Supreme Court New South Wales Medium Neutral Citation: In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302 Hearing dates: 2 – 4 February 2021 Date of orders: 26 March 2021 Decision date: 26 March 2021 Jurisdiction: Equity - Corporations List Before: Williams J Decision: Declaration sought denied; direct the parties to prepare short minutes of order giving effect to these reasons. Catchwords: CONTRACTS — oral contract — formation of contract — terms CONTRACTS — remedies — Specific performance Legislation Cited: Civil Procedure Act 2005 (NSW), s 21 Corporations Act 2001 (Cth), ss 100A, 1322 Uniform Civil Procedure Rules 2005 (NSW), r 36.2 Cases Cited: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 King v Adams [2016] NSWSC 1798 Lawrence v Ciantar [2020] NSWCA 89 Moore v Aubusson [2020] NSWSC 1466 Re Hillsea Pty Ltd [2019] NSWSC 1152 v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: Jay Koo Kim (Plaintiff) Hoju Jobs Pty Ltd CAN 612 771 945 (First Defendant) Yongseoki Choi (Second Defendant) Jin Seoung Goo (Third Defendant) Representation: Counsel: Mr D C Eardley (Plaintiff) Mr R J Pietriche (First, Second and Third Defendants) Solicitors: Praxis Lawyers Pty Ltd (Plaintiff) Rays Lawyer (First, Second and Third Defendants) File Number(s): 2017/316224 Publication restriction: N/A Judgment Introduction 1. The first defendant, Hoju Jobs Pty Limited ACN 612 771 945 (Hoju Australia) was incorporated on 2 June 2016. It operates a business that facilitates the transfer of funds from Australia to South Korea. 2. Hoju Jobs Limited, a company incorporated in South Korea, operates a business facilitating the transfer of funds from that country to Australia (Hoju Korea). Hoju Korea is not a party to this proceeding. 3. On 23 January 2017, the plaintiff (Mr Kim) paid $300,000 to Hoju Australia. At that time, Mr Yongseok Choi (Mr Choi) was the sole director, secretary and shareholder of Hoju Australia. [1] However, Mr Choi's shares were held on trust for the third defendant (Mr Goo), who had established Hoju Australia in June 2016 together with Hoju Korea. According to Mr Choi, he became a director of Hoju Australia because Mr Goo asked him to be "the director on paper" on the basis that Mr Goo would "run the business in its entirety". It is common ground that Mr Goo is a shadow director of Hoju Australia. 4. The payment of $300,000 was made following discussions between Mr Kim and Mr Goo about Mr Kim investing in the businesses of Hoju Australia and Hoju Korea. 5. Mr Kim claims that he entered into a binding oral contract with Mr Goo and Hoju Australia shortly before he made the $300,000 payment. There is a dispute about the terms of the contract, which turns in part on a question about when the contract was formed. In his Further Amended Statement of Claim filed on 11 December 2020, Mr Kim pleaded that the terms of the contract were, relevantly, as follows: 1. Mr Kim would pay $300,000 in return for 50 ordinary shares in Hoju Australia; 2. Mr Choi would retain all decision-making powers concerning Hoju Australia; 3. Mr Choi would have the power to "dissolve" Mr Kim's directorship of Hoju Australia in the event that Mr Kim committed a criminal offence to the detriment of Hoju Australia (including fraud or misrepresentation) or deliberately caused harm to Hoju Australia; 4. Mr Kim would secure an investment in Hoju Australia of 3 billion Korean Won (KRW) from overseas investors, failing which Mr Goo "would look to bring in other investors and [Mr Kim's] entitlement to profit from [Hoju Australia's] business would be diminished based on the value of any investment sourced by [Mr Goo]"; and 5. if the agreement between Mr Kim and Mr Goo "breaks", the $300,000 would be repaid to Mr Kim within three months and Mr Kim would forfeit his shares in Hoju Australia. 1. The alleged contract was not reduced to writing. 2. The Further Amended Statement of Claim pleaded that the alleged contract was between Mr Kim and Mr Goo only. By the end of the hearing, it was Mr Kim's contention that Hoju Australia was also a party to the alleged contract. The defendants did not resist that contention, but submitted that the Court would need to determine whether Hoju Australia was in fact a party to any contract in the course of determining Mr Kim's claims for declaratory relief and an order for specific performance of the contract. 3. As I have already noted, there is a dispute about the terms of the contract, which turns in part on a question about when the contract was formed.In their Defence filed on 18 December 2020, Hoju Australia and Mr Goo denied the contract alleged by Mr Kim, and pleaded that it had been agreed that: 1. Mr Kim would invest KRW 2 billion in Hoju Korea; 2. Mr Kim would pay AUD$300,000 into Hoju Australia's bank account as a deposit for his purchase of 49 ordinary shares in each of Hoju Australia and Hoju Korea; and 3. Mr Goo would refund the AUD$300,000 to Mr Kim in the event that Mr Kim failed to invest the full KRW 2 billion in Hoju Korea. 1. Shares in Hoju Australia were first issued to Mr Kim on 28 March 2017. 2. In their Defence, Hoju Australia and Mr Goo plead that the allotment of shares to Mr Kim was subject to the following conditions: 1. Mr Kim was to hold the shares subject to and for the purposes of attracting a capital investment of KRW 3.5 billion (about AUD $4.2 million) successfully from Jungdong Accounting (a Korean firm introduced by Mr Kim as a possible investor); and 2. Mr Kim would "return" the shares to Mr Choi if he failed to attract that proposed investment by the end of April 2017. 1. At the same time as signing his application for shares in Hoju Australia, Mr Kim signed the following documents (referred to as the escrow documents): 1. undated transfer of 50 ordinary shares in Hoju Australia from Mr Kim to Mr Choi in consideration for $50; 2. undated application by Mr Kim for 50 G Class shares in Hoju Australia for consideration of $1.00 each; and 3. undated minutes of meeting of directors of Hoju Australia agreeing to transfer 50 ordinary shares from Mr Kim to Mr Choi and to allot 50 G Class shares to Mr Kim. 1. There is a dispute between Mr Kim and Mr Goo about the basis on which the escrow documents were signed by Mr Kim. 2. In his Further Amended Statement of Claim, Mr Kim pleaded that he, Hoju Australia, Mr Choi, Mr Goo and Mr Jonson Yoo (an accountant acting for Hoju Australia) [2] "purportedly entered into an agreement" on 28 March 2017 that the escrow documents would only be released from escrow if Mr Kim committed a criminal offence or deliberately caused harm to Hoju Australia. It is convenient to refer to this as the plaintiff's alleged escrow agreement. 3. In their Defence, Hoju Australia and Mr Goo denied the plaintiff's alleged escrow agreement and pleaded that Hoju Australia resolved at a meeting of shareholders and directors on 27 March 2017 that, if Mr Kim failed to attract the proposed investment of KRW 3.5 billion from Jungdong Accounting: 1. Mr Kim would "return" the shares allotted to him to Mr Choi; 2. Hoju Australia would allot 50 G Class shares to Mr Kim for his investment of $300,000 paid on 23 January 2017 and Mr Kim would forfeit his ordinary shares; 3. Mr Kim would resign from his directorship of Hoju Australia; 4. the signed escrow documents would be held by Mr Goo, and Mr Goo could lodge them with ASIC at any time without further notice to Mr Kim "to effect the resolution made at the meeting" held on 27 March 2017. 1. It is convenient to refer to this as the defendants' alleged escrow resolution. 2. Clause 16 of the Constitution of Hoju Australia provides that G Class shares confer on the holder the right to participate in any dividends declared and payable by the company on that class of share, the right to repayment of capital paid on the shares in the event that the company is wound up and the right to participate in any distribution of surplus assets or profits in that event. However, G Class shares do not confer on the holder a right to receive notice of, or to attend and vote at any meeting of the company's members. 3. Hoju Australia and Mr Goo eschewed any suggestion that the parties had entered into a separate or additional agreement on 27 March 2017 on the terms of the defendants' alleged escrow resolution. Counsel for Hoju Australia and Mr Goo submitted that any such agreement would not be supported by consideration and would therefore not be legally binding. 4. However, Hoju Australia and Mr Goo submitted that: 1. the terms of the defendants' alleged escrow resolution formed part of the agreement alleged by the defendants and referred at [8] above (or, if the Court were to find that the terms of that alleged agreement were as pleaded by Mr Kim and summarised at [5] above, then the terms of the defendants' alleged escrow resolution formed part of that agreement) because, looking at the parties interactions as a whole, a binding contract was not formed until 27 March 2017, some two months after Mr Kim had paid the $300,000; 2. alternatively, that this was a case of the kind recognised in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, in which the parties had made a binding agreement when Mr Kim paid the $300,000 but they expected to make a further contract in substitution for that binding agreement and they expected the further contract to contain additional terms by consent. 1. In their Defence, Hoju Australia and Mr Goo had pleaded an agreement in the terms summarised at [8] above. They did not plead that the terms of the defendants' alleged escrow resolution were part of that agreement. However, Hoju Australia and Mr Goo relied on the defendants' alleged escrow resolution as conditions attaching to the issue of 50 ordinary shares in Hoju Australia to Mr Kim and the appointment of Mr Kim as sole director and secretary of Hoju Australia on 28 March 2017. Hoju Australia and Mr Goo also pleaded that Mr Kim held the position of sole director and secretary "only for the purposes of facilitating the proposed investment" and on the basis that Mr Kim would resign from those positions if he could not facilitate that investment. The submissions referred to immediately above departed from the defendants' pleadings in that they sought to characterise the terms of the defendants' alleged escrow resolution as part of the same agreement that governed Mr Kim's payment of the $300,000. 2. It is common ground that Mr Kim did not succeed in attracting the proposed investment of KRW 3.5 billion from Jungdong Accounting in Hoju Australia (or any other investment from any third party) and that Mr Kim did not personally invest KRW 2 billion after his payment of AUD$300,000 made on 23 January 2017. It is also common ground that, by no later than the end of May 2017, there had been a "break" in the relationship between Mr Kim and Mr Goo. 3. Forms 484 were lodged with ASIC on 8 and 9 June 2017 notifying the transactions recorded in the escrow documents. ASIC's register was then amended to record that Mr Kim was no longer a director of the company, had ceased to hold 50 ordinary shares in the company, and held 50 G Class shares in the company. Mr Kim contends that this occurred without his consent. 4. It is common ground that, in June 2017, Mr Goo made an offer to pay Mr Kim the sum of $300,000 plus an additional $100,000 to be paid over three years. 5. Mr Kim contends that he accepted Mr Goo's June 2017 offer, and that a binding oral contract was formed upon that acceptance in June 2017 pursuant to which Mr Goo was required to pay him $300,000 immediately and $100,000 in instalments over 36 months. Mr Goo denies that Mr Kim accepted his June 2017 offer. 6. The present position is that, according to ASIC's records, Mr Kim holds 50 G Class shares in Hoju Australia. Mr Choi holds 100 ordinary shares in Hoju Australia and is the sole director of the company. As I have mentioned at the outset of these reasons, Mr Choi holds these shares on behalf of Mr Goo and Mr Goo is the controlling mind of Hoju Australia. In February 2018, 1900 ordinary shares were issued to Junhgwan Kim. That majority shareholder is not a party to these proceedings and there is no suggestion that they are related to the plaintiff, Mr Kim. Mr Goo has not repaid to Mr Kim any part of the $300,000 that Mr Kim paid on 23 January 2017. Claims for relief and issues for determination 1. The primary relief sought by Mr Kim is a declaration that Hoju Australia and Mr Goo (or, alternatively, Mr Goo) have breached the contract that Mr Kim claims to have entered into with them shortly before 23 January 2017 and orders for specific performance of that contract. On the final day of the hearing, Mr Kim elected to pursue his claim for specific performance rather than damages in respect of this alleged breach of contract. The terms of the order sought were formulated by Mr Kim as follows on the final day of the hearing: "1. An order for specific performance of the contract. On the making of an order for such specific performance of the contract: i. The First Defendant and/or the Third Defendant nominate within 7 days of the order being made to the Plaintiff to whom the class G shares are to be transferred ("Transfer"). ii. That the Plaintiff is to take all steps and execute all instruments to cause, the Transfer of the class G shares as nominated by the Third Defendant within 14 days of the order being made. iii. That the First Defendant and/or the Third Defendant to cause the First Defendant's register of members to be amended in accordance with the Transfer, and notice to be lodged with ASIC within 21 days of the order being made. iv. That the First Defendant and/or the Third Defendant pay the sum of $300,000 to the Plaintiff forthwith." 1. If Mr Kim fails in his primary claim for relief, he presses an alternative claim for damages against Hoju Australia and Mr Goo (or, alternatively, Mr Goo) for breach of the contract that he claims to have entered into by accepting Mr Goo's June 2017 offer. 2. At the hearing, Mr Kim abandoned all of his other pleaded claims for relief. Hoju Australia and Mr Goo abandoned a defence of set-off under s 21 of the Civil Procedure Act 2005 (NSW) that they had pleaded in response to Mr Kim's claims for specific performance and damages for breach of contract. 3. The issues raised for determination are: 1. What were the terms of the contract between Mr Kim on the one hand and Mr Goo (or Mr Goo and Hoju Australia) on the other hand pursuant to which Mr Kim paid $300,000 to Hoju Australia? 2. In circumstances where Mr Kim failed to invest KRW 2 billion, failed to attract a third party investment of KRW 3.5 billion and there was a "break" in the relationship between Mr Kim and Mr Goo by the end of May 2017, does the contract require Mr Goo and/or Hoju Australia to repay $300,000 to Mr Kim? If so, should an order for specific performance be made and on what terms? 3. Did Mr Kim and Mr Goo enter into a further contract in June 2017? If so, did Mr Goo breach that contract and is Mr Kim entitled to damages for any such breach? Summary of evidence 1. Mr Kim gave evidence that Mr Goo approached him in about December 2016 and asked whether he would be interested in investing in "my Online Business Hoju Jobs". According to Mr Kim, Mr Goo said: "If you invest $300,000 I will give you 50% of the company's shares and make you the company's sole director. I will also give you 50% of the Korean company's shares and make you a director there too." 1. Mr Kim says that he agreed with this proposal, saying "Okay no problem, that's good", and that further discussions followed in the period leading up to 23 January 2017. Mr Kim gave evidence of a further discussion with Mr Goo shortly before 23 January 2017, at which Ms Sarah Lee (Ms Lee) was also present. Ms Lee works for Mr Goo. According to Mr Kim, Mr Goo and Ms Lee said words to the following effect during his discussion: "Mr Goo: Make a deposit not to me, but to the company, which is evidence that you have invested the money. Mr Goo: I know that you want to invest in the business but if you later want to stop you can just give me the shares back and I will pay you the $300,000 back. Mr Goo: Sarah, we need to prepare a contract. Ms Lee: Okay, but he hasn't invested the money yet, so when you are ready let me know. I will get a lawyer to prepare the contract." 1. I note that there is no reference in Mr Kim's account of this conversation to his being entitled to the return of his $300,000 if the agreement "breaks". In cross-examination, Mr Kim said that this was not discussed in January 2017 and was only discussed at a later time when his relationship with Mr Kim had already broken down. As will become apparent below, the contemporaneous email correspondence points to Mr Kim and Mr Goo having discussed and agreed on the consequence of a "break" in their "partnership" on about 28 May 2017. 2. Mr Goo denies the conversations referred to at [29]-[30] above. He gave evidence that he established the remittance business of Hoju Australia in June 2016 and it began to provide an online remittance service in mid-January 2017. Hoju Korea was established "due to the necessity to have a corresponding company in South Korea running the online remittance service". Mr Kim made various loans to him or to Hoju Australia in the second half of 2016 for the purpose of the offline remittance business. 3. According to Mr Goo, it was in the context of those dealings that he had a discussion with Mr Kim to the following effect on 17 January 2017, just two days before Hoju Australia's online remittance business was to commence operating: "[Mr Goo]: I am due to commence the online business from 19 January 2017. Mr Kim: Congratulations. [Mr Goo]: At present, only the remittance from Australia to South Korea is possible. It is central to the business to be able to secure the Korean Won in advance either in the form of purchase or lending. Mr Kim: I can keep lending the money, if the security can be provided like now. [Mr Goo]: Yes, thank you. Given the nature of the small sum online remittance business, if the bidirectional remittance (Australia to South Korea and vice-versa) is possible, there is no need to have the Korean money lent as the remittance equilibrium of Australia Dollars and Korean Won be maintained. Thus, as the next step of the business development, I am aiming at obtaining the relevant license entitling Hoju Jobs Korea as the small sum overseas remittance business in South Korea. However, this may need a substantial length of time as the required capital of KRW 2,000,000,000 or more is required. Mr Kim: If so, would I be able to form a partnership with you for the online overseas remittance business in return for giving assistance to have Hoju Jobs Korea to be registered as the small sum overseas remittance business in South Korea? [Mr Goo]: Would it be possible for you to invest KRW 2,000,000,000 or 2.4 million Australian Dollars which is the equivalent of KRW 2,000,000,000? Mr Kim: Yes, I will invest KRW 2,000,000,000 as the capital in Hoju Jobs Korea. In consideration of this, please transfer to me 50% of the all the shares in both Korean and Australian Hoju Jobs. [Mr Goo]: 50% may be hard considering the amount of money I have invested to date. I would like to hold at least one (1) more share than you do. I propose 49% for both South Korea and Australia. Mr Kim: That is acceptable. However, I would like to be the managing director for both South Korea and Australia. [Mr Goo]: I am sorry, but I propose a joint directorship either with my wife or the one I designate. Mr Kim: Yes, I will do so. I will visit South Korea in early February and deposit KRW [2,000,000,000] in full. I can now deposit $300,000 to the Hoju Jobs as the partial payment of the total investment, KRW 2,000,000,000 and the rest can be prepared in South Korea and deposit to the Hoju Jobs Korea. [Mr Goo]: Yes, that is well understood. Mr Kim: I am planning to visit South Korea in early February. Please prepare the necessary steps to register me as the managing director of Hoju Jobs Korea in time for my visit to South Korea. [Mr Goo]: Yes, that is well noted. Once the capital in the sum of KRW 2,000,000,000 is verified, I will prepare to have you and my wife registered as the director respectively. Mr Kim: Yes that is well noted. [Mr Goo]: If so, I will proceed with the directorship changes with Minwoo LLP who is a Korean law firm acting for me. Mr Kim: Yes, that is well understood. When I visit South Korea, I will visit Minwoo LLP with your wife to proceed with changes regarding the directorship. I will deposit $300,000 to the account held by Hoju Jobs Australia. [Mr Goo]: OK. However, I will regard your payment of $300,000 as a holding deposit paid to purchase 49% of shares in both Hoju Jobs Australia and Hoju Jobs Korea at the sales price of KRW 2,000,000,000 (about 2.4 million). There is no doubt that I will refund the deposit of $300,000 to you if you fail to pay KRW [2,000,000,000] in full. Mr Kim: Yes that is well noted." 1. Mr Kim denies that this conversation took place. He denies that Hoju Australia and Hoju Korea were worth KRW 2 billion and says that he did not have that kind of money in any event. 2. It is common ground that, on 23 January 2017, Mr Kim paid $300,000 to Hoju Australia by bank cheque. 3. Mr Kim said that, in the discussions prior to this payment, he understood that Mr Goo was representing Hoju Australia as well as himself and that any agreement reached was between himself, Mr Goo and Hoju Australia. 4. Mr Goo gave evidence that he did not consider the $300,000 payment to be an investment by Mr Kim in Hoju Australia. Rather, Mr Goo thought that this was a deposit that was to be refunded to Mr Kim if he failed to invest the whole of the KRW 2 billion that Mr Goo says he had agreed with Mr Kim as the price for a 49% stake in both Hoju Australia and Hoju Korea. Mr Goo says that, because the $300,000 was paid on this basis, he did not issue any shares to Mr Kim in return for the payment, and Mr Kim did not request that any shares be issued to him at the time of the payment. Mr Goo gave evidence that he had a conversation to the following effect with Mr Kim on or about the same date that the payment was made: "Mr Kim: As agreed, I have deposited $300,000 to Hoju Jobs. [Mr Goo]: Thank you. When will you pay the balance of the agreed investment as the sales price (KRW 2,000,000,000) for 49% of shares in both Hoju Jobs Australia and Hoju Jobs Korea? Mr Kim: Yes, I will leave for South Korea on about 8 February and will pay the balance of the agreed investment on or before the end of February 2017 during my stay in Korea." 1. Mr Kim denies that this conversation took place and denies that he ever said that he would pay KRW 2 billion during his stay in South Korea. Mr Kim gave evidence that: "I don't have that kind of money". According to Mr Kim, he had a discussion with Mr Goo at some time between 23 January 2017 on 8 February 2017, which included the following exchange: "[Mr Kim]: I have invested in the company now, we should make a contract. Mr Goo: Don't worry, we will do it when you get back from Korea." 1. Mr Goo denies that any such conversation took place. 2. As I have already mentioned at [8] above, Mr Goo's defence filed in these proceedings denied that he entered into a contract with Mr Kim on 23 January 2017 on the terms pleaded by Mr Kim and pleaded that: "… the plaintiff [Mr Kim] and the third defendant [Mr Goo] agreed that: (i) the plaintiff would invest KRW 2,000,000,000 in Hoju Jobs Korea; (ii) the plaintiff would pay AU$300,000 into the first defendant's [Hoju Australia's] bank account as a deposit for his purchase of 49 ordinary shares in each of the first defendant and Hoju Jobs Korea; and (iii) the third defendant [Mr Goo] would refund the AU$300,000 paid by the plaintiff [Mr Kim] in the event that the plaintiff failed to invest the full KRW 2,000,000,000 in Hoju Jobs Korea." 1. In cross-examination, Mr Goo denied that paragraphs (ii) and (iii) above were true and claimed that his legal representatives had not pleaded his defence accurately. When asked about his affidavit verifying his defence, which was filed as recently as 18 December 2020, Mr Goo said that he had just submitted the defence without reviewing it. Mr Goo said that (ii) was not true at all. Although he initially said that (iii) was true, he later said that there was a "condition precedent" attached to (iii). He was not asked in re-examination what this "condition precedent" was, and there was no application to amend Mr Goo's defence. 2. Mr Kim travelled to South Korea on 8 February 2017 and returned to Australia on about 1 March 2017. Mr Goo paid for Mr Kim's airfare. According to Mr Goo, he had some discussions with Mr Kim during this period concerning the transfer of shares in Hoju Korea to Mr Kim, but the share transfer did not proceed at that time because Mr Kim had not paid the KRW 2 billion. Mr Kim told Mr Goo that he would need more time to make this payment, but Mr Goo and Mr Kim agreed during a telephone conversation in late February 2017 that Mr Kim and Mr Goo's wife would be registered as the directors of Hoju Korea in the meantime. Mr Kim denies that these discussions about an investment of KRW 2 billion occurred. 3. It is common ground that Mr Kim did not pay or invest KRW 2 billion in Hoju Korea during his trip, or at any subsequent time. 4. Mr Kim gave evidence that he had a conversation with Mr Goo shortly after his return to Australia in early March 2017 that included the following exchange: "[Mr Kim]: Let's finish the contract now. Mr Goo: Don't worry about it. I will make you a 50% shareholder now and director. [Mr Kim]: Okay no problems. I did everything you asked of me in Korea. I changed the directorship with your sister, and shareholding as you asked with an accountant. Mr Goo: Good, thank you. [Mr Kim]: Actually, the accountants are interested in online money transfer businesses so they said they might come to Australia to see how we work. Mr Goo: That sounds good!" 1. Mr Goo gave a different version of the conversations between him and Mr Kim after Mr Kim's return to Australia. According to Mr Goo, Mr Kim told him that he had attracted Jungdong Accounting to invest KRW 3.5 billion in return for 50% of the shares in both Hoju Australia and Hoju Korea, and suggested that Mr Kim's own proposed investment of KRW 2 billion could be discussed further after the investment from Jungdong Accounting was finalised. Mr Kim asked Mr Goo to recognise his contribution to the online remittance business by attracting Jungdong Accounting's investment, and Mr Goo agreed to consider this further after that investment was confirmed. 2. Mr Kim denies that these conversations took place. He gave evidence that, whilst Jungdong Accounting had expressed some interest and wanted to visit Australia to see how Hoju Australia operated, he had never discussed an investment of any particular value and they did not agree or commit to invest. 3. It is common ground that representatives of Jungdong Accounting did visit Australia. Mr Kim gave evidence that they stayed at his home during their visit to Australia. Mr Kim introduced them to Mr Goo at a meeting at Mr Goo's office on 24 March 2017. Mr Goo deposed that, after this meeting, he began to rely on Mr Kim's representation that Jungdong Accounting would invest KRW 3.5 billion. 4. Mr Goo also gave evidence that he had a conversation to the following effect with Mr Kim on 27 March 2017: "Mr Kim: As you heard during our meeting with Korean Investors on 24 March 2017, Jungdong wishes to complete this proposed investment of KRW 3,500,000,000 (about $4.2 million) before the end of April 2017. Jungdong is a reputable CPA accounting firm and it made this investment decision because of my close relationship with a principal of Jungdong Accounting. Jungdong decided to invest 4.2 million to Hoju Jobs because they think that I am sole director who holds 50% shares of Hoju Jobs so that I can protect the Korean Investors from misusing their investments. I need to show them this protection before attracting the proposed investment. [Mr Goo]: Ok and I allow you to be a sole director who holds 50% shares of Hoju Jobs Australia temporarily until the end of April 2017. You shall return 50% shares to me or any one nominated by me by resigning from a director if you fail to attract the investment from Jungdong by the end of April 2017. In this case, I will refund the deposit of $300,000 paid by you within 3 months. Mr Kim: Yes, I agree with your conditions. [Mr Goo]: I will contact Mr. Choi who holds 100% of shares as the sole director of Hoju Jobs on my behalf and request him to transfer 50% of shares and his directorship to you tomorrow." 1. Mr Goo gave evidence that he went to see Mr Yoo, together with Mr Kim and Mr Choi, on 27 March 2017. Mr Goo deposed that he gave instructions to Mr Yoo at the meeting (and in the presence of Mr Kim and Mr Choi) to: 1. prepare documents to appoint Mr Kim as sole director of Hoju Australia and the holder of 50 per cent of the shares in Hoju Australia subject to the condition that Mr Kim shall return his shares to Mr Choi if he fails to attract the proposed investment of KRW 3.5 billion before the end of April 2017; and 2. prepare documents that enable Mr Goo to "get the shares back from Mr Kim and remove him as a director" if Mr Kim failed to attract that investment by the end of April 2017. 1. According to Mr Goo, Mr Kim agreed with both of these instructions, subject to the proviso that Mr Kim asked for documents to be prepared to "secure the deposit of $300,000 held by Hoju Jobs Australia until Mr Goo will refund to me if I fail to attract the proposed investment from Korea". To achieve this, Mr Kim proposed that Hoju Australia "allows me the preference shares until I receive $300,000 back from Mr Goo". Mr Yoo then referred to the issue of G-Class shares as "preference shares" and asked Mr Goo whether he agreed with Mr Kim's proposal. Mr Goo replied: "I don't know what the G-Class Share is. I am fine as long as I can get my shares back from Mr Kim and I can control the business as I do now if Mr Kim fails to attract the proposed investment until the end of April 2017." 1. Mr Goo gave evidence that he returned to see Mr Yoo together with Mr Kim on the following day (28 March 2017), and that Mr Kim signed the escrow documents on that occasion. In cross-examination, Mr Goo acknowledged that there was some discussion towards the end of the meeting on that day about the use of the escrow documents in the event that Mr Kim committed a crime or caused Hoju Australia to commit a crime. However, Mr Goo denied that he told Mr Kim he would only cause the shares to be transferred back to Mr Choi if Mr Kim committed a crime or fraud. 2. Mr Choi gave no evidence of any discussion about circumstances in which Mr Goo may "get [the] shares back" from Mr Kim. 3. Mr Yoo gave very general evidence in chief about his understanding of the purpose for which the escrow documents were signed at or following the meeting, which said took place at his office on 27 March 2017. When asked what he could recall being discussed at the meeting, Mr Yoo answered: "The initial meeting I had with those people were discussing issues about setting up a company, having the structure where you have a Class G against ordinary shares. And requests for – to prepare some documents in regards to that matter." 1. Mr Yoo described the documents that he was asked to prepare as "escrow documents which says about the, the minutes and also the transfer of shares from ordinary to G Class shares". When asked what was the purpose of the escrow documents, Mr Yoo answered: "Ther [sic] purpose was that the two parties were engaged in the business and they were getting into a venture of some kind involving oversea[s] investments. I didn't know what particular involved in detail so there were an agreement where one party was promised to deliver something at a certain date and if that wasn't let the escrow, escrow documents has to be executed. And that was the main purpose." 1. In cross-examination, Mr Yoo agreed with the proposition that, on 28 March 2017, Mr Goo told Mr Kim in his presence that the escrow documents would only be lodged if Mr Kim committed a crime or caused criminal liability to Hoju Australia. 2. Mr Kim denied that the conversation referred to at [48] above occurred. He gave evidence to the effect that he signed the escrow documents after being told by Mr Goo and Mr Yoo that the documents would only be used if Mr Kim committed a crime. According to Mr Kim, this conversation occurred during a meeting at Mr Yoo's office attended by Mr Kim, Mr Goo, Mr Choi and Mr Yoo, on the same day that the documents were signed (that is, 28 March 2017). 3. Mr Goo denies saying that the escrow documents would only be lodged if Mr Kim committed a crime or fraud or caused Hoju Australia to commit a crime. 4. It is not necessary to resolve the discrepancy between the evidence of Mr Kim on the one hand, and the evidence of Mr Goo and Mr Yoo on the other hand, about whether the escrow documents were signed on the same occasion on which Messrs Kim, Goo and Choi met at the offices of Mr Yoo and had the discussions referred to above, or on the day after that meeting. 5. Minutes of a meeting of directors of Hoju Australia dated 28 March 2017 record that, on that day: 1. four ordinary shares in Hoju Australia were allotted to Mr Choi (in addition to the one ordinary share that he already held); 2. five ordinary shares in Hoju Australia were allotted to Mr Kim; 3. Mr Kim was appointed as a director and secretary of Hoju Australia, and Mr Choi resigned from those positions. 1. Notification of the changes to the company's office holders and the issue of the shares to Mr Kim and Mr Choi was lodged with ASIC on 29 March 2017. ASIC was notified that 50 ordinary shares had been allotted to Mr Kim and 49 ordinary shares had been allotted to Mr Choi. The reason for this discrepancy between the notification to ASIC and the number of shares referred to in the minutes of meeting of Hoju Australia and in the application for shares signed by Mr Kim was not explained in the evidence. Neither party suggested that anything turned on this discrepancy. 2. There is no evidence of any resolution having been passed by the shareholders or director of Hoju Australia in the terms of the defendants' alleged escrow resolution referred to at [14] above. 3. It is common ground that Sarah, an employee of Hoju Jobs, sent an email to a solicitor, Sarah Hamilton, on 29 March 2017 setting out the terms of the arrangements agreed as at that date. The email stated, relevantly: "As of today, all share and directorship duties have been transferred from Mr Choi to Mr Kim. … Mr Kim has invested money into the business already … Mr Kim has invested $300,000 AUD into the Hoju Jobs Pty Ltd Anz bank account on 23rd of January 2017. Here are the conditions Mr Goo and Mr Kim have agreed upon: - 50 shares allocated to Mr Kim - 50 shares allocated to Mr Goo (shares will be kept under his mother's name) - Mr Kim is the director, but Mr Goo has all decision making power including the power to dissolve Mr Kim's position as director at any time that Mr Kim acts with the intention of deliberately causing issues for the company (if you need detailed list, I can ask for it) or commits any criminal offences to the detriment of the company e.g. fraud, misrepresentation. - Mr Kim will be paid wages of net $5000 per month until the business reaches a break even point. The exact date of this cannot be determined. However from the break even point, any profits from the business will be divided equally between the Mr Goo and Mr Kim. The above was the original agreement but Mr Goo has just informed me that as of today Mr Kim has 50 and Mr Choi has 50. Mr Goo was unable to put his mother's name as owner of the shares … Mr Goo also operates an offline business. Mr Goo is entitled to all profits from that business. The investment from Mr Kim to Hoju Jobs was deposited to the business bank account. Any expenses both offline and online business incurs will be paid from that bank account with few exceptions. … There are potential investors from South Korea who plan to invest approx. 3,000,000,000 KRW (equivalent to $3.5M AUD). This new business will be commencing in July when new legislation regarding money transfers out of South Korea will come into effect. Mr Kim's duty will be to ensure that the investors do in fact invest that money and the new service is carried out. At the moment he has 3 potential investors. In the case that the investors do not show any more interest in the business, Mr Goo will be acquiring his own investors from the US. If this occurs, Mr Kim agrees to transfer part of his shares to that investor, thus what he takes from the business profit will also reduce, in proportion to the units of shares transferred. Mr Goo will still retain 50 percent. In the case of a partnership break, with regard to initial investment of $300,000 - This amount will be returned to Mr Kim within 3 months of the agreed date - Upon the transfer of the full amount, Mr Kim agrees to forfeit/transfer all this [sic] remaining shares to Mr Goo. Please let me know if you need any more information." 1. Mr Goo gave evidence that Sarah sent this email on his instructions and after the content had been agreed between himself and Mr Kim. That evidence was not challenged or disputed by Mr Kim. 2. Mr Kim failed to secure the investment from Jungdong Accounting. 3. I note Mr Goo's solicitors sent a letter to Mr Kim on 10 June 2017 that stated that the G Class shares were issued as security for a loan of $300,000 made by Mr Kim to Hoju Australia as part of a transaction involving $370,000. In their respective affidavits, Mr Kim and Mr Goo deposed that Mr Kim made various payments to Hoju Korea customers in the period from late 2016 to early 2017 to alleviate a liquidity crisis that was the being experienced by Hoju Korea and Mr Goo in South Korea. For each such payment made by Mr Kim in South Korea, Mr Goo paid the equivalent Australian dollar sum to Mr Kim in Australia as security for repayment of the KRW amount to Mr Kim in South Korea. The Australian dollar sums paid as security amounted to $370,000 in total. Neither Mr Kim nor Mr Goo referred in their affidavits to any loan of $300,000 made by Mr Kim to Hoju Australia on 17 January 2017, whether funded by part of the $370,000 security payments or not. The statement in the 10 June 2017 letter is unsupported by any other evidence in these proceedings and is contrary to Mr Goo's evidence referred to at [50] above. 4. Returning to the chronology, it is common ground that the relationship between Mr Kim and Mr Goo had broken down by the end of May 2017. 5. According to Mr Kim, this occurred when Mr Kim challenged Mr Goo on 30 May 2017 about payments totalling $10,000 out of Hoju Australia's bank account. Mr Kim says that the conversation concluded with Mr Goo telling him: "If you are going to act like this then get out of my company. I will give you your $300,000 back plus another $100,000 within the year." 6. Mr Goo denies that this conversation occurred. He gave evidence of a different cause of the breakdown in the relationship. According to Mr Goo, he discovered on about 30 May 2017 that Mr Kim had transferred all of the shares in Hoju Korea to himself without Mr Goo's knowledge or consent. He raised this with Mr Kim during a conversation on 31 May 2017 and also asked Mr Kim about the investment from Jungong Accounting. Mr Kim told him that the investment "will come through this week" and Mr Goo replied: "Yes, I will then be waiting until this week. If you fail to attract the investment from Jungdong by this week, I will remove you from a director and get my shares back from you as agreed." Mr Goo says that, when the investment had not come through by Friday, 2 June 2017, he instructed Mr Yoo to "lodge the escrow documents". 7. Mr Kim gave evidence that Mr Goo told him on 2 June 2017 that he had instructed Mr Yoo to "lodge the escrow documents". Mr Kim protested that he had not committed any crime. It is unnecessary to go into the detail of the conflicting evidence of Mr Kim, Mr Goo and Mr Yoo concerning discussions about the use of the escrow documents. It is sufficient to note that Forms 484 were signed by Mr Choi and lodged with ASIC on 8 June 2017 (notifying the transfer of Mr Kim's 50 ordinary shares in Hoju Australia to Mr Choi and the issue of 50 G Class shares to Mr Kim) and 9 June 2017 (notifying the cessation of Mr Kim as a director and secretary of Hoju Australia). As I have mentioned earlier in these reasons, Mr Kim maintains that he did not agree to the escrow documents being deployed and ASIC being notified of these changes. Mr Goo and Mr Yoo claim that Mr Kim did agree. Mr Choi ultimately agreed that Mr Kim did not tell him that he consented to the ASIC notifications before Mr Choi signed the Forms 484, although Mr Choi assumed that Mr Kim and Mr Goo were in agreement about this. Mr Kim has not sought any relief in these proceedings under s 1322(4)(b) of the Corporations Act 2001 (Cth) in respect of the registration of those documents. 8. Mr Goo gave evidence that, on 13 June 2017, he proposed to Mr Kim that "I pay $400,000 including $300,000 held by Hoju Jobs Australia if you transfer me all the shares to me. I will refund your deposit of $300,000 to you now. However, the extra $100,000 can only be paid by instalment over the term of three (3) years." According to Mr Goo, Mr Kim did not accept the offer. Instead, Mr Kim replied: "I will consider your offer and let you know my decision soon." Mr Goo maintains that Mr Kim never accepted the offer. 9. Mr Kim claims that he did subsequently accept the offer. He gave evidence that, at some time in June 2017, he had a conversation with Mr Goo in which he told Mr Goo that he was leaving Hoju Australia and said: "You can keep my shares. But I want my money back. You have said that you will pay me my $300,000 plus $100,000 compensation." According to Mr Kim, Mr Goo replied: "Okay I will pay you the $300,000. I cannot give you the $100,000 straight away but I can pay you back in a year." Mr Kim says that he replied: "Okay". 10. When he first commenced these proceedings, Mr Kim sought declarations that the transfer of his 50 ordinary shares in Hoju Australia to Mr Choi and the issue of 50 G Class shares to Mr Kim were void, orders for the rectification of Hoju Australia's register accordingly and notifications to ASIC of the declaration and orders, and an order for repayment of his $300,000 investment. Mr Kim did not plead that he had entered into an agreement with Mr Goo under which he was entitled to be paid $400,000. Mr Kim was cross-examined about an affidavit that he affirmed on 19 October 2017, that he did not read as part of his evidence in chief at the hearing. In that affidavit, Mr Kim complained about his shares having been converted to G Class shares without his $300,000 investment being returned to him, but made no reference to having accepted any offer made by Mr Goo to pay him $400,000. 11. There is an ongoing dispute between Mr Goo and Mr Kim about the ownership of shares in Hoju Jobs Korea and Mr Kim's dealings with funds in a bank account of Hoju Jobs Korea that Mr Kim closed on 19 June 2017. These matters are the subject of investigations and proceedings in South Korea and are not directly relevant to issues raised by the parties' pleadings in respect of the claims that were pressed at the final hearing. Factual findings and determination of issues 1. Mr Kim and Mr Goo gave different evidence concerning the conversations between them in 2017. I reject the submission made on behalf of Mr Kim that I should generally accept his evidence wherever it conflicts with the evidence of other witnesses. In my opinion, it would be erroneously simplistic to adopt that approach to assessing the competing evidence of Mr Kim and Mr Goo about conversations that occurred some three years ago in circumstances where they have been locked in dispute for almost the whole of the time since those conversations took place. 2. I consider that, in assessing the evidence of both Mr Kim and Mr Goo, it is necessary to have regard to the well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319: "… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." 1. I have also taken into account that, where a particular aspect of the evidence given by Mr Kim or Mr Goo is contrary to that party's interests in these proceedings, the evidence is somewhat more likely to be reliable notwithstanding the passage of time because it is less likely that the party's memory of the relevant conversation or event has been affected by conscious perceptions of self-interest or is a reconstruction based on conscious consideration of what could or should have been said or done. 2. For the purpose of making findings about what was or was not agreed orally between the parties, I have therefore weighed the evidence of each of Mr Kim and Mr Goo about their discussions against the objective surrounding facts that are either undisputed or established by contemporaneous documents, and the inherent probabilities: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at [15]; Fox v Percy (2003) 214 CLR 118 at 129; [2003] HCA 22; Re Hillsea Pty Ltd [2019] NSWSC 1152 at [16]. 3. This approach is consistent with Sackar J's summary of the principles to be applied when ascertaining the existence and terms of an oral contract in King v Adams [2016] NSWSC 1798 at [65]-[69], which I note has subsequently been cited with approval by Ward CJ in Eq in Moore v Aubusson [2020] NSWSC 1466 at [332] and which I respectfully adopt: "65. Ascertaining the existence and terms of an oral contract is a question of fact: Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at [90] (per Campbell JA, Allsop P and Basten JA agreeing); Gardiner v Grigg (1938) 38 SR (NSW) 524 at 532 (per Jordan CJ, Nicholas J agreeing); Maggs v Marsh [2006] EWCA Civ 1058 at [26] (per Smith LJ, Moses and Hallett LJJ agreeing). 66. Consideration of surrounding circumstances and post contractual conduct is permissible when the existence or terms of an oral contract are in issue: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [20] (per Spigelman CJ, Beazley and McColl JJA); Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 at [47]; King v Benecke [2013] NSWSC 568 at [186]. 67. Spigelman CJ explained in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]: 'The subject matter and the concomitant terms of the [oral] contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?' 68. In Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, Heydon JA (as his Honour then was) observed: '…a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words … The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement … The conduct of the parties, however, must be capable of proving all the essential elements of an express contract … Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances … Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.' 69. In Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, Allsop J (as he then was) similarly explained: '[Contracts] can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so … Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound/ in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract.' (citations omitted)" 1. As counsel for Mr Goo and Hoju Australia submitted, the Court of Appeal has recently confirmed that it is permissible to have regard to post-contractual material if it is relevant to determining the terms of a contract that is not wholly in writing: Lawrence v Ciantar [2020] NSWCA 89 at [114] (Bathurst CJ, Meagher and Gleeson JJA agreeing). 2. For the reasons explained below, I find that the oral contract between Mr Goo and Mr Kim was formed over a period of time between 23 January 2017 (or shortly before that date) and 29 March 2017, in the context of the changing circumstances in which an investment of KRW 2 billion promised by Mr Kim in January 2017 did not materialise and Mr Kim began instead to put forward proposed third party investors. As at 29 March 2017, the terms of the contract were: 1. Mr Kim would invest KRW 2 billion in return for 49 ordinary shares in each of Hoju Australia and Hoju Korea; 2. Mr Kim's payment of $300,000 to Hoju Australia on 23 January 2017 was a deposit for that promised investment of KRW 2 billion; 3. Mr Goo would refund Mr Kim's payment of $300,000 in the event that Mr Kim's promised investment of KRW 2 billion did not proceed; 4. Mr Kim held the 50 ordinary shares in Hoju Australia issued to him on 28 March 2017 on the condition that they would be transferred to Mr Choi (to be held on behalf of Mr Goo) if Mr Kim failed to attract the proposed third party investment of KRW 3.5 billion before the end of April 2017; and 5. Mr Goo was entitled to give effect to the escrow documents in order to cause those 50 ordinary shares to be transferred to Mr Choi if: 1. Mr Kim failed to attract the proposed KRW 3.5 billion investment; or 2. Mr Kim committed a crime or fraud, 3. provided that Mr Kim would be issued with 50 G Class shares in those circumstances as security for the return of his $300,000 payment made on 23 January 2017 (in circumstances where Mr Kim's promised KRW 2 billion investment had not materialised). 1. This is a case of the kind referred to by Sackar J in King v Adams, supra, at [68] (citing Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153) in which new terms were added to the contract on or about 28 March 2017 in the context of changing circumstances in the commercial relationship between Mr Goo and Mr Kim (namely Mr Kim's ongoing failure to invest the KRW 2 billion that I find he promised to invest in January 2017, and the potential third party investments subsequently introduced by Mr Kim). 2. I accept the submission made on behalf of Mr Goo and Hoju Australia that, in this case, the parties reached the point of having fully formed their contract on 29 March 2017. In my view, this is the proper analysis of the parties' interactions viewed objectively as whole and in the context of the changing circumstances. I note that it also aligns with the objective fact that the parties took the first steps towards consolidating a record of all of the aspects of their agreement on 29 March 2017. 3. I also find that the contract did not include a term that any G Class shares issued to Mr Kim after 29 March 2017 would be issued in consideration for his $300,000 payment made on 23 January 2017 so that Mr Kim would no longer be entitled to a refund of the $300,000 once any G Class shares were issued. To the extent that it was submitted on behalf of Mr Goo that the contract only entitled Mr Kim to a refund of his $300,000 in exchange for the forfeiture of the 50 ordinary shares issued to him on 28 March 2017, and that the refund is no longer available in circumstances where Mr Kim now only holds G Class shares in Hoju Australia, I reject that submission. 4. There is no evidence that Mr Kim ever asked about or requested that shares in Hoju Australia be issued to him after he paid the $300,000. Mr Kim's evidence is that he merely asked Mr Goo about entering into a contract after making this payment. It is inherently improbable that Mr Kim paid $300,000 in consideration for a promise of 50 ordinary shares in Hoju Australia (and a 50 per cent shareholding in Hoju Korea) and then took no steps towards having shares in Hoju Australia issued to him until the end of March 2017. This would have been inconsistent with their previous business dealings which were undocumented but in which Mr Kim did take security in Australia for the repayment of money that he paid in KRW in South Korea on behalf of Hoju Korea at Mr Goo's request. 5. In Mr Kim's account of his conversation with Mr Goo shortly before he made the $300,000 payment, Mr Goo referred to the payment as a deposit: see [30]. That is consistent with Mr Goo's defence that the $300,000 was merely a deposit for a proposed investment by Mr Kim of KRW 2 billion in that, if made, would entitle Mr Kim to shares in Hoju Australia and Hoju Korea. 6. Mr Goo was not challenged in cross-examination about his evidence that he required a capital investment of KRW 2 billion into Hoju Korea in order to obtain the relevant licence. That is an objective matter that supports Mr Goo's claim that $300,000 paid on 23 January 2017 was a deposit for a larger promised investment of KRW 2 billion. Hoju Australia and Hoju Korea were newly established businesses and it is possible that they were not worth KRW 2 billion as at January 2017, as Mr Kim says. There is no evidence of the value of the businesses at that time. However, the fact that the business may have been worth less (or even considerably less) than KRW 2 billion does not detract from the probability of Mr Kim having promised an investment of that sum in circumstances where Mr Goo's unchallenged evidence establishes that this sum was required in order to commence Hoju Korea's online remittance business. 7. I note Mr Kim's evidence that he did not have KRW 2 billion available to invest. However, it does not follow that he did not promise an investment of that amount. Rather, Mr Kim's inability to make the investment himself explains why his efforts appear to have been directed to introducing third party investors with the necessary funds. I reject Mr Kim's evidence that sought to downplay these efforts as nothing more than responding to some interest expressed by Jungdong Accounting. The representatives from Jungdong Accounting stayed in Mr Kim's home when they visited Australia in late March 2017. The 29 March 2017 email on which Mr Kim relied was sent within a few days of their visit and referred to potential investors from South Korea who planned to invest approximately KRW 3 billion. I find that Mr Kim was actively seeking to introduce an investment of this magnitude from Jungdong Accounting and/or other potential investors identified by Mr Kim as referred to in the 29 March 2017 email, and that he told Mr Goo about these potential investors and introduced him to Jungdong Accounting in order to keep alive the possibility of Mr Kim being issued with shares in Hoju Australia and Hoju Korea. The importance to Mr Kim of having shares issued to him rather than simply having his $300,000 returned to him is demonstrated by the fact that, until at least November 2017, the principal relief sought by Mr Kim in these proceedings was the re-transfer of 50 ordinary shares in Hoju Australia to him and the restoration of his directorship of Hoju Australia. 8. Another objective matter that supports a finding that Mr Kim had promised a KRW 2 billion investment in January 2017 is that Mr Goo paid for Mr Kim's travel to South Korea in February 2017. Mr Goo says that the purpose of the trip was for Mr Kim to deposit the KRW 2 billion with Hoju Korea. It is inherently unlikely that Mr Goo would have funded this trip if Mr Kim's only promise had been to invest the $300,000 that he had already paid, and if Mr Kim had not told Mr Goo that he would invest the capital that Hoju Korea required to obtain the licence necessary to establish its online business. 9. I reject Mr Goo's evidence given in cross-examination that the second and third elements of the agreement pleaded in his defence filed on 18 December 2020 were a mistake on the part of his legal representatives and are inaccurate: see [40]-[41] above. Those second and third elements are entirely consistent with Mr Goo's affidavit evidence referred to at [33] and [37] above. Mr Goo affirmed an affidavit containing that evidence on 24 June 2019, but he required an interpreter and the affidavit was not accompanied by an interpreter's affidavit as required by r 36.2 of the Uniform Civil Procedure Rules 2005 (NSW). I did not permit that affidavit to be read at the hearing, but Mr Goo was subsequently permitted to read an affidavit on the same terms that he affirmed on 2 February 2021 after it was sight translated to him by an accredited interpreter who made the affidavit required by r 36.2. Mr Goo's assertion in cross-examination that his agreement with Mr Kim did not include a term that he would refund the $300,000 to Mr Kim if the KRW 2 billion investment was not made, just one day after affirming an affidavit translated to him that contained statements to that very effect, is not credible. 10. It seems to me that the third element is also consistent with the description in the 29 March 2017 email about what was to happen in the event of a "partnership break". This email was sent on the instructions of Mr Goo and with the agreement of Mr Kim: see [62]-[63] above. 11. For the reasons explained at [84]-[90] above, I reject Mr Kim's evidence referred to at [29]-[30], [34] and [38] above, accept Mr Goo's evidence referred to at [33], [37] and [39] above and reject Mr Goo's evidence referred to at [41] above. In relation to the conversations after Mr Kim's return to Australia in early March 2017, I reject Mr Kim's evidence referred to at [44] above and accept Mr Goo's evidence referred to at [45] above. 12. The objective fact of the timing of the issue of shares in Hoju Australia to Mr Kim two months after he made the $300,000 payment and just days after the visit from the Jungdong Accounting representatives, considered in the absence of any evidence that Mr Kim had asked for shares to be issued to him at any time between making the $300,000 payment on 23 January 2017 and 28 March 2017, is consistent with Mr Goo's evidence referred to at [49]-[50] that Mr Kim's shares were required to be re-transferred to Mr Choi if Mr Kim failed to attract the proposed investment. This aspect of Mr Goo's evidence is also substantially consistent with the consequences of Mr Kim failing to attract the KRW 3.5 billion investment, set out in the 29 March 2017 email referred to at [62]-[63] above, although the email contemplates that that the shares may be transferred directly from Mr Kim to a different third party investor introduced by Mr Goo. I therefore accept Mr Goo's evidence referred to at [49]-[50] and find that the 50 ordinary shares in Hoju Australia were issued to Mr Kim on 28 March 2017 on the condition that they would be transferred to Mr Choi in the event that Mr Kim failed to attract the proposed investment of KRW 3.5 billion before the end of April 2017. 13. Mr Goo's evidence referred to at [50] above is contrary to his interests in these proceedings in resisting an order for payment of $300,000 to Mr Kim. According to that evidence and the "partnership break" term referred to in the 29 March 2017 email referred to at [62] above, the requirement to transfer the 50 ordinary shares to Mr Choi (or "return" those shares to Mr Goo) if Mr Kim failed to attract the third party investment did not alter or diminish his right to have his $300,000 payment refunded to him if he did not personally invest KRW 2 billion promised in January 2017. Mr Kim's right to the refund of his $300,000 payment in those circumstances was pleaded in Mr Goo's defence. 14. The issue of G Class shares was not in substitution for the repayment of the $300,000 but rather to provide Mr Kim with some security for Mr Goo's obligation to repay that sum, in circumstances where Mr Goo was in a position to deploy the escrow documents to cause Mr Kim's ordinary shares to be transferred to Mr Choi. The statement in the 10 June 2017 letter referred to at [65] above is of insufficient weight to detract from this conclusion based on the evidence referred to immediately above that the G Class shares were the agreed security for Mr Kim's right to the refund of the $300,000 payment that he had made on 23 January 2017. 15. As I have already noted at [61] above and as counsel for Mr Goo and Hoju Australia accepted, there is no evidence of a resolution in the terms pleaded by the defendants that the issue of G Class shares would be consideration for Mr Kim's $300,000 payment. Nor is there any other evidence that the oral contract included a term to that effect. The 29 March 2017 email is inconsistent with any such term having been agreed. It is inherently unlikely that Mr Kim and Mr Goo agreed to this significant qualification to Mr Kim's right to have his $300,000 refunded, yet omitted it from the account given to "Sarah" for the purpose of her instructing the solicitor in relation to the agreement. During the hearing, Mr Kim acknowledged that he must forfeit or transfer the G-Class shares upon repayment of the $300,000. 16. On the basis of the evidence referred to at [49]-[57] above, I find that the escrow documents were signed on the basis that they could be used by Mr Goo: 1. if Mr Kim failed to attract the proposed KRW 3.5 billion investment (in circumstances where Mr Kim's promised investment of KRW 2 billion had not proceeded); or 2. if Mr Kim committed a criminal offence or fraud. 1. The defendants did not submit that Mr Kim committed any crime or fraud prior to the lodgement of the escrow documents. 2. Having regard to my finding at [96(1)] above and in circumstances where it is common ground that Mr Kim did not procure the KRW 3.5 billion investment from third parties, the issues raised by the pleadings do not require any finding to be made about whether Mr Kim consented to the subsequent lodgement of the Forms 484 with ASIC on 8 and 9 June 2017. As a matter of procedural fairness, the suggestion made by counsel for Mr Goo and Mr Kim for the first time in closing submissions that Mr Kim consented to the lodgement of the Forms 484 on 8 or 9 June 2017 and that this consent varied the contract formed on 28 March 2017 by excluding Mr Kim's right to repayment of the $300,000, should not be entertained. In any event, it is difficult to see how any consent to lodgement of the Forms 484, in circumstances where (as I have found) the contract permitted those Forms to be lodged if Mr Kim failed to attract the third party investment, would provide a basis for inferring an agreement to vary the contract so as to exclude Mr Kim's right to the refund of the $300,000 on the terms agreed as at 29 March 2017. 3. Having abandoned his set-off defence, Mr Goo's defence of Mr Kim's claim for specific performance, including the repayment of the $300,000, rested on Mr Goo's contention that their agreement included a term to the effect that any G Class shares issued would be in consideration for his $300,000 payment made on 23 January 2017, with the result that Mr Kim lost the entitlement to a refund of the $300,000 payment when the G Class Shares were issued in June 2017. 4. For the reasons already explained, I accept the submission made on behalf of Mr Kim that the evidence does not support the contention that the parties discussed or agreed at any time that any G Class shares issued to Mr Kim would stand as consideration for his $300,000 payment. 5. For those reasons, I have concluded that the contract entitles Mr Kim to repayment of his $300,000 in circumstances where he failed to invest the KRW 2 billion promised in January 2017 and he forfeited the 50 ordinary shares issued to him on 28 March 2017 by reason of his failure to secure the KRW 3.5 billion investment from a third party. As I have already mentioned, Mr Kim acknowledges that he must relinquish the G Class shares in Hoju Australia on repayment of his $300,000. 6. The submissions made on behalf of Mr Goo implicitly accepted that the order for specific performance should be made in Mr Kim's favour in the event that the contract did not include a term to the effect that the G Class shares would be issued in consideration for Mr Kim's $300,000 payment. 7. Counsel for Mr Goo and Hoju Australia did not raise any objection to the terms of the order for specific performance sought by Mr Kim as set out at [25] above, but did raise an issue about whether the order should be made against Mr Goo and Hoju Australia or against Mr Goo alone. Counsel did not submit that Hoju Australia was not a party to the contract. On the contrary, up until the final day of the hearing when the set-off defences were abandoned, counsel for Mr Goo and Hoju Australia had positively asserted that Hoju Australia was a party to the contract. However, counsel submitted that it was necessary for the Court to make a positive finding that Hoju Australia was a party to the contract before making an order for specific performance against both Mr Goo and Hoju Australia. Mr Kim's primary submission was that both Mr Goo and Hoju Australia were parties to the contract (although this was not pleaded), but his alternative position was that Mr Goo was a party to the contract and the order for specific performance could be made against Mr Goo alone. 8. The question whether Hoju Australia was a party to the contract is to be ascertained objectively on the basis of all of the evidence above rather than according to what Mr Kim and Mr Goo now say their subjective intentions were. I have concluded that Hoju Australia was not a party to the contract that I have found was formed between about 23 January 2017 and 29 March 2017 on the terms set at out [80] above. Rather, the contract was between Mr Kim and Mr Goo in relation to two companies effectively controlled by Mr Goo. The $300,000 was paid as a deposit for working capital that Mr Kim promised to provide for Hoju Korea. Mr Goo promised that Mr Kim would receive shares in both Hoju Australia and Hoju Korea in return for that working capital. Mr Goo also promised that he personally would refund the $300,000 deposit if the investment did not proceed: see [33], [40] and [48] above. Neither Hoju Australia nor Hoju Korea joined in making this promise concerning the issue of shares. Mr Goo promised to cause those shares to be issued by the companies that he controlled. The additional terms negotiated in March 2017 concerned the issue and transfer of shares in Hoju Australia. The transfer of 50 ordinary shares from Mr Kim to Mr Choi was not something that Hoju Australia could agree to. The shares in question were not property of Hoju Australia: Corporations Act, s 100A. 9. In light of that finding, the terms of the order for specific performance proposed by Mr Kim and set out at [25] above are not appropriate. It seems to me that the specific performance order that will appropriately give effect to these reasons for judgment is as follows: Order that the contract between the plaintiff and the third defendant referred to at [80] of the judgment of the Court in Re Hoju Jobs Pty [2021] NSWSC 302 be specifically performed by: (a) the plaintiff executing within 14 days of the date of this order all instruments reasonably required by the third defendant to give effect to the transfer of the plaintiff's G class shares in the first defendant to the third defendant or any nominee of the third defendant notified to the plaintiff in writing; (b) the third defendant paying to the plaintiff the sum of $300,000 within 14 days of the date of this order; and (c) the plaintiff delivering to the third defendant the executed instruments referred to in (a) above simultaneously with the third defendant making the payment referred to in (b) above. 1. The parties will have an opportunity after considering these reasons for judgment to make any submissions about the precise terms of the order together with any order pressed by the plaintiff in respect of interest and orders for costs. 2. As referred to at [25] above, the plaintiff also sought a declaration in the following terms: "A declaration… that the Defendant breached the Contract and the escrow termination event was not engaged." 1. I do not consider that it is appropriate to make a declaration in terms that do not identify the contract or the conduct that constituted the breach. Moreover, I have found that the third defendant was entitled to the deploy the escrow documents. 2. In light of those findings and conclusions, it is not strictly necessary to address Mr Kim's alternative claim for damages in the sum of $400,000 for breach of the separate agreement that Mr Kim claims to have entered into with Mr Goo in June 2017. For completeness, I record that I reject Mr Kim's evidence referred to at [71] that he orally accepted Mr Goo's offer made in June 2017 to repay his $300,000 together with an additional sum of $100,000. That evidence is entirely inconsistent with the claims pleaded by Mr Kim in these proceedings in November 2017, as I have referred to at [72] above. I am therefore not persuaded on the balance of probabilities that Mr Kim orally accepted Mr Goo's offer and I would have dismissed Mr Kim's alternative claim for breach of an agreement allegedly made in June 2017 had it been necessary to determine that claim. Conclusion and Directions 1. I make the following directions: 1. Direct the parties to prepare short minutes of order giving effect to these reasons, including orders dismissing the various claims not pressed and orders in relation to costs, such short minutes of order to be sent to the Associate to Williams J by 9 April 2021. 2. To the extent that the parties disagree about the terms of those short minutes of order, the competing terms for which the parties contend are to be identified within the document referred to in order (1) above and each party is to file and serve written submissions of no more than 3 pages in support of the orders for which that party contends by 9 April 2021. ********** Endnotes 1. Mr Choi was the second defendant to these proceedings, but Mr Kim discontinued the proceedings against him during the hearing. 2. Mr Yoo was the fourth defendant to these proceedings, but the proceedings had been discontinued against him prior to the commencement of the final hearing. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 March 2021