Wang v Yu

[2023] NSWSC 1182

Supreme Court

New South Wales

Medium Neutral Citation:

Wang v Yu [2023] NSWSC 1182

Hearing dates:

13-15 June, 1-3 August 2023

Date of orders:

5 October 2023

Decision date:

05 October 2023

Jurisdiction:

Equity

Before:

Meek J

Decision:

Findings made against Plaintiff’s claim and in favour of First Defendant’s cross-claim. Parties to bring in short minutes of order

Catchwords:

COMMERCIAL — Property development venture — P introduces D1 (a friend) to an investor (P’s then boyfriend) and D1 by the trustee of his family trust (D2) suggests and enters into a project with the investor through the mechanism of a Unit Trust to develop property at Meadowbank purchased by a company (D3) — D1 commits his time and expertise to the project and investor commits initial funds pending further investors providing more substantial funds — P requested by investor to act as a “gatekeeper” for investor’s money but starts to make payments to D3 at the request of the investor — Subsequent dispute as to whether the payments are made on behalf of the investor or funds contributed by P by way of loan to D3 — P’s relationship with the investor breaks down and P presses claims for recognition of her contribution of funds — A Unitholders Agreement recognising adjustment of rights to accommodate more substantial investors makes no provision for P’s payments — P sets up a meeting to confront D1 regarding recognition for her payments — P fails to attend meeting but her new boyfriend (2XD) attends the meeting and allegedly assaults D1 — Subsequently, following the meeting, D1 makes an immediate payment of $10,000 to 2XD and later on pays sums totalling $200,000 to 2XD for P and after negotiations D1 enters into a Deed of Settlement and Release acknowledging payments made to P and providing for transfer of D2’s beneficial interest in units to P — Later still, D1’s solicitor sends correspondence purportedly affirming Deed — Ultimately, P sues for specific performance of obligations in Deed to effect transfer of beneficial interest in units — Later, D1 brings a cross-claim alleging Deed entered into under duress and seeks to “void” Deed and recover payments against P and new boyfriend — Held assault occurred, Deed entered into as a result of duress, purported affirmations occurred whilst duress persisting, Defendants entitled to avoid Deed

UNIT TRUSTS — Doctrinal differences between shares and units discussed

CONTRACTS — Duress — Forms — Duress to the person — Assault — Whether will deflected in entering into Deed of Settlement and Release — Whether Deed was affirmed on several occasions — Whether duress still operative

EVIDENCE — Principle in Jones v Dunkel — Failure of 2XD (P’s ex-boyfriend) to be called to give evidence — Discussion of principles regarding failure to call the witness on issue of alleged assault — Whether inference should be drawn where witness may be asked about assault — Discussion regarding whether the potential availability of protection afforded by a s 128 Evidence Act 1995 (NSW) certificate impacts whether a Jones v Dunkel inference may be drawn — It is necessary to distinguish between cases in which the witness, if called, would have been asked by the party calling them to admit to a crime of some seriousness from cases in which (as here) the witness would likely (consistent with the defence to the claim) deny any such crime — Held on the facts Jones v Dunkel inference able to be drawn consequent upon the failure of 2XD to give evidence in defence of the cross-claim and the failure of P to call 2XD in her case

WITNESSES — Principle that there is no “property” in a witness — Rules regarding legal representatives conferring with a client of other legal representatives

PLEADINGS — Expression “at all material times” — Unhelpful in clarifying issues in circumstances where anything connected with a time period is a pleaded fact

EQUITABLE REMEDIES — Rescission — Discussion regarding availability of restitution — Differences between rescission at law and in equity — Onus of proof — Once the party seeking rescission demonstrates that they are entitled to rescind a contract, the onus falls to the party opposing rescission to demonstrate that restitutio in integrum is no longer possible or that the rescinding party is otherwise disentitled to rescind

LIMITATION DEFENCES — Whether the right and title to the debt of a person having a cause of action to recover a debt is extinguished automatically pursuant to s 63 Limitation Act1969 (NSW) independently of whether s 14(1)(a) is pleaded as a (limitations) defence to that cause of action

Legislation Cited:

Chancery Amendment Act 1858, 21 & 22 Vict, c 27

Evidence Act 1995 (NSW)

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW)

Limitation Act 1969 (NSW)

Limitation of Actions Act 1974 (Qld)

Supreme Court Act 1970 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

A v N [2012] NSWSC 354

Abram Steamship Co Ltd v Westville Shipping Co Ltd [1923] AC 773

Alati v Kruger (1955) 94 CLR 216; [1955] HCA 64

Ampol Ltd v Caltex Oil (Aust) Pty Ltd (Supreme Court (NSW), Foster J, 22 December 1982, unrep)

Antonio v Antonio [2010] EWHC 1199 (QB)

Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (No 4) (2008) 170 FCR 9; [2008] FCA 1038

Aust-Wide Management Ltd (Receiver Appointed) v Chief Commissioner of Stamp Duties (1996) 33 ATR 384

B & S Contracts and Design Ltd v Victor Green Publications Ltd [1984] ICR 419

Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319

Barton v Armstrong [1976] AC 104

Berridge v Public Trustee (1914) 33 NZLR 865

Binsaris v Northern Territory (2020) 270 CLR 549; [2020] HCA 22

Bloomingdale Holdings Pty Ltd v 63 Buckley Street Pty Ltd [2008] VSC 168

Braam v BBC Hardware Ltd [2020] VSCA 164

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Brown v Smitt (1924) 24 CLR 160; [1924] HCA 11

Cachia v Westpac Financial Services Ltd [2000] FCA 161; (2000) 170 ALR 65

CBS Songs Ltd v Amstrad Consumer Electronics PLC [1988] AC 1013

Chapman v Colson [2015] NSWSC 120

Charles v Federal Commissioner of Taxation (1954) 90 CLR 598; [1954] HCA 16

Chief Commissioner of State Revenue v Centro (CPL) Ltd (2011) 81 NSWLR 462; [2011] NSWCA 325

Clayton Utz (a firm) v Dale (2015) 47 VR 48; [2015] VSCA 186

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40

CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121

De Lorenzo v De Lorenzo [2020] NSWCA 351

Dilosa v Latec Finance Pty Ltd (No 2) [1966] NSWR 259

Director of Public Prosecution for Northern Ireland v Lynch [1975] AC 653

Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24

Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599

Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36

Elite Realty Development Pty Ltd v Sadek [2022] NSWSC 1333

Elite Realty Development Pty Ltd v Sadek [2023] NSWCA 165

Elkington v Moore Business Systems Australia Ltd (1994) 13 ACSR 342

Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218

Fabre v Arenales (1992) 27 NSWLR 437

Festa v The Queen (2001) 208 CLR 593; [2001] HCA 72

Fish & Fish Ltd v Sea Shepherd UK [2015] AC 1229

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15

Harmony Shipping Co SA v Davis [1979] 3 All ER 177

Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298

Hill v Rose [1990] VR 129

Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168

Hudak v Adams [2013] NSWSC 1464

In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302

Jagatramka v Wollongong Coal Limited [2021] NSWCA 61

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Jonsue Investments Pty Ltd v Balweb Pty Ltd [2013] NSWSC 325

Knell v QAV Pty Ltd [2020] WASCA 23

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61

Kramer v McMahon [1970] 1 NSWR 194

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11

Lewis v Nortex Pty Ltd (in liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1083

Ling v Pang [2023] NSWCA 112

Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23

Malek Fahd Islamic School Ltd v Minister for Education and Early Learning [2023] NSWCA 143

Maskell v Horner [1915] 3 KB 106

Mason v New South Wales (1959) 102 CLR 108; [1959] HCA 5

McGrath v Troy as Administratrix of Estate of Wade [2010] NSWSC 1470

North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705

O'Sullivan v Management Agency and Music Ltd [1985] QB 428

Pao On v Lau Yiu Long [1980] AC 614

Papas v Co [2018] NSWSC 1404

Payne v Parker [1976] 1 NSWLR 191

Penhall (as executor of the estate of the late Paul Sukkar) v Abu. Tony Pty Ltd atf Abu. Tony Discretionary Trust [2023] NSWSC 434

Permanent Custodians v Nobilo [2012] NSWSC 109

Price v Spoor (2021) 270 CLR 450; [2021] HCA 20

R v Rogerson; R v McNamara (No 24) [2016] NSWSC 105

Re Hillsea Pty Ltd [2019] NSWSC 1152

Re Investa Properties Ltd [2007] FCA 1104; (2007) 25 ACLC 1186

Reef & Rainforest Travel Pty Ltd & Anor v Commissioner of Stamp Duties [2002] 1 Qd R 683; [2001] QCA 249

RHG Mortgage Corporation Ltd v Ianni [2016] NSWCA 270

RHG Mortgage Ltd v Ianni [2015] NSWCA 56

Rowell v Larter (1986) 6 NSWLR 21

Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53

Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47

Smith v William Charlick Ltd (1924) 34 CLR 38; [1924] HCA 13

Spedley Securities Ltd (in liq) v Greater Pacific Investments (in liq) (1992) 30 NSWLR 185

Spence v Crawford [1939] 3 All ER 271

Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573

Universe Tank Ships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366

Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102; [1995] HCA 14

Texts Cited:

Barker, Kit, Peter Cane, Mark Lunney and Francis Trindade, The Law of Torts in Australia (5th ed, 2012, Oxford University Press)

Beale, Hugh, Chitty on Contracts (31st ed, 2012, Sweet & Maxwell)

Carter, JW, Elisabeth Peden and GJ Tolhurst, Contract Law in Australia (5th ed, 2007, LexisNexis Butterworths)

D’Angelo, Nuncio Commercial Trusts (2014, LexisNexis)

Encyclopaedic Australian Legal Dictionary (LexisNexis)

Halsbury’s Laws of Australia (online)

Heydon, JD and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)

Heydon, JD, Cross on Evidence (online, LexisNexis)

Heydon, JD, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2014, LexisNexis)

Meagher, RP, WMC Gummow & JRF Lehane, Equity – Doctrines & Remedies (3rd ed, 1992, Butterworths)

O’Sullivan KC, Dominic, Steven Elliott KC and Rafal Zakrzewski, The Law of Rescission (3rd ed, 2023, Oxford University Press)

Odgers SC, Stephen, Uniform Evidence Law (16th ed, 2021, Thomson Reuters)

Pittavino, David A, and Xavier P Walsh, “Pacta Sunt Servanda: The Enforcement of Bargains and the Limitation of Actions” (2023) 1(2) Contract and Commercial Law Review 120

Wigmore, John Henry, Treatise on the Anglo-American System of Evidence in Trials at Common Law (3rd ed, 1940, Little, Brown & Co)

Category:

Principal judgment

Parties:

Lu Wang (Plaintiff / First Cross-Defendant)
Jiayi Yu (First Defendant / First Cross-Claimant)
STYU Pty Ltd atf SY Family Trust (Second Defendant)
Auslon Property Group Pty Ltd atf 567 Pacific Unit Trust (Third Defendant)
Song Yang (Second Cross-Defendant)

Representation:

Counsel:
D Smallbone (Plaintiff / First Cross-Defendant)
P Lonergan (Defendants / First Cross-Claimant)
J Mack (Second Cross-Defendant)

Solicitors:
Sunfield Chambers Solicitors & Associates (Plaintiff / First Cross-Defendant)
Kammoun Sukari Lawyers (Defendants / First Cross-Claimant)
Harris Freidman Lawyers (Second Cross-Defendant)

File Number(s):

2020/301530

JUDGMENT

Introduction

1. HIS HONOUR: These proceedings arise out of arrangements between the parties relating to a development of property at Meadowbank (project). The project commenced following the plaintiff, Lu Wang (Dr Wang) mutually introducing for investment partnership purposes a former school friend and acquaintance, the first defendant, Jiayi Yu (otherwise known as Steven Yu (Mr Yu)) and Dr Wang’s then boyfriend, Toshiyuki Yamaguchi (Mr Yamaguchi).

2. The project involved the building of a block of 30 residential apartments and a single retail shop: T 209-210, Exhibit P23. It was structured through a unit trust (Trust) in which a company of which Mr Yu is the sole director and shareholder (namely, the second defendant, STYU Pty Ltd ATF Sy Family Trust (STYU)) and Mr Yamaguchi held an equal number of units.

3. The third defendant, Auslon Property Group Pty Ltd (APG), was the trustee of the Trust.

4. The events bear some features common to commercial arrangements between parties involved in property development.

5. However, what started as a type of joint venture property development between Mr Yu/STYU and Mr Yamaguchi in which Dr Wang – from Mr Yu’s perspective – was initially a form of supervisor or “gatekeeper” of investment funds paid by Mr Yamaguchi morphed into something more undefined whereby Dr Wang began to make payments to APG (the character of which payments is in dispute).

6. The arrangements between Mr Yu and Mr Yamaguchi were oral and not formally documented. Their rights as between themselves may be gleaned from Mr Yu’s evidence regarding his discussions with Mr Yamaguchi, inferences drawn from the terms of the Trust, and an email 2 days after the Trust was created referring to Mr Yu’s understanding of the arrangements between them.

7. As can often happen between people who are acquaintances, when they engage in business relations with one another the arrangements are either not documented at all or poorly documented and their respective understandings of what the arrangements are, and their entitlements differ.

8. That frequent occurrence has happened here.

9. The informality attending the arrangements between Mr Yu and Mr Yamaguchi was compounded by a complete failure, at least initially on the part of Dr Wang, to seek to formalise and document with Mr Yu and APG the basis on which she commenced to make payments to APG. Over time, with the making of more payments, Dr Wang’s desire to assert claims of right regarding such payments increased. Her ability to press her claims became more complicated consequent upon the breakdown of her relationship with Mr Yamaguchi.

10. Then, sadly, the interactions between Dr Wang and Mr Yu took on a more sinister character in which consequent upon Dr Wang seeking to press her claims for recognition of monetary inputs to the company on the one hand and Mr Yu not directly recognising such claims (at least in part because he regarded it as being a matter to be sorted out as between Dr Wang and Mr Yamaguchi), Mr Yu claims he was assaulted on 11 May 2015 by Dr Wang’s new boyfriend, the second cross-defendant, Song Yang (known as Allen Yang (Mr Yang)). Ultimately, on 28 June 2016, Mr Yu says he was pressured to enter a deed of settlement and release (Deed) by duress from fear of Mr Yang, which Mr Yu says occurred at the instigation of Dr Wang. Further, monies were paid by Mr Yu to Mr Yang immediately after the alleged assault and, additionally, monies were paid by Mr Yu to Mr Yang for Dr Wang prior to the entry into the Deed (he says) at the request of and under the threat of violence from Mr Yang.

11. On 13 April 2021, Mr Yu and STYU claimed to have elected to “void” the Deed by reason of duress.

12. Dr Wang in the proceedings principally claims specific performance of the Deed. In particular, Dr Wang seeks an order that:

1. STYU transfer all of its beneficial interest in Class B Units under the Trust which it holds jointly with Mr Yamaguchi by way of trust deed: cl 4A;

2. STYU and Mr Yu undertake to use their best endeavours to transfer the beneficial interest in the Class B Units upon completion of the project: cl 4D2; and

3. STYU and Mr Yu do everything necessary to give effect to the above: cl 10:

CB 103, 560, 561.

13. Mr Yamaguchi is not a party to the Deed, and Mr Smallbone (who appeared for Dr Wang) submitted it is evident that the parties decided that STYU would declare itself to be the trustee of its interest for Dr Wang and chose to give effect to their agreement to effect what is described, perhaps clumsily, as a transfer but is (he submits) in fact a declaration of trust: T 9.42-.48.

14. Dr Wang seeks other relief which essentially depends upon whether the order for specific performance is made or not including that APG prepare books and certain records of accounts, and that an enquiry be held and an account be taken as to the benefits, interest and profits obtained by Mr Yu and STYU from the Class B Units, and, in addition to or in lieu of specific performance, orders that they pay Dr Wang damages at law for breach of covenant or in equity under Lord Cairns’ Act (a colloquial reference to the Chancery Amendment Act 1858, 21 & 22 Vict, c 27 – now see s 68 Supreme Court Act 1970 (NSW)) for damage it is said that Dr Wang has sustained by reason of the refusal of the defendants to specifically perform the deed or for breach of covenant: CB 104-105.

15. Mr Yu, by a cross-claim, seeks declarations that agreements to pay monies to Dr Wang and Mr Yang are void and of no effect and seeks repayment of the funds he paid and judgment for $210,000.

16. It may be noted that the defendants (who are all parties to the Deed) and Mr Yu and STYU in particular did not expressly seek a declaration that they had avoided the Deed.

17. Nonetheless, as noted below, it was obvious that whether the Deed has been effectively avoided was essentially an issue as between the defendants and Dr Wang (in particular, whether, if the Deed was avoided, restitution was possible).

18. Ultimately, I have found that the Deed was entered into by the defendants as a result of duress.

19. The above-mentioned four persons are the main participants featured in this real-life drama. Two of them, Dr Wang and Mr Yu, gave evidence. The other two (Mr Yamaguchi and Mr Yang) were not called to give evidence giving rise in their case to questions as to whether a Jones v Dunkel inference arose.

20. Dr Wang is the common link between the main parties. She had known Mr Yu since school days. She had also known Mr Yamaguchi since childhood and was in a relationship with Mr Yamaguchi during the early part of the period covered by the relevant events. She ceased to be in a relationship with him and from February 2015 was in a relationship with Mr Yang until February 2017: T 98.39, 160.34-36.

21. There were aspects of the evidence of Dr Wang and Mr Yu which I found difficult to accept. I will address this more particularly below.

22. I will address specifically below the events that bear upon the issues in the proceedings listed below. However, it is helpful to give a brief summary of the context of the parties’ claims in the proceedings.

23. Mr Yu outlined the project to Dr Wang who introduced Mr Yamaguchi as the initial investor. Mr Yu says that he spoke with Mr Yamaguchi and agreed that Mr Yamaguchi would provide initial funding for the project and that Mr Yu would contribute his time, skills, connections and an office space.

24. In July 2014, the Trust was created with STYU holding 20 units and Mr Yamaguchi 20 units (totalling 40 units).

25. Mr Yu says that he and Mr Yamaguchi would be equal unitholders (50-50) but envisaged that, ultimately, other more substantial investors would be required.

26. Other investors were introduced to the project by a unitholders agreement signed on 24 April 2015 (Unitholders Agreement).

27. Dr Wang was from the time of the creation of the Trust a director of APG with Mr Yu. She was also the signatory to APG’s bank account. Surprisingly, Mr Yu was not also a signatory to the bank account.

28. Dr Wang says that she paid to APG (and an associated company) sums totalling $616,206.83 as funding for various purposes. The bulk of those funds was paid in over the period 13 October 2014 to 23 March 2015.

13. Dr Wang claims that she sought to have her funds repaid. Mr Yu, on the other hand, says that prior to January 2015, he had no idea that she contributed funds.

14. I will describe salient features of the Unitholders Agreement below. However, it suffices to note at this point that there was a restructuring of unit entitlements.

15. STYU’s units and Mr Yamaguchi’s units were, for want of a better description, converted to D Class Units and they were issued with B Class Units, the features of which I will refer to below.

16. The events reached a crisis point in late-June 2016 whereby Dr Wang says that STYU agreed by the Deed to transfer its beneficial interest in its B Class Units to Dr Wang in addition to her having received from Mr Yu and STYU the sum of $200,000.

17. It is that deed which has become the focus of the parties’ rights in the proceedings. Dr Wang, for her part, seeks to enforce the Deed. Mr Yu, for his part, claims that the Deed was entered into by him under duress and he asserts that in April 2021, he elected to “void” the Deed.

18. I pause to note that various parts of the evidence and submissions in these proceedings contained references to unitholders possessing “legal title” to, or “legal interest” or “legal estate” in, units of the Trust: see, e.g., CB 176, 499, 561, 578; T 10, 12, 513, 528, 529. Such references are misconceived. It is true that units in a unit trust are often compared to or spoken in terms that emphasise their resemblance to shares in a functional or commercial sense: Charles v Federal Commissioner of Taxation (1954) 90 CLR 598; [1954] HCA 16 at 608-609 per Dixon CJ, Kitto and Taylor JJ; Cachia v Westpac Financial Services Ltd [2000] FCA 161; (2000) 170 ALR 65 at [87] per Hely J; JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis) at [3-12]; Nuncio D’Angelo, Commercial Trusts (2014, LexisNexis) at [1.40]. Both shares and units entitle their holder to certain rights, which may include rights with respect to voting, payment of funds (by way of dividend (shares) or distribution (units)) and may be organised into different types of “class”.

19. Doctrinally speaking, however, shares and units differ in significant respects. A share is a legal chose in action: Re Investa Properties Ltd [2007] FCA 1104; (2007) 25 ACLC 1186 at [26] per Lindgren J; De Lorenzo v De Lorenzo [2020] NSWCA 351 at [20] per Leeming JA. Both legal and equitable title to shares may be enjoyed where, e.g., one person holds shares on trust for another person. On the other hand, a unit in a unit trust, like the interests enjoyed by beneficiaries of other types of trust, is necessarily an equitable chose in action: Aust-Wide Management Ltd (Receiver Appointed) v Chief Commissioner of Stamp Duties (1996) 33 ATR 384 at 386 per Handley JA (Beazley JA – as her Excellency then was – agreeing); Elkington v Moore Business Systems Australia Ltd (1994) 13 ACSR 342 at 350 per Bryson J (as his Honour then was). A unit constitutes an undivided share in the beneficial estate in the property held subject to the unit trust, with the trustee holding the legal title to that property (although the extent to which it can be said a unitholder has a proprietary interest in particular items of property forming the subject matter of the trust will necessarily vary depending on the terms of the trust deed: Jonsue Investments Pty Ltd v Balweb Pty Ltd [2013] NSWSC 325 at [20] per White J (as his Honour then was)).

20. A unit in a unit trust, like other equitable interests, may be assigned to a third party or held on sub trust (see, e.g., Chief Commissioner of State Revenue v Centro (CPL) Ltd (2011) 81 NSWLR 462; [2011] NSWCA 325 at [46]) but it is wrong to say that a unitholder can possess legal title to units: Reef & Rainforest Travel Pty Ltd & Anor v Commissioner of Stamp Duties [2002] 1 Qd R 683; [2001] QCA 249 at [11] per McPherson JA (Thomas JA and Muir J agreeing). The fact that there may be a “register” of unitholders does not convert what is an equitable chose in action (the unit) into legal property.

The parties

37. Dr Wang was born in September 1980 in Liaoning, China. At the time of the hearing, she was aged 42. Dr Wang can speak, read and write in English: e.g. CB 185[39].

38. Dr Wang is qualified as a medical practitioner in China and Australia and an accredited specialist respiratory physician: CB 168. In her affidavits, she described her occupation as being “Medical Practitioner”: CB 161, 168. Currently, she indicated that she still practices lawfully, though mainly does consultation jobs regarding any pharmaceutical and medical projects: T 53.

39. Mr Yu was born in January 1982 (approximately 16 months after Dr Wang was born) also in Dalian, Liaoning Province, China: T 177.

40. In about 1996, Dr Wang met Mr Yu for the first time when they attended the same high school. They were in the same class for one year and attended the same school for the next two years: CB 168. Then for a time, they went their separate ways.

41. In 2000, when Mr Yu was 18, he travelled to Australia. Between 2001 and 2006, he completed a Bachelor of Laws and Finance at the University of Melbourne: CB 181[8]. In 2007, he was admitted as a solicitor in the Supreme Court of Victoria. Between 2007 and 2008, he was employed as a graduate solicitor and practised in corporate law. Between 2008 and 2010, he was employed by Norton Rose Fulbright in Melbourne as a junior associate, again practising in corporate law: CB 181.

42. Between approximately 2010 and 2012, Mr Yu indicated in his affidavit that went to Boston University and completed a Master of Laws: CB 182. During cross-examination, he revised that timing to be the period between 2010-2011 noting that the Master of Laws only took one year: T 172-173.

43. In early 2012, he recommenced his employment with Norton Rose Fulbright but in the Beijing office further practising in corporate law: CB 182. He clarified that he spent six months in Beijing and then came back to Sydney: T 173.

44. In about mid-2012, when Mr Yu returned to Sydney, he ceased working as a solicitor, he says due to other business opportunities: CB 182, T 173-174. He worked, in particular, for a client establishing the Longton Property Group: T 174.

45. Mr Yu has a sister, Jialing Yu who did some work for the company: T 196.4-8.

46. Mr Yamaguchi, though of Japanese heritage, was raised in China and is fluent in Mandarin. Mr Yu states he conversed with Mr Yamaguchi almost solely in Mandarin: T 182.

47. Dr Wang and Mr Yamaguchi were girlfriend and boyfriend from at least the time when Dr Wang introduced Mr Yamaguchi to Mr Yu in (early) 2014: CB 182[18]. They broke up in December 2014: T 100.

48. APG was registered on 18 July 2014, on the same date as the Trust was created. The application for registration of APG was made by Ross Koffel, a solicitor (Mr Koffel): Exhibit P11. The application for registration proposed a share structure of 100 fully paid shares with Mr Yamaguchi and Mr Yu having 50 shares each: Exhibit P11.

49. The initial directors of APG were Mr Yu and Dr Wang. Mr Yu was the initial secretary: CB 619-621.

50. At the time of incorporation (or shortly thereafter) APG had 100 issued paid-up shares. The company search does not clearly indicate precisely what the shareholding was as between Mr Yu and Mr Yamaguchi from 18 July 2014 and 7 May 2015. Nonetheless, the Unitholders Agreement indicates that Mr Yu and Mr Yamaguchi agreed to sell 49 shares to Ms Junting Liang (Ms Liang) as representative of YTF and SL Pty Ltd ATF YTF and SL Family Trust and 6 shares to Ms Dongfang Jia (Ms Jia) as representative of HJ&S Pty Ltd ATF HJ&S Family Trust: CB 491-492.

51. On 7 May 2015, it appears (by reference to document 7E6936021) that there were changes to shareholdings (undoubtably consequential upon the Unitholders Agreement – as to which see below) whereby the shareholding in APG was (CB 622, 623):

1. Mr Yu – 23 shares;

2. Mr Yamaguchi – 22 shares;

3. YTF and SL Pty Ltd – 49 shares; and

4. HJ&S Pty Ltd – 6 shares.

52. Consequent upon the events relating to the Unitholders Agreement, Ms Liang and Ms Jia were appointed as directors on 3 May 2015. Dr Wang ceased to be a director on 8 August 2015. Mr Yu ceased to be a director on 1 April 2019. Yuan Xiang Ng (Mr Ng) and Jialing Yu were appointed as directors on 5 May 2020. Ms Liang and Ms Jia ceased to be directors on the following day 6 May 2020. On 11 May 2020 (6 days after appointment), Jialing Yu ceased to be a director. On 1 June 2021, Mr Ng ceased to be a director and Shilin Lai was appointed as a director and remains the sole director of APG. It appears that the majority shareholder, Ms Liang, appointed him: T 222.29-48. Notwithstanding the above changes in directorship, the shareholding in APG has remained constant since approximately 7 May 2015.

53. Another company, Auslon Development and Management Pty Ltd (ACN 601 050 140) (ADM) was associated with APG and seemingly involved in the management of the project. There is little in the evidence that explains precisely the set up and involvement of ADM. Some insight as to its role is explained in the Unitholders Agreement. In particular, the Unitholders Agreement provides that “[t]he Original Unitholders [STYU and Mr Yamaguchi], through the current directors of The Company [Mr Yu and Dr Wang] as well as the Management Company shall continue to be responsible for the day to day operations of the Project” (emphasis added): cl 12.1(a), CB 503. ADM is defined as being the “Management Company”: CB 515.

54. ADM was registered on 4 August 2014. Mr Yu was its initial director. It had 1 ordinary share held by APG: Exhibit P1. On 15 April 2017, Mr Yu ceased to be a director of ADM and another person, Min Hu was appointed as director: Exhibit P1. On 12 June 2017, Leon Lee and Brendan Joseph Nixon were appointed as liquidators of ADM in a creditors voluntary winding up. On 29 June 2017, they ceased to be liquidators and Blair Pleash was appointed as liquidator (ceasing on 4 December 2017): Exhibit P1. Account statements for two Westpac bank accounts for ADM for the period 1 October 2014 to 31 August 2015 were tendered at the hearing and marked as Exhibit P3.

55. Dr Wang was, it appears, the only signatory on APG’s bank account: T 195.3-8, 195.15-22.

56. APG had an accountant. However, the evidence does not disclose clearly who that was. Mr Yu referred to a name “Maxmillion” (T 188.45-46, 222.27, spelling not clarified) but could not recall the name of the person working on it. Later, he said that was the name of the accounting firm: T 233.5-15.

57. In or about April 2015, it appears that Jason Yang, Ms Liang’s accountant worked with APG’s accountant and with Dr Wang in relation to the figures for verifying the amount of $1.31 million that came to be inserted in cl 1.2(a) of the Unitholders Agreement (fixed as being the financial input of STYU and Mr Yamaguchi) and thereafter he became APG’s accountant: T 188.45-50, 232.28-233.3.

58. It appears that Dr Wang was also the account signatory for ADM before the new investors became involved. Ms Liang essentially appointed Ms Jia (see below) as a financial controller to take on a similar role that Dr Wang was performing on behalf of Mr Yamaguchi: T 202.8-19.

59. The parties provided written submissions both prior to the hearing and on the final day of hearing as well as their counsel addressing orally on the final day of the hearing.

60. I will make reference to the oral submissions by transcript page reference. For convenience, I will refer to the various written submission documents as follows:

1. Dr Wang’s opening written submissions (POS) and closing written submissions (PCS);

2. Mr Yu’s opening written submissions (DOS); and

3. Mr Yang’s opening written submissions (AYOS) and closing written submissions (AYCS).

Issues

61. The parties prepared for the purposes of the hearing lists of issues. Notwithstanding a pretrial direction for the provision of an agreed set of issues, each of the parties provided a separate set of issues. For the purposes of addressing the claims in the proceedings, I set out below a list of issues which I have adapted from those separate sets of issues. I have reordered the numbering of the issues to deal with them in a logical (essentially chronological) order in which they arise.

62. The issues are:

1. What was the arrangement between Mr Yu and Mr Yamaguchi regarding the project? Specifically:

1. What did they agree regarding their respective contributions to the project?

2. What, if any, part did Dr Wang have in that arrangement?

3. What is the significance of Mr Yu being remunerated for project work?

4. What was the extent of Mr Yamaguchi’s investment and were there limits upon it?

2. Was there any change in the arrangements between Mr Yu, Mr Yamaguchi and Dr Wang between 18 July 2014 and 11 May 2015? Specifically:

1. What payments were made by Dr Wang?

2. Why did Dr Wang make the payments?

3. Was Mr Yu assaulted at the 11 May 2015 meeting?

4. If the assault occurred, was Mr Yang acting under the authority of Dr Wang or did Dr Wang procure the assault by Mr Yang on Mr Yu?

5. Did Mr Yu pay Dr Wang or Mr Yang $10,000 on or about 12 May 2015 and $200,000 in or about November or December 2015, and, if so, should those sums be repaid? Specifically:

1. Why were the payments made?

2. Were the payments vitiated by duress?

6. Did Mr Yu sign the Deed under duress?

7. Did Mr Yu/STYU affirm the Deed by correspondence on 22 December 2017? Specifically:

1. Was there an affirmation of the Deed?

2. Was the duress still operative?

8. Did Mr Yu/STYU affirm the Deed by correspondence on 13 August 2018? Specifically:

1. Was there an affirmation of the Deed?

2. Was the duress still operative?

9. Did Mr Yu/STYU effectively elect to avoid the Deed on 13 April 2021? Specifically:

1. Was the purported election effective?

2. Was the duress still operative?

10. Is restitution required and available?

11. Is Mr Yu estopped by deed or other conduct from claiming the sum of $200,000?

12. Should the Court grant specific performance of the Deed?

13. If specific performance is denied what, if any, relief should be given in relation to the Deed including an account and damages?

63. In referring to the relief claimed and in describing the issues above, it is notable, as I have indicated, that Mr Yu and STYU in particular did not expressly seek a declaration that they had avoided the Deed.

64. The lack of any particular pleading in relation to that left unstated, and accordingly, somewhat elusive, the precise basis on which Mr Yu alleged that Dr Wang was for want of a better description implicated in the duress.

65. In his opening and closing submissions, Mr Mack (appearing for Mr Yang) rhetorically submitted that it is not clear why Mr Yang had been joined to the cross-claim. He submitted that the cross-claim seems built on the premise that Mr Yang as agent for Dr Wang assaulted Mr Yu, made demands of Mr Yu and received monies from him: AYOS [2], [3]; AYCS [2].

66. Mr Mack went on to comment that it is alleged that the assault was made by Mr Yang as agent for Dr Wang: AYCS [2].

67. In the cross-claim by which Mr Yu sought relief against Mr Yang and Dr Wang, he particularised the events occurring on 11 May 2015 as being an assault by Mr Yang (with four accomplices) who attended the restaurant “pursuant to the request of” Dr Wang and advised Mr Yu that they were “acting under the authority of” Dr Wang: CB 140[2a].

68. Although the precise legal basis for Dr Wang being implicated was not articulated essentially the matter was litigated on the basis that Mr Yu was alleging that Mr Yang and his accomplices were acting under the authority of Dr Wang as her agents. That the duress case was framed as alleging that Mr Yang was “acting under the authority of” Dr Wang is reinforced at least in a factual sense by the letter from Ibrahim Kammoun (Mr Kammoun) on behalf of Mr Yu to Brydens Lawyers (Brydens) (then acting for Dr Wang) on 13 April 2021 whereby it was asserted that, at the meeting on 11 May 2015, Mr Yang and his accomplices advised Mr Yu that they were acting under the authority of Dr Wang: CB 580.

69. In the above circumstances, I have proceeded on the basis that Mr Yu claims that Mr Yang was Dr Wang’s agent for the alleged assault or that Dr Wang procured the alleged assault upon Mr Yu by Mr Yang.

70. The cross-claim alleges that, on or about 11 or 12 May 2015, Mr Yu was induced by duress “under the part of the cross-defendants” to pay to Dr Wang and Mr Yang the sum of $10,000 and induced to lend them the sum of $200,000: CB 140-141. The cross-claim contains allegations that Mr Yang demanded Mr Yu pay to Dr Wang monies that she had paid into the Trust and that the sum of $10,000 was demanded for Mr Yang to provide to Dr Wang: CB 141[2c]. The pleading contains somewhat conflicting allegations that the sum of $200,000 was a loan to both Dr Wang and Mr Yang (CB 141[4]) although the particulars of that allegation are that the monies were to be lent to Dr Wang: CB 142[4b].

71. The primary allegation is that Dr Wang and Mr Yang have been “unjustly enriched” at the expense of Mr Yu in the sum of $210,000 (CB 142[6]) and alternatively the sum of $200,000 was a loan with an implied term that it would be repayable on demand: CB 142[9].

72. The relief sought in relation to the monies frames the payments as an agreement or arrangement to pay the sum of $10,000 and a lending of the sum of $200,000: CB 140.

73. Mr Mack makes the point that Mr Yu and Dr Wang appeared to accept that Dr Wang had the benefit of the payment of $200,000 (which, as I have found, appears to be the case) and makes the observation that there is no claim for monies had and received but rather for unjust enrichment and observes that Mr Yang has not been enriched: AYCS [3].

74. Apart from a matter which I will refer to below which arose during evidence in which Mr Yu described a demand by Mr Yang for the sum of $10,000 as being a form of “sweat fee”, the evidence in the case pointed essentially to the monies paid by Mr Yu to Mr Yang or Dr Wang as being essentially for Dr Wang’s benefit, not as a “loan” as such but rather as payments having the effect of being a type of “repayment” or contra payment reducing, in a manner of speaking, the monies paid by Dr Wang to APG (and one payment to ADM).

The credit and reliability of witnesses

75. Each of Dr Wang and Mr Yu were called to give evidence and were cross-examined.

76. In addition, a solicitor, Shun Cheng (Mr Cheng), who was the managing partner of Guantao & CS lawyers (who relevantly acted for Dr Wang in 2015), gave evidence.

77. As noted above, Mr Yamaguchi and Mr Yang were not called to give evidence.

Dr Wang and Mr Yu

78. Each of Dr Wang and Mr Yu were cross-examined at length. Indeed, Mr Yu was cross-examined on the third day of the hearing and remained under cross-examination until the resumption of the hearing on 1 August 2023.

79. In closing submissions, each of Mr Mack and Mr Smallbone provided written submissions which outlined aspects of Mr Yu’s evidence which they submit provide a basis for rejecting his evidence on all material matters. The submissions proceeded on the basis that I should accept the evidence of Dr Wang as being reliable.

80. I had concerns regarding the credibility and reliability of each of Dr Wang and Mr Yu. Neither of them emerged unscathed from cross-examination.

81. There were parts of the evidence of both of those witnesses that I found difficult to believe.

82. Mr Yu had a tendency to not answer questions directly and deflect a degree of the cross-examination by argument and other means.

83. Further, Mr Yu appeared, in my estimation, to be a very poor historian. He acknowledged that he was not good with dates.

84. There were material parts of the evidence of Dr Wang which I found difficult to believe.

85. Ultimately, I consider that more reliable indicators of the facts that occurred can be established by reference to at least some of the contemporaneous documents and I have had particular reference to such documents.

78. Essentially, I have approached and weighed the evidence having regard to objective surrounding facts which are either undisputed or established by contemporaneous documents and the inherent probabilities of life as they bear upon the events: see e.g. In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302 at [77] per Williams J citing Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599 at [15] per Gleeson CJ, Gaudron, Kirby and Hayne JJ; Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at 129 per Gleeson CJ, Gummow and Kirby JJ; Re Hillsea Pty Ltd [2019] NSWSC 1152 at [16] per Black J.

79. I consider that rather than reject entirely the evidence of Dr Wang and Mr Yu, a nuanced approach is important in relation to their evidence and, accordingly, I will address in relation to the issues in the matter which I deal with below the evidence which I accept and that which I do not.

Mr Cheng

88. Mr Cheng was examined principally on day five of the proceedings.

89. Earlier, on day two of the hearing, Mr Lonergan had sought to tender a letter from Guantao & CS lawyers to Sydney Law Practice dated 18 June 2018 (CB 599-606) and file notes: CB 607-609. Specifically, he sought to get into evidence paragraphs 15 and 16 of the letter: CB 601; T 79. Mr Smallbone objected on two grounds, firstly, hearsay and secondly, privilege: T 79. There was argument over the admissibility of the document. Paragraphs 15 and 16 of the letter read as follows:

15. On 21 December 2015 from 3:00 to 5:00 pm a meeting was held in our office between your client, her then boyfriend Alan, Yu and the writer. I was not sure whether the finalised draft deed was shown to Yu before the meeting, when he saw that deed he was very upset and he said words to the effect:

“These are not my own properties and in no circumstances would I sign this deed.”

The reason why your client's then boyfriend was involved was because your client informed me before and after this meeting in words to the effect:

“Steven is afraid of Alan. Alan looks as intimidating as a gang member and he could threaten Steven and let him to co-operate with us.”

16. Attached and marked with the letter "N" is a copy of the file notes I took. By seeing my file notes I also remember that when I mentioned to Yu about your client's possible action against the Company by serving a statutory demand and then winding up application. Yu said in words to the effect of:

“If you do this, everything will be gone and we all lose.”

It appeared that Yu fully understood the effect of statutory demand and winding up application as I was informed by your client that Yu was a lawyer in Australia and they were high school classmates back in Dallan, China. The third page of the file note is a copy of the drawing by Yu as I remember he was trying to explain to us the structure of the Company/project.

90. There was a question as to whether the document was admissible as a business record pursuant to s 69 Evidence Act 1995 (NSW) (Evidence Act). Mr Lonergan, by reference to the decision of Finn J in Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (No 4) (2008) 170 FCR 9; [2008] FCA 1038, submitted that the document was admissible.

91. Mr Smallbone submitted that the relevant representation in paragraph 15 (being the statement “Steven is afraid of Alan. Alan looks as intimidating as a gang member and he could threaten Steven and let him to co-operate with us.”) was a representation of Dr Wang.

92. Mr Smallbone submitted that by reference to cl 6 in Pt 2 of the Dictionary to the Evidence Act, the representation contained in the document is taken to be made by the person only if the document was written, made or otherwise produced by the person, or the representation was recognised by the person as (relevantly) her representation by signing, and initialling or otherwise marking the document.

93. As Dr Wang had not written the letter nor adopted the letter by signing or marking it, I indicated that my impression was that the hearsay exception in s 69(2) Evidence Act did not appear to apply and, accordingly, the document was not admissible as a business record. Mr Lonergan appeared to accept that: T 84.11-17.

94. However, Mr Lonergan submitted that the paragraphs in question could be tendered under s 69 for a non-hearsay purpose citing the comments of Hamilton J in Lewis v Nortex Pty Ltd (in liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1083 at [10].

95. It is far from clear to me that the purpose of the tender was a non-hearsay purpose. Whilst Mr Lonergan focussed attention on paragraphs 15 and 16 at CB 601, the critical part of the material in those paragraphs, as I understood Mr Lonergan, was the statement in the concluding part of paragraph 15 to the following effect:

The reason why your client’s then boyfriend was involved was because your client informed me before and after this meeting in words to the effect:

“Steven is afraid of Alan. Alan looks as intimidating as a gang member and he could threaten Steven and let him to co-operate with us.”

96. My understanding was that Mr Lonergan sought to have the statements adduced for the purpose of proving the truth of the statements, in particular, to demonstrate that Mr Yu was afraid of Mr Yang. When I asked Mr Lonergan what his asserted non-hearsay purpose was, he indicated that it was to show that there were communications between solicitors “in or around the [date of the] 2016 deed”: T 85.10.

97. There was further discussion about it and, eventually, Mr Lonergan indicated that, in particular, in relation to paragraph 15, he contended there was an admission made by Dr Wang: T 89.24-25. I indicated that I was not persuaded at that time that it was Dr Wang’s representation for the purposes of the Evidence Act provisions and that to the extent that it was a representation made by Mr Cheng that he was not available to be cross-examined. Mr Lonergan withdrew the tender and indicated that he would revisit the matter: T 89.27-43.

98. Mr Lonergan revisited the matter when the hearing resumed on 1 August 2023. He indicated that his instructors had arranged to issue a subpoena for the attendance of Mr Cheng: T 298-299. Mr Cheng attended on the following day pursuant to the subpoena: T 339.

99. After some submissions by counsel as to whether Mr Cheng should be permitted an opportunity to receive legal advice in relation to the evidence he had been called to give, Mr Cheng was given that opportunity: T 343-344. He returned to give evidence on 2 August 2023. To address Mr Smallbone’s objection to the evidence being received on the basis that it may disclose some privileged communication, I indicated that I proposed that the evidence be taken on the voir dire so that the evidence could be received, and that counsel could then later debate whether the evidence should be received as evidence on the hearing: T 300. Ultimately, Mr Cheng’s evidence was received on the voir dire: T 442.

100. Mr Lonergan called Mr Cheng: T 428. He adduced some initial evidence from Mr Cheng. It appeared that Mr Cheng exhausted his memory regarding the matter and then Mr Lonergan made an application under s 32 Evidence Act for Mr Cheng to refresh his memory: T 432.

101. Mr Smallbone directed my attention to the provisions of s 32(2)(b) Evidence Act, particularly s 32(2)(b)(i), submitting that it was not established that events recorded in the document were fresh in Mr Cheng’s memory: T 434. The issue appeared to be whether, on 18 June 2018, what was contained in the document at paragraphs 15 and 16 was recorded by Mr Cheng when those matters were fresh in his memory: T 435.

102. The requirement for the material being “fresh” in the memory of the witness does not appear to be limited by reference to a specific time that is necessarily proximate to the recording of the matter in the document: Stephen Odgers SC, Uniform Evidence Law (16th ed, 2021, Thomson Reuters) at [EA 32.150].

103. In R v Rogerson; R v McNamara (No 24) [2016] NSWSC 105 (R v Rogerson), Bellew J noted (at [8]-[15]):

8. There is a dearth of authority as to the meaning of the term "fresh in his or her memory" as it appears in s. 32. In Graham v R [1998] HCA 61; (1998) 195 CLR 606, the High Court considered the phrase as it appears in s. 66 of the Act. The plurality (Gaudron, Gummow and Hayne JJ) made the following observations (at paragraph [4]):

“The word 'fresh' in its context in s. 66 means recent or immediate. It may also carry with it a connotation that describes the quality of the memory (as being not deteriorated or changed by lapse of time) but the core of the meaning intended is to describe the temporal relationship between the ‘occurrence of the asserted fact’ and the time of the making of the representation. Although questions of fact and degree may arise, the temporal relationship required will very likely be measured in hours or days, not, as was the case here, years.”

9. Taken by itself, that passage may lend support to the Crown's position. However, subsequent to the decision in Graham the Parliament amended 66 of the Act by inserting s. 2A. The effect of that amendment was to overcome the restrictive interpretation which had been applied by the High Court in Graham to the interpretation of the phrase "fresh in the memory".

10. No corresponding amendment was made to the provisions of s. 32. In that regard the authors of Uniform Evidence in Australia (Lexis Nexis 2015) make the following observation (at p. 109):

“Under s. 32(2) the freshness of the event in the witness' memory when the events were recorded is just one of the matters that must be taken into account by the Court. Under s. 66(2) it is the only requirement. This difference in drafting together with the liberalisation of the freshness test in s. 66(2)A suggests the Court should not take a liberal approach in its consideration of whether the events were ‘fresh’ in s 32(2)(b)(i). Although there has been no amendment to s. 32 so as to bring it into line with s. 66(2)A, it is suggested that s. 66(2)A provides guidance to interpreting the freshness consideration in s. 32.”

11. In making those observations, the authors make reference to a decision of Roth(a Pseudonym)v The Queen [2014] VSCA 242 where Neave and Priest JJA made the following observation (at [40]):

“Although it is unnecessary to decide the question we would have difficulty in accepting the argument that 'fresh in the memory' for the purposes of s. 32 of the Act should be read in the same manner as it was interpreted in Graham for the purposes of s. 66, which modifies the hearsay rule.”

12. I am left to conclude, in these circumstances, that a generally liberal rather than a restrictive, approach is to be adopted in resolving the present question.

13. Adopting that approach, I turn to the provisions of s. 32(2). That section sets out considerations which, although not exhaustive, are mandatory in determining whether or not leave should be granted.

14. The first of those considerations is that contained in s. 32(2)(a). It requires that I take into account whether the witness will be able to recall the fact or opinion adequately without using a document, in this case his statement. I am satisfied in the circumstances Mr McLannen will not be able to recall those passages to which I have referred without reference to his statement.

15. The second consideration in s. 32(2)(b) has two separate components. The first is whether the document from which it is sought that the witness revive his memory is one that was written or made when the events recorded in it were fresh in his memory. In the course of giving evidence, and in answer to a leading question from the Crown, the witness agreed with the proposition the relevant events were fresh in his memory at the time his statement was made. There was no further question put to the witness as to why this was so. Indeed, there was no further question put to the witness so as to confirm that he understood the import of the phrase "fresh in his memory".

104. Mr Cheng was asked whether he recalled the reason for sending the letter in question and he indicated that he did. There was no real suggestion that he might not have recalled that reason.

105. Subsequently, Mr Cheng was asked whether when he wrote the letter the contents that he put into the letter were fresh in his memory at that time and he indicated that that was the case: T 437.36-38.

106. Contrary to the position in R v Rogerson, I have no reason to think that Mr Cheng did not understand the import of the phrase “fresh in his memory”.

107. Mr Cheng was asked to read paragraph 15 of the letter: T 437.

108. Mr Cheng then gave the following evidence (T 438.12-18):

Q. Having read that paragraph can you recall a conversation at the meeting on 21 December 2015 between yourself and Dr Wang regarding her - or Mr Yang engaging with Steven Yu?

A. I think it was immediately after the meeting when Dr Wang realised Mr Yu was not going to accept the document I prepared and she said words probably to the effect that, you know, "Alan would help me to sort it out". And she, you know, she, also said Steven is afraid of Alan.

109. Mr Lonergan asked Mr Cheng whether Dr Wang had said why Mr Yu was afraid of Mr Yang. He was unable to recall why. He indicated that Dr Wang did not give him the details: T 438.45-50.

110. Mr Cheng was asked why he put the word “persuade” in inverted commas (CB 601[17]). Mr Cheng also had difficulty remembering why he had done that although initially proffered that it was an alternative way of negotiation rather than by being assisted directly by lawyers: T 440.16-49.

111. Mr Smallbone cross-examined Mr Cheng. He suggested to him that Dr Wang has said that Mr Yu was “a friend” of Mr Yang rather than “afraid” of Mr Yang. He further suggested that the word “afraid” could be an interpretation. When he ultimately put to Mr Cheng that Dr Wang did not say that Mr Yu was afraid of Mr Yang, Mr Cheng rejected that notion stating: “I think she said”: T 445.36-446.20. I sought to clarify with Mr Cheng that his answer “I think she said” meant “I think she said ‘afraid’” and he confirmed that: T 446.24-27.

112. Mr Smallbone, a little later, suggested to Mr Cheng that what Dr Wang was communicating to him was not that Mr Yu was afraid of Mr Yang but rather that he was more likely to take notice of Mr Yang. Mr Cheng also rejected that confirming that Dr Wang did say that Mr Yu was afraid of Mr Yang, although Mr Cheng did not know exactly what she meant by that: T 427.24-40.

113. Dr Wang was recalled for further cross-examination by Mr Lonergan to address this issue. He put to her that, on the occasion of the meeting, she had told Mr Cheng that Mr Yu was afraid of Mr Yang. She denied that and she also denied that at the time of the meeting she was aware that Mr Yu was afraid of Mr Yang: T 452.13-26.

114. I asked Mr Smallbone whether there was any reason why I should not accept the evidence of Mr Cheng. He submitted as follows (T 475.8-28):

SMALLBONE: Your Honour would accept him as an honest witness, no doubt about that. The only thing, really, in his evidence that is averse to my case in any way, I would submit, is the suggestion that the plaintiff said to him that the defendant was afraid of Alan. But, in that—

HIS HONOUR: Do you say that I should accept his evidence about that?

SMALLBONE: No.

HIS HONOUR: Why?

SMALLBONE: The plaintiff denied it. He has been asked to give that evidence a long time after the event. The context showed that he was told that they were friends and that they had known each other a long time and so on and that they had been, you know - the plaintiff and the defendant had been to the same high school. The plaintiff was, he'd observed, he'd remembered that she had been suffering some exhaustion at the time from the effects of her pregnancy. It would be easy for him to make a mistake about it. It would be easy for him to - just to have confidence that those were the words spoken after all that time, no doubt he is genuine in his evidence, but it would be hard for anyone to be sure about it and it is a very inexact proof.

115. Notwithstanding Mr Smallbone’s submission, I am comfortably satisfied that Dr Wang did tell Mr Cheng that Mr Yu was afraid of Mr Yang. I reject Dr Wang’s evidence that she did not tell him that.

The Briginshaw standard

116. In approaching the question of whether an assault occurred, Mr Mack submitted that the Briginshaw “standard” was applicable: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw) at 361 per Dixon J (as his Honour then was).

117. Matters emphasised by Mr Mack were that the Court must feel an actual persuasion of the occurrence of the relevant event (in this case, an assault) and that the Court’s satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences: Briginshaw at 361-362.

118. In Briginshaw, Dixon J noted that when in civil proceedings a question arises as to whether a crime has been committed, the standard of persuasion is, according to the better opinion, the same as upon other civil issues. But, consistently with this opinion, weight is given to the presumption of innocence and exactness of proof is expected: at 363.

119. In a civil proceeding, the Court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities: s 140(1) Evidence Act.

120. Without limiting the matters the Court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence; (b) the nature of the subject-matter of the proceeding; and (c) the gravity of the matters alleged: s 140(2) Evidence Act.

121. In making findings in the proceedings and, in particular, in relation to whether the alleged assault on Mr Yu occurred and whether Mr Yang demanded payment of monies, I have proceeded on the basis of the requirement of proof to the standard of s 140 and I have been particularly mindful of the nature of the case and the gravity of the matters alleged.

Failure to call witnesses

122. As noted above, two persons significant to the events which are the subject of the proceedings were not called to give evidence. One was Mr Yang, the other Mr Yamaguchi.

General principles

123. I raised with the parties whether an inference should be drawn about the failure of Mr Yang and Mr Yamaguchi to be called to give evidence referring to Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (Jones v Dunkel) at 308, 312, 320-321.

124. Counsel made submissions regarding this, and I was provided with quite a degree of authority regarding the Jones v Dunkel principle.

125. The rule in Jones v Dunkel is a principle of judicial reasoning which addresses the drawing of inferences of fact: Ling v Pang [2023] NSWCA 112 (Ling) at [24] per Kirk JA (Leeming and Mitchelmore JJA at [1], [2] respectively agreeing).

126. The rule has been described in various ways.

127. Two types of inferences that might in any given circumstances be drawn are that:

1. the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party’s case; and

2. the failure to call a witness may also permit the Court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 (Kuhl) at [63] per Heydon, Crennan and Bell JJ.

128. The rule permits an inference, not that the evidence not called by a party would have been adverse to the party, but that it would not have assisted the party: Kuhl at [64] citing Dilosa v Latec Finance Pty Ltd (No 2) [1966] NSWR 259 (Dilosa) at 276-277 per Street J.

129. The rule applies only once all the evidence in the case is in. Whether some inference should be drawn, what inference, and with what significance are all matters depending upon the circumstances of the particular case. It is not a rule to be applied formulaically: Ling at [24].

128. The matters which underpin and permit the drawing of an inference that the uncalled evidence would not have assisted the party’s case are that:

1. it is expected or natural for the party in question to have called the person;

2. the person’s evidence would have elucidated a particular matter; and

3. the absence of the person is unexplained: Ling at [23] citing Payne v Parker [1976] 1 NSWLR 191 at 201 per Glass JA.

131. What underlies the principle is that the failure to call the witness “serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party”: Ling at [27] citing Jones v Dunkel at 320-321 per Windeyer J quoting from John Henry Wigmore, Treatise on the Anglo-American System of Evidence in Trials at Common Law (3rd ed, 1940, Little, Brown & Co) (Wigmore on Evidence) vol 2, s 285, p 162.

132. Precisely what may be inferred from the absence to call a witness requires some consideration. This was addressed by the Full Court of the Federal Court in Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [79] per Besanko, Perram and Katzmann JJ:

79. But the fact that one can infer that a party was afraid to call some particular witness or tender some particular document can take a trier of fact only so far. It is accepted that where a party fails, without explanation, to call a witness who that party might have been expected to call and whose evidence might have elucidated the matter in dispute, then the inference may be drawn that the evidence of the absent witness would not have assisted the party that failed to call that witness: Jones v Dunkel at 308, 312 and 320–321. By itself that inference is frequently somewhat barren, for knowing that the evidence of a witness would not have assisted tells one nothing about what the witness’s evidence affirmatively would have been. Often more directly useful is the allied principle that in such a case the trier of fact may more confidently draw any inference unfavourable to the party that failed to call that witness if that witness appears to be in a position to cast light on whether the inference should be drawn: Jones v Dunkel at 308 per Kitto J, 312 per Menzies J, and 320–321 per Windeyer J. Neither inference is mandatory and, generally speaking, these inferences only become material where the balance of the evidentiary record is equivocal.

133. The observation that such an inference “is frequently somewhat barren, for knowing that the evidence of a witness would not have assisted tells one nothing about what the witness’s evidence affirmatively would have been” is a helpful reminder of the limits of the principle.

134. Practically speaking, their Honours’ observations recognise that the aspect of the principle that is more often deployed is the notion that the trier of fact may more confidently draw any inference unfavourable to the party that failed to call that witness if that witness appears to be in a position to cast light on whether the inference should be drawn.

135. Their Honours make the observation that, generally speaking, the inferences only become material where the balance of the evidentiary record is equivocal. That observation has been endorsed in this Court: see, eg, CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [144] per McColl, Macfarlan and Simpson JJA; RHG Mortgage Corporation Ltd v Ianni [2016] NSWCA 270 at [27] per Basten JA (as his Honour then was) and at [156] per Ward JA (as the President then was) (Meagher JA agreeing at [29]).

136. The sort of circumstances which have been recognised as indicating in any given case that an inference is not available, or if available, is of little significance, has been discussed in caselaw.

137. Exactly the same principles apply when a party, who is capable of testifying, fails to give evidence as in a case where any other available witness is not called: Jones v Dunkel per Windeyer J at 321 citing Wigmore on Evidence vol 2, ss 289,290, pp 171-180; see also Dilosa at 276-277; Kuhl at [63]. That is relevant here as Mr Yang did not give evidence as a part in his defence of the cross-claim and Dr Wang did not call Mr Yang in her case.

Explanations for failure to call a witness

138. Caselaw addresses the type of circumstances that may be regarded as adequate explanations regarding failures to call witnesses.

139. Thus, a party may not be sufficiently aware of what the witness would say to warrant an inference that the party feared to call him. It has been said that a party is not, under pain of a detrimental inference, required to call a witness “blind”: Fabre v Arenales (1992) 27 NSWLR 437 (Fabre) at 449G-450A per Mahoney JA (Priestley and Sheller JJA agreeing).

140. Further, if a witness has a reason for not telling the truth or refusing to assist and the party who may call him or her is aware of this, an inference may not arise. Thus, it has been indicated that it is at least arguable that no inference will be drawn if a witness, if called, would have been asked in effect to admit a crime of some seriousness: Fabre at 450B-C.

141. It has been said that the rule in Jones v Dunkel is a particular application of the broader principle that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted: Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 (Ho v Powell) at [15]-[16] per Hodgson JA, Beazley JA (as her Excellency then was) at [1] agreeing. The observations of Davies AJA at [76] (to the effect that the principle does not permit an inference to be drawn that evidence which was not called would, in fact, have been damaging to the party who withheld it, but, rather, depending on any given case, may permit evidence to be given greater weight and an inference or inferences to be more readily drawn when the other party who might have called evidence to the contrary has chosen not to do so) do not detract from that observation.

142. More particularly, the rule can operate against a party whether or not they bear a burden of proof: JD Heydon, Cross on Evidence (online, LexisNexis) (Cross on Evidence) at [1215] citing Ho v Powell at [16]; see also Knell v QAV Pty Ltd [2020] WASCA 23 at [96]-[108] per Pritchard and Vaughan JJA.

Submissions

143. Mr Mack, in addressing Jones v Dunkel issues, submitted that the present case is a circumstantial one and referred to the observations of Bathurst CJ, Bell P (as his Honour then was) and White JA in Jagatramka v Wollongong Coal Limited [2021] NSWCA 61 in relation to drawing conclusions based on circumstantial evidence. In particular, he referred to the comments of the Court of Appeal regarding a “links in the chain” approach to assessing evidence that it is not enough that the links considered as a whole lend support to the ultimate conclusion sought to be reached, but rather it is necessary to find that the circumstances proved made it reasonable to reach that conclusion on the balance of probabilities: at [45] citing the principle stated by the High Court in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 per Dixon, Williams, Webb, Fullagar and Kitto JJ.

144. Mr Mack’s submission that the case is a circumstantial one invites examination.

145. The law has various terms by which it classifies types of evidence. One form of taxonomy is that the law for certain purposes distinguishes between “direct evidence” and “circumstantial evidence”.

146. “Direct evidence” is a term used in a couple of senses. In one sense, it describes testimony, as contrasted with hearsay, being an assertion made by a witness in court offered as proof of the truth of any fact asserted by the witness, including the witness’s own mental or physical state at a given time. In a second sense, “direct evidence” is used to refer to a witness’s statement that the witness has perceived a fact in issue with one of his or her five senses or was in a particular mental or physical state (if that is a fact in issue): Cross on Evidence at [1110].

147. “Direct evidence” as such is contrasted with “circumstantial evidence” which may be defined as any fact (sometimes called an “evidentiary fact” or “fact relevant to the issue”) from the existence of which a judge or jury may infer the existence of a fact in issue (sometimes called a “principal fact”): Cross on Evidence at [1110] citing, inter alia, Festa v The Queen (2001) 208 CLR 593; [2001] HCA 72 at [5] per Gleeson CJ.

148. There are various issues in the proceedings which I have identified above and deal with below. Insofar as Mr Yang is concerned, at least a number of those issues are not what I would describe as necessarily or exclusively issues involving circumstantial evidence.

149. One issue relates to whether the alleged assault by Mr Yang on Mr Yu occurred, and, if it occurred, whether it occurred as alleged by Mr Yu.

150. Determination of that issue involves consideration of all relevant evidence. At least part of that consideration is consideration of the direct evidence Mr Yu gives of the assault. Thus, consideration of whether the assault occurred is not exclusively an exercise of making a finding based on circumstantial evidence.

151. There are other parts of evidence in which Mr Yu gives an account of discussions with Mr Yang which involve direct evidence from Mr Yu and at least in that respect do not, or at least do not exclusively, require application of principles relating to drawing of inferences from circumstantial evidence.

152. Each of Mr Smallbone and Mr Mack submitted that no Jones v Dunkel inference should be drawn from the fact that Mr Yang did not give evidence on the basis that he would, if called, be asked to admit to a crime of some seriousness and that this provided a sufficient explanation as to why he was not called. In this regard, they relied upon the decision of Adamson J (as her Honour then was) in Permanent Custodians v Nobilo [2012] NSWSC 109 (Nobilo).

153. In closing submissions, Mr Mack submitted that the protection afforded by s 128 Evidence Act has been held not to affect the Jones v Dunkel principle (and, in particular, the reasoning of Mahoney JA in Fabre to the effect that an inference may not arise if a witness has a reason for not telling the truth) citing Nobilo at [73].

154. However, that is not necessarily the case. Indeed, it has been recognised by the Court of Appeal that a suggestion that the witness might be reluctant to give evidence because it may constitute an admission of wrongful conduct on his or her part might well be ameliorated by the potential protections offered by s 128: Ling at [31]-[32] per Kirk JA (Leeming and Mitchelmore JJA agreeing); RHG Mortgage Ltd v Ianni [2015] NSWCA 56 at [90] per McColl JA (Sackville AJA agreeing), [122] per Emmett JA.

155. Additionally, there is authority to the effect that the fact that an absent party witness might fear that to give evidence in civil proceedings might prejudice him in later criminal proceedings is not per se a sufficient explanation for the failure to give evidence so as to preclude a Jones v Dunkel inference being drawn: Cross on Evidence at [1215] citing Rowell v Larter (1986) 6 NSWLR 21 at 24 per Young J (as his Honour then was) and Clayton Utz (a firm) v Dale (2015) 47 VR 48; [2015] VSCA 186 at [181]-[200] per Tate JA (Ashley JA agreeing).

156. Further, the notion that a Jones v Dunkel inference cannot be drawn in a civil case where a defendant chooses not to give evidence because police have been notified of a complaint and have issued a COPS Event Summary was not embraced by Rein J in Hudak v Adams [2013] NSWSC 1464 at [41]. His Honour, albeit not needing to resolve the question of whether a Jones v Dunkel inference (see at [42]) could not be drawn in those circumstances, stated at [41] (bolding in original):

41. … In my view it would be surprising for a defendant against whom a claim of fraud is brought to be able to rely on a concern that criminal charges will be laid as a reason why an adverse inference could not be drawn if he fails to give evidence. First, because if his evidence would, if accepted, support his case that what had been done had been effected with the complete concurrence of the plaintiff, he would have no concern that he would thereby incriminate himself on a charge of obtaining property from the plaintiff by fraud. Second, because it strikes me as inherently unfair that a party who wants to put the plaintiff to proof can decline to give evidence and do so without an adverse inference being drawn. If criminal proceedings are feared, a defendant may take the chance that the plaintiff will not be able to adduce sufficient evidence to establish his case, or may admit liability or not defend the proceedings. The third reason is that even in criminal cases there is, in exceptional and rare circumstances, room for a Jones v Dunkel inference: see Azzopardi v The Queen [2001] HCA 25, (2001) 205 CLR 50 and Comptroller-General of Customs v Parker [2006] NSWSC 390, [89] - [94] in which Simpson J explains that where the accused who does not give evidence and has a personal involvement in the transaction in question, a Jones v Dunkel inference can be drawn.

157. I am not persuaded that a Jones v Dunkel inference cannot be drawn for the reasons advanced by Mr Smallbone and Mr Mack.

158. The facts of Fabre, Nobilo and Bank of Western Australia Ltd v Tannous [2010] NSWSC 1319 (Tannous) (referred to by Adamson J in Nobilo at [74]-[75]) differ from those in the present proceedings.

159. There are a number of reasons why those cases are distinguishable from the present proceedings. However, at least one reason is that the relevant witnesses in Nobilo and Fabre, if called, would have been asked by the party calling them to admit to a crime of some seriousness.

160. In Nobilo, Mrs Saad would have been called (by the Nobilos) to support their case that they did not execute the mortgage and, essentially, that she (Mrs Saad) forged their signatures on the mortgage (see e.g. [101]).

161. In Fabre, if called as a witness for the insurer, Mr Arenales would have been asked (by the insurer) to give evidence regarding the circumstances as to the commission of a crime he was involved in, namely, the break and enter offence and the police pursuit that followed.

162. In Tannous, the situation was even more starkly removed from the circumstances of this case. In that case, the defendant’s son, Michael had in fact sworn affidavits admitting to having forged his parents’ signatures and otherwise to have persuaded them to enter into various transactions misrepresenting those transactions to them. Lest there be any doubt, I do not read the comments of Davies J expressing surprise that Michael had sworn such affidavits as necessarily implying what, if any, inference his Honour might have drawn had Michael not been called: cf Nobilo at [74]. His Honour, in the reasons for judgment, simply does not address any Jones v Dunkel inference.

Failure to call Mr Yang

163. The positions of Mr Yang as a party and whether he would be called in his own case in defence of the cross-claim, and his position as a potential witness in the case of Dr Wang should be distinguished.

164. The central allegation in Mr Yu’s defence of the proceedings and his cross-claim is to the effect that Mr Yang engaged in serious wrongdoing by assaulting him in the company of associates or with the assistance of associates, giving rise to a fear in Mr Yu that if he did not cooperate with what Dr Wang wanted, Mr Yang would cause harm to Mr Yu and his family.

165. Mr Smallbone submitted that no adverse inference should be drawn from his failure to call Mr Yang to give evidence. He submitted that Mr Yang was not available as a witness to Dr Wang because “I can’t conference him. He has his own solicitor” (i.e. he was a separately represented party), that he (Mr Smallbone) could not “interrogate him and find out his story” and that “[h]e’s got his own interests in this case”: T 462.

166. However, there is no “property” in a witness and one side cannot “prohibit the other side from seeing a witness of fact, from getting the facts from him and from calling him to give evidence or from issuing him with a subpoena”: Harmony Shipping Co SA v Davis [1979] 3 All ER 177 at 180h-i per Lord Denning MR. Thus, there is no legal impediment to Dr Wang’s legal representatives from being able to speak to Mr Yang per se.

167. Subject to one matter, Mr Yang’s defence in the proceedings did not suggest that his evidence would in any way conflict with Dr Wang’s evidence or position in the case nor that Mr Yang’s interests in the case would in any way conflict with Dr Wang’s interests.

168. The one matter is that Mr Yang admitted that he was Dr Wang’s boyfriend, but did not admit that that was the case “at all material times”, whereas Dr Wang denied that she was in a boyfriend-girlfriend relationship “at all material times”: CB 140, 149, 156. However, there was no real dispute in the proceedings that Mr Yang was Dr Wang’s boyfriend at the time of the alleged assault. Dr Wang’s denial of paragraph 1 of the cross-claim is potentially explicable with her not per se disputing that at some point of time Mr Yang was her boyfriend, but rather disputing the extent of the time period during which he was her boyfriend. It being borne in mind that the pleaded assertion regarding him being her boyfriend was framed in terms of being at “all material times”, which expression might be steeped in pleading tradition but is often entirely unhelpful in clarifying issues in circumstances where anything connected with a time period is a pleaded fact.

169. There are of course rules regarding legal representatives conferring with a client of other legal representatives: Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) r 33. However, it is well-known that arrangements can be made and are often made for legal representatives for one party to speak with another party in the presence of that party’s legal representatives.

170. Mr Smallbone led no evidence to suggest that any attempt had been made by his instructors to speak with Mr Yang. Whilst I accept Dr Wang’s evidence that she broke up with Mr Yang in February 2017, the fact remains that Dr Wang accepted that she and Mr Yang “are still friends”: T 160. Further, during the court hearing, Mr Yang, at least part of the hearing, sat next to or at least adjacent to Dr Wang. I do not accept that Mr Yang was unavailable as a witness for Dr Wang to call.

171. In terms of the matters which would permit an inference to drawn, I consider that it might be expected or be natural for Mr Yang to be called as a witness in his own case. Having regard to the allegations made against him on the cross-claim, I consider that his evidence would be expected to have elucidated the matter of whether he assaulted Mr Yu such as to give rise in Mr Yu the alleged fear or concern which Mr Yu claims amounted to duress.

172. Thus, the issue is really whether the absence of Mr Yang is unexplained.

173. Mr Yang’s defence denied any assault. Thus, it would not be the case that Mr Yang would, from his perspective, be asked to confess to wrongdoing. This is not a case in which Mr Yang would be called by his own counsel in effect “blind”.

174. On the facts here, Mr Yang, if called, by either Dr Wang or his own counsel would not have been asked to give evidence confessing to the commission of a crime of some seriousness. Rather, his evidence presumably would have fallen in line with his pleaded defence, namely, not admitting that Mr Yu paid him the sum of $10,000 and denying that any such payment was made under circumstances of duress (CB 157), which allegation included particulars of an assault by Mr Yang: CB 140.

175. In the above circumstances, I consider that the uncalled evidence from Mr Yang would not have assisted Dr Wang’s case nor Mr Yang’s case in relation to whether the assault occurred or not. Even if I be wrong in relation to that, and no adverse inference may be drawn from the absence of Mr Yang giving evidence, I am nonetheless satisfied by the evidence of Mr Yu that the assault did occur. In making that finding, I expressly confirm that I have been mindful of the provisions of s 140(2) Evidence Act and, in particular, the gravity of the matters alleged and also mindful of the criticisms made by Mr Smallbone and Mr Mack of Mr Yu in giving evidence including certain inconsistencies in his responses.

660. Mr Smallbone put to Mr Yu that he knew perfectly well in June 2020 when he saw the letter (23 June 2020) from Brydens that Dr Wang was “further pursuing her rights” under the Deed: T 352.

661. Mr Yu, at least by this stage in the cross-examination, was somewhat argumentative in his responses and Mr Smallbone accused him of deflecting in his answers: T 352.

662. First, Mr Smallbone put to Mr Yu that he arranged for the deregistration of APG to defeat Dr Wang’s rights: T 291-292, 352. Mr Yu denied this and indicated that deregistration of the company “is quite common practice because, you know, you just close up the company once the project's done”: T 292.1-3, see also 352.20-30.

663. Mr Smallbone asked Mr Yu why he had not told Dr Wang that he was attempting to avoid the Deed when he received the letter from Brydens. Mr Yu indicated that he did not think it was necessary as the Excel spreadsheet had been provided to Dr Wang and he had explained everything to her: T 356.

664. Secondly, Mr Smallbone put to Mr Yu that he deliberately waited until April 2021 to avoid the Deed and to seek to have it declared invalid because he thought he could take advantage of the Limitation Act 1969 (NSW) (Limitation Act) by waiting that long and then it would be too late for Dr Wang to sue him or the company for her money. Mr Yu denied that: T 356.13-357.5.

665. Thirdly, albeit a little later in the cross-examination, Mr Smallbone questioned Mr Yu regarding monies that he had obtained out of the project, and it was put to him that he did not wish the transactions to be investigated. Mr Yu responded that he did not want transactions to be investigated by someone who was not entitled to do so (namely, Dr Wang): T 365.38.

666. Essentially, Mr Smallbone’s reasons for cross-examining on monies Mr Yu received from the project was said to be for the reason of asserting that the defence of duress was a fabrication and that Mr Yu had a financial interest in the project in not wanting to account: T 366.30-367.40.

667. When Mr Yu was challenged as to his reason for waiting until 13 April 2021 to send the letter to avoid the Deed, he essentially indicated that he had had enough and needed to respond to the issue rather than avoiding it and he found that his lawyer Mr Kammoun was competent and gave him the confidence to deal with the matter through legal proceedings: T 357.7-28.

668. A little more insight is given to the question of whether the duress was still operative as at 13 April 2021 by the events that happened shortly after that.

669. On 4 May 2021, the letter from Kammoun Sukari Lawyers was sent to Mr Yang apparently by WeChat: CB 193[88], 584-586.

670. Mr Mack cross-examined Mr Yu about this: T 425.31-426.47.

671. The gist of the cross-examination was that terminology that Mr Yu used regarding “brother” was not consistent with Mr Yu being afraid or terrified of Mr Yang. However, Mr Yu indicated that use of “brother” was to indicate respect and confirm that he was terrified of Mr Yang: T 425.41-426.2.

672. Specifically, Mr Yu proffered that he did not wish to involve or draw Mr Yang into the matter but rather only did so because Dr Wang had persisted in her claims and “cannot let it go”: T 426.5-9.

673. I find that Mr Yu was fearful of Mr Yang and was, at least up until the time of the filing of the cross-claim, reticent about formally drawing Mr Yang’s name into any formal police involvement or, until the point of the cross-claim, involvement in the proceedings.

674. I accept that in some of the responses Mr Yu gave to Mr Smallbone that he was argumentative. However, ultimately, I accept that Mr Yu was still affected by the assault and operating under the effects of the duress by the time of the 13 April 2021 letter electing to “void” the Deed.

Issue 10: Is restitution required and available?

682. On 13 April 2021, Mr Yu, by his legal representatives, (Kammoun Sukari Lawyers) elected to “void” the Deed in the email letter to Brydens.

683. The parties in the proceedings have proceeded on the basis that that was a purported attempt by Mr Yu to rescind the Deed.

684. I find that the 13 April 2021 letter in its form was effective to elect to avoid or rescind the Deed in a context in which Mr Yu was still affected by the assault and operating under the effects of the duress.

685. It is appropriate to briefly address how the question of restitution arises in this case. The election to rescind in turn raises the question of whether restitution is required and available.

686. Questions of restitution and prejudice were not front and centre in the way the case had been pleaded. The issue of restitution does not appear directly on the pleadings but rather was raised in the list of issues provided by Mr Smallbone barely a week before the hearing.

687. Mr Smallbone’s opening submissions did elaborate a little on the question of restitution.

688. Possibly because the issue of restitution did not directly appear in the pleadings but rather was raised in the list of issues provided barely a week before the hearing, there was no direct evidence in chief by any party addressing the question of restitution.

689. In the context of my initial concern regarding the direction of cross-examination based on limitation periods, Mr Smallbone (helpfully) explained his case regarding restitution as follows (at T 360.34-44):

SMALLBONE: I said besides any question of affirmation, even without an affirmation it’d still be necessary for the party seeking to avoid the deed to show that it was possible to restore the parties to the status quo ante, and any matter that bears upon prejudice to the plaintiff is relevant to that, and that’s a matter for the defendant to show in supporting the validity of the avoidance. Relevant to that are questions of how are the rights that the plaintiff would be relegated to prejudiced by the delay and the events that have occurred in the intervening period. I’m wanting to put to him that he deliberately abstained from avoiding the deed until a time at which he thought that he would have the advantage of a limitation defence to the claims that the plaintiff would be relegated to.

690. He confirmed this a little later on as well (at T 361.39-361.3):

SMALLBONE: My opening submissions dealt with the question of the ability to restore the parties to the status quo ante.

HIS HONOUR: Do they reference limitation periods?

SMALLBONE: I will just look them up. Paragraph 85 on p 12.

HIS HONOUR: All right. Is that the only reference? It’s not amongst any of the issues that all counsel provided as being the list of issues in dispute? It’s not pleaded, it’s not amongst the statement of issues that were directed. I find it in para 85 of your outline of submissions, that’s the gist of it.

SMALLBONE: It’s part of issue 5(g) on my list of issues, which is whether it is too late to void the deed and/or the payments, inability or unwillingness of the defendants to make restitutio integra.

Submissions

691. Despite the question of restitution being an issue in the proceedings, subject to what I am about to say, none of the parties directed my attention to any texts or caselaw addressing the legal principles regarding restitution.

692. Mr Smallbone, without distinguishing between restitution at common law or in equity, nonetheless made particular submissions to the effect that restitution would be impossible because Dr Wang was or would be prejudiced (T 5.18-24; 360.34-44), in particular, he submitted that she would be stymied in having an action against APG on the basis that the limitation period had expired: T 357.40.

693. Effectively, Mr Smallbone’s submissions were that it was too late for Mr Yu and STYU to avoid the deed and that Dr Wang would be prejudiced by any such avoidance.

Principles regarding restitution

694. As I mentioned above, closely connected to the question of rescission in the third and fourth senses is the notion of restitution. There are differences as between common law and equity regarding what is required by way of restitution following rescission by the act of a party of a deed said to have been procured by duress.

695. At common law, complete restitution is required. Where a contract voidable at law is wholly executory it may be rescinded without difficulty. However, in many situations concerning contracts that had been partly or completely executed, rescission at law was not available: MGL 3rd ed at [2408].

696. The limitations on restitution at common law were reflected in part in its procedures. Procedurally, because rescission was the act of the (aggrieved) party there was no suit at common law for rescission nor action per se for restitution. It was a matter for the parties to seek full restitution and, in the absence of agreement between them, the aggrieved party could seek to obtain restitution by actions such as for money had and received to recover money paid under the contract or for trover to recover the value of chattels transferred under the contract or for ejectment to recover possession of land given after contract but before conveyance. The common law has no remedy to permit an allowance for depreciation in value of goods or land or for the value of costs of acts of part performance: MGL 3rd ed at [2408].

697. The common law has no means of enforcing reconveyance of legal estates and interests in land once they had been conveyed (even if the conveyance had been procured by fraud): MGL at [25-045], [25-050].

698. But equity takes a less stringent view than the common law as to what suffices by way of restitution. The classic description is that given by Lord Blackburn in Erlanger v New Sombrero Phosphate Co at 1278-1279, namely that (emphasis added) “the practice has always been for a Court of Equity to give this relief whenever, by the exercise of its powers, it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract”, including by ordering accounts of profits and making allowance for deterioration. If complete restitution is not possible, equity uses its powers so as to do what is practically just between the parties, and by so doing restore them substantially to the status quo: MGL at [25-065] citing Alati v Kruger (1955) 94 CLR 216; [1955] HCA 64 (Alati v Kruger) at 224 per Dixon CJ, Webb, Kitto and Taylor JJ.

699. Specifically, equity has ancillary remedies which can be used and adapted in a broader range of cases of rescission to attempt to bring about restitution which is practically just. These include remedies of account, delivery up and by granting relief on terms: MGL at [25-035].

700. It is evident from the above that there were cases in which the aggrieved party could not effectively rescind at law because restitution was not available. In such cases, equity in its concurrent jurisdiction treated the aggrieved party’s act of rescission as ineffective at law but as revesting rights in equity at the time of the purported rescission with respect to which equity could decree full relief at the time of the subsequent suit: MGL 3rd ed at [2409].

701. Even when exercising its concurrent jurisdiction with the common law courts, equity regards rescission as still being the act of the (aggrieved) party and the task of the Court is to confirm that the claimant had been entitled to rescind and, if so, to make consequential orders directed particularly to the making of mutual restitution: MGL at [25-090]; Alati v Kruger at 224 per Dixon CJ and Webb, Kitto and Taylor JJ citing Abram Steamship Co Ltd v Westville Shipping Co Ltd [1923] AC 773.

702. The relevant time for deciding whether restitution can be ordered is the date of the purported rescission, or, if there be none such beforehand, the date of the commencement of the litigation. Intervening circumstances will not necessarily destroy the effectiveness of the rescission or preclude the Court from pronouncing upon it. However, if the claimant has acted unconscientiously during the pendency of the action, the Court may in its discretion refuse relief: MGL at [25-090] citing Alati v Kruger at 225; cf Kramer v McMahon [1970] 1 NSWR 194.

703. Practical examples of the types of restitution which are possible in equity’s concurrent jurisdiction are given in cases cited in MGL at [25-080]-[25-090] including: Alati v Kruger and Brown v Smitt (1924) 24 CLR 160; [1924] HCA 11.

704. The party rescinding has the same right of restoration of the status quo ante as the other party: MGL 3rd ed at [2412].

705. The breadth of equity’s power to fashion a remedy to procure substantial and practical justice in the circumstances of a claim for restitution was emphasised by Cole J (as his Honour then was) in Spedley Securities Ltd (in liq) v Greater Pacific Investments (in liq) (1992) 30 NSWLR 185 at 191E referring at 191G-194A to Alati v Kruger at 223-224; O'Sullivan v Management Agency and Music Ltd [1985] QB 428 at 458 per Dunn LJ; and Hill v Rose [1990] VR 129 at 143-144 per Tadgell J.

706. Conceptually, partial restitution is not available, at least in cases where fraud is not involved: MGL at [25-130] referring to Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 at 472, 475 per Brennan CJ, Gaudron, McHugh and Gummow JJ and explaining the decision in Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102; [1995] HCA 14. Thus, Lord Wright said of cases where there was “no deceit or intention to defraud” (i.e. where the defendant is “innocent”) the Court is “less ready to pull a transaction to pieces”, whereas in cases of conscious fraud, the Court “will exercise its jurisdiction to the full”: MGL 3rd ed at [2415]; MGL [25-130] quoting Spence v Crawford [1939] 3 All ER 271 (Spence v Crawford) at 288 per Lord Wright.

707. A claimant who seeks to set aside the relevant contract or deed will generally be reasonable in the standard of restitution which he or she requires. As the claimant seeks equity, however, he or she must be prepared to make satisfactory restitution although it is generally the responding party who complains that restitution is impossible: MGL 3rd ed at [2412] citing Spence v Crawford at 289 per Lord Wright.

708. The authors of MGL 3rd ed (under a part referring to equity’s auxiliary and exclusive jurisdiction) state at [2415]:

A defendant to a suit for rescission of a fraudulently induced conveyance will not be heard to complain that he has affected improvements to the property whilst he had legal title to it; to a claim by him for an allowance for compensation by the claimant as a condition of rescission.

709. Rather, as the authors indicate, equity leaves the respondent to the consequences of his iniquity, citing Berridge v Public Trustee (1914) 33 NZLR 865 at 872 (per Edwards J).

How does restitution arise in this case?

710. The relevant time for deciding whether restitution can be ordered is the date of the purported rescission (see above).

711. On the basis, which I have found, that Mr Yu did seek to avoid the Deed by the letter sent by Mr Kammoun dated 13 April 2021, and that the duress was still operative at the time that he did that, question arise as to:

1. What, if any, restitution was required as at 13 April 2021?

2. Has Mr Yu acted unconscientiously during the pendency of the action?

712. Mr Smallbone submitted that if the Deed is avoided, the parties are relegated to their antecedent positions and, in particular, Dr Wang relegated to any antecedent cause of action: T 357.47-49.

Onus of proof regarding restitution

713. Generally speaking, once the party seeking rescission demonstrates that they are entitled to rescind a contract, the onus falls to the party opposing rescission to demonstrate that restitutio in integrum is no longer possible or that the rescinding party is otherwise disentitled to rescind: Erlanger v New Sombrero Phosphate Co at 1283 per Lord Blackburn, 1286 per Lord Gordon; Dominic O’Sullivan KC, Steven Elliott KC and Rafal Zakrzewski, The Law of Rescission (3rd ed, 2023, Oxford University Press) (The Law of Rescission) at [18.124] 425 cf Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573 at 588 per Jacob J. As the learned authors of The Law of Rescission observe, that view accords with the operation of the restitutio in integrum bar as a defence to a claim for rescission: at [18.124] 425.

714. This is also consistent with the notion that a party resisting rescission on the ground of affirmation has the onus of establishing that the agreement was affirmed: Elite Realty (Peden J) at [278].

715. It should not be thought that the Court’s preparedness to “pull a transaction to pieces”, is limited to cases of conscious fraud. It applies to a transaction induced by duress for the same reasons as it does for transactions induced by fraud (i.e. the principle enunciated in Spence v Crawford at 288). As Lord Cross of Chelsea said in Barton v Armstrong (at 118):

There is an obvious analogy between setting aside a disposition for duress or undue influence and setting it aside for fraud. In each case—to quote the words of Holmes J. in Fairbanks v. Snow (1887) 13 N.E. 596, 598— “the party has been subjected to an improper motive for action.”

716. In the circumstances of this case, Dr Wang bore the onus of demonstrating that restitution was no longer possible or that the rescinding party is otherwise disentitled to rescind.

Limitation period as prejudice

717. The particular prejudice that Mr Smallbone alleged in the matter was that Dr Wang had rights against APG and that Mr Yu had consciously waited until purporting to rescind the contract so as to prevent, by expiry of a limitation period, Dr Wang being able to pursue rights against APG.

718. Apart from reference to a “limitation period prejudice”, Mr Smallbone did not address particular submissions to the provisions of the Limitation Act nor elaborate specifically how in light of a limitation period there was some form of prejudice that might disentitle the defendants from rescinding the Deed.

719. The argument appeared to be premised on the basis that Dr Wang had some form of right in debt against either APG or against Mr Yu. That is not a premise that I accept (see below). However, for the purposes of addressing Mr Smallbone’s submissions regarding prejudice, it is relevant to consider the provisions of the Limitation Act.

720. In particular, it is relevant to consider whether the right and title to the debt of a person having a cause of action to recover a debt is extinguished automatically pursuant to s 63 Limitation Act independently of whether s 14(1)(a) is pleaded as a (limitations) defence to that cause of action.

721. Section 14(1)(a) of the Limitation Act states:

14   General

(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims—

(a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed,

722. Section 63 of the Limitation Act provides the following:

63   Debt, damages etc

(1) Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against the person’s successors, extinguished.

(2) Where, before the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, an action is brought on the cause of action, the expiration of the limitation period does not affect the right or title of the plaintiff to the debt damages or other money—

(a) for the purposes of the action, or

(b) so far as the right or title is established in the action.

(3) This section does not apply to a cause of action to which section 64 or section 65 applies.

(For the interaction between ss 14(1)(a) and 63(1) see Papas v Co [2018] NSWSC 1404 at [404]-[410] per Hallen J; Malek Fahd Islamic School Ltd v Minister for Education and Early Learning [2023] NSWCA 143 at [10]-[11] per Basten AJA).

723. One method of postponing the expiration of a limitation period is by establishing acts of confirmation on the part of the debtor (either by acknowledgment of, or part payment towards, the debt): s 54 Limitation Act.

724. It has long been understood that limitation periods do not impose a restriction on the Court’s jurisdiction and must be pleaded in order to bar the remedy of a plaintiff: Price v Spoor (2021) 270 CLR 450; [2021] HCA 20 (Price v Spoor) at [9]-[10] per Kiefel CJ and Edelman J, [40] per Gageler and Gordon JJ and [78] per Steward J. Additionally, s 68A Limitation Act explicitly states that a party shall not have the benefit of the extinction of a right of action without pleading the extinction. That provision, therefore, on one view, seems to echo the traditional interpretation of limitation periods as being required to be pleaded by a party seeking to raise a limitations defence.

725. Section 68A states in full (emphasis added):

68A   Extinction of right or title must be alleged in proceedings

(1) Where in proceedings before a judicial tribunal a question arises as to extinction under this Division of a right or title, a party to the proceedings shall not have the benefit in those proceedings of any such extinction of that right or title unless, as part of the proceedings, the party has pleaded or otherwise appropriately claimed in accordance with the procedures of the tribunal that the right or title has been so extinguished.

(2) In subsection (1), a reference to proceedings before a judicial tribunal is a reference to proceedings before a court or person authorised by law or by agreement to bind the parties to the proceedings by a decision on a question arising in the proceedings as to whether or not a right or title has been extinguished under this Division.

726. It is clear from that provision that a defendant shall not have the benefit of any extinction of the plaintiff’s right or title to a debt (pursuant to e.g. s 63 Limitation Act) unless, as part of the proceedings, the defendant has pleaded or otherwise appropriately claimed in accordance with the procedures of the Court that the right or title has been so extinguished.

727. That is consistent with r 14.14 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which requires that a defendant must plead specifically in their defence certain matters, including “statute of limitation, extinction of right or title”: r 14.14(2)-(3) UCPR.

728. Rule 14.29 UCPR provides that a claim of extinction pursuant to s 68A may be made by affidavit or by notice: e.g. Chapman v Colson [2015] NSWSC 120 (Chapman v Colson) at [75] per Harrison AsJ.

729. It is possible to find authority that suggests that s 63 Limitation Act extinguishes the debt on the expiry of the limitation period, notwithstanding that if any question arises in any judicial proceeding whether the debt has been extinguished, the party claiming extinction must plead the statute (to obtain the benefit of the extinction) (s 68A): e.g. McGrath v Troy as Administratrix of Estate of Wade [2010] NSWSC 1470 at [57]-[58].

730. The High Court recently discussed the mechanics of statutory limitation periods in Price v Spoor, where their Honours were concerned with the legislative provisions of the Limitation of Actions Act 1974 (Qld).

731. As stated above, it is well established that a statutory limitations bar does not preclude the Court’s jurisdiction to hear a claim but rather goes to the remedy available to the claimant: Price v Spoor at [9]-[10] per Kiefel CJ and Edelman J, [40] per Gageler and Gordon JJ and [78] per Steward J; David A Pittavino and Xavier P Walsh, “Pacta Sunt Servanda: The Enforcement of Bargains and the Limitation of Actions” (2023) 1(2) Contract and Commercial Law Review 120 at 124-128. In this regard, it is said that parliament has chosen to pursue the public policy of ensuring the finality of litigation through making available to litigants a statutory right to plead a limitations defence, which is “statutorily entrusted to each defendant”: Price v Spoor at [88] per Steward J (see also at [41] per Gageler and Gordon JJ).

732. Accordingly, to obtain the benefit of a statutory bar on limitations, it is incumbent on a defendant to plead the statute: Price v Spoor at [9] per Kiefel CJ and Edelman J. Otherwise, the issue of limitations does not arise.

733. In the absence of particular submissions on the matter, I consider that, based on Price v Spoor, there is an argument that s 63 of the Limitation Act does not operate to extinguish a plaintiff’s right and title to a debt independently of whether a limitations defence has been pleaded by a defendant.

What were the parties’ antecedent rights?

734. Mr Smallbone submitted that the defendants had made no attempt to assist Dr Wang to revert to her antecedent rights, that they had adduced no evidence as to what had been done with the project funds or regarding the financial result of the project and that all but one of Dr Wang’s advances (of money) were made more than six years prior to 13 April 2021 and (at CB 12[85]):

to relegate [Dr Wang] to actions on those advances, would expose her to enormous difficulty and doubt, with a substantial risk of a limitation bar, besides the various difficulties which the first and second defendants seek to raise by contesting the basis of liability …

735. Thus, the submission begs the question of what the antecedent rights of Dr Wang were.

736. I have earlier, in dealing with Issue 2 above, commented on what rights the making of such payments gave to Dr Wang.

737. Mr Smallbone intimated during submissions that Dr Wang may have lacked clarity as to what her rights were as at the time that the Unitholders Agreement was entered: T 457.16-25.

738. In my view, Dr Wang’s remedy for funds contributed was primarily a claim against Mr Yamaguchi.

739. I have found that the reason she made the payments was as a result of a request by Mr Yamaguchi to pay his investment amounts.

740. I have rejected Dr Wang’s evidence that she raised with Mr Yu claims for payment in October 2014. Dr Wang’s boyfriend-girlfriend relationship with Mr Yamaguchi ceased in about December 2014. I have accepted Mr Yu’s evidence that Dr Wang first informed him that she was putting money into the company at least in approximately January 2015.

741. However, rather than take action against Mr Yamaguchi in respect of payments that she had made on his behalf, Dr Wang sought to press a claim with Mr Yu. She did so over the period January-March 2015. However, Mr Yu rebuffed her approaches to him to recompense her for payments with him, rightly telling her that it was really an issue between herself and Mr Yamaguchi.

742. Dr Wang’s growing sense of unease and dissatisfaction about recognition of the payments she had made was compounded by her realisation that the Unitholders Agreement made no provision for her payments.

743. For reasons that were not explained by Dr Wang, at least in these proceedings, rather than seek redress from Mr Yamaguchi she sought to seek redress from Mr Yu.

744. I consider that her actions in that regard, both by self-help methods in the assault on Mr Yu, and the consequent negotiation of the Deed, and even in these proceedings, have been built on the false edifice that somehow Mr Yu is responsible to remedy the fact that she has paid over monies to APG, rather than Mr Yamaguchi being responsible.

745. In light of the above, I consider that Dr Wang’s antecedent rights were rights against Mr Yamaguchi.

746. I find that there is nothing in the conduct of Mr Yu up to the time of 11 May 2015 by which he encouraged Dr Wang in the belief that she had specific rights against him or against STYU or indeed even against the company.

747. There is no evidence that Dr Wang is unable to proceed against Mr Yamaguchi.

748. To the extent that Mr Smallbone submitted on Dr Wang’s behalf that there would be a limitation period “prejudice” in the defendants rescinding the Deed as at 13 April 2021, I do not accept that Dr Wang has discharged the onus of demonstrating such prejudice.

749. Conceptually, equity could formalise the position of rescission of the Deed by declaration on terms that preclude the defendants from pleading any limitation period. However, Mr Smallbone did not address any specific questions in cross-examination to Mr Yu as to whether any limitation period might be pleaded by Mr Yu or the other defendants if Dr Wang sought to sue APG or him.

750. None of the defendants nor Mr Lonergan on their behalf asserted that if there were any such antecedent rights of action that Dr Wang might have against any of the defendants that they would plead a limitation period against her.

751. I do not accept that Dr Wang has demonstrated that there is any prejudice in formalising the rescission by Mr Yu of the Deed.

752. I do not accept that Mr Yu is precluded from avoiding the Deed on the basis that restitution in equity is not available. As I have found, Dr Wang’s antecedent rights were rights against Mr Yamaguchi and there is no evidence that Dr Wang is unable to proceed against Mr Yamaguchi.

753. Even if I am mistaken about Dr Wang’s rights and her rights are against APG, I do not accept that she has discharged the onus of demonstrating that restitution is no longer possible or that the defendants or any of them are otherwise disentitled to rescind.

Issue 11: Is Mr Yu estopped by deed or other conduct from claiming the sum of $200,000?

754. Dr Wang’s antecedent rights were rights against Mr Yamaguchi. The payments totalling $200,000 made by Mr Yu were made as a result of the duress.

755. I have found that those payments were made to Dr Wang.

756. On the basis that Mr Yu is not precluded from avoiding the Deed, I find that Mr Yu is not estopped by the Deed or other conduct from claiming the repayment of $200,000 to Dr Wang.

Issues 12 and 13: Specific performance and/or damages and an account

757. Having regard to my findings, it is not necessary for me to deal with the issues of whether:

1. the Court should grant specific performance of the Deed; and

2. what, if any, relief should be given in relation to the Deed including an account and damages.

Conclusion

758. In the result, I find that:

1. the Deed was signed as result of duress occasioned by an assault on Mr Yu on 11 May 2015 procured by Dr Wang;

2. the correspondence dated 22 December 2017 and 13 August 2018, whilst in their terms affirming the Deed, were not affirmations because the duress was still operative;

3. on 13 April 2021, Mr Yu avoided the Deed, at a time at which the duress was still operative;

4. Dr Wang’s antecedent rights were rights against Mr Yamaguchi;

5. there is no evidence that Dr Wang is unable to proceed against Mr Yamaguchi;

6. Dr Wang has not demonstrated that restitution is not available;

7. Mr Yu made a payment of $10,000 in favour of Mr Yang which payment was made under duress, and he is entitled to repayment of that sum; and

8. Mr Yu made a payment of $200,000 in favour of Dr Wang which payment was made under duress, and he is entitled to repayment of that sum.

759. No party suggested an outcome in relation to costs other than that costs should follow the event.

760. In the above circumstances, I direct the parties to bring in short minutes of order to give effect to the reasons for judgment in relation to the relief on the amended statement of claim and the cross-claim.

761. The short minutes of order may include orders for delivery up of the Deed for its cancellation.

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Decision last updated: 05 October 2023