus” of doing so; Petelin v Cullen (1975) 132 CLR 355 at 359-60.

67. The necessary difference between what the document was and what the person believed the document to be has also been described as "fundamental" or "serious" or "very substantial"; see Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at [42].

Misleading statements

68. The observations of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are relevant to the allegations of misleading statements or misrepresentation raised by the Defendants:

Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon 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 could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

…

Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration.

…

What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee).

Unconscionability

69. Unconscionable conduct under section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (Asic Act) (‘Unconscionable conduct in connection with financial services’), and section 21 of the Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth)) (ACL) (‘Unconscionable conduct in connection with goods or services’) must be serious misconduct, or something clearly unfair or unreasonable; Hurley v McDonalds Aust Pty Ltd [1999] FCA 1728; Tonto Home Loans Australia P/L v Tavares [2011] NSWCA 389.

70. The Court must determine whether the impugned conduct as a whole has a tendency to lead a person into error; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [25] per French CJ. The question is objective, and rests upon what an ordinary or reasonable person in the position of the person receiving the representations would have made of those representations; Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at [7] per French CJ, Crennan and Kiefel JJ.

71. Further, section 21 of the ACL requires the unconscionability to involve a “high level of moral obloquy” and its application be “carefully confined”; Attorney-General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 at [121] per Spigelman CJ.

Uncertainty

72. Courts will seek to adopt a construction which will preserve the validity of the contract, especially where that contract has been part performed; The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436 and Meehan v Jones (1982) 149 CLR 571 at 589.

73. However, a construction will not be strained where the terms of the contract are not sufficiently definite or capable of being made definite so that the promises and performances to be rendered by each party are reasonably certain; G Scammell and Nephew Ltd v Ouston [1941] AC 251 at 268-9 per Lord Wright.

Specific performance

74. Specific performance will not be ordered where there is an adequate remedy at law; Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279 at 284 per Lord Selborne.

75. Further, specific performance is generally not ordered where it enforces the maintenance of personal relationships or the performance of personal services; Maiden v Maiden (1909) 7 CLR 727. In J C Williamson Ltd vLukey and Mulholland (1931) 45 CLR 282, Dixon J (with whom Gavan Duffy CJ agreed) observed at 297-298:

Specific performance is inapplicable when the continued supervision of the Court is necessary in order to ensure the fulfilment of the contract. It is not a form of relief which can be granted if the contract involves the performance by one partv of services to the other or requires their continual co-operation.

76. However, as the High Court (Brennan CJ, McHugh, Gummow, Kirby, and Hayne JJ) explained in Patrick Stevedores v MUA (1998) 195 CLR 1 at [78], constant supervision by a Court is not by itself a useful criterion for refusing a decree of specific performance:

We see in the orders no defect which sometimes is expressed as the involvement of the court in "constant supervision" of continued conduct. Reservations of that nature have been expressed in decisions of this Court[80]. However, questions of degree rather than absolute restrictions upon the scope of curial relief are involved[81]. Reference was made in the Federal Court judgments and in submissions to this Court to the speech of Lord Hoffmann in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd[82]. His Lordship affirmed the refusal by the judge at first instance of an order for specific performance of a lease for a term of 35 years containing a covenant to keep premises open for retail trade during usual hours of business in the locality. His Lordship's statement that the usual practice was not to grant specific performance to carry on an activity over a period of time was made in response to a submission by the lessor to the effect that the equitable remedy was no longer to be understood as granted in the auxiliary jurisdiction where damages would be an inadequate remedy. The lessor submitted, without success, that in cases such as Argyll Stores the court "should look at the whole panoply of available remedies and consider the appropriate one rather than the gloss of rules put on them restricting their use"[83].

(footnotes omitted).

77. The First and Third Plaintiffs also relied on CH Giles & Co Ltd v Morris [1972] 1 WLR 307 (CH Giles), applied in dicta by Ward J in Newtown Management Pty Ltd v Owners of Strata Plan 67219 [2009] NSWSC 150 (Newtown Management) at [201] in noting the difference between specifically enforcing a close personal relationship, and specifically enforcing an agreement to establish such a relationship. In ordering specific performance whereby a person would be appointed as managing director of a company, Megarry J observed in CH Giles at 316:

The distinction between an order to perform a contract for services and an order to procure the execution of such a contract seems to me to be sound both in principle and on authority. I do not think that the mere fact that the contract to be made is one of which the court would not decree specific performance is a ground for refusing to decree that the contract be entered into.

Parties’ submissions

Overview

78. The Plaintiffs submit the JVA executed by the parties on 20 September 2016 is a legally binding document which the Defendants were not entitled to terminate. The Plaintiffs submit it was the Defendants who were in fundamental breach of the JVA, through failing to issue additional shares in SPD, transfer 50% of the issued shares to PSR Burwood, and establish the jointly managed SPD bank account and in removing Robert as a director of SPD. Accordingly, the Plaintiffs’ primarily seek relief by way of specific performance.

79. The Defendants accept the existence of an agreement, but contend the JVA did not reflect that agreement and was not intended to be legally binding. Rather, the Defendants maintain the parties reached an oral joint venture agreement, the terms of which were not reflected in the JVA. Further, the Defendants invoke a non est factum defence as the JVA was not explained to Tony as enforceable and binding, and also submit the Plaintiffs misled the Defendants, and/or engaged in unconscionable conduct through conveying shares at substantially less than their actual or agreed value.

80. In addition the Defendants submit the Plaintiffs were in breach of the JVA or the oral joint venture agreement through failure to pay the further $5 million, and in any case equity will not enforce the JVA by specific performance because the terms of the JVA are unclear and Plaintiffs are not ready, willing and able to perform all of the obligations set out in the JVA.

81. The Second Plaintiff adopts most but not all of the submissions made by the First and Third Plaintiffs. In short the Second Plaintiff presses specific performance of the JVA except for two terms – namely Robert be placed on the board of PSR Burwood and Oxford Constructions be the nominated building company. In summarising the parties’ submissions, a reference to the Plaintiffs will be a reference to the First and Third Plaintiffs’ submissions, relied upon by the Second Plaintiff, unless otherwise stated.

Credibility

Plaintiffs’ submissions

82. The Second Plaintiff expressly makes no submission as to credibility of any witnesses in the proceedings (Second Plaintiff’s closing submissions [25]).

83. The First and Third Plaintiffs submit all three of the Defendants’ witnesses lacked credibility and the Court should reject their recollections that are not corroborated by a contemporaneous document.

84. In respect of Tony, the Plaintiffs submit his evidence was, at times, evasive, illogical and designed to suit his purposes (First and Third Plaintiffs’ closing submissions [14]-[28]). In respect of David, the Plaintiffs submit his recollection of events is unreliable and should be accepted. In particular, the Plaintiffs submit David’s narrative that he cannot prepare nor understand professional documents in English was contradicted by his own evidence that he did in fact prepare the document at CB386, his accounts of what occurred at the meetings between 27 August 2016 and 3 December 2016 change and should not be preferred to that of Robert, and his evidence in explaining the final contents of the JVA to Tony should be seen as downplayed on his behalf (First and Third Plaintiffs’ closing submissions [29]-[41]).

85. In respect of Lilian, the Plaintiffs provide three examples in support of their submission she was not a witness of truth. First, the Plaintiffs use Lilian’s evidence on the NAB email exchange (CB441-CB442) as an example of her tendency to say what she thought assisted her case. Next, the Plaintiffs use Lilian’s evidence on the receipt of documents in English to submit she can read English documents, and finally Lilian’s evidence on the ability to draft emails in English to show she was capable of expressing ideas clearly in professional English language in an email (First and Third Plaintiffs’ closing submissions [42]-[62]).

86. In respect of their witness Robert, the Plaintiffs submit the worst that can be said about him is he was prone to speeches and tangents, but none of these tendencies were designed to distract from the truth (First and Third Plaintiffs’ closing submissions [63]).

Defendants’ submissions

87. The Defendants characterise Robert as evasive and a “vigilant advocate for his cause.” The Defendants point to two examples in support of their submission he should not be believed; first, his response to Chinese newspaper advertisements as to his qualifications and areas of expertise, and secondly, his dealings with the PSR Burwood investors and shareholders where he initially said he only dealt with them orally, but then produced documents regarding PSR Burwood’s investment and shareholding which were agreements drafted by him which post-dated the JVA but made no reference to the JVA (Defendants’ closing submissions [15]-[16]).

88. In respect of their own witnesses, the Defendants submit Tony, Lilian and David’s departure from their affidavit evidence in oral evidence could be explained by the fact nuance of a language will change the response and perception of the person being questioned or explaining themselves (Defendants’ closing submissions [40]).

87. In respect of Tony, the Defendants submit he gave evidence against his interest from time to time, and his departures from his affidavit evidence were often supported by facts, such as the $300,000 he denied saying he would pay to Robert as interest was not shown as interest owing to the NAB in the account records. Further, the Defendants submit the Plaintiffs’ submissions on Tony’s ability to translate and comprehend English documents should not be accepted, with Tony seeking Mandarin speaking solicitors when he wanted to reach agreements relating to complex matters. This is also supported by Tony’s inability to recognise HWL’s name in cross-examination, which the Defendants submit was not contrived but reflected the fact Tony did not read English (Defendants’ closing submissions [41]-[46]).

88. In respect of David, the Defendants submit the joint venture payment agreement document sent from David to Robert for review on 5 September is not significant given there were other English speaking people who could have prepared the documents, including accountants and Piewan Jian as the book keeper for SPD. Further, the Defendants note the provision of emails by an employee (like David) to their employer in the language they receive them is evidence they are diligent in providing information and should not be a basis from impugning credibility. In addition, the Defendants note David’s reading of the earlier versions of the JVA to Tony can be explained by the fact the initial documents were “records of intention” and the JVA was described by Robert as for taxation purposes and not a legal document so there was no need for David to translate the JVA (Defendants’ closing submissions [47]-[51]).

89. In respect of Lilian, the Defendants submit in relation to her denial of a conversation with Ms Domingo of NAB, Ms Domingo may be mistaken. The Defendants also submit her provision of the JVA to NAB was simply to explain the fact the loan to SPD would be repaid shortly. Finally, the Defendants submit the Plaintiffs could not demonstrate Lilian’s understanding of English was such that she could author any document in English or read enough English to understand the relevant documents in the proceedings. The Defendants note Piewen Jian typed Lilian’s emails in English, even though the emails refer to Lilian in first person. Further, the reference to Lilian replying to messages, simply reflects, according to the Defendants, Lilian’s ability to text using simplified Chinese characters or rudimentary English (Defendants’ closing submissions [52]-[55]).

Is the JVA legally binding?

Plaintiffs’ submissions

92. The Plaintiffs detail ten reasons which support the finding the parties objectively intended for the JVA to be legally binding. First, the JVA is signed. Secondly, the Plaintiffs rely on Lilian’s oral evidence to submit the Defendants were under time pressure to have the JVA signed because they wanted to repay the NAB mortgage. Thirdly, the Plaintiffs rely on Robert’s unchallenged recollection of a conversation on 17-18 September 2016 where he said he would not invest money until the fundamental terms of the agreement are signed by the parties. Fourthly, the Plaintiffs note David sent the draft JVA (as at 5 September 2016) to Mr Pan requesting it be turned into a legal document soon.

93. Fifthly, the Plaintiffs submit David negotiated amendments to the final JVA, sat with Robert who was making amendments to the JVA on David’s computer, emailed the final version of the JVA to Robert for signing, and witnessed the signature of Tony on three occasions. Sixthly, Robert’s act of causing PSR Burwood to make the first payment of $300,000 pursuant to the JVA was, according to the Plaintiffs, objective conduct consistent with the signed JVA intending to create contractual relations. Seventhly, Lilian sent the signed JVA as a “full executed agreement” to NAB on 23 September 2016. Eighthly, Robert caused PSR Burwood to pay a further $4.7 million to SPD pursuant to the JVA on 29 September 2016, which SPD then used to discharge the NAB mortgage on 30 September 2016.

94. Ninthly, when the Defendants purported to terminate the JVA in April 2017, the Plaintiffs submit there was no suggestion the JVA was not enforceable or not a binding agreement. Finally, the Plaintiffs submit the Defendants did not complain about the JVA until after SPD had paid off the debt to NAB, obtained further money to be held in a separate account, taken the benefit of Oxford Construction’s building work for which the Defendants have not paid for, and the Plaintiffs had commenced the proceedings (First and Third Plaintiffs’ closing submissions [65]-[80]).

95. In response to the Defendants’ reliance on the parties working towards the production of a different agreement after the JVA was signed as evidence the JVA was not binding, the Plaintiffs submit it was always contemplated the parties may enter into a new, more tax effective arrangement. However, the Defendants’ time pressure and Robert’s requirement for a signed JVA meant the final form of the JVA intended to bind the parties to contractual relations (First and Third Plaintiffs’ closing submissions [81]).

Defendants’ submissions

96. The Defendants submit the factors relied upon by the Plaintiffs in arguing the JVA is binding are “largely equally congruent” with an oral agreement evinced by a document where the terms of that document were not intended to be binding (Defendants’ closing submissions [56]).

97. The Defendants submit the determination of the provenance and authorship of the JVA resolves in broad terms the issue of whether the JVA is a binding written agreement. On this point they submit the JVA was the Plaintiffs’ document, meaning the JVA was not explained to Tony, and the JVA was intended to serve a purpose which was not to create a binding. Further, the Defendants submit the terms of the agreement between the parties were not contained in the JVA, and the conduct involved would disentitle the Plaintiffs from enforcing the JVA, including the disavowal of its preparation and the Plaintiffs’ involvement in its preparation (Defendants’ closing submissions [6]).

98. The Defendants submit the following factual matters support their contention the JVA was authored and prepared by Robert. First, the only source of professional legal or accounting input suggested at the time was Robert’s lawyer but no advice was given as a result of his lawyer being too busy. Secondly, Robert was an accountant who advertised himself as having professional experience to assist his clients in making investments. Thirdly, there is no evidence any other professional advisor was involved from when Robert sent a draft version of the JVA to the Defendants to the execution of the JVA on 20 September 2016. Fourthly, Charly Chen, Tony and Lilian’s son, denied being in any way responsible for the preparation of the JVA.

99. Fifthly, Robert gave no evidence in his affidavits of any conversations on 19 September 2016, yet in cross-examination said there were negotiations resulting in changes in response to demands by the Defendants. Sixthly, the Defendants submit none of the negotiations, demands or discussions were pleaded or raised by the Plaintiffs and are inconsistent with the Plaintiff’s case the JVA was “discussed line by line” with Tony, Lilian and David. Seventhly, there are, according to the Defendants, significant alterations between the documents sent by Robert on 19 September 2016 and the final executed JVA, with the changes explicable only as advantaging Robert and his interests. Eighthly, Robert accepted he said he was prepared to “amend” the JVA, and the Defendants submit this is merely evidence of the oral agreement and that a later written agreement would make provision for the concerns of both parties.

100. Ninthly, Robert sent an email on 1 February 2017 to a lawyer saying the JVA was “drafted…by him.” Tenthly, Robert sent the documents but dismissed the advice of the independent solicitor as “too inexperienced.” Finally, in cross-examination Robert accepted he drafted the JVA but nonetheless said it was a mutual agreement without providing any evidence of this mutuality (Defendants’ closing submissions [12]).

101. The Defendants also set out evidence which, they submit, does not support the Plaintiffs’ position as to the binding nature of the JVA. The Defendants submit there is an absence of any reference to a binding JVA in the deeds of agreements with the shareholders of PSR Burwood who have supplied the money for the purchase price. Further, the shareholders appear to have supplied Robert the $8.5 million provided to the Defendants, but Robert’s 37% interest (amounting to $5 million) represents the outstanding amount payable to the Defendants which Robert appears to no longer have control over. Further, the Defendants note the delay between Robert drafting an agreement reflecting the terms he desired on 5 September 2016, and the execution of the JVA on 20 September 2016 on different terms to the 5 September agreement, including being concerned with addressing revenue and taxation issues. The Defendants also note Robert prepared further updates of the JVA during October 2016 (Defendants’ closing submissions [13]).

102. If the Court were to find Robert prepared the JVA, the Defendants submit it follows the Court should find Tony could not read or understand the JVA and Robert knew this. The JVA differed materially from the oral discussions and previous drafts. Robert gave no evidence of any negotiations or explanation with Tony in relation to the JVA. Robert had prepared documents in a similar form as records of intention with provision for execution, but they were to be subject to amendments and advice so were not intended to be legally binding, and the JVA did not reflect the parties’ discussions as to the terms of the JVA (Defendants’ closing submissions [14]).

103. The Defendants submit based on the above circumstances, this is a case where the jural act of entering into a contract is not established by the signature. The Defendants submit the Plaintiffs first insisted on the performance of the JVA in April 2017, and up until that time there was no reason for Tony of SPD to regard the JVA as one that was contractual or binding in its terms. Further, the material difference from the terms previously discussed was a matter that required explanation (Defendants’ closing submissions [17]-[20]).

Non est factum

Defendants’ submissions

104. The Defendants submit a non est factum defence arises because there was reliance placed on Robert to prepare the JVA for a particular purpose. This purpose did not involve giving PSR Burwood a considerable discount on the value of shares, permitting PSR Burwood the value of the shares without making the whole $13.5 million investment, and permitting PSR Burwood to obtain the shares without Oxford Construction entering into a construction contract for the project – all aspects the Defendants allege form part of the final JVA. The Defendants also rely on Tony’s evidence in cross-examination (T170/38-50) in support of their claim the JVA was not explained to him as enforceable and intended to be binding (Defendants’ closing submissions [21]-[22]).

Plaintiffs’ submissions

105. The Plaintiffs submit the non est factum defence must fail on multiple grounds. First, the Plaintiffs submit David (and most likely Lilian) explained the JVA to Tony. Secondly, even if they did not the Plaintiffs submit Tony was careless in not requesting they (or Charly) do so before he signed it, relying on Einstein J’s remarks in Bank of Western Australia Limited v Phil Zhanming Luo [2010] NSWSC 733 at [50] (Luo).

106. Thirdly, the Plaintiffs submit in any case the “radical difference” said to exist between the JVA and Tony’s claimed understanding of the JVA – namely, the JVA contained no express requirement Robert pay the whole $13.5 million prior to becoming a joint venture partner – is not the type of radical difference that attracts the defence of non est factum. Further, the Plaintiffs submit it is difficult to accept Tony’s claim he thought the JVA would require Robert to pay the $13.5 million prior to becoming a joint venture partner since an early version of the JVA also did not contain this requirement.

107. Fourthly, Tony’s evidence he did not understand any of the draft JVAs is, the Plaintiffs submit, contrary to Tony receiving legal advice in relation to at least one of the earlier JVAs, and David translating each word and discussing in detail of the draft JVA (First and Third Plaintiffs’ final submissions [87]-[92]).

Misrepresentation and/or unconscionability

Defendants’ submissions

108. The Defendants submit if the Court accepts Tony’s affidavit evidence of what Robert said to him, then the Defendants were misled about the contents of the JVA (Defendants’ closing submissions [23]). Further, the Defendants submit such evidence also makes the JVA unconscionable since it conveys shares at substantially less than their actual or agreed value and this should be regarded by the Court as serious misconduct (Defendants’ closing submissions [24]).

Plaintiffs’ submissions

109. As the Defendants case on Robert misleading Tony and/or making misrepresentations to Tony and/or engaging in unconscionable conduct by doing so is based on the same factual allegations as their non est factum case, the Plaintiffs reiterate their submissions. Namely, the Plaintiffs submit, the objective facts are inconsistent with the evidence of the Defendants’ witnesses going to these allegations, and the evidence of the Defendants’ witnesses should not be believed in the absence of some reliable contemporaneous record or other satisfactory corroboration (First and Third Plaintiffs’ final submissions [93]-[98]).

Uncertainty and the Home Building Act

Defendants’ submissions

110. The Defendants raise the uncertainty of the JVA and the provisions of the Home Building Act 1989 (NSW) (Home Building Act) in the context of submitting the JVA is not enforceable by way of specific performance.

111. First, the Defendants note the JVA is premised on Robert being principal of a building company to construct the development, but does not make clear what role Robert is to play in the management of SPD given his other roles in PSR Burwood and Oxford Constructions. Further, the Defendants note the absence of a written contract for Oxford Constructions to perform the residential building works involves a statutory prohibition on doing residential building work according to section 7 of the Home Building Act.

112. The Defendants also point to a number of terms which, they submit, lack sufficient certainty for the Court to allow the parties to work co-operatively without Court supervision. Examples include the limitation on the Plaintiffs making a “profit” on the construction which appears for the first time in the JVA, and the reference in the same clause to “original actual construction” as costs plus 7% being impossible or difficult to administer since it contemplates something in the nature of a fixed cost contract with possibility of increases, or a contract for provision of services and materials with cost limitations but with the possibility of agreed variations.

113. Two further examples of areas of ambiguity, the Defendants submit, are first the power given to Robert to make the “final decision on construction,” with it being unclear what falls under “construction” (such as possible finance and payment). Secondly, at the end of the project there is meant to be distribution of “profit” but the Defendants submit it is unclear what profit means in that context (Defendants’ closing submissions [31]-[35]).

Plaintiffs’ submissions

114. The Plaintiffs submit the JVA is not, as pleaded by the Defendants, void for uncertainty, and the Courts should be astute to adopt a construction which will preserve the validity of the contract (First and Third Plaintiffs’ final submissions [99]-[101]).

115. Further, the Plaintiffs submit the relevant sections of the Home Building Act (namely sections 6, 7 and 10) do not make the JVA unenforceable. Section 7 does not, according to the Plaintiffs, apply to the JVA since it is not itself a contract under which Oxford Constructions performs residential building work. Even if section 7 does apply, the Plaintiffs submit section 10 does not make the JVA unenforceable by a party (such as PSR Burwood or Robert) who is not the person who contracted to do the work (First and Third Plaintiffs’ final submissions [102]-[106]).

Was the agreement lawfully terminated?

Plaintiffs’ submissions

116. The Plaintiffs submit the JVA was not lawfully terminated by the Defendants on 28 April 2017.

117. In response to the Defendants’ contention PSR Burwood breached the JVA by failing to make the $5 million payment to SPD, the Plaintiffs submit a commercial construction of clauses 3 and 7 of the JVA should be read as only requiring the payment of the $5 million to take place a reasonable time after the Defendants transferred the shares and established the jointly managed SPD account. As the Defendants had not by 30 November 2016 transferred the 50% shareholding in SPD to PSR Burwood or established the jointly managed SPD bank account, PSR Burwood was prevented from performing its obligation to pay the final $5 million pursuant to clause 7. The Plaintiffs submit that as the law will not permit a party to take advantage of its own wrong, SPD cannot claim breach out of PSR Burwood being prevented from performing its obligation under the JVA (First and Third Plaintiffs’ final submissions [109]-[117]).

118. The Plaintiffs also reject the Defendants’ claim the Plaintiffs’ failed to cause Oxford Construction to enter into a building contract with SPD for a maximum price of $36.5 million, on the grounds the JVA does not contain any such obligation, and clause 8 expressly contemplated any variation to construction costs should be discussed and agreed by Tony and Robert (First and Third Plaintiffs’ final submissions [117]-[118]).

119. Further, the Plaintiffs submit if there was any breach of the JVA, it was not a breach giving rise to termination since it would not have passed the test of essentiality set out by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) NSWLR 633 at 641–642 (First and Third Plaintiffs’ final submissions [119]-[120]). In addition, the Plaintiffs did not repudiate the JVA in the sense that no words or conduct evinced an intention to no longer be bound by the JVA or fulfil the JVA in a manner substantially inconsistent with its obligations (First and Third Plaintiffs’ final submissions [124]-[127]).

120. As a separate argument, the Plaintiffs submit the Defendants lose any entitlement to terminate the JVA since they had breached and remain in breach of the JVA by failing to issue the additional shares in SPD and transfer 50% of the issued shares in SPD to PSR Burwood, failing to establish the jointly managed SPD bank account, failing to pay $2 million of the third capital contribution into the jointly managed SPD bank account, and removing Robert as SPD director prior to the purported termination of the JVA (First and Third Plaintiffs’ final submissions [128]-[133]). The Second Plaintiff “demurs” from this latter submission regarding Robert as SPD director, submitting Tony was at all times bound by fiduciary duties to PSR Burwood, but not to Robert (Second Plaintiff’s closing submissions [26]-[28]).

Defendants’ submissions

121. The Defendants submit they were entitled to terminate the JVA based on PSR Burwood’s failure to make the final payment of $5 million and the alleged failure by the Plaintiffs to cause Oxford Constructions to enter into a building contract with SPD for a maximum $36.5 million. The Defendants maintain they were pressing the Plaintiffs for payment, despite Robert’s denials on this point. Further, the Defendants submit they made Robert director once the $8.5 million was paid and there is no reason why Robert as director could not have established an account and paid the $5 million into SPD with either himself or Tony as signatory. Further, the Defendants infer from the failure of Robert or PSR Burwood to seek a transfer of the shares from November 2016 to April 2017 that Robert knew he had to pay a further $5 million but did not have those funds or did not want to pay it, and that Robert did not regard himself as presently entitled to the shares as their acquisition would have revenue consequences (Defendants’ closing submissions [26]).

121. In addition, the Defendants submit Oxford Constructions insisted on entering into a contract with SPD for the construction of the project but wanted to have a “cost plus” 7% contract. The Defendants submit a “costs plus” contract was not what was required by the JVA (Defendants’ closing submissions [27]).

122. The Defendants submit they were not in breach of the JVA as Robert did not immediately ask Tony to issue the shares after payment of the $5.25 million, Robert made a further payment of $2 million without receiving the shares, no written request was made by Robert about the requirement to open a joint bank account, and Robert was not prevented from opening the bank account in the name of himself and Tony (Defendants’ closing submissions [25]).

Consequences of PSR’s payment of agreed purchase price for the shares

124. The First and Third Plaintiffs make particular submissions on the three consequences they say flow from PSR Burwood having paid the $5.25 million (being the price for the shares in SPD) in September and early October 2016. First, the Plaintiffs submit PSR Burwood has an accrued right, enforceable by mandatory injunction, to require SPD and Tony to perform the contract obligations for which the payment was consideration, being issuing additional shares in SPD and transferring 50% of the issued shares to PSR Burwood (First and Third Plaintiffs’ closing submissions [134]).

125. Secondly, the First and Third Plaintiffs allege Robert has an accrued entitled to require SPD and Tony to do all things reasonably necessary to have Robert appointed as an SPD director. They submit this arises from the express provision in recital 7 of the JVA that Tony and Robert will be the only two directors of SPD (First and Third Plaintiffs’ closing submissions [134(b)]. The Second Plaintiff disagrees on this point, submitting the true intent of the clause was that Tony and PSR Burwood would be entitled to nominate a director, not Tony and Robert, and PSR Burwood could always nominate a person other than Robert at any time (Second Plaintiff’s closing submissions [29]).

126. Thirdly, the First and Third Plaintiffs submit Tony was bound to exercise the voting rights attached for the benefit of Robert (which would entail not terminating his directorship) (First and Third Plaintiffs’ closing submissions [134 (c)]).

Relief

First and Third Plaintiffs’ submissions

Declarations

127. The First and Third Plaintiffs seek declarations in accordance with paragraphs 3-9 of the Summons, submitting this is not a case where this is no practical utility in doing so nor where the Plaintiffs’ conduct disqualifies themselves from that relief (First and Third Plaintiffs’ closing submissions [135]).

Specific performance

128. The First and Third Plaintiffs seek specific performance of the JVA in accordance with paragraph 10 of the Summons. First, the First and Third Plaintiffs set out the benefits the Defendants have obtained from the JVA, namely the use of $8.5 million from PSR Burwood which they could use to discharge the NAB loan and avoid payment of default interest under that loan, the project management skills of Robert, and Oxford Constructions performing its promise to enter into an agreement to perform construction works (First and Third Plaintiffs’ closing submissions [147]).

129. The First and Third Plaintiffs note all the Court need do now is require performance of the balance of the obligations of the JVA. They note the Courts will readily compel the transfer of shares. Further, the purported removal of Robert as a director of SPD was, according to the First and Third Plaintiffs, a nullity and so the order at paragraph 10(d) operates as a restorative mandatory injunction. They characterise the obligation to engage Robert as director as falling within the types of clauses considered in cases like CH Giles and Newtown, being part of agreements to establish rather than enforce a personal relationship.

130. In respect of the obligation to open a joint bank account, the First and Third Plaintiffs submit this is clearly defined in the JVA and does not involve the performance of a large number of acts over a long period or constant supervision of the Court. They submit there is no risk arising from the obligation to jointly manage the bank account as pursuant to clause 9 the funds are to be applied for construction purposes, meaning the final decision on construction is to be made by Robert should the parties fail to agree. Further, the monies paid pursuant to clauses 3, 4 and 5 are earmarked funds.

131. In respect of the funds which are not earmarked, namely the $2 million in clause 6 and the $5 million in clause 7, which are to be paid into the jointly managed SPD bank account, the First and Third Plaintiffs submit the intention is for the funds to be used for construction purposes, as it would be “commercially insensible” if the $7 million in total was to be paid to Oxford Constructions, a company over which Tony has no control, especially since Oxford Constructions may not ultimately be the builder. The First and Third Plaintiffs submit it is far more sensible for $7 million to be paid into the SPD joint bank account and paid to Oxford Constructions as and when required (First and Third Plaintiffs’ closing submissions [148]-[158]).

Restitution

132. In the alternative to specific performance, the First and Third Plaintiffs seek restitution, namely the $8.5 million paid by PSR Burwood together with interest should be ordered to be repaid by the Defendants to PSR Burwood. The First and Third Plaintiffs submit this should be the case as either the money was paid under a mistake of fact or law that the JVA was binding, or because the moneys were paid for consideration that has failed. They also seek interest on the $8.5 million pursuant to section 100 of the Civil Procedure Act 2005 (NSW) from the date those moneys were paid to the Defendants, and a declaration SPD holds the Burwood Property on constructive trust or a charge in favour of PSR Burwood to secure the repayment to PSR Burwood of the moneys ordered to be repaid (First and Third Plaintiffs’ closing submissions [159]-[161]).

Second Plaintiff’s submissions

133. The Second Plaintiff’s request for relief is set out in the Short Minutes of Order dated 23 October 2017. The Second Plaintiff essentially seeks the same relief as the First and Third Plaintiffs, but maintains the JVA should remain on foot save for paragraphs 8 and 9 of the JVA (Short Minutes of Order dated 23 October 2017 [5]). In terms of replacing Robert, the Second Plaintiff seeks an order the Defendants appoint a natural person nominated by the Second Plaintiff as director of PSR Burwood (Short Minutes of Order dated 23 October 2017 [10](e)).

Defendants’ submissions   

134. The Defendants’ submit the JVA cannot be enforced by specific performance, pointing to not just the distrust between the Defendants and the Plaintiffs, but the falling out between the Plaintiffs themselves. The Defendants note none of the persons seeking relief amongst the First and Third Plaintiffs have contributed money to the joint venture in accordance with the JVA.

135. The Defendants further submit the effect of orders made appointing Robert director would be opposed by all the PSR Burwood shareholders, with PSR Burwood being a joint venture partner with Tony. Further, the JVA involves no separate contracts in the sense the whole of the obligations of the joint venture are required to be performed to bring about the purpose of the venture, being the development of the property. Equity, it is submitted, will not enforce separate parts of promises where the consideration for the promise is the whole of the agreement (Defendants’ closing submissions [27]-[30]).

136. The Defendants also use their submissions on the uncertainty of the JVA to support their claim for specific performance being unenforceable (Defendants’ closing submissions [31]-[34]; see [110]-[113]).

137. Further, the Defendants submit the Plaintiffs are not ready willing and able to perform all of the obligations set out in the JVA. They submit the parties are in dispute as to the source and rights to use the money previously disclosed to the Court, meaning those funds can no longer be regarded as a basis for future performance since the First and Third Plaintiffs are now apparently not offered by PSR Burwood (Defendants’ closing submissions [35]).

138. The Defendants also raise the doctrine of mutuality in closing submissions, submitting it applies to protect the Defendants against the prospect of the bargain that they made being defeated by the enforcement of the performance in a way that does not confer the mutual benefit. The absence of obtaining any benefit arises, according to the Defendants, because the Plaintiffs are at loggerheads and there is no agreement as to a builder or director to represent the other interests in the joint venture if it were ordered to be specifically performed (Defendants’ closing submissions [36]).

139. In terms of restitution, the Defendants submit they have accepted from the outset the responsibility to repay the monies received under the failed JVA and the only questions for determination which remain if specific performance is not ordered are the terms of such repayment, bearing in mind consideration of the responsibility for its failure and any rights to damages and costs (Defendants’ closing submissions [60]).

The Evidence

Evidence of Robert

140. Robert swore three affidavits, one of 12 May 2017 (RH1), another of 9 August 2017 (RH2) and a third of 21 August 2017 (RH3).

141. In his affidavit of 12 May 2017, Robert stated he was sole director of PSR Burwood, and that he became aware Tony had obtained development consent for the Burwood Property in or about 2013 (RH1 [2]-[9]).

142. On or about 28 November 2016 Robert asserted he had a conversation with Tony in which he told him that having paid the balance of $2.4 million to CLT, a joint bank account should be opened so he could make the final $5 million contribution. He said Tony said he would organise that. He also raised the question of the acquisition of 50% of the shares in SPD. Tony responded that he had been advised that that would trigger a capital gains tax liability by SPD and stamp duty liability on the part of PSR Burwood. Tony told Robert that his solicitor had some alternative solutions that he would like Robert to consider seriously. Robert said that he was happy to consider alternative solutions provided they were reviewed by his solicitor. He further said that now that he owned 50% of the shares in SPD he wished to be made a director (RH1 [18]).

143. Robert said he was appointed a director on 2 December 2016 but did not at that time receive any shares nor was he made a joint signatory to any joint bank account (RH1 [19]).

144. Robert said from September onward he caused Oxford Constructions to undertake various works in relation to the Burwood Property which included setting up a site office, appointing staff and consultants, obtaining quotes from various proposed sub-contractors, demolishing existing buildings and achieving a clearance certificate of contaminated soil. He said Oxford Constructions had invoiced SPD $1,038,953.46. Of that amount, $817,162.58 had been paid (RH1 [20]-[21]).

145. In his affidavit of 9 August 2017, Robert said he attended a function at law firm Colin Biggers and Paisley in February 2016. Prior to that he did not know Tony or Lilian or David. He met Lilian at the function who informed him she and her husband were developing the Burwood Property (RH2 [2]-[4]).

146. He next met Tony and Lilian at McDonalds in Strathfield. He recalled telling Tony and Lilian he had a degree in chemical engineering which he obtained in China. He studied accounting at UTS and worked as a trainee accountant for a couple of years, about 10 years ago. Since that time he had focussed on property development (RH2 [5]-[7]).

147. Soon after they met, Tony, Lilian and David went to Wollongong to see a project Robert was undertaking there. Robert also attended at their offices on several occasions between March and late April 2016 to discuss the development of the Burwood Property. Robert said that during one of the early meetings Lilian proposed SPD sell the land to him for $23 million. He said he thought that was too high. He denied ever telling them he was an accountant and further denied ever saying he was on the panel of CBA. He agreed he would have said that he had an existing relationship with CBA (RH2 [11]-[14]).

148. On 13 March 2016, Lilian sent him an email with some project feasibility figures she had prepared (RH2 [15]).

149. In March 2016, Robert took Mr Leeming, a senior relationship executive at CBA, to inspect the Burwood Property (RH2 [16]).

150. After the meeting with Mr Leeming, Robert said he had a meeting with Tony, Lilian and David. He told them he was prepared to buy into the project provided he got 51% of the shares in SPD. He further said the shares would be calculated on the basis that the land was worth $20 million and that his company Oxford Constructions would be the builder and would charge costs plus 7% on actual construction costs. He said Lilian accepted costs plus 7% but indicated that she would not accept a valuation of $20 million nor him getting 51% of the shares in SPD (RH2 [19]).

151. At that point Robert said that he withdrew from negotiations in early May 2016 (RH2 [20]).

152. Later in the year on 27 August 2016 Robert said he was again contacted by David Chau who asked whether he was still interested in being involved in the development. He said he was. He then had a meeting with Tony and Lilian and David. At the meeting he asserted that Lilian asked whether he was still interested in becoming a joint venture partner on the basis of land value at $20 million. She told Robert that he would need to invest the money quickly as they had to repay NAB who had been giving them “a hard time”. Robert said he was interested.

153. He then said he had a series of meetings with Tony and Lilian between 31 August and 3 September 2016 discussing the terms of the proposed joint venture (RH2 [21]-[29]).

154. Robert asserted during the 2 September 2016 meeting, the Feasibility Document prepared by Lilian was discussed. He denied however that $36.5 million was referred to as the agreed price for construction. His recollection was that Oxford Constructions would charge costs plus 7% and he would do as best he could to keep construction costs at or below the limits (RH2 [30]).

155. At the end of the meeting however he recalled saying to everyone concerned that he needed a signed agreement and that he would not invest in the project until he had the fundamental terms of the agreement written down in an agreement they both signed. He further denied during the course of any meeting saying that he was an accountant and that a solicitor was not needed (RH2 [32]-[33]).

156. Shortly after that meeting on or about 3 September he agreed he prepared a draft document which reflected what he understood had been discussed. On 5 September at 12.28pm he sent that to David (RH2 [34]).

157. He received an email he said from David on 5 September attaching a document entitled “Joint Venture Payment Agreement”. He did not draft that agreement and the first time he saw it was when he received the email from David on 5 September (RH2 [35]).

158. Robert said he attended a meeting at HWL, with Tony and Lilian and David and Mr Pan on 7 September 2016. Mr Vaughn was also present. Robert asserted Mr Vaughan said that he was concerned issuing shares in SPD would give rise to capital gains tax liability for the company as well as stamp duty liability for him. Mr Vaughan suggested the better structure was not to issue shares in SPD but to have a loan and profit share arrangement. Robert said he was not prepared to invest unless he was issued 50% of the shares in SPD and was made a director (RH2 [39]).

159. Robert denied he ever attended a meeting with Ms Peggy Poon prior to the JVA being signed, and stated he only attended a meeting with her on 29 September 2016 (RH2 [43]).

160. Robert said on the weekend of 17 and 18 September 2016 he had a further meeting with Tony and Lilian and David. During the meeting Lilian said it was important that they get the agreement finalised because they needed to pay out NAB. Lilian also suggested that Robert could pay the money now and sort the agreement out later. He rejected that idea and said the money he was investing was investor money and he was not willing to invest unless the fundamental terms were agreed in writing and signed by the parties (RH2 [44]).

161. As a result of the discussions he made some amendments to the JVA and at 3.47am on 19 September he sent an email to Tony and Lilian and David and a copy to his lawyer Mr Denis Zhou attaching the revised version (RH2 [46]).

162. At 2.26pm that day he sent a text to David with a copy of a certificate of registration of the new company PSR Burwood (RH2 [47]).

163. At 2.39pm on 19 September he received an email from Lilian asking for him to add his builder licence number to the agreement. He then contacted his lawyer Mr Zhou and asked him if he was able to look at the draft agreement on an urgent basis but he was told Mr Zhou was busy (RH2 [48]-[49]).

164. Robert said at 9.41am the next day on 20 September he received an email from David attaching an amended version of the JVA. He assumed the amendments had been made by Tony and Lilian to address the capital gains tax liability of SPD. Robert said he was comfortable with the changes (RH2 [50]-[51]).

165. Later on 20 September 2016 he attended the offices of CLT at Burwood. During the meeting he had with Lilian she indicated they had included some change in the version to try to help their GST position still however providing that Robert would get 50% of the shares in SPD (RH2 [54]).

166. Robert indicated he was happy with the document and that he was prepared to sign it. Lilian indicated that once signed the first payment would have to be made. She also said that she and Tony would look at how they might be able to improve the agreement from a tax point of view later. Robert said he responded by saying he would consider amending the document if they could come up with any improvement that he was happy about but he would need to look at it and agree with any amendment and further would need the agreement of his solicitors, his banker and investors (RH2 [54]).

167. Robert indicated he and Tony then signed the JVA, with David as a witness. Later that day he received a text message from David reminding him to transfer the deposit (RH2 [55]).

168. On 29 September 2016 at David’s request, Robert attended a meeting with Tony and Lilian and their accountant Peggy Poon. Discussions were then conducted as to ways in which the deal could be restructured to minimise tax and stamp duty (RH2 [60]).

169. In late September 2016 Oxford Constructions undertook various early works on the property and he continued to make the payments (RH2 [65]).

170. Around Christmas 2016 Robert said Tony asked whether he could pay some more money to Tony. Robert said he would not do so as he needed a transfer of shares and a joint bank account opened (RH2 [76]).

171. In January 2017 the question of restructuring the arrangement was raised again by Tony and Lilian and David to Robert (RH2 [77]).

172. In a further meeting in early February 2017, Robert said he again requested Tony and Lilian to transfer the shares. Tony said he would sort it out (RH2 [81]).

173. He refused ultimately to agree to any restructuring as drafted by Tony’s lawyers. In Robert’s mind it altered the fundamental terms of the JVA (RH2 [82]-[84]).

174. Robert clarified what he had earlier said in relation to the payment of invoices. The invoices totalling $1,038,953.46 were received by Oxford Constructions from consultants and sub-contractors. The amount of $817,162.58 has been paid by Oxford Constructions ,not SPD (RH2 [88]).

175. In Robert’s third affidavit of 21 August, Robert said he attended at the office of State Revenue in Wollongong for the purposes of paying stamp duty on 17 August 2017. The matter is currently being assessed (RH3 [1]-[2]).

452. In relation to the two of them, in my view the two page email from Mr Vaughan to Lilian and David dated 8 September 2016 (CB399-400) is telling. I find it hard to believe Mr Vaughan, who dealt with Tony, Lilian and David, would have bothered sending such a detailed email if he thought it was an entire waste of time on the basis that none of his clients could understand what he was advising them on. There is no evidence of Lilian or David complaining to Mr Vaughan about his use of English, nor not understanding the contents of the email.

David

456. In the case of David, in my view he deliberately downplayed his ability to both understand and draft legal documents and lengthy emails. For example, David vehemently denied he drafted the document at CB386 (being the Joint Venture Payment Agreement), attached to the email of 5 September 2016 (CB385). David accepted that if the email said it was sent by him, then it was (T231/37), but could not explain who drafted the document. David was also content to pass it on to Mr Pan (CB387), despite allegedly not knowing who authored the attachment. I accept Robert’s denials he drafted the document (RH2 [35]) and in my view, the only logical inference is that David drafted the document at CB386.

457. His attempts to distance himself from the document are understandable in that it undermines his assertion about his lack of understanding of English. This is not a mere email about some social event. It is a serious document prepared for a professional purpose and importantly which contemplates the signing of contracts. It speaks volumes in my view about what clearly must have been discussed between David, Lilian and Tony, and, by the very nature of the document, suggests Tony was intending to sign.

458. A further example of David trying, unsuccessfully in my view, to disassociate himself from documents in English to downplay his understanding of the JVA is his position he did not understand what he wrote in the email at CB392 which we admitted he sent (T233/24-27), and also sent on to his sister Lilian even though he allegedly did not expect her to understand it either (T234/28-30). In my view, this evidence is bordering on absurd. I am satisfied he understood the words of the email he sent from his account, and sent various documents such as CB392 and CB395 to Lilian not so she had a record or a copy, but because he believed and knew that she could read and understand the draft Joint Venture Agreement and other emails to like effect. It makes no sense for him to be sending documents to her in English if he genuinely could not understand them himself and believed his sister could not either.

Lilian

459. Similarly, in my view Lilian fully appreciated it would assist her case and more to the point Tony if it could be thought that they all had limited, if any, ability to speak, write or understand English. I am satisfied however, based on the evidence before me, that Lilian can and does speak and write in English from time to time.

460. Lilian accepted she spoke in English to her English speaking lawyer in an earlier transaction (T216/19-25), to suppliers and customers in the Kings Cross convenience store (T215/35-45), to suppliers in the Walsh Bay restaurant (T217/7-8), and her project manager Nelson Silva (T217/34-36).

461. Lilian also received a number of documents in English including the joint Venture agreement (CB414), an email from David on the structure of the deal (CB395), and the aforementioned highly comprehensive email from Mr Vaughn on the various complexities of the deal (CB399). Her evidence was of course she was unable to read emails from her brother and she simply ignored them (T218/29). She suggested for example her assistant would read emails and if there was anything of importance she would let Lilian know (T218/47-50). I simply do not accept that evidence as truthful. I am satisfied in addition to understanding spoken and written English, she was able to write emails in English and did so from time to time. The mere fact she had an assistant does not detract from that at all. Indeed her assistant Ms Pei Wan Jian for example does not refer to receiving a telephone call from Lilian when she was overseas for the purposes of dictating Exhibit P5.

462. Lilian’s attempt to downplay her English abilities was evident in her denial she ever spoke with Ms Domingo of NAB (T215/5-15). In my view, Ms Domingo’s email of 16 September 2016 to Lilian making express reference to “our telephone conversation this morning in relation to property valuation” (CB442) suggests otherwise. There is no evidence Ms Domingo spoke Mandarin. Further, if Ms Domingo had spoken with Lilian’s assistant I am certain the email would have said so. In my view it is also implausible to suggest the bank would speak to a person’s assistant about property valuation, rather than the person involved in the commercial activity.

463. Lilian’s response attaching the JVA of 20 September 2016 further showed she perfectly understood the bank wanted positive proof there was a binding arrangement in place so that the loan would be discharged. Ms Jian did not give any evidence on talking with Ms Domingo, or sending the JVA unbeknownst to Lilian. In addition, Lilian’s concluding sentence in her emails to Ms Domingo on 23 and 27 September (“please do not hesitate to contact me”) suggests she was comfortable and competent to converse with Ms Domingo. This is supported by Tony’s remarks “it was my wife who was dealing with the bank in terms of getting the loans mainly” (T143/36-38).

464. Lilian’s attempt to distance herself from her exchange with NAB speaks more broadly, in my view, to how far she was prepared to go to procure a favourable result in this case.

(b) Tony’s understanding of the JVA

465. In my view, I do not accept Tony did not comprehend the various documents relating to the JVA, including the final JVA itself, because they were in English. It is clear over the years Tony has signed agreements in English. It is also plain from his evidence that when signing contracts in English he has had people proficient in both English and Mandarin explain the document to him before signing (T135/40-44).

466. Tony was, it seems to me, capable of understanding a contractual document written in English if necessary explained to him in Mandarin. In relation to the documents relating to the JVA, not only in my view did David (T139/9-11) and Lilian (T137/46-49) explain relevant documents to him, but he had a Mandarin speaking lawyer at HWL if he chose to take that course as well.

467. I do not accept his portrayal of David and Lilian as incapable of comprehending written English well enough to give him an adequate explanation. According to Tony in cross-examination, Lilian could only tell him “the brief content” of the English written documents (T138/40-46), while David could not “understand professional terminologies” (T139/9-11). In light of my findings above (see [452]-[464]), I am simply unable to accept Tony’s characterisations of Lilian and David’s comprehension of English.

468. Further, I am quite certain, as an experienced and highly successful businessman, Tony would require an understanding of the detail of important transactional documents, not just the brief content of such documents. In my view, this would particularly be the case in relation to an agreement he was being asked to sign, such as the JVA he executed on 20 September 2016. Consistent with his commercial background, Tony knew signing a contract was an important step in that it may result in binding legal relations (T136/27-30), and I am certain he had every clause of the JVA he executed explained to him by David. I do not accept Tony’s evidence to the contrary (DC2 [92]-[93]). The terms of the JVA are neither complex nor prolix. In my view it would have been extraordinarily careless of Tony not to request an explanation of the document before he signed it. Although that is open as a theoretical possibility, Tony did not impress me as a savvy entrepreneur who lurched from deal to deal achieving success by default.

469. While David denied ever explaining to Tony the terms of the JVA executed on 20 September 2016 (T238/25-27), in my view I cannot accept this evidence. David, I am satisfied, was familiar with the various iterations of the JVA, having sat alongside Robert on 19 September 2016 while Robert made amendments to the JVA, by the end of the evening had the JVA on his computer, and on the morning of 20 September emailed Robert the JVA (T237/22-T238/24).

470. In my view, David’s apparent excuse in cross-examination for not explaining the JVA of 20 September to Tony is a falsehood. David’s response to being asked whether he explained the final version of the JVA to Tony was that he did not know it was going to be signed on that day (T2397-11), and later stated there was a 50/50 chance it would be signed (T239/47-50). While this uncertainty may to some extent explain why David did not initially describe the contents of the JVA of 20 September to Tony, it does not explain why, upon realising it was in fact going to be signed, he did not then describe the contents to Tony. As a witness, David was present when the JVA was executed (T24-18-20), and in my view, having implicitly acknowledged he would explain the JVA to Tony when he knew he was going to sign it, it does not make sense for David to not do just that.

471. Further, David accepted he considered it necessary to translate each word and discuss the detail of the contents of the draft JVA with Tony (T230/13-19) (though partially resiled from this at T237/17-20), and he was the person who gave Lilian and Tony advice (T242/25). He also accepted it was part of his role to tell them what he thought of the deal (T242/34-36), and the joint venture transaction was significant for him, Lilian and Tony (T237/8-9). He explained in relation to the JVA executed on 20 September not only the change from $10 million to $10.5 million but also key points about the investment amount and how everyone was going to share in the profit at the end (T239/27-29, T241/38 and T242/43-44).

472. In my view, it is more likely than not David did in fact talk Tony through the terms of the JVA before he executed the document. This is consistent with what he considered was his responsibility to translate documents for Tony (T236/40-50), and with my findings on what Tony would have required before executing an agreement such as the JVA on 20 September 2016.

473. On these grounds, in my view Tony’s continued efforts in cross-examination to appear ignorant of the English written documents circulating between the parties from September 2016 (T173/14-21; T173/30-35; T174/30-35), is a falsehood. I am satisfied he was not only kept informed of the negotiations and drafts of the JVA throughout September 2016, but understood the meaning, contents and terms of various versions of the JVA, including the JVA he executed on 20 September 2016.

(c) Robert’s conversation with Lilian and Tony on 17-18 September 2016

474. As I have said already, on balance I found Robert’s evidence both plausible and corroborated by a number of contemporaneous documents.

475. In particular, I am satisfied the conversation recalled by Robert that took place at a meeting on the weekend of 17 or 18 September 2016 with Tony, Lilian and David (RH2 [44]) did take place. In recalling this conversation, Robert asserted Lilian indicated the agreement needed to be finalised so that NAB could be repaid before the end of the month. Robert made the point that he was not willing to invest unless he got a 50% shareholding and directorship of SPD as well as the ability to make decisions on the construction. Indeed it was during this meeting that Robert was requested to simply pay the money over and sort out the agreement later - a proposition he rejected.

476. David and Tony did not challenge the conversations in their affidavits, despite responding to other aspects of Robert’s second affidavit. Further in cross-examination, Tony, rather than denying, simply could not recall whether Robert said he was only willing to invest in the project if they entered into a written agreement (T210/30-40).

477. Lilian denied the conversation (CL [19]), but accepted in cross-examination she and Tony emphasised to Robert the need for him to make a large payment before 30 September so they could discharge the NAB loan (T210/26-29) – a statement entirely consistent with Robert’s recollection of his discussions with Tony and Lilian on that weekend.

478. Tony’s recollections in his affidavit evidence of him or Lilian telling Tony the need for Robert to pay the money to discharge the interest and mortgage (DC2 [74]; DC2 [72]) also sits consistently with Robert’s account of Lilian again asserting this need in the meeting on 17-18 September 2016. In my view, Tony’s vigorous denial of ever having told Robert in discussions that he needed to repay the NAB mortgage (T153/35-50) was a low point in his evidence. He gave a somewhat incoherent answer when he was confronted with his affidavit evidence which said precisely that (T154/37-39). I am satisfied he and Lilian did tell Robert about his perceived need to repay the money during their negotiations, including on 17-18 September 2016, and I reject as untruthful any suggestion to the contrary.

479. It is true there are no contemporaneous records to support Robert’s account of this conversation. However, without any credible challenges to Robert’s account, together with Lilian and Tony both giving evidence which is consistent with Robert’s account, I am satisfied such a conversation did take place, with the Defendants making clear they wanted payment from Robert before 30 September 2016, and Robert making clear he would not provide this payment unless there was a signed written agreement.

(d) Robert’s alleged representations to Tony, Lilian and David regarding the JVA

480. In my view, I am unable to accept Tony’s account of how Robert described the JVA to him. Tony claimed in his second affidavit Robert told him “we can just draft something simple initially and we will work out the situation later if there is a problem” (DC2 [83]) and in cross-examination stated Robert told him the JVA “was a temporary document and we need to sign it, after that lawyers will be engaged to compose a clearer and more official document” (T170/38-50). Detail of this important qualification is omitted from his first affidavit. David also asserted he did not believe based on Tony’s remarks Robert was asking him to sign a legally enforceable document (LLZ1 [65]).

481. In my view I find it very difficult to accept anything said by Tony, let alone David and Lilian, in respect of almost any factual issue if otherwise not factually corroborated in a document. Whilst I accept that each side understood the written and signed document may not be the most ideal arrangement from a tax point of view, both sides had a desire, indeed a need, to consummate a binding arrangement even if in the future they intended to explore whether something more favourable would replace it.

482. Further, having accepted Robert made clear to Lilian, David and Tony only several days before 17-18 September 2016 that he needed a signed written agreement to secure investment, in my view it is unlikely Robert would have represented to Tony, David and Lilian on 20 September that the JVA they were executing did not in fact bind them to contractual relations.

Legal consideration

Intention to be bound by the JVA

483. In order to come to a view about whether the parties intended to be bound by the terms of the JVA, it is plain an objective assessment of the situation is required. Beginning with the document itself, in my view the fact both Robert and Tony signed the JVA document in the presence of David as a witness conveys a representation each was binding their respective corporate entities to the terms of the JVA.

484. I am satisfied this representation is consistent with the evidence disclosing the reasons why the parties wanted to execute a legally binding agreement, even if they contemplated later amending the agreement to proceed in a more efficient way forward.

485. In respect of the Defendants, I am satisfied they were time pressured to reach an agreement with Robert so they could discharge their $4.7 million loan with NAB by 30 September 2016 (which they did following Robert’s payment of $4.7 million to SPD on 29 September 2016), as acknowledged by Lilian (T210/26-29) and Tony (DC1 [74]; DC2 [72]) (but denied in cross-examination, see T153/35-50), and recalled by Robert in an account I accept (RH2 [44]).

486. Further, execution of the JVA meant the Defendants were not just obtaining monies to pay out NAB; they were obtaining effectively a partner in the joint venture that could undertake the construction work. The Defendants’ desire to enter into binding contractual relations with the Plaintiffs is further evidenced in David’s email to Mr Pan on 5 September 2016 which attached the draft JVA and requested he “turn this agreement to legal document soon” (CB387).

487. The Plaintiffs on the other hand clearly wanted to engage in the development for profit, but more to the point Robert appreciated that PSR Burwood could not responsively part with any funds without a legal binding arrangement. Commercial common sense, as well as Robert’s conversation with Tony and Lilian on 17-18 September which I have accepted took place, makes this clear.

488. It is true after the JVA was signed the parties intended and did in fact work towards the production of a different agreement. Indeed there was no doubt discussion that in due course the parties may enter a new more tax effective agreement. In my view however, that does not detract from the JVA being binding according to its terms. It seems to me on balance that objectively both sides required a binding agreement. Nothing less was going to be acceptable to NAB and/or the Plaintiffs’ investors, and both parties were aware of that.

489. In my view, the fact the parties signed the JVA several days after these discussions is a strong objective indication the parties understood, intended and indeed were eager for the JVA to be agreed upon and bind them to contractual relations.

490. The parties’ conduct following the execution of the JVA is also consistent with both parties having entered legally binding relations. There was no complaint by the Defendants that the signed JVA did not in fact accord with their understanding of the terms they agreed to (at least until the Plaintiffs commenced these proceedings). Instead, the parties conducted themselves entirely consistent with the terms of the executed JVA. As agreed to in the JVA, Robert caused PSR Burwood to make the first payment of $300,000 on the afternoon of 20 September 2016 (CB429), the very afternoon the JVA was signed. On 23 September, replying to NAB’s request to provide them with a “copy of full executed agreement,” Lilian emailed NAB an attachment of the “JV agreement,” with no suggestion it was not in fact the final executed agreement (CB441-442).

491. On 29 September 2016, following an email from NAB forwarded by Lilian to Robert regarding the ‘NAB Loan payout’ (CCB440), Robert caused PSR Burwood to pay a further $4.7 million to SPD, again consistent with the terms of the JVA (CB446-447). Further payments were made by Robert on 6 October, 27 October and 28 November 2016 pursuant to the JVA. In addition, Oxford Constructions commenced demolition work on the site on 19 October 2016 and Robert was appointed as an SPD director on 2 December 2016.

492. Further, the letter from the Defendants’ solicitors to the Plaintiffs on 21 April 2017 stated that despite breaches of essential terms which the Defendants regarded as repudiatory, SPD “remains ready, willing and able to perform its obligations under the agreement (a copy of which is attached to this letter)” (CB560-561). The attachment was the signed JVA of 20 September 2016, and the letter went on to call for the Plaintiffs to perform that agreement.

483. In my view, this conduct and contemporaneous material is further evidence the parties objectively intended to enter into legally binding relations by executing the JVA on 20 September 2016.

484. On these grounds, I am satisfied that while the parties contemplated working towards the production of a different agreement, the evidence as a whole objectively shows the JVA executed by the parties on 20 September 2016 was intended to legally bind them to contractual relations.

Non est factum

495. As is plain from the authorities discussed above the availability of such a defence is limited where an agreement was signed. In my view the Defendants have failed to meet the “heavy onus” of showing why such a limited defence would be justified on the facts.

496. First, as I have found, I am satisfied Tony did have the contents of the JVA explained to him on 20 September 2016 by David before executing the document. However, if I am wrong on this finding, Tony’s decision to nonetheless execute the agreement in my view falls into the category of carelessness which does not attract the defence of non est factum; Luo per Einstein J at [50]. The mere fact that Tony did not receive legal advice as to the final version of the JVA in my mind is not to the point. He had lawyers available to him and presumably did not need them and indeed did not want to spend the money on them. In any event David translated each word at least of the JVA of 5 September 2016, and he clearly had the ability, which Tony took up no doubt, to speak to Lilian.

497. Furthermore, Tony’s alleged failure to understand the document turns, it seems, upon the JVA containing no express written requirement PSR Burwood pay the whole of the $13.5 million prior to becoming a joint venture partner (see DC1 [93]). In my view, this difference between what Tony contemplated the JVA to say and what it actually said does not amount to the sort of radical difference contemplated under the defence of non est factum. In any case, the lack of such an express requirement was present in all earlier versions of the draft agreement and it is inconceivable that this would not have come to Tony’s attention or indeed, if it was important, something that he would not have insisted upon.

498. In my view the defence must fail.

Misrepresentations or unconscionable conduct

499. The Defendants’ case on both misrepresentations and unconscionable conduct hinge on Tony being requested to sign a document he had no opportunity to read or understand and did so in the context of representations made to him about the effect of it. As clear in my factual findings, I reject the basis for these assertions. I am satisfied Tony had the opportunity to understand the JVA he executed on 20 September 2016, and was not in any way through misrepresentations or unconscionable conduct led to believe the execution would not bind the parties to legal relations. Again, the fact the parties contemplated formulating a more tax effective arrangement did not, in my view, in any way undermine the intent of the parties to be legally bound by the JVA they executed on 20 September 2016.

Uncertainty and unenforceability under the Home Building Act

500. The Defendants plead the JVA is void for uncertainty and unenforceable under the Home Building Act but supply very little if any specificity as to how or why it should be so characterised. In closing submissions, the Defendants raise uncertainty in the context of arguing why specific performance should not be awarded, and so I will deal with this issue in determining relief.

501. However by way of passing comment I note I am not satisfied the JVA breaches any provision of the Home Building Act. In my view the Plaintiffs are correct in submitting section 7 of the Home Building Act does not apply to the JVA given it is not a contract under which Oxford Constructions performs residential work. Further section 10 of the Home Building Act does not make the JVA unenforceable by parties like PSR Burwood or Robert who are not contracted to do the residential work.

Breaches of the JVA

The alleged breaches

502. With both sides asserting the other has breached the JVA, it is necessary to first turn to the relevant terms of the JVA.

503. Clause 2 of the JVA contemplated the payment of $5.25 million by PSR Burwood to SPD for the purchase of 5.2 million shares in SPD. The money was then to be utilised by SPD to pay off all existing mortgages on or before September 2016.

504. Clause 3 of the JVA required PSR Burwood to lend $8.25 million to SPD which was to be paid back at the end of the development. By clause 7 of the JVA, the final instalment of the $8.25 million described in clause 3 (that is the 5 million) was to be paid into a jointly managed SPD bank account by 30 November 2016.

505. In my view the correct construction of the JVA would require the transfer of the shares before the obligation arose to make the payment. The reason for that would simply be that otherwise PSR Burwood would agree to make a payment of $5 million in a company in which it held no shares, had no directorship and had no charge or other form of security. It is clear from the agreement it was intended PSR Burwood and Tony would, by the completion of the purchase under clause 2, have equal shares in SPD which I consider also informs the timing of the payment of the $5 million.

506. It is common ground that by 30 November 2016 the Defendants had not transferred the 50% shareholding in SPD to PSR Burwood or established a jointly managed bank account. No occasion has therefore arisen for PSR Burwood to pay the $5 million, indeed it has been prevented from doing so by these breaches by the Defendants. Although there is no express term in the agreement, PSR Burwood’s obligations would be to make the final payment of $5 million within a reasonable time after the Defendants have transferred the 50% shareholding in SPD to PSR Burwood and established the jointly managed bank account. On that analysis it seems to me PSR Burwood has not breached the JVA by failing to pay the final $5 million.

507. Insofar as it alleged the Plaintiffs have failed to cause Oxford Constructions to enter into a building contract with SPD for a maximum price of $36.5 million, I am of the view there is no such term in the JVA. Discussions have taken place about increased construction costs resulting from delay, but in my mind none of that amounts to any breach of the JVA by Oxford Constructions.

508. However, it seems to me a different situation arises in relation to the Defendants. In my view, they have breached the JVA in two obvious and fundamental respects; they have failed to issue the additional shares in SPD and transfer 50% of them to PSR Burwood despite receiving the monies for them, and have failed to establish a joint bank account. The payment by PSR Burwood of the $5 million into the jointly managed bank account of course was dependent on the establishment of such an account. Further breaches include a failure to pay the $2 million of the third capital contribution into a jointly managed SPD account and the removal of Robert as a director prior to the termination of the JVA.

Consequences of findings on breach

509. In light of my findings the Plaintiffs were not in breach of the JVA by failing to pay the $5 million or cause Oxford Constructions to enter into a building contract with SPD, it follows they did not engage in any repudiatory conduct as alleged and therefore the Defendants had no grounds to purport to terminate the JVA on 28 April 2016.

510. The consequences of PSR Burwood having paid the agreed purchase price for the shares and the Defendants invalidly terminating the JVA are as follows. Subject to discretionary and other considerations, in theory at least, PSR Burwood has an accrued right to require SPD and Tony to perform the contract obligations for which the payment was consideration, having paid the contract price for the share in September and early October 2016 totalling $5.25 million. That would involve the issue of additional shares in SPD and transfer of 50% of the issued shares to PSR Burwood. Again theoretically that right can be enforced by mandatory injunction. As the right accrued when the contract price was paid and accepted, the right cannot be diluted or affected by any subsequent termination of the JVA.

511. In addition, Robert has an accrued entitlement to require SPD and Tony to do all things reasonably necessary to have him reappointed as the director of SPD. That flows from clause 7 again. As an accrued entitlement, it is not one that can be valued at or changed as a result of any subsequent termination of the JVA.

512. Further, the 50% of the existing shares in SPD were consequently held on a bare trust for PSR Burwood and Tony was arguably bound to exercise the voting rights attached for the benefit of Robert. It would follow that as a result, the termination of his directorship was unlawful and plainly wrong.

Relief

513. In my view, I am not satisfied specific performance is an appropriate order in this case.

514. The mere fact Tony, Robert and others have been engaged for some little time now in confrontation manifesting itself as it has in this case is not in and of itself a reason why specific performance should be refused. It is rightly pointed out that questions of degree rather than absolute restrictions upon the scope of curial relief are involved. However, here the parties are seriously at loggerheads on a number of issues. With allegations of misleading and unconscionable conduct, it is apparent they do not trust each other and yet the kind of arrangement going forward if specific performance were ordered may well enforce fiduciary obligations of one sort or another.

515. Both sides have instructed their respective representatives to accuse the other side of mendacity. Again, in and of itself that may not be a bar to specific performance, but the atmosphere both prior to and during the conduct of the litigation is such that forcing people to work together who dislike, let alone distrust, each other is a recipe for commercial disaster. Independently of the position taken now by PSR Burwood under its new management, there are significant risks in my view in requiring the parties to cooperate reasonably and sensibly with each other in the current environment.

516. In a development of this size and complexity there will be numerous construction and design issues going forward that are bound to arise. Neither side in this litigation, it seems to me, respects each other. Robert regards himself as an expert both it seems to me in financial issues, and in construction issues. The Defendants on the other hand would no doubt defer to his expertise on the construction side but regard him as having betrayed them (wrongly as I have found) in terms of assisting them to achieve a more advantageous arrangement for tax purposes.

517. On the balance of what I have said above and as a matter of discretion leaving aside whether Robert or PSR Burwood is now ready willing and able to complete this transaction (and I will assume he or they are), it seems to me given the atmosphere of this case it would be untenable in the extreme to require these people to work together.

518. In addition to my views just expressed, the intrusion of new directors and shareholders of PSR Burwood into what is clearly a very troubled context will only add, in my view, to the uncertainty of sensible commercial decision making going forward. Mr de Robillard for the new entrants in the litigation seeks apparently to agitate some Cross-Claim against Robert. As set out, the separate representation has not simply been brought about by some technical conflict - it has been brought about by a desire on behalf of his clients to litigate against Robert, no doubt covering the circumstances in which they parted with monies PSR Burwood used in part, or in whole, to contribute to the JVA. In my view this raises real questions as to how the JVA may be enforced where the parties who seem to seek to enforce it themselves are not in agreement.

519. Further, the JVA was forged in circumstances where Robert was the sole director and shareholder of PSR Burwood, meaning it made sense for him to be made (as he was) a director of SPD and, as the Defendants note receive a distribution of the profit pursuant to clause 10 of the JVA (T208/6-14; Transcript dated 3 November 2016, T22/30-35). With the internal management of PSR Burwood now altered and Robert finding himself a minority shareholder of PSR Burwood, the structure of the agreement is also altered. In my view this added complication is a further reason why specific performance is not an appropriate form of relief.

520. For the above reasons although I am of the view the Defendants are in breach of this Agreement and that it is at least theoretically open to the Plaintiffs to require specific performance, in the exercise of my discretion in this case I do not regard it as an appropriate form of relief.

521. There is little doubt Oxford Constructions, on one view of the factual material, has engaged in certain construction and other works associated with the development of the Burwood Property. Oxford Construction alleges it has incurred substantial costs for which it is entitled to be compensated. It may have as well, at least theoretically, a lost opportunity case. However, in my view this is an issue to be determined subsequently, and is not, contrary to the Plaintiffs’ submissions (see First and Third Plaintiffs’ closing submissions [157]-[158]; Transcript dated 3 November 2016, T9/45-T10/5), relevant in my determination of the appropriateness of specific performance.

522. I would therefore decline to make orders in paragraph 10 of the summons. However, based on my findings, I would otherwise make orders for the appropriate declaratory relief. In my view the declarations do not lack practical utility and the conduct of the First and Third Plaintiffs has not disqualified themselves from that relief.

523. That has the following consequence. There is no doubt the $8.5 million paid by PSR Burwood together with interest should be repaid by the Defendants to PSR Burwood. This is purely on the basis the monies were paid for a consideration that has failed. The Plaintiffs therefore are entitled to recover those monies as monies had and received. Alternatively there would be an entitlement to the repayment of those monies because they were paid impliedly upon the condition that they be recovered by a defaulting purchaser when the vendor elected to terminate the contract. It would follow that the Plaintiffs are entitled to interest under a Section 100 of the Civil Procedure Act on those monies from the date they were paid to the Defendant.

524. A further consequence is that either a constructive trust or a charge in favour of PSR Burwood should be ordered to secure the repayment to PSR Burwood of the monies.

Conclusion

525. In conclusion, in my view the parties did, objectively, intend to enter into legally binding relations by executing the JVA on 20 September 2016. I am not satisfied the legally binding status of the JVA is in any way undermined or undone by the defence of non est factum, allegations of misrepresentations or unconscionable conduct, nor assertions of uncertainty and unenforceability.

526. Further, I am satisfied the Plaintiffs did not breach the JVA as alleged by the Defendants, and therefore in my view the Defendants’ purported termination of the JVA on 28 April 2017 was not valid. In my view, it was the Defendants who breached the JVA, entitling the First and Third Plaintiffs’ to the declaratory relief sought. In my view however, in the exercise of my discretion I do not regard specific performance as an appropriate form of relief.

527. I will hear the parties on the appropriate relief that should be granted in accordance with my decision and on the question of costs, if the need arises.

Decision last updated: 07 December 2017