Goo v Sim

1. [1]

   In these proceedings, the plaintiffs seek to recover money that they claim was paid to the defendant, Mr Sun Sick Sim (Mr Sim), in connection with a business venture to create an online remittance portal (or website) for the real-time transfer of money between individuals in Australia and South Korea.

2. [2]

   Mr Sim was a director of the second plaintiff, Tokorea Pty Limited (Tokorea), and an employee of the third plaintiff, Oakwood Sydney Pty Limited (Oakwood), an entity that was controlled by the first plaintiff, Mr Seoung Jin Goo (Mr Goo).

3. [3]

   There are two amounts of money that are the subject of the plaintiffs’ claim. The first is an amount of $110,000 that was given (mostly in cash) to Mr Sim by Oakwood in October 2014. The second is an amount of $50,000 which Mr Goo alleges he gave to Mr Sim in cash in early December 2014.

4. [4]

   The plaintiffs’ case is, in essence, that Mr Sim has misappropriated the funds by using them for his own benefit rather than for the purposes of the online remittance business. Their case is formulated in several alternative ways and includes claims of monies had and received, breach of trust, and breach of fiduciary, equitable and/or statutory duties owed to Oakwood and Mr Goo as a joint venture partner, as an employee of Oakwood and/or as a director of Tokorea.

5. [5]

   Mr Sim does not dispute receiving the $110,000 but denies liability on the basis that the money became the property of Global HR and Trading Co Limited (Global HR) (a South Korean company he set up for the new business) and has been spent on business expenses and his salary. Global HR is not a party to these proceedings and was dissolved in late 2020. Mr Sim denies that he ever received the second amount of $50,000 from Mr Goo.

6. [6]

   As will appear, most of the facts are in dispute and there are significant conflicts in the evidence given by Mr Goo and Mr Sim. Submissions were made concerning their credit, with each seeking findings that the other was a dishonest witness. Determining what happened has also been impacted by the informal arrangements between the parties and a lack of documents, including the absence of any bank records and other documents relating to Global HR and the payment of its business expenses.

7. [7]

   The plaintiffs’ relied upon the affidavits of Mr Goo affirmed on 28 August 2019 (Goo 1) and 19 March 2020 (Goo 2) and the affidavit of Mr Junghoon Back affirmed on 4 June 2020.

8. [8]

   They also relied on the bundle of documents annexed to an affidavit of Lisa Cox (a solicitor in the employ of the solicitors for the plaintiffs) sworn on 3 February 2021 (Ex C) relating to a notice to produce for inspection served on Mr Sim and subpoenas issued by the plaintiffs to Westpac Banking Corporation and KEB Hana Bank (KE Bank; also referred to in the documents as the Korean Exchange Bank).

9. [9]

   Mr Sim relied on his affidavit sworn on 14 October 2019 and the affidavits of Dae Young Kim dated 22 November 2019 and Deok Kon Kim dated 25 November 2019, who are both Korean translators and annexed English translations of documents written in Korean.

10. [10]

    Mr Goo, Mr Sim and Mr Back were each cross-examined. Mr Goo and Mr Back gave evidence through Korean translators.

Background facts and summary of the evidence

1. [11]

   Unless indicated otherwise, I am satisfied of the following matters. Where reference is made to a document that was written in Korean, I have referred to the English translation of that document.

2. [12]

   Mr Goo is a management consultant who has experience in the currency exchange and money transfer industry.

3. [13]

   Oakwood was incorporated in July 2008 by Mr Goo. Mr Goo was appointed a director but resigned on 10 February 2012 due to a change in his visa status. Oakwood’s current sole director and secretary is Mr Junghwan Kim, a friend and business associate of Mr Goo.

4. [14]

   Oakwood has 125 ordinary shares on issue. 20 shares are held by Mr Jun Won You and 105 by Mr Kim, who holds them on trust for Mr Goo.

5. [15]

   Oakwood was initially run by Mr Goo as a Sydney-based investment company. In January 2012, it changed its business to run a currency exchange and money transfer service for Australian-based customers seeking to transfer money to Korea and operated on a cash basis.

6. [16]

   Tokorea was incorporated in March 2013 by Mr Goo. Mr Goo is currently the sole director and secretary, having been appointed to both positions on 23 November 2018. On Tokorea’s incorporation, Oakwood held all 100 shares on issue. As at the hearing, Oakwood held 75 shares and Mr Sim held 25.

7. [17]

   Mr Sim is an information technology engineer. Throughout the relevant period, he was employed as a Senior IT Support Engineer Sydney Architect with ACM Group and Collection House, a credit management company.

8. [18]

   Mr Goo and Mr Sim met through their respective wives. There is a dispute between Mr Goo and Mr Sim as to when that occurred which is not necessary to resolve. Mr Goo says they met in December 2007. Mr Sim says it was in October 2013. Mr Goo’s evidence, which I accept, is that he and Mr Sim became friends, frequently talked about business when they met (such as when they had dinner with their wives) and that Mr Goo understood that Mr Sim was employed as a project manager at an information technology company.

9. [19]

   Mr Goo’s evidence is that in late 2013, he first floated his idea of an online exchange business with Mr Sim. He gives evidence of a discussion with Mr Sim in which Mr Goo referred to “an idea to turn the Oakwood business into an online exchange business” and wanting to make a “website” but not being able to because of his “lack of… English [skills] and resources”. Mr Goo says that Mr Sim said he thought it was a “good idea”, mentioned that he was an “IT professional” who works in technology as a project manager, and “could help with this”.

10. [20]

    Mr Goo gives evidence that, in March 2014, Mr Sim told Mr Goo that he wanted to be involved in Mr Goo’s “new business venture”. Mr Goo says that he told Mr Sim he would be happy for Mr Sim to “join my company” as “[w]e need someone with IT specialisation who has the ability to build the website”. Mr Goo says that, at the time, he trusted Mr Sim, they were close friends and had met frequently to discuss Mr Goo’s business.

11. [21]

    Mr Goo’s evidence is that they agreed that Mr Sim would invest $50,000 into Oakwood, which would subsequently be invested in Tokorea, Oakwood would pay Mr Sim $2,000 per month and Mr Sim would be allowed to have a stake in the company. According to Mr Goo, they had a conversation in the following terms:

12. [22]

    Mr Sim does not accept Mr Goo’s evidence about the conversations referred to at [19]-[21] above. He denies asking to be involved in Mr Goo’s business and says that Mr Goo approached Mr Sim to join. Mr Sim deposes to a conversation in which Mr Goo said he was intending to set up a bank using the Oakwood name to run a stable remittance business, if Mr Sim invested into Oakwood he would make a good return, that Mr Goo intended on buying a city office, a café, a remittance website and other businesses through Oakwood, and asked Mr Sim if he would like to invest in Oakwood and “come on board as a manager”. According to Mr Sim, he said he would like to invest and work with Mr Goo, he would need a suitable salary and return on his investment, asked for $2,000 per month, and if the business did well, they could discuss sharing the profit later.

13. [23]

    There is no reference in Mr Sim’s account of the conversation to Tokorea, to his working on the website or to the $2,000 per month being paid to his wife, Ms Eun Jin Lee (Ms Lee). Mr Sim’s appointment as a director of Tokorea (at [24] below), Mr Sim’s IT background and the fact that payments were made by Oakwood to Ms Lee for the period 1 July to 31 December 2014 support Mr Goo’s evidence that they discussed those matters and agreed that Mr Sim would become involved in Tokorea and the online part of the business, and that the $2,000 payments would be made to Mr Sim’s wife.

14. [24]

    On 14 April 2014, Mr Sim was appointed as a director and secretary of Tokorea. Mr Goo explains that he agreed to Mr Sim becoming the director because he believed that his own visa status at the beginning of 2014 prevented him from being a director.

15. [25]

    According to Mr Goo, soon after Mr Sim was appointed as the director of Tokorea, Mr Sim proposed bringing in an external software company to build the website for the online remittance business, with Mr Sim to oversee the project and the costs being Oakwood’s responsibility. Mr Goo’s evidence is that he raised with Mr Sim the possibility of both of them investing $200,000. According to Mr Goo, Mr Sim said he only had $50,000 available to invest and agreed to take on the full responsibility for the development of the online exchange platform.

16. [26]

    Mr Sim recalls a conversation around that time. While it is to a different effect, namely that Mr Goo asked Mr Sim to find out how another entity did real-time remittance through their website, Mr Sim agrees that he offered to introduce Mr Goo to someone who might be able to do the work on the website.

17. [27]

    In or around April 2014, Mr Sim introduced Mr Goo to Mr Sam Yoon, a director of Vivito Communications. According to Mr Goo’s evidence, at the meeting, Mr Sim indicated that Vivito would build the website and “everything will probably be done by August 2014”. It is common ground that Vivito were retained by Oakwood to construct the Tokorea website, although Mr Sim denies that he or Mr Yoon indicated that it would be completed by August 2014.

18. [28]

    On 28 April 2014, Mr Goo and Mr Sim executed a document written in Korean titled ‘Oakwood Pty Ltd and Tokorea Pty Ltd Management Contract’ (Management Contract) (TB49-52). The Management Contract refers to Mr Goo as “Managing Director”, Mr Sim as “Independent Director”, and Oakwood and Tokorea as consisting of Mr Goo and Mr Sim as the management, as well as several shareholders and branch managers. It provides for Mr Goo to be paid an additional 30% when total sales exceed $100,000, that Mr Sim will be paid up to half of Mr Sim’s salary when the total sales exceed $100,000 and refers to Mr Joon Won Yoo [1] as a “Company Shareholder” in addition to Mr Goo and Mr Sim. It also states the following:

19. [29]

    Mr Sim deposes that he entered into this agreement with Mr Goo concerning the management of the Oakwood and Tokorea business (Sim at [10]), although in cross-examination he gave evidence that (at T115.26-27):

20. [30]

    In cross-examination, Mr Sim accepted that he was friends with and trusted Mr Goo when he signed the Management Contract (T115.40-50).

21. [31]

    Mr Goo deposes that, fifteen months after Tokorea was incorporated (namely, May 2014), he decided that Tokorea would run a business providing currency exchange and money transfer services for Australian and Korean based customers seeking to transfer money to Korea and Australia, respectively. He envisaged that the business would be conducted online by a specially designed website for Tokorea that would enable real-time money transfers to be made, with a pool of funds to be maintained by Tokorea in banking institutions in each of Australia and Korea for the purpose of carrying on the business which he understood would need to comply with the relevant legal requirements in Australia and Korea for sending and receiving money internationally.

22. [32]

    According to the minutes of a meeting of the shareholders and directors of Oakwood convened on 8 May 2014 (TB104), at which Mr Goo was appointed chairman, a resolution was passed that acknowledged Mr Sim and Mr Jun Won You as new investors in and members of Oakwood. The minutes record that the company would pay a cash dividend of 1% of the total investment made by each investor each month and that Mr Sim was responsible for managing the “online business of the company” and was entitled to 50% of the net profit of the company, which might be adjusted down to 30% by the passing of a general resolution at a shareholders meeting.

23. [33]

    On 9 May 2014, Mr Sim invested $50,000 in Oakwood and was allocated five shares in Oakwood (TB108). Mr You was allocated 20 shares based on his investment of $200,000 (TB109). According to Mr Goo, the allocation of shares to Mr Sim in Oakwood was a temporary measure until the online business to be run through Tokorea was established (Goo 1 at [39]).

24. [34]

    In evidence is a document titled ‘Details of KoreaSongGum Partnership Agreement’ that is signed by Mr Goo, Mr Sim and Mr You but is undated (Partnership Agreement) (Goo 1 at [48], [59] and [60], TB 53-58). In cross-examination, Mr Sim gave evidence that “SongGum” means “remittance” (T113.1-8).

25. [35]

    The Partnership Agreement refers to investment amounts of $50,000 by Mr Sim and $200,000 by Mr You, and “the directorship” of Mr Ahn (Mr Ahn was a director of Oakwood between 11 December 2013 and 28 September 2018 and of Tokorea between 8 August 2013 and 11 April 2014). It contains sections which refer to the following: “Division of roles for each partner”, with Mr Goo’s role described as “President - clients, HR and exchange rate (business)”, Mr Sim as “IT, accounting and auditing” and Mr You as “Apprenticeship, shareholder”; “Earnings Distribution”, with each of Mr Goo, Mr You and Mr Sim to obtain a 1% dividend and salary of 10,000, 2,200 and 1,000 respectively, and 50% of the earnings to be distributed at the end of the year; and “Partnership Break (if a partner leaves the partnership)”, which identifies the earnings and property distribution and dividends to Mr Goo, Mr You and Mr Sim in the event of profit remaining or not.

26. [36]

    According to Mr Goo, Mr Sim wanted to create a partnership agreement and prepared the document referred to at [34]. Mr Goo says that Mr Sim wanted the agreement because he was concerned that Mr You’s investment would affect his interest in Oakwood, Mr Goo said he agreed to support Mr Sim to “make it happen” but if Mr Sim made the contract, he had to include Mr You as Mr Goo was not the sole owner of Oakwood.

27. [37]

    Also in May 2014, a property located in the Sydney CBD was purchased by Tokorea as an office for Oakwood and the Tokorea business. It is common ground that Mr Sim assisted Mr Goo in locating the property and it was held by Tokorea as trustee for the KS Unit Trust. Documents in evidence record that, on around 7 May 2014, Mr Sim was allocated five units in the KS Unit Trust (valued at $10,000 per unit) and Mr Goo was allocated 20 units, with Mr Goo’s units allocated to his wife, Ms Jahyoung Youn, in mid-June 2014 who holds them on trust for him (TB59–103, Goo 2 at [35] and [36], T116.10).

28. [38]

    Mr Sim exhibits a copy of a schedule to a Deed of Guarantee and Indemnity with Suncorp Bank which he says relates to the purchase of the City Office. The schedule in evidence is only one page, undated and unsigned, and refers to Mr Sim and Ms Jahyoung Youn as the guarantors, Tokorea as trustee for the KS Trust as the borrower, and the amount of the loan/facility limit as $379,000 (TB48).

29. [39]

    Mr Goo gives evidence that the five units in the KS Unit Trust were given to Mr Sim prior to the purchase of the property and the loan application, which Mr Goo says was submitted on around 23 May 2014. He also gives evidence that they were given to Mr Sim after a conversation (which is denied by Mr Sim) in which Mr Sim asked for some “ownership in the city office” (which was held on trust for the KS Unit Trust) and because of his work in relation to the property deal and his assurance that he would do his best for the Tokorea business.

30. [40]

    On 14 May 2014, in his capacity as a director of Tokorea, Mr Sim opened two Westpac Bank accounts in Tokorea’s name (account numbers ending in 7991 and 8003) with deposits of $50 (Ex B, pages 38 and 76). Mr Sim was granted full online and telephone access to those accounts. He gave evidence in cross-examination that he was the signatory to the accounts and he, alone, had control of them (T119.25-44).

31. [41]

    Mr Sim also deposes that in about May 2014, he started work with Oakwood and was employed as a “Manager”. His evidence is that, as part of his employment, he was required to, amongst other tasks, help manage the process of constructing the Tokorea website and understand how money remittance businesses work, including the regulatory framework that existed between Australia and South Korea.

32. [42]

    Mr Goo’s evidence is that, at no time was Mr Sim considered an employee of Oakwood (Goo 2 at [9] and [17]). He says that Mr Sim was always an investor of Oakwood/Tokorea by way of his $50,000 investment in Oakwood/Tokorea. Mr Goo’s affidavit evidence that Mr Sim was not an Oakwood employee is inconsistent with the pleadings and his closing submissions in which the plaintiffs assert that Mr Sim was a senior employee of Oakwood (FASOC at [18], PCS at [100], [120]).

33. [43]

    On 5 June 2014, Mr Sim sent an email to Mr Goo and to another email address in relation to the “Korean Songgum Partnership”. The email refers to a draft “of what we talked about yesterday”. The “Draft Detail” refer to a Partnership Relationship (50 and 50), Bank Accounts in Australia and Korea, and investments by each member with Korea Songgum providing the electronic system to manage remittance.

34. [44]

    According to Mr Goo, the 5 June 2014 email was sent to him and Mr You as a draft overview of what the partnership agreement was to include. Mr Goo also gives evidence that at the time they entered into the Partnership Agreement, he had a discussion with Mr Sim during which they agreed to use Tokorea as the entity for the online exchange business (Goo 1 [64]).

35. [45]

    Mr Sim denies having the discussions deposed to by Mr Goo, referred to at [36]. Mr Sim’s evidence is that the 5 June email was addressed to an unidentified investor and there was no reason for him to enter into a partnership agreement with Mr Goo. He also denies entering into a partnership agreement.

36. [46]

    On 30 June and 1 July 2014, Mr Goo and Mr Sim exchanged a number of emails while Mr Sim was travelling overseas about the Korean end of the proposed online remittance business (TB117ff). The emails record the following.

37. [47]

    On 3 June, Mr Goo requested Mr Sim to research the laws about firm banking with the bank “we are going to deal with” to find out whether any of “this infringes Korean Foreign Exchange laws”. Mr Goo’s email also states that if further research was not necessary, Mr Sim needed to go to Korea and make a “corporate company without delay, form a firm banking contract… and start the work on activating the online transactions immediately”.

38. [48]

    In response, Mr Sim indicated that he had “checked everything out” and that if Mr Goo wanted to do it immediately, it should be possible if he spent more than $30,000, to which Mr Goo asked why it would cost that much, but if it allowed continuous transactions without infringing regulations, he would be willing to pay “even $50,000”. Mr Sim sent a further email on 1 July 2014, saying he could explain it later.

39. [49]

    Mr Sim gives evidence that, after discussions with Mr Goo, he sent an email to L & C Legal Agency on 14 August 2014 to seek assistance with the formation of a Korean company and to advise on the law that applies to money remittance businesses in Korea. According to Mr Sim’s evidence, the reason why a Korean company needed to be formed was to allow electronic transfer of funds to and from Korea (Sim at [24]). The email from Mr Sim (TB125) refers to wanting to establish a “firm banking arrangement in Korea”, that the work involved is “payment” and that “[w]e are… trying to radically switch to a fast and accurate real-time payment system”, and requests a quotation. It also describes the profile of their company, called “Global HR & Trading”, which “has set up a system to send workers or students needed in Australia” and other countries.

40. [50]

    On 18 August 2014, Mr Sim received an email from L&C (TB127) referring to what was to be done prior to setting up a company, that states the following:

41. [51]

    Pausing here, at the time 100 million Korean Won equated to approximately AUD $100,000 (T83.20-45).

42. [52]

    It is common ground that the website for the online remittance business was not completed by mid-August 2014. According to Mr Goo, other Oakwood shareholders, namely Mr You and Mr Back, were becoming frustrated with the delay of the launch of the Tokorea website and Mr Goo had asked Mr Sim on a number of occasions when it would be completed, including at a meeting that included Mr Back and Mr You in early September.

43. [53]

    Mr Sim says that he told Mr Goo that the website was being built to “Vivito’s schedule” and that he and Mr Yoon had contacted many Korean companies to set up the site. According to Mr Sim, Mr Goo asked how much they needed to invest in the Korean company, and Mr Sim told him that it would not be cheap, as a Korean firm was needed to set up the company, its systems, hardware and software needed to be bought in Korea and the legal agency had said they would need at least 100 million Korean won for capital.

44. [54]

    On 20 August 2014, Mr Sim’s five shares in Oakwood were removed from him. According to Mr Sim, he did not know (at the time) nor consent to that. Sometime during in 2014, Mr Sim received 25 shares in Tokorea. It is not clear from the evidence when that happened, but it was by no later than 2 December 2014 based on the fact that Oakwood’s shareholding in Tokorea had reduced from 100 shares to 75 by 2 December 2014 (TB6).

45. [55]

    On 25 August 2014, Mr Sim sent an email about “Current Korean matters” that referred to a “few things that are currently progressing” and requested that Mr Goo “read them when he had time”.

46. [56]

    Mr Sim’s 25 August email attaches six other emails, two of which were the emails between Mr Sim and L & C Legal Agency (referred to at [49] and [50] above). The other emails included the following: an email dated 18 August 2014 from KSNet Co Ltd that referred to a firm banking fund transfer service quote for a dedicated line (physical closed network) between businesses; an email dated 20 August 2014 headed “Real time firm banking - Australia”, and quotes for Option 1 (involving a check whether VPN equipment is compatible in Australia) and Option 2 (which refers to expenses for sharing work and managing the system); an email dated 20 August 2018 headed “Setting up a company” which refers to a power of attorney form; and an email dated 25 August 2018 from TrustMate Co Ltd providing a quotation for systems management to operate firm banking in Korea for “Global Hr”, including telecommunications systems, security firewall, hardware and maintenance costs.

47. [57]

    On 2 September 2014, Mr Sim sent an email to Mr Goo attaching copies of further correspondence relating to the purchase of technical equipment and services and attached a quotation from TrustMate for 9,160,000 Korean Won and SNT Korea for 1,960,000.

48. [58]

    Also on 2 September 2014, Mr Sim received an email from L&C headed “capital to set up the company” which attached a document “on the remittance of the capital” which Mr Sim emailed to Mr Goo later that day. The document relating to remittance is headed “Remittance Instruction” from the Korea Exchange Bank (KE Bank), is dated 2 September 2014 (TB146), and states the following:

49. [59]

    Mr Goo deposes that, in late September 2014, he had a conversation with Mr Sim in words to the following effect:

50. [60]

    Mr Sim denies that conversation (referred to at [59] above). He relies on the emails referred to at [46]-[50] and [55]-[58] and deposes to receiving a call from Mr Goo on 1 October 2014 to the effect that Mr Goo had left $109,000 in cash in the city office for Mr Sim to transfer to Korea.

51. [61]

    On 1 October 2014, Mr Sim attended the city office and was given $109,000 in cash. It is common ground that Mr You and Mr Back were in attendance when Mr Sim was given the cash and it was Oakwood’s money. There is a dispute as to whether Mr Goo was also present.

52. [62]

    Mr Goo gives evidence that he obtained the cash from the Oakwood Strathfield office, then met Mr Back, Mr You and Mr Sim in the city where a “loan agreement” was entered into, after which he gave the cash to Mr Sim. Mr Back also gives evidence that Mr Goo was at the office when Mr Sim was given the $109,000 cash.

53. [63]

    Mr Sim denies that Mr Goo was at the city office when he received the cash and signed the loan agreement.

54. [64]

    The “loan agreement” that Mr Sim signed was a one page proforma document in Korean headed “Loan Transaction Bond Certificate” [2] (Loan Document) (TB154) with handwriting that identifies Tokorea as the Borrower, Mr Sim as the Borrower’s representative, and Oakwood as the Lender, and is signed by Mr Sim. It does not include any details in the section headed “Loan Transaction Details” other than the amount of AUD109,000; there is no length of period of the loan, the interest rate or calculation method or repayment date.

55. [65]

    Mr Sim gives evidence that Mr You said that Mr Goo had wanted Mr Sim to sign the Loan Document, that it would only apply until the funds were deposited in the Korean account and that once they were deposited, the document would be destroyed. When asked in cross-examination why the Loan Document was to be destroyed, Mr Sim’s gave evidence (T133.23-34) that:

56. [66]

    Mr Goo’s evidence is that it was not agreed or contemplated that the Loan Document would be destroyed and it was intended to be retained for record keeping purposes. He deposes that the Loan Agreement was entered into to reflect Oakwood lending money to Tokorea and that Mr Back and Mr You had insisted on a loan agreement to be drawn up to reflect that Tokorea was borrowing $109,000. He also gave evidence in cross-examination that he asked for the Loan Document to be signed by Mr Sim because the other shareholders had told him that they would need the document to protect their money (T98.39-41).

57. [67]

    After the meeting, Mr Sim attended a Westpac Bank branch and arranged for the AUD $109,000 cash and an additional amount of AUD $1,000 to be exchanged and deposited with the KE Bank in accordance with the Remittance Instruction, and also paid an AUD $32 transfer fee. The additional AUD $1,032 was paid by Mr Sim from his and his wife’s Westpac bank account (number ending 6898).

58. [68]

    At 3:24 pm on 1 October 2014, Mr Sim sent an email to Mr Goo which attached a copy of a Westpac Overseas Telegraphic Transfer Receipt (Transfer Receipt) that identified that AUD $110,000 had been transferred to the Korean Exchange Bank and the $32 transfer fee had been paid. Consistent with the Remittance Instruction, the Transfer Receipt identifies the Beneficiary as Mr Sim (with account number ending 1913) and that “the Fund was for investment in Global HR and Trading”. Mr Sim’s email also advised Mr Goo that Mr Sim had remitted the extra $1032 and asked for that amount be transferred to his account. According to bank statements in evidence (Ex B), the amount of $1032 was deposited into Mr Sim and Ms Lee’s Westpac bank account the following day.

59. [69]

    On 7 October 2014, Mr Sim emailed Mr Goo documents received from L&C Judicial Scriveners which attached:

60. [70]

    On 8 October 2014, Global HR was incorporated in South Korea. Mr Goo gives evidence that he assisted Mr Sim to set up the company by connecting him to the sister of an associate who allowed her business address to be used as the registered address of the company.

61. [71]

    According to Mr Sim’s affidavit evidence, he paid the $109,000 in accordance with Mr Goo’s instructions, the 100 million Korean won was transferred to Korea and paid into an account of Global HR.

62. [72]

    On 21 November 2014, Mr Sim became the sole director and shareholder of Global HR and was registered as such on 3 December 2014. The Korean “Comprehensive Register Entries Certificate” in relation to Global HR records that it has capital of 100 million Korean Won, 20,000 shares issued at 5,000 Korean Won per share, and it had a range of purposes, including “Manpower supply home and abroad”, but makes no mention of online remittance or money transfer between countries (TB35).

63. [73]

    In cross-examination, Mr Sim gave evidence that he deposited the 100 million Won directly into a bank account held by Global HR (T139.43-45) and that the Transfer Receipt recorded this (T142.0-3). When asked how he could have deposited the funds into a bank account of a company that did not yet exist, he gave the following evidence (T143.47-144.14):

64. [74]

    Later in cross-examination, Mr Sim gave evidence that he understood that the KE Bank “would hold the 100 million won until the Global HR bank accounts were established” (T146.47–T147.3) and sought to explain the fact that he had not referred to that in his affidavit because it was “too complex” (T147.8-31).

65. [75]

    During cross-examination, Mr Sim gave evidence that the $110,000 was “all spent” in Korea and was no longer held by Global HR (T151.28-T152.41). When asked what the money was spent on, his evidence was that:

66. [76]

    According to Mr Sim, the $109,000 was spent from 2014 and through 2015 but he could not recall precisely when (T152.20-T153.10, T157.31-37).

67. [77]

    Mr Sim accepted that he made no reference to the above payments in his affidavit (T159.13-15) and said that there were documents that existed to show the expenses that were not put into evidence (T160.4-11, T160.17-21). He also said (T159.41-44):

68. [78]

    In relation to the $110,000, Mr Goo gave evidence during cross-examination that:

69. [79]

    Mr Goo gives evidence that on or around 1 December 2014, he had a meeting with Mr Back and Mr You during which Mr Back expressed concern that Mr Sim was given units in the “city office” when they had invested more than Mr Sim. According to Mr Goo, he said he might return Mr Sim’s investment in Oakwood in return for getting Mr Sim’s units back.

70. [80]

    Mr Goo deposes that, on or around 5 December 2014, Mr Sim came to Mr Goo’s house on which occasion Mr Goo gave Mr Sim $50,000 in cash from his own money. According to Mr Goo, they had a conversation to the following effect:

71. [81]

    In cross-examination, Mr Goo gave evidence that the $50,000 was taken from his safe at home, had not been withdrawn from a bank account, and that he gave the money to Mr Sim while they were in the garage (T49.8-9; T49.47-49; T51.50-52.5). Mr Goo accepted that the date of 5 December “maybe is likely incorrect” but said he had a reason to believe that it was on 1 December 2014 (T46.17). Later in cross-examination, Mr Goo gave evidence that he gave Mr Sim $50,000 in the evening of 1 December but “I received something in return, a document, his signature on it” (T51.42-43).

72. [82]

    On 5 December 2014 at 11.14 am, Mr Goo sent a text message to Mr Sim that referred to the “real estate documents” that were in the city office, that “All of the ownership is being changed to Oakwood Sydney”, and that Mr Sim just needed to “come in and sign when he had time” (TB170). Mr Goo’s evidence is that the text message related to the signing of “the KS Unit Trust paperwork”.

73. [83]

    Mr Sim denies meeting with Mr Goo at his house and receiving $50,000 while they were in Mr Goo’s garage, and denies the conversation referred to at [80]. According to Mr Sim, sometime in December 2014, he had a conversation with Mr Goo during which he told Mr Goo that Tokorea would need capital funds of at least $100,000 and a balance sheet to apply for an Australian Financial Services Licence (AFSL). He says that Mr Goo instructed Mr Sim that Oakwood would remit approximately $125,000 to Tokorea, that Mr Sim should get a bank statement that shows that balance and give it to the solicitor, and also instructed Mr Sim to then transfer $75,000 back to Oakwood and withdraw $50,000 cash and give it to Mr You.

74. [84]

    On 9 December 2014, $125,000 was deposited into Tokorea’s bank account (Ex B). On that day and the next, Mr Sim caused the funds to be transferred and withdrawn in accordance with Mr Sim’s instructions. Mr Sim’s evidence is that he did not otherwise receive $50,000 cash from Mr Goo.

75. [85]

    Mr Goo deposes that he has a “vague recollection” of a discussion with Mr Sim to the effect of that referred to at [83]. He cannot recall the specifics but believes that he may have directed Mr Sim to withdraw funds for Tokorea to obtain an AFSL and says that was a separate transaction to the $50,000 investment by Mr Sim in May 2014 (Goo 2 at [23]).

76. [86]

    The Westpac bank records (Ex B) identify that the last $2,000 payment by Oakwood to Mr Lee was made on 31 December 2014, which is consistent with the PAYG records in evidence. Mr Goo and Mr Sim do not give evidence as to why the monthly payment ceased at that time and were not asked about it in cross-examination.

77. [87]

    On 5 January 2015, Mr Sim sent a text to Mr Goo which asked Mr Sim to “bring the original documents you signed” when you come to Strathfield (TB172). Mr Goo says this text was also about signing the KS Unit Trust paperwork, as was a text he sent to Mr Sim on 2 February 2015 that refers to a missing signature and to “please come tomorrow to sign”, to which Mr Sim responded that he would.

78. [88]

    In cross-examination, Mr Sim accepted that he ceased having units in the KS Unit Trust sometime in 2015 without receiving any money in return although they were of value. He said that he gave the units up because Mr Go asked him to because, “...at the time, Mr Goo told me, "Your money is in Korea””, and rejected that he gave them up because Mr Goo had given him $50,000 in cash in the garage (T203.34-204.8).

79. [89]

    Sometime between 20 February 2015 and 23 February 2015, Mr Back, Mr You, Mr Goo, Mr Jung and Mr Sim attended the city office to view a demonstration by Mr Sim of the Tokorea business website.

80. [90]

    According to Mr Goo’s evidence, when Mr Sim demonstrated the website it appeared basic, presentable and capable of performing the function of transferring money from Australia to Korea and back again. He also gives evidence that Mr Sim “used the Korea-based [Global HR] … bank account when he transferred money from Australia to Korea”. However, Mr Goo says the website was not fit-for-purpose as it was unable to verify identification, could not report on the sending of funds to AUSTRAC, and did not incorporate any reporting or analytical tools and could only send money (Goo 1 at [101]).

81. [91]

    Mr Sim gives evidence that Mr Goo said the website looked good and asked for some additional functions, such as automatic reporting to AUSTRAC, to which Mr Sim said he had already mentioned that to Mr Yoon who said it would cost more as it was not in the contract. Mr Sim also gives evidence that the website was completed sometime in or around February 2015 (Sim at [65]-[67]).

82. [92]

    On 27 February 2015, Mr Sim caused 75 shares in Tokorea to be transferred from Oakwood to himself. Mr Sim does not give evidence about why or in what circumstances this occurred and was not asked about it in cross-examination.

83. [93]

    Mr Goo’s evidence (which was unchallenged by Mr Sim) is that he became aware of the transfer around this time and that, shortly after, he raised the issue with Mr Sim who said he would “fix it”. According to the ASIC Historical Extract in relation to Tokorea, the 75 shares were transferred from Mr Sim to Oakwood on 6 May 2015 (TB6).

84. [94]

    Sometime in March 2015, Mr Goo was told by Ms Huh (who appears may have been an Oakwood employee) that Mr Sim had come into the Oakwood office at Strathfield and wrote “something that said all his debts are repaid on a loan agreement document”.

85. [95]

    In evidence are two other versions of the Loan Document (referred to at [64]) that contain additional handwriting in Korean and English that was inserted on the documents by Mr Sim. One version (TB155) includes Korean characters which translate to “Repayment of whole amount is confirmed” and are followed by the words “(No Debt)” in English. Mr Sim accepts that he wrote those words and deposed that the version at (TB155) was the “final version of the document” and the version annexed to Mr Goo’s affidavit (referred to at [64] above) is not final. The other version of the document (the provenance of which is not clear from the evidence) (TB157) includes the words “Copy” at the top of the page and “Tokorea has no debt fully returned (money back)” in English.

86. [96]

    Mr Sim was asked about the two other versions of the Loan Document (referred to at [64] and [95] above). He accepted that he had written the words “fully returned” on the Loan Document when he attended the Strathfield office in March 2015 and that the $109,000 had not been returned to Oakwood. He gave evidence at (T210.45-T212.30) as follows:

87. [97]

    Mr Goo gives evidence that, by around April 2015, Mr Sim had ceased coming to the weekly Monday meetings and he began to have concerns about “Tokorea’s money banked in Korea”. Mr Goo says he had several conversations with Mr Sim during which he asked whether the money had been moved from the Korean bank account and Mr Sim told him that:

88. [98]

    Mr Sim denies that conversation ever occurred.

89. [99]

    Mr Goo deposes that, in late April 2015, Mr Sim showed him a copy of a bank statement for the Global HR bank account.

90. [100]

    A translated version of the April 2015 bank statement Mr Goo refers to is in evidence. Mr Goo says he did not know who translated it and was trying to locate the original Korean document. The Korean version was not made available to the court. According to the document, it was translated by Deok Kon Kim on 19 December 2016. I note that it is referred to at [9] of Mr Kim’s affidavit as a document he translated.

91. [101]

    The translated April 2015 statement is a document headed “Recent Transactions Statement” (Transaction Statement) that appears to record transactions in Global HR’s bank account with the Woori Bank in Korea during early 2014. It refers to the “Accountholder” as “Global H”, an “Account No” ending in 7292, a period of enquiry as 17 October 2014 to 17 April 2015, a printout date of 17 April 2015, a “Withdrawable balance” of 56,567,696 Korean Won, and “Woori Bank”. It contains details of the transaction time and date, amount paid or deposited (and to or by whom), and a running balance in respect of 22 transactions, including the following:

92. [102]

    Mr Goo had deposed that, at the time he was shown the Transaction Statement, the transfers on the statement “appeared to be legitimate” and that the $110,000 (which Mr Goo refers to as the “Test Funds”) “remained mostly intact”.

93. [103]

    During his oral evidence in chief, Mr Goo corrected his affidavit evidence as he did not think his “statement was clear enough”. He gave evidence that what he meant by this was, “when the amount was transferred … from the Korean bank account, that means that same amount should have been transferred to Australian bank account” (T35.14-18). Later, during cross-examination, Mr Goo gave evidence that he had not finished explaining and said, “[s]o if any money is debited - debited from the Global HR account in Korea, the money will be sent to the - to the Korea [sic] account in Australia” (T88.21-26). He also gave evidence that he was not saying that it was legitimate but that he did see the transactions and they existed on paper (T89.10-12).

94. [104]

    Mr Sim was cross-examined about the Transaction Statement. He gave evidence that the document “is not mine” (T161.17) and agreed that he did not rely on the document (T161.37). He also gave evidence that he saw the Transaction Statement in Korean in 2015 from “online banking”, explaining that he had obtained a transaction summary of Global HR when he was in Sydney at that time (T163.27-T164.11).

95. [105]

    Mr Sim said that the Transaction Statement was “not a real bank statement” and “someone had changed the figures”, describing it as “the transaction record by Excel spreadsheet” from the online banking that could be changed and accessible by anyone (T164.36-T165.38). This evidence was given when he was asked why the Transaction Statement did not record payments that Mr Sim had earlier asserted in cross-examination had been made from the $110,000, such as to Vivito in the amount of 20 million Korean won and by way of salary to himself in the amount of 50 million Korean won.

96. [106]

    Sometime in April or May 2015 (Mr Goo asserts it was May), Mr Sim and Mr Goo met at the PappaRoti café in Strathfield. Mr Goo says that, on that occasion, he asked Mr Sim to return the $110,000 as soon as possible as there was no need for them to be sitting in a bank in Korea without an operational website. According to Mr Goo, Mr Sim said the following:

97. [107]

    Mr Goo says that he “refused to sign the contract”.

98. [108]

    Mr Sim denies that the conversation referred to at [104] occurred and gave evidence in cross-examination that they met at the PappaRoti café in April 2015 (T213.31). Mr Sim deposes that Mr Goo did not ask him to return the $110,000 he described as the “Test Funds”. He also says that he never told Mr Goo about any personal debt or credit card debt in Korea or that he had spent Oakwood’s money on such debt and did not ever threaten to keep source codes from Mr Goo, Tokorea or Oakwood, arguing they were with Vivito who was building the website (Sim 1 at [68]).

99. [109]

    Mr Goo and Mr Sim were both challenged in cross-examination about the meeting and what was discussed. Mr Goo did not accept that what he had said was incorrect (T90.35-38). Nor did Mr Sim (T214.7-9).

100. [110]

     On 16 April 2015, two deposits of AUD $5,000 and $20,000 were made into Mr Sim and his wife’s Westpac bank account. The following day $25,000 was deposited into the account and two withdrawals were made by way of payments to Citibank and ANZ Cards totalling $13,116.12 (Ex B at 303).

101. [111]

     In cross-examination, Mr Sim accepted that the withdrawals made from his Westpac bank account involved payments to his personal credit cards (T205.5-12), rejected that the deposits (which totalled $50,000) was the $50,000 that Mr Goo says he gave Mr Sim in his garage for the Tokorea business (T205.19-21), and said he did not receive any cash from Mr Goo (T205.40-46). Mr Sim’s explanation in cross-examination for why he had $50,000 cash landing in his personal bank account was that it was “the salary I received from Korea” (T207.5-7, T207.43-46). When asked why he did not refer to this in his affidavit, he gave evidence that it was “[n]ot necessary to add it” (T207.13, T207.49).

102. [112]

     On 15 May 2015, Mr Ahn (in his capacity as the sole director of Oakwood) issued a Notice of General Meeting of Tokorea to Tokorea’s shareholders to move a resolution at a meeting on 5 June 2015 that Mr Sim be removed as a director effective immediately. The shareholders statement attached to the Notice refers to concerns about the direction of Tokorea under Mr Sim’s directorship in light of the following:

103. [113]

     Mr Sim did not attend the 6 June shareholders meeting (T215.24). On 12 June 2015, Mr Sim was removed as director and secretary of Tokorea. There is no evidence that Mr Sim had any further dealings with Mr Sim, Oakwood or Tokorea after this, other than as a defendant in these proceedings.

104. [114]

     Mr Sim accepted that he did nothing in response to the shareholder letter (referred to at [112]). He did not tell Mr Goo to stop saying that Mr Sim had embezzled money, did not start defamation proceedings or issue a cease and desist letter (T215.39-T216.5, T215.39-40), which he explained by reference to legal advice not having much money (T216.18-20, T216.39 and T217.17).

105. [115]

     According to Mr Goo, Tokorea has never traded. On 27 June 2016, AUSTRAC cancelled Tokorea’s registration as an independent remittance dealer on the Remittance Sector Register (TB115).

106. [116]

     In June 2016, Mr Goo established an online remittance business using a website through a company called Hoju Jobs Pty Ltd.

107. [117]

     The plaintiffs commenced these proceedings on 6 May 2019.

108. [118]

     On 19 March 2020, the plaintiffs served a notice to produce on Mr Sim that sought, amongst other documents:

109. [119]

     No documents were produced by Mr Sim in response to that request. According to correspondence sent by his solicitor on 15 April and 7 October 2020, Mr Sim had no documents in his custody or control that fell within the scope of that request, did not have any physical copies of bank statements concerning Global HR, had been unable to access electronic copies of the bank statements sought and could only obtain physical copies by travelling to South Korea which was not an option in late 2020 due to travel restrictions and cost.

110. [120]

     Mr Sim was also cross-examined about why he did not produce Global HR’s bank statements in response to the notice to produce. He gave evidence that “online banking was not possible” (T221.13), then accepted that he could access Global HR’s bank statements online through online banking by using a log-in ID and password (T221.25-31, T221.44-49), then gave evidence that he could not get a bank statement unless he went to Korea (T222.2-4, T222.36-39), said he could not get a bank statement online but could access a “transaction” and extracts of online banking of Global HR from 2015 to 2020, and then agreed that he did not include the extracts in his affidavit (T222.19-30, T224.16-29). In re-examination, Mr Sim explained that Korean online banking does not provide the official bank statement (T225.2-T225.7).

111. [121]

     On 28 July 2020, the plaintiffs issued a subpoena to KE Bank seeking the production of bank statements and documents relating to accounts in the name of Mr Sim and Global HR during the period 1 February 2014 to 31 July 2015. No documents were produced in response to the subpoena.

112. [122]

     On 2 December 2020, the plaintiffs issued a letter of request for service of a subpoena on KE Bank in South Korea. A subpoena was issued on 17 December 2020, was returnable on 28 January 2021 and stood over to the hearing. There was no response to that subpoena.

113. [123]

     On 7 December 2020, Global HR was dissolved.

Claims and issues for determination

1. [124]

   In the Further Amended Statement of Claim (FASOC), the plaintiffs assert that:

2. [125]

   The plaintiffs claim that, by reason of Mr Sim’s conduct (at [124(c)] and [124(e)] above), Mr Sim has breached fiduciary, equitable and statutory duties he owed to Oakwood, Mr Goo and Tokorea, and is in breach of trusts (including an implied trust) in favour of Oakwood and/or Tokorea: FASOC at [19], [21], [41]-[43A] and [44]-[45]. They assert that those duties and trusts arose in circumstances which included that Mr Sim had been party to a joint venture with Mr Goo and Oakwood which provided, for the establishment of the online remittance business to be operated through Tokorea (FASOC at [16] and [17]) and an employee of Oakwood and director and shareholder of Tokorea: FASOC at [18] and [20].

3. [126]

   They also plead that the $110,000 and the $50,000 are repayable as money had and received for the use of Oakwood and the Tokorea Business: FASOC at [47].

4. [127]

   By way of relief, the plaintiffs seek a declaration, equitable compensation or judgment for the sum of the $110,000, equitable compensation for the $50,000, an account of profits, interest and costs: FASOC at [1]-[7].

5. [128]

   In his defence to the FASOC (Defence), Mr Sim denies or does not admit each of the allegations save for admitting that he owes fiduciary and statutory duties to Tokorea as an officer and director, that he received the $110,000 from associates of Mr Goo and was an employee of Oakwood: at [21], [24] and [47]. Mr Sim also asserts that he was instructed by Mr Goo to transfer the $110,000 to Global HR (which he did), was not required to refund or return the money and says that the money is no longer in his possession: Defence at [24] and [29].

6. [129]

   At the hearing, the plaintiffs did not press their other pleaded claims that asserted the formation of a partnership between Mr Goo, Mr Sim and Oakwood and sought to recover losses arising from the failed business venture for which they said Mr Sim was liable based on breaches of fiduciary duties, contractual obligations, obligations under the Australian Consumer law and a tortious duty of care. Although the other claims were abandoned on the first day of the hearing, the fact that the parties’ evidence was also directed to the abandoned claims has not assisted in the presentation of the plaintiffs’ case.

7. [130]

   The plaintiffs’ written closing submissions (PCS) refer to various separate and alternative claims. Despite the number, the plaintiffs submitted that the overarching theme of their allegation is straightforward. They contended that the $110,000 and the $50,000 constituted money given in circumstances where the law would imbue a relationship of trust over the funds or impose a personal obligation on Mr Sim to repay them should the purpose and intent behind the funds being advanced fail: PCS at [96].

8. [131]

   Based on the agreed list of issues and the parties’ submissions, the key factual and legal issues for determination can be summarised as follows:

   1. (1)

      In what capacity and for what purpose did Mr Sim receive the $110,000?

   2. (2)

      Was the $110,000 paid into Global HR’s bank account?

   3. (3)

      What happened to the $110,000? Has there been a failure of the purpose for which it was provided, was Mr Sim entitled to receive a salary from it, and did Mr Sim use it for his own benefit/misappropriate the money?

   4. (4)

      What fiduciary, equitable and statutory duties did Mr Sim have when he received the $110,000 and is he in breach of them?

   5. (5)

      Does Mr Sim have a personal obligation to repay the $110,000 on the basis of money had and received, breach of a Quistclose trust or a Black v Freedman trust, or breach of duty?

   6. (6)

      Was the payment of $50,000 made to Mr Sim by Mr Goo in early December 2014? If so, for what purpose did Mr Sim receive that money and in what capacity?

   7. (7)

      Did Mr Sim use the $50,000 for the purpose for which he received the money or did he misappropriate the money?

   8. (8)

      Are any of the plaintiffs entitled to equitable compensation and, if so, what is the quantum?

9. [132]

   The first issue raised by the parties’ submissions relates to the plaintiffs’ pleadings.

10. [133]

    Mr Sim contended that the plaintiffs did not plead a Quistclose trust or that the funds were stolen and submits that it is now not open for the plaintiffs to argue that they were the subject of theft by Mr Sim, relying on Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 15.3. He submitted that the plaintiff did not plead that Mr Sim was an employee and contended that the plaintiffs cannot look to rectify their pleadings with the issuing of closing submissions. He also submitted that the plaintiffs’ failure to join Global HR is critical as, if the Court is to accept that the funds did reach Global HR, then any claim for the return of the money necessarily needed to include orders made against the company.

11. [134]

    In my view, the plaintiffs have fairly raised a cause of action based on a Quistclose trust. As the plaintiffs submit, a Quistclose trust is shorthand for a case in which an implied trust may be found to exist by reason of a specific purpose for which funds are given, the nature of which is clearly pleaded in this case: FASOC at [24]. The pleading of an implied trust is also made clearly in this case: FASOC at [44].

12. [135]

    Contrary to Mr Sim’s submissions, the FASOC pleads that Mr Sim was an employee of Oakwood: FASOC at [18].

13. [136]

    As to Global HR, while accepting it was a proper party, in the context where the evidence indicates that all the money was “spent” in 2015 and the company has since been dissolved (TB36) there is a question as to the utility of doing so. That said, and for reasons which I will come to, the position of Global HR and its absence from the pleaded case is a significant issue in this case.

14. [137]

    I deal with the submission relating to plaintiffs’ assertion that money was stolen by Mr Sim later in these reasons.

15. [138]

    The plaintiffs’ submissions recognise that, to the extent that they allege a misappropriation of funds by Mr Sim, such allegations are serious and must discharge the onus as set out in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; [1938] HCA 34 that the Court “must feel an actual persuasion of its occurrence or existence before ‘a fact’ can be found”.

16. [139]

    Actual persuasion is achieved where the allegation is made out to the reasonable satisfaction of the court taking into account the seriousness of the allegation made, the inherent unlikelihood of the occurrence and the gravity of the consequences flowing from the particular finding: Evidence Act 1995 (NSW), s 140(2); Warner v Hung, In the matter of Bellpac Pty Limited (Receivers and Managers appointed) (In Liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48]; Perry v Perry [2021] NSWSC 1669 at [150].

17. [140]

    Reference was also made to the observations of the plurality in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992)110 ALR 449 at 450 (Mason CJ, Brennan, Deane and Gaudron JJ):

18. [141]

    The absence of documentary evidence where a party might be expected to be in possession of documents to corroborate their account, may give rise to an inference that such documents as they may be expected to have would not support their account: Jones v Dunkel at 321.

19. [142]

    The unexplained failure warrants only the inference that the uncalled evidence would not have assisted that party’s case (not an inference that such evidence would have been adverse) and the court drawing, with greater confidence, an inference open on the evidence. A Jones v Dunkel inference does not permit a choice between two guesses or conjectures or supply a missing gap in the evidence: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 111 at [63]–[64]; Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd [2017] NSWCA 99 at [174].

20. [143]

    The rule in Jones v Dunkel also only applies where a party is “required to explain or contradict” something: Jones v Dunkel at 321. What a party is required to explain or contradict depends on the issues in the case as thrown up in the pleadings and by the course of the evidence in the case: Westpac Banking Corporation v Lee [2013] NSWCA 375 at [229]; Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121; [2000] HCA 18 at [51].

21. [144]

    Whether such inferences are drawn is a matter of discretion, and not mandatory, and the inference only becomes material where the balance of the evidentiary record is equivocal: CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [144] (McColl, Macfarlan and Simpson JJA); Sagacious Legal Pty Ltd v Westfarmers General Insurance Ltd [2011] FCAFC 53 at [79].

22. [145]

    Also of relevance to this case are the observations of Hodgson JA (with whom Beazley JA agreed, as Her Excellency then was) in Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 at [14]-[15]:

23. [146]

    As noted above, Mr Goo gave evidence through a Korean translator. On occasion, this appeared to lead to some misunderstandings, such as the evidence regarding the shadow director (T54.35-42, T58.34-36) and the need for questions to be repeated, particularly on the second day of cross-examination when Mr Goo said he was having difficulty with the interpreter (T89.6-12). In assessing his evidence, I have taken this into account and have been cautious before attaching significant weight to evidence that may have involved a misunderstanding of what was asked and answered.

24. [147]

    There were times when Mr Goo was non-responsive and appeared to be argumentative (T40.26-34, T40.45-48, T49.49, T96.34). He had to be asked to answer the questions put by Mr Sim’s counsel and was directed to answer a question by the court on one occasion (T88.18, T84.39-43).

25. [148]

    There were also some aspects of Mr Sim’s evidence that were new, unexplained and uncorroborated, such as his evidence that he received a document with Mr Goo’s signature on it in return for the $50,000 (T51.41-43, T53.23-26). His evidence in cross-examination that he paid expenses relating to Global HR was also new and unsupported by any documents.

26. [149]

    The reliability and credibility of Mr Goo’s evidence was also undermined by the fact that aspects of his pleaded case and/or the submissions advanced at the hearing were inconsistent with his evidence. See for example, Mr Goo’s evidence that Mr Sim was never considered to be an employee of Oakwood (Goo 2 at [9]) and the pleaded allegation that Mr Sim was an employee of Oakwood (FASOC at [18]); the evidence that Mr Goo agreed to give Mr Sim the 5 units in the FS Unit Trust for no consideration (Goo 1 at [76]) and the pleaded allegation that Oakwood transferred the units to Mr Sim by reason of his $50,000 investment in Oakwood (FASOC at [21B]); and Mr Goo’s evidence that he agreed to enter into a partnership with Mr Sim and Mr You (Goo 1 at [60]) whereas the pleading asserts a joint venture between he, Mr Sim and Oakwood (FASOC at [14A]).

27. [150]

    I did not find Mr Goo’s clarification evidence regarding the Transaction Statement convincing (see [101] and [103] above). His evidence to the effect that the Transaction Statement reflected that the funds were mostly intact as debits from the Global HR account in Korea meant that money would be credited to the “Korea account in Australia” is difficult to accept (T88.23-26). It made little sense given the identity and business of some of the payees (who were apparently located in Korea and included service providers, as referred to at [124](a), (b) and (e) above) and the fact that some of the transactions pre-dated the website demonstration referred to at [89].

28. [151]

    That said, I do not accept Mr Sim’s submission that the court should conclude that Mr Goo was dishonest. Mr Sim’s submission placed reliance on Mr Goo’s corrections to his affidavit evidence at the hearing and his evidence in cross-examination that the reference in his affidavit to a loan document (the document in Korean headed “Loan Transaction Bond Certificate” (Loan Document) (TB154)) being a pro forma document used by Oakwood was incorrect (T92.47 -T94.41). The fact that Mr Goo had to correct aspects of his first affidavit is not, in my view, indicative of dishonesty, particularly given his language skills. One of the corrections was to a date and, as referred to above, a clarification of his evidence. As to Mr Goo’s evidence during cross-examination that he had made a mistake in his affidavit that the Loan Document was a pro forma used by Oakwood, his explanation that it might have been incorrect because of his less than perfect English was not implausible in my view (T93.39).

29. [152]

    To his credit, Mr Goo did acknowledge when he was not sure about a date and that he had some memory and reading issues (T47.50-T48.4). He also made some appropriate concessions, such as that the $110,000 was for “capital” and for “business expenses” (T82.21-T82.23, T96.1-3).

30. [153]

    I am not persuaded that Mr Goo’s evidence should be rejected in favour of Mr Sim’s and have generally preferred Mr Goo’s evidence where there is a conflict. That said, there were enough issues with Mr Goo’s evidence that I have deferred to the contemporaneous documents where available and approached his evidence, where uncorroborated, with caution.

31. [154]

    During cross-examination, it was apparent that Mr Sim’s English language skills impacted his evidence, English not being his first language. On occasion, he did not understand a question, the meaning of a word or the import of his answer (see e.g., T120.48-T121-14, T156.10, T198.5-7, T188.9-30, T207.5-37). At other times, his evidence was far from clear and difficult to follow (e.gT143.45-T143.12). I have taken this into account (adopting a similar approach to my treatment of Mr Goo’s evidence).

32. [155]

    In cross-examination, Mr Sim gave evidence about matters that were material to the issues in the case that had not been addressed in his affidavit and were unsupported by the documents. In particular, he gave evidence that the $110,000 was all spent on expenses and his salary (T153.37-41, T188.41-43, T154.3-43, T155.18-24),.

33. [156]

    Mr Sim’s explanation for why he did not include that evidence in his affidavit was that he thought his affidavit “was enough” (T162.1-2), he did not want anything “confusing” and it was not “necessary” (T181.48-T182.1). That was implausible in the context of a case where the plaintiffs were asserting that he had used the funds for his personal benefit. Similarly, Mr Sim’s explanations for why he did not address other matters in his affidavit evidence were unconvincing, referring to them being “too complex” (T147.14-46), the affidavit would not “finish” (T135.30-34) and “not important” (T149.4-33).

34. [157]

    Mr Sim’s evidence in cross-examination about his ability to access bank statements for Global HR was inconsistent and his reasoning for why he did not produce bank statements relied on a technical distinction between an official hard copy bank statements and online transaction records (T164.2). Even accepting that was a proper basis for non-production, Mr Sim’s failure to produce any bank records or other documents evidencing what the $110,000 fund was spent on was, in my view, indicative of a general lack of candour on his part, particularly as he had asserted in cross-examination that he had “proof” and such “documents did exist” (T160.8-11, T207.46).

35. [158]

    During cross-examination, Mr Sim also gave inconsistent evidence regarding the deposit of the $110,000 into Global HR’s bank account, new evidence on that topic (T143.45-144.11, T144.47-49).

36. [159]

    I do not accept Mr Sim’s evidence that he understood the Loan Document would be destroyed once the money was in South Korea. Mr Sim’s evidence is inherently implausible and at odds with his later conduct, in which he falsely wrote that the $109,000 had been returned, which reflected badly on his credit (as referred to at [96]). Mr Goo’s evidence regarding the Loan Document (at [66]), which I accept, is corroborated by Mr Back and is more consistent with the logic of events at that time.

37. [160]

    I was not persuaded that the Court should find that Mr Sim deliberately excluded his position as the sole shareholder and director of Global HR from his affidavit (Sim at [36]) to create a misleading impression to the Court that, at that point, the money was out of his effective control. There was a document annexed to his affidavit which identified his status as sole shareholder (see TB167/169), which had also been sent to Mr Goo. I also reject the suggestion made in the plaintiffs closing submissions (PCS at [42]) that the court should conclude that Mr Sim tried to hide the nature of Global HR as a human resources company from Mr Goo. The documents sent to Mr Goo by Mr Sim made plain what the company was set up to do and no issue was taken by Mr Goo to that set up.

38. [161]

    Overall, and while making no findings of dishonesty (as urged by the plaintiffs’ submissions), I did not form a favourable view of Mr Sim’s evidence. While some of his evidence was plausible (for example that he spent some money on expenses for Global HR), I have concluded that I can place little weight on his evidence in the absence of corroborative material or objectively established facts and the logic of events.

Claims in relation to the $110,000

1. [162]

   The plaintiffs’ primary submission was that the $110,000 was given to Mr Sim in his capacity as a senior employee of Oakwood, and the money was and remained Oakwood’s (by reason of a trust) (PCS at 94[a] and 94[c]). In the alternative, and if it is found that the money was Tokorea’s (having been loaned by Oakwood), then it is contended that Mr Sim received it in his capacity as a director of Tokorea (PCS at 94[c]).

2. [163]

   As to purpose, in written submissions, the plaintiffs seemed to resile from the pleaded purpose and submitted that the specific purpose for which the money was given to Mr Sim was for establishing the online remittance business in South Korea or, at least, to establish a bank account and company in South Korea which could be used as the South Korean end of the remittance transfers (PCS at [49]-[51]).

3. [164]

   Mr Sim contended that the $110,000 was advanced by Oakwood to Tokorea to establish business operations in Korea (DCS at [73]). It was noted that, at the time Mr Sim received the money, Mr Sim was an employee of Oakwood and a director of Tokorea. Mr Sim accepts that when he received the funds, he owed duties to Tokorea at that time to ensure that the funds were deposited to Global HR to establish the business. However, Mr Sim says that he did not owe any duties to Mr Goo or Oakwood in respect of the funds because they were advanced by Oakwood to Tokorea (DCS at [71]).

4. [165]

   In relation to the 1 October 2014 meeting, I accept Mr Goo’s evidence and reject Mr Sim’s and find that Mr Sim was present when Mr Goo was given the $109,000 cash. Mr Sim’s evidence is corroborated by Mr Back. I draw no inference from the failure to call Mr You by either Mr Goo or Mr Sim. There is sufficient direct evidence as to who was at the 1 October meeting and what was (and was not) discussed. Further evidence from Mr You is not required to explain or contradict something in respect of those matters.

5. [166]

   I find that the Loan Document was signed by Mr Sim to record that the $109,000 was received by him on behalf of Tokorea.

6. [167]

   I accept that the Loan Document lacks a number of terms that would ordinarily be expected in such an agreement (such as a repayment date) and Oakwood does not sue under it. However, the evidence indicates that it was intended by the parties that the $110,000 was to be treated as a loan from Oakwood to Tokorea. In particular, Mr Goo’s evidence (at [66]) makes that clear. The May 2015 shareholder statement also refers to the $110,000 as the subject of a loan from Oakwood to Tokorea. Mr Sim’s signature on the Loan Document as Tokorea’s representative is consistent with this conclusion and, in my view, reflects the capacity in which he received the money that day.

7. [168]

   As to the purpose of the $110,000, I find it likely that Mr Goo and Mr Sim discussed the need for 100 million Korean Won ($110,000) and what it would be used for, prior to the meeting on 1 October 2014. I accept Mr Goo’s evidence that he had a conversation with Mr Sim in late September 2014 and they discussed the need for the funds in Seoul to start the business and to remain in Korea (at [59] above).

8. [169]

   However, I do not accept the discussion was in the terms deposed to by Mr Goo or that it was agreed or understood by Mr Goo and Mr Sim that the funds were to be used for the specific purpose of testing the functionality of the online remittance website that had been built for Tokorea (FASOC at [25(a)]. That specific and limited purpose is not supported by the contemporaneous documents that Mr Sim sent to Mr Goo (at [50], [55] and [56] above) and Mr Goo’s evidence in cross-examination (at [78]). While some funds may have been needed to test the website’s capability, there is no apparent logic as to why 100 million Korean Won was required at that stage of the business venture.

9. [170]

   For these reasons, I find that Mr Goo and Mr Sim understood and agreed that the $110,000 was provided as capital for the purpose of establishing Global HR in connection with Tokorea’s online remittance business in South Korea and to be used as working capital for that company, such as to pay business expenses relating to Global HR.

10. [171]

    I also find that Mr Sim received the $109,000 cash from Oakwood in his capacity as a director and representative of Tokorea, and that the money became Tokorea’s money at or around that time, consistent with the parties’ intention that it was to be a loan to Tokorea.

11. [172]

    I do not accept the plaintiffs’ submission that the $110,000 was never received by Tokorea (and remained the property of Oakwood) because it never entered the possession of Tokorea’s bank accounts. The funds were received by Tokorea via Mr Sim (its director) and were transferred to South Korea to the KE Bank account of which Mr Sim was the named beneficiary with the knowledge and authority from Mr Goo, and for the reasons set out below, were then transferred to a Global HR bank account.

12. [173]

    It follows that I do not accept the plaintiffs’ submission that Mr Sim received the $109,000 in his personal capacity or as a senior employee of Oakwood (PCS [94](c) and 97). Nor do I accept the plaintiffs’ submission that Mr Sim stole the money by intercepting a loan intended by Oakwood to be directed to Tokorea when he deposited the money into his bank account and then arranged for it to be transferred to the KE Bank account in Korea (PCS at [99]).

13. [174]

    I cannot be certain if and when Mr Sim caused the $110,000 to be transferred into a bank account in South Korea in the name of Global HR. The Transfer Receipt merely records that Mr Sim arranged for the money to be transferred by Westpac Bank to an account in his name at the KE Bank in Seoul on 1 October 2014 and that the money was intended for “investment in Global HR”. There is also no document that evidences the transfer from Mr Sim’s KE Bank account into a bank account in the name of Global HR after 8 October 2014, the date on which Global HR was incorporated.

14. [175]

    Nevertheless, overall, the evidence satisfies me that, on the balance of probabilities, an account was established in the name of Global HR at the Woori Bank in South Korea that was used in connection with the online remittance business and that the $110,000 was deposited into that account sometime after 8 October 2014, and I so find. This is based on the following.

15. [176]

    First, the evidence satisfies me that Global HR was set up by Mr Sim at the request of Mr Goo as a corporate vehicle to enable the establishment of a banking contract and to activate online transactions as part of the Tokorea business, that Global HR was to be run by Mr Sim on instruction from Mr Goo (similar to the position in relation to Oakwood and Tokorea), that the $110,000 represented an amount of capital required to establish that company for the Korean arm of the Tokorea business, and a bank account for that company was required to be set up. I also find that it was intended and known to Mr Goo that the $110,000 was to be transferred to a bank account to be established in the name of Global HR. This is supported by the contemporaneous documents that were sent by Mr Sim to Mr Goo and Mr Goo’s own evidence in cross-examination (at [68] and [78]).

16. [177]

    Second, Mr Goo’s evidence that Mr Sim “used the Korea-based [Global HR] … bank account when he transferred money from Australia to Korea” during the website demonstration in February 2015 indicates that a bank account in Global HR’s name was in existence.

17. [178]

    Third, the Tokorea shareholder statement refers to the withdrawal by Mr Sim of the capital fund of $110,000 from the “Woo Ri Bank in Korea under the name of Global HR” which was “investigated through internal auditing”. The document is a contemporaneous record that acknowledges the existence of the account and the money deposited into it by reference to internal auditing that had been carried out.

18. [179]

    Fourth, the Transaction Statement refers to an account at the Woori Bank in the name of Global HR with a different account number to Mr Sim’s KE Bank account and an opening balance on 7 January 2015 of just over 98 million Won. While the Transaction Statement was undermined by Mr Goo’s and Mr Sim’s evidence (indeed Mr Sim did not rely on it at all), it is a contemporaneous document that records the existence of an account with an amount close to 100 million Won. There was also no submission advanced or question put in cross-examination that it was a complete fabrication or that the bank account details referred to on the Transaction Statement were incorrect.

19. [180]

    Fifth, both Mr Goo and Mr Sim gave evidence that the $110,000 was deposited into Global HR’s bank account. Mr Goo’s evidence is set out at [126] above. Although I have reservations with Mr Sim’s evidence, he was consistent in asserting that the $110,000 had been deposited into an account of Global HR. It was also not put to Mr Sim that the $110,000 had never been deposited into an account in the name of Global HR. Rather, the cross-examination was directed to whether Mr Sim had directly deposited the $110,000 into Global HR’s bank account and the payee details and withdrawal amounts recorded on the Transaction Statement.

20. [181]

    Sixth, I place no significance on the fact that Mr Sim was identified as the beneficiary of the $110,000 on the Remittance Advice and Transfer Receipt, that the $110,000 was not deposited into a bank account in Tokorea’s name (notwithstanding Mr Sim’s evidence that he used Tokorea’s bank accounts when handling money for the business), or that Global HR was set up as a “human resources” company. Mr Goo was aware from receiving a copy of the Remittance Advice that Mr Sim was named as the beneficiary to receive the funds in his account and that the funds were to be invested in Global HR. He was also on notice of Global HR’s proposed remit from the documents he received from Mr Sim and gave no evidence that had been unaware or had raised any concerns about those matters.

21. [182]

    Seventh, and while not determinative, the plaintiffs’ opening written submissions (POS) stated that “it appears to be common ground … that [Mr Sim] caused [the money] ….to be … transferred into the bank account of a South Korean company called Global HR..” at [9]. In opening oral address, plaintiffs’ counsel said “it’s not in dispute that Mr Sim received that money in cash, that he transferred it to a bank account in South Korea, that that bank account was held in the name of a company called Global HR…. and we know it landed in Global HR’s bank account” (T19.47-T20.0-2). In view of those words, I reject the plaintiffs’ submission that what she said in opening was about how it was intended the funds would be deposited (plaintiffs’ closing submissions in reply (PSR) at [10]). Similarly, Mr Sim’s counsel stated in oral opening, that there was no dispute, as he understood it, that “the $109,000 ended up with Global HR…; that is the monies in that entity’s bank account”, which was not corrected by plaintiffs’ counsel at that time (T100.50-101.1). While accepting that plaintiffs’ counsel identified at the very end of the hearing that it was not an agreed fact where the funds actually went to, I do not accept the plaintiffs’ submission that the trial had proceeded on the basis that it was not an agreed fact that the $110,000 had landed in a bank account held in the name of Global HR.

22. [183]

    Finally, while a Jones v Dunkel inference might be drawn that the documents available to Mr Sim would not have assisted him on this issue, such an inference cannot fill a gap in the evidence or lead the court to conclude that the documents would harm Mr Sim.

23. [184]

    It follows that I do not accept the plaintiffs’ submission that the Court cannot reach a finding to the effect at [175] given Mr Sim’s failure to prove the money ever categorically landed in Global HR’s bank account (PCR at [48]).

24. [185]

    I find that Mr Sim was aware that the $110,000 was paid for the purpose of and to be used as capital and legitimate business expenses relating to the operation of Global HR in connection with the establishment of Tokorea’s online remittance business in Korea. The evidence makes plain that Mr Sim had informed Mr Goo about the expenses prior to the establishment of Global HR and I find it likely that Mr Sim understood that he was expected to keep Mr Goo informed about costs in relation to the online remittance business after 8 October 2014.

25. [186]

    I reject Mr Sim’s oral evidence (at [155] above) that all of the $110,000 was paid on business expenses for Global HR other than the $50,000 he paid to himself as salary. I also reject his submission that the Transaction Statement and the Westpac bank account records are consistent with that position (DCS at [62] and [74]). Leaving to one side that Mr Sim disclaims the Transaction Statement, from a timing point of view, it does not seem possible that the 56 million Won balance referred to on the Transaction Statement (which recorded transactions up to 17 April 2015) could have been deducted from the Global HR bank account so as to appear in an Australian Westpac bank account on 16 and 17 April. That said, I accept that the large deposits into Mr Sim’s account is evidence that supports the inference that the money in that account may have been sourced from the $110,000 at one time.

26. [187]

    I do not accept that Mr Sim genuinely believed that a payment of $50,000 to himself as salary was consistent with the purpose for which the $110,000 was provided and that he had authority to do so. I reject his evidence that the money he gave himself represented salary for work done in relation to Tokorea’s online remittance business and Global HR.

27. [188]

    I accept Mr Goo’s evidence that he paid Mr Sim separately for some expenses to set up the business and Global HR in South Korea, such as IT expenses. However, in the absence of documents from Mr Goo that identify what expenses he paid, the evidence that the $110,000 was to pay operating costs and business expenses and that Mr Sim had to pay accounting expenses, and the evidence of expense receipts sent by Mr Sim to Mr Go, I find it likely that Mr Sim paid some expenses relating to Global HR and its operations on Korea from the $110,000.

28. [189]

    I accept the plaintiffs’ submission that the Transaction Statement is not an accurate reflection that the transactions referred to were legitimate business expenses incurred on behalf of Global HR and the Korean arm of Tokorea’s online remittance business and paid for from the $110,000. The evidence of both witnesses supports this.

29. [190]

    I accept Mr Goo’s evidence that in April 2015 he had conversations with Mr Sim about the funds held in Korea, as set out at [106] above. I also accept Mr Goo’s evidence that Mr Sim told him that he had spent the money in Korea on personal debt and credit cards and he had nothing to give him, as set out at [106]. I prefer Mr Goo’s account to Mr Sim’s. Mr Goo’s evidence is supported by the Tokorea shareholder statement, the Westpac bank account records, and the fact that no funds were ever returned by Mr Sim.

30. [191]

    Overall, I am persuaded that the evidence and logic of events give rise to the reasonable and definite inference that Mr Sim did not cause Global HR to use all of the $110,000 to pay for legitimate business expenses in connection with establishing Global HR and Tokorea’s online remittance business in Korea and caused it to pay out to him money for his own personal gain. In my view, that inference can be fairly drawn from the following evidence: Mr Goo’s evidence of Mr Sim’s conversation in April 2014 in which Mr Sim admitted to using the funds in Korea to pay his personal debts and credit cards; the contemporaneous record that refers to that conversation (contained in the shareholder statement); the Westpac bank records of the deposits and withdrawals in and from Mr Sim’s bank account in April 2015; Mr Sim’s own evidence that he paid himself $50,000 from the money in Korea as salary for which he had received no authorisation from Mr Goo, which he knew was required; Mr Goo’s evidence that he paid some of the expenses (such as IT) in relation to Tokorea’s online remittance business in Korea; Mr Sim’s failure to pay back any money when requested; and Mr Sim’s evidence that none of the $110,000 is left in Korea.

31. [192]

    I accept the plaintiffs’ submission that it is open to draw an adverse Jones v Dunkel inference from the fact that Mr Sim did not produce any bank records from Global HR or other documents that he said he had available to him and have concluded that it is appropriate to do so in this case. The evidence adduced by the plaintiffs was sufficient to conclude that it called for an answer by Mr Sim. It was within Mr Sim’s power to tender documents and cast light on the issue to be determined namely, whether, as a matter of fact, Mr Sim used the funds for his own personal gain or caused the $110,000 to be spent on legitimate business expenses relating to the establishment of Global HR and the online remittance business in Korea. The documents were not available to the plaintiffs and the steps they had taken to subpoena Global HR’s bank records were to no avail. Mr Sim has also given no adequate explanation for why he could not have produced them.

32. [193]

    Thus, I infer that the untendered documents would not have assisted Mr Sim. More significantly, Mr Sim’s failure to produce documentary evidence enables me to more comfortably draw the inference that is available from the evidence that Mr Sim did not cause Global HR to use all of the $110,000 for the purposes for which they were provided and has used some of that money for his personal gain. I accept that, in this case, doing so is material as the available evidence rests, in part, on Mr Goo’s evidence of oral conversations.

33. [194]

    It follows that I find, on the balance of probabilities, that Global HR did not use all of the $110,000 for the purpose for which the money was received by Mr Sim and find that Mr Sim caused some, but not all, of the $110,000 to be paid out to him for his own benefit.

34. [195]

    The plaintiffs accept that if the court finds (as I have) that the $110,000 was paid by Oakwood and received by Tokorea (by Mr Sim as its director and representative), they cannot maintain the claims advanced on behalf of Oakwood that were premised on Mr Sim having received Oakwood’s money in his personal capacity and/or in his capacity as a senior employee of Oakwood or joint venture partner of Oakwood. Those claims were described in the PCS as the money had and received for use for Oakwood (Claim 1, PCS at [97]), a Quistclose trust in favour of Oakwood (Claim 2, PCS at [98]), a stolen funds given rise to a trust in favour of Oakwood (Claim 3, PCS at [99]), a breach of fiduciary and equitable duties owed to Oakwood as a senior employee (Claim 4, PCS at [100]) and a breach of fiduciary and equitable duties owed to Oakwood as a partner in the alleged joint venture (Claim 5, PCS at [101]).

35. [196]

    As the plaintiffs also accepted that it was not necessary to deal with all of their pleaded claims and identified their primary claims for relief in cascading order (with the claims made on behalf of Tokorea as alternative claims to those made in favour of Oakwood: PCS at [96] and [102]), I have approached the consideration of the remaining issues by reference to the alternative claims identified in the plaintiffs’ PCS that are made on behalf of Tokorea.

36. [197]

    I should record that I would not have been satisfied that the plaintiffs had established that Mr Sim was a senior employee of Oakwood or owed fiduciary or equitable duties as a party to the alleged joint venture with Oakwood and Mr Goo when he received the $110,000 (assuming the money was received by him in one of those capacities).

37. [198]

    The plaintiffs’ claim that Mr Sim was a senior employee of Oakwood was supported by some documents (see for example, the Management Contract that referred to Mr Sim being part of the management team of Oakwood and Tokorea, the 8 May minutes that referred to him being responsible for the online business of the company and having the potential to share in profits).

38. [199]

    However, but for the admission in Mr Sim’s defence (DCS at [42]), I would have concluded that he was not in a fiduciary relationship as an employee of Oakwood as the contention was directly contradicted by Mr Goo’s own evidence, in which he asserted that Mr Sim was never considered an employee (at [149] above). The quantum of Mr Sim’s remuneration from Oakwood of only $2,000 per month, the fact that Mr Sim was not a shareholder in Oakwood on 1 October 2014 (but was a shareholder in Tokorea) and the absence of any steps taken by Oakwood to terminate his employment in 2015 (at or around the time he was dismissed as a director of Tokorea) are also factors that, in my mind, militate against a finding of an employment arrangement with Oakwood that provided that Mr Sim was in a position of ascendancy, with powers and discretions vested in him in that company: Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004 at [69]).

39. [200]

    As for the alleged joint venture, the documents and discussions relied on, particularly the Partnership Agreement, strongly suggest that it was intended and agreed by that Mr You and not Oakwood, was a relevant party to the ‘joint undertaking or activity’ to be carried out with Mr Goo and Mr Sim in relation to the “KoreaSongGum (Remittance) venture”. I also considered there to be some merit to Mr Sim’s submissions that the evidence demonstrated an absence of some of the recognisable and common characteristics of a joint venture (Gibson Motor Sport Merchandise [2005] FCA 749 at [80]), namely terms that provided for the exercise of joint control by the alleged participants, the holding of proprietary interests in the assets, a requirement for Mr Sim to contribute to the joint venture (over and above what he was alleged to be doing as an employee of Oakwood), as well as a lack of certainty as to then relevant terms.

40. [201]

    The lack of clarity in the documents and absence of evidence from the relevant parties made it difficult to conclude that the parties had mutually assented to a sufficiently clear regime with terms that were intended to be binding as the essential elements of a joint venture contract: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [74]-[80]. To my mind, Mr Sim’s appointment as a director and shareholder of Tokorea (and Global HR) was also indicative that fiduciary obligations would not be imposed between the parties, over and above the corporate structures Mr Goo had put in place (Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at 160), as was the lack of any special kind of vulnerability or reliance that Mr Goo had on Mr Sim.

41. [202]

    The plaintiffs advance three claims that they contend give rise to a personal obligation on Mr Sim to repay the $110,000 to Tokorea.

42. [203]

    The first claim is for money had and received on the basis of a failure of the purpose for which the money was given to Mr Sim, which is said to be a failure of consideration, without permission. They also say that the cause of action is available in circumstances where the money was stolen by Mr Goo, as an independent restitutionary claim based on unjust enrichment.

43. [204]

    Second, they claim that the specific purpose and the circumstances of receipt of the $110,000 imbued it as trust money in which respect of which Mr Sim held as trustee for Tokorea pursuant to a Quistclose trust.

44. [205]

    Third, they say that Mr Sim stole the $110,000 by using the money for his personal expenditure, which gave rise to a trust in accordance with the principle from Black v Freedman at 110:

45. [206]

    Mr Sim submits that the plaintiffs money had and received and the Quistclose trust claims must fail as once the money was paid to Global HR the money became part of its assets and Mr Sim ceased to be a trustee of the money for Tokorea. He also argues that to the extent there was any trust in respect of the $110,000 (which is denied), the money would have been held on trust by Global HR, with any liability to repay the funds falling on the company rather than Mr Sim.

46. [207]

    In addition to raising the pleading point taken (referred to above), Mr Sim submitted that it was not open to the plaintiffs to advance the argument that the money was stolen as it was freely given by Mr Goo to Mr Sim and then to Global HR in accordance with Mr Sim’s instructions.

47. [208]

    In reply, the plaintiffs contended that Mr Sim’s submission failed to engage with the substance of the Quistclose submission they propounded. They argued that their common law money had and received and other equitable claims are not defeated even if there is no Quistclose trust because the court should find that the $110,000 was at some point transferred back to Mr Sim and was personally spent by him.

48. [209]

    The plaintiffs submitted that a Quistclose trust arose in favour of Tokorea as the $110,000 was received by Mr Sim to be used exclusively for a specific purpose, namely the establishment of the online remittance business in South Korea or, at least, to establish a bank account and company in South Korea, with the intention that if that purpose failed, the money was to be returned to Australia (PCS at [49]-[51]). They referred to the principles in Raulfs v Fishy Bite at [42] and [47] (PCS at [98]).

49. [210]

    The plaintiffs contended the $110,000 did not become Global HR’s property or part of its assets because of the specific purpose for which the money was paid, which Global HR knew through Mr Sim’s knowledge (PCS at [94](b)). They argued that Mr Sim’s trusteeship of the money did not come to an end when the money was received by Global HR and that he is liable for breach of trust as the $110,000 must have been paid out from Global HR’s bank account to Mr Sim on his direction subject to his obligation as a trustee of the money.

50. [211]

    Mr Sim, who submitted that there is no Quistclose trust issue arising in the circumstances, also relied on Raulfs v Fishy Bite at [51]. He said that there was nothing to suggest that he should be deemed a trustee of the money as it was deposited into Global HR’s account in accordance with instructions, was advanced for the general purpose of paying business expenses and capital, was not segregated from the other assets of Global HR and there is an absence of evidence suggestive of any intention to create a trust over the money.

51. [212]

    In Raulfs v Fishy Bite at [42], Campbell JA referred to Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335, in which Gibbs ACJ (at 353) (Jacobs and Murphy JJ agreeing) referred to the decision in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 as:

52. [213]

    At [49], Campbell JA referred, with approval, to the statement by Young, Croft and Smith, On Equity (2009, LawBook Co) at [6.1020]:

53. [214]

    Campbell JA (Meagher and Barrett JJA agreeing) went on to observe that (at [51]):

54. [215]

    Turning to the facts in this case, the subject of the alleged trust (the $110,000) was paid by Oakwood to Tokorea and received by Mr Sim (on behalf of Tokorea) on 1 and 2 October 2014 (by the $109,000 cash and the $1000 transfer the next day) just before Global HR was incorporated.

55. [216]

    That company was in the process of being incorporated by Mr Sim on instruction from Mr Goo. The $109,000 cash (which was treated as a loan from Oakwood to Tokorea) represented funds provided to Tokorea by a shareholder as the capital necessary to establish Global HR. Mr Goo was aware that capital of 100 million Korean Won was required for “setting up the business” (T84.6-11) and was to be used as capital, operating costs and business expenses and to “test” the online remittance website (T96.31-45, T82.21-23).

56. [217]

    Looked at objectively, it must have been the purpose and intention of Oakwood, Mr Goo, Tokorea and Mr Sim that the $110,000 was to be transferred to Global HR and to be used only for its establishment and ordinary business operations in connection with the establishment of Tokorea’s online remittance business in Korea. However, in order to establish that the $110,000 was held subject to a Quistclose trust, it is not sufficient to show that the money was advanced for such a purpose. It remains necessary to consider the other objective indicators of an intention to create a trust and whether there was an intention that the money not become part of the general assets of Global HR: Raulfs v Fishy Bite at [47] and [51]; Re Courtenay House Capital Trading Group Pty Limited (in liq) and Courtenay House Pty Limited (in liq) [2018] NSWSC 404; (2018) 125 ACSR 149 (Re Courtenay House Capital Trading) at [28].

57. [218]

    There is no evidence that Mr Goo and Mr Sim discussed a requirement to keep the $110,000 in an account separate from any other money that Global HR might receive, a powerful indicator of an absence of an intention that the money was intended to be held on trust: Raulfs v Fishy Bite, at [61]. In my view, the fact that the money was paid into an account separate to Tokorea’s is not significant as the plaintiffs’ submissions seemed to suggest.

58. [219]

    There is no evidence of any discussions that suggest an intention for the $110,000 to be returned if Tokorea’s online remittance business was not established. While it could be assumed that this would occur if the business did not eventuate, the start-up nature of the venture is also suggestive of a risk that some (or all) of the $110,000 might be expended as working capital during the set up and testing phase and the venture would fail with little or no return. There were no other objective circumstances known to Tokorea (or Oakwood) at the time the money was transferred by Mr Sim to South Korea and deposited into Global HR’s bank account which might have suggested that the business would not be established (and the venture would fail) or that the money would be misappropriated by Mr Sim: Raulfs v Fishy Bite at [61].

59. [220]

    While there is a challenge to the use to which Mr Sim has put the $110,000, the evidence suggests that he had authority to use the money to pay for some legitimate business expenses, such as accounting expenses. There is also an absence of evidence about specific directions or instructions given by Mr Goo to Mr Sim as to how and in what manner the money was to be applied by Global HR: Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27 at [49].

60. [221]

    The plaintiffs did not point to any language used by the parties that was suggestive of the $110,000 being held on trust other than contending that it was to be used for the specific purpose of testing, which purpose I have rejected as being inconsistent with the contemporaneous documents. To my mind, the business purpose to which the funds were to be put, is of a more general nature, and lacks the specificity indicative of a trust.

61. [222]

    I am also not persuaded by the plaintiffs’ submission that it is relevant to the question of whether the $110,000 was held on trust that Mr Goo’s intention and understanding was that the remittance business would allow for two-way transfers and Mr Sim’s evidence in cross-examination was that Global HR, as established, could not lawfully do that and could only ever receive one-off amounts from individuals from Australia to South Korea (T124.38-42, T176.40-49, T179.32-38). Leaving to one side the difference between Mr Goo and Mr Sim’s evidence, there was no evidence that Mr Goo was unaware of that limitation when Global HR was set up. The submission is also at odds with the plaintiffs’ pleading which asserts that the alleged joint venture business would create a website that would “facilitate the real-time transfer of money originally from Australia to South Korea”, rather than two-way transfers (FASOC [16](b)).

62. [223]

    It is inherent in the notion of money paid as working capital of a business enterprise, that such money might be expended in the course of conducting the business of that enterprise: Raulfs v Fishy Bite at [62]. This tends against the money being held as anything other than an asset of the enterprise, and in the absence of other evidence, it suggests that the money paid to the enterprise is not held on trust for or on behalf of the companies or individuals who advanced the money.

63. [224]

    In this case, no express intention to create a trust has been shown. It is more than likely that the parties gave no actual thought to the matter. The implicit basis of the trust is said to arise because the $110,000 was advanced to Tokorea as a loan and then transferred to South Korea as capital to establish another company for the purposes of the business venture, with the funds to be used for that general business purpose.

64. [225]

    In my view, when considered overall, the evidence does not suggest that the $110,000 working capital was intended not to become part of the assets of Global HR or that the parties objectively intended that the money was to be held on trust by either Mr Sim or Global HR for Tokorea (or Oakwood) once in the hands of Global HR. It follows that I am not persuaded that the plaintiffs have established that the $110,000 was held by Mr Sim of Global HR subject to a Quistclose trust in favour of Tokorea (or Oakwood) and the question of breach of any such trust by Mr Sim does not arise.

65. [226]

    The plaintiffs also argued that due to Mr Sim’s control of Global HR, his trusteeship of the $110,000 did not come to an end when the money was received into Global HR’s bank account and then paid out to Mr Sim.

66. [227]

    I accept that Mr Sim would be treated as a trustee of the $110,000 for Tokorea from the time he received the money on Tokorea’s behalf and was also in control of the money when it was received by Global HR (and later caused the money to be paid out). Nevertheless, based on my reasoning above, I have concluded that the $110,000 became the corporate property of Global HR when the money was deposited into Global HR’s bank account as its working capital in accordance with Mr Sim’s instructions. This had the consequence that Mr Sim ceased being a trustee of the money and, as Global HR’s director and having control of its funds, Mr Sim would be treated as if he was the trustee of the money of Global HR from that time: Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6 at [563], citing Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 at 405.

67. [228]

    I also accept that Mr Sim may be personally liable to Tokorea for breach of trust if he was the recipient of the $110,000 (or any part of it) as trust property held by Global HR on Tokorea’s behalf. But the plaintiffs did not advance such a case. There was no allegation made that Global HR, as the recipient of the $110,000, held the $110,000 on trust for Tokorea (or Oakwood) or was subject to any fiduciary or equitable duty. Nor was it alleged that Global HR was in breach of trust or an equitable duty when the money was paid out to Mr Sim, in respect of which Mr Sim was on notice and for which he would be personally liable: see for example, Raulfs v Fishy Bite [2011] NSWSC 105 at [74] (Rein J; not disturbed on appeal), citing Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 396 per Gibbs J:

68. [229]

    Nor did the plaintiffs advance a case that the $110,000 was held on trust for Tokorea because, for example, it was received by Global HR (and controlled by Mr Sim) by reason of Mr Sim misrepresenting the purpose for which the money was required or by fraud, such as in Re Courtenay House Capital Trading.

69. [230]

    The claim for money had and received by Mr Sim for the use of Tokorea is not pleaded in the FASOC (the only moneys had and received claim as pleaded was for the use of Oakwood and the Tokorea business by reference to Mr Sim’s failure and refusal to refund the $110,000 and $50,000 to Mr Goo and Oakwood). However, as no objection was taken by Mr Sim to the way in which the claim was advanced in the plaintiffs’ written submissions, I have dealt with it below.

70. [231]

    A money had and received claim is a common law personal restitutionary remedy. It has been described as a “[a] cause of action … [which] is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff”: Juul v Northey [2010] NSWCA 211 at [216] (McColl JA, Basten and Campbell JJA agreeing).

71. [232]

    Total failure of consideration is an established basis for restitution and a claim for money had and received: Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 (Roxborough) at [20], [101]-[109]. It arises where the state of affairs contemplated as the basis or reason for the plaintiff’s payment have failed to materialise or, if it did exist, have failed to sustain itself: Roxborough at [16], [104].

72. [233]

    It is the performance of the defendant’s promise not the promise itself which constitutes the relevant consideration for the purposes of this principle: Raulfs v Fishy Bite at [87], citing Baltic Shipping Company v Dillon (1993) 176 CLR 344 (Baltic Shipping) at 350-1; [1993] HCA 4. There is also a general requirement that failure of consideration be “total” in the sense that there must have been no part of the agreed return provided, unless perhaps the consideration can be apportioned or severed: Baltic Shipping at 350 (Mason CJ); David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (David Securities) at 382-3; [1992] HCA 48.

73. [234]

    In Roxborough, Gleeson CJ, Gaudron and Hayne JJ explained the meaning of the term failure of consideration in the restitutionary context at [16]:

74. [235]

    Broadly speaking, to establish restitutionary relief for money had and received based on unjust enrichment, the defendant must have received a benefit at the plaintiff’s expense in circumstances where there is a recognised vitiating factor such that it would be unjust for the defendant to retain it (and no countervailing factor against the grant of such relief): Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham's Warehouse Sales Pty Ltd (2012) 246 CLR 498; [2012] HCA 7 (Equuscorp) at [30] (French CJ, Crennan and Kiefel JJ).

75. [236]

    The plaintiffs do not contend that there was any contractual obligation on the part of Global HR and Mr Sim to perform that which had failed. Rather, their claim is that the $110,000, having been paid out and used by Mr Sim for himself, is recoverable as a failure of consideration and to prevent him from being enriched at the expense of the true owner, on the basis that the money was stolen.

76. [237]

    The plaintiffs do not plead a total failure of consideration as the basis for their claim for money had and received. Rather, their closing submissions assert that the failure of the purpose constituted a failure of consideration, with the purpose asserted to be the use of the $110,000 to establish the online remittance business in South Korea, or at least, to establish a bank account and company in South Korea which could be used as the South Korean end of the remittance transfers.

77. [238]

    In this case, the evidence demonstrates that a bank account and a company was established in South Korea, the Global HR bank account was used to demonstrate that the website could transfer money from Australia to Korea and some of the money was used to pay some business expenses (for example, accounting costs). The plaintiffs may not have received an established online remittance business in Korea, but it seems to me that they received something in return by way of partial consideration. It follows that I am not persuaded that a claim for money had and received based on a total failure of consideration has been made out.

78. [239]

    I am satisfied that Mr Sim obtained a benefit by using the $110,000 for his personal gain, including to pay himself $50,000 which he claimed was salary. I do not accept Mr Sim’s submission that he was entitled to take that salary because of the “loose and fluid nature” of the business arrangements between he and Mr Goo (DCS at [78]).

79. [240]

    The object of a judgment, at common law, for moneys had and received is to recognise the obligation of a defendant not to retain the plaintiff's money, but to restore its value to its rightful owner: Roxborough at [26]; ACI Operations Pty Ltd v Tallant [2013] NSWSC 367 at [41].

80. [241]

    Central to a claim for money had and received is that the plaintiff must be able to show a subsisting right to the money the subject of the claim. A personal cause of action, deriving from the count of money had and received, is available to the owner of money, with the money able to be traced to a volunteer: Heperu Pty Ltd v Belle [2009] NSWCA 252 at [127].

81. [242]

    As I understand it, the plaintiffs’ primary contention is that Tokorea was the “rightful owner” of the $110,000 based on a Quistclose trust. For the reasons set out above, I do not accept that submission.

82. [243]

    The plaintiffs also submitted (PCR at [50]) that, “[m]erely because the defendant has paid over money to a third party provides no defence to the personal claim” and the defendant’s “retention of the benefit of the receipt will suffice for personal liability”: Mason & Carter, Restitution Law in Australia (4th ed, 2021, LexisNexis) (Restitution Law in Australia) at [307]. They said that what is relevant is whether the recipient of money to the use of the plaintiff has, at some stage, exercised actual control over the funds and, whether they have received a benefit to the plaintiff’s detriment: Restitution Law in Australia at [311].

83. [244]

    The plaintiffs submitted that as Mr Sim always retained control over Global HR, any obligations attaching to him continued as the money was under his control and such obligations still existed when he received the money back from Global HR. They submitted that any receipt of the funds by Global HR in no way broke the legal recourse between Mr Sim and Tokorea’s claim for money had and received (PCS at [94](b)).

84. [245]

    Mr Sim was, I accept, in control of the $110,000 at all relevant times. But Mr Sim is not a defendant who misappropriated money directly from Tokorea and then paid it to a third party. Rather, after receiving the money on behalf of Tokorea, Mr Sim arranged for the transfer to South Korea and the deposit into Global HR’s bank account in accordance with his instructions, at which time the money became the corporate property of Global HR. While it is not possible to say when, given the continuing relationships, it seems more likely that he arranged to use some of the money for his own benefit at some later stage.

85. [246]

    The plaintiffs’ submissions asserted that, if the money was received by Global HR, it too would be personally liable, contending that Mr Sim’s knowledge would be imputed to it and, as stated in Restitution Law in Australia at [311], “[w]here notice that the money or property was the proceeds of the dishonest receipt is acquired by the third party, he or she will not be relieved of personal liability by later disposing of the money or property into which its benefit is traceable”.

86. [247]

    Mr Sim may have received the benefit of money that was to be used as capital for the purpose of and in connection with Global HR and the establishment of the online remittance business in Korea. But in the absence of the plaintiffs satisfying me that the money was the property of Tokorea after it was deposited into Global HR’s account, I am not persuaded that they have established a money had and received claim to the use of Tokorea.

87. [248]

    In Black v Freedman, the High Court held (at 110) that money given by a thief to a third party who received that money as a volunteer could be recovered by the victim of the theft although the third party had not participated in the theft.

88. [249]

    The Black v Freedman principle applies not only where the plaintiff’s money has been stolen, but also where it has been misappropriated or obtained by fraud: Re Courtenay House Capital Trading at [30] (Brereton J); Voyages Indigenous Tourism Australia Pty Ltd v Tristar Alliance Group Pty Ltd [2020] NSWSC 477 at [43]; Alesco Corp Ltd v Te Maari [2015] NSWSC 469 at [142].

89. [250]

    In the matter of Courtenay House Capital Trading Group Pty Limited (in liquidation) and Courtenay House Pty Limited (in liquidation) [2019] NSWSC 1113, a company had procured deposits into Westpac Accounts not for the advertised purpose of undertaking foreign exchange trading, but to return funds to earlier investors in the course of a Ponzi scheme which was contrary to the documentation provided to investors (although a small percentage of the deposits went to foreign exchange trading): at [36]. Black J held that money given by investors to the Companies for a specific purpose was held on a Black v Freedman trust for the investors: at [38].

90. [251]

    The plaintiffs claim for a Black v Freedman trust is sought on the basis of an allegation that Mr Sim stole the money by using the $110,000 for personal expenditure. It was submitted that Mr Sim cannot divest himself of the trust by alleging (without evidence) he removed the funds to a corporate entity of which he had sole control. They submitted that the obligation to repay continues and survives any temporary receipt by Global HR as Mr Sim was always in control of the funds and his legal obligations still existed when he then must have personally received the money and spent it.

91. [252]

    The plaintiffs did not advance a case that the $110,000 was procured by Mr Sim by misrepresenting the purpose for which the money was required, or by fraud. The only pleaded allegation is that Mr Sim did not use the money for the purpose for which it was given to him and used it for his personal needs. It is only in submissions that the plaintiffs contended Mr Sim had stolen the money and was a “thief”.

92. [253]

    I reject the plaintiffs’ claim based on a Black v Freedman trust for two reasons.

93. [254]

    First, I accept Mr Sim’s submission that a claim that the funds were stolen as giving rise to a Black v Freedman trust should have been specifically pleaded.

94. [255]

    The FASOC identifies that the plaintiffs asserted that Mr Sim had used the $110,000 for his personal needs, being contrary to various duties, and that his conduct could give rise to an implied trust (which the plaintiffs submitted was a Quistclose trust) and a claim for money had and received. I also accept that the plaintiffs referred to Black v S Freedman & Co (1910) 12 CLR 105; [1910] HCA 58 (Black v Freedman) in written submissions, and referenced “misappropriation” and “thief” during the course of the hearing to which no objection was taken at the time.

95. [256]

    However, an allegation that Mr Sim stole $110,000 is a serious one and parties are obliged to plead and give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which a party relies: UCPR, rr 15.1, 15.3. They are also obliged to draw the attention of the Court and the parties to the real issues in the case: Civil Procedure Act 2005 (NSW), s 56(1) and s 56(3).

96. [257]

    The pleading objection that has been taken and has merit in my view. The claim was not appropriately pleaded.

97. [258]

    Second, and in any event, for reasons similar to those set out in my consideration of the Quistclose trust and moneys had and received claim, the plaintiffs submissions do not satisfy me that they have met their burden of proof to establish that Mr Sim stole money that was owned by Tokorea.

98. [259]

    The final claim advanced by the plaintiffs in relation to Tokorea is the claim that Mr Sim’s conduct was in breach of his fiduciary duty owed to Tokorea as a director to not derive a personal profit from Tokorea by personally spending the money for no benefit to Tokorea.

99. [260]

    Mr Sim’s closing submissions did not address this claim, other than to acknowledge that Mr Sim was a director of both Tokorea and Global HR, and to contend that the only duty he owed to Tokorea was to ensure that the $110,000 was deposited to Global HR’s account (which he had done). He also admitted that he owed fiduciary duties to Tokorea as its director (Defence at [21]).

100. [261]

     The plaintiffs submitted that Mr Sim owed a fiduciary duty to Tokorea to not derive a personal profit from Tokorea, citing Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 (Ancient Order) at [68]-[69]. They claim that the duty arose from his statutory position as director of that company (PCS at [103], [116]-[117]).

101. [262]

     The plaintiffs also submitted that Mr Sim breached his fiduciary duty as a director by personally spending the money for no benefit to Tokorea (PCS at [103]). They claim that the use of the $110,000 was not in good faith or in the best interests of Tokorea, nor for a proper purpose (FASOC at 42(a)(i); PCS at [131]), that Mr Sim used his position to gain an advantage or profit for himself or someone else, that he caused detriment to Tokorea by depriving it of the benefit of the $110,000 (FASOC at 42(a)(ii)-(iii)), and that he put himself in a position where he advanced his own personal interest in conflict with Tokorea’s best interests (FASOC at 42(a)(iv)).

102. [263]

     As a director of Tokorea, Mr Sim could not use its property for his personal benefit without the company’s authority and could not take remuneration or other benefits from the company’s resources unless authorised by law, any company constitution or with the fully informed consent of the company in general meeting: Robert Austin and Ian Ramsay, Ford, Austin and Ramsay’s Principles of Corporations Law (17th ed, 2018, LexisNexis Butterworths) at [9.200].

103. [264]

     The fiduciary duties of a director not to promote their personal interests by taking profits or advantaging from a company’s property or funds for themselves in circumstances where there is a conflict or a real or substantial possibility of a conflict between his personal interests and those of the company cover the same grounds as the similar statutory duties under the Corporations Act 2011 (Cth): ASIC v Adler at [735].

104. [265]

     Mr Sim has a fiduciary duty to Tokorea not to promote his personal interests by taking for himself profits or advantaging from that company’s property or funds: ASIC v Adler (2002) 168 FLR 253; [2002] NSWSC 171 (ASIC v Adler) at [735] (Santow J).

105. [266]

     As I have found that the $110,000 became the corporate property of Global HR, it seems to me that Mr Sim was not taking for himself profits or an advantage from Tokorea’s property when he used some of the $110,000 for his personal gain. Accordingly, I am not satisfied that the plaintiffs have established that Mr Sim breached his fiduciary duty owed to Tokorea as a director to not derive a personal profit from Tokorea’s property or funds.

106. [267]

     Mr Sim also owed a duty to Tokorea to not put himself in a position where he advanced his own personal interest in conflict with Tokorea’s best interests. That duty is well established and has been described as a duty “not to place himself (or herself) in a position of conflict where there is a real or substantial possibility of conflict between the director’s interests and the director’s duty to the company”: Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd [2016] NSWCA 347 at [3].

107. [268]

     My finding that the $110,000 was no longer the company property of Tokorea once it was transferred to Global HR, is also relevant to the assessment of this issue. Again, it seems to me that Mr Sim’s conduct in paying himself money for his own personal gain out of the property of Global HR (even if in a manner that was inconsistent with the purpose for which the $110,000 was provided) may not have placed him in a position of conflict. The real difficulty with this aspect of the plaintiffs’ case is that they do not plead nor explain in their submissions how it is said that Mr Sim’s conduct, in using the property of another company (albeit established in connection with the Tokorea online remittance business) for his own personal gain necessarily caused detriment to Tokorea itself. In the absence of any written submissions addressing this issue I do not propose to consider that issue any further.

108. [269]

     Given my conclusion that the plaintiffs have not established any claims based on a breach of equitable obligations or duties, it is not necessary to address the issues raised by the plaintiffs’ submissions with respect to the quantification of equitable compensation. I simply record their reliance on the principles from Ancient Order and Houghton v Immer (No 155) (1997) 44 NSWLR 46, emphasising that Mr Sim’s failure to keep and produce proper accounts has made it difficult assess the compensation due to the plaintiffs and the court should assess it in a robust manner, relying on the presumption against wrongdoers.

Claims in relation to the $50,000

1. [270]

   The remaining claims relate to the asserted payment of $50,000 to Mr Sim by Mr Goo.

2. [271]

   The plaintiffs contend that Mr Goo, from his own personal source of funds, paid the $50,000 to Mr Sim, in Mr Sim’s personal capacity, or in the alternative, it was in his capacity as director of Tokorea. They submit that the court should conclude that the money was advanced for the specific purpose of finishing building the website needed for Tokorea’s online remittance business.

3. [272]

   Mr Sim denies receiving the $50,000.

4. [273]

   Even accepting that Mr Goo was a trusting person who dealt with large amounts of cash, I found the concept of him handing over $50,000 in cash to Mr Sim without something in writing somewhat odd given his evidence that he was told by Mr Back that Mr Sim was spending all the company money and not doing the work. It was unhelpful to Mr Goo’s case that there was no text, email or other document referring to that amount, and no document in evidence that could be construed as “I received something in return, a document, [with] his signature on it” (at [81]) that Mr Goo got in return from around that time, or later.

5. [274]

   That said, there is some objective evidence that supports Mr Goo’s claim that he gave Mr Sim $50,000 in cash. The facts make plain that Mr Goo was seeking for Mr Sim to return his five units in the KS Unit Trust and they were valued at $50,000 (at [79] and [88]). His explanation for why the Loan Document was prepared for the $110,000 but not the $50,000, (namely, the $110,000 was Oakwood’s money and other investors were involved T98.23-T99.1) was plausible, in contrast to Mr Sim who could give no plausible explanation for why he would give up his units worth $50,000 without any return, other than to refer to some new evidence about a conversation with Mr Goo (at [88] above).

6. [275]

   The deposits into Mr Sim’s Westpac bank account that add up to $50,000 also provide some objective support for the payment, albeit some five months later. Mr Goo was also clear and firm that he gave the money to Mr Sim.

7. [276]

   On balance and having weighed up the evidence of Mr Goo and Mr Sim against the other matters and the logic of events, I am persuaded to accept Mr Goo’s evidence that he gave Mr Sim $50,00 in cash in early December 2014. However, for the following reasons, I have concluded that Mr Goo’s claims for the return of that money must fail.

8. [277]

   In this case, Mr Goo’s causes of action in relation to the $50,000 are based on a finding that Mr Goo gave the $50,000 to Mr Sim to use for the Tokorea business and to complete the website, and that he did not use it for that purpose. The evidence relied on by the plaintiffs is Mr Goo’s evidence of his conversation with Mr Sim (at [80]), and the contention that Mr Sim received the money on the understanding that it was to be used by him for the purpose of finishing building the website.

9. [278]

   In BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd; BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd; Harpro Group Pty Ltd v BM Sydney Building Materials Pty Ltd [2019] NSWSC 421, Hammerschlag J (as His Honour then was) said, at [51]:

10. [279]

    In addition, the observations by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 about the fallibility of memory are apt in this case, given what Mr Goo conceded during cross-examination and the evidence he gave of his “vague recollections” of discussions regarding large sums of money at around the same time (Goo 2 at [23]).

11. [280]

    Leaving aside that I feel no actual persuasion that Mr Goo said the words deposed to, even if I were to assume the words were said, I cannot accept the plaintiff’s formulation of the purpose for which the funds were given.

12. [281]

    To my mind, the conversation deposed to by Mr Goo and objective facts indicates that the purpose for giving $50,000 to Mr Sim was as a payment for his removal from the KS Unit Trust. According to Mr Goo’s evidence, Mr Goo asked Mr Sim to hand back his units in return for the $50,000, to which Sim agreed. He then asked to remain involved in Tokorea, to which Mr Goo said, “invest it in Tokorea” and “complete the website”, akin to a request rather than a command or condition. Put another way, based on the terms of Mr Goo’s evidence, irrespective of whether Mr Sim agreed to continue to work for Tokorea and complete the website, Mr Sim was going to receive the $50,000.

13. [282]

    It is also entirely unclear what Mr Goo meant when he said to Mr Sim “invest the $50,000 in Tokorea to finish the website and start the business”. Does it mean that Mr Sim is to use the $50,000 to pay for the completion of the website (i.e., expenses relating to that), that Mr Sim was given the $50,000 as reward for his continuing work on the website, or that Mr Goo was giving his money to Mr Sim to invest, and if so, how was Mr Sim to do that? It is also difficult to understand why Mr Goo would give $50,000 of his own money to Mr Sim to “invest” in a company which Mr Goo controls.

14. [283]

    Significantly, the conversations Mr Goo deposes to having had with Mr Sim in April 2015 (at [97] and [106]) do not refer to any expectation on the part of Mr Goo that the $50,000 should have been invested by Mr Sim into the Tokorea business and used to complete the website, or that Mr Goo expected the money to be returned to him as the website wasn’t completed. If the payment of the $50,000 was linked to the completion of the website (which according to Mr Goo was not completed by Mr Sim in February 2015), why didn’t Mr Goo demand repayment of the $50,000 at the meeting with Mr Sim in April 2015 or refer to it in any of his discussions with Mr Sim around that time? The only funds that Mr Goo refers to in his discussions with Mr Sim at that time are the “Test Funds”, being the $110,000 in Korea.

15. [284]

    In addition, and to the extent it is relevant to this issue, based on the limited evidence before the Court, I can make no finding of fact regarding the precise requirements, performance and status of the website that was being developed for Tokorea between late February and April 2015. For example, I am unable to conclude whether Global HR was required to be or was in fact capable of facilitating two-way transfers of money between Australia and South Korea. The pleadings and evidence are inconsistent on this aspect. Mr Sim gave evidence that Global HR could only legally facilitate transfers from Australia to South Korea (T124.9-42) but Mr Goo’s evidence at [90] above suggests otherwise, and the FASOC refers to the transfer of money from Australia to South Korea (FASOC at 16(b)).

16. [285]

    Thus, the factual finding sought by the plaintiffs that the $50,000 was given to Mr Sim for the purpose of Mr Sim completing the website is not corroborated by any contemporaneous documents or any evidence of other conversations between Mr Goo and Mr Sim, or Mr Goo and others. It also seems to me to be unsupported by the logic of events.

17. [286]

    For these reasons, I do not feel an actual persuasion that Mr Goo and Mr Sim understood or agreed that Mr Goo gave $50,000 cash to Mr Sim on or around 1 December 2014 for Mr Sim to use for the purpose of the Tokorea business or for the purpose of completing the website required for that business, or that the $50,000 given to Mr Sim by Mr Goo represents an investment by Mr Goo into the Tokorea Business (FASOC at 37]). Rather, I have concluded that, on the balance of probabilities, the $50,000 was given to Mr Sim as consideration for the return of his units in the KS Unit Trust and was given to Mr Sim in his personal capacity, and not as a director of Tokorea.

18. [287]

    It is common ground that Mr Sim returned his units in the KS Unit Trust to Mr Goo sometime in early 2014.

19. [288]

    Accordingly, and while I am satisfied that the $50,000 was given by Mr Goo to Mr Sim (and Mr Sim has retained the money for his own benefit), I find that Mr Sim has not used the $50,000 contrary to the purpose for which it was given to him, as pleaded: FASOC at [30].

Conclusion, costs and orders

1. [289]

   In summary, I am not satisfied that the plaintiffs have established any of their claims against Mr Sim and refuse their application for the relief claimed in the FASOC. It follows that I will order that the FASOC be dismissed.

2. [290]

   I see no reason why the usual order that costs follow the event should not apply and propose to make an order for the plaintiffs to pay Mr Sim’s costs of these proceedings. However, as the parties have not addressed the issue of costs and the plaintiffs indicated they wished to be heard on that issue, I have deferred entry of the proposed costs order for 21 days to enable the parties to make an application if they consider a different order should be made. In that event, the party seeking a different costs order should confer with the other parties and, before the orders take effect, notify my Associate by email of such together with their written submissions on that issue (of no more than three pages) and an agreed date for submissions in response, with a view to the issue of costs being determined on the papers.

3. [291]

   For these reasons, I make the following orders:

   1. (1)

      Dismiss the Further Amended Statement of Claim.

   2. (2)

      Unless any party makes an application for a different cost order within 21 days, the defendant’s costs of these proceedings be paid by the plaintiffs on an ordinary basis as agreed or assessed.