Wong v Van Vlymen - [2020] NSWSC 841

Supreme Court

New South Wales

Medium Neutral Citation: Wong v Van Vlymen [2020] NSWSC 841
Hearing dates:
29 May, 3 and 9 June 2020
Written submissions were received from the plaintiffs on 28 May 2020, 2 June 2020 and 11 June 2020.
Written submissions were received from the first and second defendants on 27 May 2020 and 9 June 2020.
Decision date: 02 July 2020
Jurisdiction: Equity - Expedition List
Before: Sackar J
Decision:
See paras [174]-[175]
Parties to bring in short minutes of order

Catchwords:
CONTRACTS — Remedies — Damages — Damages in addition to order for specific performance
CONTRACTS — Remedies — Damages — Damages after specific performance — Damages after election to continue or enforce order for specific performance
CONTRACTS — Penalty — Whether clause in the form of a conditional release imposed an unenforceable penalty on the defendants — Whether amount to be paid upon breach was out of all proportion with the interests protected — Where loss difficult to calculate or insusceptible of calculation — Where amounts to be paid upon breach related to existing liabilities
CONTRACTS — Construction — Where clauses and terms ambiguous — Reference to surrounding circumstances
COSTS – Appropriate principles and considerations – Lump sum or gross costs order – Whether lump sum costs order should be made – Appropriate discount to lump sum or gross costs order
INTEREST — Interest up to judgment and post judgment — Sections 100 and 101 of the Civil Procedure Act 2005 (NSW) — Interest on monies due under order for specific performance — Interest on monies due under subsequent deed — Interest on legal costs — Interest on foreign currency

Legislation Cited:
Civil Procedure Act 2005 (NSW)
Supreme Court Act 1970 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Abigroup Ltd v Abignano (1992) 39 FCR 74
Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514
Ailakis v Olivero (No 2) [2014] WASCA 127
AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170
Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205
Arab Bank Australia Ltd v Sayde Developments P/L (2016) 93 NSWLR 231
ASIL Foundation (Lending) Pty Ltd v Langridge [2019] NSWSC 1574
Australian Hardwoods Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201
Auzcare P/L v Idameneo (No 123) P/L (2015) 91 NSWLR 581
Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285
Despot v RegistrarGeneral [2016] NSWCA 5
Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158
Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296
Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807
Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524
Georges v Wieland [2010] NSWSC 1378
Global Medical Solutions Australia Pty Ltd v Axiom Molecular Pty Ltd [2013] NSWSC 1433
Haines v Bendall (1991) 172 CLR 60
Hamod v The State of New South Wales [2011] NSWCA 375
Harrison v Schipp (2002) 54 NSWLR 738
Hutchinson v Payne (1975) VR 175
Johnson v Agnew [1980] AC 367
Lahoud v Lahoud (No 2) [2012] NSWCA 55
Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558
Legione v Hateley (1983) 152 CLR 406
McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260
Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104
O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525
Patrick Wong and Anor v Willem Van Vlymen and Others [2018] NSWSC 312
Peachy v Duke of Somerset (1721) 1 Str 447 [93 ER 626]
Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345
Riltang P/L v L P/L (2004) NSWSC 977
Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 244 CLR 656
Ross v Padget [2016] NSWSC 1851
Ryan Kay v Playup Australia Pty Ltd [2020] NSWCA 33
Ryledar v Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Smith v Australian Executor Trustees Ltd (No 4) [2018] NSWSC 1584
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
Waterside Workers’ Federation of Australia v Stewart (1919) 27 CLR 119
Wong v Van Vlymen [2016] NSWSC 161

Texts Cited:
Ritchie's Uniform Civil Procedure NSW

Category: Principal judgment
Parties: Patrick Wong (first plaintiff)
Overseas Shipping Trading and Investment Pty Limited; Cook Islands Company number 3421/1998 (second plaintiff)
Willem Van Vlymen (first defendant)
Margriet Van Vlymen (second defendant)
Pacific Investment Holdings Pty Ltd (ACN 001 614 964) (third defendant)
Orbis Commodities Pty Ltd (ACN 003 546 898) (fourth defendant)
Pacific Investment Ltd; Cook Islands company number 3749/2000 (fifth defendant)
Representation:
Counsel:
I Jackman SC, S Burchett (plaintiffs)
A Leopold SC, H Somerville (defendants)
Solicitors:
S Birchall, Birchall Legal (plaintiffs)
S Keleher, Keleher Lawyers (first and second defendants)
M Doble, Eakin McCaffery Cox (solicitor for the receiver of the third, fourth and fifth defendants)

File Number(s): 2015/00060753
2020/00145651

Case Name:

Wong v Van Vlymen

Neutral citation

[2020] NSWSC 841

Hearing Date(s):

29 May, 3 and 9 June 2020

Written submissions were received from the plaintiffs on 28 May 2020, 2 June 2020 and 11 June 2020.

Written submissions were received from the first and second defendants on 27 May 2020 and 9 June 2020.

Jurisdiction:

Equity Division – Expedition List

Before:

Sackar J

Decision:

See paras [174]-[175]

Parties to bring in short minutes of order

Catchwords:

CONTRACTS — Remedies — Damages — Damages in addition to order for specific performance

CONTRACTS — Remedies — Damages — Damages after specific performance — Damages after election to continue or enforce order for specific performance

CONTRACTS — Penalty — Whether clause in the form of a conditional release imposed an unenforceable penalty on the defendants — Whether amount to be paid upon breach was out of all proportion with the interests protected — Where loss difficult to calculate or insusceptible of calculation — Where amounts to be paid upon breach related to existing liabilities

CONTRACTS — Construction — Where clauses and terms ambiguous — Reference to surrounding circumstances

COSTS – Appropriate principles and considerations – Lump sum or gross costs order – Whether lump sum costs order should be made – Appropriate discount to lump sum or gross costs order

INTEREST — Interest up to judgment and post judgment — Sections 100 and 101 of the Civil Procedure Act 2005 (NSW) — Interest on monies due under order for specific performance — Interest on monies due under subsequent deed — Interest on legal costs — Interest on foreign currency

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Supreme Court Act 1970 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Abigroup Ltd v Abignano (1992) 39 FCR 74

Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514

Ailakis v Olivero (No 2) [2014] WASCA 127

AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170

Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205

Arab Bank Australia Ltd v Sayde Developments P/L (2016) 93 NSWLR 231

ASIL Foundation (Lending) Pty Ltd v Langridge [2019] NSWSC 1574

Australian Hardwoods Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201

Auzcare P/L v Idameneo (No 123) P/L (2015) 91 NSWLR 581

Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285

Despot v RegistrarGeneral [2016] NSWCA 5

Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158

Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296

Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807

Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524

Georges v Wieland [2010] NSWSC 1378

Global Medical Solutions Australia Pty Ltd v Axiom Molecular Pty Ltd [2013] NSWSC 1433

Haines v Bendall (1991) 172 CLR 60

Hamod v The State of New South Wales [2011] NSWCA 375

Harrison v Schipp (2002) 54 NSWLR 738

Hutchinson v Payne (1975) VR 175

Johnson v Agnew [1980] AC 367

Lahoud v Lahoud (No 2) [2012] NSWCA 55

Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558

Legione v Hateley (1983) 152 CLR 406

McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104

O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359

Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444

Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525

Patrick Wong and Anor v Willem Van Vlymen and Others [2018] NSWSC 312

Peachy v Duke of Somerset (1721) 1 Str 447 [93 ER 626]

Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345

Riltang P/L v L P/L (2004) NSWSC 977

Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 244 CLR 656

Ross v Padget [2016] NSWSC 1851

Ryan Kay v Playup Australia Pty Ltd [2020] NSWCA 33

Ryledar v Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603

Smith v Australian Executor Trustees Ltd (No 4) [2018] NSWSC 1584

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130

The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902

United Australia Ltd v Barclays Bank Ltd [1941] AC 1

Waterside Workers’ Federation of Australia v Stewart (1919) 27 CLR 119

Wong v Van Vlymen [2016] NSWSC 161

Texts Cited:

Ritchie's Uniform Civil Procedure NSW

Category:

Principal Judgment

Parties:

Patrick Wong (first plaintiff)

Overseas Shipping Trading and Investment Pty Limited; Cook Islands Company number 3421/1998 (second plaintiff)

Willem Van Vlymen (first defendant)

Margriet Van Vlymen (second defendant)

Pacific Investment Holdings Pty Ltd (ACN 001 614 964) (third defendant)

Orbis Commodities Pty Ltd (ACN 003 546 898) (fourth defendant)

Pacific Investment Ltd; Cook Islands company number 3749/2000 (fifth defendant)

Representation:

Counsel:

I Jackman SC, S Burchett (plaintiffs)

A Leopold SC, H Somerville (defendants)

Solicitors:

S Birchall, Birchall Legal (plaintiffs)

S Keleher, Keleher Lawyers (first and second defendants)

M Doble, Eakin McCaffery Cox (solicitor for the receiver of the third, fourth and fifth defendants)

File Number(s):

2015/00060753

2020/00145651

Judgment

Introduction

These proceedings are part of a continuing dispute between the parties which has now been in existence for some years. I will refer to the Plaintiffs as the “Wong Entities” and the Defendants as the “Van Vlymen Entities”.
By way of Notice of Motion filed 26 March 2020 the Van Vlymen Entities seek a declaration that as at 24 March 2020 the amount owing by them to the Wong Entities under an order for specific performance by Stevenson J in March 2016 (in the ‘2015 Proceedings’) and the parties’ deed of settlement entered into on 4 November 2016 (‘November 2016 Deed’ or ‘Deed’) (see below) was:

USD1.75m;

AUD2,180,204; and

not more than AUD339,867 in “legal costs and disbursements of the plaintiff and the receiver … pursuant to the November Deed.”

The issues on the Notice of Motion were defined by Points of Claim filed 26 March 2020 and Points of Defence filed 23 April 2020.
The Wong Entities’ Statement of Claim (which commenced the 2015 proceedings) was further amended in response to the 26 March 2020 Notice of Motion in order to plead and enforce the substantive rights created by the November 2016 Deed, as well as the rights the Wong Entities say were reserved upon the making of the order for specific performance for “further consideration” (see below).
Due to the Van Vlymen Entities pleading in their Amended Defence that the relief sought by the Wong Entities on the November 2016 Deed was “not enforceable in these proceedings” the Wong Entities sought and I granted leave to file a Summons seeking effectively the same relief in separate proceedings. I then ordered that the two proceedings (2015/60753 and 2020/145651) be heard together.

Background

The current dispute has its genesis in proceedings conducted over three days in February 2016 by Stevenson J (see [2016] NSWSC 161). Historically, the parties had conducted business in a Joint Venture.
The issue before his Honour was whether the relevant parties had entered a binding contract and what in the circumstances the appropriate order should be. The contract said to have come into existence in November 2014 was one in which it was asserted the Wong Entities had agreed to sell their interest in the Joint Venture to the Van Vlymen Entities.
His Honour set out the commercial background to the dispute and the previous long standing dealings between the respective principals and various corporate entities owned and controlled by them. Their relationship had been in existence since the mid 1990’s and on any view had come to an end in 2014.
Several points arose in the case. The first was whether the contract was one which had an implied term making the execution of a Settlement Agreement which had been negotiated subject to the Van Vlymen Entities obtaining finance. His Honour thought not.
The evidence called by the Van Vlymen Entities was to the effect that the objective evidence was that the Wong Entities were well aware that the Van Vlymen Entities required finance to complete the transaction. Indeed some of the correspondence in evidence (see [22] of the judgement) suggested that there could be a funding problem for Van Vlymen. So the case was conducted it seems on the basis that finance had not yet been arranged for the transaction to complete.
The question which thereafter arose was whether specific performance was appropriate.
In deciding that damages were not an adequate remedy Stevenson J observed that in substance the contract was one for the sale of shares in one of the Wong Entities (see [32]) and that it would be difficult for him to prove the value of those shares and hence the damage he would suffer as a result of My Van Vlymen’s failure to perform the contract (at [34]).
His Honour noted (at [38]) that specific performance would require Mr Van Vlymen to:

Execute and cause the Van Vlymen Entities to execute the Settlement Agreement;

Thereupon pay the deposit of USD250,000; and

Within 120 days pay the balance due of USD1.75m and SBD15million.

At the time the last two amounts it was agreed would total AUD5.34 million.
In his evidence before the Court Van Vlymen said that he did not want the contract to be terminated even though he did not then have the resources even to pay the Deposit of USD250,000 (see [41]).
His Honour found that Mr Van Vlymen likely had assets he could use to complete the purchase. Mr Van Vlymen also conceded that since December 2015 he had been in effective control of the companies and assets of the Joint Venture (see [51]). Through a set of other manoeuvres he had removed Mr Wong as Chairman of directors and appointed himself. He had also changed the constitutions of several of the companies so as to remove Mr Wong’s power of veto.
In rejecting any claim of hardship his Honour observed that the consequence of the reorganisation of the Joint Venture were the contract not to proceed and Mr Wong confined to damages was that the nature of his interest in the Joint Venture had changed in a manner which may cause him hardship in proving damage (at 70]). His Honour ordered specific performance on 9 March 2016 having given judgment on 1 March 2016. But the narrative did not end there. On one view it was just the beginning.
Mr Van Vlymen did not appeal and in due course on 11 March 2016 entered into a second settlement agreement (‘March 2016 Settlement Agreement’ or ‘Settlement Agreement’) as required by Stevenson J’s order for specific performance. More time was provided but to no avail. Mr Van Vlymen was unable to make any payment until 26 August 2016 when the USD250,000 was paid.
However, on 5 October 2016 receivers were appointed to act as trustees for sale of certain real property held by Mr Van Vlymen and his wife.
Further, on 4 November 2016 Mr Van Vlymen and Mr Wong entered into yet another arrangement, this time in the form of a deed (the November 2016 Deed). This Deed provided for a further payment of AUD1,400,000 as well as other new obligations and for settlement to take place by 28 February 2017. On 4 and 9 November 2016 Mr Van Vlymen paid pursuant to the Deed a total of AUD120,000. But the settlement date of 28 February 2017 came and went again without payment being made as agreed.
The events which followed during 2017 are chronicled in a judgment of mine of December 2018 on an unrelated topic (see [2018] NSWSC 312). What that shows is that the parties were in further dispute about the sale of certain land in the Solomon Islands involving the Solomon Islands Government.
Although the November 2016 Deed featured to some extent in the 2018 proceedings and I mentioned in passing certain aspects of it, none of the issues which arose in that case involved Mr Van Vlymen asserting that cl 8 of the Deed is unenforceable as a penalty or that interest is not payable as he does in this case.

Terms of the Settlement Agreement and Deed

Relevant Provisions of the March 2016 Settlement Agreement

BACKGROUND

(a) From around 1994, the parties have been involved in a business relationship known between them as 'the joint venture'. Broadly speaking, the relationship involved various trading and shipping activities from the Pacific region for joint accounts.

(b) As at the date of Exchange

OSTI and PIL each hold 50% of the shares in each of the Joint Entities;
ICSL is a majority shareholder in LSL and RIPEL (defined in clause 3(e) and 3(g) respectively);
PFL loaned monies to RIPEL and holds a first mortgage charge over RIPEL's assets;
CPTL loaned monies to RIPEL and holds a second mortgage charge over RIPEL's assets; and
LSL is a guarantor of both the PFL and CPTL loans to RIPEL. PFL and CPTL each have a charge over the assets of LSL.

(c) In 2013, Orbis filed a proceeding NSWSC2013 / 76702 against Wong (Orbis Proceeding). The proceeding was discontinued by consent. A costs order was made in favour of Wong.

(d) Wong is the controlling mind and will of the Wong Entities. Van Vlymen is the controlling mind and will of the Van Vlymen Entities.

(e) Together, the matters described in paragraphs (a)-(d) above and all matters incidental to them constitute the Business Relationship.

(f) The parties have agreed to fully and finally terminate and dissolve the Business Relationship. Essentially, the Wong Entities have agreed to sell their interests to the Van Vlymen Entities.

(g) On 25 November 2014, the Parties entered into a settlement agreement on the terms contained in a letter dated 21 November 2014 from Birchall Legal to Harris & Company Solicitors and Notaries (Harris & Co), as modified by an email from Harris & Co to Birchall Legal of 24 November 2014,12:03pm.

(h) The term at paragraph 2 of that letter stipulated that, within 60 days of formation, the agreement would be formalised in a comprehensively drafted settlement agreement. This document is that comprehensively drafted settlement agreement.

DEFINED TERMS

This clause 1 defines terms used in this agreement. Other terms are defined elsewhere in this agreement.

(a) Agreement Date is 25 November 2014.

(b) Claim means any obligation (including statutory, contractual or equitable), cost, damages, debt, set-off, withholding, advance, monies received, expense, liability, loss, allegation, remedy or judgment, and any demand, right, claim, suit, action, cause of action or proceeding of any kind in relation to them or otherwise, including the costs order and subsequent determination of costs on assessment in favour of Wong in the Orbis Proceeding.

(d) Exchange occurs when, all the other parties having executed this agreement, the party who executes it last, executes it.

…

SETTLEMENT

4.1 Non-refundable deposit

Upon Exchange, the Van Vlymen Entities must pay to the Wong Entities a non-refundable deposit in the sum of USD250, 000.00.

4.2 Corporation governance

(a) From Exchange until Completion, the Van Vlymen Entities must not exercise any vote as directors of, or otherwise operate, LSL, RIPEL or any entity in which the Wong Entities have an interest, that:

is not in the best interests of LSL, RIPEL or the other entities and all of their shareholders;
would impede successful Completion; or
would cause the Wong Entities, were Completion not to succeed, to be left in a materially detrimental position as against their position at the time of Exchange.

This clause applies equally to representative, nominee and alternate directors of or controlled by the Van Vlymen Entities (including Van Vlymen, Mr Colin Jones and Ms Kay Littlejohn) and the Van Vlymen Entities must procure that those directors comply with the terms of this clause (including in relation to the exercise of a veto vote) and in any event in accordance with any applicable shareholder agreement.

(b) To be clear, the disposal of any major assets in the Solomon Islands would contravene paragraph (a). Further to be clear, small, regular land sales to cover the Wong Entities' and Van Vlymen Entities' 'joint venture' Business Relationship expenses, and that are notified to the directors of LSL and RIPEL (which includes Patrick Wong) at least fortnightly, do not contravene paragraph (a).

4.3 Abstinence from voting

Subject to the Van Vlymen Entities' full performance of their obligations under clauses 4.1 and 4.2, the Wong Entities undertake, from Exchange to Completion, to abstain from exercising any vote as directors of LSL and RIPEL.

4.4 Settlement sums

As soon as possible after Exchange, but in any event within 120 days of Exchange, on a date to be agreed between the Wong Entities and Van Vlymen Entities (Completion Date), the Van Vlymen Entities must pay to the Wong Entities:

a sum of USD1,750,000.00; and
a sum of SBD15,000,000.00 by bank cheque in Honiara, Solomon Islands.

4.5 Transfer of interests

(a) On the Completion Date, the Wong Entities must:

transfer to the Van Vlymen Entities all shares in OSTI; and
relinquish all directorships of the Wong Entities, the Joint Entities, RIPEL and LSL.

(b) The Wong Entities warrant that, as at the Completion Date prior to transfer:

their shares in OSTI are owned absolutely and not encumbered or charged in any way; and
OSTI does not have any liabilities, whether or not existing, presently known or accrued or contingent or future ~~whether contingent or otherwise, or debts~~, that have not been disclosed to the Van Vlymen Entities.

(c) The Wong Entities indemnify and will keep indemnified (to be clear, jointly and severally) the Van Vlymen Entities for any breach of the warranties in paragraph (b).

…

6.2 Liquidated damages

(a) If the Van Vlymen Entities:

fail to agree a date for Completion in accordance with clause 4.4 (except if the Wong Entities are not ready, willing and able to agree a date for Completion); or
fail to pay the whole of the Total Van Vlymen Consideration before or on the Completion Date (except if the Wong Entities' are not ready, willing and able to perform all of their Completion obligations on the Completion Date); and

(iii) have breached clause 4.2,

then the Van Vlymen Entities are liable (to be clear, jointly and severally) to pay liquidated damages to the Wong Entities of the shortfall in Total Van Vlymen Consideration, less USD50,000.00.

(b) The Wong Entities and Van Vlymen Entities acknowledge and agree that:

(i) the liquidated damages payable pursuant to paragraph (a) are a genuine pre-estimate of the loss and damage that the Wong Entities will suffer in the event of the default by the Van Vlymen Entities specified in the paragraph, and goes no further than would be reasonable to protect the interests of the Wong Entities in the circumstances contemplated; and

USD50,000.00 is fair value of the shares not transferred by the Wong Entities by reason of the Van Vlymen Entities default.

RELEASES

7.1 Releases given

(a) Subject to the full performance of all obligations under clause 4 and upon successful Completion, the parties release and discharge each other from all Claims, whether or not existing, presently known or accrued, or contingent or future, that they may have against the other arising out of, in relation to or in connection with, the Business Relationship (Releases).

(b) The Releases have no effect over any Claims the parties may have against each other arising out of any breach of this agreement.

7.2 Releases procured

(a) With effect from the Completion Date and continuously thereafter, the Van Vlymen Entities warrant that they have procured releases of the Wong Entities by LSL and RIPEL on terms no less favourable to the Wong Entities than the Releases given by the Van Vlymen Entities.

…

Relevant Provisions of the November 2016 Deed

BACKGROUND

(a) On 25 November 2014, the Settlement Parties entered into the Contract requiring its formalising in terms to the effect of the 2014 Settlement Agreement.

(b) By orders made on 9 March 2016 by Stevenson J in the 2015 Proceedings, the Court ordered the Contract to be specifically performed.

(d) The Van Vlymen Entities are in default of their obligations under the 2014 Settlement Agreement.

(e) By orders made on 17 June 2016 by Stevenson J in the 2015 Proceedings (17 June 2016 Orders), the Court ordered the Settlement Parties to specifically perform and carry into effect the 2014 Settlement Agreement.

(f) On 2 September 2016, Mr Darin was appointed the Receiver and Manager of the interests of Mr Van Vlymen in the Bayview Property and the Kulnura Property, and authorised and directed to procure, to the extent those properties can, the payment of monies required for the performance by the Van Vlymen Entities of the 2014 Settlement Agreement.

(g) By orders made on 5 October 2016 by Stevenson J in the 2016 Proceedings, Mr Darin and Mr Malanos (Trustees) were appointed trustees for the sale of the Bayview Property and the Kulnura Property pursuant to s 66G of the Conveyancing Act 1919 (NSW).

(h) The Trustees propose to sell the Bayview Property and the Kulnura Property at auction on 5 November 2016, subject to agreement otherwise in terms of this deed.

The Van Vlymen Entities and Mrs Van Vlymen wish to obtain a stay of the order for specific performance of the 17 June 2016 Orders and a postponement of the sale of the Bayview Property and Kulnura Property to give them more time to complete the 2014 Settlement Agreement without the need for their sale.

(j) On or around 28 October 2016, Mr Van Vlymen initiated the negotiations underlying this deed by contacting Wong by email.

(k) On or around 2 November 2016, Mrs Van Vlymen agreed to contribute her interest (together with that of Mr Van Vlymen) in the Kulnura Property and Bayview Property to secure to the Wong Entities the payment by the Settlement Parties of the monies required by the 2014 Settlement Agreement and this deed, and to consent to the registration by the Wong Entities of caveats against those titles to protect that equitable interest in them, which agreement is embodied is this deed.

(l) The parties are agreed to postpone the sale of the Bayview Property and the Kulnura Property, to seek a stay to the 2015 Proceedings and have further orders made in the 2015 Proceedings and 2016 Proceedings on the terms set out in this deed.

(m) The parties enter into this deed to provide:

a mechanism by which, if the terms of this deed are complied with by the Van Vlymen Entities and Mrs Van Vlymen, the 2014 Settlement Agreement will be satisfied and the 2015 Proceedings and the 2016 Proceedings settled;
the Wong Entities with security, in the form of a mortgage over the Bayview Property, the Kulnura Property, the Orbis Shares and the General Security Agreement, for the money owing by the Van Vlymen Entities and Mrs Van Vlymen under this deed, or alternatively, the 2014 Settlement Agreement;
certainty that Mrs Van Vlymen has obtained independent legal and financial advice in relation to, and is fully aware of and agrees to, the security being provided; and
a mechanism by which, if the terms of this deed are not complied with by the Van Vlymen Entities and Mrs Van Vlymen, the Wong Entities may more efficiently proceed with enforcing the 2014 Settlement Agreement and their rights arising from the 2015 Proceedings and this deed, with the trusteeship of Darin and Malanos pursuant to the 2016 Proceedings.

DEFINED TERMS

This clause 3 defines terms used in this deed. Other terms are defined elsewhere in this deed.

…

(e) 2015 Total Van Vlymen Consideration means:

USD250,000;
USD1,750,000; plus
SBD15,000,000 paid in accordance with the 2014 Settlement Agreement,

and, to be clear, excludes the 2016 Settlement Payment.

…

2016 Settlement Payment means an amount of AUD1,400,000 payable by the Van Vlymen Entities and Mrs Van Vlymen in lieu of the releases given by the Wong Entities in clause 8 and procuring the release of Darin and Malanos in favour of the Van Vlymen Entities and Mrs Van Vlymen in clause 8(a) and giving the Wong Entities' Indemnity in favour of Darin and Malanos.

(j) 2016 Total Van Vlymen Consideration means:

USD1,750,000; plus
SBD15,000,000 paid in accordance with clause 6.3(b),

and, to be clear, excludes the 2016 Settlement Payment.

…

(bb) Settlement Date means 4:00pm, 28 February 2017.

…

STAY OF PROCEEDINGS, ENFORCEMENT AND SALE OF PROPERTIES

(a) Upon this deed coming into force and effect, the parties agree to move the Court for orders:

in the 2015 Proceedings for a stay of those proceedings, including enforcement of all orders made (without affecting the appointment of the Receiver and Manager) until the Settlement Date; and
in the 2016 Proceedings for a stay of all outstanding orders (without affecting the appointment of the Trustees), vacation of the hearing date of the issue of apportionment and authorisation of the Trustees and Receiver/Managers' postponement of the sale of the Bayview Property and the Kulnura Property until the Settlement Date,

in both proceedings subject to and conditional upon compliance by the Van Vlymen Entities and Mrs Van Vlymen with the terms of this deed and liberty to apply (substantively to the effect of the forms of orders contained in Schedules 3 and 4 to this deed).

(b) Conditional upon such authorisation, the Trustees and Receiver/Manager shall postpone the sale of the Bayview Property and the Kulnura Property.

(c) If this deed is fully complied with and all monies owed under it are paid as required by it and the 2014 Settlement Agreement is completed in accordance with it, the parties agree to move the Court for orders discharging all extant orders made in and further consideration of and discontinuing the 2015 Proceedings and the 2016 Proceedings.

PAYMENT

6.1 Upfront Payments

(a) On Exchange, the Van Vlymen Entities and Mrs Van Vlymen must pay to Wong the First Upfront Payment,

(b) The Van Vlymen Entities and Mrs Van Vlymen must pay to Wong the Second Upfront Payment on or before 30 November 2016 and in any event as soon as possible,

6.2 2016 Settlement Payment

The Van Vlymen Entities and Mrs Van Vlymen must pay to Wong the 2016 Settlement Payment, less the Upfront Payments, on or before the Settlement Date and in any event as soon as possible.

6.3 2016 Total Van Vlymen Consideration

(a) Subject to paragraph (b), the Van Vlymen Entities and Mrs Van Vlymen must pay to Wong the 2016 Total Van Vlymen Consideration on or before the Settlement Date, and in any event as soon as possible.

(b) Payment of the SBD15,000,000 component of the 2016 Total Van Vlymen Consideration must be paid in USD or AUD equivalent, such amount to be calculated using the average Westpac Inward TT exchange rate for the five banking days immediately preceding the date of payment.

6.4 Manner and method of payment

(a) Subject to paragraph (b), all payments under this clause must be made in a manner, time and place reasonably acceptable to Wong. To be clear, payment by way of personal cheque is not reasonably acceptable to Wong.

(b) Payment of the 2016 Total Van Vlymen Consideration must be made into the Trust Account.

SECURITY

...

7.3 Wong Entities' Indemnity

The Wong Entities indemnify Darin and Malanos for all remuneration, costs, expenses, disbursements (including legal fees) (Costs) incurred by them as Receivers and Managers and trustees for sale (as set out in clause 1.4) to the extent that such Costs have not been met by the Van Vlymen Entities pursuant to their obligations pursuant to this deed, such indemnity to be satisfied and made good by the Settlement Date, and to that end, the Wong Entities hereby charge in favour of Darin and Malanos their interest in the Bayview Mortgage and the Kulnura Mortgage to secure such indemnity.

RELEASES

(a) On payment in full of the 2016 Settlement Payment in accordance with this deed and on condition that the Van Vlymen Entities and Mrs Van Vlymen have not otherwise committed a Default under clauses 10.1(i) to 10.1(iii), the Wong Entities and Darin and Malanos release the Van Vlymen Entities and Mrs Van Vlymen from any further liability for the fees and disbursements of Darin and Malanos (including legal costs) incurred to 28 February 2017 (inclusive).

(b) On payment in full of the 2016 Settlement Payment in accordance with this deed and on condition that the Van Vlymen Entities and Mrs Van Vlymen have not otherwise committed a Default under clauses 10.1(i) to 10.1 (iii), the Wong Entities also release the Van Vlymen Entities and Mrs Van Vlymen from any further liability for the legal costs and disbursements of the Wong Entities incurred to 28 February 2017 (inclusive) in the 2015 Proceedings, the 2016 Proceedings and costs assessment NSWSC 2016/192881.

(c) On payment in full of the 2016 Settlement Payment in accordance with this deed and on condition that the Van Vlymen Entities and Mrs Van Vlymen have not otherwise committed a Default under clauses 10.1(i) to 10.1(iii), the Wong Entities release the Van Vlymen Entities from any further liability for interest accrued to 28 February 2017 in respect of:

Darin and Malanos' having incurred, and Wong's having paid or being liable to pay without reimbursement, all of the fees and disbursements of Darin and Malanos (including legal costs) referred to in paragraph (a) to date;
the failure of the Van Vlymen Entities to pay all of the assessed costs of proceeding NSWSC 2013/76703;
Wong's having paid or being liable to pay, without reimbursement, all of the legal costs referred to in paragraph (b) to date; and
the failure of the Van Vlymen Entities to pay the 2015 Total Van Vlymen Consideration in accordance with the 2014 Settlement Agreement (namely USD250,000 by 24 January 2015 and the balance by 24 May 2015).

(d) The Wong Entities, the Van Vlymen Entities and Mrs Van Vlymen release Darin and Malanos from any Claims arising out of any acts or omissions by them as Receivers and Managers and trustees for sale(asset out in clause 1.4), save that nothing in this clause shall serve to release Darin and Malanos from any Claim arising out of dishonesty, wilful misconduct or gross negligence.

…

DEFAULT

10.1 Defaults

Without limiting any other matter, each of the following events would be material and essential fundamental defaults of essential terms of this deed (Defaults):

the Van Vlymen Entities and Mrs Van Vlymen do not pay the 2016 Settlement Payment in the amount and by the date stated in clause 6.2;
the Van Vlymen Entities and Mrs Van Vlymen do not pay the 2016 Total Van Vlymen Consideration in the amount and by the date stated in clause 6.3;
any Van Vlymen Entity or Mrs Van Vlymen makes any Claim in respect of this deed prior to the Settlement Date, including a Claim that this deed or any provision of it is unenforceable or should be set aside; and
any (other) material breach of this breach of this deed.

10.2 Consequences of default

(a) If any Default occurs;

the Wong Entities may terminate this deed immediately by giving notice in writing to any Van Vlymen Entity or Mrs Van Vlymen, including by email to any known email address of Mr Van Vlymen or Mrs Van Vlymen;
the Wong Entities may maintain and pursue the 2015 Proceeding and all claims made in them or arising out of the subject-matter of them unaffected by their agreement to the terms of this deed and the Van Vlymen Entities covenant not to object to their doing so;
Darin and Malanos may maintain and continue the 2016 Proceeding and all claims made in them or arising out of the subject-matter of them unaffected by their agreement to the terms of this deed and the Van Vlymen Entities and Mrs Van Vlymen covenant not to object to his doing so;
notwithstanding anything else, the Van Vlymen Entities and Mrs Van Vlymen consent to all of the Wong Entities' costs of the pursuit of the 2015 Proceeding and Darin and Malanos' costs of the pursuit of the 2016 Proceeding from the date of Default being recoverable and on the indemnity (solicitor-client) basis and orders of the court to that effect;

...

(b) In respect of any Default in payment of monies under the terms of this deed, Wong may recover the amount of that payment as a liquidated debt from the Van Vlymen Entities and Mrs Van Vlymen in addition to any rights he may have to recover monies in the 2015 Proceedings or the 2016 Proceedings and under the 2014 Settlement Agreement, after making all just allowances for the amount and nature of any payments made.

…

(d) In the event of any Default, further and without limiting anything else in this deed:

(i) the Wong Entities, Darin or Darin and Malanos may seek to recover fees, legal costs and disbursements of receivership, management and trusteeship incurred from the date of Default or 1 March 2017, whichever is earlier;

the Wong Entities may seek to recover the Wong Entities' costs of the pursuit of the 2015 Proceeding incurred from the date of Default or 1 March 2017, whichever is earlier;
Darin may seek to recover Darin and Malanos' costs of the pursuit of the 2016 Proceeding incurred from the date of Default or 1 March 2017, w/hichever is earlier;
the Wong Entities may seek to recover interest in respect of that Default accruing from the date of Default or 1 March 2017, whichever is earlier.

COMPLETION OF THE SETTLEMENT AGREEMENT

Subject to the Van Vlymen Entities' and Mrs Van Vlymen's full performance of this deed without breach, including compliance with warranties and the payment of all monies by the Van Vlymen Entities and Mrs Van Vlymen to Wong on or before the Settlement Date, Completion as defined in the 2014 Settlement Agreement shall occur on the Settlement Date.

ACKNOWLEDGEMENTS & WARRANTIES

12.1 The Van Vlymen Entities and Mrs Van Vlymen acknowledgements

(a) The Van Vlymen Entities and Mrs Van Vlymen acknowledge that:

…

nothing in this deed varies or derogates from the 2014 Settlement Agreement;
subject to the express terms of this deed, nothing in this deed derogates from any order of the Court or any right conferred on the Wong Entities, Darin or Darin and Malanos under the orders; and

…

INDEMNITIES

(a) Each Van Vlymen Entity and Mrs Van Vlymen indemnifies Wong for all loss, damage, costs and expenses (including legal costs on an indemnity (solicitor-client) basis) incurred or suffered, or to be incurred or suffered, by him as a result, directly or indirectly, of:

any default by any Van Vlymen Entity or Mrs Van Vlymen under this deed;
any Van Vlymen Entity or Mrs Van Vlymen making any claim or arguing any defence that contradicts an acknowledgement given under this clause 13;

any breach of any warranty given by any Van Vlymen Entity or Mrs Van Vlymen under this deed.

Issues

Mr Sydney Birchall, solicitor for the Wong Entities, summarised the gross amounts that the Wong Entities say the Van Vlymen Entities still owe Mr Wong in USD and AUD in his affidavit affirmed 19 May 2020. They are:

TABLE ONE: GROSS AMOUNTS CLAIMED BY THE WONG ENTITIES

Fig.

US Dollar components

USD

1.

2016 Total Van Vlymen Consideration - USD sum

1,750,000

2.

Interest on 2016 Total Van Vlymen Consideration – USD sum

[TBD]

3.

2016 Total Van Vlymen Consideration – SBD sum

1,934,250

[SBD15 million]

4.

Interest on 2016 Total Van Vlymen Consideration – SBD sum

[TBD]

5.

Interest on Non- Refundable Deposit – USD sum

[TBD]

Fig.

Australian Dollar components

AUD

7.

2016 Settlement Payment

1,400,000

8.

Interest on 2016 Settlement Payment

[TBD]

9.

Worrells fees and disbursements (ex legals) from 1/3/17

235,530

10.

Interest on Worrells fees and disbursements (ex legals) from 1/3/17

[TBD]

11.

Worrells fees and disbursements (ex legals) to 28/2/17

31,399

12.

Interest on Worrells fees and disbursements (ex legals) to 28/2/17

[TBD]

13.

Eakin McCaffery Cox (EMC) (solicitors for Mr Darin) fees and disbursements from 1/3/17

208,205

14.

Interest on EMC fees and disbursements from 1/3/17

[TBD]

15.

EMC fees and disbursements to 28/2/17

71,540

16.

Interest on EMC fees and disbursements to 28/2/17

[TBD]

17.

Birchall Legal fees and disbursements from 1/3/17 to 15/5/20

581,667

[now revised to 710,368]

18.

Interest on Birchall Legal fees and disbursements from 1/3/17

[TBD]

19.

Birchall Legal fees and disbursements March 2016 to 28/2/17

133,119

20.

Interest on Birchall Legal fees and disbursements March 2016 to 28/2/17

[TBD]

21.

Unpaid costs assessed under NSWSC 2016/192881

209,481

22.

Interest on costs assessed under NSWSC 2016/192881

[TBD]

23.

Unpaid assessed costs under NSWSC 2014/254655

9,500

24.

Interest on unpaid assessed costs under NSWSC 2014/254655

[TBD]

In the table “TBD” stands for “To be determined” as the amounts of interest are yet to be calculated.
Mr Birchall also summarised the gross amounts paid by or recovered from the Van Vlymen Entities, as well as the net amounts actually received by the Wong Entities after deductions by the receiver. There is no dispute about the quantum of these receipts and the parties agree that the Van Vlymen Entities should be credited for the gross amounts totalling AUD2,237,477.

TABLE TWO: GROSS AND NET AMOUNTS PAID BY OR RECOVERED FROM VAN VLYMEN ENTITIES

Fig.

Payments/recoveries

AUD

[Gross amounts]

Net received by Wong

30.

First Upfront Payment paid 4/11/16

100,000

100,000

32.

Second Upfront Payment paid 9/11/16

20,000

20,000

34.

Sale proceeds of Bayview property 10/7/17

448,907

247,453

36.

Sale proceeds of Kulnura property 22/8/17

1,168,570

1,068,660

38.

Pacific Investment Pty Ltd (PIL) (Fifth Defendant) share of Bloody Ridge dividend

300,000

269,874

40.

PIL further share of Bloody Ridge dividend 21/3/18

124,500

108,000

42.

PIL further share of Bloody Ridge dividend 21/12/18

75,500

75,500

44.

SUB-TOTAL RECOVERED v PAID OUT

2,237,477

1,889,487

48.

Personal funding of Receiver by Wong

-

- 79,350

49.

TOTAL AUD PAID OUT TO PLAINTIFFS

-

1,810,137

The Van Vlymen Entities accept that they must pay the capital amounts in Items 1, 3 and 7 of Table One (for the remainder of the judgment “Item” numbers will refer to the figure numbers in Table One). Those Items represent the USD sum of the “2016 Total Van Vlymen Consideration” (defined in cl 3(j) of the Deed), the SBD sum of the 2016 Total Van Vlymen Consideration, and the “2016 Settlement Payment” (defined in cl 3(i) of the Deed), respectively. It is agreed that the amount owing on Item 7 has been reduced from AUD1.4m to AUD1.28m by the receipt of the First and Second Upfront Payments. However, in relation to Item 3, the parties dispute which of them is entitled to choose the currency (“USD or AUD equivalent”) in which the SBD amount is to be paid under cl 6.3(b) of the November 2016 Deed. They also dispute the meaning of “Westpac TT exchange rate” in that clause and the date on which the exchange rate should be calculated.
The remaining capital amounts (Items 9, 11, 13, 15, 17, 19, 21, 23) concern fees and disbursements of the receiver (Mr Darin of Worrells), the receiver’s solicitor (Eakin McCaffery Cox (‘EMC’)) and the Wong Entities’ solicitor (Mr Birchall). The Van Vlymen Entities dispute Items 11, 15, 19, 21 and 23 because they say that all of the costs referred to in those Items are the subject of a release in cl 8 of the November 2016 Deed, and, to the extent that cl 8 provides otherwise, that clause is an unenforceable penalty. They otherwise dispute the principles to be applied in determining the quantum of the amounts claimed in Items 17 and 19 (see submissions below).
The Van Vlymen Entities dispute almost all of the claims for interest on a variety of grounds (see submissions below). With respect to Items 2, 4, 5 and 8, they say inter alia that the Wong Entities have elected to forsake any claim for damages for non-compliance with the orders for specific performance or the underlying contract and therefore that they are precluded from claiming interest (or ‘damages for loss or use of money’) on the unpaid 2016 Total Van Vlymen Consideration and 2016 Settlement Payment as well as the non-refundable deposit of USD250,000 that was paid on 26 August 2016. They also raise the penalty argument in relation to Items 2, 4, 5, 12, 16, 20, 22 and 24.
In relation to the releases in cl 7 of the November 2016 Deed, the parties agree that the releases are to be provided on completion.
Therefore the issues that remain in dispute between the parties can be summarised as follows:

Did the Wong Entities elect to forsake any claim for damages for non-compliance with the orders for specific performance or the underlying contract?

Does cl 8 of the November 2016 Deed purport to impose on the Van Vlymen Entities what is in law an unenforceable penalty?

On what basis should the gross sum costs order in relation to Items 17 and 19 be calculated?

Are the various disputed claims for interest otherwise payable and on what basis should each item of interest be calculated?

In relation to Item 3, who is entitled to elect between USD or AUD, what does “Westpac TT exchange rate” mean, and on what date should the exchange rate be calculated?

Past relevant orders of the Court: Specific Performance and Interest

Mr Birchall also identified the past orders of the Court that related to the question of specific performance and interest in his affidavit affirmed 23 April 2020:

Date	Justice	Order
9/3/16	Stevenson J	1 Order that the contract referred to at [2] of the judgment of 1 March 2016 (Wong v Van Vlymen [2016] NSWSC 161) (“the Contract”) be specifically performed.
9/3/16	Stevenson J	8 Reserve further consideration of the matter.
17/6/16	Stevenson J	1 Orders the Defendants to: a) specifically perform and carry into effect the Settlement Agreement executed by them on 11 March 2016 pursuant to the previous orders of the Court.
17/6/16	Stevenson J	6 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.
5/8/16	Sackar J	6 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.
2/9/16	Sackar J	5 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.
28/10/16	Sackar J	2 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.
4/11/16	Sackar J	2 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.
3/3/17	Sackar J	3 Reserves further consideration of the matter; in particular as to further or alternative relief by way of damages and interest.

Submissions

Merger & Election

The Van Vlymen Entities submit that the right to pursue any claim for damages caused by non-compliance with the 2014 Contract underlying Stevenson J’s order for specific performance merged in the judgment for specific performance (Lahoud v Lahoud (No 2) [2012] NSWCA 55 at [30]-[31] (‘Lahoud’). They submit that this ‘merger’ argument is relevant to any claim for damages (or interest) up to 9 March 2016 (the date of Stevenson J’s orders).
The Van Vlymen Entities further submit that, subsequently, the Wong Entities “unequivocally elected” to enforce the order for specific performance (e.g. through the appointment of receivers) rather than seek an inquiry as to damages for non-compliance with it (Despot v RegistrarGeneral [2016] NSWCA 5 at [117]-[118], [123] (‘Despot’) (the ‘election argument’). They further submit that the November 2016 Deed was a “mechanism” for “enforcing” the orders of specific performance (cl 2(m)(iv) of the Deed) and did not create fresh contractual rights with respect to the USD1.75m and SBD15m amounts. They note that on 4 November 2016, the Court made orders noting the existence of the Deed and staying the order for specific performance up to and including the settlement date but not after it (see also cl 5 of the Deed). They submit that at all times the parties’ rights and obligations remained under the supervision and control of the Court (Georges v Wieland [2010] NSWSC 1378 at [25]) so that once the order for specific performance “had sprung back into life” and there was non-compliance with it, the Wong Entities had a second election to make (Despot at [123]).
The Wong Entities submit that the merger argument fails to appreciate that the Further Amended Statement of Claim of 3 September 2015 sought damages at law or in equity, alternatively or in addition to the orders for specific performance, and interest, and that the orders of Stevenson J expressly reserved “further consideration of the matter” and “liberty to apply”. They further submit that the 2016 judgment concerned only the 2014 Contract; because the Settlement Agreement had not been executed, no right or obligation under it (a fortiori, the Deed) could have been the subject of the Further Amended Statement of Claim or judgment. They say that contractual rights do not merge in an order for specific performance and may be reconsidered (Lahoud at [30]; Despot at [61], [112]-[113], [115]; Johnson v Agnew [1980] AC 367).
The Wong Entities also submit that the election argument is misconceived in law and fact. In particular, they refer to the past orders of the Court which reserved further consideration of the matter, including further or alternative relief by way of damages and interest and liberty to apply (see Abigroup Ltd v Abignano (1992) 39 FCR 74, 88; Australian Hardwoods Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201 at [50], [51], [56], [58], [77], [84] (‘Australian Hardwoods’)). They submit that the election to be made in response to non-compliance (found in Despot at [18]) does not require the abandonment of any damages claim upon choosing to enforce the order. Section 68 of the Supreme Court Act 1970 (NSW) expressly allows the Court to award damages in equity “either in addition to or in substitution for… specific performance” (see also Lahoud at [19]). The time for election between alternative remedies is when judgment is given upon the availability of remedies (Despot at [11]; see also United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 30; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444, 459-62; Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524, 546; Ailakis v Olivero (No 2) [2014] WASCA 127). The Court “may substitute other forms of relief where a decree of specific performance is not complied with” (Riltang P/L v L P/L (2004) NSWSC 977 at [51], approved in Australian Hardwoods at [53]).

Penalty

The Van Vlymen Entities submit that having agreed to pay an additional sum of AUD1.4m in consideration for the releases in cl 8 of the Deed (see cl 3(i) of the Deed), the effect of cl 8 was to impose an additional liability on the Van Vlymen Entities to pay all of the released amounts if there was any default for even a fractional period of time or for a fractional sum of money in paying the amounts specified in cll 6.2 and 6.3 by 4pm on 28 February 2017. They say that cl 8 is penal in character when viewed “as a matter of substance” (Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205 at [10] (‘Andrews’)) and that it imposed an impost that was exorbitant and grossly disproportionate to any loss or damage the Wong Entities may suffer as a result of breach (Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525 at, e.g., [34] (‘Paciocco’)). They further submit that there was nothing in the “commercial context”, or in the “commercial” or “business” interests of the Wong Entities, that denies that cl 8 was a penalty (Paciocco at [256], [283], [272]); the only relevant commercial or business interest which the Wong Entities had was obtaining a price for their shares and there was no evidence of any detriment other than loss of use of money (which can be quantified).
The Wong Entities deny that cl 8 is a penalty. They submit that despite the clumsy definition in cl 3(i), it is unnecessary to ascribe consideration to the payment of the AUD1.4m, the agreement being in the form of a deed. They say that AUD1.4m simply represents the “commercial break point” agreed in arm’s length negotiations for an extended completion on certain terms. The Wong Entities submit that cl 8 gave the Van Vlymen Entities the opportunity to obtain the releases from acknowledged existing liabilities upon payment of the AUD1.4m (which was required by cl 6.2) and lack of default under cll 10.1(i)- 10.1(ii) (Andrews at [10]; Ryan Kay v Playup Australia Pty Ltd [2020] NSWCA 33 at [94]; Auzcare P/L v Idameneo (No 123) P/L (2015) 91 NSWLR 581 at [21] (‘Auzcare’), quoting O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359, 367 (‘O’Dea’)). They also say that the benefit of cl 8 was in addition to the substantive benefits of the Deed in cl 5, which are insusceptible to monetary evaluation (Andrews at [11]). The Wong Entities further submit that, given the Van Vlymen Entities’ failure to perform up to the Deed, it is hardly surprising that the Deed provided that time was of the essence for payment and completion by 28 February 2017; it could not in those circumstances be “extravagant and unconscionable” to rely on its terms (Paciocco at [34], [54], [164], [221], [240] and [279]). See further Paciocco, 168 and 265; Arab Bank Australia Ltd v Sayde Developments P/L (2016) 93 NSWLR 231 at [76], [106], [110].

Legal and Receiver Fees and Disbursements

Items 9 & 13 – Worrells’/EMC’s fees and disbursements and costs from 1 March 2017

The Van Vlymen Entities accept liability for these Items. Given that a significant part of the relevant fees and disbursements were paid out of the proceeds of execution against the Van Vlymen’s assets, the parties agree that the Van Vlymen Entities’ gross liabilities with respect to these Items (shown in Table One) should be set off against the gross receipts in Table Two above.
However, the Wong Entities also submit that the receivership is continuing and so further expenses will need to be taken into account in due course.

Items 11 & 15 – Worrells’/EMC’s fees and disbursements up to 28 February 2017

The Van Vlymen Entities raise the penalty argument in relation to these Items. However, in the event that the penalty argument is rejected, the parties agree that liability should be calculated on the same basis as in relation to Items 9 & 13.

Item 17 – Birchall legal fees and disbursements since 1 March 2017

The parties agree that the urgency of settlement is such that a gross sum costs order should be made in respect of this Item. They also agree that a final assessment ought to await delivery of invoices for work done after 1 May 2020 (see estimate below). However, they seek establishment of the applicable principles.
The amount claimed in Item 17 has been revised to AUD710,368. The Van Vlymen Entities broke this figure up into four components.
First, there is a gross amount invoiced with respect to two indemnity cost orders totalling AUD236,293 (see Sydney Birchall affidavit dated 19 May 2020 at [107] and [110(a)(i)] and bundle of invoices). The Van Vlymen Entities accept that the GST component should be included in the award. However, they submit that a “typical” recovery on an indemnity basis is 90% (The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902 at [16] per Stevenson J (‘Berry Rural’)) and the figure should be reduced accordingly. The Wong Entities submit that there is no legal foundation for the reduction. They say that Stevenson J was reciting evidence given in the circumstances of that case and not finding 90% was a “typical” recovery on “an indemnity basis”. They say there is nothing typical about the instant case. They also say that cl 13(a) of the Deed entitles them to the full 100% indemnity against “all loss, damage, costs and expenses”, and that the words “(including legal costs on an indemnity (solicitor-client) basis)” in that clause do not reduce their unlimited entitlement but merely avoid any misunderstanding as to its width.
Secondly, there are costs incurred between 1 March 2017 and 1 March 2020 which are not the subject of an indemnity cost order totalling $84,701. The Wong Entities submit that the contractual indemnity applies and there is no basis for reducing the entitlement from 100% to 90% or at all. The Van Vlymen Entities submit that cl 10.2(a)(iv) of the Deed provides that the costs are to be recoverable on a solicitor/client basis. They say any distinction between costs assessed on indemnity basis and solicitor-client basis is a fine one so that the 10% reduction should also apply.
Thirdly, the costs incurred since 1 March 2020 have been invoiced up to 1 May 2020, totalling $103,328. All costs and disbursements since 1 May 2020 are the subject of an estimate totalling $274,000. The parties make the same arguments as summarised above with respect to the Wong Entities’ contractual entitlement to full indemnity.
The fourth amount of $12,000 has been estimated for completion of the transaction and the parties agree that amount is reasonable and should be allowed.
Finally, the Van Vlymen Entities submit that any costs ordered to be paid by the Wong Entities to the Van Vlymen Entities should be deducted. The Wong Entities submit that while this is the case theoretically, no costs orders have been or should be made against the Wong Entities.

Items 19, 21 and 23 – Birchall legal fees and disbursements up to 28 February 2017

The Van Vlymen Entities raise the penalty argument in relation to these three Items. They submit that if that argument is rejected, the amounts referred to in Items 21 and 23 have been assessed and the amount payable is AUD218,981. That leaves Item 19, totalling AUD133,119. That figure is said to be based on an estimated recovery (in respect of the gross figure of $158,888) of 80% of solicitors’ costs and 90% of counsel’s fees. A portion of the gross figure ($20,055) is the subject of an indemnity costs order. (See Mr Birchall’s 19 May 2020 affidavit [111]-[115] and the associated bundle of invoices).
The Van Vlymen Entities submit that there should only be 90% recovery with respect to the amount subject of the indemnity costs order (Berry Rural at [16]). They further submit that there should only be 70-75% recoverability with respect to the balance of the solicitors’ and counsel’s costs (Global Medical Solutions Australia Pty Ltd v Axiom Molecular Pty Ltd [2013] NSWSC 1433 at [96]-[103]; Smith v Australian Executor Trustees Ltd (No 4) [2018] NSWSC 1584 at [32]; and ASIL Foundation (Lending) Pty Ltd v Langridge [2019] NSWSC 1574 at [43]-[44]).

The Wong Entities submit that the authorities have no application, and that there is no reason to reduce the award of costs on the indemnity basis below an actual indemnity or further discount the party-party costs on the evidence of this case. They submit that the discounts they applied accord with Mr Birchall’s experience and modest charging and the “acid test” of assessment certified by Mr Camilleri of the party-party costs to 9 March 2016 (see Mr Birchall’s 19 May 2020 affidavit [114]-[121], associated exhibits and T.46-49).

Interest

The Wong Entities submit that cl 10.2(d)(iv) of the Deed gives them a contractual right to interest post 28 February 2017, while cl 8(c) implicitly acknowledges a right to interest up to that date. They further submit that even if they do not have contractual rights to interest, they have a statutory right to interest at court rates under ss 100 and 101 of the CPA.
The Wong entities submit that the court rates of interest for the purposes of ss 100 and 101 of the Civil Procedure Act 2005 (NSW) (‘CPA’) are governed by Practice Note Gen rule 16, which provides for interest at the Reserve Bank cash rate plus 4%, and UCPR 36.7, which provides for interest at the Reserve Bank cash rate plus 6%, respectively. They submit that the appropriate rates to be applied with respect to the US Dollar sums are the US Federal Funds rate plus the same margins of 4% and 6%, respectively.
The Van Vlymen Entities submit that any and all of the interest claims that succeed (contrary to their election and penalty arguments) should be reduced having regard to the amounts that have been received by Mr Wong (see Table Two above).

Items 2 & 4 – Interest on the 2016 Total Van Vlymen Consideration

The Wong Entities claim simple interest in USD on the non-payment of the USD1.75m and SBD 15m sums under s 100 of the CPA from the last date for payment under the Settlement Agreement (24 May 2015) up to 9 July 2016, and under s 101 of the CPA from 9 July 2016 to date and continuing (the USD1.75m and SBD15m sums having been ordered to be paid by 9 July 2016 by orders dated 17 June 2016).
The Van Vlymen Entities raise six arguments against these claims for interest to which the Wong Entities respond. These include the election argument and the penalty argument (with respect to interest on this sum up to 28 February 2017). Thirdly, they submit that cl 10.2(d)(iv) of the Deed is void for uncertainty (no rate and no machinery or criteria to establish it: Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345 at [26]-[38]), or, if it is not void, they submit that “seek to recover” did not in itself confer any right to interest on the Wong Entities. The Wong Entities submit that, given the heavily litigious setting and the characterisation of the USD1.75m as a liquidated debt under the Deed, the reference to interest should be construed as a reference to court rates of interest.
Fourthly, the Van Vlymen Entities submit that the Wong Entities have sought to contrive a basis for an award of interest under s 100 by making very recent claims for the USD1.75m and SBD15m amounts in the Second Further Amended Statement of Claim and Summons. They submit that those claims had no utility as the Wong Entities have been taking enforcement action for years and the Van Vlymen Entities had already acknowledged an obligation to pay the principal sums in their Notice of Motion dated 26 March 2020. They submit that the Wong Entities do not have a continuing cause of action which they are able to pursue for the amounts (Lahoud at [30]-[31]).Therefore, they submit that those claims have no proper foundation or should not result in a favourable exercise of discretion under s 100. In response, the Wong Entities submit that a claim under s 100 was included in the original Statement of Claim on the USD250,000 then due, and that the Statement of Claim was amended to claim the USD1.75m and interest as soon as that liability arose.
Fifthly, the Van Vlymen Entities submit that the “reservation” as to interest and damages (see past relevant orders) was displaced by the subsequent election and was not intended to encompass any claim for interest and damages that may be propounded in the future. In response, the Wong Entities submit that the Court’s reservation of the matter cannot be displaced by action of any party, that the reservation expressly contemplated a claim for interest and damages in the future, and that a cause of action arising on the later Deed could not be inhibited by prior orders.
Sixthly, the Van Vlymen Entities submit that any award of interest should take into account the significant benefits that have accrued to the Wong Entities in respect of the subject shares they have retained. They submit that the Wong Entities have not discharged their onus in proving loss of use of money and the extent of it.
In response, the Wong Entities submit that the dividends were declared and paid long after default under the Deed. They further submit that their contractual or statutory entitlement to interest on the liquidated debts under the Deed is independent of any benefit received from delay in completing the Settlement Agreement. They say both parties benefitted equally and there is no evidence that the benefit to Mr Wong exceeded the value of his exertions in seeking to restore the viability of the joint venture vehicles. Finally, they submit that Mr Van Vlymen’s liability to pay interest on the purchase price from the date it fell due in 2015 or was ordered to be paid is clear given that he was effectively in control of the companies to the exclusion of Mr Wong until around March 2017 (see Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 at [75]; Hutchinson v Payne (1975) VR 175 at 179).

Item 5 – Interest on the non-refundable deposit of USD250,000

The Van Vlymen Entities raise five arguments against this claim for interest. First, they submit that neither cl 10.2(d)(iv) nor any other contractual provision extends to interest on the non-refundable deposit of USD250,000. The Wong Entities submit that liability to pay interest on the Van Vlymen Entities’ delay in paying this amount is acknowledged in cl 8(c)(iv).
Secondly, the Van Vlymen Entities submit that s 100 of the CPA is irrelevant because no claim was ever made for these moneys and, accordingly, jurisdiction under that provision has not been invoked. The Wong Entities submit that interest on the amount was claimed under s 100 in the original Statement of Claim and in the Amended Statement of Claim, and under s 101 in the Second Further Amended Statement of Claim. They say that interest is payable under s 100 from the due date (24 January 2015) to the date it was ordered to be paid (9 March 2016), and under s 101 thereafter until it was paid on 26 August 2016.
Thirdly, the Van Vlymen Entities submit that, given that the deposit was paid on 26 August 2016, all interest on that sum is the subject of the release in cl 8(c)(iv). They raise the penalty argument to the extent that the clause provides otherwise. They Wong Entities deny this.
Fourthly and fifthly, the Van Vlymen Entities say that the arguments summarised in paragraphs [57] (re the “reservation”) and [58] (re the Wong Entities’ alleged failure to discharge their onus of proving any loss of use of money) apply equally to this Item. The Wong Entities make the same responses.

Item 8 – Interest on the 2016 Settlement Payment (AUD1.4m)

The Van Vlymen Entities submit that all of the arguments they raise in relation to Items 2 and 4 except for the penalty point also apply in relation to this Item. They acknowledge that their election argument is not as strong here because the sum of AUD1.4m was not part of the orders for specific performance. However, they submit that the November 2016 Deed was intended to operate as a variation of the Settlement Agreement and as a mechanism for enforcing the orders for specific performance and so the same reasoning applies.
The Wong Entities submit that the Van Vlymen Entities improperly construe one of the stated objects of the Deed. They acknowledge that nothing in the Deed varies or derogates from the Settlement Agreement or any order of the Court (cl 12.1(a)(ii) &(iv) of the Deed). They submit that the liability to pay the AUD1.4m and interest upon it is independent of the Settlement Agreement and orders, and that interest should be calculated on the net liability of AUD1.28m from 1 March 2017.

Items 10 & 14 – Interest on Worrells’/EMC’s fees and disbursements and costs from 1 March 2017

The Van Vlymen Entities accept that jurisdiction to order interest on these amounts pursuant to s 100 of the CPA is properly invoked. They submit that the award of interest should be on the sum of AUD9,350 because that is the amount that was paid personally by Mr Wong. They also submit that interest should run from the date of payment by Mr Wong (18 May 2017).
The Wong Entities accept that interest is only payable on that amount. They further submit that interest should run until the equivalent amount was paid to Mr Wong from Van Vlymen assets or to date credited against notional interest on payments made against liabilities on the gross basis agreed for dealing with the offsetting of liabilities against payments.

Items 12 & 16 – Interest on Worrells’/EMC’s fees and disbursements up to 28 February 2017

The Van Vlymen Entities submit that there is no claim for interest because any claims in respect of the principal sums have been released. However, if the penalty argument is rejected, the parties agree that interest should be paid on the AUD70,000 actually paid by Mr Wong. They say that interest should be payable from 14 November 2016 (as to the first AUD35,000 paid by Mr Wong) and 24 November 2016 (as to the further AUD35,000 paid by Mr Wong).

Item 18 – Interest on Birchall legal fees and disbursements since 1 March 2017

The Van Vlymen Entities submit that for proceedings commenced prior to 25 November 2015, s 101(4) of the CPA made interest on costs discretionary and s 101(5) provided that interest was to be calculated ‘from (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order.’ They submit that the proceedings on the Second Amended Statement of Claim were commenced well before that date, the fresh Summons not altering that position, and therefore, that any interest ordered should only take effect from the respective dates of payment by the Wong Entities to Birchall Legal.
The Wong Entities submit that the pleading of new causes of action arising after commencement of the proceedings on the November 2016 Deed (in 2017) in the Second Further Amended Statement of Claim deems the date of commencement of the proceedings upon those causes of action to be the date of amendment (s 64(3) of the CPA). They say that, consequently, the non-discretionary regime applies. However, they agree that interest and costs should take effect from the respective dates of payment.

Items 20, 22 and 24 – Interest on Birchall legal fees and disbursements up to 28 February

The Van Vlymen Entities submit that interest is not payable because the principal amounts are not payable (being penalties). In the event that the penalty argument is wrong, the parties agree that any interest should only take effect from the respective dates of payment of these costs and disbursements by the Wong Entities.

Choice of currency for the payment of SBD15m

The Wong Entities submit that they are entitled to determine the “manner” (distinct from the “method” and in addition to time and place) of payment under cl 6 of the Deed, which includes the choice of currency (see cl 6.4 of the Deed, including the heading of that clause).
The Van Vlymen Entities submit that they may elect whether the payment is made in USD or AUD on the basis that cl 6.3 of the Deed is expressed in terms of an obligation imposed on the Van Vlymens, which will be satisfied if they make the payment in either currency. The Van Vlymen Entities further submit that “manner” is referable to “how things are done”, such as whether payment is made by EFT, bank cheque or in some other way, noting that cl 6.4 concludes by stating that “payment by way of personal cheque is not reasonably acceptable to Mr Wong”.

“Westpac Inward TT exchange rate”

The Wong Entities submit that “Westpac TT Inward exchange rate” in cl 6.3(b) of the Deed means “the rate known by the parties as the ‘Westpac TT Inward exchange rate’ published previously by Westpac in Honiara and subsequently by the successor of the joint venture’s bankers in Honiara, ‘Bank South Pacific’” (Plaintiff’s written submissions dated 28 May 2020).
The Wong Entities submit that cl 6.3(b) does not contemplate a physical exchange but a method of calculation. They submit that one can glean a number of characteristics of the formula from the text of the clause. First, “inward” means the buy rate from the bank’s point of view. Secondly, the formula must refer to a single standard rate. Thirdly, the rate must be one for the conversion of Solomon Island dollars into either USD or AUD, which points to the rate being published in the Solomon Islands. Finally, the rate must be a daily rate.
The Wong Entities also refer to the evidence of Mr Wong, Mr Birchall and Mr Keleher (see below). In particular, they submit that the only banking operation shown to have used the term “Inward TT rate” is that which was known as “Westpac” in Honiara. This appears on the examples of its exchange rate sheets Mr Wong says he and Mr Van Vlymen used regularly. They further submit that Westpac in Australia has never quoted such a single standard rate.
The Wong Entities submit that if they are wrong about the proper construction of cl 6.3(b), the clause ought to be rectified to substitute “Bank South Pacific” for “Westpac” given the parties’ subjective intentions at the time the Deed was entered (see Mr Wong’s evidence below).
The Van Vlymen Entities submit that there is no basis on any recognised principle of construction for reading “Westpac” to mean anything other than a relevant branch of Westpac offering the relevant “TT inward” (or “Buy”) rate whereby the bank will pay out USD or AUD and buy in SBD. They say that would not be a bank in the Solomon Islands because it would be using the “Sell” rate to do that.
With respect to the rectification argument, the Van Vlymen Entities submit that there is no evidence as to what Mr Wong and Mr Van Vlymen’s actual subjective intentions were (Ryledar v Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [267] per Campbell JA).

Date for calculation of exchange rate

The Wong Entities submit that the exchange rate is to be calculated by reference to the 5 banking days prior to 28 February 2017. That is the date when the Van Vlymen Entities were bound to settle and pay the equivalent of the SBD15m (cl 11 of the Deed). The Wong Entities submit that the use of any later date would enable the Van Vlymen Entities to take advantage of their own wrong doing, contrary to TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, 147 [B] and [C].
The Van Vlymen Entities submit that the rate is to be calculated on the basis of the average rate quoted by Westpac in the 5 banking days immediately prior to settlement. They say that a 2020 rate focuses on the payment of a sum of money which will achieve specific performance (which is the only relevant matter for present purposes), while a 2017 rate focuses on what should have happened, but did not happen, under the original order for specific performance (which is relevant only to questions of damages, which the Wong Entities have elected to eshew). The Wong Entities submit that there is no contractual construction available to support this claim.

Legal principles

Construction

The principles to be applied in determining the rights and liabilities of parties under a contract were explained by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104 (‘Mount Bruce Mining’) at [46]-[52]:

[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience”.

[52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Incv Jireh International Pty Ltd.” (citations omitted)

Merger & Election

As noted above, the Van Vlymen Entities rely on Lahoud at [30]-[31] in support of their ‘merger argument’, and Despot at [117]-[118] and [123] in support of their subsequent ‘election argument’.
Mr Leopold SC, counsel for the Van Vlymen Entities, also referred to Georges v Wieland [2010] NSWSC 1387 (see above). In that case, Brereton J (as his Honour then was) said (at 25]):

… it is a general principle concerning orders for specific performance that once such an order has been made, the contractual rights of the parties are not superseded but their future exercise is under the control of the court, so that the working out of the order for specific performance is under the court’s control [see Singh (Sudagar) v Nazeer [1979] Ch 474, 481-2; Buckman v Rose (1980) 1 BPR 9558; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, 259-60] …

Mr Wong deposed that when he entered into the November 2016 Deed, in cl 6.3(b), he was referring to the banking business of Westpac in Honiara and believed Mr Van Vlymen was referring to the same. He said he believed that:

in the absence of an actual exchange of currency at or by the bank in Honiara from foreign currency to SBD, the Inward TT rate could be used to calculate a conversion from SBD to a foreign currency simply by multiplying the SBD sum by the Inward TT rate, instead of dividing the SBD by the rate.

During cross-examination, Mr Wong confirmed that he chose the buy (or “inward”) rate rather than the sell rate because it would give him an advantage.
In his 19 May 2020 affidavit, Mr Wong stated that he believed that Westpac continued to operate a bank in Honiara when he entered into the November 2016 Deed. Mr Wong corrected this statement in his 22 May 2020 affidavit. He said he had re-read paragraph 21 of his 23 December 2015 affidavit where he referred to the minutes of a meeting of directors of LSL (one of the Joint Venture Companies) which were received by him about a week after the meeting and referred to the company’s bank account with Bank South Pacific as “(formerly Westpac account)”.
Mr Wong was cross-examined on his ignorance of the sale of the Westpac branch in Honiara to Bank South Pacific. He conceded that he did know about the transaction in November 2016 but said that he was not focused on it at the time due to the company restructure that was occurring.
Mr Wong exhibits (at pp 28-29 of Exhibit PW-1) copies of exchange rate sheets prepared by Bank South Pacific dated 4 November 2016 and 31 March 2020 in which the bank quoted exchange rates for conversion between SBD and AUS, and between SBD and USD.

The Van Vlymen Entities’ Evidence

Mr Sean Keleher

The Van Vlymen Entities rely upon one affidavit of their solicitor, Mr Keleher, dated 22 May 2020 (with exhibit SK-2).
Mr Keleher deposed to a conversation he had with Mr Nik Siggers, Senior Associate, Westpac Consumer, Premium & Micro SME Foreign Exchange via telephone on 19 May 2020. That conversation was said to include the following:

[Keleher]: I understand that you sent an email to Mr Van Vlymen in May 2019 in which you confirmed that the Inward exchange rate means the Buy rate which appears on the Westpac Foreign Exchange Historical Rates webpage.

Siggers: Yes, that’s correct. The Inward rate is the Buy rate. The Buy rate and the Sell rate is always from the point of view of the bank. So if a customer wants to exchange a foreign currency for Australian dollars, the bank is buying the foreign currency so it applies the buy rate.

…

[Keleher]: Does Westpac provide exchange rates for the exchange of Solomon Island dollars to US dollars?

Siggers: The process for exchange of one foreign currency into another foreign currency is that the customer would contact us and obtain an exchange rate for the transaction. We use Reuters rates which provides a wholesale rate then we apply our margin and that is the rate which we quote the customer.

[Keleher]: So the rate Westpac would offer to exchange Solomon Island Dollars to US Dollars is not published on a website but Westpac can quote the rate?

Siggers: Provided the customer has a US Dollar account, yes, we can do that.

[Keleher]: And so, hypothetically, if the customer was intending to conduct the exchange of Solomon Islands Dollars to US Dollars on 28 February, the customer could call your department each day in the week leading up to the transaction and obtain a rate that Westpac would provide to effect that transaction on each day leading up to 28 February.

Siggers: Yes, that is possible.

[Keleher]: And was that the case in February 2017?

Siggers: Yes.

Documents in SK-2 are said to show that Westpac has a branch in New York (see Westpac Group‘s “Full Year 2015 Financial Result” (dated before the parties’ November 2016 Deed) and “2016 Westpac Group Annual Report” (dated after the parties’ November 2016 Deed)).

Mr Matthew Hogg

The Van Vlymen Entities rely upon three affidavits of Mr Matthew Hogg dated 22 May 2020, 24 May 2020 (with an Annexure A) and 2 June 2020 (also with an Annexure A).
Mr Hogg is a director of Agrinova Pty Ltd (‘Agrinova’). He stated that in early 2020 Agrinova obtained finance from Capital Securities Australia Pty Ltd (‘CSA’) in part for the purposes of Mr Van Vlymen paying the balance owing to the Wong Entities under the Deed.
In his 22 May 2020 affidavit, Mr Hogg stated that he will consider increasing the amount Agrinova is prepared to fund Mr Van Vlymen if this Court determines that the amount to be paid to the Wong Entities is greater than the balance available under the loan facility.
Mr Hogg stated that he needs confirmation of the final amount payable by Mr Van Vlymen to Mr Wong before Agrinova can move forward with that transaction.
Annexure A to Mr Hogg’s 2 June 2020 affidavit is a copy of a CSA loan statement for the period 14 February 2020 to 13 June 2020.

Bank South Pacific Exchange Rates (SCB-5 p 378)

Mr Leopold SC also referred to a document which he described as “an extract from the business records of Bank South Pacific” (T.124:44-45) which showed the rates at which the bank buys and sells foreign currency. It was said to show that when the bank is “selling out US dollars and therefore buying in Solomon Islands dollars, that’s a sell rate rather than the buy rate which is referred to in the contract” (T.124:1-6).

Consideration

Merger & Election

Under normal circumstances it is true that when an order for specific performance is made any claim for damages for breach of the underlying contract is lost because it will have merged in the judgment for specific performance. That is what happened in Lahoud. However, it is not the case that the contractual rights of the parties merge in the order for specific performance. Further, in this case, as I have already noted above, Stevenson J’s orders reserved further consideration of the matter as well as liberty to apply, the Wong Entities having claimed damages in addition or in the alternative to the order for specific performance.
It is also the case that the parties can superimpose upon the order for specific performance additional contractual obligations. That is what happened here. Stevenson J’s judgment concerned the 2014 contract, which was ordered on 9 March 2016 to be performed by execution of the Settlement Agreement and payment of the USD250,000 deposit. The Settlement Agreement was entered on 11 March 2016. However, Mr Van Vlymen continued to default on his obligations, leading to the Deed being entered on 4 November 2016. The Deed imposed new obligations on the parties, including the requirement for the Van Vlymen Entities to pay the additional AUD1.4m, while being stated to be a mechanism by which the new arrangement could be complied with, the Settlement Agreement satisfied, and the certain proceedings (said to be in 2015 and 2016) could be settled. Whatever the state of play at the time the order for specific performance was made with respect to the monies owed under the Settlement Agreement, it seems abundantly plain that the Van Vlymens unequivocally agreed to pay the new AUD1.4m. I do not accept the Van Vlymen Entities’ submission that their opponents’ claim for interest on that additional AUD1.4m amount has been forsaken by some election associated with their choice to enforce the prior order for specific performance. To the contrary, the Wong Entities explicitly reserved their right to seek interest on that amount in cl 10.2(d)(iv) of the November 2016 Deed.
Further, it does not seem to me that the Wong Entities did or were required to abandon their claim for damages or interest with respect to the other Items (2, 4 and 5) when they elected to enforce the order for specific performance through the receivers. Mr Jackman SC pointed out, and I think that he is right, the choice to enforce a contract or order for specific performance through the appointment of receivers to recover monies due is not a mutually exclusive alternative to maintaining a claim to damages which requires an election to be made at the first moment of non-compliance. Section 68(b) of the Supreme Court Act allows the Court to award damages in addition to specific performance. I agree with the Wong Entities’ submission that their election to retain the order for specific performance does not prevent additional relief or, if ultimately the order is vacated, alternative relief, for the Van Vlymen Entities’ original or subsequent defaults.
Further, at every turn the Wong Entities were assiduous in reserving their rights to damages and interest, not only in Court but also in the terms of the November 2016 Deed. In particular, the USD1.75m and SBD15m amounts were made payable under cl 6.3 of the Deed, while cl 10.2(b) made them recoverable as liquidated debts upon default. The Wong Entities then reserved their right to seek interest on those amounts, as well as the late payment of the USD250,000, in cl 8(c) (subject to the potential release) and 10.2(d)(iv) of the Deed. In addition, the orders of the Court have consistently reserved further consideration of those matters.
For these reasons I do not accept the Van Vlymen Entities’ arguments relating to merger and election.

Penalty

The Van Vlymen Entities raise the penalty argument in relation to Items 2, 4, 5, 11, 12, 15, 16, 19, 20, 21, 22, 23 and 24. They say that Items 2, 4 and 5, relating to interest on the USD1.75m, SBD17m and USD250,000 amounts, fall within cl 8(c)(iv) of the Deed, which provides for a release from liability for interest accrued to 28 February 2017 on the failure of the Van Vlymen Entities to pay those amounts in time under the Settlement Agreement. They say that Items 11 and 15, relating to the receivers’ fees and disbursements up to 28 February 2017, and Items 12 and 16, relating to interest on those amounts, fall within the releases in cll 8(a) and 8(c)(i). Finally, they say that Items 19, 21, 23, relating to Mr Birchall’s costs and disbursements up to 28 February, and Items 20, 22 and 24, interest on those amounts, fall within the releases in cll 8(b) and 8(c)(ii)-(iii).
All of the releases in cl 8 were made conditional upon “payment in full of the 2016 Settlement Payment [the AUD1.4m] in accordance with this deed and on condition that the Van Vlymen Entities and Mrs Van Vlymen have not otherwise committed a Default under clauses 10.1(i) to 10.1(iii)”. Those conditions are not satisfied and therefore the releases on one view do not come into effect. But the Van Vlymen Entities submit that they have agreed to pay the AUD1.4m in consideration for the releases, and cl 8, by requiring the Van Vlymen Entities to also pay all of the released amounts upon default of cll 10.1(i) to 10.1(iii), imposes an unenforceable penalty on them.
I disagree. To be considered a penalty, the amount to be paid on default must be “out of all proportion to the interests of the party which it is the purpose of the provision to protect” (Paciocco at [29]). One must have regard to the commercial context and what is to be identified is something exceptional or extreme or “out of all proportion”.
Under the March 2016 Settlement Agreement not only was the USD250,000 to be paid on exchange but the final payments of USD1.75m and SBD15m were to be paid no later than 120 days after exchange. Mr Van Vlymen could not complete on time or at all. It may be recalled that he finally paid the USD250,000 in August of 2016. The November 2016 Deed was entered due to his continuing defaults and interminable delay. Importantly, the balance of the recitals as it were set out all of the steps taken by the parties, each trying to outmanoeuvre each other in their seemingly never ending dispute. Whilst the Wong Entities failed to receive the payments promised, the Van Vlymen Entities attempted to buy more time to pay up and at the same time maintain their assets. The commercial context is one that involves serial defaulting on the part of Mr Van Vlymen and continual renegotiation between the parties as Mr Wong attempted to be paid. With this in mind, I accept Mr Jackman SC’s submission that the additional AUD1.4m represented “a commercial break point in an overall negotiation for an extended completion with a lot of strings attached” (T.69:28-29). Clause 8 gave the Van Vlymen Entities the opportunity to obtain the releases. However, in cl 5 the Wong Entities also agreed to the stay of proceedings, including the enforcement of court orders, and the postponement of the sale of the Van Vlymens’ properties by the trustees and receivers. They also agreed to move the Court for orders discharging all extant orders made in and further consideration of and discontinuing the 2015 Proceedings and 2016 Proceedings if the November 2016 Deed was fully complied with.
As Stevenson J pointed out years ago, it would have been “extraordinarily difficult” then let alone now for Mr Wong to prove what damage he has suffered by reason of the Van Vlymen Entities’ failure to complete. In a commercial transaction like this, involving sophisticated former joint venturers, to charge interest on outstanding payments, or require reimbursement for legal and receiver costs actually incurred, does not seem to me to be out of all proportion with the commercial interests involved, especially where Mr Van Vlymen has continued to delay, and Mr Wong’s principal cause and the subsequent loss and damage caused to the Wong Entities’ interests in the joint venture by that ongoing delay are likely insusceptible of calculation. Objectively viewed in this particular commercial context, I do not consider the requirement to pay the amounts referred to in cl 8 of the Deed exceptional or extreme.
Further, cl 8 concerned the potential release of acknowledged existing liabilities arising out of the Van Vlymen Entities’ failure to comply with the Settlement Agreement. It seems to me that the law of penalties has no application in these circumstances (Auzcare at [21]; O’Dea at 367).

Legal and Receiver Fees and Disbursements

It seems that the Van Vlymen Entities have accepted liability for the expenses of the receivership (Items 9, 11, 13, 15) and the parties have agreed that gross liabilities are to be set-off against gross receipts. As the receivership continues, the Van Vlymen Entities may also become liable for further expenses.
I am of the view that a gross sum costs order should be made with respect to the Wong Entities’ legal fees and disbursements. Having rejected the Van Vlymen Entities’ penalty argument, the issue left to be determined is what, if any, discount/s should be applied to the legal costs and disbursements claimed in Items 17 and 19.
I do not accept the Wong Entities’ submission that cll 10.2(a)(iv) and 13(a) of the Deed entitle them to a 100% indemnity against relevant legal costs. Both of those clauses refer to costs being recoverable on the “indemnity (solicitor-client)” basis. With respect to both Items 17 and 19, I would apply a 10% discount to the costs said to be recoverable on an indemnity or solicitor-client basis.
Further, having considered Mr Birchall’s invoices and the other evidence in this case, I agree with the Van Vlymen’s submission that the estimated recovery of 80% solicitors’ costs and 90% of counsel’s fees in respect of the amounts not subject to an indemnity costs order in Item 19 is too generous. In my assessment I should apply a discount of 30% to the total solicitors’ costs and counsels’ fees claimed on the party-party basis to allow for contingencies.

Interest

Further, I do not agree with the Wong Entities’ submission that they have a contractual right to interest under cll 8(c) and 10.2(d)(iv) of the Deed. Clause 8(c) provides for the potential release of the Van Vlymen Entities “from any further liability for interest accrued to 28 February 2017”, conditional on non-default of cll 10.1(i)-(iii). Clause 10.2(d)(iv) states that in the event of any Default “the Wong Entities may seek to recover interest in respect of that Default”. In my view, rather than conferring a contractual right to interest on the Wong Entities, these clauses merely give notice to the Van Vlymen Entities that the Wong Entities may seek to recover interest on default.
However, so far as I have a discretion to award interest under ss 100 and 101 of the CPA, I would exercise my discretion in favour of the Wong Entities with respect to each of their claims to interest. I agree that for those amounts payable in Australian dollars interest payable pursuant to s 100 (up to judgment) should be at the Reserve Bank cash rate plus 4% and interest payable pursuant to s 101 (post judgment and costs) should be at the Reserve Bank case rate plus 6%. It is appropriate for the same approach to be taken with respect to the amounts payable in USD, substituting “US Federal Funds rate” for “Reserve Bank cash rate”.
The Van Vlymen Entities accepted that if their penalty argument was wrong they should pay interest on the portions of Items 12 & 16 that were actually paid by Mr Wong (totalling AUD70,000) from the dates on which he made the relevant payments. They made the similar concessions with respect to their liability for interest on Items 10, 14, 20, 22 and 24. Having rejected the Van Vlymen’s penalty argument and noting the extent of the parties’ agreement on the other issues, I also agree with this approach.
With respect to the remaining interest Items (2, 4, 5, 8, 18), I agree that interest ought to be payable from the dates proposed by the Wong Entities: First, interest on the USD1.75m and SBD15m amounts should be paid under s 100 from the date those amounts first fell due and the Van Vlymen Entities fell into default (24 May 2015) up until the date they were ordered to be paid (9 July 2016), and under s 101 from 9 July 2016 thereafter. Secondly, interest on the USD250,000 amount should be paid under s 100 from the due date (24 January 2015) to the date it was ordered to be paid (9 March 2016), and under s 101 thereafter until it was paid on 26 August 2016. Thirdly, at this stage, interest on the unpaid portion of the AUD1.4m ought to be paid under s 100 from the date the Van Vlymen’s fell into default under the Deed (1 March 2017). Finally, interest on the gross sum costs order relating to Mr Birchall’s legal fees and disbursements since 1 March 2017 (Item 18) should be paid under s 101(4) from the dates the relevant payments were made by the Wong Entities.

The SBD Payment: Currency

The Wong Entities say that Mr Wong gets to choose the currency in which the SBD15m amount will be paid because cl 6.4 of the November 2016 Deed says so. I disagree. They place emphasis on the word “manner” as meaning the currency in which the funds are to be paid. But the word “manner”, in its ordinary English meaning, means the way to do something. Clause 6.4(a) expressly makes clear that payment by personal cheque, for example, meaning in that “way”, is unacceptable. I consider “manner” means bank cheque, electronic transfer or perhaps a bond but that it says nothing about (absent express agreement) the currency choice.
It would also seem strange to give the currency choice to the recipient of the funds. The seller has no interest other than to receive the USD or AUD equivalent of SBD on a particular day. I consider the better way to construe the clause is as an obligation on the Van Vlymen Entities to pay on a particular day at a particular rate in a currency of their choice provided it converts to SBD15m. The word “payment” at the beginning of cl 6.3(b), taken together with cl 6.3(a), refers to a payment obligation upon the Van Vlymen Entities. The refusal to accept a personal cheque and the obligation upon the Wong Entities not unreasonably to refuse any other way or manner of payment is clear reference to the means or method of payment and not the currency it is in. The choice of USD or AUD is an indication that payment will be accepted in either currency provided that on the relevant day it converts to SBD15m. If it was intended to give the choice of currency it could have been made clear. I do not think giving Mr Wong a choice over manner does any more than give him a choice over the way, the means or perhaps the method.

“Westpac TT Exchange Rate”

It should be remembered that the March 2016 Settlement Agreement provided for payment in Honiara (see cl 4.4(ii)). Clearly it seems at this point settlement was to take place in SBD and by bank cheque (again see cl 4.4(ii)).
The evidence would suggest the parties had the Joint Venture’s bank account/s at Westpac in Honiara and from time to time Mr Wong and Mr Van Vlymen would attend the bank together. There were daily published exchange rates between SBD and AUD or USD. It seems that at some time in 2015 before the November 2016 Deed was originally formed Westpac transferred its business to Bank South Pacific. It seems logical that the parties had jointly in mind a local Bank in the Solomon Islands and the relevant rate quotes there but simply were mistaken as to the precise bank at the time they negotiated the agreement. That of itself should not vitiate the contract in my view.

Date for exchange rate calculation

It further seems to me that the rate at the anticipated date of settlement should be the date for the calculation. That was the last possible “date of payment” under the Deed (cl 6.3(b)).

Conclusion

In summary, it does not seem to me that the Wong Entities have at any time elected to forsake their claims to interest and damages, nor can I say that cl 8 when objectively viewed in the commercial circumstances of this case imposes an unenforceable penalty on the Van Vlymen Entities. Having disagreed with the Van Vlymen Entities’ election and penalty arguments, I would exercise my discretion under ss 100 and 101 of the CPA in favour of the Wong Entities with respect to each of their claims to interest. I agree with the Wong Entities’ submissions that “Westpac TT Exchange Rate” means the rate previously published by Westpac in Honiara and subsequently published by its successor, Bank South Pacific, and that the exchange rate ought to be calculated by reference to the 5 banking days prior to 28 February 2017. However, I have concluded that the Van Vlymen Entities may choose whether the SBD15m amount is to be paid in USD or AUD. I consider it appropriate in this case to make a gross sum costs order and would apply a 10% discount to costs recoverable on an indemnity or solicitor-client basis, and a 30% discount to costs recoverable on a party-party basis.
I invite the parties to do the relevant calculations and bring in short minutes of order to reflect my judgment. If there are any further outstanding questions of cost, I will hear further argument.

**********

Decision last updated: 02 July 2020

Medium Neutral Citation:	Wong v Van Vlymen [2020] NSWSC 841
Hearing dates:	29 May, 3 and 9 June 2020 Written submissions were received from the plaintiffs on 28 May 2020, 2 June 2020 and 11 June 2020. Written submissions were received from the first and second defendants on 27 May 2020 and 9 June 2020.
Decision date:	02 July 2020
Jurisdiction:	Equity - Expedition List
Before:	Sackar J
Decision:	See paras [174]-[175] Parties to bring in short minutes of order
Catchwords:	CONTRACTS — Remedies — Damages — Damages in addition to order for specific performance CONTRACTS — Remedies — Damages — Damages after specific performance — Damages after election to continue or enforce order for specific performance CONTRACTS — Penalty — Whether clause in the form of a conditional release imposed an unenforceable penalty on the defendants — Whether amount to be paid upon breach was out of all proportion with the interests protected — Where loss difficult to calculate or insusceptible of calculation — Where amounts to be paid upon breach related to existing liabilities CONTRACTS — Construction — Where clauses and terms ambiguous — Reference to surrounding circumstances COSTS – Appropriate principles and considerations – Lump sum or gross costs order – Whether lump sum costs order should be made – Appropriate discount to lump sum or gross costs order INTEREST — Interest up to judgment and post judgment — Sections 100 and 101 of the Civil Procedure Act 2005 (NSW) — Interest on monies due under order for specific performance — Interest on monies due under subsequent deed — Interest on legal costs — Interest on foreign currency
Legislation Cited:	Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Abigroup Ltd v Abignano (1992) 39 FCR 74 Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 Ailakis v Olivero (No 2) [2014] WASCA 127 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205 Arab Bank Australia Ltd v Sayde Developments P/L (2016) 93 NSWLR 231 ASIL Foundation (Lending) Pty Ltd v Langridge [2019] NSWSC 1574 Australian Hardwoods Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201 Auzcare P/L v Idameneo (No 123) P/L (2015) 91 NSWLR 581 Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 Despot v RegistrarGeneral [2016] NSWCA 5 Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158 Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296 Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807 Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524 Georges v Wieland [2010] NSWSC 1378 Global Medical Solutions Australia Pty Ltd v Axiom Molecular Pty Ltd [2013] NSWSC 1433 Haines v Bendall (1991) 172 CLR 60 Hamod v The State of New South Wales [2011] NSWCA 375 Harrison v Schipp (2002) 54 NSWLR 738 Hutchinson v Payne (1975) VR 175 Johnson v Agnew [1980] AC 367 Lahoud v Lahoud (No 2) [2012] NSWCA 55 Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558 Legione v Hateley (1983) 152 CLR 406 McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260 Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104 O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525 Patrick Wong and Anor v Willem Van Vlymen and Others [2018] NSWSC 312 Peachy v Duke of Somerset (1721) 1 Str 447 [93 ER 626] Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345 Riltang P/L v L P/L (2004) NSWSC 977 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 244 CLR 656 Ross v Padget [2016] NSWSC 1851 Ryan Kay v Playup Australia Pty Ltd [2020] NSWCA 33 Ryledar v Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Smith v Australian Executor Trustees Ltd (No 4) [2018] NSWSC 1584 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Waterside Workers’ Federation of Australia v Stewart (1919) 27 CLR 119 Wong v Van Vlymen [2016] NSWSC 161
Texts Cited:	Ritchie's Uniform Civil Procedure NSW
Category:	Principal judgment
Parties:	Patrick Wong (first plaintiff) Overseas Shipping Trading and Investment Pty Limited; Cook Islands Company number 3421/1998 (second plaintiff) Willem Van Vlymen (first defendant) Margriet Van Vlymen (second defendant) Pacific Investment Holdings Pty Ltd (ACN 001 614 964) (third defendant) Orbis Commodities Pty Ltd (ACN 003 546 898) (fourth defendant) Pacific Investment Ltd; Cook Islands company number 3749/2000 (fifth defendant)
Representation:	Counsel: I Jackman SC, S Burchett (plaintiffs) A Leopold SC, H Somerville (defendants) Solicitors: S Birchall, Birchall Legal (plaintiffs) S Keleher, Keleher Lawyers (first and second defendants) M Doble, Eakin McCaffery Cox (solicitor for the receiver of the third, fourth and fifth defendants)
File Number(s):	2015/00060753 2020/00145651

Case Name:	Wong v Van Vlymen
Neutral citation	[2020] NSWSC 841
Hearing Date(s):	29 May, 3 and 9 June 2020 Written submissions were received from the plaintiffs on 28 May 2020, 2 June 2020 and 11 June 2020. Written submissions were received from the first and second defendants on 27 May 2020 and 9 June 2020.
Jurisdiction:	Equity Division – Expedition List
Before:	Sackar J
Decision:	See paras [174]-[175] Parties to bring in short minutes of order
Catchwords:	CONTRACTS — Remedies — Damages — Damages in addition to order for specific performance CONTRACTS — Remedies — Damages — Damages after specific performance — Damages after election to continue or enforce order for specific performance CONTRACTS — Penalty — Whether clause in the form of a conditional release imposed an unenforceable penalty on the defendants — Whether amount to be paid upon breach was out of all proportion with the interests protected — Where loss difficult to calculate or insusceptible of calculation — Where amounts to be paid upon breach related to existing liabilities CONTRACTS — Construction — Where clauses and terms ambiguous — Reference to surrounding circumstances COSTS – Appropriate principles and considerations – Lump sum or gross costs order – Whether lump sum costs order should be made – Appropriate discount to lump sum or gross costs order INTEREST — Interest up to judgment and post judgment — Sections 100 and 101 of the Civil Procedure Act 2005 (NSW) — Interest on monies due under order for specific performance — Interest on monies due under subsequent deed — Interest on legal costs — Interest on foreign currency
Legislation Cited:	Civil Procedure Act 2005 (NSW) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Abigroup Ltd v Abignano (1992) 39 FCR 74 Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514 Ailakis v Olivero (No 2) [2014] WASCA 127 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205 Arab Bank Australia Ltd v Sayde Developments P/L (2016) 93 NSWLR 231 ASIL Foundation (Lending) Pty Ltd v Langridge [2019] NSWSC 1574 Australian Hardwoods Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201 Auzcare P/L v Idameneo (No 123) P/L (2015) 91 NSWLR 581 Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 Despot v RegistrarGeneral [2016] NSWCA 5 Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty ltd (No 2) [2014] NSWCA 158 Edward Ted Lakis and Anor v Michael Victor Lardis and Anor (No 3) [2018] NSWSC 1296 Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 807 Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524 Georges v Wieland [2010] NSWSC 1378 Global Medical Solutions Australia Pty Ltd v Axiom Molecular Pty Ltd [2013] NSWSC 1433 Haines v Bendall (1991) 172 CLR 60 Hamod v The State of New South Wales [2011] NSWCA 375 Harrison v Schipp (2002) 54 NSWLR 738 Hutchinson v Payne (1975) VR 175 Johnson v Agnew [1980] AC 367 Lahoud v Lahoud (No 2) [2012] NSWCA 55 Lawcover Insurance Pty Ltd v Muriniti and Newell [2018] NSWSC 558 Legione v Hateley (1983) 152 CLR 406 McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 260 Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (S99/2015; S102/2015) (2015) 256 CLR 104 O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525 Patrick Wong and Anor v Willem Van Vlymen and Others [2018] NSWSC 312 Peachy v Duke of Somerset (1721) 1 Str 447 [93 ER 626] Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345 Riltang P/L v L P/L (2004) NSWSC 977 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 244 CLR 656 Ross v Padget [2016] NSWSC 1851 Ryan Kay v Playup Australia Pty Ltd [2020] NSWCA 33 Ryledar v Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Smith v Australian Executor Trustees Ltd (No 4) [2018] NSWSC 1584 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 The Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd (No 4) [2018] NSWSC 1902 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Waterside Workers’ Federation of Australia v Stewart (1919) 27 CLR 119 Wong v Van Vlymen [2016] NSWSC 161
Texts Cited:	Ritchie's Uniform Civil Procedure NSW
Category:	Principal Judgment
Parties:	Patrick Wong (first plaintiff) Overseas Shipping Trading and Investment Pty Limited; Cook Islands Company number 3421/1998 (second plaintiff) Willem Van Vlymen (first defendant) Margriet Van Vlymen (second defendant) Pacific Investment Holdings Pty Ltd (ACN 001 614 964) (third defendant) Orbis Commodities Pty Ltd (ACN 003 546 898) (fourth defendant) Pacific Investment Ltd; Cook Islands company number 3749/2000 (fifth defendant)
Representation:	Counsel: I Jackman SC, S Burchett (plaintiffs) A Leopold SC, H Somerville (defendants) Solicitors: S Birchall, Birchall Legal (plaintiffs) S Keleher, Keleher Lawyers (first and second defendants) M Doble, Eakin McCaffery Cox (solicitor for the receiver of the third, fourth and fifth defendants)
File Number(s):	2015/00060753 2020/00145651

Fig.	US Dollar components	USD
1.	2016 Total Van Vlymen Consideration - USD sum	1,750,000
2.	Interest on 2016 Total Van Vlymen Consideration – USD sum	[TBD]
3.	2016 Total Van Vlymen Consideration – SBD sum	1,934,250 [SBD15 million]
4.	Interest on 2016 Total Van Vlymen Consideration – SBD sum	[TBD]
5.	Interest on Non- Refundable Deposit – USD sum	[TBD]
Fig.	Australian Dollar components	AUD
7.	2016 Settlement Payment	1,400,000
8.	Interest on 2016 Settlement Payment	[TBD]
9.	Worrells fees and disbursements (ex legals) from 1/3/17	235,530
10.	Interest on Worrells fees and disbursements (ex legals) from 1/3/17	[TBD]
11.	Worrells fees and disbursements (ex legals) to 28/2/17	31,399
12.	Interest on Worrells fees and disbursements (ex legals) to 28/2/17	[TBD]
13.	Eakin McCaffery Cox (EMC) (solicitors for Mr Darin) fees and disbursements from 1/3/17	208,205
14.	Interest on EMC fees and disbursements from 1/3/17	[TBD]
15.	EMC fees and disbursements to 28/2/17	71,540
16.	Interest on EMC fees and disbursements to 28/2/17	[TBD]
17.	Birchall Legal fees and disbursements from 1/3/17 to 15/5/20	581,667 [now revised to 710,368]
18.	Interest on Birchall Legal fees and disbursements from 1/3/17	[TBD]
19.	Birchall Legal fees and disbursements March 2016 to 28/2/17	133,119
20.	Interest on Birchall Legal fees and disbursements March 2016 to 28/2/17	[TBD]
21.	Unpaid costs assessed under NSWSC 2016/192881	209,481
22.	Interest on costs assessed under NSWSC 2016/192881	[TBD]
23.	Unpaid assessed costs under NSWSC 2014/254655	9,500
24.	Interest on unpaid assessed costs under NSWSC 2014/254655	[TBD]

Fig.	Payments/recoveries	AUD [Gross amounts]	Net received by Wong
30.	First Upfront Payment paid 4/11/16	100,000	100,000
32.	Second Upfront Payment paid 9/11/16	20,000	20,000
34.	Sale proceeds of Bayview property 10/7/17	448,907	247,453
36.	Sale proceeds of Kulnura property 22/8/17	1,168,570	1,068,660
38.	Pacific Investment Pty Ltd (PIL) (Fifth Defendant) share of Bloody Ridge dividend	300,000	269,874
40.	PIL further share of Bloody Ridge dividend 21/3/18	124,500	108,000
42.	PIL further share of Bloody Ridge dividend 21/12/18	75,500	75,500
44.	SUB-TOTAL RECOVERED v PAID OUT	2,237,477	1,889,487
48.	Personal funding of Receiver by Wong	-	- 79,350
49.	TOTAL AUD PAID OUT TO PLAINTIFFS	-	1,810,137