New South Wales Supreme Court CITATION : Tran v Tran [2008] NSWSC 628 HEARING DATE(S) : 10 to 13 June 2008 JUDGMENT DATE : 23 June 2008 JURISDICTION : Equity Division JUDGMENT OF : Palmer J DECISION : Plaintiff fails to prove making of statements. CATCHWORDS : COLLATERAL CONTRACT – REPRESENTATIONS – Whether Defendant or his agent made representations by way of collateral contract or inducing Plaintiff to enter Deed – questions of credit – no question of principle. LEGISLATION CITED : Fair Trading Act 1987 (NSW) – s 41, s 72 CATEGORY : Principal judgment PARTIES : Minh Chanh Tran (Plaintiff) Minh Dat Tran (Defendant) FILE NUMBER(S) : SC 5604/06 COUNSEL : T.A. Alexis SC, S.M. Golledge (Plaintiff) N.A. Cotman SC, G.P. George (Defendant) SOLICITORS : Metrop Lawyers (Plaintiff) Pateman Legal (Defendant) 5604/06 Tran v Tran JUDGMENT 23 June, 2008 Introduction and issues 1 By deed dated 28 May 2002 the Plaintiff and the Defendant entered into a partnership for the development of real estate. The partnership acquired two properties for development, one at North Parramatta, the other at Pennant Hills. The partners made contributions of capital to the partnership account and borrowed money to finance the development of the properties. By the end of 2004 they had fallen into dispute about their contributions to the partnership account. 2 On 22 February 2005, the parties executed a deed which purported to terminate their relationship as to the Parramatta property, but not as to the Pennant Hills property ("the Termination Deed"). In broad terms, under the Termination Deed the Plaintiff covenanted to pay the Defendant the sum of $1,983,638 at the expiration of six months, in consideration of which the Defendant relinquished his interest in the Parramatta property to the Plaintiff. 3 The Plaintiff did not pay the Defendant in accordance with the Termination Deed. The Defendant continued to make contributions to the partnership account in respect of the Pennant Hills property but not in respect of the Parramatta property. Loans procured for the development of both properties went into default. 4 On 2 November 2006 the Plaintiff commenced proceedings for a declaration that the partnership had been dissolved and he sought consequential orders for the appointment of a receiver to the partnership and for winding up of the partnership under the direction of the Court. 5 On 6 February 2007, receivers to the partnership assets were appointed by consent. The receivers have sold both the Parramatta and the Pennant Hills properties. After repayment of bank loans secured on the properties, the costs of sale and the receivers' fees and expenses, a balance of $1,264,882 remains and has been paid into Court pursuant to a consent order made on 1 June 2007. 6 The parties remain in dispute as to how the funds in Court should be distributed in accordance with their respective partnership interests. The Defendant asserts that: – part of the fund is represented by the proceeds of sale of the Parramatta property; – he has sold his interest in the Parramatta property to the Plaintiff under the Termination Deed but has not been paid the consideration for the sale; – he has a vendor's lien over that part of the fund represented by the proceeds of sale of the Parramatta property to secure payment of the consideration of $1,983,638 payable to him under the Termination Deed; – that part of the fund over which he has a vendor's lien should now be paid out to him; – alternatively, the Plaintiff is obliged by the Termination Deed to pay the consideration of $1,983,638 out of that part of the fund represented by the proceeds of sale of the Parramatta property. 7 The Defendant was directed to file Points of Claim pleading his case. He has done so. The Plaintiff, in his Points of Defence, admits that he executed the Termination Deed but he says that the Deed is not enforceable by the Defendant because prior to execution of the Deed the Defendant, or the Defendant's father with the authority of the Defendant, misrepresented to him that: – $1,983,638, the consideration inserted in the Termination Deed, was the total amount contributed to the acquisition and development of the Parramatta property by the Defendant or his father pursuant to the partnership agreement "the First Representation"); – after execution of the Termination Deed by the Plaintiff, the Defendant and his father would provide documentary evidence establishing the accuracy of the contribution figure ("the Second Representation"). 8 The Plaintiff's Points of Defence further allege that the Defendant's father, as the Defendant's agent, represented that: "If the Plaintiff signed the Deed in the form that had been prepared on behalf of the Defendant then [the Defendant's father] would pay further amounts into the Partnership equal to 50% of all then outstanding debts of the Partnership in relation to Parramatta, including amounts payable to Sennrate Pty Ltd, and also so as to make the total of [the Defendant's father's] contributions to the Parramatta property equal to those of the Plaintiff." [sic] ("the Third Representation") 9 The Plaintiff alleges that he relied upon all of the above representations in executing the Termination Deed. He alleges that: – the representations formed a contract which was collateral to the Termination Deed; – performance by the Defendant of the collateral contract was a condition of performance of the Termination Deed by the Plaintiff; – the Defendant has failed to perform the collateral contract whereby the Plaintiff is relieved of performance of the Termination Deed; – alternatively, the First Representation was made in trade and commerce and was false and misleading in that the true amount contributed by the Defendant was substantially lower than $1,983,638; – further, the Second and Third Representations were representations as to a future matter for which neither the Defendant nor the Defendant's father, as the Defendant's agent, has reasonable grounds to make so that, pursuant to s 41 Fair Trading Act 1987 (NSW), the representations were misleading; – the Plaintiff is entitled to have the Termination Deed set aside pursuant to s 72 Fair Trading Act . 10 In response, the Defendant denies that any of the alleged representations were made by him or by his father. He says that the amount of $1,983,638 stipulated as the consideration payable under the Termination Deed correctly comprised: – the Defendant's contributions to the Parramatta property; – repayment of a loan of $300,000 by the Defendant to the Plaintiff; – interest on the amount owing as from 25 February 2005 for a period of six months being the delayed date for payment provided by the Termination Deed. 11 Determination of the issues in this case depends essentially on questions of credit. The Plaintiff alleges that the representations were made to him in a series of conversations between himself and the Defendant's father, sometimes in the presence of the Defendant, in December 2004 and February 2005. The Defendant says, however, that he had at least two conversations directly with the Plaintiff in January 2005 in which he presented to the Plaintiff information as to what contributions he and his father had made to the Parramatta property, and as to how the figure of $1,983,638 was calculated. He says that after some discussion, the Plaintiff agreed with that figure as the consideration to be inserted in the Termination Deed and that the Deed containing that figure was executed by the Plaintiff with the benefit of independent legal advice. 12 The Plaintiff says that, prior to executing the Termination Deed, he told his solicitor about the representations made by the Defendant's father. The Plaintiff says that his solicitor advised that it was a matter for the Plaintiff whether he signed the Deed as it stood. 13 The Plaintiff has not called his solicitor to corroborate the circumstances in which he signed the Termination Deed. The Defendant has not called his father to deny the representations attributed to him by the Plaintiff. The Plaintiff bears the burden of proving, on the balance of probabilities, that the representations which he alleges were made were, in fact, made and that he relied upon them. The essential question is whether I am persuaded that the uncorroborated evidence of the Plaintiff is to be preferred to the uncorroborated evidence of the Defendant. The Termination Deed 14 A draft of the Termination Deed was prepared by the Defendant's solicitors and forwarded to the Plaintiff's solicitors on the evening of 1 February 2005. The Plaintiff's solicitors required some amendments, to which I will come shortly. 15 On 25 February 2005, the parties executed the Deed in the offices of the Defendant's solicitors and their signatures were witnessed by their respective solicitors, Mr Luong for the Plaintiff and Mr Taylor for the Defendant. 16 The relevant provisions of the Termination Deed are as follows: "INTRODUCTION A. The parties have entered into a Joint Venture Agreement for the purchase and development of property at 14 Hunt Street, North Parramatta. B. Both parties have contributed moneys and labour towards the purchase and development of these properties. C. The parties have agreed to terminate the Joint Venture Agreement. [The parties agree that nothing turns on the incorrect description of their relationship as a Joint Venture and that what was meant was the partnership.) … 1.3 [The Plaintiff] will pay to [the Defendant] the sum of $1,983,638.00 on the expiration of six (6) months of the date hereof such sum to include the sum of $300,000.00 lent by [the Defendant] to [the Plaintiff]. … 1.5 [The Plaintiff] will bear all liabilities and be entitled to all profits in relation to the developments referred to in 'A' hereof from the date of this Agreement and [the Plaintiff] shall indemnify [the Defendant] in respect of any liability incurred up to the date of this Agreement and thereafter in respect of the said developments. 1.6 [The Plaintiff] will do all things necessary and sign all documents to remove [the Defendant's] name from all agreements with banks and other creditors of the Joint Venture and shall take out loans and credit accounts in his own name and shall indemnify [the Defendant] in respect of any liability arising in respect thereof on or before the expiration of six (6) months of the date hereof. 1.7 [The Plaintiff] will make all payments on all loans and outstanding accounts which have not been paid at the date of this Agreement and shall continue to make all such payments until the accounts, loans etc. are transferred into his name. 1.8 In the even that [the Plaintiff] wishes to transfer all or part of any of the properties referred to in 'A' above to [the Plaintiff] or as [the Plaintiff] may direct, [the Defendant] shall sign all documents and do all things necessary to effect such transfer and any consideration received for such transfer shall be the sole property of [the Plaintiff] and [the Plaintiff] shall be solely responsible for all fees, duties, taxes and other liabilities incurred as a result of the transfer and shall indemnify [the Defendant] in respect of such liability. 1.9 In the event that [the Plaintiff] wishes to transfer all or part of any of the properties referred to in 'A' above, and where any of the amount referred to in 1.3 has not been paid, [the Defendant] shall sign all documents and do all things necessary to effect such transfer and the net proceeds of sale after payment of all fees, duties, taxes and mortgages shall be paid to [the Defendant]. 1.10 [The Plaintiff] shall be entitled to all capital profits and losses in respect of the Joint Venture as from 1 January 2005." 17 There is no term in the Termination Deed reflecting the alleged representations of the Defendant or of his father that they would provide to the Plaintiff documentation supporting the calculation of the consideration of $1,983,638, or that the Defendant would make further contributions to the partnership account until the amount contributed by the Defendant in respect of the Parramatta project was equal to the amount contributed by the Plaintiff to that project. The affidavit evidence 18 The Plaintiff relied on two affidavits. In the first, dated 11 May 2007, the Plaintiff recounts a dispute with the Defendant's father as to contributions to the working capital of the partnership. He says: "56. Some time in the second half of 2004 I had a conversation with both the Defendant's father and the Defendant at the Defendant's house. I said words to the effect 'The partnership account requires further contribution for running costs, I am unable to continue much longer. What do you want from it?' The Defendant's father replies with the words in effect 'I want my principal sum back'. I said to the Defendant's father and the defendant words in effect 'Alright, you work you how much of your principal contribution, you have all the partnership records' . 57. The Defendant's father arranged for a draft termination deed, which was prepared by the Defendant's father solicitor Watson Stafford. It was sent to my solicitor Allanson Benn solicitor. In the initial draft of the Deed, the defendant's father and the Defendant claimed an amount of $1,983,683.00 as being the defendant's monetary contribution into the Partnership from May 2002 to January 2004. 58. I did not agree that they had paid that much money to the partnership and I disputed the claim was correct together with a number of other terms and conditions. I instructed my solicitor to request amendments and also to request the Defendant' father to produce evidence how the amount of $1,983,683.00 arose. There was matter four or five months correspondences between solicitors in relation to change of Deed terms. 59. This delay increased the pressure on me to sign the Deed. I felt I had no option to sign the Deed of Termination because the bank was threatening to act unless a resolution was achieved. Accordingly I signed the termination deed even though it still contained the provision for payment of the disputed amount by me to the defendant. I believed however that I would still be able to ask for proof of those payments and that if the defendant could not prove that he had paid the whole of that money for the partnership that I would only have to pay what had been proven. … 61. Despite many times my solicitor requested evidence of proof of payments from the Defendant no evidence of those contributions has been supplied." That is the whole of the evidence given by the Plaintiff as to how the Termination Deed came to be executed. 19 In response, the Defendant served an affidavit dated 8 August 2007. He said that the Plaintiff approached him in January 2005 and requested him to consider dissolving the partnership in respect of the Parramatta property if the Plaintiff repaid the Defendant's contributions to the costs of the Parramatta project, a loan of $300,000 which the Defendant, or his father, had made to him in early 2002 to enable the Plaintiff to make his contribution to the capital of the partnership, and interest on that loan. He said that the Plaintiff suggested that he (the Defendant) work out the Defendant's contributions to the Parramatta project. The Defendant said further that the Plaintiff agreed to repay the $300,000 loan with interest fixed at $25,000. 20 The Defendant, who is an accountant with his own accountancy practice, kept the books and records of the partnership business. He prepared a trial balance sheet of the partnership as at 8 January 2005 and a document showing the contributions of the parties to the partnership account. The trial balance sheet is in evidence at pp.121 and 122 of Exhibit P4; the contributions statement is at p.123. 21 The Defendant's affidavit gave this account of his subsequent discussions with the Plaintiff: "64. I presented these documents to the Plaintiff and we had a conversation to the effect: [Defendant]: 'I have worked out how much you would need to pay me in order to take over North Parramatta. From these figures you can see that I am entitled to $1,958.634.79 out of my total contributions in respect of both developments. That is what you will have to pay me in order to take over North Parramatta. The figure includes repayment of the $300,000.00 loan to Sennrate. Also, myself and the partnership will need to be totally removed from the liability to the bank in relation to the project and you will have to be responsible for all costs of the project and be entitled to all the profits. How are you going to come up with the money to pay me?' [Plaintiff]: 'There is no way I can pay you that now. I will need at least 6 months to pay it. I will not pay you interest for that first 6 months.' [Defendant]: 'No, that is not fair. I want you to agree to pay $25,000 in lieu of interest on the $300,000 that you should have paid up until now. You must pay the $25,000 in 6 months time and the full debt. After that interest will accrue at the same interest rate as the $2m Overdraft Commonwealth Bank rate, on the full debt, not just the $300,000. That means you must pay $1,983,637.79 in 6 months time. You must agree that if you have not made payment and you want to sell, then I get paid in priority out of the sale proceeds. This figure represents only what I have contributed. I make no profit, it is just what I have paid.' [Plaintiff]: 'Ok. Leave these documents with me and I will consider it.' 65. After this conversation I inserted additional figures, in my own hand writing, at the bottom of the Trial Balance to add on the $25,000 giving a total that I was seeking of $1,983,637.79. 66. The Plaintiff took these documents away and several days later we had a conversation where we said words to the effect: [Plaintiff]: 'I will accept your offer at $1,983,637.79. I will take over the entire project, including the bank.' [Defendant]: 'OK, good. I will instruct my lawyers, Watson Stafford to prepare a document for us to execute based on these figures. [Plaintiff]: 'OK. I will get my lawyers, Allanson Benn to check it. I will not sign anything until they have approved the document.' [Defendant]: 'OK.'" 22 There are calculations on the first page of the trial balance sheet in the handwriting of the Defendant. They show in the result a figure of $1,958,637.79, to which a figure of $25,000 is added, giving a total at the foot of the page of $1,983,637.79. This figure has obviously been rounded up to the nearest dollar for inclusion in Clause 1.3 of the Termination Deed. 23 The Defendant denied that the Plaintiff had ever raised any objection to the calculation of the sum of $1,983,638 prior to executing the Termination Deed. 24 The Plaintiff then served an affidavit in reply dated 19 May 2008. He gave this evidence as to the circumstances in which the Termination Deed was executed: "12. … I had a conversation with the Defendant's father in about December 2004. The Defendant was present. The conversation was to the following effect: I said: 'What do you want from the Partnership, can you please tell me what is your intention? I cannot keep making payment of your half share of Partnership expenses. If you want to withdraw we could auction the properties and divide the properties.' The Defendant's father said: 'If we do that we will lose more.' I said: 'Of course, yes. Because the market has currently dropped in value. If we sell Pennant Hills we will lose profit but not as much.' The Defendant's father said: 'Well what can we do so we don't lose too much?' I said: 'Well the only way is to complete the construction and then do a sale and we will not lose as much.' He said: 'No. I cannot pay anymore money into the partnership.' I said: 'Well if you cannot pay anymore in then I request that you give me all the records and details of the Partnership financial affairs so I can see what I can arrange. This will affect me and my company because it is guarantor.' He said: 'I will ask my son to make a photocopy of that for you.' The conversation then ended and I left. 13. On another occasion at about this time the Defendant's father said to me: 'North Parramatta is not making any profit due to the downturn in the market. I do not want to lose any more money. I want to withdraw from the Partnership.' I then said words to the following effect: 'There are 3 options for you to choose. You can continue with partnership but then you must put more money into the partnership account to match with my contributions so far and so that the partnership can pay its expenses such as loan repayment for both North Parramatta and Pennant Hill, outstanding construction costs for Parramatta, D.A., C.C and property rates for Pennant Hills. Your other choice is if you want to withdraw you must finalize all the outstanding bills with me and pay your ½ share of partnership expense up to date as you have not made any contribution since May 2004 then you work out of your share in North Parramatta property together with showing me the financial records.' Then I said words to the following effect: 'Finally as third choice, if you agree I will pay you one million dollars being for your principal sum in North Parramatta and you don't need to work out anything.' He said: 'I will talk it over with my son.' That conversation then ended. 14. A few weeks later I had another conversation with the Defendant's father. The Defendant was present. The conversation was to the following effect: The Defendant's father said: 'I want to get my ½ share principal contribution from the Partnership out of North Parramatta.' I said words to the effect: 'As a commercial decision I cannot agree to that because the market is not doing any good. But if I don't agree with you then you will do nothing to help the situation and this will be no good either for me or my company, Sennrate because it is guarantor for the Partnership. Therefore, I have no option but to agree for you to withdraw your share in North Parramatta. But only on condition that you will match my ½ share of contribution up to today's date and pay your share of the outstanding invoices including loan repayment. You work out your ½ share of contributions and show me the partnership account and calculation of your share.' 15. In about early February 2005, I met the Defendant and he gave me a piece of paper which contained some figures showing payments made by the Defendant's father for North Parramatta and Pennant Hills. The calculation was that the Defendant's father claimed to have paid $1,983,637.79 in respect of the North Parramatta development. I did not agree that that was correct. I had in my own mind worked out roughly what each partners contributions were at that date. I said to the Defendant's father: 'This is not correct. According to my calculations my payments for both properties has not even reached this much. You need to give me evidence to support your figures.' The Defendant's father said: 'This is the figure that my son worked out as an estimate only up to today's date.' I then said to the Defendant's father words to the effect: 'What about the money you must put in to break-even with me? and where is the proof of this?' The Defendant's father said: 'No. That has not yet been included in the calculation it is only an estimate.' I said: 'How can I know exactly the amount to pay you out. I cannot obtain finance until you show me the true figures. I think the payout figure is somewhere between $1,200,000 - $1,500,000 including the $300,000 loan to Sennrate. Please re-calculate the amount again' 16. After about a week I had not had any contact from the Defendant or his father. I made contact in person with [the Defendant's father]. The Defendant's father said to me words to the effect: 'Until you agree with my payout figure and the Deed of Termination for North Parramatta is drawn up and signed by both party, I will not instruct my son to make any payments into the Partnership account to break-even with you or give you any of the partnership financial record.' I said: 'Okay, I trust your words that you will provide evidence and make further contributions to break-even with me up to date. You should go ahead to instruct your solicitor to prepare a Deed of Termination.' The Defendant's father said: 'I have decided to change and have my own solicitor rather than using the same solicitor acting for both partners, I will get that done as soon as possible' 17. In February 2005, a draft Deed of Termination was given to me. I took it to my solicitor, Roger Luong. The figure for the Defendant's father's contributions in that Deed was an amount of $2,592,050. I said to Mr Luong: 'This amount is extremely high. I don't think it is correct.' I instructed Mr Luong to seek a amendment to the Deed by requesting copies of the partnership financial records to confirm the true figure of the Defendant's contribution to the North Parramatta property. I did not hear from [the Defendant's father] about a change to the deed. I made contact with him and had a conversation to the following effect. I said: 'why have you been quiet? What do you want to do?' He said: 'we sent a deed. You did not agree. What do you want?' I said: 'I will agree to the amount when you show me the financial records and how it comes to that amount. I have asked you to prove your amount' He said: 'I will instruct the Solicitor to amend the deed but I need you to sign the deed so I can borrow money' He also said: 'This deed will help both parties. It will help me to borrow money from my relative to make the contributions to match with you and for payment of outstanding bills. It will help you because you can use the fund that I pay to you to complete the construction quickly. I will allow you Six (6) months to repay my principal and in the meantime you can refinance and then pay me out' I said: 'If you say it like that I agree, and because you also said you will give me proof of how the figure is calculated' 18. A few days later I then went and saw Roger Luong. He said to me 'the only change to the deed is a change to the amount. It has been reduced to 1,983,637.79, no other change has been made'. I said to Mr Luong, 'I have spoken to [the Defendant's father]. He does not want to change the deed or to reduce the amount below $1,983,637.79 because he needs to show this amount to his relative to borrow money so he can then pay money into the partnership account to make even the contributions. But we have had a discussion and he agrees that he must pay money to break even with me for the up to date balance and also provide evidence to show the figure of $1,983,637.79 million is correct.' [Mr Luong] said: 'OK. If that is what you say then it is really up to you, whether you want to sign this deed.' I said: 'Ok. In that case I will sign the deed. I have no choice or way out. If I am not signing this Deed, I can't do anything. He will not contribute to his shortfall since May 2004 until now. The partnership requires the payment of the shortfall in order to make payment of Partnership expenses and loan repayment with National Bank for which me and my company Sennrate as guarantor will be liable.' 19. I signed the Deed because the Defendant's father said that once the deed was signed he would be able to go and see a relative of his and borrow the money needed to pay into the partnership to equalize the contributions between the 2 partners and, as well, to pay his share of the outstanding bills to Sennrate and others. This would mean he would be paying about $550,000 into the partnership. If that was done then I would be able to complete the building work at North Parramatta and sell or refinance the National Bank loans so as to get enough money to pay out the Defendants father the amount of his proven contributions within the 6 months allowed by the Deed.' Contemporaneous records 25 On the evening of 1 February 2005 the Defendant sent by facsimile to the Plaintiff's solicitor a draft of the Termination Deed which had been prepared by the Defendant's solicitor. The draft provides for the dissolution of the partnership, not only in relation to the Parramatta property but also in relation to the Pennant Hills property. Clause 1.3 provides for a consideration which reflects the Defendant's contributions to the costs of both projects. 26 The copy of the draft Deed, produced from the file of the Plaintiff's solicitor, shows amendments in the handwriting of Mr Luong. The reference to the Pennant Hills property is deleted and the consideration expressed in Clause 1.3 is deleted. There are other amendments to the draft but they are of no present relevance. 27 On 2 February 2005, Mr Luong wrote to the Defendant's solicitors advising that he had received instructions on the draft and requesting certain amendments. Relevantly, the letter said: "3. Please amend clause 1.3 to read as follows '1.3. Chan will pay to Dat the sum of $ (Dat's contributions)' on the expiration of six (6) months of the date hereof by progressive payment as the units are sold. We note that Dat's contribution is yet to be determined, the parties will work out Dat's contribution and will advise the same to you at a later stage. We also note that there be no deposit to be paid on the signing of this Deed." ("Dat" is the Defendant and "Chan" is the Plaintiff.) 28 There is no reference in the letter to a requirement for payment by the Defendant of any further contribution to the partnership account. 29 A major contention in the Plaintiff's case was that the Defendant's contributions to the Parramatta project were very substantially less than those of the Plaintiff, so that it was inherently unlikely that the Plaintiff would have agreed to the Termination Deed without, by a collateral agreement, requiring the Defendant to bring his contributions to the Parramatta project up to equal the amount contributed by the Plaintiff. However, the Defendant strenuously contested this assertion, insisting that his contributions to the Parramatta project not only equalled those of the Plaintiff but, indeed, exceeded them. 30 Resolution of the issue as to what contributions to the Parramatta project by each party was made exceedingly difficult by reason of the fact that large sums of money were paid into the partnership account, or paid on account of the partnership, in cash. Indeed, the Defendant said that a total of some $500,000 had been paid either to the partnership account or to the Plaintiff, in cash. In respect of many cash transactions there was very little, if any, contemporaneous record particularising the amount paid, the date paid, the payee and the purpose of the payment. The Plaintiff's oral evidence 31 The Plaintiff is not fluent in English. He speaks Vietnamese and Chinese, and gave evidence through an interpreter. 32 The Plaintiff said that his solicitor, Mr Luong, had given him advice about the Termination Deed prior to its execution. He said that Mr Luong spoke Vietnamese and Chinese and had explained the Deed to him, although not in detail. He made no attempt to procure Mr Luong's evidence for the trial, so as to corroborate the evidence which he had given about Mr Luong's advice to sign the Deed notwithstanding the absence of the terms agreed with the Defendant's father. 33 The Plaintiff said that he had never discussed anything with the Defendant alone: his discussions were always with the Defendant's father and sometimes the Defendant was present also. 34 In his second affidavit, the Plaintiff said that he received from the Defendant the trial balance sheet with handwritten figures showing how the amount of $1,983,637.79 was calculated before he told the Defendant's father to proceed to instruct his solicitors to prepare the Termination Deed. However, in his cross examination, the Plaintiff said, after some equivocation, that he received the trial balance sheet by facsimile after he had had advice from his solicitors about the terms of the Termination Deed: T22.20 – T23.26. 35 The facsimile trial balance sheet in evidence shows that it was sent from the Defendant's office on 14 February 2005, well after the Plaintiff's solicitor had sent to the Defendant's solicitor the Plaintiff's requested amendments to the draft Deed which had been received on 1 February 2005. The Plaintiff's evidence in his second affidavit as to when he received the trial balance sheet figures was, clearly, wrong. 36 When pressed as to why he had signed the Termination Deed containing an amount as consideration with which he did not agree, the Plaintiff said that he trusted the Defendant's father to honour the representations allegedly made by him. 37 In his first affidavit, the Plaintiff said that after the Termination Deed had been signed, Mr Luong wrote to the Defendant many times requesting documentary proof of the Defendant's contributions to the Parramatta project. He confirmed that evidence in cross examination. There were no such letters in evidence. A call was made for their production. None was produced: T38.15-.36. The Defendant's oral evidence 38 The Plaintiff pleaded in his Points of Defence that the representations said to have been made by the Defendant's father were made by him as the Defendant's principal or as his agent, that is, that the Defendant was only acting as a partner in the partnership as nominee and agent for his father or, alternatively, that the Defendant's father had authority to bind the Defendant in partnership affairs. These allegations were the foundation of a case that the Termination Deed was subject to an oral collateral agreement made between the Plaintiff and the Defendant's father, either as the Defendant's principal or as his agent. Similarly, the representations were said to bind the Defendant because they were made by his father as principal or as agent. Although these allegations were not formally traversed, because no Reply was filed, they were not admitted and were put in issue. 39 In cross examination the Defendant, who is fluent in English, said that in 2002, when the partnership agreement was signed, he was about thirty-two years old and had just started his own accountancy practice. His father and the Plaintiff were about sixty-three years of age. He understood that the Plaintiff was a builder by trade. 40 The Defendant said that he met the Plaintiff through his father, who had met the Plaintiff in early 2000 because they were both on the committee of a Buddhist temple association. The Defendant agreed that what had led to his execution of the partnership agreement with the Plaintiff was an intention on the part of his father to go into property development with the Plaintiff. His father had available money for investment, both from his own resources and from funds from relatives and friends. He asked the Defendant if he would sign the necessary documents and deal with the accounting side of the partnership business. The Defendant said that his father was unable to move without a wheelchair: "That's why he asked me to be the nominated person of the investment, because it is hard for him – old man – to walk in or out or do anything with construction." T49.8-.10 41 The Defendant gave this evidence: "Q. Would you accept from me that in relation to the partnership business with Mr Chanh you were to act on your father's instructions? A. I do most of the case, I respect my family so whenever there is a question relating to construction I have no experience in construction. This is my first time involved in construction so when there is a question raised by the partners or things, we always gather with my parents and friends and my Mum and Dad will be there to discuss what decisions need to be made to go ahead. Q. Can I just put this to you and see if I can get your agreement and then I will move on. Would you accept from me, that right from the outset of this partnership it was your understanding that you would be acting on the instructions of your father in relation to the business of the partnership with Mr Chanh? A. Instruction? Not all the cases. I normally make my own decision of what is going to be done. Q. Have you finished? A. Yes. HIS HONOUR Q. Did you say that your father would make all the decisions? A. Not all the cases. We were all in the family, so, decisions I have to make a final decision so whatever my partner comment 'I need this. I need this' we come up question and brain storm with my family and then make a decision." 42 I accept that the Defendant would not simply comply with his father's directions in all matters concerning the partnership business. The Defendant possesses accounting expertise which, apparently, his father does not. Further, it is to be inferred that the Defendant had to pay some regard to the wishes of the family members and friends who had contributed money to the partnership venture from the Defendant's side. However, I am satisfied that, by reason of the Defendant's respect for his father, the fact that the investment monies were coming from, or through, his father and the fact that his father asked him to be the "nominated person" for the partnership investment, the Defendant was, in truth, the agent for his father, as disclosed principal, in entering into the partnership agreement. 43 It follows that if the Defendant's father made any binding agreement with the Plaintiff, or made any representations to the Plaintiff, concerning the operation and terms of the Termination Deed, the Defendant would be bound. 44 In general, I found that the Defendant gave his evidence in cross examination frankly and without evasion. For example, when it was put to him that his evidence that $200,000 in cash had been paid to the Plaintiff by the Defendant's father was, in effect, hearsay because he was not present at the time, the Defendant freely conceded this to be so and that he was relying essentially on entries in a document signed by the Plaintiff (Exhibit D2): T54.26 – T55.21. 45 I did not find any of the Defendant's evidence inherently implausible. Absence of material witnesses 46 As I have already noted, the Plaintiff did not call his solicitor, Mr Luong, to corroborate his evidence about the reason that the Termination Deed did not contain the terms of the collateral agreement. Likewise, the Defendant did not call his father to refute the Plaintiff's evidence as to the making of the representations. 47 Both sides gave no evidence sufficiently explaining their failure to call these witnesses. Each side relied heavily on the absence of the witness on the other side for a submission that I should infer that the evidence of that witness would not have assisted the other party's case. 48 Mr Alexis SC, who appeared with Mr Golledge of Counsel for the Plaintiff, submitted that the failure to call Mr Luong was not significant. He said that the Plaintiff's evidence in paragraph 16 of the second affidavit as to a conversation with the Defendant's father was critical and that that evidence had not been contradicted by the Defendant's father. Accordingly, he said, the Plaintiff's evidence as to his instructions to Mr Luong did not need corroboration. 49 I am unable to accept this submission. Although the Defendant did not call evidence to contradict the statements attributed to his father, whether in paragraph 16 of the Plaintiff's second affidavit or otherwise, he gave evidence of conversations between himself and the Plaintiff which, if accepted, would have cast grave doubt on the Plaintiff's evidence as to the alleged agreement between himself and the Defendant's father. The Defendant's evidence in this regard was supported, at least circumstantially, by the fact that the Plaintiff, on his own admission, had been shown the calculations producing the figure of $1,983,638 before execution of the Termination Deed, and by the fact that there was no evidence of any written request to the Defendant to provide the supporting documentation, either before or after execution of the Termination Deed. 50 The evidence of Mr Luong could not have proved directly the making of the alleged statements by the Defendant's father to the Plaintiff because such evidence would have been hearsay as to the truth of the facts asserted by the Plaintiff. However, Mr Luong's evidence would have supported the Plaintiff's case because it would have provided important corroboration as to the time that the Plaintiff first expressed reservations about the correctness of the consideration stated in the Termination Deed. It would have corroborated his assertion that he sought advice from Mr Luong as to what he should do in those circumstances and that Mr Luong did not attempt to dissuade him from relying upon unrecorded promises which were at odds with the terms of the Deed. 51 For that reason, I am of the view that I should infer from the Plaintiff's failure to call Mr Luong that Mr Luong's evidence would not have assisted the Plaintiff's case. 52 Mr Cotman SC, who appeared with Mr George of Counsel for the Defendant, did not make any strenuous effort to downplay the significance of the Defendant's failure to call his father as a witness. However, the inference that the evidence of the Defendant's father would not have assisted the Defendant's case does not entail the consequence that I should disregard the significance of the Plaintiff's failure to call Mr Luong and that I should accept the Plaintiff's evidence in preference to that of the Defendant. The Plaintiff has the evidentiary burden of satisfying me that the representations alleged by him were made. In assessing that evidence I must have regard not merely to the Plaintiff's failure to call Mr Luong or to the Defendant's failure to call his father but, rather, to all of the available evidence, including those failures. Whether the Plaintiff has discharged the evidentiary burden 53 The Plaintiff has not satisfied me that the Defendant's father made the alleged representations. My reasons are as follows. 54 First, I have regard to the serious inconsistency between the Plaintiff's evidence in his first affidavit as to how he came to execute the Termination Deed and his evidence in the second affidavit. 55 In the first affidavit, the Plaintiff gives none of the conversations with the Defendant's father which he recounts in the second affidavit. All he says in the first affidavit is that the Defendant's father said that he wanted repayment of his contribution to the partnership. The Plaintiff says that he instructed his solicitor to request documentary proof as to the calculation of the amount of $1,983,638, but there is no evidence of any such request by Mr Luong. 56 The Plaintiff says further that there was "four or five months correspondence" between the solicitors regarding amendments to the Termination Deed. This is clearly wrong. The first draft of the Termination Deed was sent to Mr Luong on 1 February 2005, Mr Luong sent a letter requesting amendments on 2 February 2005, the trial balance sheet was provided by the Defendant on or about 14 February 2005 and the Termination Deed, including the requested amendments, was executed on 25 February 2005. 57 Critically, in the first affidavit the Plaintiff gives the non-existent delay of four or five months as the reason for his signature of the Termination Deed, incorporating the stated consideration. He says that the delay increased the financial pressure being placed upon him by his bank. In his second affidavit, he gives a completely different reason for executing the Termination Deed without amendment of the consideration: namely, that he trusted the Defendant's father to honour the representations which had been made to him. 58 In the first affidavit the Plaintiff says that he "believed" that he would be entitled to ask for proof of the Defendant's calculations but he does not attribute that belief to any statement made by the Defendant or his father. 59 Also of critical importance is that in the first affidavit the Plaintiff says nothing about the contributions of the Defendant to the Parramatta project being substantially less than his own, and that the Defendant's father promised to make further contributions. Further, and equally importantly, the Plaintiff says nothing at all about the fact that he was provided with the trial balance sheet and the Defendant's calculations as to the Termination Deed consideration, before he executed the Deed. 60 It is significant, in my opinion, that the Plaintiff's allegations about the representations attributed to the Defendant's father emerged only in his second affidavit, after he had received the Defendant's affidavit giving evidence at length about the Defendant's explanation to the Plaintiff as to how he calculated the figure for insertion in the Termination Deed. 61 Mr Alexis submits that the inconsistencies between the first affidavit and the Plaintiff's second affidavit and in his evidence in the witness box are not significant because, at the time the Plaintiff came to make the first affidavit, the Defendant's Points of Claim had not yet been served, so that the issues as to enforceability of Termination Deed were not yet in focus. I am unable to accept this submission. 62 The submission overlooks the fact that some of the evidence in the first affidavit is clearly wrong, whatever be the issue to which it is directed. There is no explanation as to how this error came to be made. Further, and more importantly, by the time that the Plaintiff came to make the first affidavit receivers had already been appointed to the partnership and what was then in issue between the parties was what was owing to whom in the taking of accounts. The enforceability of the Termination Deed must have been appreciated by the Plaintiff and his advisers as critical in the taking of the partnership accounts. One would have expected the Plaintiff to state in his affidavit all evidence upon the basis of which he asserted that the Termination Deed was unenforceable. 63 Second, there is an inconsistency between paragraphs 20 to 22 of the first affidavit and paragraph 2 of the Plaintiff's second affidavit. In the first affidavit the Plaintiff says that he received $300,000 in cash from the Defendant's father by way of personal loan in three instalments. In the second affidavit he says that he did not receive $300,000 but, rather, $270,000 in six instalments and that those instalments, being personal loans to him, have wrongly been included by the Defendant as contributions of the Defendant to the capital of the partnership. By this evidence, he supports his assertion that the contributions of the Defendant to the partnership were substantially less than his own. The Plaintiff gave no explanation as to how he had come to give these two completely inconsistent accounts. 64 Third, I do not regard it as probable that the Plaintiff would have executed a Deed requiring him unconditionally to make a payment which he disputed simply because he trusted the Defendant's father. The Plaintiff is an experienced builder and businessman. He had the Termination Deed explained to him in Vietnamese or Chinese by Mr Luong. Unquestionably, he knew that the Deed required him to pay $1,983,638 upon the expiry of six months. As far as the evidence demonstrates, the partnership between the Plaintiff and the Defendant was the first and only business relationship between the Plaintiff and the Defendant's family, including the Defendant's father. There was no evidence that the Plaintiff and the Defendant's father had become close personal friends since they first met in 2000. There is clear evidence that, as at February 2005, the Plaintiff and the Defendant's father had been in dispute about their respective contributions to the partnership since mid-2004. The Plaintiff was suggesting that the Defendant's father was reneging on the deal. The Defendant and his father were calling for precise information about building costs of the projects but were complaining that the Plaintiff was not providing that information. The evidence suggests quite the opposite of an atmosphere of mutual trust and confidence between the parties by the time that the Termination Deed came to be executed. 65 Fourth, the Termination Deed itself is inconsistent with the proposition that it was founded upon the common assumption that the Defendant would continue to make contributions towards the cost of the Parramatta project. Clauses 1.5 to 1.7 clearly indicate that in respect of the partnership liabilities for the Parramatta project a line was to be drawn as at 25 February 2005 and liabilities for the Parramatta project as at that date were all to be for the account of the Plaintiff. The Plaintiff must have appreciated the significance of those terms. 66 Fifth, I find it improbable that if the Plaintiff had told Mr Luong of the collateral agreement with the Defendant's father which he now alleges, Mr Luong would have given the advice as to execution of the Termination Deed which the Plaintiff now attributes to him. No prudent solicitor would have given that advice. A prudent solicitor would have advised that, if the Deed itself was not to be amended, side letters should be signed confirming the collateral agreement. 67 Sixth, I am by no means satisfied that the Defendant's contribution to the Parramatta project as at 25 February 2005 was substantially less than that of the Plaintiff. The Defendant says that he provided about $500,000 in cash; the Plaintiff disputes that contention. The evidence supports the conclusion that the parties were accustomed to paying and receiving large amounts of cash in their dealings, and scant, if any, record was made of those dealing. Exhibit D2 supports the Defendant's assertion that the Plaintiff received from the Defendant's father at least $200,000 in cash, as a loan, shortly before the partnership agreement was executed. Exhibit D1 supports the Defendant's assertion that on 27 May 2002 the Defendant provided $50,000 in cash for the purchase of building materials, and on 26 June 2002 he provided $100,000 in cash for the same purpose. Further particulars are not recorded. 68 I do not find it necessary to ascertain exactly what contributions the parties had made to the Parramatta project as at 25 February 2005 because the figure of $1,983,638 is clearly not a calculation only of what the Defendant is entitled to receive by way of repayment of contributions to the Parramatta project. The sum includes a loan of $300,000 (which the Defendant says he did not receive) and interest on that sum. It is certainly open to inference that when the Plaintiff was negotiating the consideration for the Termination Deed he himself did not approach the figure as an exact calculation of contribution repayments. He had offered a round sum of $1M. 69 The Defendant has given evidence to the effect that the contributions from him to the Parramatta project exceeded those of the Plaintiff. The documentary records, such as they are, are inconclusive. There are inconsistencies and implausibilities in the Plaintiff's evidence which cause me to question his accuracy and reliability. I am not satisfied that the Plaintiff has demonstrated that the Defendant's contributions to the Parramatta project were substantially less than his own. 70 Seventh, I take into account that the Plaintiff has failed to call Mr Luong to corroborate his evidence. I take into account also that the Defendant has failed to call his father. However, I do not think that the Defendant's failure overcomes the contradictions, inconsistencies, implausibilities and uncertainties of the Plaintiff's own evidence to the point that I should find positively that the Plaintiff's evidence should be preferred to the Defendant's evidence. 71 For these reasons, I find that the Plaintiff has failed to prove that the Defendant's father, or the Defendant, made the representations alleged in the Points of Defence. It follows that the Plaintiff has failed to prove the collateral agreement alleged and any factual basis upon which the Termination Deed can be set aside or varied under the Fair Trading Act. 72 Accordingly, I hold that the Termination Deed is enforceable against the Plaintiff according to its terms. The Deed provides that the consideration is to be paid by the Plaintiff out of the proceeds of sale of the Parramatta property. The Defendant is therefore entitled to payment of that part of the fund in court which represents the proceeds of sale of that property. Conclusion 73 The parties have agreed that a decision as to the enforceability of the Termination Deed will lead to a number of further calculations in the partnership accounting, particularly as to the distribution of the fund in Court. It is possible that some, if not all, of those calculations can be agreed. 74 In those circumstances, I will allow the parties a little time to consider the implications of these reasons. I will fix a date for the bringing in of Short Minutes of Order, which will include such directions as are necessary for any further working out of the accounts and for the payment out of the fund in Court. I will also hear argument, if any, as to costs. – oOo – DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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