Sui v Jiang

Case •

[2021] NSWSC 435

•

30 April 2021

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Sui v Jiang and Anor [2021] NSWSC 435
Hearing dates: 30 September 2020, 22 October 2020, 12 November 2020, 22 February 2021
Date of orders: 30 April 2021
Decision date: 30 April 2021
Jurisdiction:Common Law
Before: Johnson J
Decision:

1. Verdict for each of the First Defendant and the Second Defendant on the claim by the Plaintiff.

2. The Plaintiff’s claims against the First Defendant and the Second Defendant are dismissed.

3. In the absence of any written submissions (not exceeding three pages) from the parties on the question of costs being provided by email to Johnson J’s Associate by 4.00 pm on 7 May 2021, the Court will make an order in Chambers that the Plaintiff pay 50% of the costs of the proceedings of the First and Second Defendants calculated on the ordinary basis.

4. In the event that written submissions are made on the question of costs in accordance with paragraph 3 above, the Court will determine the question of costs on the papers.

Catchwords:

CONTRACT – claim for damages for breach of contract – written agreement in Mandarin Chinese prepared by non-lawyer (the Plaintiff) – whether terms of contract constituted loan agreement or shareholder investment agreement – proper construction of contract as a whole considered – claim dismissed

Legislation Cited:

Civil Procedure Act 2005

Cases Cited:

Bofinger v Kingways Group Limited (2009) 239 CLR 269; [2009] HCA 44

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 5

Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95

GL Nederland (Asia) Pty Ltd v Expertise Events Pty Ltd [1999] NSWCA 62

In the Matter of Jimmy’s Recipe Pty Ltd (No. 2) [2020] NSWSC 632

Leichhardt Municipal Council v Green [2004] NSWCA 341

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37

Rosniak v Government Insurance Office (1997) 41 NSWLR 608

Ruthol Pty Ltd v Mills [2003] NSWCA 56

South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69

Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245; [1988] HCA 11

TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68

Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370

Texts Cited:

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Category:Principal judgment
Parties: Guangyi Sui (Plaintiff)
Zhaoquing Jiang (First Defendant)
Australian Fulin Agriculture Pty Limited (Second Defendant)
Representation:

Counsel:
Mr MW Young SC (Plaintiff)
Dr E Peden SC; Mr B DeBuse (30 September 2020) (Defendants)
Mr B DeBuse (22 October 2020 and 12 November 2020) (Defendants)
Dr E Peden SC; Ms MJH Waters (22 February 2021) (Defendants)

Solicitors:
Dixon Holmes Lawyers (Plaintiff)
Sunfield Chambers Solicitors & Associates (Defendants)
File Number(s): 2019/302676
Publication restriction: ---

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Judgment

  1. JOHNSON J: By Statement of Claim filed on 27 September 2019, the Plaintiff, Guangyi Sui, seeks damages from the First Defendant, Zhaoquing Jiang, and the Second Defendant, Australian Fulin Agriculture Pty Limited (“Fulin”).

  2. The central issue in the proceedings involves the construction of a written agreement dated 26 May 2017 (“the 2017 written agreement”) and the question whether Mr Jiang is liable to pay A$1.5 million to Mr Sui by reason of an alleged breach of that agreement which was written in the Mandarin Chinese language. The 2017 written agreement concerned Crown leases on land described as Portion 6108 and Portion 6110 Perry Road, located near Alice Springs, next to the hamlet of Ti Tree in the Northern Territory (“the Northern Territory land”). Mr Sui alleges that the land had access to artesian water and it was hoped to use it for agricultural purposes, primarily for the cultivation of red-rooted salvia, a crop which is said to be popular in the People’s Republic of China (“PRC”).

Issues Arising from the Pleadings

  1. By his Statement of Claim, Mr Sui sought damages against Mr Jiang and Fulin for breach of contract in the sum of A$1.5 million.

  2. In the alternative, Mr Sui alleged that Mr Jiang and Fulin were indebted to him in the further sum of A$1.5 million being the amount loaned to Fulin and guaranteed by Mr Jiang.

  3. By Defence filed on 16 December 2019, Mr Jiang denied that he was liable to Mr Sui for the causes of action pleaded against him.

  4. In a Defence filed on 19 December 2019, Fulin denied that it was liable to Mr Sui with respect to the causes of action pleaded against it.

The Hearing of the Claim for Damages

  1. The hearing of the claim for damages was listed on 30 September 2020 with an estimate of one day.

  2. On that day, Mr MW Young SC appeared for the Plaintiff and Dr E Peden SC and Mr B Debuse appeared for Mr Jiang and Fulin. The hearing proceeded by audio-visual link.

  3. The matter had been listed with a one-day estimate upon the basis that the legal representatives previously appearing for Mr Jiang and Fulin had filed Notices of Ceasing to Act. The apparent expectation was that Mr Sui’s claim would proceed by way of uncontested hearing.

  4. Shortly before 30 September 2020, new solicitors and counsel came into the matter for Mr Jiang and Fulin. The hearing on 30 September 2020 commenced with a number of issues being raised concerning non-compliance with procedural requirements by each party.

  5. On 30 September 2020, Mr Sui was present in a city in Mongolia in the PRC. Mr Sui’s solicitor, Donald Junn, was present in a city in Italy. The international locations of Mr Sui and Mr Junn were to be explained by the restrictions upon international movement arising from the COVID-19 pandemic.

  6. The Court heard evidence on the voir dire from Mr Junn by audio-visual link (T11-21, 30 September 2020).

  7. The Court made rulings with respect to a number of objections by Mr Jiang to evidence adduced in Mr Sui’s case (T21-40, 30 September 2020).

  8. Of particular significance was a ruling allowing Mr Sui to rely upon an English translation of the 2017 written agreement made by a translator, Ms Xinran Ju, which formed part of the Plaintiff’s court book. After recounting the chequered history of the proceedings, the Court stated (T32-33, 30 September 2020):

“The objection to the English translation of the agreement is, to say the least, belated. If there was a real issue in dispute with respect to this translation, there was an expectation that this would have been communicated to the legal representatives for the plaintiff and the Court certainly before Sunday 27 September 2020.

The fact that there was objection to this document was made known to the Court when the first defendant's objections to the plaintiff's evidence, now MFI 1, was provided to my Associate yesterday.

The Court has been informed that the legal representatives for the defendants hold an expert report which challenges parts of the translation of this document.

The expert's report, as I understand it, has been provided during the morning adjournment today to senior counsel for the plaintiff. Although the areas of dispute may be limited, they are not without significance, the Court has been informed.

What then should the Court do with respect to the belated objection to the certified translation of the agreement which the plaintiff served many months ago and which is read as part of the plaintiff's affidavit? In my view, the certified translation is admissible in its present form. The certification is sufficient to identify the expertise of the person who has undertaken the translation. This is not a translation undertaken solely by the solicitor for the plaintiff, although, as it happens, Mr Junn happens to agree with the translation.

The document is relevant and admissible. It is not a legal necessity, in my view, that there be a separate affidavit from the translator attaching this document, certainly in the state of this litigation.

To take an objection now, which demands such a requirement, is, in my view, not a basis upon which the Court should exclude the translation. I propose to admit the translation.

Having done so, if there is some further application made for the defendants to be allowed to adduce evidence, despite the existence of a guillotine order, and despite the significant passage of time since the previous legal representatives for the defendants departed from the litigation, I will consider that application.

I bear in mind that a significant and central issue in this litigation is what was said in this written agreement and what the proper construction of this agreement ought be.

As I have said, I allow the plaintiff to rely upon the English translation of the agreement which is at pages 49 and 50 of the court book as an exhibit to the affidavit of the plaintiff.”

  1. The Court proceeded to rule on further objections taken by Mr Jiang and Fulin, culminating in a ruling on an objection to certain evidence tendered with respect to the Northern Territory land (T38-39, 30 September 2020):

“Objection is taken, as part of the notice served yesterday on behalf of the first defendant, to material which is contained at pp 129 and 130 of the court book, tab 17 to the affidavits of the plaintiff sworn 7 April 2020. The material in question is an email communication from a person in the Northern Territory to the solicitor for the plaintiff, indicating that that person has himself been informed that the sites in question in the Northern Territory, which are the subject matter of the agreement, have had nothing done. There is, in addition, other documentary material of a formal type, which relates to the Northern Territory land, which is subject to Crown leases.

Objection is taken on behalf of the defendants to the tender of this material, upon a number of bases including relevance, hearsay, absence of expertise to express any opinion, and s 135 of the Evidence Act, I take it upon the basis that it is complained that there can be no cross examination of the author.

One of the issues in the litigation concerns what has or [has] not happened to this land in the Northern Territory since the agreement of 26 May 2017 was entered into. It is the case that the material to which I have made mention is expressed in hearsay terms. It is not an expert report. It is what has been reported to Mr Simon McIntyre by another person following a land site visit.

The defences filed on behalf of each defendant, which I have referred to in an earlier judgment, did not meaningfully join issue or plead any matter which appears to contest this aspect. Senior counsel for the plaintiff submits that the appropriate way forward is to implement s 70 of the Civil Procedure Act 2005, and to the extent that the Rules of Evidence might otherwise stand in the way of this material being admitted, dispense with those rules.

I note that this objection was foreshadowed yesterday for the first time in litigation where the first defendant has only very recently re-enacted or revived his interest and legal representation in the proceedings. It may be taken, for the purpose of this ruling, that the first defendant is in a position to have some knowledge himself as to what has or has not happened on the plots of land in question in the Northern Territory.

It is the case that the evidence which is sought to be adduced by the plaintiff on this aspect is limited in its form. There may be an issue as to what weight ought be given to it, but in circumstances of a belated objection to it against the background which I have outlined earlier in [this] judgment, I am satisfied that on the face of it this material is not sufficiently bona fide [in] dispute and that, to the extent the Rules of Evidence may technically stand in the way of its admission, they ought be dispensed with.

I make an order under s 70 of the Civil Procedure Act 2005, dispensing with the Rules of Evidence to the extent that they stand in the way of the tender by the plaintiff of the material referred to in tab 17. That evidence will be accorded such weight as it deserves in light of the evidence in the proceedings.”

  1. An affidavit of Mr Sui sworn 7 April 2020 was read in his case and a bundle of documents contained in Exhibit GS-1 was admitted subject to the rulings given by the Court. Mr Sui gave evidence by audio-visual link and was cross-examined through a Mandarin Chinese interpreter (T41-64, 30 September 2020).

  2. At the conclusion of the hearing on 30 September 2020, the Court gave directions to progress an application by Mr Jiang and Fulin for leave to rely upon the evidence of a translator, Teresa Yuk-Ling Lee, with respect to the 2017 written agreement.

  3. On 22 October 2020, the Court granted Mr Jiang and Fulin leave to rely upon the affidavit of Ms Lee dated 28 September 2020 concerning the translation of the 2017 written agreement, with the question of costs being reserved.

  4. The proceedings came before the Court again on 12 November 2020. By that time, Mr Sui had filed an affidavit of Tianyue Sun dated 8 November 2020 relating to the translation of the 2017 written agreement. The Court adjourned the part-heard hearing to resume on 22 February 2021 with a one-day estimate.

  5. At the resumed hearing on 22 February 2021, Mr Young SC once again appeared for Mr Sui and Dr Peden SC appeared with Ms MJH Waters of counsel for Mr Jiang and Fulin.

  6. Affidavits of Ms Lee sworn 28 September 2020 and 10 December 2020 were read in the Defendants’ case and an affidavit of Ms Sun dated 8 November 2020 was read in the Plaintiff’s case.

  7. The translators, Ms Sun and Ms Lee, gave concurrent evidence with respect to the translation of the 2017 written agreement (T23-58, 22 February 2021).

  8. Written submissions had been exchanged between counsel for the parties dated 10, 15 and 22 February 2021 and counsel spoke to those submissions after the concurrent evidence had been taken.

Factual Matters

  1. A number of factual matters are not in contest in these proceedings.

  2. Mr Sui and Mr Jiang are both businessmen. Both have a history in the development of property (T48, 22 February 2021). Both are from the “Dongbei” or north-east region of the PRC.

Background to 2017 Written Agreement

  1. In 2017, Mr Sui was in Australia as a businessman from the PRC and was interested in finding business and investment opportunities in Australia linked to the requirements for his migration to Australia. In February 2017, Mr Sui was introduced to Shangzhe Cui, a member of the Australian Dongbei Chinese Association (“ADCA”). Through his association with Mr Cui, Mr Sui came to meet Mr Jiang who was a prominent member of the ADCA.

  2. Both Mr Sui and Mr Jiang speak Mandarin Chinese. Mr Sui does not speak English nor read or write English. All interactions between Mr Sui and Mr Jiang were in Mandarin Chinese and, to the extent that English speakers were involved in any discussions with them, the English spoken was translated by a person only identified as Suki (T51, 22 February 2021).

  3. Mr Sui and Mr Jiang visited the Northern Territory in early May 2017. They met with members of the Northern Territory Government and discussed investment in potential horticultural land to grow Chinese herbs, including red-rooted salvia (Sui affidavit, 7 April 2020, paragraph 15) on the Northern Territory land, being the site of two existing Crown leases granted to Fortune Agribusiness Funds Management Pty Limited (“Fortune”).

  4. Following the trip to the Northern Territory, Mr Sui chose the name of a company in which he was prepared to make an investment. Fulin was a shelf company whose name was changed to its present description in June 2017 in accordance with Mr Sui’s suggestion (Sui affidavit, 7 April 2020, paragraph 24).

The 2017 Written Agreement

  1. The 2017 written agreement was drafted by Mr Sui (T46, 22 February 2021). The terms of the 2017 written agreement were negotiated between Mr Sui and Mr Jiang. Accordingly, the 2017 written agreement was drafted by Mr Sui, a lay person, and not by any legal practitioner on behalf of the parties.

  2. In the 2017 written agreement, Mr Sui is referred to as Party B and Mr Jiang as Party A. The agreement was witnessed by Mr Cui.

  3. I set out hereunder the translation of the 2017 written agreement made by Ms Sun, the translator who undertook that task on behalf of Mr Sui and who gave evidence on 22 February 2021.

  4. Ms Sun’s translation of the 2017 written agreement is as follows (affidavit of Ms Sun, 8 November 2020, Annexure D) (words of particular significance are underlined);

“Date 26/05/2017   Place: Sydney

After many meetings to negotiate, Party A and Party B have reached the following agreement on the comprehensive development of agricultural land in Alice Spring, Northern Territory, Australia and on the transfer of the equity in 20 square kilometres of agricultural land:

1.   The agricultural land is located at NT Por6108 MOARRD, NT Por 6110 Perry RD, with a total area of 20 square kilometres.

2.   Party A agrees to transfer 40% of the equity in the 20 square kilometres of agricultural land to Party B, and Party B agrees to pay AUD 1.5 million (one million five hundred thousand Australian dollars) to the account of the newly established Australian Fu Lin Agriculture Investment Co.Ltd, which takes up 40% of the shareholding in the company. Within three working days from the date of signature of this agreement, Party B shall remit to the payee and account specified by Party A the RMB equivalent of AUD 150,000 as an advance payment. The balance shall be transferred to the account specified by Party A (payee: XING Xianggui Branch: Industrial and Commercial Bank of China Beijing Asian Games Village Branch) no later than 6 June 2017.

3.   Party B shall transfer in total between RMB 10 million and RMB 12 million to the account specified by Party A. Party A guarantees that the funds be safely remitted to Party B's Westpac personal account in Sydney whose details are as follows: Payee: [Account Number omitted]. The funds will be converted to AUD using the bank exchange rate on the day. Party B shall transfer the investment funds of AUD 1.5 million to the account of the new company: [Account Number omitted]. Should problems arise out of the process of remitting funds from China to Australia, Party A shall bear full responsibility.

4.   Party A guarantees the safety of the funds of Party B in Australian Fu Lin Agriculture Investment Co.,Ltd. and guarantees an annual return of 10% for three years, i.e. Party A shall pay AUD150,000 cash to Party B by the 365th day from the date AUD1.5 million enters the account. Returns shall be paid in similar fashion in the second and third year. From the fourth year onwards, Party B is entitled to request an increase in the return on his investment, or choose to take part in the company's operation and become a true 40% shareholder, or choose to leave the company, but Party B is entitled to transfer the 40% equity in the 20 square kilometres to others at the then market price. In the event the sale price is for less than AUD1.5 million, Party A shall make up the difference. Prior to the transfer of the land, Party A guarantees that Party B has legal ownership of 8 square kilometres of the agricultural land and shall provide Party B with relevant legal documents.

5.    This agreement is valid from the date of signature to December 31, 2020. Matters not covered by this agreement may be dealt with through friendly negotiation. Although this agreement is written in Chinese it has the legal effect of an agreement written in English.

Party A

JIANG Zhaoqing

[signature]

Party B

SUI Guangyi

[signature]

Witness

CUI Shangzhe

[signature]”

  1. It will be observed that the corporation described in Clause 2 of the 2017 written agreement as “The newly established Australian Fu Lin Agriculture Investment Co Ltd” is not stated to be a party to that agreement. While the reference may be assumed to be to the Second Defendant, Fulin, the correct name is indicated by the registration of “Australian Fulin Agriculture Pty Ltd” on 30 November 2015 (Sui affidavit, 7 April 2020, page 51).

  1. Between 30 November 2015 and 2 June 2017, Mr Jiang was a director and secretary of Fulin. On 16 April 2018, each of Mr Sui, Mr Jiang and Mr Cui were appointed directors of Fulin with Mr Jiang being appointed as well as secretary of the corporation (Sui affidavit, 7 April 2020, pages 53-54). According to the evidence, each of Mr Sui, Mr Jiang and Mr Cui continued to hold these offices.

  2. As will be seen, Mr Young SC submitted that it may be implied or inferred clearly from the 2017 written agreement that the company which became Fulin was a party to that agreement. On the other hand, Dr Peden SC submitted that Fulin was not a party to the 2017 written agreement, but merely “passively” included, and that this was one of several reasons why Mr Sui’s claim against Fulin should fail.

Events After Execution of 2017 Written Agreement

  1. Between 9 and 15 June 2017, Mr Sui transferred funds in the total amount of A$1.5 million to the bank account of Fulin (Sui affidavit, 7 April 2020, paragraph 27).

  2. In the course of the next few months, Mr Sui communicated with Mr Jiang via WeChat about the title to the Northern Territory land (Sui affidavit, 7 April 2020, paragraph 28).

  3. The 2018 interest payment of A$150,000.00 was paid to Mr Sui by 15 August 2018 (Sui affidavit, 7 April 2020, paragraph 29).

  4. In parts of Mr Sui’s affidavit which were allowed in evidence, he referred to WeChat communications he had with Mr Jiang in 2018 concerning the Northern Territory land (Sui affidavit, 7 April 2020, paragraphs 29-31).

  5. The 2019 interest payment of A$150,000.00 was paid to Mr Sui by Mr Jiang on 8 July 2019 (Sui affidavit, 7 April 2020, paragraph 33).

  6. The evidence does reveal that a Crown lease over the Northern Territory land was transferred on 18 December 2017 for the sum of A$968,000.00 from Fortune to Fulin (Sui affidavit, 7 April 2020, Exhibit GS-1, pages 57-78). In this way, Fulin acquired a leasehold interest in the Northern Territory land, but that is the extent of the evidence beyond that contained in the email of 20 August 2019 which the Court admitted in Mr Sui’s case.

  7. In July 2019, Mr Sui retained his present solicitors to investigate the matter. Mr Sui’s solicitors caused enquiries to be made in the Northern Territory with respect to the Northern Territory land and, on 20 August 2019, a response was received to the effect that “The sites are as they were purchased and nothing has been done” (Sui affidavit, 7 April 2020, paragraph 35; Exhibit GS-1, page 129). I overruled an objection by the Defendants to this evidence in the ruling given at the hearing on 30 September 2020 set out earlier in this judgment (at [15]). In that ruling, I stated that the evidence would be accorded such weight as it deserved in light of all the evidence in the proceedings. No evidence was adduced by Mr Jiang or Fulin on this issue so that the only evidence before the Court is that which was admitted on 30 September 2020.

  8. In circumstances where the steps taken by Mr Jiang and Fulin with respect to the Northern Territory land, after the 2017 written agreement was entered into, are within the knowledge of the Defendants and no evidence has been adduced by them to contradict the evidence admitted on 30 September 2020, it will be necessary to determine what weight should be given to the unchallenged evidence on this issue. In this respect, it should be kept in mind as well that Mr Sui has himself been a director of Fulin since 16 April 2018. I will return to this issue later in the judgment.

The 2019 Letter of Demand

  1. By letter dated 30 August 2019 addressed to Mr Jiang and Fulin, the solicitors for Mr Sui sought payment of the sum of A$1.5 million noting that, if payment was not made, proceedings would be commenced in this Court claiming damages for breach of contract (Sui affidavit, 7 April 2020, Exhibit GS-1, pages 131-132).

  2. As observed earlier, the Statement of Claim was filed in this Court by Mr Sui on 27 September 2019.

Applicable Legal Principles

  1. There was no dispute between the parties as to the legal principles to be applied concerning the proper construction of a written commercial contract.

  2. In In the Matter of Jimmy’s Recipe Pty Ltd (No. 2) [2020] NSWSC 632 (“Jimmy’s Recipe (No. 2)”), Leeming JA said (at [22]) that the meaning of the contract was to be determined objectively:

“There was no dispute, nor could there be, that the principles governing the construction of a written commercial contract such as the deed require the meaning to be determined objectively. The intention imputed to the parties derives from the contractual text in light of its context and purpose: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35], Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52]; Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392 at [51]-[75] and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]. But expressed at that level of generality, the principles do not much assist the resolution of the parties’ dispute.”

  1. In Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37, French CJ, Nettle and Gordon JJ (at [46]-[51]) expanded upon the nature of this objective exercise (footnotes omitted):

“46   The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

47   In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

48   Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

49   However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

50   Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

51   Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption ‘that the parties ... intended to produce a commercial result’. Put another way, a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.”

  1. It is necessary to place a contract in its factual matrix in order to construe it, giving a purposive and objectively reasonable construction. The intention imputed to the parties must be derived from the text of the contract having regard to its context and purpose: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16].

  2. Because the 2017 written agreement is wholly in writing, the parol evidence rule applies so that the Court cannot have regard to material beyond the text of the written agreement and the admissible surrounding circumstances only: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 (“Codelfa Construction”) at 347-348; [1982] HCA 24 (per Mason J). The subjective intention of the parties, or any expressed intention different to the written agreement, must be ignored (unless there is an admission) because there is no claim for rectification: Codelfa Construction at 352-353; Equuscorp Pty Ltd v Glengallen Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [33].

  3. Dr Peden SC submitted that Mr Sui prepared the 2017 written agreement to reflect the terms he required and therefore, to the extent that there is any ambiguity that cannot otherwise be resolved, it must be construed in favour of Mr Jiang by reason of the contra proferentem rule: GL Nederland (Asia) Pty Ltd v Expertise Events Pty Ltd [1999] NSWCA 62 at [27]. Mr Young SC submitted that the contra proferentem rule has no work to do in this case as there is no ambiguity in any event.

  4. I approach this issue upon the basis that the contra proferentem rule is one of last resort and will apply only when ambiguity remains after all other avenues of construction have been exhausted: Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 at [140] (per Leeming JA).

  5. To the extent that there are alternative meanings to be given to certain Mandarin Chinese words contained in the 2017 written agreement, reference was made to authorities concerning the natural and ordinary meaning of words and translation of words including the use of dictionaries. In Jimmy’s Recipe (No. 2), Leeming JA (at [35]-[41]) observed that Australian courts should be cautious before accepting submissions on the construction of statutes or contracts based on dictionary definitions. Construction of documents is not much advanced by choosing a favoured dictionary definition of a word, and substituting that definition into the text: South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 at [77]-[81]. As Leeming JA observed in Jimmy’s Recipe (No. 2) at [35], the choice of the favoured definition may dictate the result and produce merely the illusion of analysis.

  6. In TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [80], Leeming JA (Beazley P and Emmett AJA agreeing) noted that words may have different meanings in different contexts and there may be “inutility of dictionary definitions in construing a legal text”. Further, considering the nature and ordinary meaning does not foreclose consideration of the commercial purpose and objects of the contract and the meaning a reasonable business person would have given to the words: Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95 at [46]-[47].

  7. It was common ground that the correct approach for the Court to adopt in this case is to consider each of the definitions provided by the expert translators and determine which possible meaning of the Mandarin Chinese characters is the best fit for the proper construction of the 2017 written agreement as a whole. The meanings given to a particular word are all self-evidently contextual: Jimmy’s Recipe (No. 2) at [39].

  8. Dr Peden SC submitted that the meanings ascribed by the expert translators cannot resolve the issue for the Court and that it is not a case of preferring the expertise of one translation over the other. Mr Young SC did not dispute this approach in this case.

  9. With respect to Clause 4 of the 2017 written agreement (see [33] above), Dr Peden SC submitted that it did not provide a guarantee by Mr Jiang of the return of Mr Sui’s investment money for a number of reasons, including that the proper construction of the guarantee was not ambiguous. To the extent that it may be considered ambiguous, however, Dr Peden SC submitted that liability of Mr Jiang (as the surety) is subject to a rule of strict construction such that an ambiguous contractual provision should be construed in the surety’s favour: Bofinger v Kingways Group Limited (2009) 239 CLR 269; [2009] HCA 44 at [53]. Mr Young SC submitted that this rule had no work to do in this case as the proper construction of the guarantee contained in the 2017 written agreement was not ambiguous.

  10. Once again, it was common ground that, in some circumstances, repudiation of a contract may be regarded as an anticipatory breach entitling the innocent party to terminate the contract. In addition, a party may terminate a contract for anticipatory breach where, at the point of termination, the other party was wholly and finally disabled from performing its contractual obligations when the time for performance, so far as it is of the essence, should arrive: Sunbird Plaza Pty Limited v Maloney (1988) 166 CLR 245 at 262, 278-280; [1988] HCA 11.

  11. Applying these principles, Dr Peden SC submitted that anticipatory breach had not been established in this case. Mr Young SC submitted that Mr Sui had demonstrated this aspect of the claim.

The Evidence of the Expert Translators

  1. As noted earlier, Ms Sun and Ms Lee gave evidence at the hearing on 22 February 2021. Also in evidence is the translation of the 2017 written agreement by Ms Ju, which was admitted in the Plaintiff’s case on 30 September 2020.

  2. The greatest divergence between the translations relates to the Mandarin Chinese characters “gu quan” which appear at three locations in the 2017 written agreement, being once in the unnumbered preamble prior to Clause 1 and then twice in Clause 2 of the agreement (see [33] above).

  3. On these three occasions, Ms Ju translated “gu quan” to mean “the shareholding transfer of 20 square kilometres of agricultural land” (in the preamble) and “40% ownership of the 20 square kilometres” (at the first point in Clause 2) and “40% shareholding of the company” (at the second point in Clause 2).

  4. Ms Sun translated the term “gu quan” as meaning (as appears in the version at [33] above) “transfer of the equity in 20 square kilometres” (in the preamble) and as “transfer 40% of the equity in the 20 square kilometres” (at the first point in Clause 2) and “40% of the shareholding in the company” (at the second point in Clause 2).

  5. Ms Lee translated the term “gu quan” as meaning “transfer of the shareholder’s right of 20 square kilometres” (in the preamble) and as “transfer 40% of the shareholder’s right of the 20 square kilometres” (at the first point in Clause 2) and “40% of the shareholder’s right of this company” (at the second point in Clause 2).

  6. The variation in translation involved the use of the terms “equity”, “ownership” or “shareholding” depending upon context. The Mandarin Chinese characters “gu quan” do not appear elsewhere in the 2017 written agreement. However, Ms Lee and Ms Sun explained, as well, their translations of terms in Clause 4 of the 2017 written agreement which involved concepts of “proprietary right” or “legal ownership”.

  7. The evidence of Ms Sun and Ms Lee was of assistance to the Court in circumstances where the 2017 written agreement is composed in a language which the Court cannot read. The process of construction to be undertaken by the Court involves application of the principles referred to earlier in this judgment (at [48]-[56]). Although submissions were made by both sides with respect to features of the evidence of the expert translators, I do not consider that it is necessary for the Court to express any view concerning criticisms of the evidence of these witnesses made in closing submissions. Rather, the task for the Court is to construe the document, with the benefit of the translations, and for the Court to determine the question of meaning and context by reference to the entirety of the 2017 written agreement itself.

  8. Against this background, it is appropriate to set out the submissions of the parties before proceeding to resolution of the competing submissions.

Submissions on Behalf of Mr Sui

  1. Mr Young SC submitted that all three translations of Clause 2 of the 2017 written agreement provided that Mr Sui was to pay A$1.5 million to Fulin and that Mr Sui was to hold 40% of the shareholding in the “newly established” corporation Fulin. Clause 3 of the 2017 written agreement dealt with the mechanics of transfer of Mr Sui’s money from China to Australia with that to be organised by Mr Jiang.

  2. Mr Young SC submitted that Clause 4 was the most significant clause in the context of the present litigation. Whilst noting some variations as between the translations of Clause 4, it was noted that each translation stated that there was a guarantee by Mr Jiang that Mr Sui had legal ownership of eight square kilometres of agricultural land and that Mr Jiang was to provide Mr Sui with “legal documents” relevant to the matter. It was submitted that Clause 4 indicated that Mr Sui had not merely been promised shares, but that at the start of the fourth year of the loan (that is, after three years), he was entitled to receive a legal proprietary right to eight square kilometres of the Northern Territory land.

  3. Mr Young SC submitted that, in legal terms, the 2017 written agreement amounted relevantly to the following:

  1. Mr Sui was advancing the sum of A$1.5 million to Fulin;

  2. Mr Jiang was guaranteeing obligations of Fulin under that loan;

  3. the loan was for a three-year term;

  4. interest would be payable at the rate of 10% per annum on the loan in annual instalments;

  5. Mr Sui would be issued 40% of the shares in Fulin, but would not be the “real 40% shareholder” or have any right to participate in any decision making in relation to Fulin despite that shareholding – it followed, it was submitted, that the shareholding was issued by way of security for the A$1.5 million rather than beneficially;

  6. at the end of three years (at the start of the fourth year), there was potential for the loan to be rolled over on terms acceptable to Mr Sui;

  7. if there was no rollover of the loan, Mr Sui could choose either to retain the 40% shareholding beneficially in exchange for forgiving the loan or, alternatively, abandon the 40% shareholding and receive a transfer of eight square kilometres of Fulin’s land by way of repayment of the debt; and

  8. Mr Jiang agreed to make up any shortfall in the sale price of the eight square kilometres of the Northern Territory land to the extent that may fall short of the A$1.5 million loan amount.

  1. Although the 2017 written agreement did not name Fulin as a party, Mr Young SC submitted that Fulin was inextricably a part of the contemplated arrangement. Mr Young SC submitted that the loan was being made to Fulin, being the company that Mr Sui and Mr Jiang were setting up to be the legal owner of the Northern Territory land. In order for the eight square kilometres to be transferred to Mr Sui, Fulin as owner would have to be involved so as to sign the necessary transfer. Thus, although the 2017 written agreement only mentioned Mr Sui and Mr Jiang as parties, it was submitted that there were in fact three parties to that agreement.

  2. Mr Young SC submitted that, as at 26 May 2017, Mr Jiang was the sole director and secretary of Fulin as well as being the sole shareholder.

  3. Accordingly, Mr Jiang had the authority to contract on behalf of Fulin.

  4. Mr Sui paid the agreed sum of A$1.5 million and Mr Jiang transferred to him 40% of the shares in Fulin. The first two years’ interest payments were made to Mr Sui in 2018 and 2019.

  1. It was submitted that, in actuality, Fulin had never owned any part of the Northern Territory land as the entirety of that land was owned by the Crown. The land was subject to Crown Leases in materially identical terms, each being five-year leases commencing on 14 September 2015 and expiring on 13 September 2020.

  2. At the time of the 2017 written agreement, the Crown leases were held by Fortune, which executed a transfer of the benefit of the Crown leases to Fulin on 18 December 2017. As at the date of commencement of the present proceedings, however, that transfer had not been registered in the Northern Territory Land Register which continued to record Fortune as being the holder of the Crown leases.

  3. Mr Young SC submitted that the Crown leases did provide a regime whereby the holder of the Crown leases could obtain a freehold title to the land from the Crown, but only upon the satisfaction of a series of conditions involving the development of the land for agriculture. These conditions required that at least 10 hectares of the Northern Territory land would be cleared, cultivated, prepared and planted with commercial horticultural crops so that by the end of the fifth year, there were at least 50 acres under cultivation. There was a further condition requiring the lessee to construct sufficient infrastructure on the land.

  4. Reference was made to a search certificate concerning the Northern Territory land tendered by Mr Jiang and Fulin (Exhibit 4) which stated that the two Crown leases were extended to 13 September 2021, with Fulin in each case being recorded as the holder of that lease. Mr Young SC noted that the certificates record the same conditions in the Crown leases as in the earlier version contained in Mr Sui’s affidavit of 7 April 2020, with no provision for extension of those timeframes.

  5. Senior counsel for Mr Sui pointed to the evidence that, as at 20 August 2019, no noticeable development of any sort had occurred on the Northern Territory land (see [43] above). It followed, he submitted, that, at the very least, the requirements for cultivation and planting for the first four of the five years of the Crown leases were never met. It further followed, he submitted, that well before 30 August 2019 (the date of termination by Mr Sui), it was no longer possible for the conditions of the Crown leases to be complied with such that Fulin would be able to obtain freehold title to the Northern Territory land by 26 May 2020, the end of the third year of the 2017 written agreement, or at all (even assuming that Fulin was registered as the holder of the Crown leases).

  6. Accordingly, Mr Young SC submitted that, as at 30 August 2019, Fulin had no possibility of being able to comply with any demand Mr Sui might make after 26 May 2020 for a transfer to Mr Sui of eight square kilometres of the land. It followed that, by 30 August 2019, Fulin had committed a fundamental anticipatory breach of the 2017 written agreement by rendering itself incapable of complying with the key term of that agreement.

  7. Mr Young SC submitted that Mr Jiang was similarly in breach as he had expressly guaranteed to Mr Sui that the eight square kilometres would be transferred to Mr Sui in accordance with the 2017 written agreement.

  8. In consequence, it was submitted that the 30 August 2019 termination by Mr Sui of the 2017 written agreement was lawful and thus he is entitled to an award of damages in relation to that breach.

  9. Mr Young SC acknowledged that there is no evidence that Mr Sui had suffered loss beyond the sum of A$1.5 million plus interest as there is no evidence that, if eight square kilometres of the Northern Territory land had been sold, they would have realised more than that sum. Given the fact, however, that Mr Sui was the recipient of a guarantee under the 2017 written agreement to the effect that, if the sale price was less than A$1.5 million, then Mr Jiang would make up the shortfall, the value of Mr Sui’s contractual rights could be no less than A$1.5 million.

  10. Mr Young SC referred to Mr Sui’s alternative claim in debt for A$1.5 million in that this sum was the amount advanced by Mr Sui to Fulin. Even if Fulin was found not to be a party to the 2017 written agreement, it had still been the recipient of a A$1.5 million loan which it will need to repay to Mr Sui, in circumstances where that agreement has now been validly terminated, so that the terms of that agreement applicable to alternative means of satisfying the loan are no longer available.

  11. It was submitted that Mr Jiang was a guarantor of that loan.

  12. Either way, it was submitted that Mr Sui was entitled to a judgment against both Mr Jiang and Fulin in the sum of A$1.5 million together with interest. Interest was sought at the rate of 10% per annum as agreed and set out in the 2017 written agreement, with such interest to be paid from 26 May 2019 until judgment as interest had been paid to Mr Sui already for the first two years of the loan.

  13. Mr Young SC acknowledged that Mr Sui’s 40% shareholding in Fulin is not held beneficially, but merely by way of security for the monies owed to him. Accordingly, it was accepted that Mr Sui is both obliged and prepared to transfer the entirety of his shareholding back to Mr Jiang upon the repayment of the loan and interest in satisfaction of such judgment of the Court, in which those rights become merged.

Submissions for Mr Jiang and Fulin

  1. Dr Peden SC developed a series of submissions which included the following:

  1. the 2017 written agreement was a shareholder investment agreement as distinct from an agreement where Mr Sui was to have a personal proprietary interest in the Northern Territory land;

  2. at all times, Mr Sui was aware that the Northern Territory land was leasehold and not freehold land;

  3. a principal motivating factor in Mr Sui entering into the 2017 written agreement was his migration application to the Australian authorities;

  4. the use of the characters "gu quan" meaning "shareholder's right" (as stated by Ms Lee) best fits the context and purpose of the 2017 written agreement which was to give Mr Sui shareholder rights in Fulin and not personal property rights in the Northern Territory land; and

  5. Mr Sui had failed to establish his cause of action - the 2017 written agreement provided the mechanism for Mr Sui to exit the transaction in the fourth year and he had not sought to do so.

  1. It was submitted that the Court is required to:

  1. properly construe the 2017 written agreement in light of the available evidence of "genesis, aim and purpose";

  2. consider the three available and competing translations of the 2017 written agreement; and

  3. determine whether Mr Sui's claim succeeds against Mr Jiang and Fulin.

  1. After reciting relevant events in 2017, it was submitted that the Court could infer that Mr Sui’s investment was for immigration purposes. The investment was long term, in an Australian company, in a remote part of Australia and had the support of the Australian Government. It can be further inferred that Mr Sui sought to satisfy his migration application by investing A$1.5 million in the purchase of 40% of the shares in Fulin. Lastly, it was submitted that it can also be inferred that Mr Sui was aware that the Northern Territory land was leased rather than owned, an issue to which the Court will return.

  2. With respect to the express purpose of the 2017 written agreement, it was noted (relying on the translation by Ms Lee) that the preamble referred to a "shareholding transfer" or "transfer of the shareholder's right" and that this highlighted that the agreement concerned a transfer of "shareholding" rather than transfer of land. This was submitted to be an important indication of the purpose of the 2017 written agreement as a whole. Further, Dr Peden SC submitted that without evidence of negotiations by the parties as to the drafting of the agreement, that agreement can be presumed to be constructed to reflect the terms required by Mr Sui and any ambiguity remaining must be construed in favour of Mr Jiang by reason of the contra proferentem rule.

  3. Dr Peden SC submitted that the primary purpose of the 2017 written agreement was to set up payment mechanisms to ensure the safe transfer of Mr Sui's A$1.5 million to Australia and subsequent investment of those funds in Fulin, as evidenced by the majority of the terms of the 2017 written agreement. Mr Sui's concerns regarding overcharging by intermediaries in the transferring process was highlighted as relevant context (T45-46, 30 September 2020). It was submitted that references to a “safe” transfer in the 2017 written agreement concerned the security of the transfer mechanisms and nothing more. Accordingly, it was not possible to construe the reference to “safely” as a promise for the return of the funds.

  4. With respect to the various translations afforded to the Mandarin Chinese characters “gu quan”, Dr Peden SC submitted that the meaning of these characters which best reflects the purpose and object of the 2017 written agreement is that Mr Sui was to have shareholder rights in Fulin only and that agreement did not transfer to him any proprietary rights in the Northern Territory land.

  5. Dr Peden SC submitted that, in addition to the payment mechanisms for the transfer of the investment funds, terms were included in the 2017 written agreement to document the return of investment earnings to Mr Sui as a shareholder. Contrary to a loan agreement, the 2017 written agreement did not contain any repayment provisions. It was submitted that the terms evidencing this included:

  1. the transfer of a 40% shareholding in Fulin to Mr Sui in consideration of an investment of A$1.5 million;

  2. the guarantee by Mr Jiang of a 10% investment earning for three years;

  3. that from Year 4, Mr Sui had the right to:

  1. request an increase in the return for investment, or

  2. to fully participate in the operation of Fulin and become a real shareholder with 40% of the shares, or

  3. exit Fulin with the right to transfer 40% of the Northern Territory land (that is, 40% of 20 square kilometres) to other people according to the market price at the time,

  1. Mr Jiang agreed to bear the monetary responsibility for the difference if Mr Sui's interest was sold for less than A$1.5 million;

  2. Mr Jiang also agreed to guarantee that Mr Sui had a proprietary right of legally owning eight square kilometres of agricultural land and would give Mr Sui the relevant legal documents.

  1. It was also submitted that a further purpose was to document investment earnings on the 40% shareholding of Mr Sui and Fulin. Mr Sui was merely seeking to document an annual return of 10% on his investment in Fulin, and was not concerned about the fact that the Northern Territory land was leasehold or whether he held a proprietary interest in the land.

  2. Mr Sui deposed to his own knowledge that the lease would be transferred to Fulin (Sui affidavit, 7 April 2020, paragraph 28). It was submitted that this was evidence that personal ownership of the Northern Territory land by Mr Sui was not an entitlement that either party intended. The agreement and involvement of Fulin would have been required to give Mr Sui a personal interest in the land.

  3. Dr Peden SC submitted that the correct construction was that Fulin would retain the lease, so as to preserve Mr Sui's 40% shareholding in Fulin, as equivalent to a 40% interest in the Northern Territory land. In Year 4, Mr Sui could then elect to sell an undiluted 40% share in Fulin. It was submitted that where there was no reference to any discussions or consideration given to the mechanisms required in the subdivision or assignment of a portion of the Northern Territory land, it was improbable that the parties intended to transfer title to Mr Sui. This was supported by the fact that Mr Sui ought to be found to have known that the Northern Territory land was subject to Crown Leases.

  4. Dr Peden SC submitted that it was incorrect to treat each of the elements in Clause 4 of the 2017 written agreement as giving rise to rights based on an equivalent legal concept as contended for Mr Sui. The assurances and promises made are suited to the circumstances of the parties and should not be transformed into a “charter of rights”.

  5. If such an outcome was sought by Mr Sui, it was submitted that the word “repayment” or “loan” would have been expected to appear somewhere in the 2017 written agreement, but they do not appear. Further, it was submitted that the result now sought could easily have been achieved by a requirement that Mr Jiang repurchase Mr Sui's shares at the investment price paid. However, that is not one of the elections that Mr Sui sought as a remedy when he drafted the 2017 written agreement.

  6. It was submitted for the Defendants that the Court can confidently find that at the time the 2017 written agreement was entered into, both Mr Sui and Mr Jiang were aware that the Northern Territory land was held by Fortune as lessee from the Northern Territory Government. Dr Peden SC submitted that the Court can comfortably find that Mr Sui was aware of the leasehold status of the land at the time of formation of the 2017 written agreement for the following reasons:

  1. it was important to Mr Sui in considering investing money to know who owned the Northern Territory land (T52, 30 September 2020);

  2. Mr Sui “understood that the cooperation of the Northern Territory government was important for the success of the project” (T51, 30 September 2020);

  3. Mr Sui had travelled to the Northern Territory with Mr Jiang to meet the relevant Northern Territory Government Minister and had been accompanied by a translator (T51, 30 September 2020);

  4. Mr Sui attended a two-hour meeting with Northern Territory Government officials and subsequently travelled to the Northern Territory land (Sui affidavit, 7 April 2020, paragraph 15);

  5. Mr Sui never complained at an earlier stage that the Northern Territory land was leasehold and not freehold as was expected if that was of concern to him; and

  6. Mr Sui did not include the true facts of his knowledge of the Northern Territory land in his affidavit.

  1. It was submitted, as well, that Mr Sui had given conflicting evidence about his knowledge of Fortune's interest in the Northern Territory land:

  1. in his affidavit, Mr Sui deposed to a conversation with Mr Jiang on 1 May 2017 when Mr Jiang said his company “has 20 square kilometres of agricultural land” and that the land is currently under the name of “Australian Fortune Agriculture Investment Fund” and that he is “looking for an investor to take [a third party shareholder's] 40% out” (Sui affidavit, 7 April 2020, paragraph 10);

  2. under cross-examination, Mr Sui said that back in May 2017, he did not know that Fortune had an interest in the Northern Territory land and that Mr Jiang had never said that the land was “with the company called Fortune Agriculture” (T51, T53, 30 September 2020).

  1. It was submitted therefore that the Court can be confident that the purpose of the 2017 written agreement was not to transfer any proprietary right in the Northern Territory land to Mr Sui.

  2. It was submitted that this is consistent with the way Mr Sui drafted the 2017 written agreement. Despite Mr Sui's knowledge of the leasehold interest of Fortune in the Northern Territory land, Mr Jiang's 50% shareholding in Fortune and the parties' agreed intention to transfer Fortune's leasehold interest in the land to Fulin, the 2017 written agreement did not contain any obligation on Mr Jiang to procure the transfer of the lease from Fortune to Fulin, documentation of the process for a further transfer of the 40% interest in the land to Mr Sui or execution of that agreement by Fulin as the proposed transferee of the leasehold.

  3. Critically, it was submitted, Mr Sui was appointed a director of Fulin in April 2018, yet he brought forth no evidence that in his capacity as a director of Fulin, he sought to transfer an interest in the lease/Northern Territory land to himself. It was submitted that this is consistent with the 2017 written agreement of the parties that Mr Sui was not to have a personal proprietary interest in the Northern Territory land.

  4. It was submitted that the use of the characters “gu quan” meaning “shareholder's right” best fits the context and purpose of the 2017 written agreement which was to give Mr Sui shareholder rights in Fulin. The purpose was not to give Mr Sui personal proprietary rights in the Northern Territory land and the 2017 written agreement as drafted did not include mechanisms in which to do so.

  5. Dr Peden SC submitted that Clause 4 of the 2017 written agreement, on its proper construction, does not provide a guarantee by Mr Jiang on the return of Mr Sui's investment money. In support of this submission, it was said that:

  1. the proper construction of the “guarantee” is not ambiguous - however, to the extent that it is, the liability of the surety is subject to the rule of strict construction such that ambiguous contractual provisions should be construed in the surety's favour (see [58] above);

  2. a guarantee of “safety” is not a guarantee of repayment - the safety refers to the security of the fund in Fulin - the fund was to be used by Fulin for the purposes of the development of the land and the only guarantee was that the use of the fund would comply with that purpose - the transfer to Fulin of Fortune's lease of the Northern Territory land was part of that purpose and that transfer occurred;

  3. properly construed (and to the extent necessary in favour of Mr Jiang), the only guarantees required were that:

  1. the fund would be used for the agreed purpose, and

  2. the investment earnings of A$150,000.00 per annum would be paid to Mr Sui from the date of investment of the A$1.5 million.

  1. With respect to the claim that Mr Jiang and Fulin had committed anticipatory breaches of the 2017 written agreement, it was submitted that, on a proper construction, there was no obligation to ensure Fulin had freehold title over the Northern Territory land. Even if there was such an obligation, merely because some conditions of the Crown lease were not satisfied did not mean that freehold title could never be obtained by Fulin from 26 May 2020.

  2. Dr Peden SC relied upon the principle that a person cannot take advantage of his own wrong to insist upon a particular construction of a contract or its operation: Ruthol Pty Ltd v Mills [2003] NSWCA 56 at [94]. It was submitted that Mr Sui must bear responsibility for any failing of Fulin to comply with the Crown lease (if that is the case) because he was a director of Fulin. He cannot take advantage of the clause in the contract in an attempt to pass his own responsibility to develop the land, or that of all of the directors acting together, onto Mr Jiang alone.

  3. It was submitted that there is no evidence that Mr Sui had taken any steps to sell his shareholding in Fulin, nor is there evidence of the market price of the shares at any point in time. It was submitted that it was never contemplated by the parties that, had the contract been performed, either Mr Jiang or Fulin would simply pay A$1.5 million to Mr Sui as is alleged.

  4. Even if the proper construction of the 2017 written agreement is that there was a promise that, at some time in the future, the freehold title (rather than leasehold title) would be held, it was submitted that there is no evidence of loss suffered by Mr Sui by reason of such a breach. Fulin is the lessee of the Northern Territory land and it has not been established by Mr Sui that Fulin could not obtain freehold title in the land even if conditions are not satisfied under the lease.

  5. With respect to the claim against Fulin, Dr Peden SC submitted that Fulin is not a party to the 2017 written agreement. As lessee of the Northern Territory land, it was submitted that Fulin was not under any contractual or other obligation to perform that agreement between Mr Jiang and Mr Sui so that, in effect, Fulin was the “passive object” of that agreement. Apart from the fact that Fulin was not a party to the 2017 written agreement, it was submitted that nowhere is there any evidence brought forward by Mr Sui that Fulin was obliged to do anything in respect of the Northern Territory land.

  1. It was submitted that it was also unusual that Mr Sui had brought an action against Fulin whilst he has been a director of that company since 16 April 2018, and was therefore involved in all the decisions of Fulin. Despite his entitlement as a director to Fulin's records, Mr Sui did not give evidence of any documentation to suggest that promises were made to him regarding the development of the Northern Territory land.

  2. It was submitted that there was no evidence from Mr Sui that, as at 27 September 2019, Fulin was either not complying with conditions of the leases or was unable to effect the conversion of the leases to freehold title prior to 26 May 2020 when Mr Sui's Year 4 options with his investment earnings crystallised.

  3. Counsel for Mr Jiang and Fulin noted that Clause 5 of the 2017 written agreement made clear that matters not covered by that agreement were to be dealt with through “friendly negotiation” so that it was clear that the 2017 written agreement was intended to deal with the limited matters contained within it.

  4. It was submitted that little weight should be given to the email admitted in evidence concerning what had been done with the Northern Territory land (see [43] above).

  5. Even if Mr Sui had made good the cause of action upon which he sues, it was submitted for Mr Jiang and Fulin that Mr Sui had failed in his duties as a director of Fulin and that his commencement of proceedings against Fulin amounts to a failure to mitigate his loss as such actions may impact the market price of Fulin. Accordingly, any damages ought be reduced to the extent Mr Jiang failed to act reasonably to minimise his loss.

Decision Concerning Liability

  1. The present proceedings illustrate the difficulties and complications which arise where persons without legal training purport to enter into a written commercial agreement involving a substantial sum of money. The position is complicated even further in this case as the 2017 written agreement is in Mandarin Chinese and there is scope for debate as to the translation of words and phrases used in that agreement.

  2. That said, it is the task of the Court to seek to construe the 2017 written agreement applying the principles relevant to construction of written commercial contracts as set out earlier in this judgment (see [48]-[56]).

  3. In my view, the proper construction of the 2017 written agreement is that it was an agreement whereby Mr Sui invested funds for the activities of Fulin upon the basis of a 10% annual return for three years with various scenarios available in the fourth year. I do not consider that the 2017 written agreement provided for Mr Sui to purchase a share in the Northern Territory land at that time. Rather, the third option in that agreement allowed Mr Sui to choose to leave Fulin and to transfer his 40% holding in the shares of Fulin to others and, in the event of any shortfall involving a sale for less than A$1.5 million, Mr Sui was able to pursue Mr Jiang for the difference. The proper construction of the 2017 written agreement is that Mr Jiang undertook or guaranteed to pay to Mr Sui any shortfall so as to ensure that Mr Sui recovered the A$1.5 million invested in the first place.

  4. In reaching this view, I accept the submissions for the Defendants (at [94] above) that the meaning of the Mandarin Chinese characters “gu quan” is that proffered by Ms Lee (see [65] above) so that Mr Sui was to have shareholder rights in Fulin only and the 2017 written agreement did not transfer to him any proprietary rights in the Northern Territory land.

  5. I accept the submission for the Defendants (see [107] above) that Clause 4 of the 2017 written agreement did not provide a guarantee by Mr Jiang on the return of Mr Sui’s money.

  6. I do not favour a construction of the 2017 written agreement whereby, in some way, Mr Sui would be entitled to obtain ownership of eight square kilometres out of the 20 square kilometres which comprised the Northern Territory land. This was not a contract which allowed for the purchase of land by Mr Sui. Rather, Clause 4 of the 2017 written agreement provided for three different scenarios:

  1. on the first scenario, Mr Sui could request an increase in the return on his investment of the sum of A$1.5 million, which would then continue the arrangement at a renegotiated rate of return;

  2. on the second scenario, Mr Sui could become involved in the operation of Fulin, and become a 40% shareholder in Fulin in an ongoing and practical way; or

  3. on the third scenario, Mr Sui could choose to end his association with Fulin, and thus leave the company in circumstances where he would be entitled to transfer the 40% shareholding to others and, in the event that he did not receive A$1.5 million in payment, look to Mr Jiang to make up the difference between the sale price of the shares and the sum of A$1.5 million.

  1. The evidence reveals that Mr Sui received the 10% annual return for the years 2018 and 2019. It must be kept in mind that by April 2018, Mr Sui was himself a director of Fulin. There is no evidence that Mr Sui took any step in that capacity to further the development of the Northern Territory land, nor to otherwise seek to further his own interests in the lease or the Northern Territory land under the 2017 written agreement.

  2. Mr Sui’s cause of action alleges a breach of contract in the sense of an anticipatory breach revolving around the requirement to develop the land. I accept the submission for the Defendants (see [108] above) that, upon its proper construction, the 2017 written agreement did not give rise to an obligation to ensure Fulin had freehold title over the Northern Territory land.

  3. In my view, Mr Sui has brought proceedings in a way which has bypassed the clear options which existed in the 2017 written agreement. If Mr Sui did not wish to request an increase in the annual return (the first scenario) or to take part in Fulin’s operation (the second scenario), then the 2017 written agreement proposed the mechanism for him to choose to leave Fulin whereby his 40% shareholding could be transferred with Mr Sui being protected to ensure that he recovered the sum of A$1.5 million either from that transfer alone or, if there was a shortfall, through a combination of monies obtained through the transfer with the balance to be guaranteed by Mr Jiang (the third scenario). There is no evidence that Mr Sui sought to activate the third scenario in this case.

  4. Although there are some unusual features of the 2017 written agreement itself, no doubt contributed to by the non-involvement of lawyers in the drafting of the document, the terms of that agreement are clear enough. The agreement did not provide for Mr Sui to seek the return of the A$1.5 million per se at the end of three years.

  5. There is a paucity of evidence as to what has actually happened (or not happened) on the Northern Territory land. No party has sought to adduce evidence of any attempted cultivation of red-rooted salvia or any other crop on the land. The evidence, such as it is, suggests that little has happened on the Northern Territory land, certainly as at August 2019.

  6. This is not a case where Mr Sui is in the dark as to the activities of Fulin and its operations on the Northern Territory land. Mr Sui himself is a director of Fulin and has been since April 2018. This is not a case where the question of what has been happening on the Northern Territory land is within the exclusive knowledge of Mr Jiang and Fulin. Mr Sui himself has a clear ability to ascertain what has been happening and adduce evidence in that respect in these proceedings.

  7. In the end, what Mr Sui adduced (and which I allowed over objection) was fairly vague hearsay evidence on this issue (see [43] above). That evidence should attract limited weight in these proceedings.

  8. I accept the submission of the Defendants that Mr Sui was motivated to enter into the 2017 written agreement by factors associated with his immigration application. For that purpose, Mr Sui visited the Northern Territory and engaged in meetings and visits before entering into an agreement which was said to involve agricultural cultivation on land in the Northern Territory.

  9. It is a case that Fulin is not a formal party to the 2017 written agreement. I accept the submission of the Defendants that Fulin was, in reality, the “passive object” of the 2017 written agreement (see [112] above). I am not satisfied that Fulin is, as a matter of construction, a party to the 2017 written agreement. Nor am I satisfied, in any event, that Mr Sui has a viable cause of action against Fulin in these proceedings.

  10. I am not persuaded by Mr Sui that either or both Defendants have committed anticipatory breaches of the 2017 written agreement. I do not accept that the 2017 written agreement includes a promise by Mr Jiang to ensure that Fulin had freehold title over the Northern Territory land. Nor am I satisfied that, as at 30 August 2019, Mr Jiang or Fulin was wholly and finally disabled from performing the obligation with respect to the Northern Territory land after May 2020, should Mr Sui elect to trigger the rights in the 2017 written agreement (see [59] above).

  11. In these circumstances, I am not satisfied that Mr Sui has demonstrated, on the balance of probabilities, that he is entitled to damages against Mr Jiang or Fulin arising from the alleged breach or anticipatory breach of the 2017 written agreement of 26 May 2017. Mr Sui has not succeeded in the cause of action which he has pleaded against Mr Jiang and Fulin.

  12. Accordingly, the claim against each of Mr Jiang and Fulin should be dismissed.

Costs

  1. The ordinary rule is that costs should follow the event and, subject to what follows, there is no reason to depart from that rule in this case. The exception to this arises from the default of Mr Jiang and Fulin as at 30 September 2020, when orders of the Court had not been complied with concerning the filing of evidence so that leave was required for Mr Jiang and Fulin to rely upon the evidence of Ms Lee (see [9]-[19] above).

  2. Mr Sui seeks an order that Mr Jiang and Fulin pay on an indemnity basis Mr Sui’s costs incurred by reason of the late admission of Ms Lee’s affidavit into evidence, regardless of what costs order is made in the proceedings as a whole.

  3. It was submitted for Mr Jiang and Fulin that, notwithstanding the late filing of evidence from Ms Lee, there was no prejudice to Mr Sui and this aspect did not result in the hearing taking any more time than originally anticipated.

  4. The Defendants submitted that the appropriate costs order for the whole hearing ought be that costs follow the event.

  5. There was a clear failure by Mr Jiang and Fulin to comply with orders of the Court (including a guillotine order) prior to the hearing on 30 September 2020. As noted earlier, that hearing was listed with a one-day estimate apparently upon the basis that the claim would be uncontested. What occurred was that Mr Jiang and Fulin engaged a new legal team on the eve of the hearing which gave rise to a flurry of activity, including notification of a series of objections to evidence. In those circumstances, there was no realistic prospect that the hearing would be completed in one day. In addition, there was a belated application by Mr Jiang and Fulin to adduce evidence from Ms Lee concerning the translation of the 2017 written agreement. This was a very late development as to which Mr Sui was entitled to complain and object.

  6. The conduct of the Defendants was entirely inconsistent with their obligations as parties under s.56 Civil Procedure Act 2005. Insofar as Mr Sui’s application was for costs (on this interlocutory issue) to be ordered on an indemnity basis, there was a proper foundation for this approach given the delinquency or unreasonableness on the part of the Defendants: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616; Leichhardt Municipal Council v Green [2004] NSWCA 341 at [51], [57].

  7. Accordingly, although Mr Jiang and Fulin have succeeded in the proceedings, there is an appropriate foundation for departing from the usual rule that costs follow the event. In my view, the appropriate way forward concerning costs is not to allow Mr Jiang and Fulin all their costs, but rather to order Mr Sui to pay 50% of their costs of the proceedings on the ordinary basis.

  8. In my view, an assessment of this type will do justice as between the parties on the costs issue in these proceedings, where there were significant failures to comply with case management orders by Mr Jiang and Fulin which complicated and added to the duration of the proceedings and the number of listings which were required, whilst at the same time, recognising that Mr Sui has not succeeded on the merits in his claims against Mr Jiang and Fulin.

  9. For these reasons, I have reached the provisional view that the appropriate discretionary conclusion is that Mr Sui should pay 50% of the costs of the proceedings of Mr Jiang and Fulin calculated on the ordinary basis.

  10. In circumstances where this particular costs outcome was not raised with the parties during submissions, I will delay making this costs order for seven days to permit the parties to make short written submissions (not exceeding three pages) on this issue if they wish to do so. I will then determine the costs issue on the papers.

  11. I make the following orders:

  1. verdict for each of the First Defendant and the Second Defendant on the Plaintiff’s claim;

  2. the Plaintiff’s claims against the First Defendant and the Second Defendant are dismissed;

  3. in the absence of any written submissions (not exceeding three pages) from the parties on the question of costs being provided by email to my Associate by 4.00 pm on 7 May 2021, the Court will make an order in Chambers that the Plaintiff should pay 50% of the costs of the proceedings of the First and Second Defendants calculated on the ordinary basis;

  4. in the event that written submissions are made on the question of costs in accordance with (c) above, the Court will determine the question of costs on the papers.

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Decision last updated: 30 April 2021

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Cases Citing This Decision

3

Sui v Jiang [2021] NSWCA 285
Sui v Jiang [2024] NSWSC 1013
Sui v Jiang (No. 2) [2021] NSWSC 572
Cases Cited

21

Statutory Material Cited

1

Bofinger v Kingsway Group Ltd [2009] HCA 44
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64