Tran v Tran

[2013] VCC 654

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IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
EXPEDITED CASES DIVISION

Case No. CI-12-05889

NGOC NGA TRAN	Plaintiff
v.
THANH HONG TRAN & ANOR	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	28, 29 & 30 May and 5 June 2013
DATE OF JUDGMENT:	14 June 2013
CASE MAY BE CITED AS:	Tran v. Tran & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 654

REASONS FOR JUDGMENT

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Catchwords:             Contract – Payments made on others’ behalf – Whether payments made voluntarily or by way of loan.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms F. Bentley	WMB Lawyers
For the First Defendant	Ms H.T. Tran in person
For the Second Defendant	The First Defendant applied  for leave to represent the Second Defendant

HIS HONOUR:

1On 21 May 2012, Thanh Hong Tran (“Tran”) executed a contract on behalf of herself and Hoang Yen Pty Ltd (“Hoang Yen”) for the sale of the assets of the restaurant business of the Hoang Yen Buffet in Nicholson Street Footscray for the sum of $250,000. The purchaser was NT888 Enterprises Pty Ltd (“NT888”) as trustee for the NT888 Trust. Ngoc Nga Tran (“Ngoc”) was the sole director and shareholder of NT888. The agreement was subject to the transfer of the lease between Tran and the shopping centre owner. Receivers and managers were later appointed to the lessor and litigation was commenced in the Supreme Court by the mortgagee of the property, Bankwest.

2Tran was a defendant in the Supreme Court proceeding. Tran was at times represented by her husband Timothy Minh Nguyen (“Nguyen”), and later by solicitors. Ngoc and her husband, Tan Thanh Lam (“Lam”) provided personal support and financial assistance to Tran. However, by the end of 2012, relations between Tran and Ngoc had broken down. The restaurant business had closed and Ngoc had paid out substantial sums on behalf of Tran for legal fees, and in respect of the outgoings of the business.

3The present proceeding by Ngoc, as plaintiff, seeks to recover from Tran and Hoang Yen, the defendants, sums Ngoc says she paid on behalf of the defendants. The sums claimed against Tran total $85,679, and include $57,382.90 paid to solicitors for their fees, and $28,296.10 in rental payments and other outgoings for the business premises. The claim against Hoang Yen is for $47,397.02 calculated as the total of the business expenses paid by Ngoc of $121,166.62, less the income received from the business of $73,769.60.

4Tran seeks to counterclaim from Ngoc in respect of losses she says arise from Ngoc’s company’s failure to complete the purchase of the restaurant business and conduct by Ngoc, which Tran alleges, led to the cancellation of bookings for the restaurant and the failure of a possible sale of the business to another purchaser.

5The issues for determination in the proceeding are:

a.whether the payments made by Ngoc for legal costs, rental and other expenses of the business were advances by way of loan to Tran and Hoang Yen which the defendants should repay or, were they made voluntarily by Ngoc and cannot be recovered from the defendants;

b.whether Ngoc or NT888 was obliged to pay to Tran the purchase price of $250,000;

c.whether Ngoc was liable to Tran for damages arising from conduct which affected the restaurant bookings and a possible sale of the business.

Conduct of the proceeding and issues of credibility

6The trial was conducted by Tran on her own behalf. Tran speaks hardly any English and required the assistance of a Vietnamese interpreter. At times during the proceeding she had been represented by her husband, Nguyen, who has an excellent command of English and has worked as a bank officer in Australia for about 15 years.

7An issue left for determination in the proceeding was whether the second defendant, Hoang Yen, should be represented other than by a solicitor. Effectively, it was not necessary to decide this issue during the trial and the first defendant was permitted to lead evidence and make the submissions she wished in relation to the claims involving the company.

8The proceeding had been commenced with an application by Ngoc to restrain Tran and the company selling the restaurant business without prior notice to her. It later was considered appropriate to order the parties to exchange further affidavit material. In addition, formal pleadings were filed and served. In the defendants’ case, the defence and counterclaim had been prepared by Nguyen.

9At the trial, the affidavits were relied upon in lieu of evidence in chief and the deponents were cross-examined. Ngoc and Lam were cross-examined by Tran through an interpreter. Tran, Nguyen and Ky Minh Le (“Ky”) gave evidence on behalf of the defendants. Neither Nguyen nor Ky had sworn an affidavit in the proceeding, although Nguyen had prepared Tran’s affidavits and adopted their contents as his evidence. Ky indicated that he would adopt the relevant parts of Tran’s affidavits, and he later gave evidence to that effect.

10These measures were adopted to assist in bringing the dispute to trial reasonably quickly and to enable the parties to have notice of the other’s case, through the affidavit material and exhibits, and without strict adherence to the Court Rules relating to pleadings and discovery.

11However, the fact that the witnesses did not give more than brief evidence-in-chief, and the limitations on Tran’s ability to cross-examine Ngoc and Lam, meant that the assessment of the credibility of witnesses was a difficult task.

12In a number of key respects there were significant differences between the evidence of the plaintiff’s and defendants’ witnesses. In part, this was likely to be simply a matter of emphasis, but on occasion it is possible that witnesses may not have told the truth. I have attempted to resolve the issues in dispute by reference to objective matters including consensus in the evidence or from contemporaneous documents and, on occasion, to what seems more likely to have occurred. Nevertheless, there remained a number of matters where it was not possible to determine which version of the evidence was more probable.

History of dealings between the parties

13Tran came to Australia from Vietnam in 2008. In about December 2011, she started setting up the restaurant business in Footscray through the company Hoang Yen. She executed a lease on 29 January 2012. Tran was the lessee. The lessor was the owner of the building, KT Centre Pty Ltd (“KT Centre”) and the lease was for a term of five years with annual rental payments of $62,400 plus GST and an initial rent free period of 6 months (a fitting out period of six months from the handover date).

14Thuan Trinh Huynh (“Huynh”) and Thao Thanh Nguyen (“Thao”) were directors of KT Centre. They assisted Tran with the running of the restaurant business. In about April 2012, Tran asked Thao to help find a purchaser for the business. Through Thao and Huynh, Tran was put in touch with Ngoc who agreed to buy the business for $250,000.

15Tran’s solicitors, Zindilis Lawyers, drew up a Sale of Chattels Agreement which Tran and Ngoc executed on 21 May 2012. The vendors were Tran and Hoang Yen and the purchaser was Ngoc’s company, NT888 as the trustee for the NT888 Trust.

16Clause 5 of the Agreement stated that, “The landlord of the lease company [KT Centre] has been placed into receivership by mortgagee of the land and building where the business is operating. The Vendor will provide on or prior to settlement the Landlord’s consent through the Receiver and the Mortgagee’s consent to the new Lease for the transfer of the lease”.

17Clause 8 of the Agreement provided that, “Payment of $250,000 is due and to be paid in 30 days subject to the consent of the of the [sic] Mortgagee and Receiver of the Landlord to the Transfer of the Lease or a New Lease”, as well as being subject to certain other “conditions”.

18On about 6 March 2012, receivers had been appointed to KT Centre on behalf of the mortgagee. Shortly after the Agreement between Tran and NT888 on 21 May 2013 was signed, a copy of the contract was sent to the receivers by Zindilis Lawyers along with a request for their consent to the transfer of lease or to a new lease. On 6 June 2012, the receivers had the locks on the premises changed. The receivers disputed Tran’s “legal basis to occupy the [restaurant] premises” and gave notice that they did not consider KT Centre “to be bound by the terms of the purported lease and requires immediate vacant possession of the premises”.

19Tran immediately started proceedings at VCAT and regained possession. The restaurant reopened after two days. The VCAT proceedings continued although the course of the proceeding is unclear. Tran was required to participate in hearings and filed at least one affidavit. Mostly she was represented by lawyers.

20In about July 2012, the mortgagee commenced proceedings in the Supreme Court. Tran was named as a defendant. There were a number of interlocutory hearings and Tran filed at least one affidavit. At times she was unrepresented in the proceeding.

21Between May and July 2012, Ngoc and Lam apparently had frequent and friendly contact with Tran and Nguyen. Ngoc said that in June, “I told [Tran] that, in light of the Supreme Court proceeding, NT888 might not be able to complete the contract because it appeared that the Mortgagee and Receiver’s consent could not be obtained”.

22Ngoc said that in about late June 2012, Tran and Nguyen “began to attend my place for dinner on a regular basis, and…our friendship…became stronger over that time”. Ngoc said that Tran and Nguyen asked Ngoc and Lam to make enquires about the proceedings at VCAT and in the Supreme Court. They also assisted Tran to evict Huynh and Thao from the restaurant. This was achieved with police assistance and the restaurant was closed in about mid-July 2012.

Transfer of share in Hoang Yen

23On about 13 July 2012, Tran and Ngoc executed a transfer form from Tran to Ngoc for one of the two shares Tran held in Hoang Yen. Tran also signed a statutory declaration on that date stating that the share transfer was to “take effect immediately after signing this statutory declaration”. The account given by Ngoc in her affidavit sworn 4 December 2012 of the circumstances leading up to the signing of documents relating to the transfer of shares seems a little confused as to dates. Ngoc said that “on or about 6 or 7 July 2012” she had a conversation with her husband (Lam) about an earlier request by Tran for financial assistance. Ngoc however said that the earlier request for help was in about mid July 2012 after the restaurant closed down.

24Ngoc said that in the first conversation, Tran told her “she was struggling financially and she asked me to help her with her legal fees and with reopening and running the restaurant”. Ngoc said she would speak with Lam. Lam told her that, “if I wanted to get involved in [Tran’s] affairs and to help her reopen and run the restaurant…I should take a share in Hoang Yen before providing any assistance, financial or otherwise”.

25Ngoc said that she told Tran she was prepared to help by lending money for Tran to defend herself in the Supreme Court proceeding and to allow the restaurant to reopen and trade. She would also help Tran to run the business. Ngoc told Tran that she would only do this, “in exchange for half of the shares in Hoang Yen and joint control of the company”.

26Ngoc said that they would build the business up so that it could be sold. She said she told Tran, “I am happy for the loans to be repaid when the business is sold and we can split any other profit we make 50/50. That is what I can offer you. I can’t proceed with the purchase for $250,000 but I can offer you this instead”.

27Ngoc said that Tran told her she would discuss the proposal with Nguyen. Later, on about 13 July, Tran phoned Ngoc agreeing to the proposal and offering to “come over now to take care of the share transfer”. Lam prepared the documents which Tran and Nguyen picked up. Ngoc took Tran to the Footscray Police Station where Tran signed the Statutory Declaration. Later, at Ngoc’s house, Tran and Ngoc signed the Share Transfer form.

28Tran said in her affidavit sworn 5 February 2013, that on 13 July she and Nguyen were at Ngoc and Lam’s house. Lam raised the possibility of him buying the Nicholson Street property as a means of resolving the Supreme Court proceeding. He said it would help him in negotiations with the bank if she let him have a “stand” in Hoang Yen. He suggested transferring one of the two shares in the company to Tran. He said that a transfer to Ngoc rather than to him would be “appropriate” because Ngoc and Tran “already had a contract of sale in place”.

29Tran said she told Lam she felt “uneasy about the transfer as it would mean I give out my assets for free without receiving any money”. Lam told her that “he might not need to register the transfer if the Bank agrees to deal with him directly”. He said it was “a great opportunity for him to buy the premises as it’s a Mortgagee sale, he could get a very cheap price”.

30Lam prepared the papers and Ngoc drove her to the police station to sign the statutory declaration. She said that she and her husband “trusted Lam, so we didn’t even look at the documents”.

31Although Lam swore an affidavit on 17 May 2013, he simply confirmed the matters raised in Ngoc’s December affidavit without addressing the version of events given by Tran in her February affidavit. Similarly, in Ngoc’s second affidavit sworn on 17 May 2013, Ngoc also did not refer to the alternative version of events given by Tran in her February affidavit.

Payments made by Ngoc

32Following the execution of the share transfer documents, Ngoc and Lam made a number of payments, which they said were made pursuant to the loan arrangement entered into with Tran. These payments were made by Ngoc principally from her credit card account, and were as follows:

a.8 August 2012, $330 paid to LAC Law;

b.17 August 2012, $3,000 paid to AJH Lawyers;

c.21 August 2012, $5,720 for outstanding rent and body corporate fees on the premises;

d.21 August 2012, $6,850 paid to AJH Lawyers;

e.23 August 2012, $5,606.40 paid to AJH Lawyers;

f.27 August 2012, $8,500 paid to AJH Lawyers;

g.28 August 2012, $7,725.55 for rent and body corporate fees on the premises.

h.29 August 2012, $5,500 paid to AJH Lawyers;

i.10 September 2012, $10,000 to AJH Lawyers;

j.28 September 2012 for rent and body corporate fees on the premises;

k.5 October 2012, $8,700 paid to AJH Lawyers;

l.29 October 2012 for rent;

m.12 November 2012, $8,896.50 paid to AJH Lawyers;

The total of the payments for legal fees was $57,382.90. The total of the payments for rent and body corporate fees was $28,296.65.

$18,000 loan to Mr Nguyen

33On 21 August 2012, Nguyen executed a Deed of Loan which recorded a loan of $18,000 from the Lam Superannuation Fund to Nguyen. The schedule to the Deed recorded that the loan was to be repaid “within 24 months from 21 August 2014”. Lam said in evidence that this was a mistake and the Deed should have referred to the repayment date as 21 August 2014, or 24 months from the specified commencement date on 21 August 2012.

34Nguyen said it was agreed the repayment would not need to be made until well into the future because he had told Lam he was bankrupt and would not be released from bankruptcy for at least 2 years. The Deed provided for Nguyen to pay monthly interest at “1.5% per month and calculated [and payable] from 21 August 2012”.

35Tran, in her February 2013 affidavit, said that by a date in August 2012, Lam had paid rent and legal fees totalling about $13,000. He asked Tran and Nguyen to come to his house. He produced the Loan Deed and asked Nguyen to sign it “for the cost he had spent”. Despite his reluctance, Nguyen was persuaded by Lam to sign the document, Lam said “the repayment would not start until 2014”. Lam said the extra “$5,000 is for solicitor’s bill next time”. Lam, an accountant, offered to set up a self managed superannuation fund for Tran and Nguyen. He said, “This is for preparation when more legal costs arrive”.

36Ngoc did not refer to the Loan Deed in her 4 December 2012 affidavit. In her May 2013 affidavit, Ngoc responded to the matters raised by Tran in her February 2013 affidavit. She said that, “On about 19 August 2012, [Tran] asked me if she could borrow another $20,000. She said to me that she really wanted to move closer to the restaurant but that she and [Nguyen] could not afford to move”. The $20,000 would “pay for rent and bond on a new rental property, as well as for some overdue bills”.

37Lam had suggested lending money through the superannuation fund, although “there was only $18,000 available in the account”. Nguyen signed the Deed and “asked for the $18,000 in cash because he needed the money urgently”. Lam gave Tran and Nguyen $18,000 in cash the next evening. Ngoc said she believed the loan “was a separate and personal issue, unrelated to the Restaurant Business”. Nguyen made two cash payments of $180 as interest on the $18,000 loan.

38Lam, in his May 2013 affidavit, confirmed the version of events given by Ngoc. He also stated that when he set up the self managed superannuation fund for Nguyen he asked both Tran and Nguyen, “Are any of the trustees bankrupt?”. Both replied, “No”. Lam said he did not find out until much later that Nguyen was bankrupt.

39Lam said that, after the restaurant reopened in September 2012, he asked Tran and Nguyen “a few times about when they would be moving house” and they replied that they had not had time to look.

Reopening of the restaurant

40During August 2012, Ngoc and Tran discussed reopening the restaurant and resolving the Supreme Court proceedings. Tran said, in her February 2013 affidavit, that at the end of August Ngoc had approached Nguyen and her “and announced she wanted to reopen the restaurant, just as if it were hers”. Tran told Ngoc she could not afford to; Ngoc replied, “to leave it to her and Lam”. She said, “Lam and I will pay rent and outgoings and staffing. Whether we make a profit or loss it will be our problems”. Lam said that it was a “good proposal while waiting for the Bank to answer him” about the purchase of the premises.

41Ngoc said in her 4 December 2012 affidavit, that she told Tran, “that I would make the necessary preparations to reopen the Restaurant”. Ngoc commenced “interviewing and hiring staff”, “marketing and advertising the reopening”, “purchasing tools, equipment and stock” and “cleaning the premises”. Ngoc said, “I provided all of the funds in connection with the preparation…to Hoang Yen on account of a loan from me to that company”.

42The restaurant reopened on 15 September 2012. Ngoc worked full-time and Tran part-time in the restaurant. Lam did the accounts. In the period 15 September to 22 November 2012, the total sales were $73,769.60 and the expenses, $121,166.62. Lam said the difference of $47,397.02 was loaned by Ngoc to Hoang Yen. Lam said that in addition, “Ngoc loaned [Tran] a total of $85,679.55 for legal fees, rent and body corporate fees”. Ngoc said that she “made all the business decisions in running the Restaurant” and Tran “never expressed a desire to assume any role in the management of the business during this time”.

$40,000 loan by Nguyen

43On 24 September 2012, at the request of Lam, Nguyen withdrew $40,000 from his superannuation fund [that Lam had recently set up] and deposited the money into Ngoc’s credit card account. Tran, in her February 2013 affidavit, said that in late September 2012, Lam had said to Nguyen that he had spent $55,000 so far on the lawyers and asked Nguyen to give him $40,000 from the Superannuation Fund ”as a loan”.

44Lam said that the transaction arose because after the restaurant opened, “only Ngoc was putting money into the restaurant business [and] I thought this was unfair as [Tran and Nguyen] had borrowed money from us [and had] not used it to move house as promised”.

45Ngoc said Lam told her “it was not fair that I was paying for everything given that [Tran] and I had a 50% share” in the restaurant business. Ngoc asked Tran “to lend the company some money”.

46Lam said, the $40,000 was lent “on the condition that the company repay $5,000 per week”. The money was paid into Ngoc’s credit card account because, “at that stage, Hoang Yen did not have a bank account…and all the business expenses were paid from Ngoc’s credit card account or by cash from our takings”.

47A week or so after the loan was made, Tran asked for early repayment of the loan. Over the next six weeks, Ngoc and Lam said, the whole of the $40,000 was repaid. Lam said that, “The payments were made in cash directly from the takings of the Restaurant and from my own personal funds”. Nguyen denied that any amount had been repaid. No receipts for payment were produced in evidence.

Attempts by Lam to purchase the restaurant premises

48In late September 2012, the receivers put the 29 shops in the centre on the market. Lam said that at some stage, Bankwest had put forward a settlement proposal to Tran in respect of the Supreme Court proceeding. The Bank had suggested that Tran find a buyer for the restaurant premises. Lam said that, at the time the settlement offer was received, Tran and Nguyen asked Ngoc and him to buy the premises and repeated the request “over the following weeks”. The draft terms of settlement were not, however, sent by Tran’s solicitors to Tran and Lam until 16 November 2013. It is difficult, therefore, to gain a precise chronology of events.

49Lam apparently discussed the proposal to purchase the restaurant premises with Ngoc and other potential investors. In late October 2012, Lam said he met with a representative of the receivers. On about 20 November 2012, Lam, through his solicitors, made an offer to purchase the two shops comprising the restaurant premises for $1.352 million, conditional upon certain matters. The negotiations were unsuccessful and on 19 April 2013, the restaurant premises were bought at auction by Loc Lam and Binh Le for $2.02 million.

Ky’s offer to purchase the business for $350,000

50Tran said, in her February 2013 affidavit, that in late September/early October, Lam and Ngoc “became less interested in buying my business due to loss incurred. Whenever I raised the query, Lam said his main focus is now to buy the premises”. At this time, however, the fundamental difficulty with the sale of the business was the problem with the lease which was the subject of the unresolved Supreme Court proceeding.

51Ky Minh Le (“Ky”), was an overseas student working in the restaurant. He told Tran that he “wanted to run a restaurant” and “his mother would support him”. Tran said she “did not disclose any information about the restaurant to [Ky] at this time”, but spoke with Lam and Ngoc.

52Ngoc said in her December 2012 affidavit, that Ky had told her that Tran “had approached him to buy the Restaurant” and Ky had agreed to buy the business for $350,000. This sum was the minimum he would need to invest in a local business in order to be granted permanent residency in Australia.

53Ngoc said she was concerned Tran had not consulted her about the proposed sale, She later spoke to Tran and Tran agreed that if the restaurant were sold “for that price, then after my loans of approximately $130,000 were repaid, we could split the balance of $220,000 equally, as we had originally agreed to do”.

54Lam made similar statements in his affidavit but said that both he and Nguyen had been present during the discussions between Ngoc and Tran. Tran said in her February affidavit that the conversation did not involve her husband. Ngoc had said that when Ky paid the $350,000, Ngoc “would deduct all solicitor costs, all running costs and superannuation borrowings and with anything left over she would split into two and [Ngoc] and I [Tran] would receive half each”. Tran said she “disagreed” and wanted to talk to her husband first. Tran said that after that, she and her husband “started to take action to protect my business”.

55Lam said in his affidavit that on 21 November 2012 he phoned Nguyen to tell him that he and Ngoc had made an offer to the Bank to purchase the business premises, Lam said that Nguyen asked him “about the $250,000 that NT888 had agreed to pay for the purchase of the Restaurant Business in May 2012”. Lam said he got upset and told Nguyen, “The contract with NT888 lapsed months ago because the Receivers wouldn’t consent to the transfer of the Lease. We made a new agreement in July and the restaurant business only survived because of Ngoc and the loans”.

56The parties met that night. Ky was present. Lam’s version of events was that Tran said “she always expected the $250,000 from us [and that] we had been using them as part of a plan by us to buy the Restaurant Premises”. Lam said they “were never interested in [the premises and] were just interested in purchasing the business”. Lam showed Ky the share transfer and statutory declaration. Tran said that at the meeting Ngoc “instantly became extremely aggressive [and] kept shouting at us. Lam was also yelling calling us betrayers”.

57The next evening Tran, in Ky’s presence, told Lam that Ky was no longer interested in purchasing the business because the lease issue was unresolved. Lam said Nguyen then asked “Ngoc and I to immediately complete the sale of the business for $250,000 less the loans made by Ngoc to the company and [Tran]”. Lam said they “could not settle because the Receivers would not agree to transfer the Lease”. Lam suggested they defer any action until the following Monday, by which time the Bank should have responded to Lam’s offer to buy the premises. Lam said Tran and Nguyen agreed to wait.

Ngoc and Lam excluded from the premises

58Early on the morning of 23 November 2012, Tran changed the locks of the restaurant. Later, a confrontation occurred when Ngoc and Lam arrived. The police were called and, after speaking by telephone with Tran’s solicitor, they asked Ngoc and Lam to leave. Tran said that as she left, Ngoc said, “I will make you lose everything. You will never be able to sell your business”. Ky gave a version of this conversation in his evidence. The unprompted version was that Ngoc had said, “If I couldn’t buy this restaurant then no one else could. Ky has no hope to buy this restaurant”. Later that day, Nguyen sent a text message to Lam. Lam said that the message stated that Tran “would hand back the Lease to the bank and she would declare bankruptcy so that Ngoc and I would lose all the money”. Nguyen agreed this was an accurate translation.

County Court proceedings and grant of an injunction

59The Writ was issued on 29 November 2012. On 7 December 2012, the parties attended Court and an interlocutory injunction was granted requiring Tran to give Ngoc prior notice before she entered a contract for the sale of the business.

60Tran’s solicitor consented to the injunction. Tran attended Court without her husband. She said later her solicitor persuaded her to consent to the order and Tran sought to have the order set aside. Tran and Nguyen apparently believed that Ngoc had misrepresented the effect of the order to other persons possibly interested in purchasing the business including Loc Lam and Binh Le who had apparently paid $20,000 to Tran as a deposit for the purchase. Tran said that Ngoc’s actions had made it impossible for Tran to find another buyer for the business. On about 7 December 2012, Tran closed the restaurant. In early January 2013, Tran and Nguyen removed furniture and equipment from the restaurant.

Cancellation of restaurant bookings

61Tran has alleged that between the time after Ngoc and Lam were excluded from the restaurant on 23 November, and 7 December 2012, when the restaurant closed, Ngoc had deliberately cancelled restaurant bookings.

62The evidence of these matters is that:

a.on 21 November 2012, Ngoc received an email requesting a booking for 13 on 27 November 2012. On 25 November 2012, Ngoc responded, advising “that there was a dispute between myself and my business partner [Tran] and that the booking, if accepted, might be cancelled”;

b.on 7 December 2012, Ngoc received an email requesting a booking for 6 for lunch on 11 December. Ngoc replied that she was “not managing the Huang Yen Buffet at that stage”.

c.on 26 November 2012, Ky, who was managing the restaurant, received an email from a customer cancelling a booking after “Ms Nga [Ngoc] has just contacted and informed me that the Hoang Yen Buffet is likely to close up either this week or next week”.

Conclusions

63Action against Tran for repayment of advances: Ngoc claims the sum of $86,499.55 from Tran as damages for breach of an agreement made on about 13 July 2012. Further and alternatively, Ngoc alleges that Tran is estopped from denying the terms of the agreement.

64The sum of $86,499.55 is made up of the payments made by Ngoc on Tran’s behalf as set out earlier in paragraph 32.

65The agreement relied upon by Ngoc is contained in paragraph 47 of her December 2012 affidavit. The affidavit sets out the “effect” of a discussion Ngoc says she had with Tran, which on 13 July 2012 was consummated by Tran’s agreement to Ngoc’s proposal and the execution of the Share Transfer and Statutory Declaration.

66The “effect” of the discussions included the following:

a.Ngoc could lend Tran money to defend herself in the Supreme Court case;

b.Ngoc could lend Hoang Yen money so that the restaurant could reopen and trade;

c.Ngoc would help Tran run the restaurant business;

d.Ngoc wanted half the shares and joint control of the company, Hoang Yen;

e.this was to protect herself if she were to help run the business and provide funding;

f.Ngoc and Tran would reopen the business, to build it up and sell it;

g.this was on the assumption that they could “deal” with the Supreme Court case in the meantime;

h.the loans would be repaid when the business was sold;

i.any other profit would be split 50/50;

j.Ngoc was making this offer because she could not “proceed with the purchase for $250,000”.

67      By way of defence, Tran says that:

a.the 21 May 2012 contract for purchase of the business by Ngoc’s company NT888 for $250,000 continued to bind the parties. The condition in the contract requiring consent to the transfer of the lease or a new lease did not need to be fulfilled once the mortgagee offered to sell the restaurant premises to a willing purchaser as a means of resolving the Supreme Court proceeding;

b.there was no agreement that Tran would have any responsibility for monies advanced by Ngoc to lawyers or for the business;

c.Ngoc’s decision in September 2012 to reopen the restaurant was on the basis that Ngoc was “borrowing” Tran’s lease and chattels, that Ngoc and Lam would “pay rent and outgoings and staffing”, and whether or not Ngoc and Lam made “a profit or loss…it will be our [ie Ngoc and Lam’s] problems”.

68The unsupported evidence of all witnesses was unpersuasive. The impression was that witnesses selected parts of conversations which suited them and refashioned the discussion into what appeared as precise dialogue in their affidavits. I do not consider it would be appropriate to rely upon these statements. The evidence of Ngoc and Lam was largely untested because of the difficulties Tran had cross-examining the witnesses. This is not, however, the reason for not accepting the literal truth of the evidence of Ngoc and Lam, particularly the statements in their affidavits. In my view, the evidence of conversations from all witnesses led to the conclusion that much has been omitted and the evidence was an attempt to put forward the most favourable case for that party.

69I consider, however, that the circumstances in which payments were made by Ngoc on Tran’s behalf make it appropriate to order that Tran repay the sums which have been established by the evidence. I have had regard to the following matters:

a.Tran did not want to run the restaurant although she was happy to be involved in it. The restaurant was managed by Huynh and Thao until mid July 2012 when it was closed, and later when it was reopened in mid September 2012 by Ngoc, and then Ky;

b.Tran entered into the contract for the sale of the business to Ngoc’s company, NT888 on 21 May 2012;

c.the sale to Ngoc’s company could not be finalised until the lease was assigned or a new lease granted;

d.the Supreme Court proceeding directly concerned the validity of Tran’s lease. Until that litigation was resolved or favourably concluded, Tran could not settle the contract for the sale of the business;

e.Tran did not have the financial resources to continue paying the lawyer’s fees for the VCAT and Supreme Court proceedings or the rental and associated payments for the premises which the lawyers advised must be paid if Tran was to have any chance of succeeding in the cases;

f.whilst Ngoc and Lam had their own reasons for wanting Tran to continue defending the Supreme Court action (so that Ngoc’s company could finalise the purchase of the business by Tran, or so that the continuing pressure on the Bank might persuade it to sell the business premises to Lam), Tran stood to lose the lease, and therefore any chance of selling the business, if she could not continue to defend the action;

g.it is likely Tran asked Ngoc and Lam for financial help. Ngoc and Lam were helping with childminding and by attending Court hearings. The couples had developed a close friendship by this time and their mutual aspirations were, to a significant extent, bound together;

h.Tran was prepared, at least on paper, to create the impression that Ngoc was jointly involved in the business, by executing the Share Transfer and Statutory Declaration;

i.the payments made by Ngoc continued over many months and amounted to a significant sum;

j.during these months, Tran agreed to the reopening of the business with Ngoc effectively in control;

k.in late September 2012, Tran and Nguyen agreed to advance the sum of $40,000 apparently to assist in meeting the expenses of the business and in recognition of the contribution previously made in this regard by Ngoc;

l.in the conversations between the parties on 29 November 2012, there appeared to be an awareness by Tran that the payments by Ngoc would need to be taken into account if Ngoc were to settle the purchase of the business.

70I do not necessarily accept that the parties entered into an agreement in the terms pleaded by Ngoc in the Statement of Claim, or as stated by her in her affidavits. I do, however, accept that the monies advanced by Ngoc for the payments of the lawyer’s fees and for part of the rental and body corporate fees pursuant to the lease, were paid at the request of Tran and in circumstances where she accepted she would need to repay these amounts. If for some reason any such agreement between the parties could not be enforced, it would have been appropriate nevertheless, to order restitution to Ngoc of the amounts advanced.

71The payments made for the rent and outgoings of the business on 28 September 2012 and 29 October 2012 were made after Ngoc commenced accepting responsibility for the expenses of the business so that it could reopen. I consider that these payments are properly to be claimed against Hoang Yen and not Tran. The total of the payments made by Ngoc at the request of Tran was $70,627.90. I have excluded the two payments for rent and other outgoings after the business reopened in September 2012.

72Action against Hoang Yen for payment of the business losses: Ngoc seeks payment of the sum of $44,494.93 from Hoang Yen. The claim was made pursuant to the same agreement relied upon by Ngoc in respect of the advances made by Ngoc to Tran.

73Reliance upon the agreement, as pleaded, is even less compelling in relation to the company. However, I am satisfied that because of the circumstances in which the losses were incurred that Ngoc should be entitled to treat the expenses she paid in running the business after it reopened in September 2012, less the income received, as a debt due to her from the company.

74I accept the evidence of Ngoc and Lam that the takings of the business for the relevant periods totalled $121,166.62 and the business expenses paid by Ngoc totalled $73,769.60, together with the two further payments of $7,525.55 for rent and other outgoings on 28 September and 29 October 2012. The total adjusted claim is $59,546.03. On 13 July 2012, Tran executed documents to effect the transfer of one of the two shares in Hoang Yen to Ngoc. Thereafter, each was entitled to an equal financial share in the company. It was likely that both Ngoc and Tran anticipated that Ngoc would be appointed a director of the company. Certainly, Tran (as the only other person with a financial interest) was content for Ngoc to assume the principal responsibility for the preparations for the reopening of the restaurant and for managing the business thereafter.

75In the circumstances, where a shareholder used her own personal funds to pay for the ongoing expenses of the business, it would be expected that those expenses (or such of them which were not offset by the takings of the business) would be treated as a loan by the shareholder to the company, repayable upon demand.

76I do not accept the evidence of Tran that the arrangement by which the restaurant reopened in September 2012 was to allow Ngoc to operate the business entirely at her own risk. Such a conclusion would involve ignoring the evidence of Tran’s continued participation in the business and the negotiations with Ky in about October 2012 for the sale of the business from Tran to him.

77Ngoc’s shareholding in Hoang Yen: As a consequence of Tran’s execution of the documents relating to the transfer of one of the two shares in the company, Ngoc is entitled to:

a.a declaration that Ngoc has, since 13 July 2012, been the holder of one fully paid ordinary share in Hoang Yen;

b.an order that Tran take all necessary steps to effect the transfer of the share including the delivery of a share certificate and the registration with ASIC of the share transfer.

78Insofar as the Statement of Claim seeks relief in relation to registration of the share transfer pursuant to section 1071F(2)(a) of the Corporations Act 2001 (Cth), the County Court has no power as a “lower case” court to grant that relief.

79Counterclaim for completion of the 21 May 2012 contract: There is no basis for Tran to claim that NT888 should have completed the purchase of the business. The purchase price of $250,000 was only payable if the receivers agreed to the transfer of the existing lease or the grant of a new lease. This did not happen.

80Tran suggested that the fact the restaurant premises were offered for sale and Lam made an offer to purchase the property required NT888 to proceed with the purchase. This ignores the fact that Lam did not purchase the property, and it was unlikely that the bank would have ever been prepared to sell it to him for the price, or upon the other terms, he offered.

81Counterclaim for the cancellation of restaurant bookings: The evidence suggests that three customers cancelled bookings possibly or even probably as a result of intervention by Ngoc. It is doubtful that the actions by Ngoc in any circumstances could be regarded as an actionable tort, or a breach of any duty owed by Ngoc to Tran by reason of their shared responsibility for the management of the business or to protect the business sold by the 21 May 2012 contract.

82Leaving aside these issues of liability, and other matters of causation, it would seem that any loss would have been suffered by Hoang Yen. In the circumstances, there would appear to be little basis for this claim.

83Counterclaim arising from proposed sales prevented by Ngoc’s misuse of the injunction: Tran alleges that offers to sell the business were withdrawn when Ngoc misstated to potential purchasers the effect of the injunction granted on 7 December 2012.

84There was no evidence of the reason the offers, if in fact made, were withdrawn or would have resulted in effective contracts to purchase the business. Accordingly, this claim must also fail.

85Apart from these matters, it is difficult to reach any other conclusions about the contested factual issues in the case, including the loan of $18,000, the loan and possible repayment of $40,000 and the extent of Lam’s interest in purchasing the business premises. I have been unable to determine where the truth lies in relation to those issues and it has not been necessary for me to do so in order to decide the claims and counterclaims made in the proceeding.

Orders

86The following orders are appropriate:

a.Judgment for the plaintiff against the first defendant that the first defendant pay to the plaintiff the sum of $70,627.90, together with statutory interest from the date of issue of the writ (29 November 2012);

b.Judgment for the plaintiff against the second defendant that the second defendant pay to the plaintiff the sum of $59,546.03 together with statutory interest from the date of the issue of the writ;

c.A declaration that the plaintiff is and has been since 13 July 2012, the holder of one fully paid ordinary share in the second defendant;

d.An order that the first defendant take all steps necessary to transfer one fully paid ordinary share in the second defendant to the plaintiff, including the preparation of a share certificate and the registration with ASIC of the transfer of the share;

e.The counterclaim is dismissed.

87I will hear further from the parties about the form of the order and the question of costs.

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Certificate

I certify that these 19 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 14 June 2013.

Dated:14 June 2013

Philippa Gilkes 

Associate to His Honour Judge Anderson