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Luo v Zhai

Luo v Zhai

Case [2015] FCA 350 17 April 2015

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FEDERAL COURT OF AUSTRALIA
Luo v Zhai [2015] FCA 350

Citation: Luo v Zhai [2015] FCA 350

Parties: XIANGNAN LUO v SUTAO ZHAI and JANTOM FURNITURE PTY LTD ACN 092 171 634

File number: NSD 1035 of 2013

Judge: PERRAM J

Date of judgment: 17 April 2015

Catchwords:
CONTRACTS – breach of contract – damages for reliance loss

RESTITUTION – whether total failure of consideration – whether partial performance either insubstantial or severable

CONSUMER LAW – misleading and deceptive conduct – whether financial statements false – whether statements about customers’ intentions misleading

Legislation: Competition and Consumer Act 2010 (Cth) Sch 2 Australian Consumer Law ss 4, 18
Corporations Act 2001 (Cth) ss 231(b), 440D

Cases cited:
Baltic Shipping Co v Dillon (1993) 176 CLR 344 applied
Clark v Macourt (2013) 304 ALR 220 cited
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 applied
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 cited
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 cited
Federal Commissioner of Taxation v Qantas Airways Ltd (2012) 247 CLR 286 cited
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 cited
Hamilton-Smith v George [2006] FCA 1551 cited
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 cited
Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423 cited
Rowland v Divall [1923] 2 KB 500 considered
Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 applied
Sargent v ASL Developments Ltd (1974) 131 CLR 634 cited
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 cited

Mason K, Carter JW, Tolhurst GJ, Mason & Carter’s Restitution Law in Australia (2nd ed, LexisNexis Butterworths, 2008)

Date of hearing: 14 and 15 October 2014

Date of last submissions: 26 November 2014

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 91

Counsel for the Applicant: Mr C King

Solicitor for the Applicant: Australian International Lawyers

Counsel for the Respondents: Mr A Norrie

Solicitor for the Respondents:
Jurisbridge Legal

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1035 of 2013

BETWEEN:
XIANGNAN LUO
Applicant

AND:
SUTAO ZHAI
First Respondent

JANTOM FURNITURE PTY LTD ACN 092 171 634
Second Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

17 APRIL 2015

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Judgment be entered for the Applicant against the First Respondent for $820,000 with interest up to judgment.
2.The matter be listed for any argument on costs on a date to be fixed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1035 of 2013

BETWEEN:
XIANGNAN LUO
Applicant

AND:
SUTAO ZHAI
First Respondent

JANTOM FURNITURE PTY LTD ACN 092 171 634
Second Respondent

JUDGE:

PERRAM J

DATE:

17 APRIL 2015

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Luo v Zhai

Details

AGLC: Luo v Zhai [2015] FCA 350
Case: [2015] FCA 350
Decision Date: 17 April 2015

CaseChat Overview and Summary

In the case of Luo v Zhai, the plaintiff, Mr Luo, initiated legal proceedings against the defendant, Ms Zhai, alleging breaches of contract, misrepresentations, and misleading and deceptive conduct under consumer law. The dispute originated from a failed property sale agreement. The matter was heard and determined by the Federal Court of Australia.

The primary legal issues addressed by the court involved whether Ms Zhai had breached the contract, whether there was a total failure of consideration, whether the partial performance was insubstantial or severable, and whether Ms Zhai engaged in misleading and deceptive conduct by providing false financial statements and making misleading statements about customers’ intentions. The court also considered the allegation that Ms Zhai falsely claimed to have other interested purchasers.

The court found in favour of Mr Luo on the breach of contract claim, awarding him $820,000 with interest up to the date of judgment. The court rejected the claim of misleading and deceptive conduct against Ms Zhai, and consequently, also dismissed the claim against Jantom, who was alleged to be an accessory to the misleading conduct. The proceedings against Jantom were stayed due to its administration under the Corporations Act 2001 (Cth). The court also ruled on evidentiary objections, allowing certain parts of Mr Luo's affidavit evidence that were not in direct speech.

The court's final orders included judgment for Mr Luo against Ms Zhai for $820,000 with interest up to judgment and the stay of proceedings against Jantom. The matter was to be listed for any argument on costs at a later date.

Orders

Orders of the court

1. Judgment be entered for the Applicant against the First Respondent for $820,000 with interest up to judgment.

2. The matter be listed for any argument on costs on a date to be fixed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

There was an additional allegation that Ms Zhai had said that she had two other purchasers in the wings, but I was not taken to any evidence that this did happen and I consider it no further.VI. Conclusion There will be judgment for Mr Luo against Ms Zhai for $820,000 with interest up to judgment. Jantom was said to have been an accessory to Ms Zhai’s misleading and deceptive conduct. The claim that Ms Zhai engaged in such conduct has failed and Mr Luo would, therefore, have failed against Jantom. However, prior to judgment it was placed in administration and the proceedings against it are stayed: Corporations Act 2001 (Cth), s 440D. It is inappropriate to make any order in its case.VII. Rulings During the course of the trial I rejected Ms Zhai’s objections to certain parts of Mr Luo’s affidavit evidence which were advanced on the basis that the conversations he recounted had not been set out in direct speech. I did so because there is no such requirement: Hamilton-Smith v George [2006] FCA 1551 at [79]-[83] per Besanko J.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Luo v Zhai [2015] FCA 350

Most Recent Citation

Luo v Zhai (No 5) [2015] FCA 774

Cases citing this decision · 4 of 4 shown

Perryman v Fast Colours Pty Ltd
[2025] NSWCATCD 109

…he issue of total failure of consideration in Moody v M K Building Services Group Pty Ltd [2022] NSWCATAP 212. Moody cited the decision of Luo v Zhai [2015] FCA 350 in which Perram J considered the question of total failure of consideration. His Honour said at [38] that this posed the question as one of substanti…
Luo v Zhai (No 6)
[2016] FCA 805 Para 1

…The present question concerns costs. In Luo v Zhai [2015] FCA 350, the Court had before it Mr Luo’s attempts to recover from Ms Zhai the sum of $820,000 in respect of an unperformed share acquisition agreement. Ms Zhai was the owner of the shares in the second respondent, Jantom Furniture Pty Ltd (In Liquidation)…
Zhai v Luo
[2015] FCAFC 144 Para 3

…for $800,000. Mr Luo paid the money, but received neither the shares nor a refund. Ultimately, judgment was given against Ms Zhai ( Luo v Zhai (No 5) [2015] FCA 350).…
Luo v Zhai (No 5)
[2015] FCA 774 Para 1

…ai’) was concerned, on 17 April 2015. I had apprehended that the second respondent (‘Jantom’) was in administration at [90] of Luo v Zhai [2015] FCA 350 (‘the primary judgment’) and declined to make orders dealing with the case against it on the basis that the proceedings concerning it were stayed. It now transpi…

View all 4 citing cases →

Cases cited in this decision · 12 of 12 shown

Clark v Macourt
[2013] HCA 56 Para 26

…as if the breach had never occurred. This amounts to asking what would have happened if the promise which was not kept had been kept: Clark v Macourt (2013) 304 ALR 220 at 223 [7], 226-227 [26], 233 [60]-[62], 241 [106].…
Commissioner of Taxation v Qantas Airways Limited
[2012] HCA 41 Para 13

…t the airline meal was provided as a benefit under the contract of carriage.). I say nothing of Federal Commissioner of Taxation v Qantas Airways Ltd (2012) 247 CLR 286 at 299 [33] which is most likely best understood as being confined to its own specialised revenue context. There the High Court held that what was ‘s…
Hamilton-Smith v George
[2006] FCA 1551 Para 13

…that the conversations he recounted had not been set out in direct speech. I did so because there is no such requirement: Hamilton-Smith v George [2006] FCA 1551 at [79]-[83] per Besanko J.…
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd
[2004] HCA 55 Para 19

…ot inconsistent with the later exercise by him of a right to terminate when she failed to do so: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 489 [55]; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CL…
Roxborough v Rothmans of Pall Mall Australia Ltd
[2001] HCA 68 Para 6

…eived, inter alia, where money has been paid for a consideration which has failed: see, for example, Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 525 [15], 539 [62]. In that context (but not in others such as the law of contract) the word ‘consideration’ denotes not a promise (which might it…
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW)
[1993] HCA 27 Para 19

…8 CLR 471 at 489 [55]; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26. Neither was it said by Ms Zhai that the email was such as to give rise to an estoppel.…
Baltic Shipping Co v Dillon
[1993] HCA 4 Para 4

…ich appear to proceed on a restitutionary, rather than contractual, basis including, for example at [8], a reference to Baltic Shipping Co v Dillon (1993) 176 CLR 344, a case concerned with a claim for restitution following a total failure of consideration. The quote above at [43] in Mr Luo’s written submissions appe…
David Securities Pty Ltd v Commonwealth Bank of Australia
[1992] HCA 48 Para 22

…benefit which the contract itself contemplates or provides for. As the High Court stated in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 381-383 ‘the notion of total failure of consideration now looks to the benefit bargained for by the plaintiff rather than any benefit which might…
Commonwealth v Amann Aviation Pty Ltd
[1991] HCA 54 Para 27

…the bargain but also for any other damage suffered including expenditure incurred in reliance on the contract: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 81, 86, 89, 104, 126, 135, 154-155. The award of reliance based damages is not inevitable and care is needed in situations where the contract in q…
Sargent v ASL Developments Ltd
[1974] HCA 40 Para 19

…rminate when she failed to do so: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 489 [55]; Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26. Neither was it said by Ms Zhai that the email was such as…
[1943] AC 32
[1943] AC 32 Para 6

…tself be consideration in the contractual sense) but the performance of that promise: Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 48 per Viscount Simon LC.…
[1923] 2 KB 500
[1923] 2 KB 500 Para 8

…t this was a benefit which the Agreement contemplated might be conferred on Mr Luo under cl 6.2. This case is not, therefore, like Rowland v Divall [1923] 2 KB 500 where the purchaser of a car from a vendor who did not have title to the car obtained no benefit under the contract simply because he had possession of…

Legislation cited in this decision · 3

Corporations Act 2001 (Cth)
231(b), 440D 3 mentions (from Para 6)
Competition and Consumer Act 2010 (Cth)
1 mention
Federal Court Rules 2011 (Cth)
1 mention

Citation:	Luo v Zhai [2015] FCA 350
Parties:	XIANGNAN LUO v SUTAO ZHAI and JANTOM FURNITURE PTY LTD ACN 092 171 634
File number:	NSD 1035 of 2013
Judge:	PERRAM J
Date of judgment:	17 April 2015
Catchwords:	CONTRACTS – breach of contract – damages for reliance loss RESTITUTION – whether total failure of consideration – whether partial performance either insubstantial or severable CONSUMER LAW – misleading and deceptive conduct – whether financial statements false – whether statements about customers’ intentions misleading
Legislation:	Competition and Consumer Act 2010 (Cth) Sch 2 Australian Consumer Law ss 4, 18 Corporations Act 2001 (Cth) ss 231(b), 440D
Cases cited:	Baltic Shipping Co v Dillon (1993) 176 CLR 344 applied Clark v Macourt (2013) 304 ALR 220 cited Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 applied David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 cited Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 cited Federal Commissioner of Taxation v Qantas Airways Ltd (2012) 247 CLR 286 cited Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 cited Hamilton-Smith v George [2006] FCA 1551 cited Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 cited Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423 cited Rowland v Divall [1923] 2 KB 500 considered Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 applied Sargent v ASL Developments Ltd (1974) 131 CLR 634 cited TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 cited Mason K, Carter JW, Tolhurst GJ, Mason & Carter’s Restitution Law in Australia (2nd ed, LexisNexis Butterworths, 2008)
Date of hearing:	14 and 15 October 2014
Date of last submissions:	26 November 2014
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	91
Counsel for the Applicant:	Mr C King
Solicitor for the Applicant:	Australian International Lawyers
Counsel for the Respondents:	Mr A Norrie
Solicitor for the Respondents:	Jurisbridge Legal

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1035 of 2013

JUDGE:	PERRAM J
DATE OF ORDER:	17 APRIL 2015
WHERE MADE:	SYDNEY