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IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	 Revised
Not Restricted
Suitable for Publication	
General List

Case No. CI-20-05709

Innovative Landscape Supplies Pty Ltd (ACN 123 390 125)	Plaintiff	
		
v		
		
Spachoice Pty Ltd (ACN 614 315 570)	Defendant	

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JUDGE:	Her Honour Judge Burchell	
WHERE HELD:	Melbourne	
DATE OF HEARING:	6 -10 May 2024, written submissions dated 7 June and 5 and 26 July 2024 	
DATE OF JUDGMENT:	22 October 2024	
CASE MAY BE CITED AS:	Innovative Landscape Supplies Pty Ltd v Spachoice Pty Ltd 	
MEDIUM NEUTRAL CITATION:	[2024] VCC 1636		

REASONS FOR JUDGMENT
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Subject:	CONTRACT – ESTOPPEL 
Catchwords: 	whether the parties entered into an agreement in the terms alleged – whether the defendant made representations upon which the plaintiff relied on to its detriment – whether the plaintiff terminated the agreement – whether the plaintiff is entitled to recover debt and damages – whether the plaintiff is entitled to equitable compensation on the basis of an estoppel 
Cases Cited:	Realestate.com.au Pty Ltd v Hardingham (2022) 406 ALR 678; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Touma v Highfields Australia Pty Ltd [2024] NSWCA 160; Jones v Dunkel (1959) 101 CLR 298; Brad Teal Pty Ltd v EVR Group Pty Ltd [2024] VCC 485; Energy World Corporation Ltd v Maurice Hayes and Associates Pty Ltd [2007] FCAFC 34; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	L P Wirth 	RJ Legal Pty Ltd 	
			
For the Defendant	R A Harris 	Rostron Carlyle Rojas Lawyers 	

HER HONOUR:

Introduction 
1	The plaintiff (“ILS”) claims that it entered into a contract or arrangement with the defendant (“Spachoice”) whereby it would operate a showroom of Spachoice’s swim spas in consideration for the margin between Spachoice’s wholesale price and the retail price and other costs (“the profit-sharing agreement”), which was to run a minimum of 5 years. ILS alleges that, within a year, Spachoice denied that it was bound by such a contract or arrangement and ILS sought to terminate the agreement. ILS now seeks to recover debt and damages, alternatively, equitable compensation on the basis of estoppel. Spachoice disputes these allegations.  
2	In my judgment, Spachoice’s November 2019 hybrid agreement grounds are made out with a minimum term of 4 June 2020 and, thereafter, an implied term that the agreement was terminable at will by the parties. My reasons in respect of each ground are set out below.  
3	Accordingly, I order that there is judgment for the plaintiff in the proceeding. I will invite the parties to prepare draft orders to give effect to these reasons and will determine any issue concerning the timetable for the trial on quantum and costs on the papers. 
4	The proceeding was not reached on 20 November 2023 and was listed as a priority. The plaintiff’s quantum expert, Mr Greg Blashki, director of Pitcher Partners Corporate Pty Ltd, was unavailable to give evidence during the scheduled trial dates. A joint experts report was due to be filed by 26 April 2024 but had not been provided by the parties. Further, an objections hearing in relation to inspection of subpoenaed documents in relation to quantum was adjourned to 25 June 2024. As a result, the matter proceeded on the basis of liability only.  
5	The issues for determination are as follows:
(a)	What was the effect of the discussions between the parties, in particular Mr Dean Jordan and Mr Gaoxiang “Ivan” Lai, in mid-2019? 
(b)	By those discussions, did the parties enter into an agreement in the terms alleged? 
(c)	Alternatively, did Spachoice make representations upon which ILS relied to its detriment, and is Spachoice estopped from resiling from them? 
(d)	If Spachoice repudiated the agreement, or unconscionably resiled from its representations, is ILS entitled to damages or equitable compensation? 
Background facts
6	Until 2019, ILS had been operating a spa stores business trading as “Just Spas Bayswater” located at 1/96 Canterbury Road, Bayswater North (“the Kilsyth store”). Spachoice operated a competing business at 3/200 Canterbury Road, Bayswater North (“the Bayswater store”). Spachoice is a subsidiary of a Chinese company, Guangdong Crystal Island Healthwise Co., Ltd (“Crystal Island”). Oasis Leisure Products Pty Ltd (“Oasis”) is a wholly owned subsidiary of Crystal Island. 
7	Dean Jordan was the sole director of ILS. He conducted an associated company with Mr Leonard van Hoof called NLRD Pty Ltd, which operated a business known as “Just Spas Essendon” (“the Essendon store”).  
8	Mr Jordan’s sister-in-law, Ms Lisa Mayer, operated a similar business in Hallam through Just Spas Bayside Pty Ltd (“the Hallam store”).  
9	In 2019, the “Just Spas” businesses were in the process of changing supplier to another brand called “Sapphire Spas”. In July 2019, Mr Adam Stone, an employee of Spachoice, contacted Mr Jordan and sought to use Spachoice as a supplier to ILS. Mr Jordan presented Spachoice with an opportunity to purchase the Kilsyth, Essendon and Hallam businesses.  
10	A series of meetings followed between Mr Stone, his supervisor, Ms Lisa Devenish, and later (in August 2019) with Mr Lai of Spachoice and Mr Jordan, Ms Mayer, and Mr van Hoof from mid to late July 2919.  
11	On 11 August 2019, Mr Lai met with Mr Jordan at a café on Graduate Road, Bundoora. ILS claims that what was discussed was, in substance, that instead of Spachoice purchasing three businesses, it would purchase only the Essendon and Hallam stores, and ILS would convert its Kilsyth store into a display of Spachoice’s range of swim spas. ILS contends that Spachoice was to pay ILS the profit of each sale. This is disputed by Spachoice.  
The Witnesses 
Dean Jordan
12	Mr Jordan is the sole director of ILS.  
13	Mr Jordan had been in the spa business since around 2007. He had operated around 5 stores in that period. 
14	Mr Jordan’s evidence was not completely satisfactory, and he had difficulty explaining what was discussed clearly. There were gaps in his recollection, however, his memory lapses were generally explicable by the extensive effluxion of time involved with this case.
15	Mr Jordan conceded that, in his email correspondence, he had made a number of errors such as referring to the month of “October” instead of “August” and the sum of “$30,000” instead of “$20,000”.  These inconsistencies occurred at the relevant time.  Further, as set out below, Mr Jordan gave contradictory evidence concerning his lack of understanding of what a tangible or intangible asset was, that the restraint of trade allowed him to sell Oasis products at the Kilsyth store for his own benefit and his subsequent claim that he could not operate the store as a retail store and the false Employment Separation Agreement prepared for his employee, Ms Zoe O’Connor and the reasons for her termination. Given the flux of time, his oral evidence was not very specific. In light of the gaps in Mr Jordan’s recollection, I cannot rely on his evidence absent other objective evidence.
16	Mr Jordan said that he expanded the business of Just Spas as they did not have a great client presence. He explained the arrangement with Spa Industries Global Pty Ltd was a “stock to rock consignment stock agreement”. The Just Spas Retail Partnership Agreement dated 6 June 2017 was executed by Spa Industries Global Pty Ltd and Mr Jordan.  
17	Mr Jordan entered into a commercial lease for the premises on 5 June 2017 for a period of 3 years, with an option to renew for one further term of 2 years to be exercised by 4 March 2020. The rent was $4,166.00 per month (excluding GST) or $49,992.00 per annum.  
18	Mr Jordan said he was better at customer relations, as opposed to writing or emails.  
19	By email dated 2 March 2019 from Ms Sharon Tomlinson from Sapphire Spas, Business Development Executive, a competitor of Just Spas, communicated with Messrs van Hoof and Jordan. Mr Jordan liked their product and explored future possibilities together. Ms Mayer reached out to Ms Tomlinson to change suppliers because they had some issues with Just Spas’ warranties and the shift in the company meant they had some issues with the products being manufactured in China. The agreement was terminated on 15 September 2019. That would give a 15-day period to restock and refresh the fit out for new branding. Meanwhile, Sapphire Spas were manufactured in Pakenham. 
20	From March 2019, they negotiated with Sapphire Spas. On 18 July 2019, Ms Tomlinson wrote to Ms Mayer and Mr van Hoof about store models. By email dated 18 July 2019, Ms Mayer wrote to Ms Tomlinson and Mr Jordan with some examples of orders for floor stock. Mr Jordan had not made a decision about whether to sell to Spachoice or Sapphire. He said that the idea was that he would help Crystal Island break into the market. Mr Jordan conceded that, in August 2019, they still had time to go with another company such as Sapphire Spas, instead of Spachoice. Mr Jordan said they wanted to open up in the busy period with the new company in December 2019 to March 2020. 
21	The first contact with Spachoice was with Mr Stone. 
22	Mr Jordan received a message from Ms Devenish in July 2019, who wanted to speak about some numbers and figures about what Spachoice could offer. Mr Jordan had design work and retail pricing set with Sapphire Spas at the time.  Mr Jordan and Ms Devenish discussed past sales that ILS had done, and the future. They wanted a feel for what the shops had done and the reasons for leaving Spa Industries. The future involved different options. Ms Devenish wanted some numbers in the way of sales so they could show a concept to those higher up.  
23	Mr Jordan had a discussion with his sister-in-law, Ms Mayer, and Mr van Hoof, who were “both on board with selling”.  
24	By email dated 27 July 2019, Ms Devenish wrote to Mr Jordan entitled “something to work with you over”.  It set out an offer of being out of the business in 6 months for the sum of $300,000.00. The offer was for the three businesses.  Ms Devenish and Mr Stone came to Mr Jordan’s Essendon store and discussed what the sales could be, and what Mr Jordan’s role could be. Mr Jordan trusted Ms Devenish and Mr Stone enough to draft up an offer on his behalf.  
25	Mr Jordan and Mr Stone had a coffee at the Hungry Fox cafe in Essendon Fields and discussed the takeover of the three stores. Mr Jordan said they were still moving forward with the idea.  He gave the breakdown of the stores’ incomes. Mr Jordan said they were big in their marketplace and Mr Stone wanted that benefit.  
26	By email dated 27 July 2019, Mr Jordan wrote with a change to the amount sought to $480,000.00 after discussions with Ms Mayer and Mr van Hoof. Mr Jordan said that the collective did not intend to stay on in the business for too long if they were being bought out. They were happy to do a transition period. They spoke about the financial side and Mr Jordan said that they discussed business breakdown for the three stores with a deposit paid.  
27	By email dated 29 July 2019, Mr Lai wrote to Mr Jordan referring to a phone call earlier that day and advising that the Board accepted the price of $480,000.00 with a deposit of $50,000.00 (within 7 days of signing the letter of intent) and $100,000.00 (within 7 days of settlement) and the instalments over three years.  In return, there would be joint co-operation between the stores and Spachoice, they would not complete and Mr Jordan and Mr van Hoof would continue to run the business and ensure it is profitable. Mr Jordan did not accept that Mr Lai raised with him that the Board was not interested in the Kilsyth store in the telephone call.  
28	In an email dated 29 July 2019, Mr Lai informed Mr Jordan that the Board had agreed to the sum of $480,000.00:
“Value: 480,000AU$,
 Deposit: 50,000AU$ (within 7 business days after the letter of intent is signed).
 Initial instalment: 100,000AU$ (within 7 business days after settlement)
 Remaining balance will be divided into three equal instalments (110,000AU$),
 paid in next three years when net profit is not less than 150,000AU$ every year.”
29	Mr Lai noted in the email that, generally speaking, Spachoice would pay for the following:
“1. Fit out of store 
 2. Lease of store, so you can walk away three years later with minimum cost
 3. Stock, free up your cash flow
 4. Marketing
 5. 150,000$ for sure + 330,000$ when business runs as expected + additional bonus when financial performance is more than expect.”
30	Mr Jordan wanted to get out of the spa industry or change suppliers. Spachoice needed to grow their business. They only had the one shop in Bayswater. Their presence at the Spa Shows at the Melbourne Convention and Exhibition Centre was very small. Ms Mayer wanted to be bought out. She did not want to work for the purchaser otherwise she would prefer to have the business as her own, rather than have bonuses and commissions. They were also still in discussions with Sapphire Spas. Ms Mayer was in favour of Sapphire Spas.  Mr Jordan said he was on the fence at the time.  
31	By email dated 30 July 2019 from Mr Jordan to Mr Lai and Ms Devenish, Mr Jordan was working through the sale details. Mr Jordan said he only had a few amendments. He said there was tinkering in respect of the deposit amount and initial instalment amount. The email, relevantly, stated that: 
“The benefits of buying the 3 businesses with the fore mentioned conditions;
- Return of 150,000 AU$ plus in the first year but we will
- Convert 1,300,000 AU$ of spa sales to you from your competitor
- Have 3 Co-operators with 30 years combined experience to grow your market share” 
32	Mr Jordan said they opened up the Kilsyth store to compete with the Spachoice Bayswater store which was operating as “Sparight” pre-2019.  
33	On 1 August 2019, Mr Lai responded to Ms Devenish and Mr Jordan with a letter of intent agreeing to adjust the deposit and initial payment from $150,000.00 to $180,000.00:
 “In regard to your question this morning, the profit need to be 150,000AU$ in one full year for 150,000$, we need a firm guarantee of 150,000AU$ profit, but to me, it is about the same as what you suggested, when you make less, you use your money to fill the gap between actual profit and target profit, you then can have 150,000 from us.
 For instance, if profit is 140,000AU$, you can always find a way to make up the rest 10,000AU$ by using your money, you then have 150,000$ back from Crystal Island / Spa choice.”
34	Mr Jordan did not think that the email accurately relayed what had been discussed.  The letter of intent was not in a form that he had seen before, so Mr Jordan thought an agreement needed to be drafted by Australian solicitors. Mr Jordan said that the letter of intent was only in respect of the Essendon and Hallam stores, and not the Kilsyth store, but Mr Jordan did not appreciate that at the time. He said that he did not understand it at that point, particularly that it only covered two stores and not three stores. Mr Jordan did not agree that this letter of intent reflected his conversation with Mr Lai. For example, Mr Jordan pointed that a new target of minimum revenue of $2m in any one year after the settlement date was inserted in clause 7.1 of the letter of intent. Mr Jordan claimed Spachoice was buying all three stores and there were ideas floating around between Ms Devenish and Mr Jordan for the Kilsyth store, and he and Mr van Hoof would be running the Hallam and Essendon stores. Mr Jordan’s main concern was the targets for the stores which he said were “not right”.  
35	Mr Jordan said that Mr van Hoof told him that “we have wasted enough time” and to go with Sapphire Spas. Ms Mayer said that they should go to an “Australian Solicitor” if they were to move forward with Spachoice. Mr Jordan was happy to keep trying with Spachoice because he thought it was a better option, but they needed solicitors involved. 
36	Mr Jordan called Ms Devenish on 2 August 2019 to discuss the email. He said that the deal was going “pear shaped” and it kept changing every day or every week.  Ms Devenish said they should organise a meeting.  
37	Mr Jordan met Mr Lai for the first time on 8 August 2019 and went into a boardroom at their premises in Ringwood. Those present included Mr van Hoof, Ms Mayer, Mr Stone (who came in and out), Mr Furong Huang (Spachoice’s accountant) and Mr Lai. Mr Jordan said that he was there for about 3-4 hours. They discussed how ILS could help build the Spachoice business. Mr Jordan recalled Mr Lai did most of the talking. He spoke about the finances and how to meet targets and then getting a bonus of $100,000.00 or any of the three vendors opening more shops up and obtaining more profit over a longer period. The three of them would be employees but hitting bonuses and targets. Mr Jordan did not agree with the proposition that at that meeting they discussed the letter of intent. Mr Jordan said he wanted to discuss how the contracts would work.  
38	Mr Jordan gave inconsistent evidence about understanding what the terms of the letter of intent meant, particularly in relation to “tangible” and “intangible assets” contained in clause 5.1. He claimed that, at the time of reading the letter of intent, he did not understand those terms but now understands what they mean.  However, on cross-examination it was apparent that he still did not understand those concepts and others, such as “pledge or security interests of whatever kind”, set out in those clauses. His evidence was not very specific and was given at a very high level and in vague terms. Mr Jordan did not present as a sophisticated person, and he was unable to explain the contract in clear and effective terms.  
39	Mr Jordan said that, in the discussions on 8 August 2019, they spoke of Ms Mayer leaving the business. Mr van Hoof and Mr Jordan talked about a time frame of working for 2 years in the Hallam and Essendon stores respectively. Mr Lai then said that they did not want the Kilsyth store. Mr Joran said that he was shocked and felt that he had wasted 3 hours.  He described it as a “bomb shell”.  He claimed he was about to walk away.  
40	Mr Jordan said that the proposed remuneration arrangement for the 2 years was a bonus situation if he and Mr van Hoof met the set targets. The target was about $1.5m and they would get their bonus through that system. There was an initial deposit and a management fee. The $480,000.00 was to be paid in stages: a deposit at signing the contract, then an instalment was paid on settlement and over the next year would be a target and the following year after that. Mr Jordan and Mr van Hoof did not get paid out upfront. However, Ms Mayer did get paid out as a lump sum.
41	Mr Jordan said that there is not a reduction in the purchase price because they were keeping 2 managers and their market, even if they were buying 2 instead of 3 stores.  
42	Mr Jordan and Ms Mayer went to Nandos after the meeting and discussed how wrong the discussion had gone. They thought before the meeting they would be moving forward with Spachoice. On 8 August 2019, there was a missed call from Ms Devenish.  Mr Jordan called Ms Devenish back and she said not to give up the deal. Ms Devenish called him and said that she was shocked that this situation happened, and she would try to talk to Mr Lai. Mr Jordan said if they could work something out, they were nearly there and they would consider that situation.  
43	Mr Jordan said that he sent a screen shot of a map of the Kilsyth store to Mr Lai on 9 August 2019 to show what Spachoice would miss out on.  Mr Lai came to the Kilsyth store, and he saw how big the store was and the number of spas on the floor. Mr Lai said that they had no intention of taking on the Kilsyth store as it was too close to their Bayswater store. Mr Jordan said that all three stores were on offer to Spachoice. He understood that Mr Lai was offering only to purchase the two stores at that time.  
44	Mr Jordan told Mr Lai that he needed to come up with a concept or idea or they would be walking away. Mr Lai saw the showroom and what he was “missing out on” in passing up the Kilsyth store.  
45	Mr Lai said that he would go back and have a think about how it could work. Mr Jordan arranged to meet Mr Lai in Box Hill for lunch where Mr Lai was staying.  They discussed the Kilsyth store. Mr Lai said that as long as Mr Jodan kept up the rent for the period in the Kilsyth store, they would have the store open. His idea was Mr Jordan would pay the rent and Mr Lai would put the swim spas on the floor and Spachoice would use it as their display area and bring the clients on site.  
46	Mr Jordan said that the other topic of conversation was the Essendon and Hallam stores and how they would operate and how Mr Jordan would be free of running the Kilsyth store and he would be running Essendon store so he could meet his targets.  Mr Jordan arranged to meet with Mr Lai again in Bundoora. He said that he had to meet with Ms Mayer and Mr van Hoof. He said that the Kilsyth store would just be “ticking along”.   
47	By text message on 10 August 2019, Mr Jordan and Mr Lai were in contact about meeting at around 12 noon at Graduate Road in Bundoora. They had a 2-hour conversation about Mr Lai’s proposal on how the Essendon and Hallam stores could run.  Mr Jordan claimed that Mr Lai said that the Kilsyth store have a lot of merit in his eyes, and he wanted to keep the buyout situation to grow with Crystal Island. When the Kilsyth store situation came up, Mr Lai offered to Mr Jordan that he keeps that store, as the Board felt it was too close to their Bayswater store. Mr Jordan did not accept that Mr Lai said they were not interested in buying the Kilsyth store. Mr Lai claimed that Mr Jordan was worried about the lease running on the premises.  Mr Jordan said that he would find another supplier and run the business.  Mr Jordan said it was not discussed that only the 2 stores would be sold, and he would be restrained from running the Kilsyth store. They did not discuss terminating the lease with the landlord or a release from the lease earlier.  
48	Mr Jordan accepted that, as an idea, he raised rebranding the Kilsyth store as a Spachoice store and Spachoice taking over the store as part of purchasing all three stores. It was put to Mr Jordan that Mr Lai claimed that it was not on the cards that they would purchase the Kilsyth store. Mr Jordan disagreed with that.  It was put to Mr Jordan that Mr Lai says that Mr Jordan could use the Kilsyth store as a display store for a year until the lease ran out and how they could help him out, while they did not purchase the Kilsyth store. Mr Jordan did not accept that position.  
49	Mr Jordan then met with Mr Lai the following day at his hotel on 850 Whitehorse Road on 10 August 2019. They then went to lunch at a Chinese restaurant. Mr Jordan said that Mr Lai had come up with the concept for the Kilsyth store. Mr Jordan would still own the store and Spachoice would bring in their stock and customers into the store and he would get the difference between the retail and wholesale price. He accepted that the Spachoice Board would not buy the third store.  
50	Mr Jordan did not recall asking for more than $180,000.00 upfront from Mr Lai at the Chinese restaurant. Mr Jordan did not accept that he asked for more money for the deposit. He said he was comfortable with the three vendors getting $180,000.00.  
51	Mr Jordan said, if the Kilsyth store displayed Spachoice’s spas, he would be rewarded with the difference between the wholesale and retail price in the sales.  If Mr Jordan kept the Kilsyth store open, Spachoice could use it and come and go as they wished. Mr Jordan said that Spachoice would be able to operate the Kilsyth store under its own banner and increase its market share. He said that the mechanics of being paid under this arrangement was monthly, once the spas were sold.  Mr Jordan said that Spachoice would keep him in the loop by emailing some spreadsheets, or some other form of documentation, showing the payment of deposits made by people who had bought spas.  He would then invoice Spachoice.  Mr Jordan acknowledged that he could make sales himself too through ILS.  He saw that as a benefit because he had “so many dealing with people over the years”.  However, Mr Jordan said he would step away from the Kilsyth store and he would be running the Essendon store as its own standalone store.  
52	Mr Jordan said that Spachoice could display up to 15 swim spas in the Kilsyth store. They had 10-12 on the floor at a time and Spachoice could come and go, and he said that Spachoice had control over which spas were displayed. Mr Jordan said that they did not discuss ILS having a consignment like other stores. He said that he did not have to operate the Kilsyth store on the old consignment basis. Mr Jordan said that they both proposed the branding of the new store as “swim spa superstore”. He saw the arrangement as a long-term situation where ILS and Spachoice would work together for the branding of the new stores and to make Spachoice bigger. Mr Jordan said that they discussed Spachoice paying ILS $20,000.00 towards the shop fit out, the management side of the stores, and the restraint of trade.  Mr Jordan said that the timeframe of the 5-year restraint was an open discussion as he saw it as a long-term thing and not a “fly-in fly-out” situation.
53	Mr Jordan said that ILS would pay the rent and outgoings, and it would operate for a period as long as he kept paying the rent. Mr Lai claims there was no discussion raised around profit-sharing at the meetings on 10 and 11 August 2019.  It was put to Mr Jordan that Mr Lai claims that was first raised on 26 November 2019 after the contracts of sale for the Hallam and Essendon stores were signed. It was put to Mr Jordan that Mr Lai claims what was discussed was the concept of rebranding the store and paying an amount of money to enable the rebranding and the payment upfront to the three vendors and the first instalment and that there was no discussion about profit-sharing at that stage. Mr Jordan disputed this.  
54	Mr Jordan said they discussed the concept of the Essendon management fee that was back charged to Spachoice which was made up of rent, wages, outgoings, and the business meeting target. Mr Jordan and Mr van Hoof were locked in for 2 years after the contracts of sale were signed and they were paid a salary on an hourly basis that varied.  
55	Mr Jordan said that he could make his own sales at the Kilsyth store as an incentive. It was his store, so he could continue to sell their Oasis Spa product, and he knew a lot of people. Those sales were Mr Jordan’s sales. He denied that he could still run the Kilsyth store as he was busy running the Essendon store. Mr Jordan further denied that he had an opportunity to run the store. Mr Jordan accepted there is no document that restrained him from operating the Kilsyth store.  But as a matter of practicality, the Spachoice Bayswater store was 1.08km down the road. He owned the Kilsyth store and had the opportunity to make sales, but he did not operate it and Spachoice was free to come and use the Kilsyth store.  Mr Jordan said Spachoice wanted to use it as their display centre themselves and he did not have a running control of the business, as his focus was running the Essendon store.  
56	Mr Jordan did not agree that he would be free to employ someone as a salesperson in the store as the agreement was not to have a staff member there.  He said there was no point employing someone to sit around doing nothing and wait for Spachoice to bring a staff member and customer from the Bayswater store.  Mr Jordan said ILS paid the rent and Spachoice would “look after the store”. He did not agree that he was free to run the store as a dealership. Mr Jordan did have a staff member, Ms O’Connor, employed at the Kilsyth store until January 2020 and he gave her eight weeks’ notice as she was “no longer needed in the store”.  
57	The restraint clause for the Essendon contract excluded the Kilsyth “swim spa super” store operated by the Vendor, only if and when that business sells products that are supplied by the purchaser. Mr Jordan accepted the restraint allowed him to sell Spachoice products.  Mr Jordan could open another store after 2 years and sell Oasis products for 5 years of which 2 years he was working as management.  
58	By text message dated 12 August 2019, Mr Lai sent two options with screen shots of Excel spreadsheets.  Mr Jordan responded to the text message and referred to reducing his $100,000.00 share “to help the situation” and that, with his wife’s help in running and working in the Kilsyth store, they would work towards gaining a profit.  Mr Jordan said that he could see a great future together. He referred to the Board and said he was sorry if they could not see this.  It was put to Mr Jordan that Mr Lai said the figure of $180,000.00 would “not do it”, and Mr Jordan wanted $260,000.00 upfront. Mr Jordan said that he did not remember the conversation.  Mr Jordan said there were so many figures being floated around at that point.  
59	It was put to Mr Jordan that one option on the spreadsheet showed Mr Jordan running the Kilsyth store for a year himself.  Mr Jordan said this was not something that had been discussed. The spreadsheet indicated there was a reduction in the price with a distribution of $60,000.00 to Mr Jordan, $100,000.00 to Ms Mayer and $20,000.00 to Mr van Hoof, with an instalment of the purchase price of $240,000.00. The spreadsheet allowed for a $20,000.00 payment to run the Kilsyth “swim spa mega store” for one year. Mr Jordan said this did not reflect what they had discussed the day before. The spreadsheet also set out a $120,000.00 performance bonus for the first year and then another performance bonus in the sum of $120,000.00 in the second year, which were triggered by sales of after-tax profit of $100,000.00 which would be split $50,000.00 to Mr van Hoof and $70,000.00 to Mr Jordan. Mr Jordan did not agree with the accuracy of these figures.  
60	Mr Jordan said the deal was still up in the air. Mr Jordan still had the “Just Spas” supply until 15 September 2019. Mr Lai’s evidence was the deal was to allow Mr Jordan to run the store until the lease for the Kilsyth store expired and after that Mr Jordan could decide what he wanted to do with the Kilsyth store. Mr Jordan disputed this.  
61	The second option set out in the spreadsheet would require a $110,000.00 net profit to trigger payment of a higher amount. Mr Jordan did not agree that the proposal was to try it for the period until the end of the lease.  Mr Jordan’s evidence about the negotiations of the payment terms was chaotic and affected by his lapses in memory.  
62	Mr Jordan said that Mr Lai responded that he would talk further to the Board and see what can be done. He acknowledged that an increase of a $180,000.00 purchase price to $260,000.00 is a big jump to them. He was hopeful that they could work out the figures. Mr Jordan said that he would not hand out another company’s price list without any faith that they were actually moving forward. 
63	Mr Jordan wrote to Ms Devenish by text message on 12 August 2019 and said, “another day another curve ball…I am really sorry as it would have been so good doing this but I’ve said we are out”.  
64	Mr Lai sent a text message to Mr Jordan on 12 August 2019, advising that the Board was compromising with faith that they could do something bigger in the future.  He requested a copy of the Sapphire Spas price to have “some vision” and to see what the retail and wholesale price for Sapphire Spas was. Mr Jordan said Spachoice wanted to get the pricing right as it would go into the management fee. Mr Jordan said that they were taking about how they could work together and keep working in bigger situations in the future. He said there was always an end game that they were going to be expanding in the future. Mr Jordan said he was reluctant to hand out another company’s price list without any faith that they were moving forward. 
65	The next day, on 13 August 2019, Mr Jordan met with Messrs Lai and Stone at the Ringwood warehouse. Mr Jordan said they brought Mr Stone up to speed on the last conversation. Mr Jordan claims that Mr Lai said that Mr Jordan would “get the difference between retail and wholesale” profit share, and said, “this is good for you” and “this is going to work, we are going to build”.  Mr Jordan could not recall raising concerns about the prices being too high.  Mr Jordan did not agree that he did not raise the issue of retail and wholesale prices at the meeting.  
66	Mr Jordan went to a solicitor prior to 13 October 2019 to get the contracts for the sale of Essendon and Hallam stores drafted in “Australian terms”. By email dated 14 October 2019, from Mr Jordan to Messrs Stone and Lai and his accountant, Mr Michael Jolley, he attached some alterations to a contract. There were continual changes to the contract between the parties’ solicitors. There were tax implications in the sale which had to be sorted. 
67	Messrs Stone and Jordan were making changes to the contract. Mr Lai responded by email on 13 October 2019 that the Board was very busy in the next few days.  Mr Lai wrote that he felt that all business decisions had been made and “there is nothing to do with the board, all we need to do now is to put what was agreed on writing that works for both of us.” 
68	On 14 October 2019, Mr Jordan sent an email to Mr Jolley and asked him for an address for the meeting. He asked Mr Jolley to print off the contracts. Mr Stone attended the meeting and Mr Lai was available on WeChat. Mr Jordan said they worked through the accounting side to make the contract work in relation to tax exposure and how the management fees would run for the Essendon and Hallam stores.  They also discussed the restraint periods. There was nothing discussed about the Kilsyth store. Mr Jordan said the restraint period could not work if he was to work in the Kilsyth store. Mr Lai agreed there needed to be a change to include the Kilsyth store in the restraint period. Mr Jolley made suggestions to reword the restraint clause. Mr Jordan wondered why the Kilsyth store was not included. 
69	On 16 October 2019, Mr Lai provides some sample restraints to Messrs Jordan and Stone and referred to the 5-year time frame. Mr Jordan said that the discussion at Mr Jolley’s house was around the 5-year period.  Mr van Hoof’s concern was working outside the shop during the period if he did not “stick around”. Mr Jordan agreed that ultimately it was agreed that it would be a 5-year period.
70	By email dated 20 October 2019, Mr Stone sent an email to Messrs Lai and Jordan attaching scanned copies of the documentation with notes and changes. Mr Jordan sat down with Mr Stone in Ringwood the day before. The handwriting in that draft contract includes the reference to the swim spa display centre in the 5-year restraint of trade clause. 
71	Mr Jordan sent an email in response on 20 October 2019, which relevantly states:
 “I will talk to solicitor about this, swim spa super center as well as any new store under spachoice (open by Dean) shall be excluded, can you get company name and trading name (if applicable) and store address to me, solicitor may need them for relevant clause.”
72	By email dated 14 November 2019, Mr Stone sent a draft email to send to Mr Lai to Mr Jordan, written on his behalf, stating that they needed to discuss the Kilsyth store now that the other two shops “are nearly completed”. The signs were going up on the Kilsyth store for the swim spa superstore. Mr Jordan had received swim spas from Spachoice’s warehouse, and they were being put into the showroom.  Mr Jordan referred to the sum of $30,000.00 towards the shop fit out, which was a mistake. He said that he had not been paid for the Kilsyth store and there was a downturn while he waited for the rebranding to occur.
73	By email dated 15 November 2019, Mr Lai sent an email to Mr Jordan about the Kilsyth store, and he corrected Mr Jordan about the amount of $20,000.00 and on both options in the Excel spreadsheets from August 2019, was payable to Mr Jordan to run the superstore for one year. Mr Jordan responded that it has been 2 months, and he had lost money on wages, electricity, rent and outgoings and also had no sales during the changeover period.  
74	On 17 November 2019, Mr Jordan acknowledged that the sum was $20,000.00 and noted there were no sales and no stock or signage with no customers coming in.  Mr Jordan asked for an extra $10,000.00 towards the Kilsyth store to keep it afloat as he had “lost a large amount of money” waiting for Spachoice. Mr Jordan wrote that if he had known it would “be this way”, he would have closed the shop or rented it out or taken on another supplier, such as Spas Direct.  
75	By email dated 18 November 2019, Mr Lai responded that he did not feel that introducing other brands, especially Spa Direct, would improve Mr Jordan’s situation. He wrote:
 “Melbourne is a large pools and swim spas market, when you present the idea of super swim spa center, we both feel that it will work. Our Bayswater store is a small store with maximum two swim spas, it is nothing close to your stores, I expect most swim spas sales will be done by your store.”
76	Mr Jordan did not accept that the 18 November 2019 email meant that the Kilsyth store was to be a Spachoice dealership making all the sales. Mr Jordan said that he his “head space [was] pretty down”, he was waiting for the contracts to change over, and he had not sold anything through the Kilsyth store.
77	The contracts of sale of business for the two businesses were executed on 25 November 2019 and did include the restraint of trade for 5 years with a carve out for the Kilsyth store.
78	On 26 November 2019, Mr Jordan sent a text message to Mr Lai asking if he had time to meet to discuss the direction going forward. Mr Jordan said that he found out Mr Lai was in town and wanted a meeting. They discussed marketing, how to get people through the store, the next 6-month projections and expansion. Mr Jordan suggested, in relation to marketing, improving Facebook marketing, and internal signage in the store. Mr Lai said Mr Jordan should work with their marketing person. It was put to Mr Jordan that Mr Lai says the concept of referring to the Kilsyth store was raised at this 26 November meeting. Mr Jordan said it was raised in his previous email. Spachoice would still need to market for the Kilsyth store. Mr Jordan did not have the store as a retail store but a display store. It was put to Mr Jordan that Mr Lai says to assist Mr Jordan, he would direct customers to the Kilsyth store and if they purchased, they would pay Mr Jordan the difference between the wholesale and retail price.  Mr Jordan says this was already discussed in August 2019.  
79	They discussed sales targets for the Essendon and Hallam stores. He discussed the previous sales and targets and wanting to build on those numbers.  
80	Mr Jordan at this time was spending most of his time in the Essendon shop. He was at the Kilsyth store once per week and he had a staff member, Ms O’Connor, in there who ran the store 5-6 days per week. She was the sales assistant until 23 January 2020. They had to let her go and gave her 8 weeks’ notice period commencing the day before signing the contract. Mr Jordan said that the Kilsyth store did not need a sales assistant after that period. They stated in the Centrelink form that she had to be let go from a non-performance point of view (which was not correct) and gave her termination because of the sales of the shop.
81	Mr Jordan said that the rebranding of the Kilsyth store was completed in mid-January 2020.  
82	By invoice to Spachoice dated 19 December 2019, in the sum of $22,000.00, Mr Jordan invoiced Spachoice for the $20,000.00 contribution (plus GST).  
83	By email dated 19 December 2019, Mr Jordan asked Spachoice’s accountant, Mr Huang, to pay the invoice.  Mr Jordan chased up Mr Lai by email dated 21 January 2020 to let Mr Huang pay the invoice.  
84	By text dated 22 January 2020, Mr Jordan was still chasing up the $22,000.00 payment with Mr Lai.  Mr Lai said that it was under process and would need finance to get a signature from the Board and asked if Mr Jordan could wait 10 more days.
85	Mr Jordan said that he did not exercise the option to renew the lease by 4 March 2020. He said he could not recall specifically why he did not renew the lease. Mr Jordan was busy working at the Essendon store, and he was asking Mr Stone and Mr Ryan Zhu Spachoice’s accountant, after January 2020 about sales at the Bayswater store.  
86	By tax invoice dated 28 March 2020 from NLRD Pty Ltd to Spachoice, NLRD Pty Ltd sought a sum of $97,313.38 for management fees for the period 1 December 2019 to 28 February 2020, running costs, chemicals and fit out for the Hallam and Essendon stores. Running costs included wages, insurance, rental costs, electricity, water, and rates. Similar invoices were rendered on 31 December 2020 in the sum of $24,234.54 and $30,919.53.  
87	By email dated 14 April 2020, Mr Jordan wrote to Mr Stone because COVID has hit and there was unrest in the industry. The shops would not be on track for the targets for the Essendon and Hallam contracts. Messrs Jordan and Mr van Hoof approached Ms Ginger Zeng, Mr Stone, Mr Lai and Mr Craig Peaker (National Sales Manager of Spachoice) asking for a halt in the November 2019 contract given the COVID situation. Mr Stone wrote the email on behalf of Mr Jordan to send to Mr Lai.  
88	On 28 April 2020, Mr Lai wrote a response to Mr Jordan’s email about the situation at the Kilsyth store in blue font.  Mr Jordan said that the Kilsyth store as a support to the Bayswater store, would be getting more clients through their store and they would support the Kilsyth store to meet rent and have profit at the same time. Mr Lai said that if the Bayswater store brought customers to the Kilsyth store, and if the customer ended up buying at the Kilsyth store, then Mr Jordan would take retail profit and commission and Spachoice takes the wholesale profit.  
89	Mr Jordan accepted that this email is the first time he wrote about the arrangement that he says he struck in August 2019. There is point of difference as to how the commission would work between the parties. There was agreement about the difference between the wholesale and retail price. Mr Jordan understood that when he worked out profit, he looked at what he bought it for and what he sold it for, and he would compare “apples with apples” in relation to GST. The arrangement was in relation any sale of swim spas minus the accessories, commission and delivery at the Bayswater and Kilsyth stores.  Mr Lai claims the share of the profit was only if a Spachoice person took a client to the Kilsyth store and if a sale was made there.  Mr Jordan said that the arrangement was very clear.  
90	Mr Jordan conceded that the place of purchase would refer the client to the manufacturing company for warranty issues.  
91	By email dated 5 May 2020, Mr Jordan wrote to Mr Lai attaching invoices. 
92	By email dated 11 May 2020, Mr Jordan wrote to Spachoice deciding to close down the Kilsyth store unless he could get the pricing list by 12 May 2020, the next day. He was asking for better pricing as he was not accepting the prices that Spachoice was giving him. The lease was to be signed the next Thursday, so he needed to know if the shop was going to be viable. Mr Jordan had been asking for wholesale pricing for months so he could create the invoices. Mr Jordan said he had not received any funding apart from the $22,000.00 for signage. Mr Jordan said he could not renew the lease if the company was not paying him for what was due to him. Mr Jordan rejected the contention that the reference to an “independent shop” in his email meant he could run it as a “dealership”. He said that the dealerships had a different price list to an independent shop 
93	By email dated 11 May 2020, Mr Peaker wrote to Mr Jordan attaching the new pricing for the Swim Spa Super Store spreadsheet. Mr Jordan said he used the wholesale pricing to calculate the profit from the retail price. He said that if he did not get the pricing, he could not get paid. Mr Jordan said that he would have to close the Kilsyth store if he was not being paid as no money was coming in. 
94	By email dated 21 May 2020 from Mr Jordan to Mr Zhu, Mr Jordan sent an Excel spreadsheet of the sales of swim spas from 1 November 2019 to 1 February 2020 produced by Mr Zhu.  
95	By 27 May 2020, Mr Zhu sent Mr Jordan the Excel spreadsheet regarding sales related to the Kilsyth store together with the quote/tax invoice documents being the source documents for the spreadsheet. This was the first set of documentation given to Mr Jordan about the sales. 
96	On 1 June 2020, Mr Jordan emailed Mr Zhu asking for the Excel spreadsheet so he could create an invoice. Mr Zhu responded that the green highlights are the amounts to be invoiced, as the yellow ones had not been dispatched yet.  
97	Mr Jordan sent an invoice on 2 June 2020, in the sum of $28,394.50 and it was paid on 10 June 2020.
98	On 30 June 2020, Mr Jordan generated an invoice to Spachoice in the sum of $6,770.57 but this was not paid.
99	On 5 August 2020, Mr Jordan generated an invoice to Spachoice in the sum of $9,393.73 but this was not paid.
100	On 17 July 2020, Mr Jordan renewed the lease from 5 June 2020 for period of one year. He dealt with his landlord, Ms Gab Bartolo, who said he needed to sign his lease. There was a delay because Mr Jordan was only just starting to see income for the Kilsyth store since November 2019 when they signed the contracts. He could see future profit, as there were about 150 spas that had not left the store yet.  There as a rent reduction due to COVID from $54,071.40 to $27,035.64.
101	By email dated 6 August 2020, Mr Zhu sent a spreadsheet in the same form as before attaching the quotes/tax invoices. 
102	On 24 August 2020, Mr Zhu wrote to Mr Jordan informing him that his manager “had a bit of an issue regarding the calculation for July’s commission”. Ms Shirley Liu, Chief Financial Officer of Spachoice, said they needed to deduct the freight charges and Mr Zhu changed the invoice total to exclude delivery cost and updated the accessories amount. Mr Jordan discussed this with Mr Zhu and did not have a problem with the delivery cost and he redid the invoice and sent it back. 
103	On 27 August 2020, Mr Jordan wrote to Mr Zhu about the invoices and Mr Zhu replied that his managers were having issues with payment for management fee and commission. Mr Zhu replied that he believed all the information was consistent with the agreement between Messrs Jordan and Lai.  
104	On 28 August 2020, Mr Zhu asked Ms Brenda Liao to contact Mr Jordan to discuss the issues with management fees and commission as a matter of urgency. Mr Jordan did not recall a telephone conversation with Ms Liao.
105	By email dated 29 August 2020, Mr Lai wrote to Mr Jordan saying that he did not disclose to the Board the deal made between them, that if a Bayswater sales staff brought a customer to the Kilsyth store and a deal was made in the Kilsyth store, then the Kilsyth store received the retail profit and Spachoice kept the wholesale profit. Mr Lai informed Mr Jordan that his financial department looked into the details and the Board “disagreed with it entirely, as a result, our recent payment application is denied”. Mr Lai offered Mr Jordan a fixed rate of $200.00 per swim spa before GST. Mr Jordan said it was unsustainable for the Kilsyth store to be open. He had signed for a new lease and Spachoice now offered $200.00 per swim spa compared to receiving $3,000.00-$10,000.00 on some of the swim spas. Mr Jordan said it was another change that was not what had been discussed.  
106	Mr Lai’s email referred to a deal struck earlier in the year and not August or November 2019. Mr Jordan accepted that by directing people to the Kilsyth store would help sell more swim spas, but Mr Lai did not disclose the wholesale and retail profit arrangement to the Board. It was put to Mr Jordan that Mr Lai claims it was his understanding that either party could walk away from the arrangement at any time and there was no time frame. Mr Jordan did not agree with Mr Lai’s position. Mr Lai claims that he was ending the arrangement on 29 August 2020 because the Board did not like the situation.  
107	By email dated 8 September 2020, Mr Jordan wrote to Spachoice waiting on an update on how to proceed with the commissions. Messrs Stone and Zhu could not believe the situation. Mr Jordan said Mr Peaker did not know what was going on. Mr Jordan gave him context showing the previous transaction, emails, Excel spreadsheets and the calculations of the deal.
108	Mr Jordan referred to a telephone discussion the week prior in which Mr Lai was apologising to him most of the time saying, “that he felt that it was his fault”. Mr Jordan said it did not matter whose fault it was, it had to be resolved quickly.  
109	On 10 September 2020, Mr Lai responded that they did not have any agreement of any type in writing or verbally that the retail profit of the swim spas sold in the Bayswater store would go through the Kilsyth store. He offered two options. Mr Jordan said the options were ludicrous as they were not sustainable for the Kilsyth store. He could not make his rent due. Mr Jordan acknowledged that there was an issue with the reference to the deal being done in “October” instead of “August”.  Mr Jordan conceded this was an error in the email and he was instead referring to the August 2019 agreement.
110	Mr Jordan responded to Mr Lai’s email stating that he would be calling his solicitor on Monday.  
111	On 14 September 2020, there was a telephone discussion with Mr Peaker, Mr Stone, Mr Lai, Ms Liao, Ms Zeng and Mr Jordan. Mr Jordan said they had to come up with a better deal and it was far away from the original deal. Ms Zeng said it was not a feasible option because they were not making money out of the deal. Mr Jordan said he would not make any money if they continued forward. 
112	By email dated 14 September 2020, Mr Jordan attached the Excel spreadsheet from Mr Zhu to Mr Peaker. 
113	By email dated 15 September 2020, Mr Jordan emailed Mr Peaker and Mr Stone attaching some email that shows the deal in place that for any swim spa sold at the Bayswater store, the profit was then invoiced from the Kilsyth store to the Bayswater store. 
114	By text messages dated 15 September 2020 from Mr Peaker to Mr Jordan, he noted there was no GST component on the swim spas and accessories and the total cost was “out”. The high and low recommended retail price (“RRP”) included GST but for the purposes of calculating the profit at the high and low RRP he used the RRP excluding GST so that it was consistent with the wholesale prices which were exclusive of GST. Mr Jordan said that prior to this there was no issue about GST.
115	By email dated 18 September 2020 from Mr Peaker to Mr Jordan, he stated that the invoice contained spas sold through the Bayswater store and not the Kilsyth store and noted the issues with GST.  
116	By letter dated 17 November 2020, Mr Jordan’s solicitor wrote to Spachoice terminating the agreement. On the same date, Mr Jordan wrote to all staff that the Kilsyth store had closed as it is no longer viable to run the shop.  
117	Mr Jordan negotiated with Ms Bartolo to get out of the lease as he was breaking it.  He said that he had to keep paying for a period, and then someone else took over the lease.  
Adam Stone
118	Mr Stone gave evidence for ILS. His memory lapses were generally explicable by the extensive effluxion of time involved with this case. Mr Stone gave limited evidence as he did not have a direct line to Mr Lai until Ms Devenish left the Victorian State Manager role at Spachoice in late 2019. Given the issues with Mr Stone’s memory, I am unable to rely on his evidence absent other objective evidence.
119	Mr Stone works in national sales at Remco Pool Products.  He was an employee of Spachoice from 2019 to the end October 2022. He started off in sales in Notting Hill and then became the Victorian State Manager. He was then based in Bayswater and then the Ringwood warehouse/head office/accounting area. The company had bought out the store at Bayswater which was a spa business.  
120	Mr Stone worked with Ms Devenish, who was a director and in charge of Spachoice in Australia. Mr Stone reported to her. Crystal Island was the parent of Spachoice and Oasis. He worked with Mr Lai, Ms Liao, the Oceania manager, and Ms Zeng, the European manager. Ms Devenish left Spachoice around last quarter of 2019 and Mr Stone filled her role.  
121	Mr Stone said that he met Mr Jordan when he heard “on the grapevine” that the store in Essendon was looking at changing suppliers. He made a phone call to the shop and Mr van Hoof was not around at the time. Mr Stone ended up speaking with Mr Jordan and he asked him if they could take them on as a dealer.  Mr Jordan did not want to become a dealer, he wanted to be bought out. 
122	Mr Stone and Ms Devenish organised a meeting around mid-July 2019 at the Essendon store and discussed options for bringing them onboard or taking over the Essendon and Hallam stores.  
123	By email dated 22 July 2019 from Mr Stone to Mr Lai, Mr Stone said that he had been having further discussions with Mr Jordan. Mr Stone wrote about the Kilsyth store which was noted to be close to “us”, but he believed he had a solution for that store. Mr Stone said that bringing on three stores with one very close to their Bayswater store was not ideal because geographically there would be two stores selling the same product within 1 kilometre of each other. The Kilsyth store had one year left on the lease, and Mr Stone said it could become a “Spa Factory Seconds”. Mr Stone could not recall Mr Lai’s response to that option at that time.  
124	Mr Stone agreed it was not ideal to have two stores owned by the same distributor 1 kilometre apart. It was a concern, but the deal on the sale of the Hallam and Essendon stores would not go through without the Kilsyth store. Mr Stone said that the reference to one year left on the lease would suggest that, both parties see what happens with the store and consider the possibilities, including closing the store.  
125	Mr Stone noted that ILS was on the brink of signing with Sapphire Spas after leaving Just Spas. Unless they could act fast and secure the deal to have the three stores that circle around Melbourne to sell their spas, they would not be able to get them on board. Mr Stone noted that Mr Jordan did not want to become a dealer of Oasis spas.  
126	Mr Stone said that being a dealer means purchasing a spa at wholesale rate and selling at retail rate. Other responsibilities are they must run their own business.  They are a separate business. The dealer also chooses what stock is on the floor.  
127	On 8 August 2019, Mr Stone said he was in and out of a meeting in the boardroom at the Ringwood office.  Ms Devenish, Mr Haung, Mr Lai, Mr Jordan, Mr van Hoof and Ms Mayer attended the meeting. They were trying to come together on terms on how to get the three businesses on board. Mr Stone said it was a long meeting, but he could not remember how long. Mr Stone and Ms Devenish were the only ones running Spachoice, so he attended the meeting even though he was not in charge of negotiations.
128	The main discussions were between Mr Jordan, Ms Devenish and Mr Lai and Ms Mayer and Mr van Hoof. Mr Lai mentioned something to Messrs Jordan and van Hoof and discussions halted. He said that Ms Devenish told him that Mr Lai was not interested in the Kilsyth store.  Mr Stone was “dumbfounded”. He thought the opportunity to bring on the three stores was a great one and it was falling apart.  Mr Stone thought the Kilsyth store could be used as factory seconds or a super store as there was no room at the Bayswater store to display the spas.  
129	Mr Stone had discussions with Ms Devenish about how to save the deal. Ms Devenish was mainly dealing with Mr Lai. He could not recall speaking with Mr Lai at this time.  
130	Mr Stone had discussions with Mr Jordan at Ringwood after 8 August 2019. They discussed how they could move forward with the deal. Mr Jordan said he had spoken with Mr Lai, and they had spoken about setting up the “swim spa superstore” and it would be at the Kilsyth store. He said that the Bayswater store staff could take customers to the Kilsyth store and show them the spas on display and if any spas were sold, it would form profit (after the buy price and commission was removed) of the Kilsyth store.  
131	Mr Stone discussed the arrangement with Mr Lai on the phone. The Kilsyth store would have swim spas in it and the profit would then go to the Kilsyth store even though it was sold through Bayswater. Mr Stone liked the idea because it was better than his idea of a factory seconds outlet. He could see the potential for earnings and commission would be better. Mr Stone explained that he received a commission on any spa sold in Victoria.
132	Mr Stone sent an email to Mr Jordan and Mr Lai on 20 October 2019, after they had gone through the documentation in the contract clause by clause. He said they needed to “nut out the contract” and “get the deal to move forward” as they were not getting anywhere.  
133	Mr Stone had separate meetings with Messrs Jordan and Lai about the contracts.  He said that the initial deposit amounts, and restraint period were up for conversation.  
134	Mr Stone said that the “swimspa super store” at the Kilsyth store could not operate without the wording included in the restraint of trade clauses.  
135	On 20 October 2019, Mr Lai sent an email to Mr Stone with further changes to the contract.
136	On 20 October 2019, Mr Lai sent an email to Mr Stone and noted in reference at item 8 of the contract, that he should speak with a solicitor about any new store under Spachoice operated by Mr Jordan being excluded from the restraint of trade clause.  
137	By email dated 14 November 2019, Mr Stone wrote to Mr Jordan setting out a draft email for Mr Jordan to send to Mr Lai, because Mr Jordan’s English and grammatical skills were not the best and he asked Mr Stone to write the email for him.  Mr Jordan then sent the email to Mr Lai, noting that they needed to discuss the Kilsyth store now that the two other shops are nearly completed. Mr Stone said he was effectively taking dictation from Mr Jordan. 
138	It was put to Mr Stone that Mr Lai says only if a salesperson took a client to the Kilsyth store and they bought a swim spa or the sale had been concluded at the Kilsyth store, the arrangement was that ILS would get the difference between the wholesale and retail price. Mr Stone said that was told to him by Mr Lai further down the track. Mr Stone said that it was not what the original arrangement was.  Mr Stone says his original understanding was that any swim spa sold at the Bayswater store, whether the client had been taken to the Kilsyth store or not, would form part of the profit for the Kilsyth store. Mr Stone said initially it was any swim spa sold at the Bayswater store, and then it changed to any salesperson introducing a customer to the Kilsyth store later on. Mr Stone said he spoke to Messrs Lai and Jordan after their meeting, but he was not sure which meeting it was.  
139	Mr Stone conceded that Mr Jordan was free to sell any Oasis product from the Kilsyth store, and he still owned the store and held the lease. Mr Stone said that Mr Jordan was not bound by the retail prices for the Kilsyth store, if he decided to sell swim spas. The Essendon and Hallam stores were different because their profits were added together to meet targets under the contracts.  Under the Kilsyth store, Mr Jordan could have set whatever price he wanted. 
140	By email dated 15 November 2019, Mr Stone wrote to Mr Lai that he had been speaking about Mr Jordan who was concerned about his Kilsyth store. Mr Stone could not recall whether Mr Lai came to Melbourne in November 2019.  However, Mr Lai came to the spa shows most times.  Mr Lai contends that the retail price would have been set by the Kilsyth store if the swim spa super store was just a display store. Mr Stone said that Mr Jordan wanted the wholesale price list to work out his profit margin. The only price Mr Jordan knew at the time was the retail prices from the Essendon store.  
141	Mr Stone said that he had utility for the wholesale price list because there were different lists for different stores. Mr Stone needed to know exactly what Mr Jordan’s buy price would be, to understand the sales and for working out what the profit on each sale was for the Bayswater store and the Kilsyth store.  
142	Mr Stone said that Mr Jordan did make his own sales at the Kilsyth store.  Mr Stone did not see the invoices go out as Mr Jordan would have invoiced out of his own system.  Mr Jordan agreed that if he was selling a Spachoice swim spa to his own retail client, he would buy the swim spa wholesale from Spachoice.  
143	By email dated 14 April 2020, Mr Stone wrote an email on behalf of Mr Jordan because COVID was rampant, stating they could not sell spas at the time and the targets were “seriously concerning”. Mr Jordan was concerned about the targets that they had to meet because they could not reach their targets. The factory would not budge on any relief for the Essendon and Hallam stores. Mr Stone sent the email onto Mr Lai and the factory.  
144	On 30 April 2020, Mr Stone sent an email to Mr Lai in the following terms:
 “I was under the impression that any swim spa that was sold out of 200 Canterbury Rd, Bayswater (Sparite) the profit would go to Swim Spa Store.
 So i presume as payments have come in through the spachoice account - is it not easier for Deans store to invoice the difference of the wholesale rate and profit to Sopachoice [sic]?
That is what i thought was the deal you agreed upon.”
145	Mr Stone said he had those impressions after Mr Lai and Mr Jordan had a meeting.  
146	On 1 May 2020, Mr Stone emailed Mr Jordan saying he had spoken to Mr Lai that:
 “Predominantly any swim spas that have been sold and we have brought in customers to the showroom will qualify for this - as we do not have the room at Bayswater.”
147	Mr Stone said that his second email was not meant to convey a change from the first email. Mr Stone said that the crux of the email is that any swim spa that had been sold would qualify for the commission deal with the Kilsyth store. He could not recall a discussion with Mr Lai as it was too long ago.  
148	By email dated 11 May 2020, Mr Jordan sent an email to Spachoice stating that he was not happy with the wholesale pricing supplied by the factory, and he asked for better pricing from Mr Stone. Mr Stone had no knowledge of Mr Jordan’s lease arrangements.
149	Mr Stone said that Mr Peaker is from Queensland and is the Oasis General Manager, and he went on to become the national manager. Mr Stone received an email from Mr Peaker with the new pricing for the Kilsyth store on 11 May 2020. He could not recall why he was referring to the spreadsheet.  
150	By email dated 2 June 2020, Mr Zhu sent an email to Messrs Lai, Stone and Jordan with a tax invoice regarding Mr Jordan’s commission for spa sales.  Mr Stone had input into the Excel spreadsheets. Messrs Zhu and Stone went through the Excel spreadsheets to make sure the sales were right and were sales from the Bayswater store and the customers had been to the Kilsyth store. They made sure all the details were correct.  Mr Lai replied on 4 June 2020. That it all looked good and hoped to get more invoices like this.  
151	By email dated 6 August 2020 from Mr Zhu to Messrs Jordan and Stone, Mr Zhu send calculations for the next invoice. He had input the calculations into the Excel spreadsheet.
152	By email dated 29 August 2020, Mr Lai sent an email to Messrs Stone, Jordan and others that there was a problem with the invoices. Mr Stone said he “could not believe” that they were denying the deal existed and had thought “everything was going fine”. They had discussed it in the emails set out above. 
153	Mr Stone said he then had a conversation with Mr Jordan about the proposal to fix a rate of $280.00 before GST to future relevant transaction. He said that Mr Jordan was not very happy and “there was a lot of swearing.”  
154	On 4 September 2020, Ms Liao took over from Mr Lai and she wrote to Mr Stone regarding the Kilsyth store, the payment terms, if they brought all customers to the Kilsyth stores, and asking for any good solutions for the case. Mr Stone said his relationship with Ms Liao was not the best. Mr Stone went through the list of 14 models to determine if the customer visited the Kilsyth store. Mr Stone said there was no register as such of customers being taken to the Kilsyth store.  
155	By email dated 8 September 2020, Mr Jordan wrote to Mr Lai, Ms Liao, Mr Peaker, Ms Zeng, and Mr Stone and referred to a WeChat call about the pricing issues and the changing of the deal. Mr Jordan was not very happy. He could not recall the gist, but the two parties did not agree.  
156	Mr Stone wrote an email to Ms Liao, Ms Zeng and Mr Lai on 10 September 2020 regarding the Kilsyth store with lots of issues put on the table regarding how it could work, such as staff and marketing, and that the store not being run well.  There was no assistance in Victoria, and he was working “stupid” hours. He could not recall the WeChat conversation mentioned. 
157	On 14 September 2020, Messrs Stone, Lai and Jordan had a discussion trying to work out the issues. 
158	Mr Stone explained that Spachoice built the swim spas and the “landed cost”, being the cost of the manufacture together with shipping and other costs associated with acquisition, is different to the “wholesale price”. The cost from the factory and the margin on wholesale, was the profit that Spachoice could obtain.  The difference between the wholesale and retail price was the profit ILS could obtain on the sales of the swim spas from Bayswater.  
159	Mr Stone said it was an awesome opportunity for all companies and it was a positive. He could see Spachoice expanding and growing momentum for the company.  
Gab Bartolo 
160	Ms Bartolo presented as a careful, considered witness who was ready to make appropriate concessions. There is no reason to doubt that her evidence reflected her genuine recollection of the matters discussed.  
161	Ms Bartolo is a senior commercial property manager with Cameron, a commercial real estate agency. She organises commercial leases on behalf of landlords. One of those properties is the Kilsyth store premises.  
162	Ms Bartolo said if the tenant has the original head lease, once that initial term is coming to an end, if there is a further option on the lease, she will contact the tenant to determine if they want to take up the option. There might be some back and forth if the tenant wishes to vary the option put to them, whether that is in relation to the length of the term and/or rental figure until the landlord and tenant come to an agreement. Ms Bartolo said she tries to get the best rental for the landlord as they are the client. 
163	Ms Bartolo said she had the carriage of the renewal on the Kilsyth store premises.  She put forward a recommendation to the landlord that ILS tenant was a good tenant and, given it was during uncertain times being COVID, they also worked with the tenant on the rental side to keep all parties happy. Ms Bartolo had no issues with ILS as a tenant. 
164	The deed of renewal and variation had an option of renewal for a further term of one year. The last date for the option to renew was 4 March 2021. ILS was still at the premises at that date. ILS left the premises in 2021. Ms Bartolo said if ILS sought to renew or propose to vary the lease to have a longer term, while the tenant was still in occupation, she had no basis to not recommend to the landlord that that be done. 
165	Ms Bartolo said that after ILS left the Kilsyth store premises, the landlord rented the premises out to CSELKO Hub Pty Ltd on 3 May 2021 for term of five years.  
166	Ms Bartolo was not aware that ILS had closed the Kilsyth store on 17 November 2020. She said that they would have wanted to find out the reason why they were not operating. If it was a concern to Cameron, they would have let the landlord know.  She agreed it was of interest to the landlord to have a shop that is open as opposed to a shop that was closed. She said the original lease with ILS was for three years from 5 June 2017 to 5 June 2020.  
167	Ms Bartolo said there was option for a term of renewal on 4 March 2020 and that option was not taken up on 4 March 2020 by ILS. Ms Bartolo did not recall personally contacting Mr Jordan to follow up on the renewal, but she said someone in her agency, in the leasing and rental team, would have contacted him prior to the option date expiring pursuant to their usual practice. Ms Bartolo did not recall contacting Mr Jordan about why he had not actioned the option date. The option had expired under the initial lease. The lease comes to an end should they not take up that option.  
168	Ms Bartolo was not involved in the negotiations of the deed of renewal and variation of lease. She said that she initially received emails from ILS about reduced rent because of COVID which she sent to the rental team, who handled it from there. 
169	Ms Bartolo received the initial proposal of renewal and variation and delegated it to others in the office. Ms Bartolo formulated a recommendation to the landlord through a live spreadsheet for upcoming renewals and options. She said their property managers go through the list, and they check it over and make comments for the leasing team about recommendations and the team then takes on the feedback.  Ms Bartolo said, that being the property manager of the premises, she dealt with the tenant and advised to the leasing team if the tenant was suitable or not.  The leasing team would then speak with the landlord.  
Richard Imberger
170	Mr Imberger presented as a careful, considered witness who was ready to make appropriate concessions. I accept Mr Imberger as a witness of truth who gave evidence with the intention of assisting the Court to the best of his ability. His memory lapses were generally explicable by the extensive effluxion of time involved with this case. There is no reason to doubt that his evidence reflected his genuine recollection of the matters discussed.
171	Mr Imberger is the director of Oppenweiler Properties Pty Ltd as trustee for RII Superannuation Fund which is the registered proprietor of the Kilsyth store premises. He engaged Cameron to lease his property. Cameron would find a tenant and run the proposal past him.  If he was happy with the tenant, Cameron would negotiate the lease, and he would sign it.  
172	In July 2020, he signed a renewal and variation of lease with ILS for the Kilsyth store premises. He said that Cameron sent a copy of the lease to him to sign. He did not have a lengthy discussion with Cameron. He said that if everything was “ok” he would sign it. Mr Imberger was given details of what the tenant wanted and recommendations from Cameron about what deal could be done. If he was happy with it, he signed it. Mr Imberger said he was happy with what was proposed by Cameron for the variation of the lease for one year with an option to renew for a further year. 
173	The last date to exercise came up in March 2021. As at that date, he said that if ILS asked to the option, he would have agreed to it. If ILS asked for a longer term of the lease, he also would have accepted it. 
174	Mr Imberger conceded that the amount of rental that the tenant was prepared to pay would be a relevant consideration in deciding whether to renew the lease. Mr Imberger said that Cameron suggested the market rates and what was negotiated and agreed to in the lease.  
175	Mr Imberger did not know that ILS had closed the Kilsyth store on 17 November 2020.  
Gaoxiang Lai
176	Mr Lai is the sales director of Crystal Island. He was appointed a director of Spachoice on 15 November 2020. English is not Mr Lai’s first language. Mr Lai became involved in dealings with the ILS around July 2019.
177	Mr Lai generally presented as a careful, considered witness who was ready to make appropriate concessions. There were some gaps in his recollection, however, his memory lapses were generally explicable by the extensive effluxion of time involved with this case. English is Mr Lai’s second language, and it became clear that he was not privy to the nuances of the English language such as the word “merit” and references to “shifting the goal posts”. This resulted in confusion as to the terms used. I accept Mr Lai as a witness of truth who gave evidence with the intention of assisting the Court to the best of his ability. His evidence was consistent, and he gave evidence against his own interest, such as his failure to obtain Board approval when he negotiated the November 2019 Agreement.  
178	I generally found the account of Mr Lai to be cohesive, plausible and consistent with the objective documentation, to the extent there is any.  Although not a perfect witness, I have generally preferred the account of Mr Lai over that of Mr Jordan, particularly as to the events leading up to August and November 2019.  
179	After receipt of the email dated 22 July 2019 from Mr Stone in relation to his discussions with Mr Jordan about the opportunity to grow the business, Mr Lai said that there was hardly any chance to consider developing Mr Jordan as a dealer rather than taking over the business as ILS was considering other opportunities with suppliers.  
180	Mr Lai said that at this stage, the only retail outlet that Spachoice had at the time was at Bayswater. They had just set up their head office and warehouse in Ringwood. Mr Lai said that he understood Mr Stone was suggesting purchasing the three businesses, as Mr Jordan was not giving Oasis an opportunity as a dealer.  However, Mr Lai said that “as a salesperson we can always create some opportunity”. As a result of the email, Mr Lai called Mr Stone and went through the email with him. Mr Lai said that the spa factory seconds option for the Kilsyth store was not his first choice. He told Mr Stone that he needed to talk with the Board and get advice. 
181	When Mr Lai referred to the Board, he spoke to Mr Zhi “Ken” He, as he was effectively “the owner” and made the decisions. Mr Lai said there are three members on the Board, comprising Mr He, the President, Mr Tan, the Vice President, and Ms Shirley Liu, the Chief Financial Officer. Mr Lai said they tasked him to negotiate with Mr Jordan, with limits on the price, being $480,000.00 and to do what they say.  Mr Lais said that counterproposals involving a business like this would need him to go back to the Board.  
182	On 27 July 2019, Ms Devenish sent Mr Jordan’s email to Messrs Stone and Lai.  Mr Lai said that it was not Spachoice’s first choice to buy the Kilsyth store. Mr Lai said that the $300,000.00 figure in the offer came from the Board.  The Board gave Mr Lai the figure and he passed it onto Ms Devenish as a purchase price to negotiate for the two businesses. The Board decided that they did not need the Kilsyth store as it was too close to their Bayswater store, and it did not make sense to own two stores in the same location. Mr Lai said that the Essendon and Hallam stores were in great locations which formed a triangle around Melbourne.  
183	Mr Jordan said that $300,000.00 figure was not enough for Mr Jordan, and they required the sum of $480,000.00 with a deposit of $150,000.00 within a 30-day settlement and the remaining balance of $330,000.00 in six months. Mr Lai discussed this with the Board and sought more instructions from them. Mr Lai gave Mr Jordan a call and told him they were only interested in two stores.  
184	By email dated 29 July 2019, Mr Lai wrote to Mr Jordan following a phone call.  Mr Lai said this was the first time they spoke to each other, and they introduced themselves to each other and Mr Lai explained his experience in the spa industry.  During that conversation, Mr Lai said that he told Mr Jordan that the Board was not interested in the Kilsyth store as it was too close to the Bayswater store, so he wanted to put it aside and deal with the other two stores first. Mr Lai would then talk to the Board about a counteroffer for purchasing the two stores.  
185	In the email, Mr Lai stated that that the Board would accept the purchase price of $480,000.00 with a $50,000.00 deposit within 7 business days after the letter of intent was signed, and an initial instalment of $100,00.00 within 7 days after settlement.  If the profit was not less than $150,000.00 every year, they would then receive a performance bonus of $110,000.00. If they could not achieve the target after the third year, they would not receive the balance. Mr Lai conceded that he did not write about only two businesses in the email. He said that he had already set aside the Bayswater store in the email. He said that he only wrote what was agreed in the email.  
186	Mr Lai did not refer to Ms Mayer in the email at that stage. He only referred to Mr Jordan and Mr van Hoof. He could not recall why. Mr Lai said that if the total net profit reached $200,000.00 in the first year, then they were $50,000.00 more than the target and ILS would get $40,000.00 and Spachoice would get $10,000.00 in an 80/20 split of the profits.  
187	Mr Lai agreed that he did not discuss the Kilsyth store during the phone call that followed the 29 July 2019 email. Mr Lai did not agree that Mr Jordan could not operate the Kilsyth store and run Essendon store at the same time. Mr Lai said they could find a way. Mr Lai agreed that Mr Jordan did not want to become a Spachoice dealer and wanted to sell the three businesses. Mr Lai did not agree that a dealer always takes goods on consignment. Mr Lai agreed usually you would have a dealership contract. Mr Lai said that a contract is the best scenario with dealers. He said that not all Spachoice dealers have contracts because they are not satisfied with all the terms in the agreement.  
188	Mr Lai agreed that the Spachoice dealership agreement covered similar terms as the Just Spas agreement. Mr Lai also conceded that Spachoice tries to have credit account agreements with its dealers. He said that the dealer runs the store and earns the margin from retail price less the wholesale price and the overheads of running the business. Mr Lai said that the dealer has control over the number of swim spas they had displayed on the floor. Depending on the terms of the dealership agreement, they would have to pay for the spas on the floor at some time, in time.
189	Mr Lai did not have an answer that ILS did not have a written dealership contract with Spachoice. He said that he does not know if there is a written document or credit agreement. Mr Lai did not know if ILS was ordering and paying for stock to keep on the floor in the Kilsyth store because he did not get involved in day-to-day management. In April 2020, Mr Lai said he had discussion with Mr Stone if there was a dealership agreement in place. He was told that there was no document in place. Mr Lai said that he told Mr Stone that it needed to be fixed.  Mr Lai disagreed that his evidence in relation to this was false.  
190	By email dated 30 July 2019, Mr Jordan wrote to Mr Lai about selling three businesses. He noted there would be three operators with 30 years combined experience to grow Oasis’ market share.  
191	Mr Lai said that the spoke on the phone and they talked about what they agreed and disagreed. Mr Jordan still wanted to sell three stores and Mr Lai said that they only wanted to buy two stores. Mr Lai said that this was during the period of negotiation. He said that they had not nailed down the detail yet.  
192	By email dated 30 July 2019, Mr Lai proposed some amendments which increased the deposit and the initial instalment.  Mr Lai accepted that, at this stage, Mr Jordan wanted to sell three businesses and Mr Lai wanted to buy two. He said that he spoke with the Board and sought their advice.  
193	By email dated 1 August 2019, Mr Lai attached a letter of intent with an adjusted deposit and initial payment from $150,000.00 to $180,000.00. The deposit of $60,000.00 was provided with $120,000.00 within 7 business days after settlement. Mr Lai said that ILS had to reach $150,000.00 net profit after tax to trigger the next instalments. There was an incentive for profit-sharing above that target.  
194	Mr Lai then came to Australia to have a face-to-face meeting with Mr Jordan, Ms Mayer, Mr van Hoof and Ms Devenish on 8 August 2019 at Spachoice’s Ringwood factory in their meeting room. Mr Lai said that Mr Haung and Mr Stone came in to say “’hello’ and then left”. Mr Lai said they introduced themselves as it was the first time they met in person. Mr Lai said the main topic was about the draft letter of intent which was not an official contract. Mr Lai said the letter of intent was a way to help both parties understand each other’s position.  Mr Lai picked up a number of issues from the meeting as Mr Jordan wanted to include the Kilsyth store into the deal and Ms Mayer and Mr van Hoof were not satisfied with the deposit and initial instalment, which was $180,00.00. Mr Lai said that the three vendors also did not want to give a strong commitment on the performance. They said that the $150,000.00 target was “too high”. Mr Lai said that they also had an issue with the 10-year non-competition term which was too long, and it was not drafted in an official way. Mr Lai said the vendors wanted to get a solicitor to write it. They also discussed Messrs Jordan and van Hoof staying in the business.  
195	Mr Lai said that there was a “big argument” about the Kilsyth store at the meeting.  Mr Lai agreed that Mr Jordan was most upset when Mr Lai mentioned that they did not want to purchase the Kilsyth store.  Mr Jordan’s evidence was that this was the first time it has been raised with him. Mr Lai said that he did not expect to reach an agreement in one meeting and that it was a normal process to continue to find a solution. Mr Lai did not agree that when he said Spachoice would only buy two stores the reaction was disbelief, and he could not recall if the three vendors they walked out. He accepted there were difficulties in the negotiations, but he thought they could work it out as he was “positive”. Mr Lai accepted that Mr Jordan’s position was, unless Spachoice bought the Kilsyth store, they would not sell Essendon and Hallam stores. Mr Lai said they needed a solution, as the goal was to purchase the two shops for a reasonable price. 
196	It was put to Mr Lai that an option was to buy the Kilsyth store and then close it down. Mr Lai accepted that the vendors would be happy, but Spachoice would have the costs associated with closing down the Kilsyth store. Another option would be for Spachoice buy the Kilsyth store and move the Bayswater store into the new premises. However, Spachoice would then have the cost of relocating the Bayswater store. A third option would be for Spachoice to buy the three stores and trade with all three, but Spachoice would have the higher running costs of the Kilsyth store. Mr Lai said that he only knew the term of the Kilsyth lease was roughly one year. He did not know the exact termination date. Mr Lai said that the priority was to convince Mr Jordan to sublease the lease, terminate the lease or negotiate a term with the landlord.  He said this was Mr Jordan’s business. But Mr Jordan did not agree as those options would “cost him money”.  Mr Lai agreed that prior to the sale of the two shops, Spachoice had a competitor about 1 kilometre down the road from the Bayswater store. After the sale, Mr Jordan was no longer a competitor.
197	Mr Lai’s version of the agreement was that Mr Jordan was going to be a dealer and was selling and promoting Oasis products from his Kilsyth store. Mr Lai did not want the Kilsyth store to be in competition with the Bayswater store, but that was the only solution at that time.  
198	Mr Lai met Mr Jordan at the Kilsyth store on 10 August 2019. Mr Lai recalled that there was a salesgirl at the showroom and Mr Jordan held her in high regard. Mr Jordan showed Mr Lai around. At the coffee shop they talked about the possibilities of the Kilsyth store. They discussed developing a solution to the problem for about 1-2 hours. Mr Lai’s intention was to sort out the issues with the Kilsyth store. He said that if they could not sort it out, they could not move forward. Mr Lai agreed that Mr Jordan said that there were two options in dealing with the Kilsyth store, with a concept of rebranding the Kilsyth store as an Oasis store. The first option was Spachoice could take over the Kilsyth store and include it into the deal to buy all three stores and Spachoice runs the store. The second choice was, Mr Jordan continued to run the Kilsyth store as a dealer. Mr Lai’s impression was Mr Jordan would continue to run the store as a dealer. Mr Lai said he would talk with the Board. 
199	Mr Lai agreed that Mr Jordan said that by having more swim spas displayed at the Kilsyth store, Spachoice had more presence in the swim spa market.  
200	Mr Lai said that he incorporated performance bonuses to incentivise Mr Jordan to work in the Essendon store. Spachoice could increase its sales of swim spas by having Kilsyth selling its products. Mr Lai agreed that sales could be better if there were more displays of swim spas. This was achieved by not buying Mr Jordan’s business or to take over his lease. Mr Lai said he was happy to have a new dealer on board in the Kilsyth store to sell more Oasis swim spas.  
201	Mr Lai said that the customers could sign the contract to purchase swim spas at the Kilsyth store they did not necessarily have to go back to the Bayswater store to sign the contract.  
202	Mr Lai met Mr Jordan the next day at his apartment in Box Hill and they had a long conversation. They went to a Chinese restaurant and continued their discussions.  He said that they exchanged their opinions about the sale of Essendon and Hallam stores. Mr Jordan said that Mr Jordan made it clear at this meeting that he did not want to run the Kilsyth store. They discussed the price as it went with the performance bonus by reaching the net profit. Mr Lai said he would go to the Board.  He could not recall saying words to the effect that using Mr Jordan’s Kilsyth store “as a showroom for swim spas had merit”. Mr Lai did not know what the English word “merit” meant. He recalled they discussed that the advantage over the Bayswater store was that they could display many more swim spas for sale at the Kilsyth store. Mr Lai said that Mr Jordan could bring in sales and earn money at the Kilsyth store from sales of swim spas in the Kilsyth store.  
203	Mr Lai went to the Board for approvals and suggestions. He said that he would obtain final instructions from the Board and then he would then take them back to Mr Jordan.  
204	Mr Lai then met with Mr Jordan at a coffee shop in Graduate Road, Bundoora on 11 August 2019. Mr Lai had spoken with the Board to get their support. Mr Lai said that that at the meeting the focussed on two things. First, in relation to the Hallam and Essendon stores, Spachoice agreed to increase the deposit plus the initial instalment from $180,000.00 to $240,000.00. Mr Lai said the figure of $240,000.00 came about from the conversation the day before. Mr Jordan said it was still not enough as Ms Mayer wanted to get out of the business straight away, and she wanted $100,000.00. Mr Lai said that that the remaining $140,000.00 did not leave enough for Messrs Jordan and van Hoof. Mr Lai said he opened his computer and started to put down the figures into an Excel spreadsheet.  Mr Lai said he found out Mr Jordan’s bottom line on the initial payment of $260,000.00.  Second, they went back to the Kilsyth store and Mr Lai said that they were not interested in buying it but what they could offer him was $20,000.00 to rebrand the Kilsyth store, at Spachoice’s cost, and support the store with good marketing to drive more traffic into the store. Mr Lai said that Mr Jordan “seemed ok with that, especially [the] $20,000.00”. Mr Lai said there was no restriction on what Mr Jordan wanted to do with the $20,000.00. He said it was their way to help him out of the one-year lease.  
205	Mr Lai said that in return, Spachoice needed the Kilsyth store to continue to run and become a dealer for one year. Mr Jordan was to pay the rent as it was his business. Mr Lai said he made it clear that Spachoice was not taking over the Kilsyth store. He said that there would be no difference between his working with Just Spas or working with Sapphire Spas, he was now just working with Spachoice with $20,000.00 to help him re-brand the store. Mr Lai did not agree that the $20,000.00 was a payment to get Mr Jordan through until the contract was signed.  
206	Mr Lai did not agree that they discussed profit-sharing or the difference between the retail and wholesale price in relation to sales at the Kilsyth and the Bayswater stores. Mr Lai denied that there was a conversation at that time about Mr Jordan receiving the difference between the retail and wholesale price on sales where a salesperson might come to a store and the sales were completed at the Bayswater or Kilsyth stores. Mr Jordan said this conversation took place in November.  
207	Mr Lai denied that they discussed Bayswater having a key to the Kilsyth store.  They did discuss growing the sales of swim spas. They did not discuss both parties could walk away at any time or at the end of the lease.  
208	Mr Lai said that they discussed Mr Jordan spending a few days in the Essendon store and a few days in the Kilsyth store. Mr Lai noted that Mr Jordan already had a salesperson in the Kilsyth store. Mr Jordan said that he had to discuss with his wife to try to work something out.  
209	After the 11 August 2019 meeting, Mr Lai spoke with the Board.  
210	Mr Lai then sent two spreadsheets to Mr Jordan on 12 August 2019. He set out what was filled out in the spreadsheet at the coffee shop. The two options showed adjustments on targets if more money was paid upfront. He noted the $20,000.00 to be paid to Mr Jordan to run the Kilsyth store for one year and support him to make some money. Mr Lai spoke with the Board, and they insisted that a better profit was needed for a better upfront payment. 
211	Mr Jordan responded with by text on 12 August 2019 and Mr Lai said he was excited with the response. Mr Lai said that this message showed to him that they had solved the Kilsyth store issue. Mr Lai noted that the vendors were initially asking for $100,000.00 each upfront. Mr Jordan was reducing his $100,000.00.  Mr Lai understood that Mr Jordan would get his wife to work in the Kilsyth store to help the running and working in it to gain a profit. Mr Lai thought Mr Jordan was agreeing to work in the Kilsyth store. Mr Jordan wrote that “we can take this set up to the next level as I have done with justspas over the years”.  Mr Lai thought the Kilsyth store was going to be a dealership.  
212	Mr Lai responded that, from the Board’s point of view, the increase from $180,000.00 to $260,000.00 was a big jump. They were excited to get “Just Spas” on board and benefit from their client base. If they could work together, they could grow the business together.  Mr Lai sent another letter of intent to make sure they were on the same page on 12 August 2019.  
213	On 13 August 2019, Mr Lai recalled a meeting in the boardroom at the Ringwood Office with Messrs Stone and Jordan. He disclosed that prior to the meeting, Spachoice had an internal management meeting about Ms Denish leaving and Mr Stone was taking her role. During the meeting, they discussed an update on the Essendon and Hallam stores and whether they would have a dealer store at Kilsyth. Mr Lai said they did not discuss that ILS would earn the retail profit less commission to sales staff and other costs and that Bayswater would give details of sales for Mr Jordan to issue invoices. Mr Lai denied that this was the incentive to secure the sale of the two other businesses. He did agree that Mr Jordan agreed to the restraints and bring the competition to an end.   
214	By email dated 13 October 2019, Mr Jordan wrote to Messrs Jolley, Stone and Lai with some alterations to the contract.  Mr Lai responded that all business decisions had all been made and it had nothing to do with the Board. All that needed to be done was to put what had been agreed in writing that works for both parties. Mr Lai did not agree that one of the business decisions was that Mr Jordan would keep his lease in Kilsyth. Mr Lai said that he was only discussing the deals at the Hallam and Essendon stores. He agreed that ILS would not transfer the lease at Kilsyth to Spachoice. Mr Lai assumed that Mr Jordan would keep his lease at Kilsyth, as Oasis would rebrand it to Spachoice. Spachoice could supply swim spas to ILS and sell swim spas through ILS. Even though Mr Jordan was in the Essendon store, Mr Lai said that he could sell a swim spa out of the Kilsyth store.  
215	By email dated 13 October 2019, Mr Jordan told Mr Lai that he had sold a swim spa which was the first for the Kilsyth store. Moving forward, Mr Lai said Mr Jordan was free to sell Oasis products from the Kilsyth store as he was an Oasis dealer.  Mr Lai said he understands the concept of a dealer and the terms that are agreed in relation to payment terms, warranties, and the areas they can sell. He said that the terms of a dealer are not fixed and can be flexible.  
216	Mr Lai said that the form of contract was different to the first draft. Mr Lai sent an email dated 16 October 2019 to Messrs Jordan and Stone, setting out similar restraint of trade clauses from other deals.  
217	Mr Stone sent an email dated 20 October 2019 to Messrs Lai and Jordan after they went through the contract clause by clause together. Mr Lai knew Mr Stone was going through the contract with Mr Jordan and that they were making handwritten changes. The final restraint clause agreed to between the parties carved out the Kilsyth business. Mr Lai thought it made it clear that it was not Spachoice’s business as it stated that the “business known as Swim Spa Superstore operated by the vendor from [the Kilsyth premises]”. Mr Lai said that the restraint clause meant that Mr Jordan agreed to sell any Oasis products or products they had given written consent to.  If Mr Jordan wanted to open more Oasis stores, then Mr Lai said that was “okay”, as long as they sold their product.  
218	Mr Lai agreed they were looking into the future beyond the 2-year management period. Mr Jordan and Mr van Hoof could open other stores for Oasis in the future.  Mr Jordan was part of the long-term vision to build Spachoice and Crystal Island’s business into the future.    
219	By email dated 14 November 2019, Mr Jordan wrote to Mr Lai that they now needed to discuss the Kilsyth store, as the other two stores were nearly completed and Mr Jordan was asking for the sum of $30,000.00 towards the store, plus fit out and stock.  Mr Jordan was now asking for $40,000.00.   
220	By email dated 15 November 2019, Mr Lai responded that he was surprised about the request for $30,000.00 as he was under the impression that $20,000 was what had been agreed.  He referred to the following:
 “You can find the proof on the text message I sent you on Aug 11th night (10:11am) as to the board’s reply
– both option A and B show that: 20,000$ to Dean to run Bayswater super swim spa mega store for one year.”
221	Since then, Mr Lai said that they had not spoken about the Kilsyth store. Their focus was on the Essendon and Hallam stores.  
222	By email dated 17 November 2019, Mr Jordan wrote to Mr Lai and conceded that he was wrong about the $30,000.00 and it was $20,000.00 that was agreed. Mr Jordan wrote that he was willing to compromise and ask for an extra $10,000 towards the shop.  
223	By email dated 18 November 2019, Mr Lai responded to Mr Jordan that he expected most swim spa sales would be done by Mr Jordan’s store. Mr Lai said that he took Mr Jordan’s following statement, as a strategy for negotiating:
 “When we discussed this Format with this shop it was put to me that all swim spas will be down at the swim spa shop and all spas down at the spa shop
 All costumers will be directed to this shop and leads. [sic] to date we are still waiting on signs to go up. There is a swim spa down the road With water in it.”
224	Mr Lai said that they had discussions that the Kilsyth and Bayswater stores were a supplement to back each other up because of the closeness of the traffic. If a customer could not find a swim spa product at the Bayswater store, they could go to the Kilsyth store, and it would help sales for both stores. 
225	Mr Lai met with Mr Jordan on 26 November 2019 about additional support for the Kilsyth store. Mr Lai offered to Mr Jordan that if the end user cannot find a suitable swim spa in the Bayswater store, the salesperson would take the customer to the Kilsyth store and increase foot traffic and opportunities to make the sales in the Kilsyth store. The Kilsyth store would then make sales and Mr Jordan would get the retail profits. Mr Lai claims Mr Jordan was happy with that and said he would give it a try. Mr Lai did not discuss what would happen if the client went back to the Bayswater store. Mr Lai said the discussion was in relation to helping to bring more traffic to the Kilsyth store to help make sales. Mr Lai said there was no discussion about how long the arrangement would go on for.  
226	Mr Lai denied that the agreement was that for any sale in the Bayswater store for a swim spa, the Kilsyth store would get the difference between the retail and wholesale price. Mr Lai said that it sounds like he was selling the business of the Bayswater store, and he would need the authorisation from the Board. Mr Lai did not discuss this with the Board. Mr Lai did not agree that his claim that there was a 26 November 2019 agreement was untrue.  
227	Mr Lai agreed there were no documents about the 26 November 2019 deal.   
228	Mr Lai said that he suggested to Mr Jordan that the Kilsyth store would get the difference between the retail price, less the wholesale price, less commission as the Bayswater store sacrificed its traffic so Mr Jordan would need to pay for the sales staff. Mr Lai said that Mr Jordan was happy with that as he would have additional traffic.  Mr Lai said that Mr Jordan would be a dealer and would set up his own retail price, selling other Oasis products (not just swim spas) while he had management responsibilities for the Essendon store while achieving sales targets.  
229	Mr Lai said that the arrangement was to his disadvantage as they had the Hallam and Essendon stores, and the Ringwood warehouse so they could have sent the customer to one of those stores rather than send the customer to a dealer. Mr Lai said that Spachoice was sacrificing its profit. If they sent the customer to the Kilsyth store, Spachoice would only make wholesale profit. If they sold product at one of their other stores, they would get retail profit.  
230	After the meeting, Mr Lai called Mr Stone and told him what happened at the meeting. Mr Lai informed Mr Stone that if the end user cannot find the swim spa model in the Bayswater store, then they would allow the salesperson to bring the customer to the Kilsyth store and make the sale there. Mr Jordan would get the retail profit and Spachoice would get their wholesale profit from the sale. Mr Lai said that he told Mr Stone that Mr Jordan would then pay the commission to Spachoice’s salesperson. Mr Lai did not agree that they had already agreed to the commission deal in August 2019 and Mr Jordan was only coming back to discuss marketing.  
231	By invoice dated 19 December 2019, the Kilsyth store sent Spachoice an invoice in the sum of $22,000.00. Mr Lai says this was for the rebranding. On 19 December 2019, Mr Jordan asked Mr Lai to chase up the payment of the invoice. The invoice was paid in January 2020. Mr Lai said it was delayed because of the Chinese New Year shut down period. 
232	Ms Liao took over Mr Lai’s position in early 2020. In January 2020, Mr Lai brought Ms Liao over to introduce her to everyone.  
233	By email dated 28 April 2020, Mr Jordan wrote to Mr Lai to sort things out: 
 “We then agreed that all sales for swim spas will go through this shop From the showroom down the road and the leads as we ll.
 All sales would be transferred over and this would keep the shop alive
 Also a payment of $20000 would be made for good will to as it was firstly agreed that this shop would be sold in the takeover.
 Meeting you in January we confirmed this again and this seems to be working and there has been some great swim spa sales since.
 What I need to confirm that these spas are supplied as agreed
 They would be turned over where possible to stores or costumers and would always look fresh.
 I was to run the store Pay all wages and bills as a shop would and Cl (Crystal Island) would supply the swimspas for display”. 
234	Mr Lai said that the reference to running the store was consistent with his understanding that Mr Jordan would run the Kilsyth store, pay the wages as a dealer normally would.  
235	By email dated 20 April 2020, Mr Lai agreed that Mr Jordan was a dealer, and the rebranding was at Oasis’ cost. Mr Lai said that as support it was agreed that Baywater would direct as many swim spa leads and swim spa sales to the Kilsyth store as possible. Mr Lai did not know if the Bayswater store had a system of recording customers who qualified for the condition if the Bayswater store salespeople brought a customer to the Kilsyth store, and they ended up buying a swim spa at the Kilsyth store.  
236	It was put to Mr Lai that in the absence of a system to keep track of such customers, it was unworkable. Mr Lai did not know what the internal systems were to follow up on the arrangement. He said that he wrote the email dated 14 April 2020 to record the deal for others to understand.  
237	Mr Jordan responded that:
“if a customer buys a swim spa from Bayswater the retail profit is taken to Kilsyth and I have to pay commissions on this to staff then spa choice takes the wholesale profit”. 
238	Mr Jordan thought this was an error and did not respond.  
239	Mr Lai was taken to the section in his 20 April 2020 email in relation to consignment.  He wrote in that email that ILS had similar terms to other dealers, meaning that consignments had to be paid 3-6 months after dispatch from their warehouse to the Kilsyth store, or within 7 days after they were sold. He denied that the email was false.  
240	Mr Lai said that the dealer terms were not discussed at the meetings.  
241	Mr Stone sent an email to Messrs Jordan and Lai on 30 April 2020 that he was under the impression that the Kilsyth store would get the profit on any sale sold out of the Bayswater store. Mr Lai had a discussion with Ms Liao, and Mr Stone and clarified how things should be.  Mr Lai asked Mr Stone to look into the dealer agreement between the Bayswater and Kilsyth stores. Mr Stone responded: 
 “I have spoken to Ivan and I will go through the list of spas sold and those allocated to Swim Spa Store.
 Predominantly any swim spas that have been sold and we have brought in customers to the showroom will qualify for this - as we do not have the room at Bayswater.”  
242	By email dated 11 May 2020, Mr Jordan wrote to Mr Peaker, Ms Liao, Mr Stone and Mr Lai that Mr Jordan threatened to close the Kilsyth store and that his lease needed to be signed by Thursday, and he needed to know if the shop was going to be viable in its present form or not.  Mr Jordan referred to what Mr Lai could come up with to “save a dealer and treat then with the respect they deserve.”
243	By email dated 2 June 2020, Mr Jordan sent an invoice in the sum of $28,394.50 to Mr Lai, Mr Stone, and Ms Liao to check the calculations as discussed with Mr Jordan.  Mr Lai thought it has been calculated internally already. The Excel spreadsheet had the wholesale price, retail price and commission. Mr Lai responded on 6 August 2020. He said he wrote the email because it was good news to Spachoice that the Kilsyth store was selling swim spas so he was hoping they would bring in more sales. Mr Lai considered the invoice and the Excel spreadsheet, but the email came to him 6 months after his position had changed. They wanted him to get involved in checking the calculations. This invoice was paid. He wanted to congratulate them for making sales and was hoping for more sales which would mean paying more commissions. Mr Lai was not saying he was hoping for more sales by Spachoice to Mr Jordan for wholesale prices in the email.  Mr Lai said it was more sales for both parties. He said he tried to help the Kilsyth store get more traffic and that marketing was one way to get more sales.  
244	Mr Lai said that the financial procedure was adjusting, and he could not recall if the 2 June 2020 invoice had been sent to Ms Liao for approval.  He could not recall if he sent messages to the Board about the ILS invoices.  Mr Lai agreed that Ms Liao had an issue with the second invoice as it did not deduct freight charges and the accessories amount on the original sales had been updated.  Mr Lai agreed that if Ms Liao did not have an issue with the second invoice, it would have been paid. 
245	Mr Lai said that it was a mistake to pay the commissions sought.
246	In August 2020, it came to the Board’s attention that thousands of retail profits were being paid to ILS instead of being kept by Spachoice. Mr Jordan was claiming commissions for swim spas sold out of the Kilsyth and Bayswater stores. The Board asked Mr Lai why they were paying that money. They did not ask him why they did not just buy the Kilsyth store. Mr Lai was in trouble with the Board, and they instructed him that they could not continue to provide that support to the Kilsyth store and to try to work something out with Mr Jordan.  
247	Mr Lai cannot recall exactly what he told the Board about the arrangements with the Kilsyth store.  
248	On 29 August 2020, Mr Lai sent an email to Mr Peaker, Mr Zu, Ms Zeng, Ms Liu, and Mr Stone because the finance department found an usual payment and invoice and the Board was asking what was happening. The Board asked him to stop the support to the Kilsyth store. Mr Lai said that he and referred to the 20 April 2020 email, rather than the November 2019 discussions as it was the most recent communication. Mr Lai said that this shocked him to stop the support and arrangement in sacrificing the Spachoice profit. He referred to letting their salesperson bring a customer to the Kilsyth store if they could not find a suitable swim spa in the Bayswater store and if the deal was made in the Kilsyth store, the Kilsyth store kept the retail profit and paid the staff commission. Mr Lai felt embarrassed because he tried to give Mr Jordan as much support as possible and he could not continue with it when faced by his boss, as he could not sacrifice the interests of the company, especially when he had clear instructions from the Board. Mr Lai did not think there was a timeframe to the arrangement in November 2019. Mr Lai disputed that what he wrote in the 29 August 2020 email was untrue.  
249	Mr Lai said that the Board gave him options and he put them to Mr Jordan. Mr Lai said he “learnt”. The Board instructed Mr Lai that, in relation to the commission in the sum of $28,000.00, they would “leave them” because they had already paid as long as Mr Jordan took the offer of payment of $200.00 per spa where a Bayswater store staff member brought the customer to the Kilsyth store and closed the deal. 
250	During the negotiations in July to August 2019, Mr Lai said he was in constant contact with the Board and told them the details of the deal at that point. The purpose of the $20,000.00 was to keep Mr Jordan’s store running.  The Board was willing to pay for the Kilsyth store to be rebranded as an “Oasis superstore”. Mr Lai said that between July 2019 until January 2020 he tried to keep the Board in the loop as much as possible. He told the Board that the Kilsyth store was a “Swim Spa Superstore”. He agreed that he did not tell them about the commissions to be paid and denied that this was untrue.  
251	Mr Lai agreed he was “kind of” willing to say anything to Mr Jordan to get the sales of the two shops.  
252	Mr Lai agreed that the invoices dated 30 June 2020 in the sum of $6,770.57 and $9.393.73 have not been paid by Spachoice.  
253	By email dated 8 June 2020, Mr Jordan did not agree with the proposal. Mr Lai said they looked into details of the context of how the deal was made. Some of the sales were valid and some were customers who had not visited the Kilsyth store. They then increased the offer to $400.00 per swim spa, as opposed to $200.00.  
254	On 4 September 2020, Mr Stone produced a report on 14 models on swim spas sold at the Kilsyth store or customers who visited the Kilsyth store. 
255	By email dated 10 September 2020, Mr Lai stated:
 “As per current commission request, we have been looking through record [sic] carefully, there are several types of deals from what we can tell:
 a. our sales bring customer to Kilsyth, Kilsyth make a deal with customer and invoice customer directly.
 b. our sales bring customer to Kilsyth, customer buy floor spa on Kilsyth store finally, spa choice invoice customer directly though.
 c. our sales bring customer to Kilsyth, customer finally pick swim spas from bayswater and Ringwood, spachoice invoice customer directly.
 d. our sales bring customer to Kilsyth, customer order a swim spas but cancelled the order in the end - for example invoice 9330. 
 e. customer never step in Kilsyth, but make a deal with spachoice directly, for example, invoice 8041.”
256	Mr Lai said that “a” and “b” of the above email, are close to Mr Lai’s version of the agreement. 
257	On 14 September 2020 Messrs Stone, Jordan, Lai and Peaker had a meeting to try to work out the issues. Nothing was worked out. 
258	Mr Lai said that he was aware that Mr Jordan closed the Kilsyth store after August 2020.  
ILS’ submissions
Formation of Agreement and its terms
The allegations
259	ILS alleges the following terms in paragraph 4 of the Further Amended Statement of Claim (“the FASOC”):
a)	Spachoice would pay to ILS the sum of $20,000.00; 
b)	ILS would rebrand its retail premises at the Kilsyth store consistently with Spachoice’s brand; 
c)	ILS would operate the Kilsyth store for the display and demonstration of swim spas offered for sale by Spachoice; 
d)	Spachoice would pay to ILS commission on Spachoice’s sales of swim spas calculated as the difference between the retail and wholesale prices with costs associated with sale at its store in Bayswater, such as delivery, subtracted from that amount; 
e)	Spachoice would, at reasonable intervals, give to ILS calculations of the sum payable by Spachoice to ILS; 
f)	following receipt of the calculations, ILS would give Spachoice a tax invoice claiming the sum due; and 
g)	the minimum term of the Agreement was to be 5 years, alternatively until the end of ILS’s lease at the Kilsyth store.
260	In paragraph 3 of the FASOC, ILS define “Agreement” being the agreement “in about August 2019”. 
261	The particulars given by ILS for those terms are: each of the terms alleged in the preceding paragraph is an express, oral term of the Agreement, particulars of which appear in paragraph 3 of the FASOC. As to the term in sub-paragraph (g) above, it is alternatively an implied term to give business efficacy to the Agreement in the context of the sale of the Essendon and the Hallam stores, and the terms of the sale set out in the Annexure to the FASOC.
262	ILS observes that Spachoice denies the Agreement; it admits, however, that there was a conversation on 11 August 2019, but it alleges that it was predominantly in relation to “other business dealings”.  
263	ILS points out that “tellingly”, Spachoice pleads in paragraph 4 of its second further amended defence, “without admission of the existence of the alleged Agreement, [it] admits” that there was a term that “ILS would operate the Display Store for the display and demonstration of swim spas offered for sale by Spachoice”.  
264	ILS contends that in Spachoice’s opening, a new concept is slipped in: the operation of the “Swim Spa Superstore” at the Kilsyth store, as alleged and admitted, was a “trial”. Not only is this not pleaded; the evidence does not support it. Mr Stone’s evidence, which is consistent with his email of 30 April 2020 at 3.27 pm and Mr Jordan’s email of 30 April 2020 and 3.04 pm, is that Mr Lai had reported the terms of the Agreement to him, which were that “the profit” on the sale of swim spas was payable to ILS. 
Before the critical conversations
265	ILS submits that Messrs Jordan and van Hoof and Ms Mayer had three businesses for sale, and they were to be sold as a package. The price for the three businesses was the sum of $480,000.00. 
266	ILS concedes that it is possible that both parties were truthful in their perception as to whether the early discussions concerned the sale of two or three businesses, but notes that it does not matter what was the substances of these early negotiations were as later events overtake it. 
267	On Thursday, 8 August 2019, it was common ground between the parties that there was a lengthy meeting in Spachoice’s boardroom. At that meeting, Mr Lai said that Spachoice was not interested in purchasing ILS’s Kilsyth business. ILS contend that Mr Jordan and his business partners were frustrated by Mr Lai’s position and left the meeting. 
268	ILS submit that Mr Jordan then set up a meeting with Mr Lai on ILS’ premises the next day, 9 August 2019, and succeeded in persuading Mr Lai to include the Kilsyth store in the deal being negotiated. In that conversation, ILS asserts that Mr Jordan suggested that Spachoice could deploy ILS’s space as a “spa showroom”, which was an idea that Mr Lai liked.
269	Mr Jordan and Mr Lai met again on 10 August 2019 in Box Hill. ILS claims that the conversations that took place on 10 August 2019, laid the foundation for the critical conversations that followed. 
270	ILS relies on Mr Jordan’s evidence of what Mr Lai said which was:
 MR JORDAN: “So he spoke along – he spoke about, or his words were, “I’ve come up with an idea. I’ve spoken to the board about it. I think this can work” and I was like, “Okay. Well, what is it?”, in a sense. So it was that the Bayswater store would still be run by myself. They would take over the running of the Bayswater store. I would then be going to the Essendon store and run that and Lenny would go to the [Hallam] store and they would take full control of that store itself and put all the products in there that needed to go in there, as long as I kept up my end of the bargain of keeping the rent going and keeping it ticking over for that period. 
 COUNSEL: For what period?
 MR JORDAN: For the period of what my timeframe would be in that store, in the sense of as long as that rent was paid they would have that store open, they would keep ticking along.”
271	In response, ILS claim that Mr Jordan asked for an explanation of how it would work, and Mr Lai obliged as follows:
 “So his idea was that – well, his idea was I would pay the rent. As long as the lights were on they could come whenever they wanted to, they would put their swim spas on the floor there, they would bring people from their showroom down there and they would limit their swim spas on the floor and use that as their display here. So they would go along and display their product and when the customer came in from anywhere itself, that they would meet them there, they would go through the product. When they make a sale at all they would then go and give me the difference between the wholesale and the retail itself and - - -“
272	ILS submits that Mr Lai’s evidence of this conversation, to some extent, was consistent with Mr Jordan’s evidence:
 “So at that date Dean clarified that he does not want to continue to run Kilsyth store, so he made it clear. Then we also, around Kilsyth store, we had another conversation, a big discussion and it went nowhere, and I said to Dean, “Okay, I will talk to the board and see what we can do”.
The critical conversations
273	ILS claim that the following day, 11 August 2019, was the first of the two critical conversations.
274	Messrs Jordan and Lai met in a café in Bundoora. Mr Jordan gave evidence about the conversation as follows:
 MR JORDAN: “So when the Bayswater situation came up, that they would then offer me to keep the store itself. He had spoken to the board and the board said they still didn’t want the store itself because too close in proximity to their other store down the road, and then said to myself that if I could keep that store open and running and allow them to come in there and display their product in there and bring the swim spas into that shop, I would be rewarded from the difference between the wholesale and the retail in the sales. 
 … his wording was that I would be financially covered if I kept that store open. If I kept that store, kept the lease in there, kept the lights on, they would use it as much as they could with free rein, coming and going, and I would be able to operate that store as much as – so they would be able to operate that store under their own banner and increase their market share and then I would be rewarded from the difference between wholesale and retail, obviously, and keep that side of it going. 
 COUNSEL: Did you discuss the mechanics of how you would get paid?
 MR JORDAN: Yes. So that was meant to be on a monthly to – obviously when the spas were sold I would be kept in the loop, in a sense, by emails or by spreadsheets or some form of documentation to show me that people had bought spas and moved on and paid their deposits. These would be going out and then I would be invoicing them correctly for that. 
 I also had opportunity because I know so many people, I have been in the industry so long, that I had that shop, I could come and go and show people that I had sales with, I could make sales through that store as well through Innovative itself. More sort of separate sales, if need be. Because I have had so much dealings with people over the years and they just saw that as a benefit. 
 We also discussed about, obviously, the other two stores, keeping them ticking. My biggest concern was that I couldn’t run Bayswater and I couldn’t run Essendon. 
COUNSEL: How was that to be resolved?
 MR JORDAN: So I would be stepping away from the Bayswater store itself and I would be running the Essendon store as its own stand alone store and the same with Lenny, Lenny would move on. 
 COUNSEL: Who proposed - - -?
 MR JORDAN: That was Ivan at that time, yes.”
275	And further:
 COUNSEL: Did you talk about what you were going to call this place?
 MR JORDAN: Yes. We did sort of discuss a little bit previous, in the accepts [sic: aspects] of what that store could be. So it was going to be a – what do you call it? Along the lines of a swim spa store, a seconds store or stuff like that, because that was when they were taking it back over. So I think a little bit later on down the track we named it a swim spa store itself and started branding it that. I can’t be 100 per cent sure of that - - - 
 COUNSEL: Branding? Was there a discussion at this café about branding?
 MR JORDAN: Yes, branding the stores. Branding them, it’s just - - - 
 COUNSEL: Who proposed what about branding the store?
 MR JORDAN: We both proposed - we went through that, that was part of our discussions, that we would both work together 12 
 for the branding of the new stores and the branding of the – moving forward, how to make this company a bigger and better long term situation. 
 COUNSEL: What about this store in Bayswater; did you talk about branding that store specifically?
 MR JORDAN: At that time that was going to be a swim spa store. So the branding would be along the swim spa store itself. I think the Swim Spa Superstore eventuated. I can’t be sure if it was right on that date or if it was later on in discussions but, yes. 
 COUNSEL: Was there anything else discussed during that meeting?
 MR JORDAN: Just more about the management of the other side of it too. So we also had – they would contribute some money towards – how do you say it? They would pay myself $20,000 towards marketing, towards the shop fitout, towards all this sort of stuff that I had to make that work itself from the shop point of view, and then also about the management side of it, how we would then go on to manage the other stores itself, ticked that through. Then also the restraints of how – what I could do in that shop itself, what I could do in the other shops itself, so that was the chat about the five years and the timeframes and that sort of started to – it wasn’t more about then, it was just more an open discussion that really sort of gave us a timeframe in that sense and that’s where I sort of went down that path. I saw it as a long term thing, wasn’t going to be a fly in, fly out situation.”
276	ILS submit that Mr Lai said that he spoke with the Board ahead of the meeting on 11 August at Bundoora. As to the Kilsyth store, ILS contend that he gave the following evidence:
 “I told Dean, “I’m sorry, we are not going to take Kilsyth store. That’s not in our interest but what we can do for you, we are going to offer you – we are going to give you $20,000. We are going to re-brand – to help you to re-brand Kilsyth store at our cost. That will include signage, wall display, banners, et cetera, et cetera. We are going to offer you better products, high quality products so you have less issue. We are going to give you as much support as possible on marketing to help you to drive more traffic into your store by doing good marketing campaign”. So Dean seems okay with that, especially when I say 20,000. … 
 I told Dean, “In return we would need you to continue to run that store and become SpaChoice dealers for one year. So it’s in favour of you so you get additional support by way of 20,000 and the only way we can get that back [I mean the 20,000] is we help you in the right way to sell some of our products”. So that’s pretty much what I told Dean in that meeting.”
277	ILS argue that Mr Lai’s evidence as to what was discussed is not credible because it does not address the issue of the impasse posed by the Kilsyth store that they needed to overcome to permit the sale of the Essendon and Hallam stores. ILS assert that Mr Lai’s evidence is, in substance, that Mr Jordan was content to become a dealer of Spachoice’s products generally. ILS contends that is precisely what Mr Jordan was not going to do. ILS claim that Mr Jordan had been firm in his opposition to becoming a dealer for Spachoice. It says if that was the business model that he and his business partners were looking to continue with, they would have pursued the deal with Sapphire Spas that they had already lined up.  ILS submits that the proposition that Mr Jordan agreed to run the Kilsyth store as a dealership contradicts Mr Lai’s evidence set out above, that Mr Jordan “clarified that he does not want to continue to run Kilsyth store, so he made it clear”. 
278	ILS says that Mr Lai contradicted both this pleaded case and his outline of evidence when he said that the payment of $20,000.00 was not for the purpose of rebranding the ILS premises but for “whatever [Mr Jordan] wants”. Although it was put to Mr Jordan that the point of the $20,000.00 was “to run the spa store for a year until the lease expires” ILS submits that Mr Lai’s evidence was not to that effect at all. 
279	ILS contends that Mr Jordan’s evidence is much more consistent with commercial circumstances and what was motivating him. ILS claim that their understanding of the Agreement was a commercial attractive opportunity, as it involved a conclusion of ILS’s business, a handover of control of ILS’s leased premises to Spachoice and a meaningful, ongoing income stream. ILS also assert that this is consistent with what they believe was Spachoice’s desire to keep Mr Jordan involved and grow its business. ILS take issue with Spachoice’s version of the Agreement which they say is nothing more than a dealership swap. 
280	ILS argues that the Court should not give much weight to Mr Lai’s evidence regarding the spreadsheet that he said was used in the meeting as this was not put to Mr Jordan. 
281	ILS submits that on 13 August 2019, another meeting occurred at the Ringwood office, this time with Mr Stone present. ILS contends that Mr Stone was “brought up to speed” and the 11 August 2019 conversation was reiterated in Mr Stone’s presence. 
282	ILS claims that Mr Lai’s evidence regarding his internal management meeting and subsequent Ringwood office meeting was vague. ILS assert that his evidence was that, in the meeting with Messrs Jordan and Stone, they discussed two things: Ms Devenish’s departure and “product prices and specifications and how good our product is, [etc], [etc]”. He denied that there was a discussion in that meeting about ILS being paid retail margin as commission for certain sales.
283	ILS submits that Mr Stone’s evidence largely corroborated Mr Jordan’s evidence and that nothing was put to him to suggest any bias, and that Mr Lai’s version of events on 13 August 2019 were not put to him. 
284	ILS contends that no criticism is made in Spachoice’s submissions of Mr Stone’s credibility, other than he had a poor memory. ILS accept that, while this is true, his poor memory makes his corroborating evidence in cross-examination more powerful. 
285	ILS note Mr Stone’s evidence in cross-examination was consistent with how ILS’s first invoice in June 2020 was calculated. 
286	ILS asserts that, although Spachoice argue that the Kilsyth store was a dealership, this was not the case, as a dealership arrangement is very different from not only the showroom or display store concept that was discussed, but also very different from what eventuated. ILS claims that Mr Lai’s assertion in cross-examination that the relationship with ILS was “a dealership, exactly like other dealers” was false and became obvious in later cross-examination. 
287	ILS submits that Mr Stone’s uncontradicted evidence as to the nature of the dealership was consistent with Mr Jordan’s uncontradicted evidence about his conversation with Mr Lai on 11 August 2019.
288	ILS contends that Mr Stone’s evidence also mirrors Mr Jordan’s evidence in relation to the dispute over whether ILS retaining a retail margin was discussed in the 11 and 13 August 2019 meetings, or the 26 November 2019 meeting. 
After the critical conversations
289	ILS claims that on 14 October 2019 Messrs Jordan, Stone and Lai (appearing by WeChat) met to discuss the draft contract with Mr Jolley, Mr Jordan’s accountant. According to Mr Jordan’s evidence, they discussed the sale of the business and restraint of trade. ILS argues that Mr Lai gave no evidence of the meeting and Mr Stone’s evidence reflects Mr Jordan’s. ILS notes that on 24 November 2019, the parties executed contracts for the sale of Essendon and Hallam stores. 
290	ILS submits that following the critical conversations, both parties conducted themselves in a manner inconsistent with Spachoice’s version of the Agreement. ILS argues that the most “telling” sign of this was when Spachoice assisted them in the production of its first invoice for commission, and the fact that Spachoice paid this commission. 
291	ILS submits that the way the Kilsyth store was operated was consistent with the Agreement and not with a consignment dealership situation. It claims that Spachoice maintained the stock, had a key and took customers regularly to the store. 
292	ILS contends that everything was going according to plan, in that ILS was receiving commission on the sales, until Spachoice had an apparent “change of heart”. ILS asserts that Spachoice’s evidence inadequately explains this change. ILS claims that Mr Lai’s evidence was that others within the Crystal Island organisation processed payment, but Spachoice did not call any evidence to explain that payment. 
Minimum term
293	In seeking to recover the profit it would have made under the Agreement if it had been performed, ILS seeks to establish an implied minimum term of the Agreement. ILS submits that the parties contemplated an ongoing agreement, which was reflected in the negotiations regarding Mr Jordan’s restraint of trade and the need for Mr Jordan to maintain his lease and associated overheads. 
294	ILS argues that the implied term for the minimum duration of the Agreement was the same as the restraint of trade period, being 5 years. ILS claims that the Restraint Period, as defined in Special Condition (“SC”) 8 of the contract of sale of the Essendon store, has cascading lower periods, which are only relevant if the enforceability of the 5-year period is contested. ILS contends such a contest assumes a prima facie breach by Mr Jordan. ILS asserts whether a Court would ultimately enforce only a lower period is beside the point: the threat of litigation to enforce the maximum period is designed to deter Mr Jordan from attempting to compete at all during that period. ILS claims that Spachoice has not alleged in this proceeding that the restraint period of 5 years was unenforceable, and the Court has evidence of its negotiation. 
295	ILS cites Realestate.com.au Pty Ltd v Hardingham in which the High Court considered the principles relating to the circumstances in which the Court will infer a term into a contract. 
296	ILS submits that it can be inferred that there was an agreement which was satisfactory to ILS as otherwise the sales of the Hallam and Essendon stores would not have proceeded. ILS contends that it was also clear, to a reasonable hypothetical observer, that the restraint of trade was a significant clause relevant to the understanding of the Agreement. ILS claims that there is evidence by way of text messages and evidence given by Mr Lai in cross-examination, that Mr Jordan was part of Spachoice’s long-term vision. 
297	With regards to Spachoice’s allegation that the implied minimum term is lacking in certainty, ILS argues that the rhetorical questions posed by Spachoice in its submission have obvious answers:
(a)	5 years from what date? Commencement of the Restraint Period, as defined in the contract of sale for the Essendon store, which was 1 December 2019. 
(b)	Is it 5 years from 11 or 13 August 2019 or 5 years from some other date? This question is materially the same as the first (above). A reasonable commercial bystander would not ask the question in those terms. 
(c)	What is the maximum term? None: after the minimum term is achieved, the parties are no longer bound to continue. The Spachoice submissions deal with authorities concerning implied notice periods in such circumstances, but those circumstances are not the circumstances of this case. The Agreement was terminated before the expiry of the minimum term, and liability is therefore to be calculated by reference to the minimum term. 
(d)	Does [the provision for cascading shorter periods of the restraint of trade] require a Court to determine if the Restraint Period is for a period of 5 years, 4 years or 3 years, before it can determine the term of the [Agreement]? No. This is addressed above.
298	ILS submits that it is of no consequence that the restraint of trade provision had not been discussed as at 11 and 13 August 2019, because Messrs Lai and Jordan knew that the sale of the other businesses would include a term restraining Mr Jordan from training and that it would be for a certain period.
299	ILS refers to Spachoice’s submission that ILS was opening itself up to being sued for breach of the Agreement if they chose not to renew the Lease (a submission which implied that ILS was compelled to renew the Lease regardless as to whether the Agreement proved profitable). ILS claims that this is simply consistent with how most agreements work in the case of breach, and not a compelling argument against an implied term for a minimum period. 
300	ILS further rebuts Spachoice’s submission that a minimum term should not be implied because there was no meeting of minds and no discussion about duration. ILS argues that silence as to a commercial term does not mean it is so uncertain as to be void or that there was no concluded agreement. ILS contends that the silence in this case was that it was not necessary to negotiate.  
301	ILS submits the silence of Messrs Jordan and Lai (with respect to duration of the Agreement) when they well knew what execution of the sale contracts meant for Mr Jordan’s (and ILS’s) ability to trade, and for how long that was to apply (namely 5 years), is consistent with an acceptance of what was necessary to achieve the intended sales of swim spas through ILS’s Kilsyth premises, trading as Spachoice’s “Swim Spa Super Store”, with ILS earning commissions. ILS claims that no commercial bystander would consider that the silence implied that the Agreement was terminable at will. ILS asserts that would make no commercial sense: in making and performing the Agreement, Mr Jordan would have sacrificed not only his business but would have done so without the security of any source of income and having locked himself out of the market where he has good commercial standing. 
302	ILS submits that Spachoice’s argument that Mr Jordan stated that he alone could have chosen to not renew the lease and end the Agreement is not what was put in cross-examination. ILS contends that the point of the cross-examination quoted above was to identify that, commercially, it was immaterial to the parties and the Agreement that ILS did not, as at August 2019, have 5 years remaining on its lease. ILS relies on the evidence of Ms Bartolo and Mr Imberger which it says demonstrated that that lack of concern was well placed, and that, on the balance of probabilities, ILS would have been able to extend its lease sufficiently to perform the Agreement for at least the minimum period of 5 years. What mattered was that there was to be a restraint of trade, which was an issue expressly on the table from the time of Mr Lai’s first letter of intent sent on 1 August 2019. 
303	ILS states that Mr Jordan’s email dated 11 May 2020 does not indicate that he believed the Agreement was terminable at will. ILS submits that the email does identify a breach (or at least an arguable one): a failure to co-operate in the performance of the Agreement or to act in good faith, breach of which was sufficiently serious to justify termination; alternatively, the conduct of which Mr Jordan complained amounted to a repudiation of the Agreement, which he was prepared to accept. ILS submits that, in any event, although post-contractual conduct is admissible on the question of the existence of a contract, it is not admissible for construction or interpretation of contract. 
304	ILS contends that, alternatively, if the term of the Agreement was not a minimum of 5 years, it was until the end of ILS’s lease. On its calculation, that date was 4 June 2022.
305	ILS claims that if it and Spachoice had agreed to continue the Agreement beyond the end of the lease, ILS could have obtained a new lease for the Kilsyth “Swim Spa Superstore”, and it would have been in ILS’s interests to continue operating the Agreement until at least the end of the restraint period on 30 November 2024. ILS states that it would not have lain in the mouth of Spachoice immediately after the execution of a new lease, to assert that the Agreement was unenforceable or terminable at will. In other words, the extension or renewal of ILS’s lease would have implied an extension of the minimum term of the Agreement (an opportunity that, ILS asserts by Spachoice’s conduct, ILS has lost). 
306	ILS relies on the test set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings. It submits that an implied minimum term for an agreement does not operate in a partisan way and binds both parties. ILS argues that the term is equitable as it is a quid pro quo provided by Spachoice in exchange for ILS’s commitment to “keep up” the lease. 
307	ILS states that, without the minimum term, the agreement is commercially unworkable – as without the Agreement, ILS would have no way of generating an income given the restraint of trade. ILS submits that this kind of deal would be intolerable and would open them up to liabilities to third parties such as ILS’s landlord. ILS contends that for the reasons already discussed the implied minimum term was also an obvious term. 
308	ILS argues that the term is capable of clear expression and was expressed clearly in the submissions, as well the proceedings.
Repudiation and termination
309	ILS submits that, by reneging on the Agreement, Spachoice evinced an intention not to be bound by it and thereby repudiated the Agreement. ILS contends that it accepted this repudiation by its solicitors’ letter dated 17 November 2020, and thereby terminated the Agreement. 
Estoppel
310	ILS argues that if the Court does not conclude that a legal agreement came into effect, then ILS should succeed on the basis of estoppel. 
311	ILS say that Mr Lai has induced Mr Jordan to assume that ILS would have an ongoing relationship with Spachoice in which ILS would earn the retail commission from Spachoice’s sales of swim spas in exchange for Spachoice having exclusive, ongoing access to ILS’s premises. That assumption is evidenced by the arrangements that were effected between December 2019 (the rebranding of ILS’s Kilsyth premises as a Spachoice “Swim Spa Superstore”) and the eventual calculation and payment of commissions for sales of swim spas in June 2020. 
312	ILS submits that as a result of being induced, Mr Jordan executed the sale of the Essendon store and included the restraint of trade. ILS contends that, contrary to Spachoice’s submissions, Mr Jordan did give ample evidence that he relied on Spachoice’s representation to execute the contracts of sale. ILS point out Mr Jordan gave evidence that, unless he could come to a solution in relation to ILS’s business, his business partners were not interested in selling – and he was personally privy to the contract for the sale of the Essendon store. ILS claims it is not necessary to prove reliance for Mr Jordan to utter the magic words, “I relied on …”, or some other form of language. 
313	ILS states that, in the latter half of 2020, Spachoice resiled from the assumption that Mr Lai had induced. It asserts that Spachoice did so unconscionably, offering as an alternative compensation the meagre sum of $200.00 commission on sales. In the circumstances, ILS submits it was reasonable for ILS to terminate Spachoice’s access to the Kilsyth premises and to bring its lease to an end. 
314	ILS contends that, because Spachoice is estopped from resiling from the assumption it induced, equity will require Spachoice to compensate ILS. The measure of that compensation, if that is the remedy to which ILS is entitled, is to be measured at a later trial. 
November agreement
315	ILS claims that if the Court prefers Mr Lai’s evidence, then Spachoice has effectively admitted liability by its plea of the agreement Mr Lai says he made with Mr Jordan on about 26 November 2019. In those circumstances, ILS states the Court should make declarations that Spachoice is liable to ILS in accordance with the terms of that agreement as pleaded by both parties. 
Spachoice submissions
316	Spachoice deny that any Agreement to the effect alleged was agreed. To the extent that any agreement was reached, Spachoice submits that it was to the effect that on 26 November 2019, Messrs Lai and Jordan agreed:
(a)	sales salespersons from the Bayswater store when suitable were to direct customers to the Kilsyth store to look at the swim spas on display at that store; 
(b)	if a sale occurred at the Kilsyth store by reason of the introduction of a client to the Kilsyth store, then ILS as the owner of the Kilsyth store was to invoice the customers and receive the difference between the retail price and the wholesale price and the associated costs with the sale; and
(c)	either party could end the agreement at will, should it not be suitable to either of them.
July and August 2019 Emails and text message and August 2019 meeting
317	Spachoice submits that, in an email dated 27 July 2019, an initial offer to purchase the businesses was made in the sum of $300,000.00. Mr Lai said that he instructed Ms Devenish to make this offer. Spachoice contends that Mr Jordan responded by asking for $480,000.00 after speaking with Mr van Hoof and Ms Mayer. 
318	Spachoice states that even though, in his 27 July 2019 email, Mr Jordan makes reference to “tangible” and “intangible” assets, he declared in his evidence in chief that under the letter of intent dated 1 August 2019 he did not know what these terms meant. Spachoice claims that Mr Jordan then resiled from these comments in cross-examination. 
319	Spachoice asserts that both parties agree that there was a telephone conversation before the 29 July 2019 email but notes that Messrs Jordan and Lai disagree on the content of that conversation. Mr Jordan said that he expressed that he wanted out of all three stores and would only consider an arrangement for the transition period (he said that this was what he and Mr van Hoof and Ms Mayer wanted), whereas Mr Lai stressed that he communicated to Mr Jordan that he was not interested in purchasing the Kilsyth store. Spachoice submits that Mr Lai says the Board agreed to paying the $480,000.00 sought by Mr Jordan for the Essendon and Hallam stores only. 
320	Spachoice contend that Mr Jordan’s evidence was that, prior to sending the 30 July 2019 email, he says he spoke with Mr van Hoof and Ms Mayer, and that Ms Mayer expressed she did not wish to work for the business moving forward. Mr Jordan said he told Mr Lai about this on the phone prior to sending the 30 July 2019 email. In addition, Mr Jordan’s evidence was that he was aware Spachoice would require a restraint of trade provision for any sale. 
321	Spachoice states that, in the 30 July 2019 email from Mr Jordan to Mr Lai and Ms Devenish, he accepts the $480,000.00 offer which included the increased deposit of $60,000.00 but continued to press for the sale of the three stores. Spachoice submits that Mr Jordan’s statement in this email that Mr van Hoof and Ms Mayer would continue to work for a year in the stores, contradicts his evidence that when he spoke to Ms Mayer prior to sending the email, she had insisted she did not want to work for the business moving forward. 
322	In relation to the email sent from Mr Lai to Mr Jordan on 1 August 2019 containing the letter of intent, Spachoice contends that Mr Jordan gave evidence that he did read the letter of intent and the cover email, both of which only referred to the Hallam and Essendon stores. Spachoice claims that Mr Jordan’s evidence that he did not understand the letter of intent should not be accepted because he failed to raise any concerns after receipt of the email. 
323	Spachoice asserts that, according to Mr Jordan it was only at the meeting on 8 August 2019 at the Spachoice warehouse that Mr Lai first conveyed to Mr Jordan that Spachoice was not interested in purchasing the Kilsyth store. Spachoice states that Mr Stone’s evidence is that he was not in the meeting when this was discussed, and that his reaction being “dumbfounded” was consistent with the fact that if the deal fell over his prospects of commission would be reduced.
324	In relation to the 9 August 2019 meeting between Messrs Lai and Jordan at the Kilsyth store and later at a coffee shop, Spachoice submits that, at this meeting, Mr Jordan began to realise that Spachoice had no interest in purchasing the Kilsyth store and so he pivoted and suggested the idea of a Spa showroom. Spachoice contends that, in his evidence, Mr Lai recalled that Mr Jordan expressed concern over the fact that the lease still had one year remaining. Spachoice claims, in response, Mr Lai said that he suggested subleasing, attempting to end the lease early, but ultimately felt that Mr Jordan was more inclined to operate the store as an Oasis dealer for the remainder of the lease. 
325	In relation to the 10 August 2019 meeting between Messrs Lai and Jordan, firstly at Mr Lai’s apartment and then at a Chinese restaurant, Spachoice argues that Mr Jordan’s evidence was as follows:
a)	Mr Lai told him that he had spoken to the Board, and Mr Lai then went on to suggest that Mr Jordan continue to run the Kilsyth store and pay rent and outgoings. Despite this, Spachoice would supposedly have control of the store for as long as ILS paid the rent, and that they would keep the Kilsyth store “ticking over”; 
b)	Mr Jordan said he would run the Essendon store and Mr van Hoof would run the Hallam store;
c)	with ILS paying the rent, Spachoice would store their spas in the Kilsyth store and use it as a display store. Spachoice would invite potential customers to the Kilsyth store, would meet them there, explain and sell the product. After making the sale, ILS would receive the difference between the wholesale and the retail itself; 
d)	given that Mr Jordan knew a lot of people who bought spas, he was still free to bring customers to the display store in Kilsyth and make his own sales; and
e)	Mr Jordan accepted he was free to sell any Oasis products from the Kilsyth store.  
326	In relation to the same 10 August 2019 meeting, Spachoice submits that Mr Lai gave the following evidence:
a)	he discussed with Mr Jordan growing the dealer network;  
b)	that the agreed initial payment of $180,000.00 ($60,000.00 deposit and $120,000.00 initial payment) was not enough for Mr Jordan. Mr Lai said he would need to go back to the Board to discuss;
c)	that Mr Jordan reiterated he did not want to continue to run the Kilsyth store, and that this remained an issue that needed to be resolved; and
d)	the amount of the performance bonus pricing, which caused the purchase instalments to be triggered and for bonus payments to be made.
327	In relation to the 11 August 2019 meeting between Messrs Lai and Jordan at a coffee shop in Graduate Road in Bundoora, Spachoice contends that Mr Jordan’s evidence was to the effect of:
a)	Mr Lai reiterated that he did not want to purchase the Kilsyth store but suggested it be used as a display store for Oasis swim spa products, and that if customers were brought to the Kilsyth store and purchased a swim spa, ILS would be rewarded with the difference between the retail and wholesale price; 
b)	Mr Jordan would have free reign to make his own sales from the Kilsyth store, and that he would use his spa networks to do so; 
c)	Spachoice agreed to pay $20,000.00 towards marketing and shop fit outs to make the Kilsyth store work, but the issue surrounding restraints of trade for 5 years remained open for discussion, as Mr Lai saw this is a “long-term thing”; and
d)	Mr Jordan denied that he wanted more than $180,000.00 as an initial payment. Mr Jordan agreed that the $20,000.00 from Spachoice was to rebrand. Mr Jordan explained that he had Ms O’Connor employed full time and “Renzo” as a floated employee at the Kilsyth store, and that he too was a floating staff member at Kilsyth. 
328	Spachoice states that Mr Lai’s evidence of the same 11 August 2019 meeting was that the following was discussed:
a)	that Mr Lai had obtained Board permission for an increase in the initial instalment to $240,000.00, but that Mr Jordan wanted more because they had to pay Ms Mayer out in the sum of $100,000.00. Mr Jordan stated that his bottom line was $260,000.00, to which Mr Lai responded that he would need to go back to the Board and started to put some figures down on a spreadsheet;
b)	that, although Spachoice would not purchase the Kilsyth store, they would provide ILS with the sum of $20,000.00 and, at its own cost, rebrand the store. Mr Lai said that the $20,000.00 could be used by ILS however they saw fit and could be used to cover a portion of what remained on the lease. Mr Lai noted that the remainder of the lease continued to be a major concern for Mr Jordan. Mr Lai acknowledged that if ILS chose to close down the store a week or so after the execution of the contract there was little he could do about it; 
c)	Mr Lai disagreed that the $20,000.00 was provided to get ILS through until the contract was executed and disagreed that there was any discussion about profit-sharing. He said the profit-sharing discussion occurred in November 2019;
d)	Mr Lai said that Mr Jordan raised the issue of continuing to operate both the Essendon and Kilsyth stores, to which Mr Lai responded that he already had staff in the Kilsyth store and that he could potentially share his time between stores. Mr Jordan responded that he would need to speak to his wife; and
e)	Mr Lai said that he started to compose an Excel spreadsheet in front of Mr Jordan, which was sent to Mr Jordan by text message on 12 August 2019. 
329	In relation to the spreadsheet, Spachoice submits that, consistent with the matters expressed in the New South Wales Court of Appeal decision in Touma v Highfields Australia Pty Ltd, the spreadsheet forwarded to Mr Jordan by text message on 12 August 2019 is a contemporaneous note of that conversation. 
330	In relation to the various text messages on 12 August 2019 between Messrs Lai and Jordan, Spachoice contends that Mr Jordan’s evidence was to the effect that: 
a)	Mr Jordan described this text message as another “curve ball” and said that they had not discussed the day before that he would operate the shop as a “megastore”, rather it was said it was discussed he would be “having input building that shop itself, bringing in customers in there when I could…I would just be running the showroom itself. So that [$20,000.00] was there”. Spachoice claims that this is incongruous with a plain reading for Mr Lai’s text message which was a follow up of the discussion he and Mr Jordan had the day before; 
b)	Spachoice asserts that in cross-examination, Mr Jordan denied that on 11 August 2019 he had any discussion about the initial payment, but then conceded that there had been a limited discussion on 10 August 2019; 
c)	Spachoice argues that Mr Jordan changed his evidence in chief during cross-examination, now stating that the $20,000.00 was to help him run the Kilsyth store up until the contract was signed. Spachoice submits that this version of events should not be believed, is contrary to Mr Lai’s evidence that the $20,000.00 was for rebranding, as well as the text messages themselves. Spachoice notes that ILS was liable to pay the lease until 4 June 2020 regardless as to any deal that was on the table for the purchase of the Hallam and Essendon stores; and
d)	Spachoice submits that, in cross-examination, Mr Jordan denied that in his 12 August 2019 text message he implied that he and his wife would be working in the Kilsyth store until the end of the lease. Spachoice contends that Mr Jordan’s denial should not be accepted by the Court as the text message clearly refers to them working in the future with Spachoice on different projects. Spachoice also notes that Mr Jordan’s denial is contrary to Mr Lai’s evidence that on 11 August 2019 Mr Jordan told him he would need to talk to his wife about working in the Kilsyth store.
331	In relation to the 12 August 2019 text messages, Spachoice asserts that Mr Lai evidence was to the effect:
a)	Mr Lai says that the text message he sent at 12.11am on 12 August 2019, reflected the conversation he had with Mr Jordan the previous day, in which it was discussed that, depending on whether Mr Jordan, Mr van Hoof or Ms Mayer chose $260,000.00 or $240,000.00 up front, their required profit margin to trigger the next two instalments would either be $110,000.00 or $100,000.00 respectively. The text message also refers to the $20,000.00 for Mr Jordan to run the Kilsyth store for one year and also a penalty of $24,000.00 (Option B) or $26,000.00 (Option A) if overall revenue of $1,800,000.00 was not reached each year;
b)	Spachoice submits that Mr Jordan replied indicating that he had spoken to his wife who had agreed to assist in the operation of Kilsyth store; 
c)	Spachoice contends that Mr Jordan was unhappy that the increase to a $260,000.00 initial payment would result in a per annum profit requirement rise from $100,000.00 to $110,000.00, but believed that his wife could help grow the Kilsyth store and make up the $10,000.00 difference; and
d)	Mr Lai obtains agreement from the Board to pay the initial sum of $260,000.00 and to keep the profit trigger at $100,000.00.
332	Spachoice claims that on 12 August 2019, Mr Lai sent an email to Mr Jordan enclosing a further letter of intent which recorded what had been agreed to in the text message that there would be an initial payment of $260,000.00 and a 7-year restraint of trade period. Spachoice points out that neither the email nor the letter of intent makes any mention of the profit-sharing agreement that ILS claims had been agreed to on 11 August 2019. 
333	Spachoice asserts that on 13 August 2019, Messrs Lai, Jordan and Stone met at the Ringwood office. Mr Jordan’s evidence was to the effect that:
(a)	The price of the takeover was discussed, and also what would be done with the Bayswater store in terms of the wholesale/retail side; 
(b)	Mr Jordan’s biggest concern was how the two years of management would work so that he and Mr van Hoof would be in a position to meet their targets operating the Essendon and Hallam stores; 
(c)	Mr Lai explained to both Mr Jordan and Mr Stone how the profit-sharing was to operate; 
(d)	Mr Jordan agreed in cross-examination that in this meeting, Mr Lai relayed the same deal he had offered him on 11 August 2019; 
(e)	It appeared that Mr Jordan’s evidence with regards to the profit share agreement that Mr Lai supposedly relayed on the 13 August 2019, seemed to be an attempt for Mr Jordan to bolster his own case and his own version of events, for instance:
a)	Mr Jordan gave evidence of how “they” would be running the Kilsyth store, so he would have time to run the Essendon store. He would not be required to do much more than pay the rent and would be getting notification of what was being sold as a result of utilising the display stores, and that he would get “the whole price”. 
b)	How Mr Jordan “used to call them the swim spa store and I used to call the other one a spa store”.
c)	How from Mr Jordan’s perspective, “everything that was sold from their store down the road would be put through the store as a sale to myself”.
d)	Mr Jordan reiterated that there would not be “any retail outlet itself” in the display store, that customers would subsequently make their purchase at another store and he “would be given the profit between the wholesale and the retail in that store itself”.
e)	Mr Jordan said that the arrangement would run for “as long as I keep up [the] lease on that property this would go in the same period of time as the management regulations in the restraint period” and that in keeping the arrangement going he “had to pay [the Kilsyth’s store’s] lease every week and pay for the lights and pay for the insurance and all the outgoings”.
334	Spachoice submits that Mr Jordan’s evidence on what he says was discussed on 11 August and 13 August 2019, is inconsistent in a number of ways:
(a)	As stated in cross-examination, he agreed what was said about the deal on 11 August 2019 being the same as what was said on 13 August 2019; 
(b)	Mr Jordan gave conflicting accounts as to what his intentions were with regards to whether the Kilsyth store was going to be run as a retail store, or a display store. It is said that on 11 August 2019, he said that he could operate the Kilsyth store as a retail store, whereas on 13 August 2019, he said that it was never going to be a retail outlet and only a display store. Spachoice contends that this representation is false because Mr Jordan repeatedly stated in his evidence that he could operate the Kilsyth store as a retail store, and that he could have managed this given that he had Ms O’Connor employed full time until 23 January 2020, and he was able to sell Oasis products from the Kilsyth store; and
(c)	There was no clear indication from Mr Jordan as to the duration of the alleged profit-sharing agreement. Mr Jordan said that on 11 August 2019, the duration was not discussed, and on 13 August 2019, he said that it would continue as long as he kept his lease but also for the same period as the management regulation in the restraint period (the management regulations under the Essendon Contract were two years, as per definition of term being two years).
335	Spachoice submits that Mr Jordan’s evidence in many ways aligns with Mr Lai’s evidence of the 11 August 2019 meeting, save for the fact that Mr Lai does not agree that the profit-sharing agreement was discussed. According to Spachoice, Mr Jordan agreed the matters stated by Mr Lai were discussed, in particular Mr Lai had spoken to the Board they discussed the branding of the store and payment of the $20,000.00.
336	Spachoice contends that Mr Lai’s evidence was to the effect that, on 13 August 2019, there was no discussion about any profit-sharing agreement, and that this was consistent with his text message at 7.46pm on 12 August 2019 which only mentioned that they were meeting to discuss prices of spas sold at Hallam and Essendon stores. 
337	Spachoice states that Mr Stone gave evidence that he spoke or met with Mr Jordan between 8 August 2019 and when the contracts were signed. Mr Stone said that Mr Lai was not present, but he also could not remember if anyone else was present. Mr Stone could not remember the date of the meeting, but he did remember that he spoke to Mr Lai by phone about similar matters but could not recall when. 
338	Spachoice recounts that Mr Stone gave evidence to the effect that there was an agreement in which spas would be displayed in Kilsyth store, sold at the Bayswater store and then profits would be dispersed to Kilsyth store. Mr Stone said that he discussed the arrangement with Mr Lai on the telephone after he had spoken to Mr Jordan. Mr Stone said that Mr Lai had told him about the arrangement in which profit would be distributed to the Kilsyth store despite not being sold there.
339	Spachoice asserts that it can be gleaned from Mr Stone’s evidence that he did not attend any meeting between Messrs Jordan and Lai on 13 August 2019, and that this is despite Messrs Lai and Jordan both giving evidence that he did attend. Spachoice claims that this is consistent with Mr Lai’s evidence that when Messrs Lai, Stone and Jordan met on 13 August 2019, the profit-sharing agreement was not discussed that day. Mr Lai gave evidence as to what was discussed at this meeting in re-examination, for instance the payment of $20,000.00 was not discussed. 
340	Spachoice argues that in cross-examination Mr Stone gave evidence that:
a)	A salesperson from the Bayswater store taking a potential client to the Kilsyth store to view a spa and this resulted in a sale would have the necessary connection to fall within the arrangement; 
b)	There was some confusion on Mr Stone’s part as to precisely how and where the sale actually occurred, and the significance of this; and 
c)	He rejected that the proposition on cross examination that a profit-sharing arrangement was discussed on 26 November 2019. He accepted that he might have spoken with Mr Lai on the phone after the 26 November 2019 meeting, but ultimately, he could not recall. 
341	Spachoice submits that if the Court finds that an Agreement was reached on 11 August 2019, this was before Mr Stone was privy to any discussions between Messrs Jordan and Lai. Spachoice contends that what is important is the discussions between Messrs Jordan and Lai, and not as information that might have been subsequently relayed to Mr Stone. 
Post August 2019
342	Spachoice submits that Messrs Jordan and Lai state that they both sought legal advice between 13 August 2019 and 13 October 2019 about the terms of the two Contracts of Sale. 
343	Spachoice contends that on 13 October 2019, Mr Jordan sent an email to Mr Lai advising him that he had sold his first swim spa out of the Kilsyth store but noting that there was no need for it to be interfered with by solicitors as the ultimately sale of the business “will be written up by our solicitor and checked by yours”.
344	Spachoice argues that Mr Jordan gave the following evidence when cross examined on his solicitor’s involvement:
(a)	Dita of Hobson Legal was retained prior to 13 October 2019; 
(b)	That he understood that the Kilsyth store arrangement with ILS was dependent on the Hallam and Essendon stores sale going through; 
(c)	That he had told his accountant, Mr Jolley, of the discussion he had with Mr Lai on 11 and 13 August 2019; 
(d)	Spachoice submits that the reason Mr Jordan said he did not discuss these meetings with his solicitor is because no such discussion took place on 11 August 2019; 
(e)	Mr Jordan agreed that the discussions regarding the profit-sharing could have been reduced to writing, but with the exception of the emails commencing 28 April 2020, there is no other written documentary evidence or text message of these discussions; and  
(f)	He agreed that he had asked Mr Stone to write the email on 14 November 2019 on his behalf, and that it would have been easy to have Mr Stone, who he said was privy to the 11 August 2019 profit-sharing agreement include a reference or explanation of the deal in his email, but he did not get him to do so. Despite this, he disagreed that the Agreement was omitted from the email because no such discussions occurred regarding this matter at the 11 August and 13 August 2019 meetings.
345	Spachoice asserts the reason why ILS did not call Mr Jolley to give evidence was because his evidence would not be favourable to their case and that this implication can be drawn pursuant to the principles of Jones v Dunkel. Spachoice argues that this inference can be drawn, given that ILS claim that the 11 August and 13 August 2019 meetings had been discussed with Mr Jolley. 
346	Spachoice submits that on 20 October 2019, Mr Stone sent an email to Messrs Jordan and Lai enclosing a marked-up version of the Essendon contract, that he and Mr Jordan had worked on. Spachoice contends that, despite the lengthy amendments made by Mr Jordan to the contract, and despite that fact that Messrs Jordan and Stone had clearly considered the Kilsyth store as they had included restraint of trade clauses and a carve out for the Kilsyth store, there was no mention in this 20 October 2019 correspondence of the so-called profit-sharing arrangement. Spachoice argues that the Essendon contract could have contained clauses which captured the profit-sharing agreement but did not.
347	Spachoice asserts that it is “telling” that Mr Jordan did not make any record of the alleged profit-sharing discussion of 11 August 2019, particularly when he had retained a solicitor and turned his mind to the operations of the Kilsyth store in the Essendon Contract. 
348	Spachoice states that the email dated 14 November 2019 that Mr Jordan sent (drafted by Mr Stone) is “telling” as:
(a)	By this time, Mr Jordan had sold an Oasis swim spa from the Kilsyth store; 
(b)	Mr Jordan is requesting a meeting with Mr Lai to discuss the Kilsyth store;
(c)	It refers to Mr Jordan, Mr van Hoof and Ms Mayer’s initial requirement that Spachoice buy the Kilsyth store, which was rejected;
(d)	It refers to meetings in the week Mr Lai came to Australia and the idea Mr Lai had of putting money into the Kilsyth store, fitting it out and having Mr Jordan run it;
(e)	It refers to their discussions of Mr Lai offering $30,000.00 towards the Kilsyth store plus fit-out of stock; 
(f)	It refers to Mr Jordan who was seeking $40,000.00 as compensation for the money he lost paying rent and outgoings, because as he said, “he lives off this shop”. Spachoice submits there is also the implication that Mr Jordan would not sign the Essendon and Hallam contracts unless he was given the $40,000.00 (a sum which under cross examination was accepted as incorrect); and
(g)	The email makes no mention of the so-called profit-sharing arrangement said to have been made in August 2019. 
349	Mr Lai replied by email on 15 November 2019, which:
(a)	questions Mr Jordan’s requests for the $30,000.00 and $40,000.00 advances;
(b)	refers to the discussion Mr Lai had with Mr Stone regarding a campaign to push sales to the Kilsyth store; and
(c)	refers to the solution that Mr Lai had offered for the Kilsyth store on 11 August 2019 which it is said Mr Jordan agreed to, and then in the next paragraph refers to him sending a message putting forward the term of $20,000.00 and feedback on Hallam and Essendon stores; and
(d)	otherwise makes no mention of the so-called profit-sharing arrangement said to have been reached in August 2019. 
350	Spachoice contends that Mr Jordan’s email on 14 November 2019 and Mr Lai’s email on 15 November 2019 both confirm what was actually discussed on 11 August 2019, in that there was no mention of any purported profit-sharing arrangement for the Kilsyth store, just the payment of $20,000.00, as well as confirmation over the structure of payments for the Hallam and Essendon stores.  
351	Spachoice claims that in Mr Jordan’s reply on 17 November 2019, he:
(a)	acknowledges Mr Lai’s offer of $20,000.00 but states that he was still seeking $30,000.00; 
(b)	threatens to change the restraining clause in the Essendon contract to enable him to sell any product from any supplier at the Kilsyth store;  
(c)	refers to customers down the road being directed to the Kilsyth store; and
(d)	once again, makes no mention of any profit-sharing arrangement said to have been reached in August 2019.  
352	Spachoice also submits that the fact that this email refers to a concern Mr Jordan has as to where the sale will occur, suggests that the 11 August 2019 agreement was not made, as under that agreement he would be receiving commission regardless as to where the sale occurred. Spachoice also asserts that the email refers to a discussion prior to 17 November 2019, where Spachoice intimated that they would help out the Kilsyth store by directing potential clients there, and that there would also be an effort to link up the marketing between the two stores. 
353	In examination-in-chief, Mr Lai said that he did not have discussion with Mr Jordan prior to 17 November 2019 which indicated that customers from down the road would be directed to the Kilsyth store. Mr Lai said that what had been discussed was that the two stores would supplement each other and share traffic, so it was possible that a customer could go to either store and that they would share marketing for both stores. 
354	On 26 November 2019, after the Hallam and Essendon contracts were executed, Mr Jordan sent an email to Mr Lai requesting a meeting for the next day to discuss the direction going forward. When asked about the meeting referred to in this email, he said: 
(a)	he could not recall where the meeting took place; 
(b)	he recalled that only he and Mr Lai attended; and 
(c)	they discussed how they would move forward with the shops, marketing plans and six-month projections. 
355	Spachoice contends that Mr Lai’s evidence is that it was at this meeting that the November 2019 agreement was formed, stating:
(a)	they met in a small office in the Ringwood warehouse and discussed that the profit-sharing agreement would be limited to sales which occurred at the Kilsyth store, after a salesperson from the Bayswater store took a customer to the Kilsyth store. The point of this agreement was to bring more customers to the Kilsyth store and help them make sales; 
(b)	there was no discussion about the length of the agreement; 
(c)	this November 2019 agreement had not been discussed with the Board;  
(d)	it was not discussed that all sales of all swim spas at the Bayswater store would be the subject of the November agreement, and Spachoice asserts that this was never discussed; 
(e)	he told Mr Jordan that ILS would need to pay the commission of the salespersons from the Bayswater store; and 
(f)	after the meeting, he called Mr Stone and relayed the discussion that he had with Mr Jordan, as Mr Stone was the person who was assigned to implement what was discussed.  
356	Spachoice states that, significantly, Mr Lai was not cross-examined about the content of his conversation with Mr Jordan on 26 November 2019.
357	Spachoice submits that when Mr Jordan was cross-examined about the meeting on 26 November 2019, he said:
(a)	he could not remember where the meeting took place, but he remembered raising concerns about the level of sales at the Kilsyth store. He agreed it was a concern getting in more traffic into the Kilsyth store, but he initially said that it was not discussed how this would be addressed; 
(b)	he agreed he was able to occasionally sell swim spas from the Kilsyth store, but that ultimately, it was not open for the general public and was not a classic retail store; and 
(c)	while he said that the profit-sharing agreement was made in August 2019, he confirmed that his view of the profit-sharing agreement was that if the sale was concluded at the Kilsyth store “ILS would get the difference between the retail and wholesale price less commission and other items”.
358	Spachoice contends that ILS’s invoice for the payment of $22,000.00 was dated 19 December 2019, almost 1 month after the Hallam and Essendon contracts were signed. The invoice was paid on 10 February 2020.   
359	Spachoice argues that issuing the invoice on 19 December 2020 is inconsistent with Mr Jordan’s evidence in cross-examination (which was itself inconsistent with his evidence-in-chief), that this was a payment to see ILS through until the Hallam and Essendon contracts were signed.
Emails between 28 April 2020 and 11 May 2020
Emails 28 April to 30 April 2020
360	Spachoice submits that in Mr Jordan’s email dated 28 April 2020, he refers to a meeting where he and Mr Lai talk about the situation at the Kilsyth store. When he was asked under cross-examination about which meeting he was referred to in that email, he first started off saying that it was a meeting in November 2019, but then paused and said it “was in relation to the previous meeting pre-contract”. Spachoice argues that Mr Jordan then again referred to a date in November 2019 as when he clarified the nature of the profit-sharing arrangement with Mr Lai.
361	Spachoice contends that Mr Jordan also gave evidence that he confirmed and clarified the profit-sharing arrangement with both Messrs Lai and Stone many times. 
362	Spachoice argues that neither Mr Stone nor Mr Lai gave evidence to the effect that the profit-sharing arrangement was discussed many times, like Mr Jordan said it was. 
363	Spachoice claims that Mr Jordan does not take issue with Mr Lai’s assertion that the customer had to at least be taken to the Kilsyth store first, but he says that any sale concluded at the Kilsyth or Bayswater stores would be subject to the Agreement.
364	Spachoice observes that, although inconsistent with its pleadings, Mr Lai’s evidence was that this scenario was not discussed on 26 November 2019.
365	Spachoice submits that Mr Lai’s evidence concerning the three emails that passed between him and Mr Jordan between 28 and 30 April 2020, is in line with what he says was discussed on 11 August 2019 in respect of the agreement to pay the sum of $20,000.00 and also what he says was discussed on 26 November 2019 regarding the terms of the November 2019 agreement. He concedes that he had no discussion with Mr Jordan as to the terms on which swim spas were to be placed on display at the Kilsyth store. 
Mr Stone’s emails dated 30 April 2020 and 1 May 2020
366	Spachoice contends that Mr Stone sent emails on 30 April 2020 and 1 May 2020, and that the 1 May 2020 email puts into context what he stated on 30 April 2020.
367	On 30 April 2020, Spachoice claims Mr Stone makes a broad statement that any swim spas sold out of the Bayswater store, the profit would go to ILS. His email a day later dated 1 May 2020 clarifies this, when he wrote:
 “Predominantly any swim spas that have been sold and we have brought in customers to the showroom will qualify for this – as we do not have room at Bayswater.”  
368	Spachoice asserts that, in his evidence, Mr Stone said that this later email was not intended to convey a change but was a different use of grammar.
369	Spachoice argues that that this is consistent with the first email, which says that it only references those swim spas sold of out of the Bayswater store where the customer had also been brought to the Kilsyth store. Spachoice states that otherwise, there would be no reason to send this second email on 1 May 2020. Spachoice submits that this also naturally encompasses a situation where the customer is taken from the Bayswater store to the Kilsyth store, and the sale was concluded at the Kilsyth store and is consistent with Mr Stone’s evidence-in-chief. 
370	Spachoice contends that the fact that Mr Jordan never objected to the description of the profit-sharing agreement as laid out in Mr Stone’s 1 May 2020 email, is indicative of the fact that he agrees with it. 
Mr Jordan’s email on 11 May 2020
371	Spachoice states that on 11 May 2020, Mr Jordan sent an email to Messrs Peaker, Lai, Stone and Ms Liao, which Mr Peaker responded to by email the same date, supplying the pricing requested. 
372	Spachoice argues that Mr Jordan’s email of 11 May 2020 is significant as he stated:
(a)	unless he receives his pricing, he will close the Kilsyth store by close of business on 12 May 2020;
(b)	he states multiple times that in his view he is working for Spachoice as one of its dealers; and  
(c)	he says that, even if he gets the pricing, he may still decide to close the Kilsyth store as he is considering what to do given that his lease is due to be signed Thursday that week.  
373	Spachoice asserts that Mr Jordan was a Spachoice dealer, despite the fact that he denied this in his evidence. Spachoice submit this was made clear due to the fact that Mr Jordan had an exclusive arrangement with Spachoice to only deal in Oasis products from the Kilsyth store.
374	Spachoice contends that ILS’s lease’s option was exercisable by 4 March 2020, and, therefore, had expired when this email was sent on 11 May 2020. Ms Bartolo confirmed that ILS did not exercise the option by 4 March 2020.
375	Spachoice argues that instead of choosing to leave the Kilsyth store as of 4 June 2020, ILS negotiated a new lease entering into a “Deed of Renewal and Variation of Lease” on 17 July 2020 for a one-year term from 5 June 2020 to midnight on 4 June 2021, with one further term of one year. 
376	Spachoice claims that this email demonstrates that any profit-sharing agreement that existed between ILS and Spachoice was determinable at will by either party. Spachoice states that the email does not suggest that Spachoice was in breach, which would give rise to a right to terminate for ILS.
Events and emails post 11 May 2020
377	Spachoice submits that on 10 June 2020, it paid ILS’s “Invoice No. 5275” dated 2 June 2020 in the sum of $28,394.50, in respect of commission pursuant to the profit- sharing arrangement. The invoice related to the sale of four swim spas.
378	Spachoice contends there remains an issue, to be determined at any subsequent quantum trial as to whether the sales are caught by the November agreement and whether the calculations reflected in Invoice No. 5275 are correct.
379	Spachoice claims that Mr Lai’s evidence was that all he checked was the calculation of the invoice and relied on others to check the veracity of the invoice. Mr Lai says he was not involved in compiling the information on the tax invoice or the Excel spreadsheet accompanying them. 
380	Spachoice asserts that Mr Lai said that the Board told him to end the November 2019 agreement (as he had not received consent from them for the November 2019 agreement). 
381	Spachoice states that Mr Lai’s evidence of his interactions with the Board should be believed, given that he effectively admitted to committing a professional mea culpa by his evidence that he had not obtained the Board’s approval. 
382	Spachoice submits that on 29 August 2020, Mr Lai, on behalf of Spachoice, sent an email to Mr Jordan terminating any profit-sharing agreement that was in place between ILS and Spachoice. In the email, Mr Lai recites the November 2019 agreement and advises that he had not received Board approval for the same.
383	Spachoice contends that on 4 September 2020, Mr Stone sent an email to Mr Lai, Ms Zeng and Ms Liao where he differentiates between those customers who had been brought into the Kilsyth store and those that had not. He followed this email up with a further email on 10 September 2020, referencing “Invoice No. 8041”, confirming that this sale was direct from the Swimming Pool & Spa Association of Australia show, so the customer did not visit the Kilsyth store.
384	Spachoice argues that this aligns with the evidence that Mr Stone gave in examination-in-chief, which outlined that the profit-sharing agreement applied to situations where a salesperson brought a customer to the Kilsyth store. 
385	Spachoice states that, on 10 September 2020 at 7.29 pm, Mr Lai sent a further email clarifying again the November 2019 agreement to which Mr Jordan responds the same day at 9.42 pm.
386	Spachoice claims that it is “interesting” that in this 10 September 2020 email there is a reference in the third paragraph to “the deal was done in October 2019 not April 2020…”. In cross-examination, Mr Jordan explained this away by suggesting he simply had the wrong date, but Spachoice asserts that this just another example of Mr Jordan relating the profit-sharing agreement to a date post-August 2019. 
387	Spachoice submits that in his email of 10 September 2020, Mr Jordan:
(a)	advised that ILS will be forfeiting its lease next week;
(b)	for the first time, suggests that his loss is somehow tied to the term of the Essendon contract of 5 years that he has been obligated to; and
(c)	significantly, does not say that it was discussed and agreed at the meetings on 11 August 2019 and/or 13 August 2019 that the profit-sharing arrangement was to be for 5 years, or for the term of the restraint period.
388	Spachoice observes that on 17 November 2020, ILS’s solicitor terminated “an agreement” without stating what “the agreement” was. 
Analysis of the Issues 
What was the effect of the discussions between the parties, in particular Dean Jordan and Ivan Lai, in mid-2019? 
Meeting on 8 August 2019
389	It is common ground that that at the 8 August 2019 meeting between Messrs Lai, Jordan, Van Hoof, Huang, Stone, Lai and Ms Mayer and Devenish, that it was expressed for the first time that Spachoice was not interested in purchasing the Kilsyth store. Mr Jordan stated in his examination-in-chief that Mr Lai said “we are not doing that anymore. We are not doing the [Kilsyth] store. We never wanted the [Kilsyth] store”.
Meeting on 9 August 2019
390	Messrs Jordan and Lai gave evidence that, at the meeting the next day, 9 August 2019, both were concerned that Spachoice’s refusal to purchase the Kilsyth store had the potential to jeopardise the whole deal. In an effort to salvage the deal, Mr Lai offers some solutions that did not involve Spachoice purchasing the Kilsyth store. The first was for Mr Jordan to sublease the premises, and Mr Lai said Mr Jordan was not interested in this. The second was for Mr Jordan to continue to operate the Kilsyth store as an Oasis dealer and continue to run the store for the remainder of the lease period. Mr Lai was under the impression based on Mr Jordan’s demeanour, that he was interested in pursuing this course of action. Mr Jordan also gave evidence that he was trying to find a workaround and says that he proposed the concept of a “spa showroom”, an idea which he believed that Mr Lai liked. 
391	There is no reliance by ILS on the 9 August 2019 meeting as a relevant discussion that constitute the Agreement alleged between the parties. ILS refers to the 9 August 2019 meeting by way of commercial context before the critical conversations on 11 and 13 August 2019. To the extent that the background is relevant, I prefer Mr Lai’s evidence that, at this point in time, Mr Jordan was interested in continuing to operate the Kilsyth store as a Spachoice dealer for the sake of salvaging the deal. If Mr Lai did in fact “like the concept” as recalled by Mr Jordan, Mr Lai’s enthusiasm was limited to the potential of the large floor space to operate as a store to showcase Spachoice’s swim spa products. This was not the inception point of any substantive “spa showroom” agreement between the parties. 
Critical meetings in August 2019
392	ILS contends that the critical conversations that constitute the Agreement occurred on 11 August 2019 between Messrs Lai and Jordan and on 13 August 2019 between Messrs Lai, Jordan and Stone. There is no reliance on discussion that occurred on 10 August 2019, save for commercial context.  
393	The evidence detailed above indicates that Mr Jordan does not dispute that Mr Lai was not interested in purchasing the Kilsyth store, indeed he notes that the deal almost fell over because of this roadblock. 
394	I accept that the reason that Spachoice was not interested in purchasing the Kilsyth store is because it was too close to their existing Bayswater store, and, therefore, did not increase their presence in a wider location or have the potential to attract any more clients in that area. 
395	It is hard to see how an arrangement whereby ILS received the difference between the retail and the wholesale price for all swim spas sold at the Bayswater store (less the sales commission, accessories and delivery costs), regardless of connection to the Kilsyth store, for the duration of the Agreement would be of any benefit to Spachoice. Under this alleged Agreement, Spachoice would effectively be providing ILS with a “no strings attached” supply of swim spas to sell for their own benefit, and furthermore, it would be Spachoice’s sales staff who would be making the sales. In effect, Spachoice would be providing the swim spas, making the sales, and ILS would be profiting on all of the difference between the wholesale and retail price for both stores. Spachoice would only earn the profit on the landed and wholesale price. If Spachoice sold directly to the consumer, without this Agreement, it would take both margins.  
396	If anything, Spachoice would be providing ILS with stock to generate competition for their existing Bayswater business, an arrangement which is clearly not in its own interests. Every swim spa sold at the Kilsyth store would represent a swim spa that could have been sold at the Bayswater store, so Spachoice would be sabotaging its own profit margin under this alleged Agreement.
397	I am not convinced that Spachoice would have offered such a charitable arrangement, purely for the purposes of helping ILS out while it had to pay off the rest of its existing lease until 4 June 2020. The sum of $20,000.00 paid to ILS in addition to a rebrand of the Kilsyth store was a gesture to help lighten the financial load of the lease, but I do not accept that Spachoice went as far as to set up an Agreement whereby Spachoice would pay ILS all profits on the retail and wholesale prices on Spachoice’s sales at its Bayswater store (minus commissions and accessories and delivery cost) and hand over retail profits to ILS for its own work. 
398	It is more probable, on the evidence before the Court, that Mr Lai agreed to pay ILS the retail profit in relation to sales of swim spas completed at the Kilsyth store (either from a walk-in customer or as a result of salesperson from the Bayswater taking the customer to the Kilsyth store and subsequently completing the sale at the Kilsyth store), together with sales where the customer was taken to the Kilsyth store by a salesperson from the Bayswater store and the sale was completed back at the Bayswater store rather than the Kilsyth store (comprising of “the November 2019 hybrid agreement”).  
399	This November 2019 hybrid agreement involves ILS getting the retail profit because it is running a spa showroom, which ultimately helps drives sales at the Bayswater store. Where there is a requisite connection with the Kilsyth store, in circumstances where it was able to display 12 – 15 swim spas (as opposed to two swim spas displayed at the Bayswater store) then the Kilsyth store was able to increase the Oasis swim spa profile. The Kilsyth store also had different models on display then the Bayswater store – Spachoice is, in essence, compensating ILS for running a spa showroom and the requisite sales can be attributed to the Kilsyth store.  
400	The question then is, why would Mr Lai negotiate away Spachoice’s retail profit as outlined above? In my view, the spa show room concept had to have a connection that would drive sales in the Bayswater store, in order for ILS to be compensated.  In addition, Spachoice would have also received an increase in market share after ILS stopped selling Just Spas products at its Kilsyth store, alongside the decision to not sell Sapphire Spas instead (and thus would have resulted in being in competition with Spachoice). This arrangement would justify Spachoice paying ILS the retail profit, in accordance with the November 2019 hybrid agreement.  
401	While Mr Lai was certainly interested in purchasing the Essendon and Hallam stores, he was firm and resolute about the terms of that purchase, and that this would not involve the Kilsyth store. Negotiations had broken down and Mr Jordan had even left a meeting in frustration on 8 August 2019, when Mr Lai insisted on the fact that he was not interested in purchasing the Kilsyth store. However, it was Mr Jordan who came back to Mr Lai and then suggested the 9 August 2019 meeting. Mr Jordan was constantly scrambling to keep the deal alive, organising meetings and, on his own version of events, come up with creative workarounds to include the offloading of the Kilsyth store in sale negotiations. Therefore, it does not make sense that Mr Lai, the man who was frustrating the progression of the transaction due to the firmness of his position of not wishing to purchase the Kilsyth store, would capitulate to the extent of offering such an unfavourable agreement simply for the purpose of salvaging the Essendon and Hallam acquisition. 
402	In my view, the confused nature of Mr Jordan’s evidence is indicative of the fact that he had an unrealistic understanding of any benefit that would be provided to Spachoice as a result of the offer he alleges was made by Mr Lai. 
403	The following paragraph taken from Mr Jordan’s evidence regarding the 11 August 2019 meeting summarises what, in Mr Jordan’s view, were the benefits of the Agreement to Spachoice:
 “… his wording was that I would be financially covered if I kept that store open. If I kept that store, kept the lease in there, kept the lights on, they would use it as much as they could with free rein, coming and going, and I would be able to operate that store as much as – so they would be able to operate that store under their own banner and increase their market share and then I would be rewarded from the difference between wholesale and retail, obviously, and keep that side of it going.”
404	Mr Jordan states that as part of the bargain, Spachoice would have “free rein” and could “operate the store under their own banner” to come and go from the store. However, this begs the question to what end would Spachoice wish to invest staffing resources into operating a store to sell swim spas for ILS’s benefit? 
405	Mr Jordan seemed to think, that if he “kept the store open, kept the lights on “there was some benefit conveyed to Spachoice because they would be increasing their market share. However, in actuality, Spachoice would not directly benefit from this perceived increase in market share because they would not be profiting on the retail price from the sales and would be effectively losing retail sales that could have occurred at the Bayswater store. It is not a convincing argument that the sale of Spachoice products at the Kilsyth store, amounts to profitable increase in market share and that this is commercially desirable at all costs, even where no retail profit is being derived from those sales. 
406	In reference Mr Jordan’s evidence set out above, it appears he was under the apprehension that he ought to be “rewarded” with the retail profits on all swim spa sales from both the Bayswater and Kilsyth stores, irrespective of whether a salesperson had taken the customer to the Kilsyth store. Mr Jordan appears to have held this belief simply because he had agreed to keep the Kilsyth store open. In this scenario, Spachoice would do all the work making the sales and providing the product, and Mr Jordan would reap the benefits as he “kept the store open” and “kept the lights on”. This is an obvious disproportionate “reward” for the task of paying for a lease and utilities and would represent a profitable passive income for him – at great cost to Spachoice. Negotiating and securing a lease over a commercial space (especially one that Mr Jordan had been previously leasing for a period of time) is not so difficult and valuable that Spachoice would be willing to forego all retail profits on all of its Bayswater store swim spa sales simply for the benefit of having more Spachoice swim spas sold and on Mr Jordan’s words “increase their market share”. 
407	Mr Jordan’s evidence set out above does not make it clear that, on his version of the Agreement, he would be “financially covered”. The alleged Agreement would make more sense if Spachoice had agreed to share some amount of profit which would, in turn, cover ILS for its outlays in paying for the Kilsyth store’s lease and utilities. But this conceptualisation is not the Agreement as proposed by Mr Jordan. What Mr Jordan was asking for was not simply to be “covered” financially, but also to make a profit in response to paying for the lease and keeping “the lights on”. 
408	It is clear Mr Jordan thought that he could sit back and collect cheques from Spachoice’s work, with his consideration being paying the lease and utilities. In describing how the arrangement would work, in relation to the 11 August 2019 meeting Mr Jordan said:
 “…obviously when the spas were sold I would be kept in the loop, in a sense, by emails or by spreadsheets or some form of documentation to show me that people had bought spas and moved on and paid their deposits. These would be going out and then I would be invoicing them correctly for that.”
409	If it is accepted that this is how the agreement was intended to operate, then Mr Jordan’s only connection to the Kilsyth store would be the forwarding of the invoices detailing products sold by Spachoice, back to Spachoice, in exchange for the retail profit. Essentially, he would be invoicing Spachoice for its own work. Indeed, Mr Jordan admits that, because he would be running the Essendon store, he “would be stepping away from the [Kilsyth] store”, so he would have no direct involvement in these sales he was to profit off. 
410	Mr Jordan’s evidence given in relation to the 11 August 2019 meeting crucially indicates that, in his view, Spachoice would be providing the Kilsyth store with floor product and monitoring the display and placement of the Spachoice’s product. Mr Jordan would have absolutely no oversight or involvement in this process. He stated:
 “So they would have free control. They would bring - they have a capacity to take up about 15 swim spas in that area but having too many in there, does it make it look too full-on, so we spoke about having between 10 and 12 swim spas in there at the time. They could come and go. I wouldn't have any control over what swim spas were in there. What they were, I would simply rock up there and the product is sitting on the floor.”
411	It is implausible that Mr Jordan could believe that he could be rewarded so extensively, when his only involvement was simply to, in his words, “rock up”. It is unconvincing that Mr Jordan’s bare minimum approach to this arrangement would result in the vast benefits he expected to receive.  
412	I further cannot rely on Mr Jordan’s evidence regarding Ms O’Connor’s employment and her termination at the Kilsyth store. His evidence that he could not operate the Kilsyth and Essendon stores post 23 November 2019, cannot be accepted. Mr Jordan simultaneously acknowledged that had an employee, Ms O’Connor, fulfilling that role, working six days a week and six-hour days. His evidence that Ms O’Connor’s employment was terminated because the Kilsyth store did not require her, is at odds with her Employment Separation Certificate (which Mr Jordan said was completed by his wife, but admitted he was aware of its contents at the time) which stated that her employment was terminated because of “Unsatisfactory Work Performance” in not meeting sales targets. 
413	In my view, the Employment Separation Certificate was prepared falsely, given Mr Jordan’s evidence that Ms Connor had been at the Kilsyth store from the beginning, and she created the store. Further, his evidence was that her employment was terminated approximately two days before the Essendon and Hallam contracts had been signed was false, as her employment was terminated on 23 January 2020 two months after the signing. Mr Jordan could have operated the Kilsyth store as a retail outlet and was able to do so with Ms O’Connor in full time employment, “Renzo” a casual employee and Mr and Mrs Jordan. In fact, Mr Jordan conceded that ILS was able to and did sell Oasis products from the Kilsyth store. 
414	I accept Mr Lai’s evidence that, although it was not ideal to have another Oasis dealer about 1 kilometre down the road, it was the only solution at the time. Mr Jordan was to continue to run the Kilsyth store, as he could display more swim spas on the floor, as well as having the capacity to bring in sales and earn profits. The 12 August 2019 Excel spreadsheets indicate that Mr Jordan was to be paid $20,000.00 to run the Kilsyth store for one year. Spachoice would have more swim spas displayed.  Mr Jordan’s text message on 12 August 2019 referred to his wife working at the Kilsyth store to help run it and work in it to gain a profit.  
415	Mr Lai, on behalf of Spachoice, emphasised throughout negotiations that Spachoice’s main interest in purchasing the Essendon and Hallam stores was to profit off increased sales in these varying locations in addition to their existing store in Bayswater. This is why there was an incentive clause in the contract, whereby instalment payments were only to be made for the Essendon and Hallam stores if Mr Jordan and his staff were able to hit certain quotas. Like any business, Spachoice wanted to make as many sales as possible and profit directly from those sales. 
416	Mr Jordan also seemed to be under the impression that there was something mutually beneficial about Spachoice staying committed to and working with and for ILS in the long term.
417	Importantly, in his evidence regarding the 11 August 2019 meeting, Mr Jordan stated:
 “the idea of the [Kilsyth] store, the [Kilsyth] swim spa store, had really a lot of merit in his eyes, he really wanted to grow that side of it but he wanted to keep us as a -as a buy-out situation, wanted to keep us growing with them. He was trying to throw everything at us.”
418	I do not accept that there would be any benefit for Spachoice to, as Mr Jordan believed to, “keep [ILS] growing with them”. Mr Jordan was the one who was wanting to sell his business – he wanted out. Why would Mr Lai want to keep ILS in and keep it “growing”? Mr Lai was only interested in Mr Jordan’s experience and knowledge of the spa industry to the extent that Mr Jordan would remain at the Essendon store. Mr Lai’s was also keen to use Mr Jordan’s network to expand his own dealership network. It was not in Mr Lai’s (and by extension Spachoice’s) interest to “grow” ILS and make it money. I find that any references made by Mr Lai to working together and growing the business together was in the context of the facilitating the acquisition of the Essendon and Hallam stores. It was also made in the context of the increase first instalment from $180,000.00 to $260,000.00 to get “Just Spas” on board with the acquisition, and benefit from ILS’ breadth of client base.  
419	Again, Mr Jordan seemed to think that there was significant commercial benefit to Spachoice by his paying of the Kilsyth store’s lease and utilities. Here, there is particular emphasis on Mr Jordan’s use of the word “allowed” in his evidence relating to the 11 August 2019 meeting, as set out below:
 “He had spoken to the board and the board said they still didn't want the store itself because too close in proximity to their other store down the road, and then said to myself that if I could keep that store open and running and allow them to come in there and display their product in there and bring the swim spas into that shop, I would be rewarded from the difference between the wholesale and the retail in the sales.” (emphasis added).
420	The consideration, in Mr Jordan’s view, was that Spachoice would be “allowed” to use the Kilsyth store to make sales, and then ILS would be “rewarded” with the “difference between the wholesale and the retail sales”. The question here is why would any commercially driven party seek permission to operate a store and be “allowed” to make sales for someone else’s benefit? This is not something that any commercial entity would seek to be “allowed” to do. Mr Lai’s evidence was that if the agreement was that any sale made by the Bayswater store for a swim spa would fall under the agreement, it sounded like he was selling the Bayswater store, and it would be something that he would need to discuss with the Board. This passage is, therefore, further proof of Mr Jordan’s distorted understanding of commercial realities in operating a financially viable business. 
421	Mr Lai’s evidence that he was open to an arrangement whereby the Kilsyth store became a Spachoice dealership is sensible and believable. Even though this is not the deal that was ultimately struck, being the Kilsyth store was to be used not only as a display store, but simultaneously as an ILS-owned retail store selling Oasis products, it is worth considering Mr Lai’s evidence as to understand his position in the negotiations, and what he thought would be a fair offer to Mr Jordan. 
422	Mr Lai made the following critical offer to Mr Jordan during the 11 August 2019 negotiations: 
 “I told Dean, "I'm sorry, we are not going to take Kilsyth store. That's not in our interest but what we can do for you, we are going to offer you - we are going to give you $20,000. We are going to re-brand - to help you to re-brand Kilsyth store at our cost. That will include signage, wall display, banners, et cetera, et cetera. We are going to offer you better products, high quality products so you have less issue. We are going to give you as much support as possible on marketing to help you to drive more traffic into your store by doing good marketing campaign".”
423	Secondly, Mr Lai said:
 “In return, I told Dean, "In return we would need you to continue to run that store and become SpaChoice dealers for one year. So it's in favour of you so you get additional support by way of 20,000 and the only way we can get that back [I mean the 20,000] is we help you in the right way to sell some of our products". So that's pretty much what I told Dean in that meeting.”
424	In Mr Lai’s view, Spachoice was coming to the table in making an attractive offer to Mr Jordan of $20,000.00 up front for marketing/rebranding or whatever purposes he needed while the lease was still on foot, access to supply of a superior product, and the opportunity to continue to operate as a Spachoice dealership. This arrangement seems like a legitimate offer in circumstances where Spachoice had no interest in purchasing the Kilsyth store itself. I agree that this offer is of some commercial value to ILS, and, therefore, does amount to a legitimate attempt to keep the broader deal on foot and address both parties’ reservations regarding the Kilsyth store. I do not accept that Spachoice would have altered its position in light of this offer to a position where ILS was receiving an unfettered passive income simply for carrying on with the lease of the premises. 
425	With regards to Mr Stone’s evidence, as I have previously mentioned, given the large lapses in his memory and the vague nature of his recollections, I did not find him to a be compelling witness and was not persuaded by his evidence. Mr Stone was unclear where or when the meeting after the meeting on 8 August 2019 occurred, that is, he did not know that it was held on 13 August 2019. He did not mention that he was at the meeting, and this is despite the fact that both Messrs Jordan and Lai say that he was present. As he could not remember he was in attendance at meeting, he relevantly could not remember where or when it was or what was said, I do not find his evidence surrounding conversations he had with Messrs Jordan and Lai allegedly after the meeting reliable. Particularly, I am not persuaded that Mr Stone had the conversation he said he had with Mr Lai after the meeting, where he alleged that Mr Lai described a profit-sharing agreement. Mr Stone was likely conflating conversations he had with different people at different points in time, and I did not find his recollection of the telephone conversation to be compelling in any way and, as a result, does not corroborate Mr Jordan’s evidence. 
426	Mr Stone changed some of his evidence in cross-examination regarding the conversations he had with Messrs Lai and Jordan. In his examination-in-chief, Mr Stone said that he had spoken with Mr Jordan in person and with Mr Lai on the phone, but later admitted under cross-examination that he was not exactly sure the manner in which he spoke with them, stating:
 “After the meeting?---Well, after they had their meeting. As I said, I can't remember if I met with them or I spoke with them on the phone but I did speak to both of them.”
427	Mr Jordan stated that he did meet with Messrs Stone and Lai at the Ringwood warehouse on 13 August 2019, and that the substance of the conversation was essentially to reiterate what had already been proposed and agreed to at the two previous meetings on 10 and 11 August 2019. Mr Jordan stated:
 COUNSEL: “What did you discuss?
 MR JORDAN: What did we discuss? The price of the takeover, how the [Kilsyth] store would work, in the sense of the wholesale/retail sort of side of it, how they would take that over themselves. That they would have access to that, how we needed to start moving forward. 
 COUNSEL: What did Ivan say about the [Kilsyth] operation?
 MR JORDAN: So Ivan's comments were simply this is still how we still would operate from a retail - - -wholesale/retail profit share. You are going to be getting this. We would run this shop by ourselves itself. You have to run the Essendon store by yourself.”
428	Mr Jordan also gave explicit evidence of Mr Stone’s contributions during this meeting and his approval of the proposed profit-sharing agreement. 
429	Mr Lai stated that, at the 13 August 2019 meeting, the profit-sharing agreement was not discussed, and instead the discussion centred around the sale price of the Essendon and Hallam stores. I accept Mr Lai’s evidence that the profit-sharing agreement was not discussed for the same reasons as to why I prefer Mr Lai’s evidence more generally over Mr Jordan. As I have stated above, the fact that Mr Stone cannot remember being at the meeting, let alone what was discussed at the meeting does not corroborate Mr Jordan’s account of the meeting. If anything, it suggests that the profit-sharing agreement was not discussed at the meeting given he had no clear memory of it. 
430	For the forgoing reasons, I accept that there were discussions between Messrs Lai and Jordan on 11 August 2019 and text messages between Messrs Lai and Jordan on 12 August 2019 and these discussions gave rise to an agreement in the terms of:
(a)	the payment by Spachoice to ILS in the sum of $20,000.00 plus GST to rebrand the Kilsyth store as a display store should Spachoice purchase the Essendon and Hallam stores; 
(b)	The Kilsyth store would be rebranded as a swim spa super store to be operated as a dealer should Spachoice purchase the Essendon and Hallam stores;
(c)	ILS would operate the Kilsyth store for the display and demonstration of swim spas offered for sale by Spachoice; and
(d)	The Kilsyth store was to be used not only as a display store as but could be and was in fact operated by ILS as a retail store selling Oasis products.  
431	I find that it was this agreement, as set out in the preceding paragraph, was given effect when Spachoice purchased the Essendon and Hallam stores.  
432	I accept Spachoice’s position, which I consider in more detail below, that separately, on 26 November 2019, there were discussions between Messrs Lai and Jordan which constituted another agreement between ILS and Spachoice in the relation to a profit-sharing arrangement. The significant matter for determination is what were the terms of the profit-sharing arrangement.  
Post August 2019
433	I am persuaded by Spachoice’s submission that the fact that there is no documentary evidence produced by Mr Jordan referring to the terms of the alleged profit-sharing agreement (with the exception of an email sent much later on 28 April 2020), suggests that the discussion and form of agreement as contended by Mr Jordan did not occur.
434	Under cross-examination, Mr Jordan agreed that it would have been simple to reduce the terms of the profit-sharing Agreement to an email and send it to Mr Lai, or that it also would have been simple to have referred to it in one of the texts between him and Mr Lai. Mr Jordan was questioned as follows:
 COUNSEL: “You understood that the nature of the discussion that you had with Mr Lai about this profit sharing is something that you could have reduced to written terms, couldn't you?
 MR JORDAN: That's correct.
 COUNSEL: You didn't send an email after those discussions on 11 or 13 August saying, "We had this discussion. This is the way forward"?
 MR JORDAN: Yes.
 COUNSEL: Nothing in writing about that, either in SMSs or emails? 
 MR JORDAN: There's the related emails later on referring to that, yes.
 COUNSEL: On 28 April 2020?
 MR JORDAN: Yes, referring back to that.
 COUNSEL: It would have been a simple thing to do, wouldn't it?
 MR JORDAN: I agree. Yes, that's where my downfall was; I was more concentrating on Essendon and Hallam at that point, yes.”
435	Mr Jordan also admitted that he got Mr Stone to draft an email on his behalf, and that there was no obvious explanation as to why Mr Stone, who on Mr Jordan’s evidence was present at the 13 August 2019 meeting and had heard the discussion around the profit-sharing agreement, would have omitted to include any reference to this profit-sharing agreement in his correspondence. 
436	I find it doubtful that a solution to the problem that almost destroyed the deal would be omitted from all contemporaneous correspondence between parties. If I were to accept Mr Jordan’s evidence that all the discussion in August 2019 centred around the profit-sharing agreement, then it would be even more likely that it would have been put into writing and confirmed with Mr Lai. There are plenty of texts relating to the purchase price, a matter which Mr Lai says was central to their meetings but appears silent on the alleged profit-sharing agreement. 
437	In my view, it is also telling that there is no reference in the terms of the Essendon and Hallam contract to the profit-sharing agreement. Looking at the marked-up terms, it is clear that the parties studied, negotiated and altered the terms extensively as their agreement took shape. A condition as pivotal as the profit-sharing agreement, which as I have said was the alleged solution to an issue that looked like it was going to undermine the whole deal, would definitely have made its way into a contract had such an agreement actually been made at that time. 
438	The correspondence between Messrs Jordan and Mr Lai on 14, 15, 17 and 18 November 2019 is the closest that either party came to referring to the profit-sharing agreement in 2019, but still remained silent on anything resembling the terms alleged by Mr Jordan. Mr Jordan’s email on 14 November 2019 is extremely muddled, but in substance, refers to a disagreement he and Mr Lai had as to who would be running the Kilsyth store, and then focuses in large part on trying to extract more money from Mr Lai as a supportive payment in order to cover his losses on the Kilsyth store. 
439	The 14 November 2019 email would have been a prime opportunity for Mr Jordan to mention the profit-sharing agreement, as in the first paragraph he states, “we need to discuss the [Kilsyth] shop now that the other two shops are nearly completed”. The email does not go much further into specifics around the supposed solutions that were already on the table to deal with the Kilsyth store, instead it seems that there is still a great deal of confusion on Mr Jordan’s part as to who is responsible for the running of the store. In my view, the language also indicates that, having finalised the contracts for the sale of the Essendon and Hallam stores, the parties could now turn their minds to the Kilsyth store. This further indicates that no profit-sharing agreement had been made between the parties on or around 11 and 13 August 2019.  
440	Mr Lai’s email dated 15 November 2019 likewise mostly focuses on the $20,000.00 payment. All that he says in relation to the Kilsyth store workaround is “I further recall that we have a long conversation in coffee shop on Aug 11th (your daughter’s birthday), where I offer the solution of [the Kilsyth] store, you are happy with that, we therefore focus on the deal of the rest two stores”. No specifics of the solution offered by Mr Lai are provided in this email.
441	I agree with Spachoice’s submission that, although there is no specific reference to the “solution”, the way Mr Lai’s email is structured strongly suggests that Mr Lai’s solution was in fact the $20,000.00 and marketing. The relevant paragraph in the 15 November 2019 email refers to a text message on 12 August 2019 that records the $20,000.00 term.  Mr Lai then states “(as mentioned above)”, which, in my view, is referring to the preceding paragraph of his email which discusses the payment of the $20,000.00 sum to Mr Jordan to run the Kilsyth store for one year.  
442	In relation to Mr Jordan’s email to Mr Lai on 17 November 2019, Mr Jordan complains that he is losing money and reiterates that he is confused as to who is going to take ownership of the management of the Kilsyth store. Mr Jordan then asks for an additional $10,000.00 to cover his losses on the shop. Critically, Mr Jordan then references the Essendon and Hallam stores and threatens Mr Lai that he will get the wording of the contract changed if he does not receive the $10,000.00.  
443	Mr Jordan says:
 “If this is not the case I’m going to have to get a the wording changed in the contract in relation to the restraint period to leave the [Kilsyth] shop open to any product to be sold as I’ve been approached to have another company put there [sic] product In there and run it with myself. Spas direct is growing rapidly In the Australian the market and they see this location as a great spot to capture the market on this side of town.”
444	This paragraph is important as Mr Jordan’s threats in relation to the Essendon and Hallam contract relate to the restraint of trade, and failing this, he is threatening to engage with another company to sell their swim spas from the Kilsyth store. It seems improbable that if Mr Jordan had been offered such an attractive offer as the August 2019 Agreement which he alleges came from Mr Lai, he would have referred Mr Lai back to these obligations under that Agreement and not have threatened to abandon the Kilsyth store agreement altogether. Further, if he was going to get the Essendon and Hallam contract amended, he would have included something about the alleged profit-sharing agreement.
445	Mr Jordan does, however, refer to an arrangement in which Spachoice would send leads down to the Kilsyth store. Mr Jordan stated:
 “When we discussed this Format with this shop it was put to me that all swim spas will be down at the swim spa shop and all spas down at the spa shop All costumers will be directed to this shop and leads. to date we are still waiting on signs to go up. There is a swim spa down the road With water in it. And we are yet to see any direction of costumers to the shop apart from a couple of email leads.” 
446	In my view, this is not a reference to the August 2019 Agreement in the terms laid out by Mr Jordan in his evidence. This paragraph is a reference to Mr Jordan’s understanding that leads in relation to swim spas that could not be held at the Bayswater store would be sent back to the Kilsyth store where there was enough space to store swim spas. 
447	I further accept that some conversation did occur between Messrs Lai and Jordan that swim spas sales will be more likely to occur at the Kilsyth store as opposed to the Bayswater store. This is reflected in Mr Lai’s email response on 18 November 2019, when he noted:
 “Melbourne is a large pools and swim spas market, when you present the idea of super swim spa center, we both feel that it will work. Our Bayswater store is a small store with maximun [sic] two swim spas, it is nothing close to your stores, I expect most swim spas sales will be done by your store.”
448	When Mr Lai addresses Mr Jordan’s threat to turn to another supplier, he does not reference that Mr Jordan would be losing the benefit of the alleged profit-sharing agreement, only that he would lose out on the promised $20,000.00 payment. If the profit-sharing agreement had been on the table at that time, I believe that Mr Lai would have reminded Mr Jordan that had he reneged on the agreement, he would thus lose the benefit of any profit-sharing agreement. Instead, Mr Lai says:
 “I personally don’t feel introducing other brand especially spa direct will improve your situation, as firstly you will lose 20,000 support for super swim spa center, plus it does not guarantee more traffic to store especially when the store has not sign up properly, unfortunately it has been taken longer to have contract done than we expected, it is not whose fault, but it just happened, it more or less delay the time of putting sign up.”
449	The next significant interaction between the parties was the 26 November 2019 meeting following the signing of the Essendon and Hallam contracts two days prior. Unsurprisingly, Mr Lai and Mr Jordan gave differing evidence as to what was discussed at the meeting. 
450	In his evidence, Mr Jordan maintained that all that was discussed was marketing, and generally how they would move forward with the shops in terms of what was needed to get more people in the door. 
451	Conversely, Mr Lai outlined that at the 26 November meeting he proposed a kind of profit-sharing agreement with Mr Jordan for the first time and that Mr Jordan agreed to try to profit-share arrangement. This was the inception of what Spachoice describe as the “November 2021 agreement”.
452	Mr Lai stated:
 “Well, just asked more support from our side. So we do have some sort of discussion and see what we can do together, and we talked about something like that. So I said to Dean, "So as additional support I will allow - so as additional support if the end user stand in Bayswater store and if they cannot find a suitable swim spa model, I will allow our salesperson to bring, to lead the end user to your store, giving you more traffic and more opportunities to make.”  
And: 
 “Because they actually would then make the sales and they would naturally get the retail profits from there. But, of course, because he is selling our profits he would need to pay us the wholesale price. So that's what you are talking about, the difference between the retail and wholesale.”
453	As I have stated above, I accept Mr Lai’s evidence that this is when the profit-sharing agreement first arose. This agreement makes considerably more commercial sense than the agreement which Mr Jordan says was struck in August 2019. Mr Lai had acknowledged in a previous email that he could not store all types of spas (notably swim spas) in the Bayswater store because there was no room, therefore, the Bayswater store salesperson would send customers where a swim spa was not on display in the Bayswater store to the Kilsyth store. It is common ground between the parties that if the sale was completed at the Kilsyth store, then it would be rewarded with the difference between the wholesale and the retail. Spachoice would receive the wholesale price. Mr Lai also mentioned that commission on the sale would need to be paid to the Bayswater store salesperson because they too were instrumental in the completion of the sale and set the sale in motion. 
454	The dispute is whether the profit-sharing agreement extended beyond the sale of swim spas completed at the Kilsyth store either from a walk-in customer or a referral from Baywater.  ILS pleads as part of its case for the “Agreement” in August 2019, that: 
“Spachoice would pay to ILS commission on Spachoice’s sales of swim spas calculated as the difference between the retail and wholesale prices with costs associated with sale at its store in Bayswater, such as delivery, subtracted from that amount".  
455	That is, that the sale of all swim spas from the Bayswater store fell within the agreement. Spachoice does not admit the allegation. In my view, as set out above, the August 2019 agreement comprised the payment of the $20,000.00, the rebrand and the display store and the balance of the terms came later in November. However, ILS has only been able to prove that it was solely customers taken to the Kilsyth store by a Bayswater store salesperson and the sale was then completed at the Kilsyth store or back at the Bayswater store, that comprises the profit-share agreement.  
456	My finding is supported by the fact that all three critical witnesses, in relation to the profit-share agreement, gave unclear and conflicting oral evidence as to their recollections in respect of the terms of the alleged agreement. The crux of the arrangement appears to be around supporting the Kilsyth store until the lease expired, and the Bayswater store would direct customers to the Kilsyth store and if the customers purchased the swim spa, ILS would obtain the retail profit. Much of the evidence did not descend into details as to what would then qualify as part of the arrangement, in particular, what would happen if the salesperson had taken a customer to the Kilsyth store and then concluded the sale at the Bayswater store.  
457	Even the documentary material is less than clear. By email dated 30 April 2020, Mr Jordan said that:
“We then agreed that all sales for swim spas go through this shop from the showroom down the road and the leads as well.  All sales would be transferred over and this would keep the shop alive.”
458	Mr Lai responds that “as support, we discussed and agreed that Spachoice will direct as many swim spa sales and leads to Kilsyth store as possible…”. 
459	Mr Stone then summarised his understanding of the agreement in his email dated 30 April 2020 at 3.27pm: 
“I was under the impression that any swim spa that was sold out of [Spachoice’s Bayswater store] the profit would go to [the Display Store]. 
So i presume as payments have come in through the spachoice account – is it not easier for Deans store to invoice the difference of the wholesale rate and profit to [Spachoice]?”
460	 However, Mr Stone qualifies his understanding of the commission deal in his email dated 1 May 2020 to state that “predominantly any swim spas that have been sold and [Bayswater has] brought in customers to the showroom qualify for this”. Mr Jordan did not respond to Mr Stone’s email to challenge the restriction on the profit-sharing agreement set out in the 1 May 2020 email.  I infer that this is also evidence of Mr Jordan’s understanding of the profit-sharing agreement at that time.  
461	Mr Jordan gave evidence that ILS was entitled to the retail margin (subject to transport and sales commission) on all swim spa sales that Spachoice made. Mr Lai asserts that only those customers who had been taken to the “swimspa superstore” would qualify.  I infer from this that it also includes customers who were taken to the Kilsyth store by a Bayswater salesperson and the sale was completed in the Bayswater store.  
462	Given:
(a)	Mr Lai’s offer to direct as many swim spa leads and sales to the Kilsyth store as possible; 
(b)	references to both Kilsyth and Bayswater stores supporting and supplementing each other and sharing traffic, so that it was possible that a customer in Bayswater could also go to Kilsyth; 
(c)	when Spachoice was marketing for the Bayswater store it would also include the Kilsyth store, together with;
(d)	Mr Stone’s evidence that predominantly any swim spas sold would have been brought through the Kilsyth store as the Baywater store did not have many spas displayed;
may have formed the foundation for Mr Jordan’s subsequent confusion that the arrangement included all sales concluded at the Bayswater store as opposed to the necessary requirement for a causal connection with the Kilsyth store. It is also clear that Mr Stone did not have any internal procedures in place for accounting and Mr Jordan to readily identify and calculate sales that qualified under the profit-sharing agreement. Mr Lai assumed that such processes would have been put in place by others.  
463	The requirement for a causal connection between the Bayswater and Kilsyth stores is apparent from the following matters:
(a)	Mr Jordan’s evidence in chief of the discussions on 10 August 2019 and 11 August 2019 about sales occurring through the Kilsyth store, while on 13 August 2019 he links sales to when a customer attends the Kilsyth store;
(b)	Mr Stone’s evidence in chief to the effect that there needed to be a connection with the Kilsyth store; and
(c)	It makes no commercial sense that Spachoice would extend the agreement to all sales from the Bayswater store.
464	In my view, the November 2019 hybrid agreement is to be inferred from the conversations and communications between the parties on 26 and 27 November 2019 in accordance with the principes sets out in Hardingham. I refer to my analysis of Hardingham in Brad Teal Pty Ltd v EVR Group Pty Ltd. In particular, I rely on the observations of Kiefel CJ and Gageler J in relation to inferring terms (as opposed to implying terms) as follows:
(a)	where terms of an agreement have not been articulated by the parties, it is necessary to have regard to the parties’ words and conduct in identifying what a reasonable person would conclude were the terms of the agreement.
(b)	the Court must consider the evidence and find the relevant express terms.
(c)	the legal process for “inference” requires the terms sought to be both “obvious” and “necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case” (being 2 of the 5 criteria set out in BP Refinery for the test for implication).
(d)	the Court must have regard to the circumstances disclosed by the evidence of what was the parties’ bargain.
(e)	the Court must take into account what might be considered to be the mutual understanding on which the parties dealt.
(f)	an agreement and its terms may be inferred from the acts and conduct of the parties, including the absence of their words. In light of surrounding circumstances, that absence may evidence a tacit understanding.  
(g)	the tacit understanding between the parties may be understood to have been evident to the agencies, in light of what was taken to be part of the mutual understanding on which the parties conducted their contractual relationships. 
465	The circumstances are that by email dated 26 November 2019 from Mr Jordan to Mr Lai, Mr Jordan asked for time to meet about the direction moving forward. The Essendon and Hallam contracts were signed by this stage. Mr Jordan said to Mr Lai that he was having trouble with getting customers at his Kilsyth store. Mr Lai said they would refer customers to the “superstore” and Mr Jordan would get the commission on those. I accept Mr Lai’s evidence that there was no profit-sharing arrangement for every single swim spa sold at the Bayswater and Kilsyth stores for 5 years – the same time frame as the restraint period. I will deal with this in more detail below. If there was an agreement in that form, Mr Jordan would record it in a text message, email or his solicitors preparing the sale contract to document the arrangement. Even in the 30 April 2020 emails, there is no reference to a 5-year term.  
466	I accept Mr Lai’s evidence that the parties did not discuss what would happen if the parties went back to the Bayswater store to conclude the sale after being taken to the Kilsyth store to view the display swim spas. In my view, the tacit understanding between the parties in the absence of words used is that the profit-sharing agreement extended to these sales. Spachoice used the display centre and had crystalised its sale at its Bayswater store after using the Kilsyth store as a marketing tool. Taking into consideration the words and conduct of the parties in the present case, when judged in light of what the parties knew, in my view would lead a reasonable person to conclude were the terms of the contract between them included the November 2019 hybrid agreement.
467	I am not persuaded that the paying of the 19 December 2019 invoice proves that Mr Lai had approved and was complying with the alleged August 2019 agreement. Mr Lai gave evidence that first, around this time he was changing positions within Spachoice, and second, he was not responsible for and had no direct oversight of the payment of like invoices. This makes sense given his senior position in the company. It is also not inconceivable that, given that there was some semblance of a profit-sharing agreement on foot (the November 2019 hybrid agreement), that invoices for profit margins that did not completely comply with this agreement but instead complied with the alleged August agreement could have been approved. Additionally, it is possible that not all invoices in a large national company would be scrutinised closely, and some could be processed and slip through the cracks without a forensic analysis of what they were for. In essence, I accept that these invoices were mistakenly paid by Spachoice insofar as they cover sales that fall outside of the November 2019 hybrid agreement. 
468	On 30 April 2020, Mr Lai set out the terms of the November agreement as Spachoice alleges, as follows:
 “As support, we discussed and agreed that spachoice will direct as many swim spas sales and leads to Kilsyth store as possible, it also benefits spachoice, as Bayswater store only have enough room for one or two swim spas, which is far not good enough, Kilsyth store is a perfect supplement. You also agreed that you allow spachoice sales people to bring customer to Kilsyth store, if customer end up buying swim spas in Kilsyth:
You take retail profit .and pay commission to our sales people, Spachoice takes wholesales profit”.
469	Mr Lai, in an email dated 29 August 2020, refers to the fact that the deal had supposedly been struck in “early 2020” instead of November 2019. In my view, Mr Lai’s memory in relation to the details such as the timing of the making of the profit-sharing agreement and its qualifications was affected by the flux of time and the fact that he was not overseeing the day-to-day operations of the stores.  
470	Relying on Mr Stone’s emails dated 30 April and 1 May 2020, I accept Spachoice’s submission they need to be read together to be understood, and that the 1 May 2019 email clarifies the 30 April 2019 email. Taken together, these emails reflect the November 2019 hybrid agreement, whereby the profit-sharing agreement only relates to sales that are taken from the Bayswater store to the Kilsyth store and concluded at the Kilsyth store or the Bayswater store. 
471	For the forgoing reasons, I find that the parties entered into a profit-sharing agreement in accordance with the November 2019 hybrid agreement.  
Events and emails post 11 May 2020
472	For reasons that I have already stated, I accept that Mr Lai did not check the veracity of “Invoice no. 5275” in the sense he was not verifying whether it related to sales under the November 2019 hybrid agreement, all he did was check the calculation. It is acknowledged by Spachoice that it will need to be determined at a quantum Trial whether the sales in this invoice were caught by the November 2019 hybrid agreement. 
473	In his evidence, Mr Lai admitted that had not sought Board approval for the November 2019 hybrid agreement. Mr Lai mentioned this explicitly in his 29 August 2020 email and noted that the Board wished to vary the agreement because they were displeased with its terms.  
474	I agree with Spachoice that the 4 September 2020 and 10 September 2020 emails sent by Mr Stone differentiate between customers brought to Kilsyth stores and those who were not. Therefore, these emails support the existence of the November 2019 hybrid agreement and not the August 2019 iteration of the profit-sharing agreement concerning the situation where the Bayswater store salesperson brought a customer into the Kilsyth store.  
475	I am not persuaded that Mr Jordan’s reference in his email on 10 September 2020 that “the deal was done in October 2019 not April 2020…’” is an admission on Mr Jordan’s part that the deal was done at a point in time after August 2019, I accept that this was likely an error as Mr Jordan’s emails frequently contained mistakes, see for example the reference to $30,000.00 instead of $20,000.00 set out above. 
476	I accept Spachoice’s submission it was a telling admission that in his 10 September 2020 email, Mr Jordan omitted what he later claimed to be a term of the August 2019 profit-sharing agreement that it was to be for 5 years or the term of the restraint period. As upset as Mr Jordan was at the time of writing this email, he would likely have mentioned that he considered Spachoice would remain bound for 5 years under the Agreement, but this was not mentioned. 
Minimum term
477	As a starting point, determining whether a term can be implied into a contract depends upon whether the conditions outlined in BP Refinery are present. The conditions are as follows:
“(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”
478	I do not consider that in this case there was an implied term that the profit-sharing agreement would run for a term of 5 years in line with the restraint of trade period outlined in the Essendon contract. This is because I have not found the BP Refinery conditions have been met in relation to the alleged implied term. 
479	Of the conditions in BP Refinery, I find that the second and third conditions are absent, in that I do not consider that the 5-year minimum term gives business efficacy to the contract such that any agreement is not effective without it, and I also do not agree that the alleged minimum terms it so obvious that “it goes without saying”. 
480	I do not agree with ILS that the agreement would only be “commercially workable” with the 5-year minimum term. ILS submits that it would be exposed to an intolerable amount of risk if it committed to the agreement without the alleged minimum term, because it had already agreed to closing their wider business to comply with the restraint of trade and were, therefore, obligated to maintaining the lease to derive income given that this was the only store they were allowed to trade from. Additionally, ILS was exposing itself to liabilities to third parties (particularly ILS’s landlord). 
481	This submission is built upon a flawed understanding of the profit-sharing agreement. Throughout negotiations, Spachoice had consistently stated that they did not want to purchase the Kilsyth store. The November 2019 hybrid profit-sharing agreement was a workaround to try and lighten the financial burden that ILS had from being stuck under and bound to continue to run the store until the end of its lease that they also did not want. This assistance was what made the wider acquisition deal tenable, and, therefore, it was the limited help offered by Spachoice to ILS that gave business efficacy to the contract. On the evidence before the Court, as set out above, Messrs Lai and Jordan did not have a discussion about the period any profit-sharing agreement was to run for. However, what was on both of their minds was the fact that ILS had one year to run on its lease and had to pay rent and outgoings in respect of the premises.  
482	The evidence that weighs against a finding that the parties contemplated a 5-year terms is that, at the time of the discussions on 11 and 13 August 2019, the length and extent of any restraint in the Essendon agreement was far from settled. In this regard the letter of intent sent on 12 August 2019 had a restraint period of 7 years, compared to the 10 years in the letter of intent sent on 1 August 2019 which had 10 years. In my view, a minimum term which mirrors the period of Mr Jordan’s restraint, conflates the restraint period under the Contracts of Sale of Businesses with the separate profit-sharing arrangement which pertained to the Kilsyth store. The restraints were a natural course of the sale of the Essendon and Hallam stores. An implied term of a 5-year minimum term is not any more obvious in light of Mr Lai’s discussions with Mr Jordan which centred around the fact that ILS had one year to run on the lease.
483	Because the length of the profit-sharing agreement was not discussed, l find that it is necessary for the reasonable or effective operation of the agreement to imply a term that the agreement post 4 June 2020 was terminable at will. I accept Spachoice’s submissions that the present case is analogous to the findings in Energy World Corporation Ltd v Maurice Hayes and Associates Pty Ltd, where the Court implied a term that the contracts was terminable at will in relation services provided after the express expiry day of an agreement.
484	In the case before me, Mr Lai gave evidence that he knew that Mr Jordan had about a year left on the lease on the Kilsyth store. In the July 2019 meetings, it was raised that Mr Jordan had a lease, but Mr Jordan did not mention the time left on the lease at that time. Mr Lai said Spachoice would support Mr Jordan until his lease expired. Mr Jordan maintained the lease and gave Spachoice access to the premises and display the swim spas. In the 12 August 2019 Excel spreadsheets, the payment of the $20,000.00 was for ILS to run the Kilsyth store for one year. Both parties knew that Mr Jordan had a lease running until 4 June 2020 and at the end of that time he could do what he wanted.  He did not need to renew the lease. During that period his store would be a display store.  
485	ILS’s evidence in relation to the length of the agreement is as follows: 
a)	On 10 August 2019, it was agreed that, as long as Mr Jordan paid the rent, they would keep the store going, and then after the contract was signed, the Bayswater store would bring customers to the Kilsyth store and he would get the different between wholesale and retail;
b)	On 11 August 2019, if Mr Jordan kept the lease ticking over and the store operational, Bayswater would bring customers there and use the Kilsyth store as much as possible; and
c)	On 13 August 2019, Mr Jordan agreed in cross-examination that what was told to Mr Stone on that date was the same deal as was conveyed on 11 August 2019. His evidence-in-chief was to the effect that Mr Lai told him as long as ILS kept up its lease on that property this would go in the same period of time as the management regulations in that restraint period. 
486	In my view, taking into account the full range of circumstances that existed at the time of the profit-sharing agreement, the evidence of witnesses as to words written or spoken by the parties (including the knowledge of relevant matters at the time of the agreement) and the apparent logic of events, any meeting of minds centred around the duration of the lease which was to expire on 4 June 2020. As such, there is an implied term that the agreement was for a fixed term, until the lease expired on 4 June 2020 and thereafter was terminable at will.
487	It was not Spachoice’s problem that ILS was at risk of the agreement being cancelled at any point in time after 4 June 2020, as any sale that was shared and sent to the Kilsyth store would be of benefit to ILS. It must also be noted that ILS was bound to the lease regardless of any profit-sharing agreement, as it was already on foot. It follows that it was also not Spachoice’s problem if the store became commercially untenable, and ILS was forced to break the lease or if it sought to extend the lease beyond 4 June 2020. 
488	I further agree with Spachoice’s submission that Mr Jordan’s email on 11 May 2020 to Messrs Peaker, Lai, Stone and Ms Liao indicates that Mr Jordan considered the Kilsyth store to be a Spachoice “dealership”. Mr Jordan refers to his own operations at the Kilsyth store when he said the following:
 “I’m not going to waist [sic] more money on a shop with a manufacture that doesn’t want to work with there dealers and just screw then where they can.”  
And
 “I’ll wait and see what eventuated over the next couple of days to see what you do to save a dealer and treat them with the respect they deserve.”  
489	I accept Spachoice’s submission that Mr Jordan was aware and had agreed to exclusively deal in Spachoice products, and, therefore, understood that in practical terms he was their dealer. For the purposes of the profit-sharing agreement, the practical effect of being a dealer is that when Spachoice sells to one of its dealers, Spachoice earns the profit on landed and wholesale price and the dealer earns the margin on wholesale and retail. If Spachoice sells directly to the consumer it makes both the margins.  
490	Spachoice agrees that Mr Jordan was just a “dealer” and was not a person who had a locked in 5-year agreement. It is true that Mr Jordan was restrained from operating another spa business for 5 years, but he was able to run a shop for a period of time and the ability to walk away from the lease in a period of 12 months. Also, under the sale agreements, Messrs Jordan and van Hoof were still managers of the Hallam and Essendon stores for 2 years and were remunerated for doing so. This is relevant to the consideration of the period of the November 2019 hybrid agreement.  
491	It is true that, by the time the email was sent on 11 May 2020, the date for which an option was exercisable under the lease had already passed, being 4 March 2020. In my view, the email implies that ILS could have chosen to abandon the lease, and by extension terminate any profit-sharing agreement once the lease had expired. I note that it did neither and unilaterally chose to enter into a “Deed of Renewal and Variation of Lease” on 17 July 2020. 
492	The relevant extracts from Mr Jordan’s email are as follows:
 “My lease is to be signed by Thursday so I need to know if the shop is going to be viable as in its present form it’s not. 
 Even with the pricing I’m still in a mind set to close it as this so far has not been a good experience with myself and my wife and we feel that it’s not going to get better”.
493	I accept Spachoice’s submission that this email suggests that it was open to ILS to terminate the profit-sharing agreement after 4 June 2020 and, thereafter, at will in circumstances where there are no allegations that Spachoice was in breach of the agreement. This email evidences Mr Jordan’s belief that either party was free to part ways of the agreement at will after the expiry of the lease.
494	I do not accept ILS’s submission that Mr Jordan’s email dated 11 May 2020 identified a breach which is the basis for his threatened termination. The breach which ILS alleges relates to Spachoice’s failure to give correct wholesale pricing. From the outset, even if this was considered a breach, this is not, in my view, the kind of breach that would justify termination in the Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd sense, as it was ultimately rectified almost immediately with the provision of a simple email containing the pricing. This was the kind of issue that cooperating businesses frequently face and is a normal delay. Due to the minor nature of the breach, I also do not consider that it amounts to a failure to co-operate in the performance of the agreement or a failure to act in good faith. Additionally, I do not accept, as is submitted, that this alleged breach was the basis upon which Mr Jordan was threatening to terminate the lease. On a proper reading of the email, as outlined above, it indicates that the threat was derived from the unsatisfactory profit which Mr Jordan was able to derive from the Kilsyth store under the profit-sharing agreement.
495	I also do not accept that the delay in handing over pricing, amounts to a repudiation, for the same reasons as it is not a breach. 
496	In relation to ILS’s submission that post contractual conduct is admissible for the existence of a contract, but not for construction and interpretation, ILS relies on the case of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd which does not support its position. The passages relied on by ILS explains that conduct (such as post-contractual conduct) can only be used to objectively imply contractual meaning, and not relying on the subjective intentions of the parties. 
497	It follows that ILS was able to terminate the agreement at will post termination of the lease as Mr Jordan outlined in his 11 May 2020 email. As a result, so was Spachoice. It makes no commercial sense for the contract to contain a term in which ILS was able to terminate at will, but Spachoice was obligated to honour an agreement for the minimum term of 5 years. 
498	I agree with Spachoice’s submission that ILS’s “Deed of Renewal and Variation of Lease” would have included a term providing security of tenure for the 5-year minimum term, had ILS believed that it was locked in for a 5-year profit-sharing agreement. ILS would have been eager to keep the agreement on foot and would have wanted to make sure the lease remained in place so they could effectively profit-share with Spachoice. 
499	The issue then is who terminated the profit-sharing agreement.  The relevant facts are as follows. On 24 August 2020, Mr Zhu wrote to Mr Jordan informing him that “Ms Liu [Liao] had a bit of issue this morning regarding the calculation for July’s commission.”
500	On 27 August 2020, Mr Jordan wrote to Mr Zhu asking for an “ETA” on invoices now due for the swim spa shop.  
501	On 27 August 2020, Mr Jordan wrote: 
 “In regards to the commission, Ms Liao replied to me that Ms Liu is still having issues with the payment even though both Ivan and I replied her enquiries on Monday morning. 
 Ms Liao said [Crystal Island] will contact you to settle the payment for management fee and commission.”  
502	The following day, Mr Jordan participated in a conference call with multiple representatives of Spachoice, wherein Mr Lai denied the existence of the agreement. The next day, Mr Lai sent an email asserting that he had not taken his discussions with Mr Jordan about the Display Store and commissions to “the Board”, and, therefore, it was not approved.
503	By email dated 29 August 2020, Mr Lai to Mr Jordan:
 “Early this year we discussed about the way of letting our sales staff to bring customer to Kilsyth store when customer can not find suitable swim spas in Bayswater store, if a deal is made in Kilsyth store finally, Kilsyth store keeps retail profit and pay staff commission while Spa choice keep wholesale profit, I voted this thinking that this will help to sell more swim spas and without looking further, so I did not disclose this to the board.
 This went well till our financial department look into details as well as our actual cost & return, the board is very surprised too [sic] see this and disagreed with it entirely, as a result, our recent payment application is denied.
 I am truly sorry for the consequence, it was my fault, I wish I have reported this to the board…
 We have further looked into this type of transaction, we want to set a fixed rate of 200AU$ (before GST) to future relevant transaction, whenever Spa Choice staff bring customer to Kilsyth store and close a deal without getting you involved in the sale, Spa Choice provide you 200$ bonus, associated cost such as staff wage, staff commission, product warranty, etc is on Spa choice. Vice versa, when Kilsyth staff brings customer to Bayswater and close a deal without getting Spa choice staff involved in the sale, you offer Spa choice 200$ (before GST) bonus, associated cost is on Kilsyth store.”
504	This offer was incendiary to Mr Jordan with Mr Lai claiming that he did not have the authority to cut the deal. There is no defence that it was beyond his authority. The Board had a change of heart to what Mr Lai had done.
505	Mr Stone was trying to work out the sales due to leads. There was no system recording sales that were the subject of leads. On 4 September 2020, Mr Stone said he could see arguments on both sides:
 “As for a good solution - i don't think there will be!!! Either way there will be an unhappy party!!! I can see the arguments to both sides - but unfortunately if Dean continues to hold his ground and takes us to court - i cannot possibly see how we can win in a court of law. He is very upset that $200 was offered.”  
506	On 10 September 2020, Mr Lai wrote:
 “I would like to stress that we do not have any agreement in any type either in writing or verbally, that retail profit of swim spas sold in Bayswater store shall go to Kilsyth.” 
507	He also suggested that a new deal could be struck involving commissions of $200.00 per sale. Mr Jordan felt that he was being “screwed over”.  
508	On 14 September 2020, there was a further conference call, wherein Mr Jordan insisted that Spachoice honour the agreement. This was followed by some correspondence between Messrs Jordan and Peaker, with the former providing evidence of the agreement, and the latter proposing a different agreement. 
509	On 17 November 2020, ILS terminated the agreement by an email from its solicitors.  
510	In my view, the Board did not like the deal that Messrs Lai and Jordan had agreed to, and it gave instructions to Mr Lai to seek to vary the terms. Its proposal of a payment of $200.00 per spa sold at the Kilsyth store was a token compared to the reward of the retail profit which could be up to $3,000.00 per spa and was uncommercial given Kilsyth’s lease and overheads. In refusing to pay the outstanding invoices pursuant to the November 2019 hybrid agreement, Spachoice was in breach of the agreement. By reneging on the agreement, Spachoice evinced an intention to not be bound by it and thereby repudiated the profit-sharing agreement. As the agreement was terminable at will, by its solicitor’s letter dated 17 November 2020, ILS accepted that repudiation and terminated the agreement.  
511	Taking into account the above matters, I find that the profit-sharing agreement contained an implied term that the agreement was terminable at will by either party after 4 June 2020. With regards to the application of the conditions from BP Refinery, I find as follows:
(a)	It must be reasonable and equitable. 
512	It was only reasonable and equitable that if Spachoice was obtaining the benefit of the display centre and its corresponding lease, then this should not be overtaken by a right to terminate at will prior to the minimum term of 4 June 2020.  
(a)	It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it. 
513	As outlined above, the business efficacy of the agreement was to establish an agreement which made the wider sale possible and overcame the impasse of the Kilsyth store, in light of the acquisition of the Essendon and Hallam stores. The November 2019 hybrid agreement did this, by entitling ILS to the profit margin for sales completed at their store that commenced at the Bayswater store and were concluded at both the Kilsyth and Bayswater stores, and, therefore, established a revenue stream to stave off the financial burden of being bound to the lease until 4 June 2020. 
(a)	It must be so obvious that “it goes without saying”.
514	Given Mr Jordan’s willingness to part ways with the Kilsyth store, and his complaining over the burden of being stuck with the lease until 4 June 2020, “it goes without saying” that he ought to have been appreciative for the assistance offered by Spachoice under the profit-sharing agreement, and had no right to bind Spachoice to a 5 year term, when the premise was simply to assist ILS to reach the endpoint under its lease. 
(a)	It must be capable of clear expression. 
515	A terminable at will clause is prima facie capable of clear expression. 
(a)	It must not contradict any express term of the contract.
516	A minimum term to 4 June 2020 and thereafter terminable at will clause does not contradict the term of the contract, as already stated, it reflects the intention which was to help ILS cover its outlays under the lease.
517	Spachoice and ILS did enter into a profit-sharing agreement, but it was the November 2019 hybrid agreement and not the August 2019 agreement. 
By those discussions, did the parties enter into an agreement in the terms alleged? 
518	ILS and Spachoice entered into an agreement on 26 November 2019. Pursuant to the November 2019 hybrid agreement, ILS was entitled to the retail profit (minus Spachoice salesperson commissions, accessories and delivery charges) in relation to sales of swim spas completed at the Kilsyth store (either from a walk-in customer or as a result of salesperson from the Bayswater store taking the customer to the Kilsyth store and completing the sale at the Kilsyth store), together with sales where the customer was taken to the Kilsyth store by a salesperson from the Bayswater store and the sale was completed back at the Bayswater store rather than the Kilsyth store.  
519	The terms of the agreement are as follows:
(a)	the parties entered into the November 2019 hybrid agreement in the terms alleged above; and
(b)	the minimum term of the November 2019 hybrid agreement was until the end of the lease due to expire on 4 June 2020, then such agreement was terminable by both parties at will.  
Alternatively, did Spachoice make representations upon which ILS relied to its detriment, and is Spachoice estopped from resiling from them? 
520	As I did not find the profit-sharing agreement was made in August 2019, this issue falls away. Spachoice cannot be estopped from resiling from an agreement that did not exist.
If Spachoice repudiated the agreement, or unconscionably resiled from its representations, is ILS entitled to damages or equitable compensation? 
521	Upon termination of the profit-sharing agreement by ILS on 17 November 2020, Spachoice’s liabilities crystallised. The sales that might have been made until that date had the consequence that a debt for commission remains due and payable to ILS and Spachoice is liable to loss or damages suffered up to 17 November 2020. The amount is to be calculated at a separate trial on quantum, unless otherwise agreed.  
Conclusion 
522	For the reasons set out above, the Court proposes to make the following declarations:
(a)	The parties entered into the November 2019 hybrid agreement in the terms alleged above.  
(b)	The minimum term of the November 2019 hybrid agreement was until the end of the lease due to expire on 4 June 2020, then such agreement was terminable by both parties at will.  
(c)	ILS validly terminated the November 2019 hybrid agreement on 17 November 2020.  
(d)	ILS is entitled to commissions accrued until 17 November 2020.  
(e)	Any loss or damage suffered by ISL is suffered up to 17 November 2020.  
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Certificate
I certify that these 129 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 22 October 2024.
Dated: 22 October 2024 
Gideon Lipinski
Associate to Her Honour Judge Burchell