Guo v Yufeng Investment Group (Australia) Pty Ltd

[2024] NSWSC 1599

Supreme Court

New South Wales

Medium Neutral Citation:

Guo v Yufeng Investment Group (Australia) Pty Ltd [2024] NSWSC 1599

Hearing dates:

4-8 November 2024

Date of orders:

13 December 2024

Decision date:

13 December 2024

Jurisdiction:

Equity - Commercial List

Before:

Nixon J

Decision:

(1)   Directs the parties to bring in short minutes of order, by 5pm on 20 December 2024, to give effect to these reasons for judgment.

(2)   Directs that, in the event that the parties are unable to agree orders to give effect to the reasons for judgment, the parties exchange, by 5pm on 20 December 2024, and provide to the Associate to Nixon J, the orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the issues in dispute.

Catchwords:

EQUITY – Fiduciaries – where First Defendant received $20m from Plaintiff following discussions between Plaintiff and Third Defendant – where 30% of shares in First Defendant were transferred by Third Defendant to Plaintiff’s wife, who was appointed a director of First Defendant – where money received from Plaintiff was transferred by First Defendant to Fourth Defendant, in which First Defendant owned 95% of shares, and was used by Fourth Defendant for purchase of shopping centre as development project – where development project was subsequently sold at substantial profit and no amount of profit was distributed to Plaintiff – whether sum of $20m was advanced by Plaintiff as a loan to First Defendant or was contributed as investment in joint commercial endeavour between Plaintiff and Third Defendant, on basis that Plaintiff was entitled to a share of profits from the development project – whether Third Defendant owed fiduciary obligations to Plaintiff – whether Third Defendant breached fiduciary obligations – whether Fourth Defendant liable as knowing participant or as alter ego of Third Defendant

EQUITY – whether Third Defendant agreed to hold a further 30% of shares in First Defendant on trust for Plaintiff – where shares held by Third Defendant were transferred to Second Defendant – whether Second Defendant holds shares on trust for Plaintiff

EQUITY – Remedies – equitable compensation – account of profits – where Fourth Defendant failed to discover relevant documents – whether Plaintiff entitled to discovery prior to making election between remedies

CONTRACT – oral loan agreement – where Plaintiff paid $16.8m to First Defendant following conversation with Third Defendant – whether the money was paid as a loan to First Defendant, or as a loan to Third Defendant which was guaranteed by First Defendant –whether term of loan that interest payable at rate of 24% per annum – whether payments received by Plaintiff were repayments made in respect of loan – whether loan was repayable on demand – whether recovery of outstanding balance is statute-barred

Legislation Cited:

Limitation Act 1969 (NSW), ss 14, 54, 63

Cases Cited:

Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 265 CLR 1; [2018] HCA 43

Anderson v Canaccord Genuity Financial Ltd [2023] NSWCA 294

Bellevarde Constructions Pty Ltd v L’Officina by Vincenzo Australia Pty Ltd [2022] NSWCA 246

Breen v Williams (1996) 186 CLR 71; [1996] HCA 57

Brunninghausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199

Chong & Neale v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137

Crawley v Short [2009] NSWCA 410

DVO16 v Minister for Immigration and Border Protection (2021) 273 CLR 177; [2021] HCA 12

ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Guojin Huang v Jinghong Wei (No 2) [2022] NSWSC 473

GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113

GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315

Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6

Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

In the matter of Sunnya Pty Ltd [2024] NSWSC 403

Jaken Properties Australia Pty Ltdv Naaman [2023] NSWCA 214

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd;Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11

Lane v L3 Enterprises Pty Ltd [2007] QSC 288

Ling v Pang [2023] NSWCA 112

Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23

Norberg v Wynrib [1992] 2 SCR 226

Ogilive v Adams [1981] VR 1041

O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31

Sangha v Baxter [2009] NSWCA 78

Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268

The Insurance Commissioner v Joyce (1948) 77 CLR 39; [1948] HCA 17

Tozer Kemsley & Millbourn (Australasia) Pty Ltd v Collier’s Interstate Transport Service Ltd (1956) 94 CLR 384; [1956] HCA 6

Watson v Foxman (1995) 49 NSWLR 315

Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48

Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51

Zibara v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18; [2021] FCAFC 4

Texts Cited:

PD Finn, Fiduciary Obligations (Federation Press, 2016)

Category:

Principal judgment

Parties:

Wencheng Guo (Plaintiff)
Yufeng Investment Group (Australia) Pty Ltd (First Defendant)
Roseburg Investment Pty Ltd (Second Defendant)
Changran Huang (Third Defendant)
152 Rowy Pty Ltd (Fourth Defendant)

Representation:

Counsel:
MS Henry SC w DJ Delany (Plaintiff)
J Kay Hoyle SC w FD Di Lizia (First and Fourth Defendants)
G Ng SC w N Li (Third Defendant)

Solicitors:
Arnold Bloch Leibler (Plaintiffs)
Mitry Lawyers (First and Fourth Defendants)
Unsworth Legal (Third Defendants)

File Number(s):

2022/00329438

Publication restriction:

Nil

JUDGMENT

Introduction

1. This proceeding arises out of a personal and business relationship between the Plaintiff, Mr Wencheng Guo, and the Third Defendant, Mr Changran Huang.

2. It is common ground that in May and October 2013, following conversations with Mr Huang, Mr Guo paid substantial sums into a bank account of Yufeng Investment Group (Australia) Pty Ltd. At the time, Mr Huang was a director and the Chairman of Yufeng.

3. Mr Guo claims that these moneys were paid pursuant to two oral agreements between Mr Guo and Mr Huang:

1. first, an agreement in May 2013 that Mr Guo would make a $20m investment in a joint commercial endeavour with Mr Huang involving the acquisition and development of a shopping centre in Eastwood, New South Wales (Eastwood Shopping Centre), in return for receiving a 60% share of income and profits; and

2. secondly, an agreement in October 2013 that Mr Guo would make a $16.8m loan to Mr Huang, which was guaranteed by Yufeng, with interest payable annually at a rate of 24% per annum.

4. It is common ground between Mr Guo and Mr Huang that Yufeng received the sum of $20m from Mr Guo in May 2013. Shortly prior to the receipt of those funds, Mr Huang, who was sole shareholder of Yufeng, transferred 30% of the shares in Yufeng to Mr Guo’s wife. Mr Guo claims that Mr Huang agreed, at around this time, to hold another 30% of the shares in Yufeng on trust for Mr Guo. In May 2013, Mr Huang transferred his 70% shareholding in Yufeng to the Second Defendant, Roseburg Investment Pty Ltd, as trustee of Mr Huang’s family trust.

5. The Eastwood Shopping Centre was not purchased by Yufeng, but by the Fourth Defendant, 152 Rowy Pty Ltd. Yufeng owned 95% of the shares in 152 Rowy, with the other 5% being held by a company associated with Mr Huang’s accountant.

6. The purchase price for the properties comprising the Eastwood Shopping Centre project was $55.97m. In July 2021, 152 Rowy sold those properties for $155m. Mr Guo did not receive any share of the income from the operation of the Eastwood Shopping Centre, or any share of the profit from the sale of the Eastwood Shopping Centre.

7. Mr Guo claims that he and Mr Huang entered a joint venture in relation to the purchase and redevelopment of the Eastwood Shopping Centre; that Mr Huang owed fiduciary obligations to Mr Guo; that Mr Huang breached those fiduciary obligations by retaining Mr Guo’s 60% share of the profits and income from the Eastwood Shopping Centre project, without Mr Guo’s informed consent; that 152 Rowy knowingly participated in this breach, or alternatively is liable as Mr Huang’s alter ego; and that Roseburg Investment holds 30% of the shares in Yufeng on trust for Mr Guo.

8. In respect of the $16.8m loan, Mr Guo claims that he received various payments between 2016 and 2022, which he appropriated to the (partial) payment of the interest due under that loan, but that the full amount of the principal remains unpaid. He claims the outstanding $16.8m principal from Mr Huang and Yufeng, together with the amount of the unpaid interest.

9. The Defendants do not dispute that Mr Guo paid moneys to Yufeng, or that such moneys were paid as a result of conversations with Mr Huang. However, they contend that each of the transactions in question was an unsecured loan to Yufeng (and not to Mr Huang), that each loan was repayable on demand, and that, because the loans were made more than six years before the proceeding commenced, any claim by Mr Guo for the repayment of those loans was statute-barred.

Witnesses

10. Mr Guo gave evidence in support of his claims and was cross-examined over the course of three days. In addition, he called evidence from two ex-wives, Ms Ying Deng and Ms Lin Zhang, who were also cross-examined, including regarding conversations with Mr Huang.

11. Mr Huang did not give any evidence in defence of Mr Guo’s claims, and did not call any other witness. There was no explanation for the absence of Mr Huang, who had sworn a lengthy affidavit (parts of which were tendered as admissions by Mr Guo).

12. Yufeng and 152 Rowy did not call any evidence from their director, Mr Jiquan Huang, despite having served two affidavits affirmed by him. Mr Jiquan Huang is Mr Huang’s son. There was no explanation as to why he was not called to give evidence. A redacted copy of one of his affidavits was tendered by Mr Guo, on the basis that it contained admissions. According to this document, Mr Jiquan Huang had, in 2023, an address in North Strathfield, New South Wales.

13. Yufeng and 152 Rowy called one witness, Ms Xueyi Fan. Ms Fan is not an employee or officer of either of those companies. Instead, she is employed as a tax accountant by a business which was engaged by Yufeng and 152 Rowy to review their books and records. Her evidence was essentially confined to statements about matters recorded in those documents. She was not cross-examined.

14. Roseburg Investment did not appear at the hearing.

Credit attack on Mr Guo

15. Mr Huang submitted that any part of Mr Guo’s witness statement and oral evidence which was not corroborated by a document which the Court is satisfied records a genuine dealing must be treated as unreliable.

16. Mr Huang advanced three main criticisms of Mr Guo’s evidence: first, that Mr Guo’s evidence was “coloured by his sense of grievance and his regret at having made a bad bargain”, referring to Mr Guo’s intemperate language and casual attacks on Mr Huang’s integrity in the course of cross-examination; secondly, that Mr Guo had “a propensity for reconstruction”, referring, for example, to his changing evidence regarding how the $20m investment was effected; and thirdly, that Mr Guo had “an inability to distinguish truth from untruth”, referring to his refusal to accept that some statements made by him in the past were inconsistent with his evidence in this proceeding, and that both could not be true.

17. I accept that there is some force in these criticisms.

18. As regards the first criticism, Mr Guo was frequently animated and voluble in his answers, raising his voice and expressing anger in response to questions. He frequently gave lengthy, non-responsive and self-serving answers.

19. It was plain that Mr Guo has a deep-seated grievance regarding what he sees as a betrayal by a former close friend. That is not surprising, given that (on the Defendants’ own case) Mr Guo contributed $36.8m to Yufeng, which was used to purchase an investment that made a very substantial profit, and the Defendants assert that Mr Guo is entitled neither to receive any share of that profit nor to have any of his money repaid.

20. I do not, however, regard Mr Guo’s temperament in cross-examination as a significant matter when assessing his evidence. The well-known limitations on making credit assessments based on a person’s demeanour are amplified where (as here) cultural issues may impact the manner in which a person responds to questions, and where evidence is given through an interpreter: DVO16 v Minister for Immigration and Border Protection (2021) 273 CLR 177; [2021] HCA 12 at [54] per Edelman J; Guojin Huang v Jinghong Wei (No 2) [2022] NSWSC 473 at [18] (Kunc J).

21. As regards the second criticism, Mr Guo’s evidence has, in some respects, changed over time as documents have come to light or issues have been raised in response to his evidence. For example, he initially claimed to recall having transferred $20m in cash to Yufeng’s bank account, but later changed this evidence when it became apparent that only $10.1m had been transferred. In his second affidavit, he gave evidence of a set-off arrangement between himself and Mr Huang regarding the $9.9m balance of his investment, which had not been mentioned in (and was inconsistent with the evidence given in) his first affidavit.

22. The risk of reconstruction is particularly marked in this case. Many of the critical events in these proceedings happened over 11 years ago. It is common ground that the key transactions were not documented. The documents which do exist contain, in some cases, contradictory information. Further, Mr Guo has been in dispute with Mr Huang for almost three years about these transactions, and has entrenched views on his claims, which may well affect his recollection of events. As McLelland CJ in Eq observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:

“human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

23. These matters serve to reinforce that the Court is to reason to its conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] per Gleeson CJ, Gummow and Kirby JJ. This does not eliminate the established principles about witness credibility, but it tends to reduce the occasions where those principles are seen as critical: ibid.

24. While oral testimony needs to be carefully assessed in light of the objective contemporaneous evidence, particularly when given by a party to litigation many years after the events, such testimony can provide important context for understanding particular documents and their significance. In ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [28], Bell P (with whom Bathurst CJ and Leeming JA agreed) observed as follows:

“Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”

25. Those comments are particularly important here. The key transactions in this case were undocumented and were entered by means of conversations between Mr Guo and Mr Huang. Those conversations occurred against the background of a personal relationship between Mr Guo and Mr Huang, and their shared membership of the Chaoshan community (which, it was common ground, provided important cultural context for the dealings between them). Moreover, the contemporaneous documents contain, at times, inconsistent and contradictory information about the transactions in issue. In order to place documents in context, and to resolve such inconsistencies, it is necessary to have regard to the oral evidence regarding the circumstances and dealings which gave rise to the transactions in issue.

26. Whatever criticisms may be made about Mr Guo’s temperament, or about particular evidence that he gave, Mr Guo’s core narrative regarding his relationship and his conversations with Mr Huang was consistent. Over three days of cross-examination, his evidence of the circumstances and discussions which led to the payments that are the subject of these proceedings did not alter in any significant way.

27. As regards the third criticism, I accept that Mr Guo’s evidence was, in some respects, inconsistent with statements made by him in contemporaneous documents, and that his explanations for those inconsistencies were at times confused or otherwise unsatisfactory. I have addressed particular instances below, when addressing specific factual issues in this proceeding. Although in a number of respects, I have determined that Mr Guo’s evidence should not be accepted, it does not follow that all of his evidence should be disregarded. As Basten JA said in Sangha v Baxter [2009] NSWCA 78 at [155] (Handley AJA agreeing), there “are risks in making global findings about credibility of any particular witness”. His Honour observed (at [155]-[156]) that:

“Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful or capable of being categorised in a variety of ways which are unlikely to be capable of clear delineation in some cases.

Further, findings of credibility are not usually findings with respect to factual issues in the case, but are rather subsidiary findings on the way to determination of issues. Like many aspects of the evidence in a trial, the evidence of a witness who is believed to have lied in a particular respect, will nevertheless be able to bear some weight and should be placed into a balance, with other material evidence, before a conclusion is reached in relation to a critical fact. The rejection of a witness in total, absent corroboration is likely to mean that, even where corroborated, little attention will be paid to the evidence of the witness and less to the possible consequences which might flow from the fact that particular evidence is shown to be truthful: see generally, King v Collins [2007] NSWCA 122 at [44].”

28. For those reasons, despite there being force in a number of Mr Huang’s criticisms, it does not follow that Mr Guo’s evidence should be disregarded or given no weight. Instead, these matters serve to emphasise that it is necessary to assess Mr Guo’s evidence carefully, in light of the contemporaneous documents, the objectively established facts, the apparent logic of events, the existence and nature of corroborative evidence, and the effect of the evidence as a whole.

Absence of Mr Huang

29. Mr Huang did not give any oral evidence in his defence of Mr Guo’s claims, and his absence is unexplained.

30. In those circumstances, Mr Guo contended, and I accept, that the Court is entitled to draw an inference against Mr Huang that his evidence would not have assisted his case; and to draw, with greater confidence, inferences against him that are open on the evidence, where it appears that Mr Huang was in a position to cast light on whether the inference should be drawn: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63]-[64] per Heydon, Crennan and Bell JJ.

31. As Kitto J put it in Jones v Dunkel (1959) 101 CLR 298 at 308; [1959] HCA 8:

“any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence”.

32. In Ling v Pang [2023] NSWCA 112 at [27], Kirk JA said (Leeming and Mitchelmore JJA agreeing) that:

“What underlies the principle in Jones v Dunkel is that the failure to call the witness ‘serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party’: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; at 320-1 at 320–321 per Windeyer J; see also Fabre v Arenales (1992) 27 NSWLR 437 at 449 per Mahoney JA.”

33. This is particularly the case where the witness who is not called is a party. As Rich J observed in The Insurance Commissioner v Joyce (1948) 77 CLR 39 at 49; [1948] HCA 17, “when circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matter prefers the well of the court to the witness box a court is entitled to be bold”. In Chong & Neale v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137 at [212], the Victorian Court of Appeal observed that:

“In Dilosa v Latec Finance Pty Ltd [No 2], Street J recognised that where the absent witness is a party then considerable importance may well attach to the inference that nothing which the party could say would assist his or her case. As Gleeson CJ said in Azzopardi, the judgments in Weissensteiner recognise that the inference that may be drawn from the silence of a party to civil litigation may be significant. Santow J drew such an inference in ASIC v Adler because the parties who were available and not called had a personal involvement in the transactions in question. …”

34. A Jones v Dunkel inference is not a substitute for evidence. If there is no evidence of a matter, such an inference cannot fill the void: Bellevarde Constructions Pty Ltd v L’Officina by Vincenzo Australia Pty Ltd [2022] NSWCA 246 at [37] per Brereton JA (White JA and Simpson AJA agreeing).

35. While the silence of one party cannot “fill the place of actual evidence on an issue”, it may “serve to resolve a doubt or an ambiguity, especially where the facts are peculiarly within the knowledge of the silent party”: Tozer Kemsley & Millbourn (Australasia) Pty Ltd v Collier’s Interstate Transport Service Ltd (1956) 94 CLR 384 at 403; [1956] HCA 6 per Fullagar J.

Claim regarding $20m Investment

Factual background

36. Mr Guo first met Mr Huang in 2006.

37. They are both members of the Chaoshan community in China, which is a community of people from an area of Guangdong province, centred on the cities around Jieyang, Shantou and Chaozhou. All of their conversations took place in the Chaozhou dialect, unless other people were present (in which case they spoke in Mandarin Chinese). Mr Guo does not speak or read English.

38. From the 1980s, Mr Guo established a business which was primarily involved in the trade of palm oil. In around 2010, he founded a group of companies in China called the NNF Group (“Nian Nian Feng”). From around that time, he invested in a number of property developments in China.

39. Mr Huang’s business in China was called the Yuhu Group.

40. By 2012, Mr Guo and Mr Huang were good friends. They did not, prior to 2012, have any business dealings together in China.

41. It was common ground that, within the Chaoshan business community, there is a custom of loans being made between members of that community without any documentation. Mr Guo deposed that:

1. such loans are generally arranged by telephone calls and sometimes using WeChat;

2. the lender “usually” charges interest on this type of loan, which can be as high as 3 to 4% per month; and

3. if the lender requires funds to be repaid, usually at least 5 days’ notice will be given to the borrower, and the borrower must pay back the deposited funds and the interest following the repayment demand.

42. Mr Guo gave the following evidence about this practice in cross-examination:

“Q. … Within the Chaoshan community, there is a practise of business people lending money to acquaintances without the need for a written loan agreement, correct?

A. INTERPRETER: Yes.

…

Q. The loans made in accordance with this practise can involve very large amounts of money, correct?

A. INTERPRETER: What do you mean?

Q. They can involve loans totalling millions of y[ua]n, correct?

A. INTERPRETER: Yes.

Q. They’re generally arranged by telephone call or through messages on WeChat, correct?

A. INTERPRETER: Yes.

…

Q. Often, the discussions that lead to such loans being made can take no more than a few minutes, correct?

A. INTERPRETER: Yes.

…

Q. Before making such a loan, the lender doesn’t perform a detailed review of the borrower’s financial position, correct?

A. INTERPRETER: Yes.

Q. The lender doesn’t seek to verify the value of the borrower’s assets and liabilities, correct?

A. INTERPRETER: Yes.

Q. The lender doesn’t seek to check the annual income or expenses of the borrower, correct?

A. INTERPRETER: Yes.

Q. And the lender doesn’t require documents as evidence of any of those matters, correct?

A. INTERPRETER: Yes.”

First visit to Australia

43. In around June or July 2012, Mr Guo and his then wife, Ms Deng, had a meeting with Mr Huang at his office in Shenzhen. Mr Huang told Mr Guo that the Yuhu Group was undertaking business in Australia. He invited Mr Guo and Ms Deng to visit Australia, in order to see if they would like to invest with him in Sydney.

44. Mr Guo and Ms Deng agreed, and Mr Huang arranged the trip for them, including making applications for visas and arranging air tickets.

45. On 30 August 2012, Mr Guo and Ms Deng arrived in Sydney, staying for around two weeks. Mr Huang arranged accommodation and local transportation, and gave Mr Guo $10,000 spending money. One of the places to which Mr Guo was taken by Mr Huang was a shopping centre. Mr Huang explained that he had purchased this shopping centre for around $16m through a family trust.

46. Mr Guo gave unchallenged evidence that Mr Huang told Mr Guo, in the course of this visit, that Mr Huang would establish a company in Sydney and proposed that they do business together, stating: “I will look for investments and you could invest in projects with me together”.

47. In September 2012, Mr Huang established Yufeng, which at that time was called Yuhu Group (Australia) Pty Ltd. At that time, Mr Huang was its director, secretary and sole shareholder.

48. Following his first visit to Sydney in 2012, Mr Guo loaned money to companies in China which were associated with Mr Huang.

February 2013 trip to Australia

49. Mr Guo took further trips to Sydney in January 2013 and February 2013 at Mr Huang’s invitation.

50. In middle to late February 2013, Mr Huang took Mr Guo to see the Eastwood Shopping Centre. Mr Guo gave evidence that, during this visit, Mr Huang said to him words to the following effect:

“(a)   the shopping centre is a very good project and prospect for investment;

(b)   the market valuation for the property is around AUD $56 million but Mr Huang might be able to negotiate a lower price of around AUD $55 million or even $53 million; and

(c)   although it is a project that will involve a large investment, it is a very good investment because of the rental income from the shopping centre and because it might be possible to convert and redevelop some of the space to realise more commercial benefits.”

51. Later that same day, Mr Huang took Mr Guo to dinner at the Golden Century restaurant in Sydney.

52. Mr Guo deposed that, in the course of this dinner, Mr Huang again told Mr Guo that he thought the Eastwood Shopping Centre was a good investment project, and said words to the following effect:

“The shopping centre can be purchased with a price of AUD $55 million and, with the other costs including tax, the whole purchase price will be AUD $60 million”

“I will fund approximately half of the $60 million using bank loans. For the other half of the purchase price, which is $30 million, I hope you can contribute $20 million. You will be holding 60% of the shares. I will be contributing $10 million. I will be holding 30% of the shares. I will be also be providing the management team to run this project. That means I will be holding another 10% of the shares as value in kind."

53. Mr Guo further deposed that Mr Huang said that, if they purchased the Eastwood Shopping Centre, Mr Huang would apply for approval to redevelop the shopping centre and would seek to increase the number of apartments within the shopping centre complex and to expand the capacity of the shopping centre; and said words to the following effect:

“Currently the shopping centre is very old. The shops that are rented are not very organised. The leases for some of the shops have already expired, and the centre didn't enter into new agreements. The shops are just paying the rental fee according to the terms of the expired leases. So currently the shopping centre generates an income of about $2 million. But after the renovation, we are planning to sign new lease contracts with the shops. Then the shops will generate a rental income of $3 to $4 million, or even $4 to $5 million on an annual basis.

We will divide the income according to our shareholdings in the project. It is a very good project."

54. Mr Guo did not contend that any agreement was reached at this meeting. Instead, his evidence was that he told Mr Huang that he would think about his proposal.

Meeting in March 2013

55. In March 2013, Mr Guo was staying at a hotel room which Mr Huang had arranged and booked in Sydney.

56. At Mr Huang’s request, Mr Guo attended a meeting at Mr Huang’s house in Mosman.

57. Mr Guo deposed that, at this meeting, he and Mr Huang had a conversation to the following effect:

“Mr Huang:    What do you think about the Eastwood project that I mentioned to you last time?

[Mr Guo]:    This is a good project. I'm willing to invest in it.”

58. Mr Guo also deposed that Mr Huang advised him that there were advantages in setting up a family trust, saying words to the effect that: “If you transfer your funds into the family trust, and something bad happens to you in China, this asset, because it belongs to the entire family, is safe”. According to Mr Guo, a conversation took place to the following effect:

“Mr Huang:   Of your shares of 60%, I will hold 30% on your behalf and Deng Ying will hold the other 30%. It would be better not to register any shares under your name. It would be safer for you. You should expedite the process of setting up a family trust. As soon as the family trust is established, Deng Ying should transfer the shares she is holding on your behalf to the family trust. it will help me to attract investors if it can be shown on paper that I own 70% of the total shares. It will bring you no loss. It will be beneficial for my business activities in the future. Also, Deng Ying is very beautiful and young. To protect against what might happen if she Ieaves you, it would be better if I hold 30% of the shares on your behalf initially, and then also on behalf of your family trust when it is established.

[Mr Guo]: Ok.”

59. Mr Guo also deposed that, at this meeting, the following discussion took place:

“Mr Huang:    There will be three directors of the joint venture. One will be either you or Deng Ying. I will be another director and there will be one more.

[Mr Guo]:    I propose Deng Ying.”

Transfer of shares to Ms Deng and appointment as director

60. Prior to April 2013, Mr Huang held all of the 100 shares issued in Yufeng.

61. On 11 April 2013, Mr Huang transferred 30 of the shares in Yufeng to Ms Deng, retaining 70 shares. On the same day, Ms Deng was appointed as a director of Yufeng.

62. Ms Deng did not remember the details of the papers relating to Yufeng which she was asked to sign, but could recall signing papers because Mr Guo asked her to do so. She never performed any function as a director of Yufeng.

63. Mr Huang stated, in a part of his affidavit which was tendered by Mr Guo, that he understood Ms Deng’s role as a director to be similar to that of a director of one of his companies in China “in the sense that the appointment was in name only, but carried no power”. He explained that he “had companies in China, the only directors of which were employees of mine who exercised no control or influence over the management of the company”.

Transfer of $10.1m to Yufeng

64. Around the start of May 2013, Ms Deng opened, at Mr Guo’s request, an account with the Bank of China in Hong Kong. Mr Guo transferred money into this account, which Ms Deng then transferred, at Mr Guo’s request, to Yufeng.

65. In particular, Ms Deng transferred the following amounts from this account to Yufeng’s account:

1. on 2 May 2013, an amount of $4.5m; and

2. on 3 May 2013, an amount of $5.6m.

66. In closing submissions, the Defendants accepted that these payments were made by Ms Deng on behalf of Mr Guo, using Mr Guo’s money.

67. On the “Customer Advice” form for the $5.6m transfer to Yufeng, Ms Deng wrote a note in Mandarin which translates as follows: “Money to buy 30% shares in Eastwood Shopping Centre”.

68. Ms Deng wrote this note shortly after the transaction, and before she put the document in a safe. In cross-examination, she gave the following evidence regarding the content of this note:

“Q. Now, just in relation to the handwritten note there, Ms Deng, you’re recording that the money you’re transferring is for a 30% share in the Eastwood Shopping Centre. Is that correct?

A. WITNESS: Yes.

Q. And you understood, and when you say “money”, you’re referring both to the money that you transferred on 3 May as well as 2 May 2013.

A. INTERPRETER: Yes.

Q. And at the time you made this notation, you understood that those funds were being transferred in relation to obtaining a 30% share in the Eastwood Shopping Centre. Is that correct?

A. INTERPRETER: Yes.

Q. And you form that understanding on the basis of discussions you had with Mr Guo.

A. INTERPRETER: Yes. He said to me - he asked me to transfer the investment money, the investment project in Australia.

Q. And so you understood that Mr Guo would be getting a 30% share in the Eastwood Shopping Centre. Is that correct?

A. INTERPRETER: Yes, that’s what he told me.”

Receipt of $20m

69. The two payments which Ms Deng made into Yufeng’s account in early May 2023 totalled $10.1m (less fees).

70. Mr Guo gave evidence that, in late April 2013, he had a discussion with Mr Huang in which:

1. Mr Guo explained that he only had around $10m cash available;

2. Mr Guo referred to a debt of around 90 million yuan which Mr Huang owed to Mr Guo in China; and

3. Mr Guo proposed that, for the remaining balance of Mr Guo’s $20m investment, Mr Huang would transfer the amount of $9.9m towards the acquisition of the Eastwood Shopping Centre and Mr Guo would deduct this from Mr Huang’s debt to him in China.

71. In May 2013, Mr Guo met Mr Huang at his house in Mosman. Mr Huang told Mr Guo that he had received the two bank transfers totalling $10.1m, and that he had made a payment of $9.9m into Yufeng’s bank account on behalf of Mr Guo.

72. At this meeting, Mr Huang signed a document on the letterhead of Yufeng, dated 19 May 2013, which he handed to Mr Guo. Mr Guo has retained the original of this document. It states as follows:

“[Yufeng] acknowledges the receipt of twenty million Australian dollars (AUD 20,000,000.00) in investment funds from shareholder Ms Deng Ying.”

73. Although there was an issue raised by the Defendants on the pleadings and in opening submissions as to whether Yufeng had in fact received $20m from Mr Guo (and, in particular, whether the $9.9m set-off transaction occurred), this issue fell away in the course of the hearing. In closing submissions, Senior Counsel for Mr Huang made the following concession:

“HIS HONOUR: Just to clarify something that … flows from what you were saying about the 9.9 million offset. And a few times you’ve mentioned the [figure of] 20 million. You accept that there was 20 million paid as recorded in Mr Huang’s receipt.

[SENIOR COUNSEL FOR MR HUANG]: I don’t think I can dispute that, given the receipt.”

74. Accordingly, it was common ground between Mr Guo and Mr Huang that Yufeng received a total of $20m from Mr Guo.

75. However, there remains a dispute as to whether this was an investment or a loan (despite the receipt signed by Mr Huang referring to this sum as “investment funds”).

Change of company name to “Yufeng”

76. Mr Guo gave unchallenged evidence that in March 2013, he asked Mr Huang to change the name of his company, in order to recognise Mr Guo’s interest in the company; and that Mr Huang agreed to change it to “Yufeng”, once he had received all of the investment funds from Mr Guo.

77. In September 2014, Mr Guo visited Mr Huang at his house in Mosman and asked him to keep his promise to change the company name.

78. On 23 October 2014, Yufeng’s name was changed from Yuhu Group (Australia) Pty Ltd to Yufeng Investment Group (Australia) Pty Limited. Mr Huang informed Mr Guo about the name change in November or December 2014.

79. Mr Guo understood “Yufeng” was a portmanteau, combining “Yuhu” (the name of Mr Huang’s group of companies) and “Nian Nian Feng” (the name of Mr Guo’s group of companies). The Defendants did not advance any alternative explanation for the choice of name.

Mr Huang’s shareholding in Yufeng is transferred to Roseburg Investment

80. On 15 May 2013, Roseburg Investment was registered, which was then named Haibin Investment Pty Ltd.

81. Roseburg Investment is the trustee of the Huang Family Trust. The directors and shareholders of Roseburg Investment are, and at all times have been, Mr Huang’s wife and Mr Huang’s son.

82. In a part of Mr Huang’s affidavit which was tendered by Mr Guo, Mr Huang stated that he caused this trust to be established with Roseburg Investment as its trustee.

83. On the date that Roseburg Investment was registered, Mr Huang transferred his 70% shareholding in Yufeng to that company. Roseburg Investment continues to hold those shares.

Acquisition of Eastwood Shopping Centre by 152 Rowy

84. On 16 May 2013, Mr Huang established 152 Rowy, which was then named Yuhu Property (Australia) Pty Ltd.

85. Mr Huang was a director of 152 Rowy from 16 May 2013 to 12 November 2018. His son, Jiquan Huang, has been a director at all times since 12 November 2018.

86. The shares in 152 Rowy were held, as to 95%, by Yufeng and, as to 5%, by VG International Pty Ltd.

87. Mr Stephen Gao, who was at all material times Mr Huang’s accountant, was a director and 90% shareholder of VG International.

88. Mr Guo gave unchallenged evidence that Mr Huang told him, some time in around 2014, that Mr Gao was another investor in the Eastwood Shopping Centre project, saying words to the effect that Mr Huang “had not been able to fulfil his share of the investment in the Eastwood project and that Mr Gao had invested”.

84. On 30 May 2013, 152 Rowy exchanged contracts for the purchase of the two titles comprising the Eastwood Shopping Centre project, namely, 152-160 Rowe Street, Eastwood (being the shopping centre and office tower) and 168-190 Rowe Street, Eastwood (described in finance documents as the “Strip Shops and Development Land”). The total purchase price for those properties was $55m.

85. 152 Rowy paid a total deposit of $5.5m in respect of these two contracts. This deposit was funded by the transfers made by Ms Deng on 2 and 3 May 2013. On 9 May 2013, the amount of $10.1m which had been transferred by Ms Deng to Yufeng was moved into another account of Yufeng and, on 31 May 2013, an amount of $5.5m was withdrawn from this account.

86. A ledger entries report of 152 Rowy for the year ending 30 June 2013 records the amount of $5,500,500 as a loan from Yufeng; and a ledger entries report of Yufeng for the year ending 30 June 2013 records the two transfers from Ms Deng totalling $10.1m as “Loans from Guo Family Trust”. The Guo Family Trust did not exist as at 30 June 2013. (As noted below, it was not established until September 2014.)

87. On 10 October 2013, National Australia Bank (NAB) issued a letter of offer to 152 Rowy for a total facility of $33m to assist with the purchase of the Eastwood Shopping Centre project. On 14 October 2013, this letter of offer was accepted by each of 152 Rowy and the two guarantors, Yufeng and VG International. Mr Huang signed as a director of each of 152 Rowy and Yufeng, and Mr Gao signed on behalf of VG International.

88. Mr Huang also executed a Finance Agreement with NAB on behalf of each of 152 Rowy (as borrower) and Yufeng (as guarantor).

89. On 25 October 2013, the purchase of the properties comprising the Eastwood Shopping Centre project completed.

90. The balance due on settlement for those properties was $50,758,412.47. The payment of this balance was funded by drawing down the $33m facility with NAB, with the remainder of the settlement funds coming from an amount of $22m which was transferred from Yufeng’s account into 152 Rowy’s account on 21 October 2013.

91. As explained at paragraphs [266]-[267] below, the sum of $22m which Yufeng provided to 152 Rowy for the purchase of the Eastwood Shopping Centre included the amount of the $16.8m loan, which Mr Guo had paid into Yufeng’s account on 16 and 17 October 2013.

Ms Deng’s shareholding in Yufeng transferred to Tongxin

97. In July 2013, Ms Deng bought a property in Mosman, which was paid for by Mr Guo. The property was 100 metres walk from Mr Huang’s house. When Mr Guo was in Sydney, he would meet Mr Huang “every two days”.

98. On 19 September 2014, a discretionary family trust called the Guo Family Trust was established. The settlor was Mr Gao. The trustee was Tongxin International Pty Ltd. The appointors were Ms Deng and Mr Guo’s son. Mr Guo and Ms Deng were named in the trust deed as Income Beneficiaries and Corpus Beneficiaries.

99. On 21 October 2014, Ms Deng transferred, at Mr Guo’s request, her 30% shareholding in Yufeng to Tongxin as trustee of the Guo Family Trust.

100. Mr Guo deposed that, in November 2014, he had a conversation with Mr Huang to the following effect:

“[Mr Guo]:    The Guo Family Trust has been established now. Can you return the shares that you have been holding on my behalf to the Guo Family Trust?

Mr Huang:    No. First, it would help me to come back up in the business community and it will also show that Yuhu is a reputable company if I hold these shares in my name. Secondly, Deng Ying has also transferred 30% of the shares that she holds on your behalf to your family trust. If I am to transfer the shares that I have been holding on your behalf to the family trust, the family trust would have too much assets. Since Deng Ying is in control of your family trust if you two get divorced you cannot control these assets. Deng Ying might take all these assets away. So you should not put too much assets under her control. It would be safer to put these assets with me.

[Mr Guo]:    Ok.”

May 2015 – Letter of Undertaking

101. Some time prior to May 2015, Mr Zhuang Ruwu had loaned 40 million yuan to companies which Mr Guo controlled in China. In 2015, Mr Zhuang was chasing up payment of those moneys.

102. In May 2015, Mr Zhuang and Mr Guo had a telephone call. Mr Zhuang asked Mr Guo whether he had shares in Mr Huang’s company which had bought the Eastwood Shopping Centre, and Mr Guo replied that he did. Mr Zhuang and Mr Guo arranged to meet at Mr Huang’s house in Mosman.

103. This meeting occurred in May 2015. At this meeting, Mr Zhuang asked Mr Guo to sign a letter of undertaking.

104. There was in evidence a copy of a Letter of Undertaking which was signed by each of Mr Guo on 26 May 2015 and Mr Huang on 27 May 2015 (each of whom is referred to as a “Promisor”). This letter of undertaking referred to the loan made by Mr Zhuang’s company, and recorded promises by Mr Guo that the monthly interest rate from June to September 2015 would be 2%; that the loan would be repaid in full along with interest on 30 September 2015; and that if the loan was not repaid in full by that date, Mr Guo would pay monthly interest at a rate of 2.5% from 1 October 2015. The Letter of Undertaking continued as follows:

“Mr. GUO Wencheng now agrees to use the investment from his Yuhu Property (Australia) Pty Ltd in Eastwood NSW, Australia, as collateral for the loan.”

105. The reference to Mr Guo’s “investment” in Mr Huang’s company and the agreement that this would be available as “collateral” for Mr Zhuang’s loan likely explain why Mr Huang was asked to sign this document.

Other events from 2015 to 2018

106. In October 2015, Mr Guo moved to Australia. He has been a permanent resident since that time.

107. In around 2015, Mr Guo and Ms Deng divorced.

108. On 4 March 2016, Ms Deng resigned as a director of Yufeng and, on 17 March 2016, she resigned as a director of Tongxin.

109. On 13 April 2016, HD International Pty Ltd replaced Tongxin as trustee of the Guo Family Trust. On the same day, the trust deed was amended to exclude Ms Deng as a beneficiary.

110. On 14 April 2016, Tongxin transferred its 30% shareholding in Yufeng to HD International as trustee of the Guo Family Trust. At that time, the directors of HD International were Mr Huang and Mr Guo’s son, and the shares in HD International were held, as to 70%, by Mr Huang and as to 30%, by Mr Guo’s son.

111. On 12 November 2018, Mr Huang was replaced as a director of HD International by his son, and his shares in HD International were transferred to his son.

112. HD International remained trustee of the Guo Family Trust until 14 October 2024, when this Court made orders appointing Willow G Holding Pty Ltd as trustee.

2021: Sale of Eastwood Shopping Centre

113. On 12 November 2018, Mr Huang resigned as a director of Yufeng and 152 Rowy.

114. In February 2019, Mr Guo visited Mr Huang’s home in Hong Kong. He gave evidence that, at this meeting, Mr Huang said words to the following effect:

“the redevelopment requires quite a huge amount of funds. I'm not able to cope with it. I'm going to sell the project.”

115. On 22 April 2021, 152 Rowy entered into a contract for the sale of the two properties comprising the Eastwood Shopping Centre project for a total amount of $155m. Around this time, Mr Guo was informed by Mr Gao that a contract of sale had been entered for the Eastwood Shopping Centre and a deposit had been received.

116. In cross-examination, Mr Guo agreed with the proposition put to him by Senior Counsel for Mr Huang that: “It was Mr Huang’s decision to sell the shopping mall.”

117. On 15 July 2021, the sale of the Eastwood Shopping Centre completed.

118. In August or September 2021, Mr Guo again spoke to Mr Gao, and was told that the Eastwood Shopping Centre had been sold.

119. According to an extract of Mr Jiquan Huang’s affidavit which was tendered as an admission by Mr Guo, following receipt of the settlement funds, an amount of $100,538,122.79 was paid to NAB. This was applied to repay 152 Rowy’s $33m facility with NAB (which had been used to purchase the Eastwood Shopping Centre), and also to repay loans which had been made by NAB to three related companies of 152 Rowy, which together totalled in excess of $67m. On the same day, 152 Rowy entered into intercompany loan agreements with each of those three related entities (in each case, for the amount of the entity’s indebtedness to NAB which had been discharged by 152 Rowy’s payment).

120. The balance of the net proceeds of sale, being $20,073,664.62, was paid into 152 Rowy’s bank account. The bank statement for this account for July 2021 reveals that the whole of this amount was disbursed, to persons who are not identified, within four days of receipt.

March 2022: Distribution Proposal

121. In October 2021, Mr Guo visited Mr Huang at his house in Hong Kong. Mr Guo gave unchallenged evidence that he told Mr Huang that he had heard about the sale of the Eastwood Shopping Centre and asked when he would receive his share of the profit from the sale. Mr Huang responded as follows:

“The contract has been entered into, and the deposit has been received, but the balance hasn’t been received yet. I will receive the rest of the payment on around 28 February 2022.”

122. In fact, as at October 2021, the whole of the settlement proceeds had been received and disbursed several months earlier.

123. On 28 February 2022, Mr Guo called Mr Huang. Mr Guo gave unchallenged evidence that they had a conversation to the following effect:

“[Mr Guo]:    You mentioned to me when we met in Hong Kong that you would receive the rest of the payments from the sale of the Eastwood shopping centre on or around 28 February.

Mr Huang:    There is something wrong with the loan of the buyer. They have already delayed the payment to around 18 March 2022.”

124. On 18 March 2022, Mr Guo again called Mr Huang, and was told: “I now confirm the payment has been received.”

125. On 25 March 2022, Mr Huang sent Mr Guo a WeChat message which contained a distribution proposal in relation to the sale proceeds from the Eastwood Shopping Centre project (the Distribution Proposal). The Distribution Proposal read as follows (emphasis in original):

“Eastwood Project Distribution Proposal

1.    Project sales gross profit

The sale price of the Eastwood project is AUD 155 million dollars. After subtracting the purchase cost of AUD 59.18 million dollars, and the cumulative investment of approximately 5.77 million dollars, the profit pre-tax is 90.05 million dollars. Based on the income tax rate of 30% for the Australian company, the income tax payable amount is 27.02 million dollars. The final post-tax distributable profit is 63.03 million dollars.

Index 1: Purchase cost

Stamp duty	3,063,880.00
Purchase cost	55,585,000.00
Development cost	397,171.78
Other costs	82,895.00
Legal cost	54,335.00
Total purchase cost	59,183,281.78

2.    Profit distribution

The ownership of the Eastwood development project is held by Yuhu Properties Pty. Ltd., whose shareholders include VG International (5% shareholding) and Yufeng Investment Group Pty Ltd (95% shareholding). Yufeng Investment Group Pty Ltd is made up of 70% shares held by the Huang Family Trust, and the remaining 30% held by the Guo Family Trust. Based on the net profit of 63.03 million dollars after tax, VG International shall receive AUD 3.15 million, while Yufeng Investment Group (Australia) Pty Ltd shall receive AUD 59.88 million, of which the Huang Family Trust shall receive AUD 41.92 million and the Guo Family Trust shall receive AUD 17.96 million.”

126. The pre-tax profit figure of “90.05 million dollars” in the Distribution Proposal appears to have been a typographical error. According to 152 Rowy’s tax return for the financial year ending 30 June 2022 (in which the sale of the Eastwood Shopping Centre project occurred), 152 Rowy made a pre-tax profit of $90,005,523: that is, $90.005m rather than $90.05m. The amount of tax assessed to be payable by 152 Rowy was $27,001,656.90. This resulted in an after-tax profit of $63,003,866.10, rather than, as stated in the Distribution Proposal, $63.03m.

Mr Guo rejects Distribution Proposal

127. Mr Guo did not accept the Distribution Proposal. He deposed that his reason for not doing so was that he understood, based on his agreement with Mr Huang, that he “would own 60% of the Eastwood project and that Mr Huang would hold half of my shares on my behalf”.

128. However, in a WeChat message which Mr Guo sent to Mr Huang on 3 April 2022, just over one week after receipt of the Distribution Proposal, Mr Guo did not assert that he was entitled to a 60% share of the profits from the Eastwood Shopping Centre project. Instead, he claimed that he was entitled to a 30% share, and that this share had been, in effect, reduced by reason that the project had not been purchased by Yufeng (in which Mr Guo had a 30% interest), but had instead been purchased by 152 Rowy (in which Mr Guo had, through Yufeng’s 95% shareholding in that entity, a 28.5% interest).

129. Mr Guo’s WeChat message was a carefully considered statement of his position. He gave evidence that he drafted it with the assistance of a friend on 2 April 2022, and he did not send it to Mr Huang until 7.05pm on the following day. Mr Guo’s message identified six points, set out his position on each, and asked Mr Huang: “Please read the following six statements carefully and give me a clear response as soon as possible.”

130. Mr Guo’s message relevantly read as follows (emphasis added):

“2… When I came to Sydney in early 2013, you again stressed the need to set up a family trust. You were interested in the Eastwood shopping centre project and asked me to transfer 117 million RMB from China to Australia, which was equivalent to 20 million Australian dollars based on the exchange rate at that time. At that time, we verbally agreed that the company would pay me interest, but to this day there is no explanation for this interest.

3. Regarding the investment in the Eastwood shopping centre project, we verbally agreed at the time that I would own 30% of the project and you would own 70%. Later, probably because of your funding or other reasons, although you asked Jinyu LI and other investors to invest you have only found Liqin GAO to invest. Liqin GAO holds 5%. You give me 30% of the remaining 95% and you take 70%, which means my share was reduced from 30% to 28.5%. This is inconsistent with the original agreement, and I hope you can follow the original agreement.

4. As a shareholder for so many years, I know very little about the Eastwood shopping centre project. In 2016, I wanted my eldest daughter (who graduated with a degree in accounting from the University of Melbourne) to join this project as an accountant, but you didn’t agree after I asked you two or three times. To this day, from the time we purchased the project to the time we sold the project and received the full payment, you have not let me see the sales contract and all accounts. Next week, I plan to visit your son Jiquan with my son Huidong. Please ask your son to compile a complete set of the above information for me, a shareholder, to view.”

131. The earliest document which referred to Mr Guo holding a 60% interest in Yufeng was a letter dated 26 July 2022, which Mr Guo’s solicitors sent to, among others, Yufeng and Mr Huang. This letter stated, relevantly, as follows:

“(g)   The Proposed Settlement Distribution does not reflect the terms agreed between Changran Huang and Wencheng Guo in respect of the Eastwood Project.

(h)    It was agreed between Changran Huang and Wencheng Guo that:

(i)   Wencheng Guo would invest $20 million to help fund the purchase of the Eastwood Project;

(ii)   in return, Wencheng Guo would own 60% of the shares in the investment;

(iii)   Changran Huang would own the remaining 40% of the shares in the investment; and

(iv)   Changran Huang would hold half of Wencheng Guo’s share of the investment on Wencheng Guo’s behalf.

(i)   Pursuant to that agreement:

(i)   Wencheng Guo and his former partner Ying Deng transferred $20 million to Yufeng in May 2013;

(ii)   30 ordinary shares in Yufeng were transferred to Ying Deng (these shares are now held by HD International in its capacity as trustee of the Guo Family Trust); and

(iii)   the remaining 70 ordinary shares in Yufeng were held as follows:

(A)   30 shares beneficially owned by Wencheng Guo but held by Changran Huang on Wencheng Guo’s behalf; and

(B)   40 shares owned by Changran Huang.”

132. Mr Guo’s solicitors stated that Mr Guo’s position was that “the profits from the Eastwood Project must be distributed between the respective Huang and Guo family interests in accordance with the agreed 60:40 shareholding”. They requested the provision of “a revised settlement distribution calculation reflecting the correct position”.

133. Mr Guo did not subsequently receive any revised Distribution Proposal. Nor has he received any amount from the sale of the Eastwood Shopping Centre project. Nor did he receive, in the period of almost 8 years during which the Eastwood Shopping Centre was owned by 152 Rowy, any payment in respect of the rental received or income earned by 152 Rowy from that shopping centre.

August 2022: Different figures for net profit

134. On 10 August 2022, Ms Cynthia Duan, who was Chief Financial Officer (CFO) for the Yuhu Group, sent an email to Mr Stephen Gao attaching “the Financials and Tax recs for 152 Rowy Pty Ltd for FY22”, and setting out a calculation of the dividend that would be payable to VG International from that profit. Ms Duan then provided a revised calculation on 12 August 2022.

135. This revised “VG Calculation” was as follows:

Net income from Asset Disposal	95,489,706
Expensed Development Cost	- 3,010,081
FY Management fee (Staff cost for DA and asset sales)	- 198,000
Interest Cost – Mainly reps the shareholder loan interest paid	- 18,106,759
Income tax for FY22 – subject to tax review	- 21,821,733
Property Net Income after Tax and Interest	53,343,760
Carried forward tax loss from PY	- 2,426,383
VG Franked Dividend	2,545,869

136. The figures in this calculation differ in a number of respects from those in the Distribution Proposal. The net income from the sale of the Eastwood Shopping Centre project is recorded as $95,489,706 (rather than $90.05m in the Distribution Proposal); and the net income after tax and interest is $53,343,760, which is further reduced by a carried forward tax loss from the prior year of around $2,426,383, resulting in an amount of $50,917,377 (compared to the figure of $63.03m recorded in the Distribution Proposal, which does not appear to have taken account of interest costs or the prior year loss).

137. VG International’s “dividend” was calculated as being $2,545,869, which is exactly 5% of $50,917,377, reflecting VG International’s shareholding in 152 Rowy.

138. According to 152 Rowy’s bank statements, 152 Rowy paid an amount of $2m to Mr Gao on 30 September 2022 and a further amount of $545,869 to Mr Gao on 17 October 2022. The second of those payments has the narrative “VG dividend”. The total of the two payments is the same as the amount of the dividend which Ms Yuan had calculated, in her email of 12 August 2022, to be owing to VG International.

November 2022: Discussion between Ms Zhang and Mr Huang

139. Following his divorce from Ms Deng, Mr Guo married Ms Zhang.

140. Mr Guo and Ms Zhang had a child together, and subsequently divorced.

141. Ms Zhang was called by Mr Guo as a witness.

142. Ms Zhang was aware that, up until March 2022, 152 Rowy had been making regular weekly payments to Mr Guo. These payments (which are addressed in paragraphs [286]-[301] below) had ceased around the time that the Eastwood Shopping Centre was sold.

143. At around this time, Mr Guo made a number of statements to Ms Zhang to the effect that he was going to receive “a huge amount of money”. However, Mr Guo then stopped paying child support to Ms Zhang from around June 2022. In those circumstances, Ms Zhang did not trust Mr Guo’s previous statements and was keen to know what the true position was.

139. On 7 November 2022, Ms Zhang sent a WeChat message to Mr Huang, which stated as follows:

“Boss Guo has not paid child support for a few months now. He said some things have happened. I don’t trust his word. Could you please give me an answer.”

145. Ms Zhang gave evidence that on the same day, she received two telephone calls via WeChat from Mr Huang. Ms Zhang deposed that, in the course of their conversation, Mr Huang said words to the following effect:

“Mr Guo has a law suit with me. It is about a project in Eastwood that we worked together before. Mr Guo is the main investor. The project is sold but we have not settled the money. The way Mr Guo calculates the money is different.”

146. She was questioned in cross-examination regarding the extent of her recollection, and gave the following evidence:

“I cannot remember each sentence what he said to me, yeah, but I remember the general idea because I asked him - because, you know, firstly, when I was with Mr Guo, I know we receive, like, a weekly payment from the project. So that’s enough to cover our life spending. And - but that - that stopped because of the project sold.

So we’re supposed to receive what we paid before, right? And I’m ask him, ‘So if you stopped pay weekly and you sold the project, and Mr Guo was the major investment people and he put more money, so he supposed to get most money and to cover my kid’s spending,’ and Mr Huang said yes he will, and he provide a certain amount to Mr Guo, but Mr Guo not accept, yeah.”

147. I accept Ms Zhang’s evidence regarding the “general idea” of her conversation with Mr Huang. The “general idea” of the conversation as set out above is consistent with the terms of Ms Zhang’s WeChat message to Mr Huang (seeking to know what had happened with the Eastwood Shopping Centre project), with the terms of Mr Huang’s Distribution Proposal (promising a substantial payment to the Guo Family Trust in respect of that project), and with the terms of Mr Guo’s response to that proposal (disputing the sufficiency of the payment proposed in the Distribution Proposal).

148. Further, Mr Zhang gave convincing evidence as to why the terms of this conversation with Mr Huang were a matter of importance to her:

“Q. Ms Zhang, do you accept that the clarity of your memory of this conversation had been reduced by the passage of some more than five months, between the time you had your 17-minute conversation in Mandarin, and the time you made this statement in English?

A. I don’t think, because this is so important about me and my kids’ life. So, I definitely remember the general idea what he was told me.”

Investment or Loan?

149. In closing submissions, it was common ground between Mr Guo and Mr Huang that Yufeng received $20m from Mr Guo, as stated in the receipt signed by Mr Huang in May 2013.

150. It was also common ground that the agreement, pursuant to which Mr Guo provided those funds to Yufeng, was undocumented and arose out of a conversation between Mr Guo and Mr Huang.

151. Mr Guo contended that the substance of his oral agreement with Mr Huang was that these funds represented his contribution to a joint commercial endeavour being undertaken by Mr Huang and Mr Guo involving the acquisition and development of the Eastwood Shopping Centre and that, in return for contributing these funds, Mr Guo would be entitled to a percentage (either 60% or alternatively 30%) of the profit and income from the Eastwood Shopping Centre project.

152. Mr Huang contended, in closing submissions, that the substance of the oral agreement between himself and Mr Guo was that Mr Guo would be issued 30% of the shares in Yufeng and would make shareholder loans to Yufeng for the purchase of the Eastwood Shopping Centre.

153. In summary, this is a case where there is no dispute that conversations took place between Mr Guo and Mr Huang in early 2013; that an oral agreement was reached as a result of those conversations; and that pursuant to this agreement Mr Guo received 30% of the shares in Yufeng and Yufeng received $20m from Mr Guo. Instead, the dispute concerns the character of the oral agreement pursuant to which those transactions occurred, namely, whether it was an agreement for an investment in the Eastwood Shopping Centre project, or an agreement to make a loan for the purposes of that project. This is an issue to be resolved by considering Mr Guo’s evidence of the relevant conversations, and the inferences available from contemporaneous documents, the objective facts and the surrounding circumstances: Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268 at [49]-[50], [53].

154. Where the existence and terms of an oral contract are in issue, consideration of the surrounding circumstances, including the history of the relationship between the parties and their conduct prior to and at the time the contract was entered is permissible, as well as post-contractual conduct: Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 at [47]-[50] (Ball J) and the cases there cited. Further, given Mr Huang’s failure to give evidence of the relevant conversations, inferences which are available on the evidence regarding the terms of his oral agreement with Mr Guo may be more confidently drawn (see paragraphs [29]-[35] above).

155. An immediate problem with the case advanced by Mr Huang in closing submissions is that it is radically different from the defence that he pleaded. In his Commercial List Response, Mr Huang did not assert that there was an agreement for Mr Guo to become a 30% shareholder and for Mr Guo to make shareholder loans to Yufeng. Instead, Mr Huang pleaded that:

1. Mr Guo requested that Mr Huang transfer a portion of his shareholding in Yufeng to Mr Guo or his nominee, in order to assist Mr Guo with an application for permanent residency in Australia and to support Mr Guo’s business activities;

2. Mr Huang agreed to this request, “on the basis that he would retain the beneficial interest in any shares transferred to Mr Guo or his nominee” (that is, Mr Huang would in fact remain sole shareholder of Yufeng); and

3. Mr Guo did not make any loans to Yufeng, with any such loan being made by Ms Deng, “which subsequently became owing to the trustee of the Guo Family Trust, whether by reason of assignment of the loan or otherwise”.

156. Accordingly, Mr Huang denied both that Mr Guo held any shares in Yufeng and that Mr Guo made any loans to Yufeng, and instead asserted that a different agreement was reached, involving shares in Yufeng being held on trust for Mr Huang. As matters transpired, these allegations were unsupported by any evidence from Mr Huang and were abandoned at trial.

157. Likewise, there was no oral evidence from Mr Huang to support the alternative case, advanced in closing submissions, that there was an agreement that Mr Guo would receive shares in Yufeng and would make shareholder loans to Yufeng. Mr Huang was, in effect, seeking that the Court find that an oral agreement was reached which was not pleaded and was not supported by any evidence of the relevant conversations.

158. In contrast, Mr Guo’s claim that he contributed $20m to Yufeng as an equity investment in the Eastwood Shopping Centre project is supported by his affidavit evidence of the conversations in question, which was not contradicted by any evidence from the only other participant to those conversations, Mr Huang.

159. As I have noted above, Mr Guo’s evidence of these conversations, under cross-examination over the course of three days, was consistent. I am satisfied, having seen and heard his evidence under sustained challenge from Senior Counsel for Mr Huang, that Mr Guo’s evidence represented his honest and best recollection of events.

160. Further, Mr Guo’s claim that he contributed $20m as an investment in the Eastwood Shopping Centre project, rather than making a $20m loan to Yufeng which was repayable on demand, is supported by the contemporaneous documents and the inherent probabilities of the events as revealed by the evidence as a whole. It is sufficient to refer to the following matters.

1. First, Mr Guo contributed funds to Yufeng in May 2013 shortly after Mr Huang transferred 30% of the shares in Yufeng to Mr Guo’s nominee, Ms Deng, and Ms Deng was appointed a director of Yufeng (see paragraphs [60]-[65] above). There was plainly a connection between those transactions.

2. Secondly, at the time of forwarding funds to Yufeng in early May 2013, Ms Deng made a contemporaneous record that these funds represented “Money to buy 30% shares in Eastwood Shopping Centre”. Ms Deng gave unchallenged evidence that she wrote this note because Mr Guo told her that he “would be getting a 30% share in the Eastwood Shopping Centre” (see paragraphs [67]-[68] above).

3. Thirdly, on 19 May 2013, Mr Huang handed Mr Guo a document on Yufeng’s letterhead, signed by Mr Huang, which acknowledged “the receipt of twenty million Australian dollars (AUD 20,000,000.00) in investment funds from shareholder Ms Deng Ying” (emphasis added) (see paragraphs [71]-[74] above).

4. Fourthly, after the receipt of these funds from Mr Guo, the company’s name was changed to “Yufeng”. I am satisfied that this change of name was made to recognise that the business of this company represented a joint commercial endeavour being undertaken by Mr Huang (“Yuhu”) and Mr Guo (“Nian Nian Feng”) (see paragraphs [76]-[79] above).

5. Fifthly, on 27 May 2015, each of Mr Guo and Mr Huang signed a Letter of Undertaking, whereby Mr Guo agreed to “use the investment from his Yuhu Property (Australia) Pty Ltd in Eastwood NSW, Australia, as collateral for the loan [to Mr Zhuang]” (see paragraphs [103]-[105] above). By signing this document, Mr Huang in effect acknowledged that Mr Guo had made an “investment” in the Eastwood Shopping Centre project, which could be used “as collateral” for other borrowings by Mr Guo.

6. Sixthly, on 20 December 2017, 152 Rowy issued a document certifying that Mr Guo was “our company project partner” (see paragraphs [291]-[292] below). The only project undertaken by 152 Rowy was the Eastwood Shopping Centre project.

7. Seventhly, on 25 March 2022, Mr Huang sent the Distribution Proposal to Mr Guo in relation to the Eastwood Shopping Centre project, which acknowledged the 30% interest held by the Guo Family Trust in Yufeng, which in turn had a 95% interest in the entity that owned the Eastwood Shopping Centre (152 Rowy) and, on this basis, calculated that Mr Guo’s family trust had an entitlement to “receive AUD 17.96 million”, representing 28.5% (being 30% of 95%) of the net $63.03m profit from that project (see paragraphs [125]-[126] above).

8. Finally, Ms Zhang gave evidence that in November 2022 Mr Huang told her that “Mr Guo is the main investor” in the Eastwood Shopping Centre project, which had by then been sold (see paragraphs [145]-[148] above).

161. In contending that the funds contributed by Mr Guo represented a loan to Yufeng rather than an investment in the Eastwood Shopping Centre project, Mr Huang referred to three main matters.

162. First, Mr Huang relied on evidence given by Mr Guo in cross-examination that, in his commercial real estate development business, it was his usual practice, before making an investment, to take steps such as commissioning valuations, evaluating funding options, and engaging professionals to assist him in assessing the project, so that he could assess the return on equity. In contrast, it was common ground that loans were usually advanced within the Chaoshan business community without any due diligence or any assessment of the borrower’s ability to repay. Having regard to those matters, Mr Huang submitted that, in circumstances where Mr Guo did not undertake due diligence in respect of the Eastwood Shopping Centre project prior to agreeing to pay $20m to Yufeng, it is likely that Mr Guo was making a loan to Yufeng which was repayable on demand, rather than an investment in the Eastwood Shopping Centre project.

163. I do not accept this submission. The evidence regarding the practices within the Chaoshan business community supports the conclusion that the funds which Mr Guo provided to Yufeng did not represent a loan, but an investment.

164. It is common ground that loans between members of that community, including loans of millions of yuan, can be arranged simply by a telephone call of a few minutes or by a WeChat message, without anything more.

165. In early 2013, Mr Huang and Mr Guo, who both belonged to this community, had been friends for around seven years. If Mr Huang wanted a loan from Mr Guo, he could have, consistently with the business practices of that community, made a short telephone call or could have sent a WeChat message to him. However, instead of adopting such a course, Mr Huang arranged for, and paid for, Mr Guo and his wife to take a number of trips to Australia; he took Mr Guo on a visit to the Eastwood Shopping Centre and explained why he considered it to be a worthwhile project, and his plans for that project (including his redevelopment plans and the likely income from the shopping centre); he took Mr Guo to dinner at the Golden Century restaurant to explain his proposal to Mr Guo; he transferred 30% of the shares in his company to Mr Guo’s wife, and appointed her a director; he gave Mr Guo documentation confirming that Mr Guo had made a $20m investment; he gave Mr Guo advice on setting up a family trust in Australia, to which Mr Guo’s shares in Yufeng were transferred; and he changed the name of his company so that it incorporated reference to Mr Guo’s group of companies. All of those matters are at odds with any contention that Mr Guo’s $20m contribution to Yufeng was simply an undocumented loan of the kind that might regularly be made by a short phone call.

166. Further, Mr Guo explained that he did not ask questions about the management team that Mr Huang was supplying for the project, or demand to see documents regarding the likely financial return from the project, because he trusted Mr Huang and trusted Mr Huang’s assessment of the project. For example, Mr Guo explained, when asked why he did not require the production of documents showing rental income, that:

“It’s not necessary. That’s not the way we Chaoshan people conduct business. We are not stingy. Especially regarding the relationship I had with Mr Huang at the time. I trusted him. I trust his character, or personality. Let me tell you, we Chaoshan people we count on our words …”

167. In addition, a loan repayable on demand would not have suited Mr Huang’s commercial objectives.

168. Mr Huang intended to redevelop the Eastwood Shopping Centre. In cross-examination, Mr Guo agreed with the proposition put to him by Senior Counsel for Mr Huang that he “understood from those discussions [with Mr Huang in early 2013] that Mr Huang saw the Eastwood Shopping Centre as a long-term investment”.

169. If Mr Huang had sought to fund this project by moneys which were repayable on demand, there would have been a risk that a demand might be made for those funds at any time, in circumstances where Mr Huang may have had no means to repay those funds without selling the Eastwood Shopping Centre project (which, in turn, might have required that the project be sold before steps had been taken to redevelop the property so as to realise the value of Mr Huang’s investment).

170. Instead, Mr Huang’s long-term commercial objectives were more likely to be achieved if he sought, and obtained, an investment from a business partner in the Eastwood Shopping Centre project, in return for a promise to share profits from the acquisition and development of that project.

171. Secondly, Mr Huang relied on the fact that, in Yufeng’s books and records, the payment of $10.1m by Ms Deng is recorded as a loan. Mr Huang pointed out that under the facility with NAB, it was a condition precedent that Yufeng (which was a guarantor) provide financial statements “in form and substance satisfactory to the Bank” and provide, within 120 days of the close of each financial year, “a copy of the unaudited annual report or balance sheet and profit & loss account”. Mr Huang submitted that, in circumstances where the financial records of Yufeng were to be provided to NAB, and where it was in the interests of Yufeng not to report to NAB that money was owed to a third party unless it was in fact owed, there could be greater confidence in the veracity of the loans recorded in Yufeng’s financial statements.

172. For the reasons given below, I do not accept that any significant weight can be given to the relevant entries in Yufeng’s financial statements.

173. In its financial report for the year ending 30 June 2013 (FY13), Yufeng recorded, as a non-current liability, a loan of $10.1m from Ms Deng. It is common ground that Ms Deng did not make any loan to Yufeng, and that the amount of $10.1m which was paid to Yufeng represented Mr Guo’s money. Further, it is common ground that Yufeng received $20m from Mr Guo in FY13. The entry in the FY13 report is inconsistent with those agreed matters.

174. It is also common ground that Yufeng received $20m from Mr Guo (including the payments totalling $10.1m which were made by Ms Deng) pursuant to an agreement formed in one or more conversations between Mr Guo and Mr Huang. However, Mr Huang does not appear to have had input into the preparation of the FY13 report of Yufeng. This report was not signed by Mr Huang and appears to exist only in draft. Significantly, Mr Huang sought (in a part of his affidavit which was tendered by Mr Guo) to distance himself from the entry in Yufeng’s FY13 report regarding the $10.1m transaction:

“I am now aware that these payments were recorded in the accounts of Yufeng as ‘Loan from Ying Deng’. I do not recall giving any instructions to the accounting staff of Yufeng or external accountant about how to record the payments in its accounts.”

175. Accordingly, there is no basis to conclude that the recording of this transaction as a “loan” in the FY13 report was based on anything said by Mr Huang, who was the only person within Yufeng with personal knowledge of the relevant conversation with Mr Guo and therefore with knowledge of the relevant agreement. In those circumstances, the description of the payment as a “loan” (and, in particular, as a loan by Ms Deng) can be given no weight.

176. In its financial report for the year ending 30 June 2014 (FY14), Yufeng recorded, as a non-current liability, a loan of $24m from the “Guo Family Trust”, which was shown to have increased from $10.1m in the prior financial year. It is apparent that the “loan” of $10.1m from Ms Deng which was recorded in the FY13 report was changed, in the FY14 report, to a “loan” in the same amount from the “Guo Family Trust”; and was recorded as having increased by an amount of $13.9m in FY14.

177. There is no evidence regarding the basis for the change in the identity of the lender or the quantum of the loan. There is no basis for concluding that the information came from Mr Huang, given his evidence set out above. Further:

1. the “Guo Family Trust” did not exist as at 30 June 2013 or 30 June 2014; and

2. the amount by which the “loan” was increased in FY14 ($13.9m) does not correspond with the quantum of any of the payments which Mr Guo caused to be made to Yufeng in FY14.

178. In those circumstances, I do not consider that the entry regarding this “loan” in the FY14 report can be given any weight. Nor, given these matters, can any significance be attributed to the fact that Yufeng’s financial report for the year ending 30 June 2015 (FY15) records the “Loan from the Guo Family Trust” in the amount of $24m as being unchanged from FY14.

179. In the financial report of Yufeng for the year ending 30 June 2016 (FY16), the amount of the loan from the Guo Family Trust was reduced to $10.1m. However, at the same time, the FY16 report erroneously recorded that this figure was unchanged from the figure in the FY15 report (in fact, as noted above, the corresponding figure in the FY15 report was $24m). Accordingly, the reduction does not appear to be the result of any transaction which occurred in FY16, and may have been the result of a restatement of the FY15 accounts (but, if so, there is no evidence of any such restatement or the basis for any such restatement).

336. Mr Guo relied on the Letter of Undertaking which he signed in May 2015, which referred to interest being payable on Mr Zhuang’s loan at 2% per month (see paragraph [104] above). However, little can be gleaned from one arrangement with another lender, arising from a different personal relationship. Further, the Letter of Undertaking appears to indicate that the interest rate of 2% per month was only charged from June 2015, after a dispute had arisen about repayment and after the Letter of Undertaking was signed. The letter relevantly states as follows (emphasis added): “Mr. GUO Wencheng now promises that from 1 June 2015 to 30 September 2015, the monthly interest rate of the loan will be 2% and promises to repay the loan in full along with interest thereon before 30 September 2015”. This letter does not therefore provide any indication as to the interest rate at the time when the loan was entered.

337. Secondly, there is evidence that Mr Huang had made an interest-free loan to Mr Guo. On 25 July 2018, Mr Guo provided a confirmation on Yufeng’s letterhead, which was stated to be required “[d]ue to tax audit requirements”. Relevantly, this confirmation stated that, in October 2013, Mr Guo had paid amounts totalling $14,999,760 into Yufeng’s bank account “as repayment to Mr. Huang Changran for a personal loan” which “was unsecured and interest-free”, with the amount of the repayment being “used entirely to repay the loan principal”. (It should be noted that the payments in question on 14 October 2013, totalling around $15m, are shown in Yufeng’s bank statements as distinct from the two payments made on 16 and 17 October 2013 which together comprise the $16.8m loan.)

338. Mr Guo disputed the accuracy of this document, but did not provide any convincing explanation as to why he was willing to sign a document, for tax audit purposes, which he knew not to be accurate:

“Q. Mr Guo, you had no reason to sign a document confirming that you had made loan repayments when you in fact had not done so. Correct?

A. INTERPRETER: But if the payments weren’t made from me, then this money was - the purpose of making these payments was to reconcile the accounts for what actually happened. The money came from China to purchase the property, and now he needs to close that account. It’s clearly written down. It’s due to tax audit requirements.”

346. In those circumstances, I accept that the confirmation signed by Mr Guo establishes the matters stated in it.

347. Mr Guo submitted, in closing address, that this confirmation “merely show[s] that in relation to other borrowings, different approaches were taken by Mr Huang and Mr Guo”.

348. However, this submission does not pay adequate regard to the fact that the loans in question were made between the same people (Mr Huang and Mr Guo), at around the same time (in 2013), in around the same amount.

349. It is implausible that, in 2013, Mr Huang would have agreed to pay interest to Mr Guo on a personal loan in the amount of $16.8m at a rate of 24% per annum, in circumstances where, shortly prior to this transaction, Mr Huang had made a personal loan to Mr Guo in the amount of around $15m which was “interest-free”.

350. Thirdly, on Mr Guo’s own case, he did not receive any payments in respect of the $16.8m loan before March 2016, such that Mr Huang had failed to meet his obligation to pay interest on the anniversary of the loan in October 2014 and October 2015. By March 2016, the outstanding interest, if calculated at a rate of 24% per annum, would have been around $9.75m. However, there is no documentary record of Mr Guo making any request for the payment of interest. Instead, at around this time (in April 2016), Mr Guo agreed that a company which Mr Huang controlled, HD International, would become trustee of the Guo Family Trust.

351. It is inherently unlikely that Mr Guo would have appointed, to such a position, a company which was controlled by a person who had failed to keep his financial promises to Mr Guo for the past two years, and who was around $9.75m in debt to Mr Guo in respect of those promises.

352. Fourthly, despite interest continuing, on Mr Guo’s case, to increase at the rate of 24% per annum from 2013 onwards, there is not a single reference, in any document prior to the letter of demand that was sent in July 2022, to the amount of interest owing at any point in time. There is no evidence that, at any time prior to July 2022, Mr Guo performed any calculation of the sum owing to him in respect of interest. He does not give any evidence of performing any such calculation, and he does not claim that he referred to the total amount owing in the course of any conversation with Mr Huang during this period of almost nine years.

353. It is implausible that a person who was owed such a large amount of money, with the amount of the debt increasing year on year at a significant rate, would not been concerned to calculate, or to discuss with the borrower, how much was outstanding at any particular point in time.

354. Fifthly, Mr Guo conceded in cross-examination that none of the payments which he received from Mr Huang between March 2016 and March 2022 (referred to in paragraphs [271]-[315] above) was a payment in respect of interest. That evidence is confirmed by the contents of his tax returns for the relevant financial years, which did not declare any of those payments as income received by way of interest.

355. There is not a single contemporaneous document referring to any of these payments as being made in respect of interest, or as being appropriated by Mr Guo in respect of interest.

356. Sixthly, there is no plausible explanation as to why, if the loan had been accruing interest at a rate of 24% per annum, this was not raised in Mr Guo’s lengthy message to Mr Huang in early April 2022, which detailed his complaints arising from their business dealings.

357. On Mr Guo’s case, by the time of his April 2022 message, the loan to Mr Huang had been accruing interest for 8.5 years. The interest accrued on this sum by that time would have been around $34.4m. If all the repayments up to that time, totalling around $14.3m, were (as Mr Guo claims) appropriated to interest, the result would be that, as at early April 2022, Mr Huang owed Mr Guo in excess of $36.9m in respect of the October 2013 loan ($16.8m + $34.4m - $14.3m). However, this loan did not warrant a mention in the April 2022 message.

358. A more coherent picture emerges if the personal loan for $16.8m which Mr Guo made to Mr Huang in October 2013 was, like the personal loan for $15m from Mr Huang to Mr Guo which was repaid in October 2013, made on an interest-free basis.

359. On this scenario, it is not surprising that Mr Guo appointed Mr Huang’s company as trustee of the Guo Family Trust in April 2016. According to Mr Guo, Mr Huang had promised to repay the loan when he could do so, and at the latest when the Eastwood Shopping Centre was sold. As at April 2016, the Centre had not yet been sold, and so the time for repayment in full had not fallen due; and Mr Huang had, in March 2016, repaid $3m to Mr Guo. There remained every reason for Mr Guo to trust Mr Huang at this time.

360. Similarly, on this scenario, it is not surprising that Mr Guo did not declare any interest income in any of the relevant financial years, despite taking seriously his obligations to prepare tax returns. The explanation is that he did not receive any such income, and instead received repayments in respect of principal.

361. Similarly, it is not surprising, on this scenario, that there do not seem to be any calculations of, or communications about, the amount of interest owing in the period from 2014 to 2022.

362. Finally, on this scenario, it is not surprising that Mr Guo did not specifically raise the $16.8m loan in his April 2022 message to Mr Huang. By the time of this message, Mr Guo had received around $14.3m in repayments, such that the outstanding balance of the loan had reduced to around $2.5m. Further, $2m of those repayments had been made around a week prior to Mr Guo’s message (on 25 March 2022), with another 1 million yuan having been received earlier in the same month. In those circumstances, there would have been no reason for Mr Guo to conclude that the balance of the loan would not be paid off shortly afterwards, in keeping with Mr Huang’s promise to repay the outstanding principal when the Eastwood Shopping Centre was sold.

363. For the reasons set out above, I am not persuaded that there was an oral agreement to pay interest on the loan at a rate of 24% per annum. Further, there is no basis to find that interest was payable at any other rate, particularly given the lack of any contemporaneous document referring to interest and given Mr Guo’s concession that none of the payments made in respect of the loan were payments in respect of interest.

What amount was repaid in respect of principal?

364. I am satisfied, having regard to the evidence summarised at paragraphs [271]-[315] above, that each of the payments set out in the Schedule to Mr Guo’s Amended Commercial List Statement represented a repayment in respect of the $16.8m loan. Mr Guo accepted, in closing address, that if the payments were not made in respect of interest, then they must have been made in respect of the principal: “It seems to us they’re either interest or they’re principal, no one suggests there’s a gift being made”.

365. It follows that those payments reduced the outstanding balance of the loan by a total amount of A$13,472,869.50 plus 4,000,000 Chinese yuan.

366. Mr Huang contended that there was a further amount of $4m received by Mr Guo in respect of the loan.

367. In July 2015, Mr Guo signed a document confirming “repayment of my investment of 4 million Australian dollars ($4,000,000.00) in Yufeng”. It was common ground that this represented a repayment of the amount which Mr Guo had invested in the Parramatta project. This investment was described in the WeChat message which Mr Guo sent to Mr Huang in early April 2022 in the following terms:

“In 2013, you were interested in another project in Parramatta. At that time, you said that you would sign the contract and give me 30% of the shares according to the shareholding ratio. I had to pay a deposit of 23.4 million RMB, which was 4 million Australian dollars according to the exchange rate at that time. But later, the project was cancelled”.

368. Mr Huang submitted as follows:

1. the $16.8m loan was advanced by way of two payments by Mr Guo to Yufeng on 16 and 17 October 2013;

2. on the Customer Advice form relating to the second of those payments, the bank manager wrote, based on information supplied by Mr Guo, “I have two payments (on 15 October and 17 October) of 4,889,160 Australian dollars in total for the Paramata [sic] land” (see paragraph [261] above);

3. it followed that:

1. around $4.889m of $16.8m which was transferred by Mr Guo to Yufeng in October 2013 had been transferred for the Parramatta project, and

2. the repayment in July 2015 of $4m in respect of the Parramatta project must have been a repayment in respect of the $16.8m loan.

369. Mr Guo did not offer any satisfactory explanation for why he provided the information in the note on the Customer Advice form to the bank manager if it was inaccurate (see paragraph [263] above). However, it does not follow that the note should be accepted as accurate, having regard to the following matters.

370. First, Mr Guo gave evidence that he contributed funds to the Parramatta investment by way of a payment of $5.646m which he had made to Yufeng in July 2013 (see paragraph [262] above). There was no evidence from Yufeng or Mr Huang challenging Mr Guo’s account that the payment of $5.646m which he made to Yufeng in July 2013 represented a payment for the Parramatta investment.

371. Secondly, it was common ground that the amount of $16.8m was advanced by Mr Guo as an unsecured loan. For reasons set out above, I have concluded that it was a personal loan to Mr Huang. Further, the whole of the amount of $16.8m was, upon receipt, transferred into an account of 152 Rowy, from which the funds were withdrawn to pay the outstanding balance due on the settlement of the purchase of the Eastwood Shopping Centre, which occurred one week later (see paragraphs [266]-[267] above). It follows that any amount which was (as stated in the July 2015 document signed by Mr Guo) received by way of “repayment” of an “investment of 4 million Australian dollars ($4,000,000.00) in Yufeng” was likely not received as a repayment in respect of that loan.

372. For those reasons, I am not satisfied that the amount of $4m, which Mr Guo received from Yufeng in July 2015, reduced the outstanding principal of the $16.8m loan.

Is any claim for the balance of the loan statute-barred?

373. Mr Huang and Yufeng contended that any claim for repayment of the $16.8m loan was statute-barred. In particular, they submitted that:

1. the $16.8m loan was repayable on demand;

2. the limitation period on a cause of action in debt for recovery of a loan which is repayable on demand commences to run from the date on which the loan is made; and

3. accordingly, any action to recover the $16.8m loan became statute-barred, and the debt was thereby extinguished, on 18 October 2019: Limitation Act 1969 (NSW), ss 14, 63.

374. In Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566; [1956] HCA 51, the High Court (Dixon CJ, McTiernan and Taylor JJ) held that: "A loan of money payable on request creates an immediate debt.” Accordingly, where a loan is repayable on demand, the lender's cause of action arises immediately on the receipt of the money by the borrower, so that the lender's cause of action becomes statute barred at the expiry of six years after the receipt of the money: Ogilive v Adams [1981] VR 1041 at 1043 (Fullagar J).

375. Mr Guo disputed that the $16.8m loan was repayable on demand. He contended that, in the conversation which gave rise to the loan agreement, Mr Huang promised to repay the loan when he was able to do so, and at the latest when the Eastwood Shopping Centre was sold.

376. I accept Mr Guo’s evidence that there was a conversation to this effect. Mr Guo’s conduct in not demanding repayment of the principal in full at any time prior to the sale of the Eastwood Shopping Centre, despite his financial difficulties in the intervening period, was consistent with such a conversation having occurred.

377. Mr Huang and Yufeng contended that, even if such a conversation had taken place, the loan was nonetheless repayable on demand. First, they referred to GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315, where the Victorian Court of Appeal (Santamaria JA, Kyrou JA and Elliott AJA) held that an obligation on a debtor to repay a loan when able to do so was “illusory and void for uncertainty”, and that such a loan was “repayable on demand” (at [51]-[55]). Secondly, they referred to the decision of Chesterman J in Lane v L3 Enterprises Pty Ltd [2007] QSC 288. In that case, the “only agreement reached with respect to the date for repayment of capital was that the loan was to be repaid when the second defendants sold the newsagency business, or, if there was no sale, ‘eventually’” (at [13]). Chesterman J held as follows (at [72]):

“There may have been some uncertainty about the term of the loan. The plaintiff’s evidence was that the money was to be repaid on the sale of the newsagency or if there were no sale, ‘eventually’. A term that the loan be repaid upon a contingency that might not occur or otherwise ‘eventually’ may well be void for uncertainty. In that case the loan would be one with no date fixed for repayment, in which case it is repayable on demand; see Seldon v Davidson [1968] 1 WLR 1083 at 1088 or, perhaps, within a reasonable time after request for repayment has been made; see Seldon at 1090. In any event the contingency has occurred and demand has been made.”

378. In the present case, as in Lane, the “contingency has occurred” (the Eastwood Shopping Centre was sold in July 2021) and a “demand has been made” (by way of the solicitor’s letter dated 26 July 2022).

379. The critical issue is whether the loan was statute-barred prior to the time of any such demand.

380. This question can be answered by reference to the payments which I have found were made in respect of the $16.8m loan between March 2016 and March 2022.

381. If the $16.8m loan is properly characterised as one which was repayable on demand, those payments by or on behalf of Mr Huang were payments made to Mr Guo (being the person who had the cause of action for repayment of the outstanding principal) in respect of Mr Guo’s right or title, and therefore amounted to a confirmation of Mr Guo’s cause of action: Limitation Act, s 54(2)(a)(ii).

382. The first of those payments (and confirmations) was made in March 2016, more than three years before the limitation for any cause of action in respect of a loan made in October 2013 which was repayable on demand would have expired.

383. Subsequent payments (and confirmations) occurred at regular intervals through to March 2022.

384. The effect of each such confirmation is that “the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation”: Limitation Act, s 54(1).

385. It follows that if the $16.8m loan in October 2013 is properly characterised as a loan repayable on demand, any cause of action in respect of that loan was not statute barred when Mr Guo demanded repayment of the loan in July 2022, by reason of the various repayments which were made by or on behalf of Mr Huang in respect of the loan in the period from March 2016 to March 2022.

Relief

386. For the reasons given above, I have found that Mr Guo loaned the sum of $16.8m to Mr Huang in October 2013; that the loan was guaranteed by Yufeng; that it has not been established that the loan was made at an interest rate of 24% per annum (or at any other interest rate); and that repayments totalling A$13,472,869.50 plus 4 million Chinese yuan were made by or on behalf of Mr Huang in reduction of the principal.

387. These repayments will need to be taken into account in determining the outstanding balance of the principal. Such a calculation will need to take account of the prevailing exchange rate at the time that each of the payments of Chinese yuan was made.

388. As noted above, Mr Huang and Yufeng contended that the $16.8m loan was repayable on demand. Mr Guo contended that Mr Huang promised to repay the loan at the latest on the sale of the Eastwood Shopping Centre, but submitted that there was an implied term that “liability to repay would not arise until some notice was given”.

389. It is not necessary to resolve this issue. Whether the loan was repayable on demand, or whether the obligation to repay only arose on the giving of notice, Mr Guo did not demand repayment, or provide notice to Mr Huang requiring repayment, until 26 July 2022. It follows that, in either case, the obligation to repay the outstanding balance did not arise until that date. Accordingly, Mr Guo is entitled to interest on the outstanding balance of the loan, at Court rates, from 26 July 2022 until the date of judgment.

Orders

390. Mr Guo has had substantial success in relation to each of his claims, regarding his $20m investment in the Eastwood Shopping Centre project and his $16.8m loan to Mr Huang.

391. In respect of his claim concerning the $20m investment, Mr Guo is entitled to further discovery, so as to allow him to make an informed decision whether to elect for equitable compensation or an account of profits, and whether to make a split election as against Mr Huang and 152 Rowy.

392. I will direct the parties to confer regarding short minutes of order to give effect to these reasons. Such orders should include orders disposing of the loan claim, and orders dealing with any timetable for further discovery concerning the investment claim.

390. It is my preliminary view that costs should follow the event, such that Mr Guo is entitled to his costs of the proceeding against Yufeng, Mr Huang and 152 Rowy, on the ordinary basis. I will, however, give the parties an opportunity to be heard on whether any different costs order should be made, and whether any costs order should only be made at the time when final orders are made in this proceeding.

391. If the parties are unable to agree on the form of orders, the parties will have an opportunity to make submissions on the areas of dispute.

392. Accordingly, I make the following orders. The Court:

1. Directs the parties to bring in short minutes of order, by 5pm on 20 December 2024, to give effect to these reasons for judgment.

2. Directs that, in the event that the parties are unable to agree orders to give effect to the reasons for judgment, the parties exchange, by 5pm on 20 December 2024, and provide to the Associate to Nixon J, the orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the issues in dispute.

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Decision last updated: 13 December 2024