Sunicorn v Ran Zhang - [2024] VCC 101

[NEW CIB

IN THE COUNTY COURT OF VICTORIA
AT MELBOURNE

COMMERCIAL DIVISION
GENERAL LIST

Revised
Not restricted
Suitable for publication

Case No. CI-21-04799

Sunicorn Pty Ltd & Ors	Plaintiffs
v
Ran Zhang & Ors	Defendants

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JUDGE:	HER HONOUR JUDGE MARKS
WHERE HELD:	Melbourne
DATE OF HEARING:	12-15 September 2023, 18-21 September 2023, and 13 December 2023
DATE OF JUDGMENT:	27 February 2024
CASE MAY BE CITED AS:	Sunicorn v Ran Zhang
MEDIUM NEUTRAL CITATION:	[2024] VCC 101

REASONS FOR JUDGMENT
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Alleged joint venture agreement – factual basis not established

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Goussis	Legalment
For the First and Fourth Defendants	Mr T Purdey	Tao Jiang Lawyers
For the Second and Third Defendants	Mr A Felkel	Herald Legal

Table of Contents

BACKGROUND

THE PROCEEDING

EVIDENCE

ISSUES

Joint venture agreement
Misleading or deceptive conduct
Money due under ESAs

CONCLUSION

HER HONOUR:

BACKGROUND

The plaintiffs in this case are Sunicorn Pty Ltd as trustee of Sunicorn Trust, K.S.J.D. Investments Pty Ltd as trustee of the K.S.J.D. Family Trust (KSJD), and H.S.SU Pty Ltd as trustee of H.S.SU Family Trust (HSSU).
The defendants are Ran Zhang (known as Tina), Zichuan Bai (known as Charles), Bigbai Pty Ltd, and Yaozhi Zhang Pty Ltd (YZ). Charles is director and sole shareholder of Bigbai, and Tina is the director and sole shareholder of YZ. Tina and Charles were married when the relevant events at the centre of this dispute took place, but are now divorced; they were separately represented by solicitors and counsel in this case.
The plaintiffs bring three claims against the defendants, arising out of circumstances in which the plaintiffs each paid $43,850, and then a further $280,000 (collectively, the payments), to YZ’s bank account. The payments were in connection with the plaintiffs each obtaining what may loosely be described as a 10% share in two properties in Sherbrook Avenue, Ringwood (the Ringwood Properties).
The plaintiffs’ claims are contained in the 2nd Further Amended Statement of Claim dated 17 September 2023 (2FAmSoC). Leave was given to the plaintiffs to make minor changes to that pleading, in the course of final submissions, as noted in an order made on 15 December 2023. I refer here to the 2FamSoC, with those minor changes, as the final statement of claim.
The first claim[1] the plaintiffs make is that the payments were made pursuant to a joint venture agreement entered into ‘in or about mid December 2018/mid January 2019’ between Bigbai and YZ and the plaintiffs ‘in respect of the purchase, management, the obtaining of town planning permits, and subsequent, sale with town plan permits’ of the Ringwood Properties (the JVA). Bigbai and YZ deny the existence of the JVA.
[1] Paragraphs 8-10 and 31-34 of the final statement of claim.
The plaintiffs claim that implied terms of the JVA were breached, and that they were entitled to, and did, rescind the JVA, or now give notice that they do so.
They also plead[2] that the written component of the JVA consisted of three agreements, each entitled ‘Entrusted Shareholding Agreement’ (ESA). Each plaintiff entered into an ESA with Bigbai and YZ in January 2019. The plaintiffs plead that the ESAs are void for uncertainty. They say that is another reason that they are entitled to, and did, rescind the JVA, or that they now give notice that they do so. Bigbai and YZ deny the JVA claims.
[2]Paragraphs 35-39 of the final statement of claim.
The plaintiffs seek declarations relating to rescission, and orders to be made against Bigbai and YZ that all the money paid be returned to them, or an order for damages.
The second claim[3] is the plaintiffs’ preferred claim, and the principal one pressed at trial. It is that Bigbai and YZ engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law, and that Tina and Charles aided and abetted Bigbai and/or YZ, or were knowingly involved in the contravention. The plaintiffs plead various representations were made to them, including that the Ringwood Properties were purchased in the names of Tina and Charles, and that there were no other investors involved. The plaintiffs say that as a result of the alleged representations, they entered into the JVA. They say without that otherwise, they would not have entered the JVA. They say the alleged representations made were misleading; amongst other things, they plead that the properties were purchased in the name of Qiang Ma (known as Mark) and YZ or nominee (and so there was another investor involved). They seek damages against all four defendants, being the return of all the money paid.
[3]Paragraphs 19-30 of the final statement of claim.

The third claim is brought in the alternative to the first two claims.[4] This third claim relies only on the ESAs. (The plaintiffs do not say, at this part of their case, that the ESAs were part of the JVA, or that they were void for uncertainty). I will refer to this claim as the ESA claim. By the ESA claim, each plaintiff claims $278,715.60 against Bigbai and YZ pursuant to the relevant ESA that plaintiff entered. The amount claimed is less than the amount claimed under the first and second claims; it is not a full refund of the money the plaintiffs paid.
[4] The ESA claim was first pleaded by the plaintiffs during the trial. It is contained in paragraphs 41-50
of the final statement of claim.
YZ admits the ESA claim (including the quantum claimed of $278,715.60).
Bigbai admits that Bigbai and YZ are jointly and severally liable to the plaintiffs under the ESAs, but does not admit the amount claimed as due. It disagrees with the basis of the calculation of how much is due under the ESAs, offering a different formula to that which the plaintiffs and YZ accept as appropriate. Further, if the plaintiffs’ and YZ’s formula is found to be correct, Bigbai does not admit that the amount claimed is accurate, as it has not seen some documents it says would be relevant to that quantification.
By the close of the case, the parties all agreed that if the plaintiffs were not successful under either the first claim or the second claim, money was due in relation to the ESA claim. They also agreed that I should determine the basis of the calculation of the money due under the ESA claim at this stage. Orders were made with the effect that the case has been split, so that the quantum due under the ESAs claim would be determined later, if I determined that the ESA claim was upheld.
For the reasons given below, I find that neither of the first two claims are established. It follows that (as the parties agreed) the ESA claim is upheld. I find that the basis of the calculation of the ESA claim is as pleaded by the plaintiffs and YZ (not Bigbai).
The amount due under the ESA claim will be the subject of a later trial, unless the parties agree to orders in that regard.
THE PROCEEDING
This proceeding commenced in November 2021. It was brought by the three plaintiffs already mentioned (Sunicorn, KSJD and HSSU), and also (initially) by the directors of those corporate plaintiffs: Wee Lin Ng (known as Steven), Shu Hong Chen (known as Janni), Jian Huang Dong (known as Jack) and Haosen Su (known as Sam). Steven and Janni are Sunicorn’s directors; Jack is a director of KSJD; Sam is a director of HSSU.
The directors were no longer plaintiffs by the time of trial. When I refer to the ‘plaintiffs’ in this decision I refer to the plaintiffs who remain – Sunicorn, KSJD and HSSU.
Following discussion about what the issues in this case were, on the first day of trial, the plaintiffs filed a further amended statement of claim on 13 September 2023. They then filed the 2FAmSoC on 17 September 2023.
On 18 September 2023, Tina and YZ (the first and fourth defendants) filed a Defence to the 2FAmSoC, as did Charles and Bigbai (the second and third defendants).
In the course of final submissions, the plaintiffs sought leave to amend the 2FamSoC slightly. In response, the defendants sought leave to amend their Defences dated 18 September 2023. Leave was given for these minor changes, and they were noted in an order made 15 December 2023, without the parties needing to file further pleadings. This case deals with the case pleaded in the 2FamSoC, and the Defences, with those minor agreed changes noted in the 15 December 2023 order.
An agreed statement of issues, and chronology were filed on 11 September 2023. The agreed issues were refined in the course of the trial. A final agreed statement of issues was filed on 20 September 2023 (dated 19 September 2023). On 6 October 2023, an agreed amended chronology was filed. By agreement on the final day of the trial, all the entries that had been indicated as ‘not agreed’ were now stated as ‘agreed’. Two ‘disputed’ entries remained.
A joint Court Book was filed, and additional pages added as the trial proceeded. The parties filed an agreed index of relevant documents on 6 October 2023, and the documents listed in it became Exhibit 1.
Sunicorn, KSJD and HSSU filed closing submissions on 1 November 2023, and further closing submissions on 6 November. On 22 November 2023, Tina and YZ filed closing submissions. On 27 November 2023, Charles and Bigbai filed closing submissions. Sunicorn, KSJD and HSSU then filed brief reply submissions on 4 December 2023. Oral closing submissions were made on behalf of all parties on 13 December 2023.
The plaintiffs have amended their statement of claim several times. In final submissions the plaintiffs raised issues that were not included in the pleadings (or were subtly, but quite significantly, different from the pleadings). However, the defendants made it clear throughout trial that they submitted that the plaintiffs should be bound to their pleadings. They objected to dealing with the further issues belatedly raised.
No leave was given for any further issues to be raised. Following significant discussion, the pleadings were revised during the hearing, and alongside that, the parties’ counsel settled the list of issues to be determined in the trial. The final list of issues to be determined was agreed to by counsel for the plaintiffs. No leave was sought to amend the plaintiffs’ case further to reflect the further issues belatedly raised. It is not fair to the defendants for these new issues to be considered as they were never part of the issues in dispute and were only raised in final submissions. I therefore consider the case on the issues as they stood by close of trial, and do not deal with those issues only raised in the plaintiffs’ final submissions.
EVIDENCE
The witnesses in this case gave evidence of things that they said were said in conversations that occurred some years earlier.
As McLelland CJ in Equity observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:
… 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 process 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.
I put primary emphasis on the objective facts surrounding what occurred, including the contemporaneous documents (including the many WeChat messages circulated at the time).
Janni, Steven, Jack and Sam gave evidence for the plaintiffs. Tina and Charles gave evidence for the defendants. I prefer the evidence of Tina and Charles where it conflicted with that of Janni, Steven, Jack and Sam.
Janni gave the most substantive evidence about relevant events for the plaintiffs. She did not listen carefully to questions, was often more concerned with arguing her case, and needed to be reminded repeatedly to answer the questions put to her. I found her evasive and non-responsive in cross examination, and her evidence was shown by the documents to be incorrect on at least two occasions (she said no loans were ever discussed regarding the Winyard Properties and the Heathmont Property, and that no ESAs proceeded for the Heathmont Property). I consider her evidence unreliable save where supported by documents.
Steven made it clear in his evidence that he principally relied on what Janni (his wife) had told him about what had occurred during relevant meetings and conversations, as to what he thought had occurred. He does not speak Mandarin and could only follow some words in key relevant conversations (whereas Janni is fluent in Mandarin). He gave evidence of his impressions (rather than of knowing what was said) regarding a key meeting held on 13 January 2019.
Jack gave evidence that he asked that he, Steven, Janni and Sam be made purchasers of the Ringwood Properties. No-one else at the meeting corroborated this evidence, and there is no other evidence to substantiate it. Tina gave clear evidence that this request was not made. I do not accept Jack’s evidence that this was requested. Jack avoided answering some questions, and the contemporary documents contradict some of his evidence.
Sam did not recall much of the relevant events.
I found Tina to be a reliable and careful witness, who gave a clear and coherent account of relevant events. I also found Charles’ evidence credible.
Tina and Charles operated a business of managing property development projects. They were involved in three projects with Janni, Steven, Jack and Sam, as detailed below. The final one was the Ringwood Properties (the subject of this case).
The Winyard Properties project involved the purchase of properties at 47-55 Winyard Drive, Mooroolbark, Victoria (the Winyard Properties), the obtaining of permits to build town houses, and the sale of the properties.
Charles, Mark, Jing He Zhi (known as John), ‘and/or nominee’, purchased the Winyard Properties under contracts of sale executed on 30 November 2017 for a total price of $3.8m. John is Jack’s accountant.
Tina arranged a detailed feasibility report to be prepared for the Winyard Properties, dated 1 December 2017. It set out various options for development and feasibility analyses including costings.
On 6 December 2017, a week or so after the contracts of sale were executed, three agreements were entered into in relation to the Winyard Properties:
(a)a Shareholders Agreement was executed for Winyard Drive Pty Ltd, by Defoe International Pty Ltd (30% shareholder), TJC Group Pty Ltd (21%), and Winyard Group Pty Ltd (49%). Defoe’s directors were Mark and his wife. TJC’s directors were John, Tina and Charles.
(b)a Shareholders Agreement for Winyard Group was executed, between TJC, KSJD, Jason’s Construction Family Trust, Jaya Rena Trust (which was Janni’s family trust), TLC Family Trust and Nicole Family Trust.
(c)Winyard Drive and HC Winyard Management Pty Ltd executed an agreement, providing that Winyard Management was to manage the Winyard Properties project.
On 15 December 2017, Nomination Forms were executed nominating Winyard Drive as purchaser of the Winyard Properties, under the contracts of sale of 30 November.
Winyard Drive sold the Winyard Properties under a contract of sale (subject to planning permit being obtained) executed on 9 October 2018, for $5.5m.
On 22 May 2019, a planning permit for the Winyard Properties was obtained.
On 19 August 2019, settlement of the sale of the Winyard Properties occurred.
The Heathmont Property project involved the purchase of the property at 42-44 Marlborough Rd, Heathmont, Victoria (the Heathmont Property), the obtaining of permits to build townhouses, and the sale of the property.
Tina arranged for a detailed feasibility report to be prepared. The report was dated 25 March 2018, and set out various options for development and feasibility analyses including costings.
Jack, Janni, Charles, ‘and/or nominee’, purchased the Heathmont Property by a contract of sale dated 24 April 2018, for $4.1m.
Two days later, on 26 April 2018, two agreements were executed:
(a)A Shareholders Agreement for Marlborough Heathmont Pty Ltd, between HSSU (41% shareholder), Zhi-Xian Shen (11%), KSJD (22%), Sunicorn (11%), Z & L (Aust) Pty Ltd (10%), Tina Zhang Pty Ltd (TZ) (2.5%) and Bigbai (2.5%).
(b)Marlborough Heathmont and HC Marlborough Management executed an agreement on 26 April 2018. It provided that Marlborough Management was to manage the Heathmont Property project.
On 14 May 2018, a Nomination Form was executed under the contract of sale of 24 April 2018, nominating Marlborough Heathmont as purchaser of the Heathmont Property.
A planning permit was obtained for the Heathmont Property on 12 September 2019.
Settlement of the sale of the Heathmont Property occurred on 10 January 2020.
Charles, Mark, ‘and/or nominee’ purchased the two properties which comprised the Ringwood Properties, by contracts of sale executed on 5 March 2018. They purchased 30 Sherbrook Avenue, Ringwood for $1,335,000, and 32 Sherbrook Avenue, Ringwood for $1,550,000. A 10% deposit was paid in respect of each purchase.
Mark agreed to lend Tina and Charles $145,000. Tina gave evidence that their arrangement was that Mark lent them half of the 10% deposit for the Ringwood Properties (so that they paid half the deposit, and Mark the other half). There is an unsigned loan agreement in evidence, for $145,000.
On 13 January 2019, a meeting where the Ringwood Properties were discussed took place at Jack’s house between Tina, Charles, Janni, Steve, Jack and Sam. (There was some dispute about when this meeting occurred. I am satisfied on the balance of probabilities that it occurred on 13 January 2019. WeChat messages of 17 December 2018, 8 January and 13 January 2019 support that.)
At the meeting, Tina and Charles offered Janni, Steven, Jack and Sam an investment opportunity: the chance to have a 20% to 30% share in the Ringwood Properties. Tina said that ‘we’ had purchased the properties, by which I accept she meant she and Charles. She also said there was another investor, but did not give details of who. (The plaintiffs dispute that she mentioned another investor at that stage, but as indicated above, I prefer Tina’s evidence.)
That day, Tina sent an email to Janni and Steve attaching a brochure, feasibility report, and plans for the Ringwood Properties. In a WeChat conversation (previously set up to discuss the Heathmont project), Tina attached a brochure, feasibility report, plans and screenshots of the Schedule to the Ringwood Properties’ contracts. The screenshots showed the purchase prices and the (proposed) settlement date, but had the names of the purchasers blocked out. Tina gave evidence that this was because at that stage the defendants had not decided to invest, and so they did not need to know details about the signatories.
On 14 January 2019, Janni phoned Tina and told her that the plaintiffs wanted to have a 30% share (10% each) in the Ringwood Properties.
I accept Tina’s evidence, that at this stage Tina told Janni that Mark was an investor in the properties. The plaintiffs say that when they signed the ESAs they did not know about there being another investor. However, a 21 January 2021 WeChat message sent by Jack (and written by Janni), which was sent after a dispute had arisen between the parties and Janni had spoken to a lawyer, makes it clear that the plaintiffs did know about there being another investor at the time they signed the ESAs. That WeChat message[5] included the following:

2. You breached the escrow agreement because your company did not legally own the title to the land. The title to No. 32 belonged to Mr Ma.

3. Before signing the contract, you clearly told us that the other major shareholder’s shareholding was also held by you and that your intention was to avoid paying double stamp duty. Is not this concealment of the truth a deception?
[5]This and other messages and documents in evidence were in Mandarin. A translation was provided in evidence.

The reference to ‘escrow agreement’ was agreed to be to the ESAs. Relevantly to this issue, this message supports Tina’s evidence that before they signed the ESAs, Tina told the plaintiffs about there being another investor in the properties.
Jack, Janni and Steven all claimed that the word Before, at the outset of paragraph 3 of the extract above, was a typographical error, and it should have said After. This made no sense in the context of the rest of paragraph 3. None of them could explain it in cross examination satisfactorily. Evidence was provided of how the words ‘before’ and ‘after’ are written in Mandarin, and they are patently quite different looking characters. Jack gave evidence that he had intended to write ‘after’, using a Chinese keyboard on his phone. In cross-examination he agreed that the words ‘after’ and ‘before’ are very different characters in Mandarin. I do not accept there was any typographical error.
In claiming that they did not know about another investor’s involvement before they signed the ESAs, the plaintiffs also relied on a 19 November 2020 WeChat message sent by Tina to Sam. In it she said, ‘another matter is that there is another partner in the project he and I are jointly suing Charles’. They claimed that 19 November 2020 was the first they heard of there being any other partner in the project. I reject that was the first they heard of another partner’s involvement, given the WeChat message of 21 January 2021 (discussed above) and given Tina’s evidence.
On 15 January 2019, a WeChat group chat regarding the Ringwood Properties was set up between Charles, and Tina, Janni, Steve, Jack and Sam. Charles sent a draft ESA to the group. Janni then telephoned him and asked for a change to the draft ESAs, which was made.
Sunicorn executed an ESA on 16 January 2019 (but dated 20 January 2019).
On 18 January 2019, there was a meeting at a Box Hill café which Tina, Charles, Jack, and Sam attended.
KSJD executed an ESA that day (but dated 17 January 2019), as did HSSU (but dated 17 January 2019).
Bigbai and YZ also executed these ESAs at the Box Hill meeting that day.
The ESAs broadly provided that in consideration of Sunicorn, KSJD and HSSU ‘(defined as the ‘entrusting parties’) paying 10% of the costs and expenses of the Ringwood Properties (including their development), each beneficially owned a 10% interest in the properties, which would be held on their behalf by Bigbai or YZ (defined as the ‘commissioned parties’).’

Pursuant to each of the ESAs, requests for payment were made on 18 January 2019, and as a result, the plaintiffs each transferred $43,850 into YZ’s bank account.
On 15 February 2019, HC Sherbrook Management Pty Ltd was registered.
On 17 February 2019, Nomination Forms were executed under the contracts of sale, relevantly nominating:
(a)Bigbai as purchaser of 30 Sherbrook; and
(b)Sherbrook Property Pty Ltd as purchaser of 32 Sherbrook. Mark was sole director and shareholder of Sherbrook Property.
Pursuant to each of the ESAs, further requests for payment were made on 8 April 2019, and the plaintiffs each transferred $280,000 into YZ’s bank account by about 18 April 2019.
Settlement of the purchases occurred:
(a)for 30 Sherbrook on 3 May 2019, with Bigbai registered as sole proprietor; and
(b)for 32 Sherbrook on 9 May 2019, with Sherbrook Property registered as sole proprietor.
On 21 May 2019, a joint venture agreement in respect of the purchase, management and development of the Ringwood Properties, was executed between Defoe, TZ, Sherbrook Property, Sherbrook Management, Bigbai, and YZ. The parties to it agreed that the beneficial owners of the project would be Defoe (55%), Bigbai (22.5%) and TZ (22.5%).
The defendants say that Bigbai and TZ’s combined share of 45%, under this joint venture agreement, includes the 30% share belonging to Sunicorn, KSJD and HSSU under the ESAs. Tina is sole director and shareholder of both TZ and YZ.
In November 2020 there were a number of WeChat messages regarding the properties. These included the 19 November 2020 message discussed above, where Tina advised Sam that ‘another matter is that there is another partner in the project he and I are jointly suing Charles’.
In a WeChat message on 4 December, Tina attached copies of the contracts of sale, ASIC search, the Mark JVA and a personal guarantee Charles signed regarding 30 Sherbrook Avenue.
On 16 January 2021, Jack told Tina in the group WeChat that the plaintiffs wished to withdraw from the Ringwood Properties project, and requested a refund of the money they had paid.
On 17 March 2022, the properties were sold in contracts of sale:
(a)30 Sherbrook for $1.3m.
(b)32 Sherbrook for $1.68m.
Settlement took place on 15 December 2022. A balance (after paying Defoe) of about $462,000, which includes Sunicorn, KSJD and HSSU’s entitlements, is being held in the trust account of the solicitors for Sherbrook Management, which managed the sale.

ISSUES
Joint venture agreement

As set out above, the plaintiffs claim that they made the payments pursuant the JVA. They claim that implied terms of the JVA were breached, and that they were entitled to, and did, rescind the JVA, or now give notice that they do so.
They also plead that the written component of the JVA consisted of the ESAs, which each plaintiff entered into with Bigbai and YZ in January 2019. The plaintiffs plead that the ESAs are void for uncertainty. They say that is another reason that they are entitled to, and did, rescind the JVA, or that they now give notice that they do so.
The plaintiffs seek declarations relating to rescission, and orders to be made against Bigbai and YZ that all the money paid be returned to them, or an order for damages.
All claims related to the JVA fail, as I am not satisfied that the JVA existed.
The plaintiffs plead that it consisted of written, oral and implied terms. The case put is that a JVA was made containing all those terms. I am not satisfied that the oral or implied terms were agreed.
The express oral terms of the JVA pleaded (in paragraph 9 of the final statement of claim) were that:
(a) the parties must contribute the purchase price and capital required to manage and obtain town planning permits for the Ringwood properties in the following proportions and would share in the profits or losses of the joint venture in the same portions:
(i)        Bigbai and/or YZ – 70%;
(ii)        Sunicorn – 10%;
(iii)       KSJD – 10%; and
(iv)      H.S.SU – 10%; and
(b)the parties would enter into shareholder agreements to reflect the 10% share in the joint venture of each of the Plaintiffs.
However, there was no evidence to support the claim that there was an express oral term of the contract to the effect claimed in in sub-paragraph 9(a). There was no evidence that Bigbai or YZ were mentioned in the oral discussions or of them holding 70%. There was also no evidence of mention of Sunicorn, KSJD or HSSU or of them holding 10% (each) in those discussions. There was evidence that on 14 January 2019, Janni told Tina that she and Steven (together), and Jack and Sam wished to invest in the project, at 10% each. That is quite different to what is pleaded.
So far as sub-paragraph 9(b) is concerned, there is no evidence that the phrase ‘joint venture’ was used by anyone in relevant discussions. There was also no evidence that there was oral discussion, let alone agreement, that ‘the parties’ – that is, Bigbai, YZ, Sunicorn, KSJD and HSSU – would enter into shareholder agreements. These companies were not discussed at that time.
As there was no evidence of words being spoken corresponding to the alleged oral terms, or of them being agreed, the plaintiffs have not established that such terms were agreed.
In paragraph 10 of the final statement of claim, the plaintiffs plead there were implied terms of the JVA that:

(a) Bigbai and/or YZ would purchase the Ringwood properties and be registered as the registered proprietors of the Ringwood properties; and
(b)there were no other investors in, nor any other joint venture agreements, in respect of, the Ringwood properties.

I am not satisfied that either of the alleged implied terms should be implied. Terms are only implied into a contract where it is necessary to give business efficacy to a contract. They are not implied if the contract is effective without the term: BP Refinery (Hastings) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.
As the first and fourth defendants submit in relation to the term pleaded in sub-paragraph 10(a):
… it was not necessary to give business efficacy to the alleged JVA (under which the plaintiffs would beneficially own a combined 30% share in the Ringwood Properties) for Bigbai or YZ to be the registered proprietor of both 30 and 32 Sherbrook Avenue. Such an agreement was effective without this term. This is shown by what occurred under the Sherbrook Joint Venture Agreement. The plaintiffs’ combined beneficial 30% share in the Ringwood Properties was effectively held by Bigbai and YZ (through TZ) holding a beneficial 45% share in the Ringwood Properties. In this way, the legal ownership of the Ringwood Properties did not affect the underlying beneficial ownership.
The implied term alleged in sub-paragraph 10(b) is not required in order to give business efficacy to the agreement. And, as indicated above, I accept Tina’s evidence that she told those present at the 13 January 2019 meeting that there was another investor in the Ringwood Properties, and that she told Janni on 14 January that the investor was Mark.
Misleading or deceptive conduct
The plaintiffs plead that Bigbai and YZ engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law, and that Tina and Charles aided and abetted Bigbai and/or YZ, or were knowingly involved in the contravention.
The plaintiffs plead that relying on the faith of various alleged representations and induced thereby, the plaintiffs entered the JVA. They seek damages against all four defendants, being the return of all the money paid.
I have found that there was no JVA. The misleading and deceptive conduct claim therefore goes nowhere, as it depended on the JVA being entered into. The plaintiffs’ case is that that if the misleading and deceptive conduct had not occurred, they would not have entered the JVA.
The plaintiffs did not plead (or submit) that they were misled into signing the ESAs (as standalone agreements).
As there was no JVA, there is no need to consider the misrepresentation claim further. It has not been established.
Money due under ESAs
The parties agreed that if the first two claims were not established, money was due under the ESA claim. As discussed above, the only issue for determination at this point of the proceeding is how the monies due under this claim are to be calculated.
This relevant issue is:
Whether Bigbai and YZ are liable to pay Sunicorn, KSJD and H.S.Su their 10% proportionate entitlements under the ESAs, to be calculated on the basis of:
(a) their capital contributions thereunder less their share of the net loss incurred by the Ringwood Properties development project (adjusted to exclude interest expenses); or
(b) 10% of the net proceeds of the project (including interest as an expense).
Tina and YZ submit that sub-paragraph (a) is the appropriate basis of calculation. The plaintiffs agree.
Charles and Bigbai submit that sub-paragraph (b) is the appropriate basis of calculation.
I agree with Tina and YZ’s submissions that, properly construed, the ESAs relevantly provide:
a. in consideration of each of Sunicorn, KSJD and H.S.Su paying 10% of the costs and expenses of the purchase and development of the Ringwood Properties, it was agreed that each of Sunicorn, KSJD and H.S.Su would beneficially own a 10% share of the Ringwood Properties, which shares would be held on their behalf by Bigbai and YZ (recitals and clause 1);
b.the costs and expenses in respect of which Sunicorn, KSJD and H.S.Su would be proportionately liable (as to 10% each) would include the purchase price of the Ringwood Properties, stamp duty, capital gains tax and other taxes, other reasonable costs and expenses incurred in the property development project, and costs and expenses of their proportionate shares (clause 4.2);
c. the agreement would take effect upon the signature of both parties (clause 8);
d. if Bigbai and YZ determined to call on Sunicorn, KSJD and H.S.Su to contribute to the purchase and development of the Ringwood properties, they would send a notice, and Sunicorn, KSJD and H.S.Su would each pay their proportionate contributions accordingly, and when paid such contributions would be credited to Sunicorn, KSJD and H.S.Su’s accounts under the ESAs (clause 9);
e. the ESAs would be terminated by the sale of the Ringwood properties and/or the completion of the property development project (clause 11.2); and
f. after completion of the property development project, and termination of the ESAs, all the net profits or losses of Sunicorn, KSJD and H.S.Su’s proportionate shares would be calculated and all entitlements payable under the ESAs would be transferred to them by Bigbai and YZ within seven business days (clauses 11.4 and 12).
I also agree with Tina and YZ’s submissions that:
Under the ESAs, the costs and expenses in respect of which Sunicorn, KSJD and H.S.Su were proportionately liable (as to 10% each) included the purchase price of the Ringwood Properties, stamp duty, capital gains tax and other taxes, other reasonable costs and expenses incurred in the property development project, and costs and expenses of their proportionate share. This did not include interest expenses on borrowings obtained by other parties to fund their contributions to the property development project, as they were not costs and expenses of Sunicorn, KSJD and H.S.Su’s proportionate shares. Nor would interest on such borrowings be “reasonable costs and expenses of the project”, in circumstances where some parties paid their proportionate contributions at 100% (such as Sunicorn, KSJD and H.S.Su) and others did not.
It follows that, under the ESAs, after completion of the project, and termination of the ESAs (which has now occurred), all the net profits or losses of Sunicorn, KSJD and H.S.Su’s proportionate shares should be calculated without any deduction for the interest expenses incurred. The calculation begins with the capital contribution of each of Sunicorn, KSJD and H.S.Su made (which was credited to their respective accounts), less (in this case) their proportionate share of net loss on the project.
No substantive argument was put for Charles and Bigbai as to why Bigbai and YZ should be liable to pay Sunicorn, KSJD and HSSU their 10% proportionate entitlements under the ESAs, to be calculated on the basis of 10% of the net proceeds of the project (including interest as an expense). The relevant interest did not relate to their proportionate shares of the project.
I find that the appropriate calculation is:
Bigbai and YZ are liable to pay Sunicorn, KSJD and H.S.Su their 10% proportionate entitlements under the ESAs, to be calculated on the basis of their capital contributions thereunder, less their share of the net loss incurred by the Ringwood Properties development project (adjusted to exclude interest expenses).

CONCLUSION

The plaintiffs brought three claims. The claims relying on the JVA, and on misleading and deceptive conduct, have not been established.
The defendants agreed that money was due under the third claim relating to the ESAs. The issue to be determined in relation to that was the basis on which that was to be calculated. I have found that the basis claimed by the plaintiffs in the final statement of claim (which the first and fourth defendants agreed was the appropriate basis) is the correct way to calculate the amount due. I have rejected the basis on which the second and third defendant claimed the amount due should be calculated.
As indicate above, now that I have determined the appropriate calculation to the applied, the next step is to determine the amount due by applying that calculation. That will be the subject of the next stage of the case.
The parties are directed to provided minutes of proposed orders as to the next steps required in this case, by consent if possible, by 4 pm on 8 March 2024.

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Certificate

I certify that these 21 pages are a true copy of the reasons for the ruling of Her Honour Judge Marks, delivered on 27 February 2024.
Dated: 27 February 2024.

Andrew Beckwith
Associate to Her Honour Judge Marks