KL Aussie Pty Ltd v Lien Hoa Women Buddhist Meditation Centre (Chua Lien Hoa) Incorporated [2022] NSWSC 614

Supreme Court New South Wales

Medium Neutral Citation: KL Aussie Pty Ltd v Lien Hoa Women Buddhist Meditation Centre (Chua Lien Hoa) Incorporated [2022] NSWSC 614 Hearing dates: 9-10 May 2022 Date of orders: 18 May 2022 Decision date: 18 May 2022 Jurisdiction: Equity Before: Darke J Decision: Plaintiff held to be entitled to judgment for possession. Writ of possession to be issued forthwith, but not to be executed before 15 June 2022. Catchwords: CONTRACTS – formation – where defendant sold property to plaintiff with right to vacant possession – where defendant alleges existence of oral contract entitling it to remain in possession until vendor finance repaid – where plaintiff denies existence of oral contract – existence of oral contract not established on the balance of probabilities – plaintiff held to be entitled to vacant possession Category: Principal judgment Parties: KL Aussie Pty Ltd (Plaintiff) Lien Hoa Women Buddhist Meditation Centre (Chua Lien Hoa) Incorporated (Defendant) Representation: Counsel: Mr H W Somerville (Plaintiff)

Solicitors: Emerson Lewis Lawyers (Plaintiff) File Number(s): 2021/220232 Publication restriction: None

Judgment 1. By a Summons filed on 2 August 2021, the plaintiff company seeks an order for possession against the defendant incorporated association in respect of a property at 595 Canterbury Road, Belmore ("No 595"). The plaintiff is the registered proprietor of No 595, having completed a purchase of the property from the defendant on 28 August 2020. The purchase was completed at the same time as purchases by the plaintiff from the defendant of the adjoining properties at 593 Canterbury Road, Canterbury ("No 593") and 597 Canterbury Road, Canterbury ("No 597"). No relief is sought in respect of those two properties. It seems that the plaintiff is in possession of both of them. 2. The contract for sale in respect of No 595 clearly provides for vacant possession to be given to the plaintiff on completion. That is not in dispute. However, the defendant alleges that it is entitled to remain in possession until the plaintiff repays certain vendor finance advanced by the defendant to enable the plaintiff to complete the purchases. The defendant contends that in August 2020 an oral contract was entered into, whereby the plaintiff promised the defendant that it could remain in occupation of No 595, rent-free, until the vendor finance is fully repaid. The existence of the oral contract, which is not referred to in any contemporaneous documents, is denied by the plaintiff. 3. Before turning to the evidence concerning the alleged oral contract, it is convenient to refer to the documentary evidence in relation to the transaction. 4. Contracts for the sale of the three properties were initially entered into on 17 April 2020 by the defendant as vendor, and Huynh Lam and Thi Pham as purchasers. Mr Lam (who is sometimes referred to as "Leon") and Ms Pham (who is sometimes referred to as "Kathy") became the directors of the plaintiff upon its incorporation on 30 April 2020. 5. Ren Zhou Lawyers was named in each of the contracts as the vendor's solicitor. M R Barber & Associates was named in each of the contracts as the purchaser's solicitor. The purchase prices under the contract were $1,150,000 for each of No 593 and No 595, and $880,000 for No 597. The contracts each provided for deposits of 10% of the purchase price, but it appears that deposits totalling only 5% of the purchase prices were paid. The contracts were not completed by the nominated date for completion, being 30 May 2020. 6. However, it seems that, by agreement, those contracts were rescinded, and on 4 June 2020 new contracts were entered into on the same terms, except that the plaintiff became the purchaser, and the nominated date for completion became 12 June 2020. It appears that the deposits paid under the earlier contracts were treated as deposits under the new contracts. 7. Title searches attached to the contracts indicated that each property was subject to a registered mortgage to Westpac Banking Corporation, and a caveat lodged by Financier Australia Holdings Pty Ltd and others that claimed an interest under a mortgage dated 14 November 2019. 8. The plaintiff sought finance for its purchases from Capital Securities Australia (SA) Pty Ltd ("Capital Securities"). An email sent by Ms Pham and Mr Lam to the defendant on 30 July 2020 suggests that a shortfall in funds might result in a need for settlement of the contracts to occur in two stages. That prospect did not eventuate. Settlement of all three contracts occurred on 28 August 2020. Nevertheless, it appears that the plaintiff was unable to borrow from Capital Securities the full amount required for settlement. In these circumstances, discussions occurred about the provision by the defendant of vendor finance. 9. An email sent on 12 August 2020 (from "Rocco" – a financial advisor to Ms Pham – to "Rosina") apparently in connection with the plaintiff's application to Capital Securities for finance, suggests that, by that time, a Vendor Finance Agreement had been signed by the parties. That particular document does not seem to be in evidence. I note, however, that although at one point there was a version of a Vendor Finance Agreement that provided for a repayment period of 6 months, the Vendor Finance Agreement ultimately entered into on about 28 August 2020 had a repayment period of 24 months. I note further that the 12 August 2020 email suggests that the proposed vendor finance would be in place "while they wait for funds to come in from Vietnam". 10. As it turned out, the plaintiff borrowed from Capital Securities only $1,840,000 towards the combined total purchase price of $3,180,000. The term of the Capital Securities loan was 2 months. The loan was to be secured by mortgages over the three Canterbury Road properties, and mortgages over two other properties, in Belmore and Mildura respectively. 11. On about 28 August 2020, the defendant as Lender, the plaintiff as Borrower, and Ms Pham and Mr Lam as Guarantors, executed a Vendor Finance Agreement ("the Agreement") in respect of a loan of $1,405,000. The Agreement provides for the loan to be repaid at the end of a 24 month period. Interest is payable at a rate of 5.5% p.a, with the first year's interest payable on 15 August 2021 and the second year's interest payable at the end of the loan period. The Agreement contains provisions to the effect that the Canterbury Road properties will be held as security in respect of the loan. The Schedule to the Agreement refers to the grant of a mortgage by the plaintiff to the defendant over those properties, and the giving of consent to allow a caveat to be lodged on the secured property. The Agreement also contains an entire agreement clause (cl 28). 12. I note in passing that the defendant says that the alleged oral contract was made prior to the execution of the Agreement. 13. Also on about 28 August 2020, the parties to the Agreement entered into a Deed of Priority with Capital Securities. That Deed essentially made provision in relation to priority as between the two lenders to the plaintiff. The Deed makes express reference to the Agreement, and subordinates payment of the debt to the defendant under the Agreement to payment of the debt to Capital Securities under its mortgage. 14. As already mentioned, the three contracts for sale were completed on 28 August 2020. It can be inferred that sufficient funds were available to enable the mortgages to Westpac to be discharged, and the caveats of Financier Australia Holdings Pty Ltd and others to be withdrawn. 15. On about 27 October 2020, the plaintiff effected a refinance in respect of the Capital Securities loan. The plaintiff granted mortgages to SFA002 Pty Ltd to secure a loan of $2,485,000. The mortgages were of the three Canterbury Road properties and the Belmore property. The term of the loan was 6 months. In May 2021, the term of the loan was extended for a further 6 months. 16. Title searches of the three Canterbury Road properties (dated 15 June 2021) reveal that each of the properties was subject to a registered mortgage to SFA002 Pty Ltd, and subject to a caveat lodged by the defendant. The defendant's caveats are not in evidence. Presumably, they claim an interest arising from the Agreement. 17. On 29 October 2020 and 30 October 2020, the plaintiff made two payments to the defendant (into the Ren Zhou Lawyers trust account) totalling $383,454.39. It is not clear whether these funds became available as a result of the refinance, or otherwise. The circumstances in which these payments occurred is the subject of some dispute, but it seems to be accepted that the payments were made in respect of the plaintiff's obligations to the defendant under the Agreement. I note in that regard that no interest payment seems to have been made by the plaintiff to the defendant in August 2021 as contemplated by the Agreement. The plaintiff says, however, that the total of the payments made in October 2020 greatly exceeds any amount that has fallen due under the Agreement. 18. On 19 November 2020, Ren Zhou Lawyers sent a letter to the plaintiff in the following terms: This is the second letter that our client sent to you. Our client requested from you a payment plan in writing in regarding to the outstanding amount owed to our client at the time of the purchase of the subject properties, Time Method of payment Alternative securities Since last email, you did not reply to our client at all. Our client wanted to give you 2nd chance to respond to our client's request within 7 days of this letter. This letter is posted to you by express post. The earlier letter, to which reference is made in the above letter, was not admitted into evidence. 1. On 22 January 2021, Bunton Lawyers, acting for the plaintiff, sent a letter to Ren Zhou Lawyers which included the following: We have been handed a copy of the Vendor Finance Agreement, between KL Aussie Pty Ltd and your client Lien Hoa Women Buddhist Meditation Centre. The copy we have is unsigned and undated, although we are instructed that the original document has been executed. We are instructed by our client that a payment of $383,454.39 was sought by your firm on behalf of your client and that amount was deposited to your Trust Account on 29th October 2020. Our clients will continue to fulfill their obligations pursuant to the said Vendor Finance Agreement. In particular the balance of the loan will be settled on the Termination Date set out in the agreement. Please note that our client will not respond to further requests from your firm or your clients to settle the balance of the loan (or any part thereof) prior to the termination date. In the event that there is another document or agreement that rescinds of the terms [sic] of the Vendor Finance Agreements could you kindly advise us as to the nature of that document and provide us with a copy at your earliest convenience. FURTHER, we are instructed that representatives of your client continue to occupy the premises at 595 Canterbury Road Belmore. We note that said property was transferred by your client to our client pursuant to a contract which has been completed. The property was sold with vacant possession and there is no right of occupation by those persons. We hereby request that you arrange for those persons to vacate the premises by 5.00pm on Friday 5th February 2021. We are further instructed that representative [sic] of your client approach and contact Ms. Pham and Mr. Lam with demands for an early payment of the loan referred to above. Could you kindly request your client, its representatives, employees, agents or principals to desist from this behaviour as it is now approaching harassment. Our clients reserve their rights to take legal action in that regard. 1. There was no reply to this letter. 2. On 24 May 2021, Emerson Lewis Lawyers, the plaintiff's present solicitors, sent a letter to Ren Zhou Lawyers which included the following: 4. By way of background, we are instructed as follows: 4.1 in 2020, KL Aussie entered into a contract for the sale and purchase of land (Contract) located at 595 Canterbury Road, Canterbury, NSW 2193 (the Property) from Lien Hoa; 4.2 the sale has completed and the Property has been transferred by Lien Hoa to KL Aussie; and 4.3 it was a term of the Contract was [sic] that Lien Hoa was required to give vacant possession of the Property to KL Aussie upon completion. 5. We are instructed that on 22 January 2021, our client's former lawyers, Bunton Lawyers, wrote to your office requesting that vacant possession be given by 5:00pm on Friday 5 February 2021. 6. We are instructed that vacant possession of the Property has not been given to KL Aussie and that despite Lien Hoa's contractual obligations, a Lien Hoa or some other third party continue to occupy the Property. 7. We are instructed to make further and final demand that vacant possession of the Property be given to our client by no later than close of business on Tuesday 1 June 2021. 8. Please confirm by no later than close of business on Friday 28 May 2021, that your client will give vacant possession of the Property. 9. In the event that our client does not receive written confirmation that your client will provide vacant possession of the Property as requested above, we are instructed to make an urgent application to the Supreme Court of New South Wales seeking an order for specific performance and/or orders for vacant possession of the Property without any further notice. To the extent that becomes necessary, this letter will be relied upon on the question of costs. There was no reply to this letter. 1. The proceedings were commenced on 2 August 2021. 2. At the hearing, the plaintiff read affidavits of Ms Pham and Mr Lam, including affidavits made by them in reply. 3. The defendant was represented in the proceedings by a solicitor until the retainer was terminated by the defendant a few days before the hearing. In those circumstances, the conduct of the defendant's case at the hearing was taken by Ms Nho Tran, who is a nun and the Treasurer of the defendant. The defendant read affidavits of Ms Tran and Ms Thi Ho, who is also a nun. She is the Abbott (or Master) of the meditation centre conducted by the defendant. A third affidavit, of a Mr William Pham, was read, but he did not attend for cross-examination despite being required for that purpose. His affidavit was thus not able to be relied upon. 4. Parts of the affidavits of Ms Tran and Ms Ho were rejected, including those parts concerning the alleged oral contract. However, I granted leave, over the objection of counsel for the plaintiff, to adduce oral evidence on that issue. Some evidence of that character was adduced, albeit with difficulty, due in part to evident limitations upon the proficiencies of Ms Tran and Ms Ho with the English language, and in part to limitations upon Ms Tran's ability to conduct legal proceedings. I should note, however, that neither of their affidavits (made at a time when a solicitor was acting for the defendant) indicates that a translator was used in connection with the making of the affidavit. It later emerged that Ms Ho's affidavit had been prepared by Ms Tran, who translated it, and explained it to Ms Ho, before the latter signed it. 5. Ms Ho gave evidence (in response to a leading question) of a telephone conversation involving herself, Ms Tran, William Pham and Ms Pham (Kathy). She said that she thought the conversation occurred in or around August (presumably 2020), but that she did not really remember. Ms Ho gave evidence to the effect that in this conversation Kathy told her that she would "take the money from Vietnam and I pay up to you" and "you stay here forever when I pay up and you move out". In cross-examination, Ms Ho stated that she and Ms Tran were using her telephone in one place, with William Pham on another telephone in another place, and that Kathy came in to the call. Ms Ho further stated that in the conversation she said that she could not agree to a two year period for vendor finance, but that William Pham later told her that she had to sign or the vendor finance would not be approved. Later in her cross-examination, Ms Ho said that not only did Kathy promise to get money from Vietnam, Mr Lam (Leon) also said he was waiting for money to come from his family in Vietnam and would "pay off to you". 6. Ms Tran gave evidence that there were a number of conversations about vendor finance over about a two-week period from the beginning of August 2020. In relation to the first of these conversations, Ms Tran said that it involved herself and Ms Ho, and Kathy. She said that Kathy said she needed vendor finance to complete, and it was agreed that vendor finance could be for 6 months. Ms Tran said that an agreement that provided for 6 months was not approved by "the funder", so there was then a conversation about vendor finance for 24 months. Ms Tran gave evidence that, in this conversation, Ms Ho said that the defendant could not do 24 months "because we need to move out after we sold the property, we need to find new property to relocate the temple to do the worship", and that Kathy said she will pay off the vendor finance earlier. Ms Tran said that Ms Ho agreed to the 24 months and said "but please don't chase us out", to which Kathy said that she would not. Ms Tran said that Kathy also said "we will pay you shortly" from money coming from Vietnam or from a family member. 7. Ms Tran was unable to recall much about the other conversations, but stated that at some stage Kathy said "we live there without paying rent". Ms Tran further stated that in the "latest conversation" Ms Ho said, in effect, that the defendant needed to buy a new property to relocate to, to which Kathy said: No worry, we're going to you know settle in six weeks time to pay off. 1. In cross-examination, Ms Tran said that the alleged oral contract was a very important matter for the defendant. She said, however, that she did not tell the defendant's lawyers about it. Ms Tran explained that fact on the basis that "we believed them" and treated them (Kathy and Leon) like a family member. She said that the vendor finance agreement was put into a document because it was "a big amount" and very important, and also because it was something for the funder to approve. 2. Ms Pham (Kathy) and Mr Lam (Leon) each deposed, and stated in the witness box, that there was no oral contract as alleged. 3. Ms Pham deposed that after settlement of the sale of the Canterbury Road properties, she and Leon had a discussion with Ms Tran about vacating No 595 so that the property could be renovated and prepared for a tenant. Ms Pham deposed that Ms Tran told her that Ms Ho did not want to see her, and that "you need to pay us our money now". She further deposed that Ms Tran rejected the suggestion that the defendant could remain in the property by signing a lease agreement. 4. Mr Lam deposed that a discussion occurred in substantially the same terms. I note that in cross-examination, Mr Lam accepted that one version of the Vendor Finance Agreement (shown to him on the screen of Ms Tran's telephone) provided for a repayment period of 6 months. He said, however, that he and Ms Pham did not make a request for the term to be 24 months. He seemed to say that the 24 month term was the result of something internal to the funder (i.e, Capital Securities). Mr Lam went on to say that they tried to refinance again to pay the defendant faster, and that that was what they were aiming for. Mr Lam also said that a number of requests were made to the defendant to enter into a lease (presumably of No 595), and that the defendant rejected an offer to move into No 597 (so that No 595 could be renovated). 5. For various reasons, the assessment of the evidence going to the existence of the alleged oral contract has not been easy. I have already referred to the fact that the relevant parts of the affidavits sought to be relied upon by the defendant in that regard were rejected. Whilst leave was given to adduce oral evidence on the issue, the evidence adduced suffered as a result of the limited proficiencies in spoken English evidently possessed by both Ms Ho and Ms Tran, exacerbated by limitations upon Ms Tran's ability to conduct legal proceedings. The latter point also meant that the cross-examination of Ms Pham and Mr Lam was probably not as effective as it might otherwise have been. The cross-examination of Ms Pham in particular was rather brief. 6. Even though Ms Ho was firm as to the existence of the alleged contract, her account appeared somewhat confused, and I generally formed the impression that she did not have a good recollection of the details of the events of August 2020. The degree of confidence that might be placed upon her testimony was further weakened by the following matters. At one point she denied (at Transcript 59.35) having heard of a property at 260 Newbridge Road, Moorebank, yet the evidence is clear that the Moorebank property (or at least part of it) has for some time been used by the defendant to carry out its spiritual activities. That is reflected in the result of a Google search. Ms Tran gave evidence that the relevant information was provided to Google by herself and her Master (Ms Ho). Ms Ho herself gave evidence later in her cross-examination (e.g, at Transcript 76.05) about the setting up of the temple at the Moorebank property. Ms Ho also displayed at times a marked reluctance to answer questions. Whilst that reluctance was principally directed towards questions about financial matters (for which Ms Tran may have been better equipped to answer), it was also seen, for example, in relation to a question about whether she recalled that lawyers acted for the defendant in relation to the sale of the property to the plaintiff (see Transcript 74.16). At other times, Ms Ho was at pains to declare that, as a nun, she never told lies, only the truth, thereby imploring that her account be simply accepted. 7. Ms Tran adopted a similar approach in that regard, albeit to a lesser extent. Ms Tran also seemed to me to lack a good recollection of the details of what occurred in August 2020. 8. My assessment of both Ms Pham and Mr Lam was also affected by their apparently limited proficiencies in spoken English. Further, Ms Pham was in the witness box only briefly. Mr Lam was the subject of more extensive questioning. He seemed to me to be trying to answer the questions as accurately as he could, but again, he did not exhibit a good recollection of the details of the relevant events. 9. Despite the difficulties referred to above, and my reservations concerning the accuracy and reliability of the testimony given by both Ms Ho and Ms Tran, it can be said that in the context of a transaction involving vendor finance, where the vendor will not receive any, or any significant, proceeds of sale on settlement, it is plausible that there would have been some discussion about the vendor's position in the period before repayment. That is particularly so where the term of the finance is to be 24 months, not six months. Unless the plaintiff exercised its right to early repayment (see cl 4.3 of the Agreement), the defendant, throughout that 24 month period, would not be able to use the funds for its own purposes, such as the acquisition of new premises. In short, it would be logical for the defendant to seek an assurance that its occupation of No 595, which it used for its spiritual purposes, would not be disturbed until the plaintiff had repaid the vendor finance. 10. Nevertheless, I am unable to be satisfied, on the balance of probabilities, that the plaintiff (through either or both of Ms Pham and Mr Lam) promised or assured the defendant that it could remain in occupation of No 595 until the vendor finance is fully repaid. I am also not satisfied that the plaintiff promised or assured the defendant that it could continue its occupation of No 595 rent-free. 11. There is no contemporaneous documentary record of any such agreement having been made. The making by the plaintiff of clear promises or assurances to that effect would almost certainly have been seen by the defendant as a very important matter. Ms Tran conceded as much. It is thus difficult to believe that the defendant, through either Ms Ho or Ms Tran, would not have told its solicitors about such an agreement, with a view to having it suitably recorded. After all, at that time the parties were in the course of settling the terms of the Agreement (and the associated Deed of Priority), and each party had solicitors acting for it. It would have been a simple matter for a provision to be added to the Agreement to reflect an agreement concerning continued occupation, or for such an agreement to be recorded separately. The suggestion that the solicitors were not told of the agreement due to a high level of trust placed in the plaintiff is, to my mind, unconvincing. 12. The making of the alleged agreement is also inconsistent with the conduct of the plaintiff in asking the defendant to sign a lease. I accept the evidence given by Ms Pham and Mr Lam about that matter. I note that Ms Tran agreed in cross-examination that, about two weeks after the settlement, the plaintiff asked the defendant to sign a lease. Ms Ho was reluctant to answer the questions put to her on this topic (see Transcript 83.35-83.45). The plaintiff's conduct in this respect would have been a flagrant breach of the oral agreement alleged by the defendant but, again, there is no documentary record of any complaint being made, including in the letter sent by Ren Zhou Lawyers on 19 November 2020 concerning the issue of when the vendor finance would be repaid. 13. It is also relevant that there was no response given to the letters, sent on 22 January 2021 and 24 May 2021 to Ren Zhou Lawyers, that asserted a right to vacant possession of No 595. 14. The abovementioned matters, coupled with my reservations concerning the accuracy and reliability of the evidence given by Ms Ho and Ms Tran, leaves me in a position where I do not feel an actual persuasion that promises or assurances were made by the plaintiff to the defendant as alleged. The defendant has failed to establish, on the balance of probabilities, that an oral contract was made as alleged. 15. That is not to say that Ms Ho or Ms Tran have consciously given incorrect evidence on that matter. It may be that their accounts are the product of faulty recollection and a degree of reconstruction of events (including discussion that I think occurred about the possibility of the vendor finance being repaid early), and that they genuinely believe in the truth of what they now assert. In any case, I find myself unable to accept their evidence to the effect that an agreement was reached for the defendant to remain in occupation of No 595, rent-free, until the vendor finance is fully repaid. 16. It follows from the above that the plaintiff is entitled to possession of No 595. The plaintiff is the registered proprietor of the land, having acquired it following settlement of a contract for sale that provided for vacant possession on completion. In my view, a judgment for possession, as opposed to an order in the nature of specific performance, should be entered, with leave for the issue of a writ of possession forthwith. The evidence suggests that neither Ms Ho nor Ms Tran (or any other nuns involved with the defendant) presently reside at the property, or at least not on a full-time basis. Ms Tran gave evidence that they stopped staying there at night about two months ago. However, in order to allow a reasonable time for the defendant to remove its goods, the Court will order that the writ of possession not be executed before 15 June 2022. 17. It is appropriate that the question of any damages be deferred until after the plaintiff recovers possession of No 595. Accordingly, the matter will be listed for further directions in July 2022. The plaintiff, being the successful party on the question of possession of the property, should have an order in its favour for the costs of the proceedings to date.