SMYP Proprietary Limited v Sea and Sun (Development) Pty Limited trading as Australia Skyrd Estate Winery

[2021] NSWDC 778

District Court

New South Wales

Medium Neutral Citation:

SMYP Proprietary Limited v Sea & Sun (Development) Pty Limited trading as Australia Skyrd Estate Winery [2021] NSWDC 778

Hearing dates:

5-6 August 2021, 9-10 August 2021, 12 August 2021

Date of orders:

12 August 2021

Decision date:

12 August 2021

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

(1) Verdict and judgment for the Plaintiff against the First Defendant for $239,621.33;

(2) First Defendant to pay the Plaintiff’s costs of the Plaintiff claim against it on an indemnity basis;

(3) Verdict and judgment for the Second Defendant against the Plaintiff;

(4) Verdict and judgment for the Cross-Defendant against the Cross-Defendant and the cross-claim;

(5) Cross-Claimant to pay Cross-Defendant’s costs of the cross-claim on an indemnity basis; and

(6) The plaintiff to pay the Second Defendant's costs incurred in defending the claim made against him.

Catchwords:

CONTRACT – ACTION FOR BREACH – Plaintiff’s claim in evidence on accounts stated.

CONTRACT – NOVATION OR NEW CONTRACT – resulting from company restructure by Plaintiff.

WHETHER COMPROMISE of original agreement- whether consensus ad idem.

CONSUMER LAW – Whether breach of an express term of contract amounts to a “representation” that enlivens Australian Consumer Law – Whether director of a company liable for same if company breaches an express term of the contract.

EVIDENCE – Significance of failure of Defendant to cross-examine Plaintiff’s principal witness.

Legislation Cited:

Competition and Consumer Act 2010 (Cth)

Cases Cited:

Nil.

Texts Cited:

Nil.

Category:

Principal judgment

Parties:

Plaintiff - SMYP Proprietary Limited
Defendant - Sea & Sun (Development) Pty Limited trading as Australia Skyrd Estate Winery

Representation:

Plaintiff
Bennett, D.
Defendant
Hall, C.

File Number(s):

2020/00069992

Publication restriction:

Nil.

Judgment

1. HIS HONOUR: There is in Australia a business known as Portavin. Its stationary carries a slogan, “Integrated Wine Services”. Its emails had a further slogan, “Caring for your wine from tank to shelf”. Mr Nathan Cameron swore an affidavit on 9 December 2020. Paragraph 7 says that the business supplies bottles, corks, and cartons, and bottles, and labels, and stores wine products. Originally the plaintiff was known as Portavin Holdings Pty Ltd. There were a number of subsidiaries, they were Portavin NSW Pty Ltd, Portavin SA Pty Ltd, Portavin WA Pty Ltd, and Fearman Pty Ltd, which operated in Victoria. This group of companies was acquired in September 2017 by San Miguel Yamamura Australasia Pty Ltd. On 22 September 2017, the name of Portavin Holdings Pty Ltd was changed to SMYP Pty Ltd, which is the plaintiff in these proceedings. Part of the acquisition of the Portavin business involved transferring all Portavin businesses; that is, those conducted by Portavin’s original subsidiaries, to their parent company, now known as SMYP Pty Ltd.

2. The defendant company was registered in New South Wales on 9 January 2007. It changed whatever its original name was to Sea & Sun (Development) Pty Ltd on 29 January 2007. Its shareholders are Mr Mei Qing Lin, who is the second defendant, and his wife Jianggee Xhao. On 22 July 2015, the company acquired the business name of Australia Skyrd Estate Winery. On 1 October 2015, it also acquired the business name of Kahlon Estate’s Wines. In Mr Lin’s affidavit of 8 August 2021, this was said:

“I am presently 54 years of age. My first language is Mandarin. I was born in China. I came to Australia to live in 2000. I am a permanent Resident of Australia now.

In China I worked in the computer industry as a computer distributor. I studied Machine Design at [a] Chinese University. I obtained a degree from Beijing University of Aeronautics and Astronautics in 1988.”.

In about 2015, I purchased the Sea & Sun Winery and commenced to operate it. At the time that I acquired it, I commenced to run it with the previous owner who helped me and since that time I’ve learnt my skills on the job. I’ve also been assisted by other qualified wine makers and from whom I have learnt on the job and in particular by a Mr David Conway.”

The acquisition of the winery referred to in [6] in 2015 is confirmed by the timing of the acquisition of the business name, “Australia Skyrd Estate Winery”. Most of the emails sent by the defendant, by which I mean the defendant company, acting through the second defendant, Mr Lin, contain under the “signature” of the sender, this matter:

“Australia Skyrd Estate Winery

[telephone and fax numbers]

Winery Address: 42 Airport Road, Renmark SA, 5341, Australia

Vineyard address: Crescent Street, SA”.

3. In short, the plaintiff company, could be described as a wine bottler, and the defendant company, could be described as a wine maker.

Business Background

4. Mr Lin’s first affidavit, affirmed on 4 May 2021, contains this matter:

“From February 2016 to July 2017, the defendant placed its bottling services with the Portavin Sydney bottling plant (which was located at 68 Anzac Street, Chullora NSW, 2190). The plant relocated in October 2017 to Portavin South Australia bottling plant at 160 May Terrace, Ottoway SA, 5013, where it is currently located.

Due to discrepancies in bottling costs, we stopped bottling at Portavin’s South Australian Bottling Plant in about February 2018.”

5. On 5 February 2016 the defendant made an application to Portavin NSW Pty Ltd for commercial credit. That application can be found at pp 97 to 101 of the court book, supplied to me by the plaintiff. I shall refer hereafter to the court book as merely CB when giving references to page numbers. At CB 101, part of the form, is a Deed of Guarantee and Indemnity. However, that was never completed by Mr Lin. Credit of $100,000 was allowed to the defendant, the document showing that can be found at CB 96, a letter to Portavin NSW Pty Ltd from National Credit Insurance (Brokers) Pty Ltd, advising that the relevant insurer, whose name is not given in the document, had approved a limit of $100,000 to the defendant based upon the information available to it as at 17 February 2016. Attached to the application to Portavin NSW Pty Ltd are the terms and conditions, that constituted the contract entered into between the defendant and Portavin NSW Pty Ltd. Thus commenced the relationship between the plaintiff and the defendant.

6. Between 23 August 2017 and 27 September 2017, the defendant retained Portavin NSW Pty Ltd to provide certain services. The total cost of those services was $194,022.19. This work was done for the defendant by Portavin NSW Pty Ltd, and is summarised in [10] to [13] of Mr Cameron’s affidavit, which is exhibit C. The work included liaison with Lynair International Logistics Pty Ltd for shipping of the completed product to ports in China and included preparation of palletised cartons of wine for overseas shipping. There is no dispute about this work or the payment for it.

7. A document at CB135 tells me that all told there were 14 containers of wine prepared for shipping to China. During the week commencing 9 October 2017, three containers of 2016 Shiraz, three containers of 2016 Merlot, two containers of 2015 Shiraz, and one container of 2015 Merlot were to be sent to China. During the week commencing 16 October, one container of 2016 Sauvignon Blanc, three containers of 2016 Cabernet Sauvignon, and one container of 2015 Pinot Noir were to be sent to China. It would appear that that was what actually occurred.

Restructuring of Plaintiff

8. In the meantime, the restructuring of the Portavin business occurred. On 28 September 2017, the plaintiff sent to the defendant an email at 2.02pm. It has to be recalled that Portavin Holdings Pty Ltd changed its name to SMYP Pty Ltd on 22 September 2017. After referring in short fashion to the restructure, the email continues in this fashion:

“As a result of that transition, it is necessary for you to,

Complete and return to us a new Account Application Form; and,

Sign and return the new SMYP Terms and Conditions to us.

Please also note,

Both the new Account Application form and Terms and Conditions will be emailed to you separately in PDF format.

With respect to the Account Application form, trade references are not required, and SMYP will honour all previously negotiated trading terms.

It is important that you read and understand the Terms and Conditions as they have been updated to reflect the Terms and Conditions used across the SMYA Group in Australia. In that regard, we are happy to discuss any issues or concerns you have with the Terms and Conditions with you.

If we do not receive the completed signed Account Application forms and Terms and Conditions, but you place an order with SMYP Pty Ltd after receiving this letter, we will take that as acceptance by you of the separately emailed terms and conditions and they will apply to any future orders placed by you.

We look forward to continuing our successful relationship with you. If you have any queries, please direct them to our SMYA Credit Manager, Sandra Surman, on [phone number] or by email to [redacted].”

The mail was signed by Mr Cameron who described himself, correctly, in the email as the Chief Financial Officer and Director of SMYP Pty Ltd. At 3:27pm on the same day the plaintiff sent to the defendant an Application for Commercial Credit form, and the SMYP Standard Terms and Conditions. Those documents can be found at CB 170 to 175.

Relationship Between the Parties

9. There was no formal response by the defendant to those emails, and no fresh Application for Commercial Credit form was completed and submitted, nor were the Terms and Conditions signed and returned. Nor was the Deed of Guarantee and Indemnity at the end of that document completed and sent to the defendant. Nevertheless, the defendant continued to deal with the plaintiff. The defendant went on to place further orders with the plaintiff, thus accepting the plaintiff’s terms and conditions. The defendant in these proceedings accepted that to be the case and admitted that in the pleadings.

10. The relevant clauses of the Standard Terms and Conditions are these:

“5.2 Prices quoted are strictly net and payment in full must be made in accordance with the Contract and within the times stated on either the quotation or the invoice with respect to the relevant Goods. If the times for payment are stated on both the quotation and the invoice, then the time stated on the invoice applies.

5.3 Interest must be paid by the customer on overdue accounts calculated daily from the day following the day upon which the payment should have been made, at the rate of eighteen (18%) per cent per annum and without any demand being necessary.

5.4 Upon demand being made by the Seller, the customer must indemnify the Seller against all costs (including legal costs on a solicitor/client basis), expenses or other sums incurred by the Seller in exercising any right or remedy available to it upon default by the Customer, which sum will also carry interest at the rate specified above if unpaid within one (1) calendar month of demand having been made.

15.2 If a Default occurs then the Seller, without prejudice to any other remedies available to it, may do any one or more of the following:

(1) Suspend production of the Goods.

(2) Decline to deliver the Goods, or any balance of the Goods still due under the contract.

(3) Stop any Goods in transit and have them returned, at the expense of the Customer, to the Seller.

…

(8) To sell the Goods elsewhere and require the Customer to pay as damages any difference between the sale price received in that regard and the contract price for those Goods.”

I interrupt to ask Mr Costlow at some time convenient to him to send to my associate electronically a copy of Mr Cameron’s affidavit sworn on 9 December 2020, which is exhibit C in these proceedings, as I am going to be instructing him to inserts parts of that affidavit in these reasons. They are well‑known to both sides, and it is not necessary for me to read them out. Now I return to the judgment.

Initial Dealings Between the Parties

11. Mr Cameron’s affidavit, Exhibit C, contains this:   

“SMYP Quotes

19. On 31 October 2017, the Plaintiff sent to Mr Lin via email the following further quotations.

Date	Quotation No	Amount
25/10/2017	PSQ0000548	$13,964.30
25/10/2017	PSQ0000549	$13,964.30
25/10/2017	PSQ0000550	$27,598.61
25/10/2017	PSQ0000551	$13,799.30
25/10/2017	PSQ0000552	$13,964.30
25/10/2017	PSQ0000553	$13,799.30
25/10/2017	PSQ00001154	$13,964.30

20. On around 14 November 2017, Mr Lin, on behalf of Sea & Sun, returned via email signed copies quotations PSQ0000548, PSQ0000549, PSQ0000550, PSQ0000553. Mr Lin also returned a signed copy of PSQ00001154 on 14 December 2017. Exhibited at pages 110-124 of NC-1 are copies of the email from Mr Lin dated 14 November 2017 attaching the signed quotations and a copy of signed PSQ00001154.

21. Exhibited at pages 125 – 154 of NC-1 are copies of the following invoices issues to the Defendant:

Date	Invoice Number	PSQ	Ref Number	Amount
12/10/2017	PSI0000543	PSQ005975	006522	$27,863.01
12/10/2017	PSI0000544	PSQ005980	006523	$13,291.62
11/10/2017	PSI0000541	PSQ005978	006519	$14,069.00
11/10/2017	PSI0000542	PSQ005983	006521	$26,968.81
10/10/2017	PSI0000540	PSQ005981	006524	$14,453.64
9/10/2017	PSI0000426	PSQ005978	006520	$15,244.22
24/10/2017	PSI0001245	PSQ005977	006518	$28,000.13
24/10/2017	PSI0001108	PSQ005976	006517	$14,069.00
12/10/2017	PSI0000588	PSQ006047	006624	$15,088.40
30/11/2017	PSI0005244	PSQ0000548	000590	$13,964.28
30/11/2017	PSI0005246	PSQ0000549	000591	$13,964.28
1/12/2017	PSI0005482	PSQ0000550	000592	$28,264.53
30/11/2017	PSI0005248	PSQ0000553	000595	$13,956.54
22/12/2017	PSI0008003	PSQ0001154	001162	$13,887.54

First Dispute

22. On or around 20 October 2017, Sandra Surman of SMYP sent an email to Mr Lin requesting payment of Sea & Sun’s then account, totalling $120,585.52.

23. On 31 October 2017, Mr Lin responded to the above email raising a query with the calculation of the invoices.

24. Between 31 October 2017 to 16 November 2017, a number of emails were exchanged between SMYP and Mr Lin regarding the amount claimed in the invoices. No issue of liability (other than quantum via the calculations) was raised by Mr Lin at this time.

25. On 16 November 2017, Mr Lin sent an email to the SMYP confirming that he agreed to the SMYP’s calculation regarding the balance and bulk wine volumes and would organise the delivery of the remaining wine shortly.”

12. There are some aspects of this first dispute (long resolved) relied upon by the plaintiff as disclosing a “pattern” that occurred in the subsequent dispute, which is the subject of these proceedings. That requires me to consider a number of emails. The first of those is an email sent on 20 October 2017 by Sandra Surman, the national credit manager for the plaintiff’s parent company, to the defendant, about outstanding accounts. The email is this:

“My name is Sandra Surman, and I am handling your trading account with Portavin. I phoned a couple of times and left messages, but unfortunately have not been able to speak with you, so hence my email.

I have been advised by our South Australian Branch that you have a number of containers to be sent from our premises today and on Monday, these have already been authorised to be dispatched. There are also further containers of wine to go within the next week and early in November.

Mr Lin, to ensure there are no delays with your dispatch of further containers, urgent payment of your account would be appreciated no later than Wednesday the 25/10/17. The amount that is due to be paid is $120,585.52.

Please find attached a reconciliation of your account. I believe this has already been emailed to you. If you have any queries re your account please do not hesitate to contact me on the number listed below.

I look forward to receiving your payment advice no later than 25/10/17.”

13. That email received this response from the defendant on 31 October 2017:

“Entirely based on your invoices, after I with my staff spent two weeks more to check them many times, we found:

Overcalculated bottled wine (in 6 x 750 ml per carton): [then follows a table which ends up showing the following]

Overcharge for bottling and dry goods if $1 per bottle A$47,637.92.

Bulk wine used details (litres) [then follows another table ending with this] Total amount of lost bulk wine ($1.8 per litre plus GST) $264,567.90. Total amount you owe:

[then follows a calculation] $205,480.30.

I look forward to see this payment for $205,480.30 from you ASAP.”

This is indeed, as submitted by the plaintiff, an extraordinary claim. For what the plaintiff did, it became indebted to the defendant for $205,480.30!

14. The third email in this chain commences at CB 222. It is an email from Mr Dave Cleary, who was at the time Acting State Manager for New South Wales, a position which he came to hold substantially some short time later. The email contains this matter:

“I have worked through the bulk wine tab on the spread-sheet and believe there has been a double up as highlighted on 28/2/17. (Row 129-145). We have no records of these wines being delivered. I believe the volumes and/or trucks must have been altered and are part of the deliveries on 4/3/17.

With these volumes removed … (see Row 205)

Hahn delivered 1,331,027 litres

PVS received 1,328,144 litres

Variance of 2,883 litres in delivery or 0.2%.

From the 1,328,144 litres we have received we bottled equivalent of 1,308,776 litres and incurred bottling losses of 19,367 litres or 1.48% (6,463 litres of this was due to a broken wine line - 0.98% losses without this).

Please advise if you have any queries about this.

Additionally, I have spoken to Sandra Surman. As discussed, she has advised that payment of overdue accounts totalling $43,564.05 must be paid prior to release of containers. (This covers $23,214.05 from Sydney $20,350 from Adelaide). Please confirm when payment has been made.”

15. The fourth email can be found at the foot of CB 221. It is again an email from Mr Cleary to the defendant sent on 16 November 2017. And contains this matter:

“Hi Mr Lin,

Hope you are well.

Can you please advise if you have any outstanding concerns with your invoices or bulk wine volumes, or you are comfortable that this is now all been resolved? I believe you have more containers in the coming weeks and want to ensure everything is resolved before they need to be despatched to avoid any delays. Please advise ASAP.

Thanks.”

16. Mr Lin did reply on the same day to that email from Mr Cleary. His reply can be found at the top of CB 221. The substance of it is this:

“Thank you for your concerns. I agreed your calculation regarding the balance and bulk wine volumes that were resolved a few days ago. I will organise to ship the left wine in your place soon.”

17. In his written submissions, Mr Bennett, for the plaintiff, quoted only the first, second, and fifth of those emails, and did not draw my attention to the emails that I just quoted which could be numbered three, and four. When analysed as I have done the significance argued by Mr Bennett is attenuated. Clearly both the defendant and the plaintiff have made errors or inaccuracies in their calculations and/or records.

The Dispute – The Claim

18. I turn to the present dispute which arises from quotations given by the plaintiff to the defendant commencing on 23 November 2012. Mr Cameron’s affidavit (Exhibit C) contains this matter:

“27. On or around December 2017, the SMYP emailed to Mr Lin the following further quotations:

Date	Quotation No	Amount
23/11/2017	PSQ0001155	$13,794.02
13/12/2017	PSQ0001595	$13,959.02
23/11/2017	PSQ0001156	$13,959.02
5/12/2017	PSQ0001395	$28,977.73
5/12/2017	PSQ0001397	$24,535.10
7/12/2017	PSQ0001429	$13,799.28
13/12/2017	PSQ0001599	$12,540.02
30/01/2018	PSQ0001427	$27,753.01

28. On or around 14 December 2017, Mr Lin signed and returned the following quotations via email:

(a) PSQ0001155

(b) PSQ0001595

(c) PSQ0001599

(d) PSQ0001154

(e) PSQ0001156

29. Exhibited at pages 161-172 of NC-1 are copies of the emails and signed quotations.

30. Exhibited at pages 173-181 of Exhibit NC-1 are copies of quotations:

(a) PSQ0001395

(b) PSQ0001397

(c) PSQ0001429

(d) PSQ0001427

31. Exhibited at pages 182-197 of NC-1 are copies of the following invoices issued to the Defendant:

Date	Invoice Number	Ref Number	Amount
22/12/2017	PSI0007999	P001163	$13,999.04
22/12/2017	PSI0008001	P001595	$13,959.00
22/12/2017	PSI0008159	P001599	$42,013.75
22/12/2017	PSI0008160	P001164	$13,959.00
30/01/2018	PSI0010698	P001404	$28,977.73
30/01/2018	PSI0010700	P001406	$24,535.10
30/01/2018	PSI0010703	P001438	$13,799.28
12/01/2018	PSI0010704	P001436	$27,753.01

32. On or around 23 April 2018, the SMYP sent an email to Mr Lin attaching a Statement of Account confirming the total amount owing of $505,085.24. Exhibited at pages 198-201 of NC-1 is a copy of this email and Statement of Account.

33. In March 2018, a credit towards Sea & Sun’s account was provided to Sea & Sun for $13,860.00 for 7,000 litres of 2016 Merlot wine which was “lost”. The lost wine was a result of a wine hose line break at the SMYP’s Chullora site. Exhibited at pages 202 of NC-1 is a copy of the credit towards Sea & Sun’s account.”

19. On 19 September 2018 the plaintiff issued to the defendant a credit of $8,987.90, inclusive of GST. The record concerning that can be found at CB 279. It appears that the defendant believed that payment of that sum resolved the long-outstanding dispute with the defendant.

20. Mr Cameron’s affidavit then continues in this fashion: associate to insert from exhibit C paras [39] to [42].

“Storage Fees and Charges

39. Between January 2018 to present, the SMYP has incurred, and continues to incur fees and charges associated with the storage of the product on behalf of the Defendant.

40. Each month, the SMYP renders an invoice to Sea & Sun for these fees. Exhibited at pages 213-258 of NC-1 are copies of the invoices issued to Sea and Sun relating to the storage fees and charges.

Demands

41. On or around 8 August 2019, I caused the SMYP’s solicitor, Marsdens Law Group, to send a letter of demand to Sea & Sun, together with a copy of outstanding invoices. Exhibited at 259-298 of NC-1 is a copy of this letter the invoices.

Sale of Stock

42. As at April 2020, the SMYP still held the following uncollected stock on behalf of Sea & Sun:

Skyroad Stock on Hand – 17 April 2020
Product Code	Product Title	Quantity on Hand – 6 Packs	Bottles
SKY17LOT158CSVEX6.4	2017 Lot 158 Cab Sauv EXPORT 6pk	2,522	15,132
SKY17LCSHZEX6.1	2017 Little Cheers Shiraz EXPORT 6pk	2,352	14,112
SKY15DMTPINEX6.1	2015 Demeter Pinot Noir Export 6pk	330	1,980
SKY16RRBSPINEX6.1	2016 RR. B&S Pinot Noir Export 6pk	151	906
SKY15FLMEREX6.1	2015 Feeling Merlot Export 6pk	77	462
SKY16KHSHZEX6.1	2016 Koohahs Shiraz Export 6pk	76	456
SKY16RRBSSVBEX6.1	2016 RR. B&S Sauv Blanc EXPORT 6pk	46	276
SKY17KHMEREX6.1	2017 Koohahs Merlot EXPORT 6pk	37	222
SKY17RBRSMEREX6.1	2017 RR. B&S Merlot EXPORT 6pk	26	156
SKY17LTSHZEX6.1	2017 Longtail Shiraz EXPORT 6pk	16	96
SKY17LTSHZEX6.2	2017 Longtail Shiraz EXPORT 6pk	15	90
5,648	33,888

21. As at the current time, the plaintiff quantifies its loss in this way:

Outstanding invoices	$88,446.80
Interest on invoices at 18% per annum	$54,363.53
Storage and handling costs	$75,066.32
Interest on storage at 18% per annum	$25,862.69
Wine sold in mitigation	($4,118)
Total	$239,621.33

This sum is meticulously calculated in a spreadsheet which is annexed to the written submissions of plaintiff’s counsel which are MFI 1. In addresses no issue of quantification of the plaintiff’s claim was disputed.

The Defence

22. The real defence raised by the defendant is pleaded at the end of the defence to both the originating process and the amended statement of claim but is conveniently repeated in the cross-claim served by the defendant upon the plaintiff at the same time as the defendant served its defence to the amended statement of claim. The pleading is this:

1. The Cross Claimant is a producer of wine stocks.

2. In about August 2018, the Cross Defendant was in possession of the Cross Claimant’s wine stocks and made claim that the Cross Claimant was indebted to it.

3. By an agreement entered into about this time, the Cross Defendant agreed with the Cross Claimant that it would release the Cross Claimant’s wine stocks to it, if the Cross Claimant [paid] the sum of $200,000.

4. On 25 August 2018 and 20 September 2020, the Cross Claimant paid the Cross Defendant the sums of $50,000 and $150,000, totalling $200,000.

5. In breach of the agreement, the Cross Claimant [sic] refused to release [to] the Cross Claimant its wine stocks.

6. The Cross Defendant suffered [sic] loss and damage.

7. The Cross Defendant wrongfully withheld the Cross Claimant’s wine stocks and/or has sold them and/or has destroyed them as [sic] had a value totalling the following amounts:

[Quantification of cross-claimant’s claim omitted. Total sum claimed $279,082.65].

23. The evidence concerning this alleged compromise settlement is confused and is confusing. It appears to me that there has been a conflation in the minds of some of the witnesses of meetings, conflation of attending meetings in person, and attending them by telephone, and perhaps conflation of oral representations with representations in emails.

24. As I pointed out towards the commencement of these reasons, Mr Lin’s native language is Mandarin. Because of some language difficulties and perhaps also for ease, Mr Lin, on behalf of the defendant, often communicated with the plaintiff through either Ms Olivia Ou or Ms Maggie Xu. Exhibit A is an affidavit of Mr Tony Royal, sworn on 11 June 2021. Mr Royal is the general manager of the plaintiff. His affidavit contains this:

“15. For the past 15 years, Portavin has supplied services to several clients based in China.

16. As such, Portavin employed Maggie Xu (Maggie) and Olivia Ou (Olivia) who speak and write in both English and Mandarin to assist with translating to overcome the language barrier with these clients.

17. As part of their role Maggie and Olivia would often:

(a) act as the translator in email correspondence between Portavin staff and Chinese Clients; and,

(b) be present during conference calls with Chinese Clients to act as a translator during these calls.

18. In or around 2018, I asked Maggie to assist me with corresponding with Mr Lin.

…

20. Maggie would assist me by receiving emails from Mr Lin which she would translate to English and forward to me. I would then advise Maggie of the response I want to send to Mr Lin. Maggie would translate my response and email that to Mr Lin.

21. As far as I am aware, all emails sent by Maggie to Mr Lin were done at my direction and contained the wording I requested Maggie to send. For instance, as I spoke Maggie would type, with the quantum of typing consistent with the level of words I had spoken to her, or I would send an email to Maggie in English, and she would translate that and forward it to Mr Lin in Mandarin. I never saw anything occur that would cause me to consider the translations were not accurate.”

25. Ms Xu swore and affidavit on 8 June 2021 and was cross‑examined. Indeed, she was the only witness for the plaintiff who was required for cross‑examination. Her affidavit contains this matter:

“21. From my meeting with Mr Lin and email correspondence, I was of the view that Mr Lin’s ability to speak English was 6/10. Based on my discussions with him and his responses to me after words were spoken in English and I translated them to him in Mandarin, he understood English better than he was able to speak it.”

26. Mr Lin was the only witness for the defendant. He was also cross‑examined. The quality of evidence given by AVL during the current COVID‑19 lockdown is extremely poor, probably because of an overload of traffic between this Court’s Sydney complex and legal practitioners and witnesses and, for example, access being between the Courts and gaols for dealing with criminal matters. Doing the best I could from listening to Mr Lin’s evidence, I agree with Ms Xu that his ability to comprehend English is better than his ability to speak it.

Meeting 24 April 2018

27. There was a meeting at the defendant’s winery on 24 April 2018. Mr Royal’s affidavit, Exhibit A, contains this:

“33. On or around 24 April 2018, I attended a meeting at Mr Lin’s winery with Olivia and Tim Sankey to further discuss Portavin having a security over the bulk wine that Mr Lin had in his tanks (the April meeting). At the meeting the following was [proposed]:

(a) SMYP would take ownership of the following bulk wine until the outstanding amount of $311,152.39 had been repaid:

(i) Tank 27802: 100 kilolitres of 2018 Cabernet Sauvignon;

(ii) Tank 10003: 100 kilolitres of 2018 Grenache; and

(iii) Tank 10005: 100 kilolitres of 2018 Shiraz.

Exhibited at page 133 to 134 of TR-1 are emails from Olivia to Tony and Tim Sankey following on the April meeting would summarise the wine of which SMYP agreed to take ownership.”

Those emails can be found at CB 610 and 611. The substance of each email is this:

“Please find below the list of wines we agreed to take from Skyrd.

Tank number	Vintage and variety	Volume
27802	2018 Cabernet Sauvignon	100 KL
10003	2018 Grenache	100 KL
10005	2018 Shiraz	100 KL"

28. Mr Tim Sankey swore an affidavit on 7 June 2021. It is Exhibit D. He is a Sales Manager. When he swore his affidavit, he was the National Sales Manager of the plaintiff. His affidavit says this about the “2018 Meeting”:

“16. In attendance at the 2018 Meeting was:

(a) Mr Lin;

(b) Maggie, and

(c) Tony Royal (Tony).

17. I recall that in the lead-up to the 2018 Meeting I had been made aware of a dispute in relation to Outstanding Invoices that were owed by Mr Lin to SMYP (the Invoice Dispute). The Invoice Dispute was that Mr Lin was alleging that the invoices issued to him by Portavin/SMYP did not match the wine that had been dispatched.

18. In or around this time I had a conversation with Tony and Dave Cleary (Dave) regarding the outstanding invoices that were owed by the first defendant. The first defendant was a significant revenue customer of SMYP/Portavin at the time, and I was asked to contribute, from a sales perspective, as to what impact the invoice dispute might have on Portavin’s sales.

19. In preparation for the 2018 Meeting, I prepared a list of the Outstanding Invoices and the wine that had been dispatched, in order to discuss the same with Mr Lin at the 2018 Meeting.

20. Whilst in attendance at the 2018 Meeting, the following matters were discussed:

(a) The possibility of the bulk wine being held as collateral or security for the Outstanding Invoices. Whilst at the meeting, Tony and I assessed the volume of wine in the bulk stores, and Tony tasted the wine, so that he could determine a rough value of what the wine would be worth.

(b) The possibility of releasing a container of stock at a time for Mr Lin to sell, and in return provide the proceeds to Portavin/SMYP to gradual pay down Outstanding Invoices.

21. I do not recall specific details about what was said during the 2018 Meeting, however I recall that we left the meeting with Mr Lin refusing to accept the quantum of the Outstanding Invoices that were owed to SMYP.

22. There was no resolution as a result of the 2018 Meeting, and it is my understanding that following the 2018 Meeting, the dispute was escalated for the Directors of SMYP and the General Manager to attend to.

23. I do not recall having any further involvement in relation to the release of stock.”

Meeting 8 August 2018

29. There was another meeting at the defendant’s winery on 8 August 2018. Mr Royal’s affidavit contains this:

“35. In or around August 2018, I met with Mr Lin, Maggie, and Tim Sankey, the State Sales Manager (Sankey) at Mr Lin’s winery (the August meeting), to discuss an arrangement in relation to the payment of the outstanding Invoices.

36. At the August Meeting, we had a conversation to the effect of the following:

Tony: How much do you get when you sell a container in China?

Lin: I get $70,000 Australian dollars per container.

Tony: If you pay $200,000 to Portavin, you can have two containers to sell, you can use the proceeds to clear the balance of the $108,000 owed to Portavin, and then you can have access the rest of your stock.

Lin: No, when I paid $200,000, I want to access to all of my stock.

Tony: No, absolutely not.

37. For the purpose of the conversation deposed to at par 36 above, Maggie acted as translator.

38. I recall that we left the August meeting with no final agreement having been reached in relation to payment of the Invoices.”

30. Ms Xu’s affidavit contains this:

“Interaction with Mr Lin

9. On around 27 July 2018, Tony sent me an email that he had received from Mr Lin and asked me if I could translate it into English to assist him.

10. In around August 2018, Tony said to me words to the effect of, ‘can you help Dave with translating for a customer who owes us around $300k?’

11. I understood Tony to be referring to David Cleary (Dave), the New South Wales State Manager at SMYP.

12. On around 8 August 2018, I met with Mr Lin and Dave at Mr Lin’s winery in South Australia.

13. At the commencement of the meeting, Dave said to Mr Lin words to the effect of, ‘This is Maggie. She will assist with interpreting today’.

14. I also said to Mr Lin words to the effect of, ‘I can assist with communicating. You can speak or write in Mandarin, and I can translate that to English’.

15. Throughout the meeting, Mr Lin spoke to me in Mandarin. I would then turn to Dave and repeat what Mr Lin said to me in English. Dave would tell me how to respond and I would do so to Mr Lin in Mandarin.

16. When translating, I translated the words spoken in front of me. I did not paraphrase or insert any personal opinions or comments.

17. Following the meeting, on 14 August 2018 Dave sent me an email he had prepared [to send to] Mr Lin setting out the discussion that occurred at the meeting on 8 August 2018 and asked me to translate it from English to Mandarin. I did so, and on 14 August 2018, Dave sent a copy of this email to Mr Lin. Annexed and marked A is a copy of this email chain. I believe this to be an accurate outline of what was discussed.”

31. The email in question can be found at CB420 to 422. It is necessary that I consider it. Unfortunately, the email is lengthy. The email commencing at CB 420 is with the English translated into Chinese pictograms underneath the English. The document in question has also been added to following upon discussions on 16 August 2018. For present purposes, I omit, obviously, the Chinese pictograms and the comments recorded on the document on 16 August 2018. As I said earlier, the email was sent on 14 August 2018. It was sent at 5.25pm. That day was a Tuesday. Leaving aside the formalities, the document is this:

“Thank you for your time last week. Below is a summary of our agreed understanding on various items and subsequent clarification following further investigation.

“BOTTLED WINE VOLUME

(1) Mr Lin accepted Portavin’s bottled volume of 292,516.17 x six packs. Mr Lin acknowledged that his figures were incorrect due to the inclusion of some credits applied by Portavin.

(2) Mr Lin reviewed Portavin’s figures for exported wine and domestic wine dispatches and pickups. Mr Lin disagreed with Portavin’s domestic figures stating his records were compiled from all invoices sent to him.

1. deliveries on Mr Lin’s list were accepted by both parties as occurring to reduce the number of records being searched. These delivery dockets have now also obtained and dispatches confirmed. It was agreed that Portavin would search for original dispatch documents for the disputed 25 deliveries to provide proof to Mr Lin of these despatches. Some were provided during our discussion, others have since been collected from our archive records.

2 records are yet to be located, totalling 118 x six packs. A further 51.33 x six packs were removed during a stocktake on 7/10/16. There is a variance of 408.83 x six packs that Portavin has been unable to verify at this point and in good faith had previously offered to credit Mr Lin for.

Total volume currently missing records equals 578.16 x six packs.

A spreadsheet showing these specific dispatches is attached and copies of the despatch paperwork will be emailed separately to verify our position.

BULK WINE

(1) Mr Lin had previously agreed to Portavin’s bulk wine reconciliation in November 2017 and confirmed in writing via email on 19/3/18.

(2) It was agreed that Hahns delivered 1,331,027 litres by their records and Portavin received 1,328,144 litres by their records, a variance of 0.2%. During our discussion on 8/8/18 we agreed to take a middle value for further calculations if required. Middle value = 1,329,585.5 litres.

(3) Mr Lin advised his bottled wine calculations were based on 750 mL per bottle. Portavin explained that fill volume is higher than this and is calculated at 753 mL per bottle. Mr Lin would not accept this and insisted all calculations be completed as 750 mLs per bottle.

(4) Mr Lin’s calculation = Bottle volume of 292,516.17 x six packs at 750 mL per bottle = 1,316,322.77 litres. Equates to loss of 13,262.7 litres or 0.9975%. Mr Lin claims this loss is too high.

Portavin’s calculation = Bottle volume of 292,516.17 x six packs at 753 mLs per bottle = 1,321,588.06 litres. Equates to wine loss of 7,997.4 litres or 0.6015%.

WAREHOUSE CHARGES

(1) Mr Lin advised warehouse storage charges had been applied to his account following a previous meeting with Portavin. Portavin can consider relief on finished goods storage, provided all outstanding issues are resolved without requiring legal proceedings.

LADENING OF STOCK AT PVS PORTAVIN

(1) Mr Lin has 410 x six packs of Skyrd 2016 Sauvignon Blanc unlabeled at PVS, as no additional labours were supplied at that time of bottling. This stock is required to be labelled prior to sale in China with only Little Cheers 2016 Sauvignon Blanc available to use. Mr Lin must provide directions in writing before this work can be considered/completed. Mr Lin will provide written instruction, and this stock will be available for collection.

As a full and final settlement offer Portavin will agree to credit Mr Lin’s account for the amount of $8,170.88 plus GST. This figure has been determined using Mr Lin’s calculations previously presented at $1 per bottle and $1.80 per litre for bulk wine as of below [calculation imitated].

Mr Lin please confirm your acceptance of this offer within 48 hours and confirm in doing so that all discrepancies regarding your account are now deemed to be resolved.

We look forward to your response.”

32. Clearly the text which I have quoted establishes that the meeting was in fact held on 8 August 2018. The email was copied to Mr Royal, and to Maggie Xu, it was not copied to any other person, indicating to me that Mr Sankey was not present at this meeting. The email was clearly under the hand of Mr David Cleary. I point out at this stage that no evidence has been adduced by either party from Mr David Cleary. If he were to be called, one would expect him to be called in the plaintiff’s case.

33. Mr Lin maintained stoutly in his evidence that the meeting was attended by Ms Xu, and a gentleman whose name he did not remember. He also maintained that at some stage Mr Royal was in communication with those at the meeting by means of the telephone. However, at p 67 of the transcript of these proceedings, at line 46 Mr Lin when pressed by Mr Bennett as to who was at the meeting said, “Dave, Maggie”. In other words Mr Lin could not remember the gentleman’s surname, but he could remember the first name, Dave.

32. I am persuaded on the evidence that the meeting on 24 April 2018 was attended by Mr Royal, Mr Sankey, Ms Ou, and Mr Lin. I am also persuaded on the evidence that the meeting on 8 August was attended by Mr Cleary, Ms Xu, and Mr Lin; if Mr Royal had any involvement in the meeting, it was only by telephone attendance, not in personal. I do not accept that Mr Sankey was present at the meeting on 8 August 2018.

33. One thing, however, is abundantly clear, and that is that no agreement was reached at that meeting, a conclusion only reached by Mr Bennett for the plaintiff, and Mr Hall for the defendant on 10 August 2021. In that regard, one can see the concession made in Mr Bennett’s second written submission, MFI 2 at [2].

16 August 2018

36. There was a telephone conference lasting 100 minutes on Thursday 16 August 2018 between, at least, Mr Royal and Mr Lin. The email prepared after that, dispatched at 3:11pm, refers to the conference as being, “this afternoon”. The email was sent by Mr Royal to Mr Lin, and copied to Mr David Cleary, Ms Xu, Sandra Surman, and Mr Cameron, who is the Chief Financial Officer of the plaintiff. The email described the “outcome” being matters proposed after the 8 August meeting to which Mr Lin now agreed. The outstanding matters as at the end of the telephone conference were that Mr Lin was to confirm by the close of business on 17 August 2018 the two matters referred to in par 2 under the heading “BOTTLED WINE VOLUME” in Mr Cleary’s email of 14 August 2018.

37. The two matters to be confirmed are recorded thus in the added material to email of 14 August 2018:

1. deliveries on Mr Lin’s list were accepted by both parties as occurring to reduce the number of records being searched. These delivery dockets have now also been obtained and dispatches confirmed. It was agreed that Portavin would search for original dispatch documents for the disputed 25 deliveries to provide proof to Mr Lin of these dispatches. Some were provided during our discussion, others have since been collected from our archive records. Mr Lin agreed 16/8/2018 - close of business Mr Lin to confirm 17/8/2018.”

The other matter is this. At the end of the matter under the heading “BOTTLED WINE VOLUME”:

“A spreadsheet showing these specific dispatches is attached and copies of the dispatch paperwork will be emailed separately to verify our position. Close of business 17/8/18 for Mr Lin to confirm.”

38. Mr Royal’s email to Mr Lin of 16 August 2018 requires action to be completed by the close of business on Friday 17 August 2018. What can be seen as the plaintiff’s position from its emails of 14 August and 16 August was that if the defendant acquiesced to the outstanding matters by the close of business on 17 August, the plaintiff would allow a credit of $8,170.88 plus GST, which was in fact credited to the defendant’s account on 19 September 2018., as I pointed out earlier in these reasons at [19] $8,170.88 plus GST, $8,987.97 inclusive of GST. Mr Royal’s email on 16 August 2018 has this final sentence: “Mr Lin, this is our final offer to settle all outstanding issues.”

39. At this stage, I refer to what Mr Royal said happened at the meeting on 8 August 2018, which I have already quoted at [29]. In particular, the conversation to which Mr Royal deposed that he had with Mr Lin. I remind myself and the defendant that Mr Royal was not required for cross‑examination. That means that the defendants either accept what he said was true, or that what he said was so demonstrably untruthful that cross‑examination was not required. Could the conversation deposed to in [36] of Mr Royal’s affidavit be true, albeit that he did not attend the meeting in person, but according to Mr Lin was involved at some time on the telephone? This is not at all implausible. In fact, as I have considered it in detail, I believe that it is likely, that is more probable than not. What was brought up by Mr Royal provides the means whereby the sum of $200,000 was calculated and gave the defendant the means of repaying its debt to the plaintiff. It also explains what happened soon after 17 August, the release of two containers of wine to the defendant. It also adds meaning to the email chain which I am about to quote. It is also consistent with what Mr Royal says in [39] of his affidavit:

“At the time [8 August 2018], I did not consider it to be commercial for Portavin to provide Mr Lin with a discount of $108,000 for payment of the outstanding invoices.”

That is consistent with the final statement to Mr Lin in Mr Royal’s email to him on 16 August 2018.

The email chain

40. The email chain to which I have just referred can be conveniently found as an annexure to MFI 2, Mr Bennett’s second set of written submissions made on 10 August 2021. The email chain is one that I insisted that the parties provide to me because it made understanding what occurred much easier than going from place to place within the court book:

“Extracts of Email Correspondence Between the Parties

Line No.	DATE	TIME	FROM	TO	COURT BOOK	Relevant Text Extracted
1	17/8/18	2:24 pm	Mr Lin	Maggie Xu	423 / 430 / 630	Translation set at 2:43pm – Mr Lin writes email in Chinese, per 3 below
2	17/8/18	2:33pm	Maggie Xu	Mr Lin, Tony Royal	432 / 633	Regarding our proposal of outstanding payment resolution, Tony just replied with the following: 1) Please transfer $50,000 to Portavin’s Bank Account by closed of business Monday the 20th of August 2018; 2) Please transfer the other $150,000.00 to Portavin’s Bank Account no later than by closed of business Thursday the 20th of September 2018; Tony can accept your proposal only subject to the $50,000.00 can be transferred to Portavin’s bank account by closed of business Monday the 20th of August 2018.
3	17/8/18	2:43 pm	Maggie Xu	Tony Royal	423	Mr Lin’s email says: Hello! I want to resolve our outstanding items as soon as possible. 1. I will not collect any stocks from you, by the 20th next month I’ll pay you $200,000.00 after that I can collect all my stocks from you, then al discrepancies regarding my account are now deemed as resolved. 2. If we can’t make an agreement on it, and decide to take legal actions, then there is no necessary for us to discuss any more. The lawyers of both sides need to do research and go through all documents from beginning. Also, if we decide to take legal actions, we’ll give up the 1260 x 60pk pf 2-15 Chardonnay, my company in China advise that the wine has been hold for too long, and no market value at all, the supermarkets in China won’t put them on shelves anyway.
4	17/8/18	2:51 pm	Mr Lin	Maggie Xu, Tony Royal	434	My customer is transferring the deposit from Hong Kong today, which will be in my account here before 22 Aug 2018. So I will transfer $50,000 to your account before 22 Aug 2019.
5	17/8/18	3:43 pm	Maggie Xu	Mr Lin, Tony Royal	632	Please email a bank receipt once payment has been made before the 22 Aug 2018. Thanks.
6	21/8/18	10:47 am	Mr Lin	Maggie Xu, Tony Royal	436 / 615	Please release 1-2 contain of Koohahs 2017 Merlot from Portavin SA, because this label wine in my china stock is empty. And you hold wine in Portavin NSW. It will be more help to me if release 2 containers. And please deliver 70k of corks to INFUSE. Thanks!
7	21/8/18	11:01 am	Tony Royal	Mr Lin / Maggie Xu	426 / 437 / 637	No stock will be released from Portavin SA until the $50,000 is paid tomorrow and the $150,000 is paid by the 20 Sept – as agreed. You can access your wine in NSW anytime.
8	21/8/18	11:08 am	Maggie Xu	Mr Lin / Tony	426 / 438	Chinese translation in the above email.
9	21/8/18	12:07 pm	Maggie Xu	Tony, Royal, Mr Lin	427 / 636	Mr Lin’s email says: Hello! As for your such response, before I pay, I have to request a copy of our stock report, I need to reconcile if it is as same as last copy of stock report sent by Olivia, and in her email also stated that which stock can be released after I paid $200K.
10	21/8/18	12:10 pm	Tony Royal	441 / 635	Very simple you do not get access to your SA stock until the $50k is paid tomorrow – you had agreed today – and the balance of the $150k is paid on or before the 20 Sep.
11	21/8/18	12:17 pm	Maggie Xu	Mr Lin, Tony Royal	442	Above email was sent in Mandarin to Mr Lin
12	21/8/18	12:27 pm	Mr Lin	Maggie Xu, Tony Royal	429	Email in English: Mr. Lin’s says: Before I pay, I need a copy of stock report to reconcile my stocks, in order to avoid for any discrepancies in future.
13	21/8/18	12:36 pm	Maggie Xu	Mr Lin, Tony Royal	429	Above email was sent in Mandarin by Mr Lin
14	21/8/18	12:44 pm	Portavin SA	Tony Royal	445	As discussed, please see the attached Finished Goods stocl on hand for SkyRd.
15	19/9/18	1:10 pm	Maggie Xu	Mr Lin, Tony Royal	452	Mr Lin’s email translation is: Hi Maggie, Yesterday the Customs tax was not completed yet, will try to work it out today and then can arrange the transaction of money asap. Money should be no issue to pay you.
16	24/9/18	11:23 pm	Mr Lin	Maggie Xu, Tony Royal	454	Please find attached copy of payment receipt. Please arrange delivery of left corks in your stock to infuse, which will be used tomorrow.
17	26/9/18	10:59 am	Tony Royal	Portavin SA, Olivia / Maggie / Michelle	459	Stock is on hold until Maggie and I have a telephone conversation with Mr Lin. Regards Tony Ps Maggie please set up a time tomorrow morning at 8.30am for a telephone hook up with Mr Lin and Maggie.
18	26/9/18	11:00 am	Portavin SA	Tony Royal, Olivia / Maggie / Michelle	460	Ok, thank you. Tony.
19	27/9/18	11:01 am	Maggie Xu	Mr Lin, Tony Royal	461 / 616	Please advise if you agree with below packing details of the released 2 x 20’ containers. 1st Container – 2017 Koohahs Merlot ENG BACK LBL EXPORT 6PK – 2352 X 6 PK 2nd Container – 2017 Koohahs Merlot ENG BACK LBL EXPORT 6PK - 2049 x 6 PK 2015 Feeling Merlot EXPORT 6PK – 202 X 6PK
20	27/9/18	11:09 am	Maggie Xu	Portavin SA, Tony Royal	462	Just got Tony’s approval to release 2 containers of Skyrd’s stocks. Please release following stocks for Mr. Lin: 1st Container – 2017 Koohahs Merlot ENG BACK LBL EXPORT 6PK – 2352 X 6 PK 2nd Container – 2017 Koohahs Merlot ENG BACK LBL EXPORT 6PK - 2049 x 6 PK 2015 Feeling Merlot EXPORT 6PK – 202 X 6PK
21	27/9/18	11:52 am	Portavin SA	Mr Lin	638	I have the approval to release 2 container, please ensure that I have at least 5 days notice prior to cut off when sending through the booking."

41. It is significant, in my view, that on 17 August Ms Xu replied to Mr Lin’s Chinese email, email 1, sent at 2:24pm, in English in email 2 sent at 2:33pm, prior to her translating Mr Lin’s email into English and sending it to Mr Royal. Her English response to Mr Lin’s Chinese email sent within nine minutes allows little time for Ms Xu to have spoken to Mr Royal to obtain instructions, and one must consider the possibility of an inadequate version of Mr Lin’s email being conveyed to Mr Royal. Whether Mr Royal read the translated email from Mr Lin late on 17 August 2018 is unknown and is the sort of question which ought to have been put to him in cross-examination. However, there was no cross-examination of Mr Royal.

42. The release of only two containers of wine is consistent with emails numbered 6, 19, 20, and 21. Furthermore, there was acquiescence in what actually happened by the defendant and a complete failure by him to assert his alleged rights until 1 April 2020 when a defence was filed to the initiating process. The following evidence was given by Mr Lin in cross-examination:

“Q. What, in fact, did happen was that after you paid $200,000, two containers were released to you. Do you agree with that?

A. Yeah, yeah, yeah, yeah, yeah, he only released two of the containers.

Q. Yes. And you never wrote an email that said, where’s the rest of my wine, did you?

A. Yeah, I wrote that email, yeah, before they were paid.

Q. When did you write…

A. I…

Q. …when did you write that email?

A. I - in my - I think that before I pay the - pay that 200,000, yeah.

Q. If you just listen to my question? After you received the two containers, you did not write an email complaining that you didn’t receive the rest of the wine, did you?

A. No, we all - on the phone, called Maggie.

Q. But you’ve used email with the plaintiff extensively up until this time, so why did you send an email?

A. (No verbal reply)

Q. The question is why..

A. Hello?

Q. ..didn’t you send an email, Mr Lin?

A. Already send it before.

Q. Why didn’t you follow-up with what you thought was a breach of an agreement?

A. That breach already, yeah, so..

Q. So why didn’t you follow-up that breach?

A. I was already sending before, yeah. Yes. Yes.

Q. You didn’t bring any proceedings in this case until 9 November 2020, did you?

A. Pardon?

Q. That is, you filed a cross claim only on 9 November 2020.

A. (No verbal reply)

Q. Mr Lin, I’ll ask you this question.

A. Yes? Yes?

Q. Why did you wait two years to bring a claim for what you say was the rest of the wine?

A. ..(not transcribable).. sue me everything I - I - yeah.

Q. Well, if you say you were owed the balance of the wine in September 2018, why did you wait for two years and one month to sue the plaintiff?

A. No, I sued - sue him deposit that they sue me, yeah.

Q. So, why did..

A. I never sue him.”

When one considers all the emails in this case, one can see that prior to 8 August 2018 Mr Lin/the defendant was not reluctant to voice in emails errors alleged to have been made by the plaintiff, yet Mr Lin now asks me to believe that, having reached agreement that if he paid $200,000 to the plaintiff he could get all his stock back, and he did pay $200,000 to the plaintiff, but he only received back two containers of stock, nevertheless, he made no protest whatever about what might be thought to be outrageous behaviour by the plaintiff.

43. I am not persuaded on the balance of probabilities that the parties reached any consensus ad idem on 17 August 2018, that email 1 translated in email 3 was not what Mr Royal was responding to in Ms Xu’s email, email 2. Nor am I persuaded that Mr Lin accepted that the email he sent, email 1, constituted an offer that was accepted by the plaintiff in Ms Xu’s email, email 2. If I be wrong in that regard, emails 9 and 12 seeking to insert a new condition amount to a repudiation of the alleged agreement, a repudiation that was accepted by the plaintiff by its subsequent conduct. Accordingly, the plaintiff must succeed in its claim and the cross-claim must fail.

44. The matter could also be approached in another fashion. Accepting as I do that Mr Royal had the conversation with Mr Lin that he deposed to in [36] of his affidavit, it is quite possible that it did not occur at the 8 August meeting, but it might have occurred on the afternoon of 17 August 2018. If that be so, then Ms Xu’s email, email 2, was only confirming the financial arrangement that Mr Royal proposed rather than the whole of the agreement which actually was reached. It may be that Mr Lin’s email, email 1, was translated to Mr Royal orally by Ms Xu and once it was it was only after that time that Mr Royal said the words “No, absolutely not”, the words with which he ends the conversation deposed to in [36] of his affidavit. That would also explain why everything points to the defendants’ acquiescing in what happened subsequently, the dispatch to him of only two containers of wine, and why he made no protest that the plaintiff had breached the agreement that he now says was reached on 17 August 2018. In short, Ms Xu’s email, email 2 in the chain I am now considering, did not contain all of the agreement reached between the plaintiff and the defendant on the afternoon of 17 August 2018.

45. Another way of viewing the defendant’s inaction after 17 August 2018 to protest an outrageous breach by the plaintiff of the agreement that he now says was reached is that the allegation first raised on 1 April 2020 in the defence to the originating process is, in fact, a recent invention.

Credit

46. Before I turn to Mr Lin’s personal liability, I should make a few observations concerning credit. I have approached Mr Lin’s evidence circumspectly. One item which excited my interest is email 9 in the email chain of 21 emails, which I have recently quoted and discussed. The original of the email in Chinese and its English translation by Ms Xu can be found at CB 427. Although I refer to that email as being potentially a reputation of the alleged earlier agreement, one will note that in it Mr Lin refers to an email previously sent to him by Olivia, referring to stock which could be released after he paid the $200,000. When cross-examined about that, at T73, this evidence was given:

“Q. So, this is 13 days after the meeting [8 August 2018], and in that email you say, ‘Before I pay, I have to request a copy of our stock report. I need to reconcile if it as same as last copy of stock report sent by Olivia, and in her email also stated that which stock can be released after I pay $200,000’?

A. Yeah.

Q. If all the wine was to be released to you, why were you seeking to clarify which stock was going to be in the delivery?

A. Yeah, that - that’s Maggie translate wrong. I have - I write in Chinese, Chinese Mandarin, but I say all of the wine is for me, but Maggie sent the - Olivia sent the list to me, but it’s the Maggie is translate wrong to.. Tony. But - but, I no take yet - more, but I trust it because I trust her. Before my meet - before I sent - I sent her the money, yeah.

Q. Mr Lin, is there a reason you’ve not made that clear in any of your affidavits, including the two that were prepared during this hearing?

A. Pardon? That - yeah, okay.

Q. You’ve not said that in any affidavit including the one you prepared yesterday. Why haven’t you told his Honour that before now?

A. No, have - before I, yeah, I - I say it like this, it’s - no, Maggie.. (fault in recording equipment) translate wrong. It should be..(fault in recording equipment).. because we have to pay 200, not - not like $200, 200,000, so we must have agreement and pay. That’s reasonable, we - we”.

47. The point is simple, Mr Lin was telling me that Ms Xu had translated his message in Chinese incorrectly into English. When I look at the Chinese email sent by Mr Lin I can see written in English the words Olivia and a dollar sign, then the Arabic numerals 200 and the English letter K. That matter is reproduced in Ms Xu’s translation of the email.

48. It appears to me that Mr Lin sought to explain a weakness in his case by blaming Ms Xu as the interpreter and saying that she had misinterpreted the email when that was never the subject of cross-examination of Ms Xu, nor was it deposed to in any of the three affidavits affirmed by Mr Lin in these proceedings. In other words, it appeared to me that this explanation of a mistranslation by Ms Xu was merely to extract himself from what he perceived may have been a difficult problem for him. That speaks poorly about Mr Lin’s credit.

49. Furthermore, in cross-examination Mr Lin was asked whether he had threatened Ms Xu with an action against her if she did not change her evidence. Mr Lin would not agree with that proposition but did admit that he had threatened to sue her if she did not tell the truth. The question remains, why was it necessary for him to ring Ms Xu and tell her to tell the truth and make a threat against her if she did not? Again, that speaks poorly about Mr Lin’s credit.

50. Another thing which I bear in that is in my view many of the answers given by Mr Lin in cross-examination amounted to an attempt to present himself as a man whose English was much more limited than it actually was. After all, at the time of giving evidence, Mr Lin had been living in Australia for 21 years, and has tertiary educational qualifications. He is not an unintelligent man. He should be able to pick up English more readily than he would have me believe in the evidence which he gave. In other words, I cannot rely solely on Mr Lin’s word if it is the only evidence on a particular point.

Case Against Mr Lin as Second Defendant

51. As should be clear from what I have said earlier, Mr Lin was joined as the second defendant in these proceedings by the amended statement of claim filed on 17 September 2020. The relevant pleading is this:

“17. By reason of the breach of the Agreement by the First Defendant, the Plaintiff has suffered a loss and damage which it claims from the First Defendant.

FIRST DEFENDANT - MISLEADING AND DECEPTIVE

18. Further or in the alternative, the plaintiff repeats par 1 to 16 above and says that between the period 12 January 2018 and 1 August 2018 the First Defendant represented to the Plaintiff that:

18.1 It would pay for the goods supplied to it or the goods which had been manufactured for it (‘the Payment Representation’).

18.2 It had accepted liability for the payment of the goods pursuant to the Agreement (‘the Payment of Amount Representation’).

(together hereafter referred to as the ‘Representations’).

19. The first defendant made the representations in trade and commerce.

20. The Representation were representations as to an existing and/or future matter, inter alia, as to the circumstances in the future in which the First Defendant would pay the plaintiff for the goods manufactured and/or supplied in accordance with the terms of the Agreement and the time in which the payment would be made to the plaintiff in accordance with the terms of the Agreement.

21. To the extent that the Representations contain, in part or in whole, a representation as to future matters, the plaintiff relies on s 4 of the Australian Consumer Law, at Schedule 2 of the Competition and Consumer Act 2010 (ACL).

22. In reliance on the Representations, the Plaintiff provided the goods and proceeded to manufacture for supply the wine under the terms of the Agreement.

23. The Plaintiff contends that the First Defendant had no reasonable grounds for making the representations and in the circumstances, by reason of the matters pleaded above, the representations were misleading and deceptive or likely to mislead or deceive the plaintiff, in contravention of s 18 of the ACL.

……..

SECOND DEFENDANT - AIDED AND ABETTED

25. The plaintiff repeats and relies upon pars 17 to 23 above and says that the Second Defendant was:

(a) A person directly or indirectly or knowingly concerned in, or a party to, the First Defendant’s contraventions of the ACL.

(b) Further, or the alternative, engaged in conduct which was misleading or deceptive in contravention of the ACL.

(c) Alternatively, made the representations negligently.

26. And the Plaintiff seeks damages for a reason of the Second Defendant’s contravention of the ACL from the Second Defendant.”

Each of those paragraphs of the pleading have been denied by both of the defendants.

52. The plaintiff can only point to a breach of express contractual terms by the first defendant. If the plaintiff’s position be correct, any breach of a contractual term would amount to a breach of the Australian Consumer Law (“ACL”), every failure to pay a debt would be a breach of the ACL. I cannot accept that. The point of the ACL and its statutory predecessors was to provide a remedy where no remedy existed at law or in equity.

53. The Australian Consumer Law can be found in Sch 2 to the Competition and Consumer Act 2010 (Cth). Section 4 of the ACL is in these terms:

“4  Misleading representations with respect to future matters

(1)  If:

(a)  a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b)  the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

(2)  For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a)  a party to the proceeding; or

(b)  any other person;

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

(3)  To avoid doubt, subsection (2) does not:

(a)  have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or

(b)  have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.

(4)  Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:

(a)  a misleading representation; or

(b)  a representation that is misleading in a material particular; or

(c)  conduct that is misleading or is likely or liable to mislead;

and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.”

Section 18 is in these terms:

“18  Misleading or deceptive conduct

(1)  A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)  Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1).

Note:          For rules relating to representations as to the country of origin of goods, see Part 5‑3.”

Section 236 is in these terms:

“236  Actions for damages

(1)  If:

(a)  a person (the claimant) suffers loss or damage because of the conduct of another person; and

(b)  the conduct contravened a provision of Chapter 2 or 3;

the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

(2)  An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.”

54. It is important to note that what s 4 requires is the making of a representation with a respect to any future matter, which might include the doing of a thing or refusing to do a thing - and that the person who makes that representation does not have reasonable ground of making the representation. While he has not pleaded specifically is the actual representation relied upon. As I said, all that is relied upon is the contractual promise to pay when the work was done.

55. This is not, in my view a relevant representation under s 4. Usually in cases where the ACL is relied upon, a specific statement is pleaded as the representation made, and then the asserting party needs to prove that that statement has in fact been made, and that the person who made it had no reasonable grounds for making that specific representation. Here, all that is really alleged is that Mr Lin, the second defendant, was the director of the first defendant. The first defendant failed to adhere to its contractual obligations, and therefore the contractual obligations amounted to a “representation” and that because Mr Lin must have known that the company could not pay the debts of the company as they fell due, he must have been aiding and abetting the making of the representation on behalf of the First Defendant.

56. I am not persuaded that this has been established in this case. This is yet another bare attempt to go beyond the veil of incorporation which is still substantive law and, were it not so, our economic system might well collapse if directors of companies found themselves to be liable for any act, neglect, or default of a company itself. In my view, the claim against the second defendant must fail.

57. For those reasons I make the following orders:

1. Verdict and judgment for the Plaintiff against the First Defendant for $239,621.33;

2. First Defendant to pay the Plaintiff’s costs of the Plaintiff claim against it on an indemnity basis;

3. Verdict and judgment for the Second Defendant against the Plaintiff;

4. Verdict and judgment for the Cross-Defendant against the Cross-Defendant and the cross-claim; and

5. Cross-Claimant to pay Cross-Defendant’s costs of the cross-claim on an indemnity basis.

58. I shall hear the parties on the notice of the costs order to be made in favour of the Second Defendant.

59. [Further submissions]

60. This is the 28th year in which I shall have observed that nothing excites the zeal, the ardour, and the passion of the legal profession more than an argument about costs. I have now heard an argument about the quantum of the costs of the successful second defendant. In my view, those costs ought be modest. I have listened patiently to an impassioned address by Mr Hall, who is for both the defendants, as to why I should make the ordinary order, that is an order that the costs follow the event, and let the quantum of the costs be assessed by a costs assessor. I do so reluctantly because in my view the costs would be modest. That is something, however, that can be determined by the costs assessor or by a cost appeal panel, or on an appeal to this Court.

61. I order the plaintiff to pay the second defendant's costs incurred in defending the claim made against him.

Decision last updated: 04 April 2022