Cheng v Chan [2022] NSWLC 25

Local Court New South Wales

Medium Neutral Citation: Cheng v Chan [2022] NSWLC 25 Hearing dates: 9 and 10 December 2021, further written submissions Date of orders: 08 July 2022 Decision date: 08 July 2022 Jurisdiction: Civil Before: Crompton LCM Decision: Dismiss the claim, Judgment for Defendant Catchwords: CONSUMER LAW — Misleading or deceptive conduct — Representations — Silence or non-disclosure Legislation Cited: Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 18 Cases Cited: Addenbrooke Pty Ltd (ACN 055 973 576) v Duncan and Others (No 2) (2017) 348 ALR 1 Briginshaw v Briginshaw (1938) 60 CLR 336 Helton v Allen (1940) 63 CLR 691 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 Watson v Foxman (1995) 49 NSWLR 315 Category: Principal judgment Parties: Brenda Choy Fong Cheng (Plaintiff) Roy Chan (Defendant) Representation: Counsel: Mr Goodyear (Plaintiff) Mr Philips (Defendant)

Solicitors: Ma & Company Solicitors (Plaintiff) Keypoint Law (Defendant) File Number(s): 2019/00366808 Publication restriction: Nil

JUDGMENT

BACKGROUND 1. The plaintiff, Brenda Choy Fong Cheng, and her husband, Kwai Tak Cheng (also known as Denny) reside in Hong Kong, China. Their son Nelson Cheng resides in Woolloomooloo, Sydney. The plaintiff asserts that Mr Cheng (Denny) was her agent in relation to this matter. 2. The defendant is Roy Chan. Nelson Cheng and the defendant met each other at St Joseph's College in 1996. In 2003, the defendant ran into Nelson who is a chef. 3. On 1 April 2010 the company the subject of these proceedings, The Rice Den Pty Ltd, was incorporated, then named Rice The Experience Pty Ltd. In August 2010 the company ran a business of a restaurant from premises in Chatswood. 4. During 2010 and 2011 Nelson Cheng would visit the Chatswood premises. Every now and then on a Monday, Nelson and Roy would catch up at the Woolloomooloo premises. During this time Roy offered Nelson a job at the Chatswood premises and on 11 February 2013 Nelson commenced working there. 5. In about the middle of 2014 the company was looking at ceasing operations from the Chatswood premises and commencing operations at premises in St Leonards. Nelson and Roy discussed Nelson investing an amount of $80,000 in the company. Prior to September 2014 Nelson informed Roy that, due to Nelson going through a divorce, the investment of $80,000 would be done in the plaintiff's name. 6. On 3 September 2014, in Hong Kong, before departing for Australia the plaintiff, by written General Power of Attorney, appointed Mr Cheng (Denny) as her Attorney to liaise and negotiate with relevant parties and enter into any agreements, instruments or relevant documents in relation to acquiring shares in the company. 7. On 29 September 2014 the plaintiff, Mr Cheng (Denny) and the defendant met at the Elbow Room Café in Chatswood in relation to the investment, for the first and only time. That meeting lasted for approximately 30 minutes with 15 minutes of the time being spent on the issue of the investment. What was or was not said during the course of the meeting is the subject of the only substantial factual dispute between the parties. 8. Apart from attending the meeting and exchanging some text messages with Denny in 2015, the defendant had little contact with the plaintiff or Denny. Mr Cheng (Denny), admitted that this was not his first time in business, and that he had legal representation and the ability and resources to carry out due diligence. Prior to the investment being made neither the plaintiff nor Mr Cheng (Denny) asked for a document in relation to the company. 9. Between 10 November 2014 and 30 April 2015, the plaintiff paid $80,000 in eight instalments to the company. On 26 January 2015 the plaintiff was provided with 14 shares in the company. 10. On 28 January 2015 Mr Cheng (Denny) sent an email to the defendant (copying in Nelson) in which he sought a better provision of shares in the company, stated that "we have advised that we do not wish to take advantage in the profit and loss on the present operation in Chatswood" and stated "I understand that legitimately it is unlikely to be lawfully bound. However I hope that we can respect this gentleman agreement among all partners". 11. On 22 March 2015 the company ceased operating from the Chatswood premises and on 5 June 2015 the company commenced operating from premises located at St Leonards. 12. On 2 September 2015 Nelson resigned from working for the company and at about the same time Mr Cheng (Denny) began making demands for the return of the investment. After his resignation, Nelson commenced proceedings for unfair dismissal against the company which went into liquidation on 8 October 2016. 13. The company did not make a profit at either the Chatswood premises or the St Leonards premises. 14. On 21 October 2016 the first meeting of creditors was held. The plaintiff was represented at that meeting. The plaintiff lodged a Proof of Debt in the sum of $80,000 plus legal fees for "an unpaid shareholder's loan". The plaintiff's Proof of Debt was admitted on that basis, for $80,000. 15. On 12 May 2017 the second meeting of creditors was held. The plaintiff was represented at that meeting. On 30 September 2018 the liquidator's appointment ended and on 12 January 2019 the company was deregistered.