District Court New South Wales Medium Neutral Citation: Tram v Innerwest Property Partners Pty Ltd & Anor [2024] NSWDC 155 Hearing dates: 26 March and 19 April 2024 Date of orders: 8 May 2024 Decision date: 08 May 2024 Jurisdiction: Civil Before: Weber SC DCJ Decision: See Orders Catchwords: CIVIL – Enforceability of a Deed – Questions of Illegality Legislation Cited: Cheques Act 1986 (Cth) Civil Procedure Act 2005 (NSW) Corporations Act 2000 (Cth) Duties Act 1997 (NSW) Cases Cited: Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 Iannotti v Corsaro (1984) 36 SASR 137 Jones v Dunkel (1959) 101 CLR 298 REW08 Projects Pty Ltd v PNC Lifestyle Investments Pty Ltd (2017) 95 NSWLR 458 Thomas v Hollier (1984) 156 CLR Texts Cited: Nil Category: Principal judgment Parties: Plaintiff: Tan Hieu Tram First Defendant: Innerwest Property Partners Pty Ltd Second Defendant: Mohammad Abedin Representation: Counsel: Plaintiff: Mr R Size Defendants: Mr D Brezniak Solicitors: Plaintiff: David Leamey Solicitor and Barrister Defendant: Raihani Mayaz File Number(s): 2023/165280 Publication restriction: None JUDGMENT Introduction 1. The plaintiff (Mr Tram) was the sole director of Tram Holdings Pty Ltd (Tram Holdings). Tram Holdings owned a property at 3/164 Darlinghurst Road, Potts Point (the Property). The first defendant (Innerwest) is a company which conducts a real estate agency. The second defendant (Mr Abedin) was its sole director. Mr Abedin's wife (Ms Tang) also worked for Innerwest. Mr Tram engaged Innerwest to sell the Property. 2. Mr Abedin and Ms Tang found a purchaser for the Property. On 1 August 2022, Mr Tram executed a contract for sale of the Property on behalf of Tram Holdings (the Contract). The Contract stated a purchase price of $3,500,000 including a deposit of $350,000 (CB 48). Completion of the sale occurred on 31 October 2022 (CB 59). Tram Holdings has received the deposit (minus an agency fee of $60,000) and balance of the stated purchase price. 3. Mr Tram asserts that he is entitled to be paid a further $550,000. 4. The basis for this assertion is Mr Tram's claim that the price stated in the Contract did not represent the true purchase price for the sale of the Property. He gave evidence that Mr Abedin found a buyer who wanted to pay part of the price in cash. He says that Ms Tang negotiated a price of $3,500,000 plus $550,000 in cash. 5. Subsequently, Mr Abedin signed a deed committing both he and Innerwest to pay $550,000 to Mr Tram within 60 days (the Deed) (CB 132); Mr Abedin and Innerwest failed to pay the $550,000 as required in the Deed. 6. Mr Tram's case is that subsequently Mr Abedin told him that in order to pay the sum of $550,000, he had electronically transferred $100,000 to Mr Tram. He then provided him with a cheque for $450,000 (the Cheque) (CB 67). It seems clear however that the transfer of $100,000 never eventuated, and the Cheque was dishonoured. 7. Mr Tram's sues alleging that Mr Abedin and Innerwest have breached the terms of the Deed by failing to pay him $550,000 within 60 days of 1 August 2022. There is no dispute about this failure to pay. 8. Mr Abedin disputes an obligation to pay any monies pursuant to the Deed. The fundamental basis of his position is his assertion that he did not sign the Deed, and thus was not bound by its terms. 9. Mr Tram pleaded an alternative case that Innerwest is liable pay him damages in the amount of $450,000 plus interest. This alternate cause of action is pleaded pursuant to ss 71 and 76(1)(a) of the Cheques Act 1986 (Cth) (Cheques Act). This cause of action is based on the fact that that the Cheque was dishonoured. 10. Finally, the defendants say on the other hand that the Cheque was delivered in escrow and that it was banked in breach of the conditions pursuant to which it was drawn and procured to Mr Tram. 11. Finally, the defendants also allege that "the claim for part payment (consideration) from the purchaser" is unenforceable as an agreement contrary to public policy (see Amended Defence at [18]). Did the Second Defendant Sign the Deed 1. The first issue to be determined is whether Mr Abedin signed the Deed. For the reasons which follow, I have found that he did execute the Deed, as the plaintiff alleges Mr Tram's evidence is corroborated by Ms Shen's Evidence 1. Mr Tram's evidence that he saw Mr Abedin sign the Deed is corroborated by the evidence given by Ms Sharon Shen (Ms Shen). Ms Shen is a real estate agent who at the relevant time was employed by Innerwest. Ms Shen gave evidence that she witnessed both Mr Abedin and Mr Tram execute the Deed. She says that she signed the Deed herself as the witness to both signatures. She further says that Mr Abedin signed the deed twice, once in his personal capacity, and once in his capacity as the sole director and secretary of Innerwest. 2. Mr Abedin made submissions to the effect that I should not accept the evidence of Ms Shen due to her association with other witnesses called by the plaintiff. These witness included Mr Khan and Mr Hadjakis. 3. The defendants submitted that: "It is submitted that Mr Tram and the supporting witnesses are all known to each other, have known each other for some time, are friends, and for those reasons, as one would expect, gave evidence that is supportive of each other. However, other than attempted corroboration of each other's evidence, they do not go to the heart of the issue before the court, and that is whether there is any existence of a debt owed, what the real sale price is for the property, and whether the conditions imposed on handing over of the cheque were ever met." 1. I do not accept this submission, and I note in this regard that the serious allegation which underlies this blandly put submission, was never put to the witnesses whose evidence the defendants now wish to challenge by it. 2. I accept the evidence of Ms Shen. Mr Tram's evidence is consistent with the objective facts 1. Mr David Leamey was the solicitor acting for Mr Tram and his company on the conveyance of the Property. He gave evidence of the fact that following settlement he searched the PEXA Property Settlement platform and discovered an order on the agent dated 31 October 2021. The Order had been provided by the solicitors for the purchaser. The Order in its operative part states: "Settlement of this matter has taken place today. You are authorised to account to the vendor or their solicitors for the cash amount of $550,000 held by you" (CB 66) 1. In my view, this Order on Agent provides powerful objective support for the case that the defendants were holding $550,000 in cash as the plaintiff alleges. Mr Tram's evidence is also consistent with Mr Abedin's silence following settlement 1. Mr Tram's evidence that Mr Abedin and Innerwest owed him $550,000 following settlement to my mind is also powerfully corroborated by Mr Abedin's failure to dispute that he owed Mr Tram that sum on settlement. The assertion of indebtedness was made in writing on several occasions both by Mr Leamey and by the solicitor for the Purchaser. The first such communication was the Order on Agent to which I have just referred (CB 66). 2. When there was no payment made in response to the Order on Agent, Mr Leamey sent Mr Abedin emails requiring release of the sums held by him (CB 63). By email dated 8 November 2023, Mr Leamey wrote demanding payment of $550,000 and threatening further action, in the event that such payment was not made(CB 70). Mr Abedin did not respond to these emails (T91.2). 3. In Thomas v Hollier (1984) 156 CLR at 157, Gibbs CJ stated: "The failure to answer a letter may amount to admission if there are circumstances which render it more reasonably probable that a man who denied the assertions made against him in the letter would answer those assertions than that he would not: see Weidmann v Walpole (7); Young v Tibbits (8); and Lustre Hostery Ltd v York (9)."(citations omitted) 1. To my mind the Chief Justice's observation in Thomas v Hollier applies with force to the present case. In my view, if Mr Abedin and Innerwest did not in fact owe the moneys which Mr Leamey was asserting were owed, they would have denied the assertion. They did not, and I comfortably conclude that their silence amounted to an admission of the correctness of Mr Leamey's assertion that the moneys were held by the defendants and payable to his client. 2. In so doing, I also reject Mr Abedin's assertion made during cross-examination that he denied owing the money in phone conversations with Mr Tram (T91.35) and Mr Leamey (T92.34). In this regard I prefer Mr Leamey's unchallenged evidence at [4] of his first affidavit that Mr Abedin "did not tell me there was no money owing or that he disputed the claim in the demand" (CB 90). 3. I also note that the evidence of conversation with Mr Leamey which Mr Abedin alleged occurred arose for the first time in cross examination; that is to say that there was no mention of what was obviously an important matter in Mr Abedin's affidavit evidence in chief. 4. I accept Mr Leamey's evidence Mr Tram's evidence is corroborated by Mr Khan 1. Mr Tram's evidence as to being owed $550,000 by Innerwest and Mr Abedin was also corroborated by evidence given by Hasan Khan (Mr Khan). 2. Mr Khan gave evidence at [8]-[11] in his first affidavit (CB 93) that Mr Tram told him that Innerwest had not paid him money owed upon sale of the Property. He stated that he called Mr Abedin to ask why Mr Tram was not happy with him, and that Mr Abedin said: "the money is in safe hands". 3. As I have earlier indicated Mr Khan was amongst the witnesses, whose evidence was put in issue by Mr Abedin on the basis that his associations with other witnesses should lead to me rejecting his evidence. This proposition was never put to Mr Khan, and I reject it. 4. I accept Mr Khan's evidence. Mr Abedin's evidence is implausible as to the circumstances in which he provided Mr Tram with the Cheque 1. Mr Abedin gave evidence as to the circumstances in which he provided Mr Tram with the Cheque. He said that on 27 June 2022: 1. Mr Tram said he needed money to invest in a gold mine in Adelaide; 2. Mr Abedin offered to loan Mr Tram $450,000 at 2% interest per month should Innerwest be unable to sell the Property by September 2022; 3. Mr Abedin offered to give Mr Tram a cheque for that amount on condition that Mr Tram return the cheque should Innerwest sell the Property by September 2022; 4. Mr Tram accepted the offer; 5. Mr Abedin gave Mr Tram the Cheque signed but undated; and 6. in breach of the agreement, Mr Tram banked the Cheque after Innerwest sold the Property. (See Affidavit of Mr Abedin dated 21 November 2023 at [10]-[11] 1. Mr Tram denies Mr Abedin's evidence. In my view, his denial is supported by the objective fact that Mr Abedin directed Macquarie Bank to proceed with payment of the Cheque after the bank had queried the signature on the Cheque (See CB 72-75). 2. Mr Tram also gave evidence as to his financial circumstances at the relevant time. He said that he owned five properties worth approximately $13 million, which property portfolio was only encumbered as to approximately $5.135 million (see Affidavit of Mr Tram dated 25 March 2024 at [5]-[7]). 3. I accept this evidence, which was unchallenged. This evidence leads me to comfortably conclude that if on 27 June 2022, Mr Tram in fact needed $450,000 by September 2022 to invest in a gold mine, he could have used his own properties as security for a loan on terms far more beneficial than interest of 2% per month as were alleged by Mr Tram to be the arrangements between them. 4. In summary, I conclude that the Cheque was not proffered conditionally as asserted by Mr Abedin, but rather it was proffered as part of an attempt (which was probably not a genuine one) to repay part of the $550,000 which was owing to Mr Tram. Mr Abedin's failure to call Ms Tang 1. Mr Abedin did not call Ms Tang. As I have earlier indicated, Ms Tang worked at Innerwest with Mr Abedin. She was and is Mr Abedin's wife. Ms Tang signed the Agency Agreement with Mr Tram (CB 37). Mr Tram gave evidence at [15] of his first affidavit (CB 29) that Ms Tang was present at a meeting with the vendor when it was agreed that the sale price would be $4,050,000, of which $550,000 would be paid in cash (CB 29 at [18]). 2. There was no explanation adduced in evidence as to why Ms Tang was not called, and I infer that Mr Abedin feared to call her, as her evidence would not have assisted his case (Jones v Dunkel (1959) 101 CLR 298 at 308). The Quantum of the Commission Provides Further Objective Support for Mr Tram's Case 1. Mr Tram's gave unchallenged evidence that he agreed with Mr Abedin that Innerwest commissions would be $60,000, rather than a commission $60,750. He said that he thus negotiated the commission down. The agreed commission payable on the Agency Agreement was 1.5%. 2. A commission of $60,750 negotiated down to an even $60,000 as the plaintiff asserts, is to my mind, only consistent with the sale price in fact being $4,050,000. The commission was clearly accepted by Mr Abedin. If on the other hand the sale price was as stated on the contract; namely $3,500,000, then the commission payable would have been $52,500. 3. Thus in my view, the agreed and paid commission provides further objective evidence supportive of Mr Tram's case. Mr Dubedat's Evidence 1. The defendants relied upon evidence of a forensic document examiner, Mr Stephen Dubedat. Mr Dubedat expressed the opinion that the signature on the Deed was "written by a writer other than the writer of the specimen signatures, and no attempt was made to copy a genuine signature" (see [28] of Mr Dubedat's Report (CB 120)). He described the basis for his opinion as being that there was "no significant evidence" to support any of the alternative hypotheses which he had identified in his Report ( DX1 at [23] (CB 119)). 2. The second of those alternative hypotheses was as follows: The questioned signature was written by the writer of the specimen signatures, and the differences are found due to the signature having been deliberately written illegibly or in an unusual manner, so as to afford the signatory some plausible grounds for disclaiming the signature, should it be deemed expedient. 1. Mr Dubedat explained his reasons for rejecting this hypothesis at [25] (CB 120): "With respect to hypothesis (ii); no evidence was found to support the proposition that the questioned signature has been deliberately modified. I refer to Wilson Harrison's "Suspect Documents Their Scientific Examination" at page 419 which states "When the signature on a formal document has been deliberately modified, two discoveries may confidently be expected on close examination. The first is that the modification is in some rather prominent features of the letter design which is invariably pointed out by the person disclaiming the signature, and the second is that, apart from this one obvious feature, the rest of the signature appears to be normal". 1. It seems to me that Mr Dubedat's reliance upon the statement from Mr Harrison's text is suggestive of the fact that he excluded the possibility that Mr Abedin signed the Deed "in an unusual manner" merely because the signature on the Deed was not a rendition of Mr Abedin's own signature with "modification" to "some rather prominent features of the letter design". 2. When Mr Dubedat was asked in cross-examination (at TP 80.17) whether he started from an assumption "that a person who forges their signature would do it in a way that makes one prominent modification and not just do it in a way that is radically different", he did not answer the question directly. Instead, he gave evidence (at TP 80.21) that "it's very rare to see … someone deliberately modify their signature". He went on to say that he had only seen "maybe ten" signatures that had been deliberately modified in over 25 years of the practice of his profession. He said that those ten examples conformed with Mr Harrison's textbook observations, to which I have earlier referred. 3. During cross-examination, Mr Dubedat agreed that he could not "conclusively exclude the possibility in this case that … the person has just signed in a way that's nothing like their real signature" (T80.46). 4. At the end of the day, Mr Dubedat's evidence appeared to me to be based on the fact that the affixing of a false signature was in his experience a rare event. This may well have been Mr Dubedat's experience, but I do not see that conclusion in fact arises from his field of expertise. Ultimately it is my task to determine what occurred in this case, regardless of whether what occurred may be rare in Mr Dubedat's experience. 5. In that regard, as both Mr Tram and Ms Shen who were present at the execution of the Deed gave evidence that they saw Mr Abedin sign it, I conclude that Mr Abedin signed the deed in a manner which did not resemble his usual signature, and that he did so for the purpose of later denying his signature. Miscellaneous Criticisms of the Drafting of the Deed 1. The defendants in their written submissions made curious comments regarding the drafting of the Deed which to my mind were irrelevant to the issue as to whether Mr Abedin is bound by the Deed. These comments included such criticisms as to the manner in which the Vendor and Mr Abedin himself were named. I shall not deal with all of these submissions as in my view they are irrelevant to the issues before me. 2. That said, in the submissions criticizing the drafting of the Deed, the defendant also contended that Mr Abedin could have no liability under the Deed as any moneys which were held, as the plaintiff alleges, were held by Innerwest, not Mr Abedin. I do not accept this submission. Mr Abedin and Innerwest are together defined in the preamble of the Deed as "the Agency". Pursuant to clause 1 of the Deed, "the Agency" that is obliged to make the $550,000 payment. Thus, both Mr Tram and Innerwest are jointly and severally liable to make the payment. Alleged Illegality 1. The Amended Defence at [18] alleges that the agreement under the Deed is "unenforceable as an agreement contrary to public policy". Four particulars of the allegation are provided. These are: "In answer to the whole of the claim of the plaintiff the defendants say that the claim for part payment (consideration) from the purchaser for the alleged agreement dated 01/02/2022 transfer of the land pursuant to the contract for sale from Tram Holdings Pty Limited to the purchaser (s) in cash is unenforceable as an agreement contrary to public policy: Particulars The alleged agreement dated 01/08/2022 is liable to ad valoram duty under and pursuant to the Duties Act NSW. The alleged agreement dated 01/08/2022 recites the vendor of the property at 3/64 Darlinghurst Road Potts Point as the Plaintiff in these proceedings being a person different from the vendor in the contract for sale from Tram Holdings Pty Ltd to the purchaser(s) dated 01/08/2022. The alleged agreement dated 01/08/2022 is and remains unstamped. The only purpose for the non-disclosure of the true consideration in the contract for sale dated 01/08/2022 by and on the part of Tram Holdings Pty Ltd was to avoid ad valorem duty required by and pursuant to the provisions of the Duties Act 1997 NSW" 1. I shall deal with each of these particulars. Allegation that Deed is liable to ad valorem duty 1. The first particular is that "the alleged agreement dated 1/08/2022 is liable to ad valoram duty under and pursuant to the Duties Act NSW". The defendant did not elaborate on this contention. In their written submissions the defendant submitted: "[13] The only reason that one can rationally think of, for which the vendor and purchaser would put down a reduced sale price, is for financial benefit by which: a.The purchaser will save on transfer / stamp duty, wherein rather than paying an amount of $218,680.00 on the higher alleged selling price, the purchaser will have paid $180,180.00 on the contract price, representing a saving of $38,500. b.The vendor will save on any capital gains tax to be paid. The Plaintiff in cross examination said he would have paid the correct tax T51.15. [14] Notwithstanding any intention that might have been had by the Plaintiff, the circumstances are that the Plaintiff and purchaser engaged in conduct that was illegal in reporting a sale price that was less than what it is alleged to have been. [15] It is respectfully submitted that this Court ought not to aid this claim wherein it would be contrary to public policy to allow a Plaintiff to successfully sue for damages in connection with an agreement devised to benefit the parties financially in breach of the relevant taxation / revenue laws. 1. The plaintiff submitted that whether the agreement under the Deed is liable to ad valorem duty under the Duties Act 1997 (NSW) (Duties Act) depends upon whether the Deed provides for the transfer of "dutiable property" or is a "dutiable transaction" (Duties Act s 8(1)-(2)). He went on to submit that as the Deed does not provide for the transfer of any property, nor does it provide for a "dutiable transaction" within the meaning of s 8(1)(b) of the Duties Act. It was thus submitted that the agreement under the Deed is not liable to ad valorem duty. 2. I shall return to this issue later in these reasons. Allegation that Deed recites different vendor 1. The second particular relied upon by the defendant was that "the alleged agreement dated 1/08/2022 recites the vendor of the property at 3/64 Darlinghurst Road Potts Point as the Plaintiff in these proceedings being a person different from the vendor in the contract for sale from Tram Holdings Pty Limited to the purchaser(s) dated 1/08/2022". This allegation is correct in that the purchaser under the Contract is Tram Holdings (CB 48), whereas the Deed recites that Mr Tram has sold the Property (CB 46). In my view however, that fact is irrelevant to the question as to whether the Deed is unenforceable as an agreement contrary to public policy. 2. I note that the defendants made no submission to the contrary Allegation that the Deed is unstamped 1. The third particular is that "the alleged agreement dated 1/08/2022 is and remains unstamped". I should note that no objection was taken to the tender of the Deed on that basis. 2. It is certainly correct that the copy of the Deed upon which the plaintiff has sued is unstamped. The plaintiff submitted that as the deed was neither an "instrument chargeable with duty" nor a document recording a "dutiable transaction" (Duties Act s 296). As such he submitted that the Deed was not required to be stamped. 3. The plaintiff further submitted that a failure to stamp an instrument that ought to have been stamped is irrelevant to whether an agreement underlying the instrument is unenforceable as an agreement contrary to public policy. 4. The defendants made no submissions on the issue of the Deed being unstamped, beyond that which I have set out above. 5. I shall return to this issue later in my judgment. Allegation that purpose was to avoid ad valorem duty 1. The fourth particular of illegality pleaded by the defendant was that "the only purpose for the non-disclosure of the true consideration in the contract for sale dated 1/08/2022 by and on the part of Tram Holdings Pty Ltd was to avoid [ad] valorem duty as required by and pursuant to the provisions of the Duties Act 1997 NSW". 2. I do not see this as being a particular of illegality. At best it seems to me to be a misplaced submission, rather than a particular of illegality. 3. I further note that this particular was not advanced in the defendants submissions. The Allegation of a Failure to Execute the Deed in Conformity with the Corporations Act 1. The defendant also submitted that Innerwest did not execute the Deed in conformity with s 127 of the Corporations Act"(Defendants Submissions [18(j)]. This contention is incorrect. 2. Section 127(1) states that a company may execute a document without using a common seal if the document is signed by "for a proprietary company that has a sole director—that director". The unchallenged evidence was that Mr Abedin was the sole director of Innerwest. Section 127(3) of the Corporations Act states that a company "may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1)". The Deed meets those requirements. What is the Alleged Illegality? 1. The plaintiff correctly asserted that it is important to isolate the manner in which it is alleged that the enforcement of the Deed would be contrary to public policy. 2. The defendants submitted that it would be "contrary to public policy to allow a Plaintiff to successfully sue for damages in connection with an agreement devised to benefit the parties financially in breach of the relevant taxation / revenue laws". As I have earlier indicated, the defendants' submissions on this topic rose no higher than this assertion. 3. In Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 (Equuscorp), French CJ, Crennan and Kiefel JJ said at [23]: … an agreement may be unenforceable for statutory illegality where: (i) the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute; (ii) the making of the agreement is impliedly prohibited by statute. A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute; (iii) the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a "contract associated with or in the furtherance of illegal purposes". In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable. That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute "whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable." 1. It seems to me that the defendants' submission as to illegality appears to characterise the agreement recorded by the Deed as falling within the third category identified by the plurality in Equuscorp. That is to say that the agreement recorded by the Deed, because of its connection with the understatement of the purchase price in the Contract, is "associated with or in the furtherance of illegal purposes" being presumably the underpayment of stamp duty or capital gains tax. 2. I shall approach the Defendants' case on that basis 3. Thus, applying Equuscorp, the Court is tasked with discerning from the scope and purpose of the relevant legislation whether the purpose of the legislation will be fulfilled without regarding the Deed as unenforceable. The defendants did not rely upon any authority relevant to this issue. 4. The plaintiff submitted that the issue of illegality ought to be resolved in his favour by applying the decisions in Iannotti v Corsaro (1984) 36 SASR 137 (Iannotti) and REW08 Projects Pty Ltd v PNC Lifestyle Investments Pty Ltd (2017) 95 NSWLR 458; [2017] NSWCA 269 (REW08). 5. In Iannotti, the parties executed two documents purporting to evidence the sale of a business. But they presented only one of them for stamping. The purchaser paid only the price identified in the stamped document. The vendor sued to recover the price identified in the unstamped document. The trial judge refused to enforce the documents. On appeal, King CJ (with whom Johnston J agreed) reversed the trial judge's decision. The Chief Justice stated: Apart from the provisions of the Stamp Duties Act, I would have no doubt that it is contrary to public policy for the courts to enforce documents brought into existence for the deliberate purpose of defrauding the revenue. It seems to me however that the Stamp Duties Act constitutes a code in relation to such documents. The legislature has refrained from rendering void false documents brought into existence with intent to defraud the revenue. It has contented itself with providing for penalties to be recovered in non-criminal proceedings. There is every indication in the Stamp Duties Act that the legislature has made a deliberate choice as to how to deal with the problem of false documents brought into existence for the purpose of defrauding the revenue of stamp duty. It would be inconsistent, in my opinion, with the policy disclosed by the Stamp Duties Act for the court to hold that a document is illegal and void because it was executed with intent to defraud the revenue of stamp duty … Not only can I find nothing in the Act which renders such documents void, but on the contrary positive provision enabling the use of such documents in evidence after payment of unpaid duty and penalties. 1. In REW08, the parties entered into a series of contracts for the sale of land and deeds of rescission rescinding the contracts. The purchaser sought specific performance of one of the contracts. The vendor argued that the contract was unenforceable because it was "associated with or in furtherance of illegal purposes". 2. The primary judge (Darke J) found that the purpose of the transactions was to avoid immediate liability for stamp duty. His Honour however, rejected the argument that the contract was unenforceable. His Honour did so for reasons similar to those adopted by King CJ in Iannotti. His Honour stated that: The cardinal purpose of the comprehensive legislative regime [i.e. Chapter 11A of the Duties Act 1997 (NSW)] to which I have referred is to ensure that the proper amount of duty is received by the State in respect of dutiable transactions. I consider that such purpose will be fulfilled without holding the 13 June 2014 contract to be unenforceable. Moreover, it is my view that holding the contract to be unenforceable would be incongruous with the legislative regime. Finally, it is my view that holding the contract to be unenforceable would be a disproportionate sanction having regard to the scale of any benefits that PNC might have expected to obtain, or in fact obtained, as a result of the transaction whereby the contract was entered into. [100] 1. His Honour's decision in REW08 was affirmed by the Court of Appeal. Justice Macfarlan (with whom Beazley P and Gleeson JA agreed) 2. In REW08 the Court of Appeal held that the legislative regime for the payment and collection of stamp duty does not expressly render an agreement made for the purpose of avoiding duty unenforceable. Macfarlan JA stated "that the legislature stopped short of providing the sanction of unenforceability is a powerful indication that it did not intend that outcome to eventuate, even by implication" [24]. 3. The plaintiff submitted that applying what fell from Macfarlan JA the legislative purpose of the Duties Act would be fulfilled without regarding the agreement recorded in the Deed as unenforceable. 4. I also agree with this submission. 5. The Court of Appeal in REW08 also found that the non-payment of stamp duty was not "essential to the parties' bargain … rather it was only an incidental consequence". The plaintiff submitted that this conclusion applies with equal force in the present case. 6. He submitted that any desire on the part of the purchaser to avoid paying stamp duty was not essential to the agreement under the Deed. 7. I agree with this submission. 8. The plaintiff further submitted that as to capital gains tax, there is no evidence that Mr Tram intended to avoid such tax. Mr Tram gave evidence (at T51.5 – T51.15) that he would have had his accountant account for the money and capital gains tax would be paid in the ordinary course. Mr Tram submitted that the fact that he sought payment of the $550,000 by bank transfer rather than by a cash transaction is consistent with this evidence (see affidavit of Tan Hieu Tram dated 25 March 2024 at [12]). 9. I accept Mr Tram's evidence on this topic, which was unchallenged. 10. Finally, the plaintiff relied upon what fell from the Court of Appeal in REW08 at [25]. He submitted that to deprive him of the benefit of the Deed would impose "a penalty upon … disproportionate to its assumed wrong". Mr Tram submitted if the Court was to deny him the benefit of the Deed; that is to say a right to be paid $500,000, that outcome would constitute a disproportionate loss compared to the amount of any loss to the revenue. 11. I agree with this submission. Conclusion on Illegality 1. For these reasons I reject the defendants' case that the Deed is unenforceable and contrary to public policy. The Absence of the Purchaser as a Party 1. Earlier in these reasons I have recorded submissions of the plaintiff that the Deed was not in fact either dutiable, nor did it require stamping (See [54]-[55] and [58]-[62] herein). I did not deal with those submissions, and said that I would return to them. 2. The question of whether the Deed required stamping or is otherwise dutiable derives ultimately from the allegation that the contract for sale of the Property understates the sale price. It is the debt arising from that understatement which the Deed picks up. The purchaser of the Property however was not a party to the Deed, and as such the Purchaser was not a party to the proceedings. 3. As the purchaser of the Property is the party to the contract for sale upon whom stamp duty consequences may fall, if the contractual purchase price was understated, I do not consider it appropriate to decide the issues raised by the plaintiff, to which I have referred, in the absence of the purchaser as a party. 4. That said, I am conscious of the fact that this matter raises the possibility of a fraud on both federal and state revenue authorities which the Court should not ignore. 5. Accordingly, I propose to direct the Judicial Registrar of the Court to provide these reasons to the appropriate officers of the Australian Taxation Office and the New South Wales Office of State Revenue. Conclusion 1. For these reasons, the Plaintiff is entitled to judgment and verdict in the sum of $550,000. Costs should follow the event. Orders 1. That there be judgment and verdict for the plaintiff against the defendants in the sum of $550,000. 2. Orders that there be interest thereon at the rates pertaining from time to time pursuant to s 100 of the Civil Procedure Act 3. That the defendants pay the costs of the plaintiff as a specified gross sum being the sum of $28,442.72. 1. The Court directs the Judicial Registrar to provide a copy of these reasons to the appropriate officer of the Australian Taxation Office and the New South Wales Office of State Revenue. Amendments 22 May 2024 - Updated Costs Order and amended Order 1 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: 22 May 2024