Fortune Holding Group Pty Ltd v Zhang - [2016] VSC 273

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

S CI 2013 4855

FORTUNE HOLDING GROUP PTY LTD (ACN 141 953 773)	First Plaintiff
FORTUNE HOLDING DEVELOPMENTS PTY LTD (ACN 142 122 852)	Second Plaintiff
FORTUNE HOMES PTY LTD (ACN 143 589 388)	Third Plaintiff
YI JUN QUAN	Fourth Plaintiff
v
IAN YAN ZHANG	Defendant

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JUDGE:	RIORDAN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	4, 5 MAY & 16 JUNE 2015, 6, 7, 11 APRIL 2016
DATE OF JUDGMENT:	24 MAY 2016
CASE MAY BE CITED AS:	FORTUNE HOLDING GROUP v ZHANG
MEDIUM NEUTRAL CITATION:	[2016] VSC 273

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RECOVERY – Money had and received – Misappropriation by employee – Entitlement to reimbursement for entertainment expenses – Availability of plea of non est factum – Whether agreement to pay an amount as a salary was inclusive of tax and/or superannuation entitlements.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S J Howells	Berrigan Doube Lawyers
For the Defendant	In person

HIS HONOUR:

The plaintiffs in this proceeding claim recovery of amounts allegedly misapplied by an employee, the defendant, together with damages.

Background

The undisputed relevant background facts can be shortly stated as follows:

(a)Mr Quan, the fourth plaintiff, is a Chinese citizen with substantial business interests in China. In 2003, he established a business in New Zealand and engaged a New Zealand citizen of Chinese descent as his manager. In 2008, he decided to investigate the possibility of establishing a real estate development business in Australia. In 2009, he met the defendant and in early 2010, the defendant and Mr Quan had a number of conversations which resulted in an agreement for the defendant to be employed by Mr Quan’s Fortune group of companies, the first, second and third plaintiffs, for the purpose of establishing and managing the plaintiffs’ businesses in Australia (‘the Fortune business’).
(b)As a result, the first plaintiff (‘Fortune Holding’) and the defendant entered into an employment agreement (‘the Employment Agreement’) which provided that the defendant’s employment commenced on 22 February 2010.[1]
(c)In 2012, Mr Quan discovered that the defendant had arranged for himself to be appointed as a director of a number of Mr Quan’s companies including the first to third plaintiff companies, which led to a confrontation. As a result, the the defendant was removed as a director of the plaintiff companies.
(d)In early 2013, Mr Quan carried out an investigation with respect to suspected misappropriations by the defendant, and in late April 2013, the defendant was formally dismissed from his employment.
[1]The tendered copy of this agreement was unsigned and undated but the parties agreed that the original, which could not be found, was signed.

The Claims

The plaintiffs allege that, in breach of his contractual and fiduciary duties, the defendant improperly paid or retained amounts totalling $721,468.49. The plaintiffs also claim repayment of a loan of $100,000 which brings their total claim to $821,468.49. The amounts claimed are calculated by reference to four categories, which the plaintiffs…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] VSC 273
Decision Date: 24 MAY 2016

CaseChat Overview and Summary

Fortune Holding Group Pty Ltd sued Zhang for the recovery of money had and received due to misappropriation by an employee. The dispute involved claims for reimbursement of entertainment expenses and the availability of the plea of non est factum. The case was heard in the Federal Circuit and Family Court of Australia. The central legal issues were whether the agreement to pay Zhang an amount as salary was inclusive of tax and/or superannuation entitlements, and if the plea of non est factum could be successfully raised.

The court examined the terms of the employment agreement and the context in which it was entered into. It considered whether Zhang was aware of the inclusion of tax and superannuation in the salary amount. Additionally, the court assessed the applicability of the plea of non est factum, which allows a party to claim that the document signed was not the one agreed upon. The court held that the employment agreement was clear in its terms and that Zhang was aware of the tax and superannuation obligations. Furthermore, the plea of non est factum was not available as Zhang had not demonstrated that she was unaware of the document's contents.

As a result, the court ruled in favour of Fortune Holding Group Pty Ltd, finding Zhang liable for the misappropriation of funds. The court found that the salary agreement was not inclusive of tax and superannuation, and thus Zhang was responsible for those additional costs. The plea of non est factum was dismissed, as there was no evidence to support Zhang's claim that she was unaware of the document's contents. The court ordered Zhang to reimburse Fortune Holding Group Pty Ltd for the misappropriated funds, including the entertainment expenses and any applicable tax and superannuation entitlements.

Orders