The Export-Import Bank of China v CSTT Co Holdings Pte Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2022 05230

THE EXPORT‑IMPORT BANK OF CHINA	Plaintiff
v
CSTT CO HOLDINGS PTE LTD (UEN: 201224508M)	Defendant

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JUDGE:	Delany J
WHERE HELD:	Melbourne
DATES OF HEARING:	24 March, 25 March, 31 March, 1 April and 9 April 2025
DATE OF JUDGMENT:	6 August 2025
CASE MAY BE CITED AS:	The Export‑Import Bank of China v CSTT Co Holdings Pte Ltd
MEDIUM NEUTRAL CITATION:	[2025] VSC 475

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CONTRACT — Alternative claims — Comprehensive 2013 loan agreement for US $74.5 million loan between plaintiff and parent company to which defendant was not a party — Alleged 2013 agreement partly in writing and partly oral between plaintiff and defendant — Alleged 2013 agreement not proved — 2016 security agreement in writing between plaintiff and defendant — No consideration — 2016 and alleged 2013 agreements not part of same transaction — Defendant not bound by 2016 security agreement — McVeigh v National Australia Bank Ltd (2000) 278 ALR 429; [2000] FCA 187, referred to.

AGENCY — Authority — Constitution required application of company seal attested to by two directors — 2016 agreement not executed by defendant under seal — 2016 agreement not signed by director of defendant — Agreement signed by executive director of parent company — Indoor management rule — Other companies in the group executed the agreement under seal — Past consideration — Plaintiff put on inquiry — Defendant not bound — Northside Developments Pty Ltd v Registrar‑General (1990) 170 CLR 146; [1990] HCA 32, applied.

AUTHORITY — Ratification — Acts of single director in 2016 purportedly on behalf of defendant — Plaintiff relied on signed 2020/2021 agreement — Single director existing guarantor under comprehensive 2013 loan agreement signed 2020/2021 agreements — Director cannot make a representation as to his authority so as to make it a representation of the defendant — No ratification — Lederberger and Scheiner v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509; [2012] VSCA 262, applied.

ESTOPPEL — Estoppel alleged as alternative to 2013 agreement — No reliance — Crabtree‑Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49, Kramer v Stone (2024) 99 ALJR 126; [2024] HCA 48, applied.

EVIDENCE — Application of Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 — Whether inference is open depends on pleadings and evidence adduced at trial — Does not supply a gap in the evidence.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ghassan Kassisieh	Northan Legal
For the Defendant	Ben Petrie	K&L Gates

TABLE OF CONTENTS

A. Overview........................................................................................................................................ 1

B. The transactions and the competing cases............................................................................... 3

B.1 The pleaded Facility Agreement.......................................................................................... 4
B.2 The CSA Loan Agreement..................................................................................................... 5
B.3 The 2016 Security Agreement............................................................................................... 6
B.4 Registration on the PPSR....................................................................................................... 8
B.5 Ruyi’s Financial Difficulties.................................................................................................. 8
B.6 The 2020/2021 Agreements................................................................................................... 8
B.7 Default by Ruyi..................................................................................................................... 10
B.8 EXIM’s alternative 2013 CSTT Undertaking Case in contract and estoppel................ 11

C. The trial......................................................................................................................................... 12

D. The key issues............................................................................................................................. 13

E. The witnesses............................................................................................................................... 15

F. The witnesses not called............................................................................................................. 16

F.1 EXIM’s submissions.............................................................................................................. 16
F.2 CSTT’s submissions.............................................................................................................. 19
F.3 Consideration: The principles and their application....................................................... 21

G. The Chronology.......................................................................................................................... 23

G.1 Events prior to January 2013.............................................................................................. 24
G.2 January 2013.......................................................................................................................... 29
G.3 The 2013 loan facility agreement....................................................................................... 32
G.4 August 2015 – 25 July 2016................................................................................................. 35
G.5 Terms of the 2016 Security Agreement............................................................................. 41
G.6 2019 ‑ May 2021.................................................................................................................... 42
G.7 December 2021 ‑ June 2023................................................................................................. 44

H. Was there the Facility Agreement as alleged?....................................................................... 45

I. Was there the CSTT Undertaking Agreement as alleged?................................................... 47

I.1 EXIM’s submissions.............................................................................................................. 48
I.2 CSTT’s submissions............................................................................................................... 49
I.3 There was no CSTT Undertaking Agreement................................................................... 51

J. EXIM’s Estoppel Case.................................................................................................................. 54

J.1 EXIM’s submissions.............................................................................................................. 54
J.2 CSTT’s submissions............................................................................................................... 56
J.3 EXIM Estoppel Case is not made out.................................................................................. 57

K. Is the 2016 Security Agreement enforceable?........................................................................ 59

K.1 The issues.............................................................................................................................. 59
K.2 Consideration: CSTT submissions..................................................................................... 60
K.3 Consideration: EXIM’s submissions.................................................................................. 61
K.4 One transaction: findings.................................................................................................... 63
K.5 No consideration: findings................................................................................................. 68

L. Authority issues........................................................................................................................... 68

L.1 Authority to bind and ratification: the principles............................................................ 69
L.2 The scope of pleaded issues concerning authority.......................................................... 74
L.2.1 The competing submissions................................................................................... 74
L.2.2 The pleadings............................................................................................................ 75
L.2.3 Ruling as to the scope of the pleaded issues........................................................ 79

L.3 The substantive submissions.............................................................................................. 80
L.3.1 The CSTT submissions............................................................................................ 80
L.3.2 EXIM’s submissions................................................................................................. 85

L.4 The CSTT Constitution........................................................................................................ 91
L.4.1 EXIM’s submissions regarding the CSTT Constitution...................................... 92
L.4.2 CSTT’s submissions regarding the CSTT Constitution...................................... 92

L.5 Authority issues: findings................................................................................................... 93

M. CSTT’s Estoppel Case............................................................................................................... 99

N. Disposition................................................................................................................................. 100

HIS HONOUR:

A. Overview

The plaintiff, the Export‑Import Bank of China (‘EXIM’) is incorporated in the People’s Republic of China. It is a Chinese‑government‑owned bank whose primary business involves providing loans to assist in areas of China’s foreign trade, overseas investments and other related fields.

The defendant, CSTT Co Holdings Pte Ltd (‘CSTT’) is a private company incorporated in Singapore on 4 October 2012. 100% of the shares in CSTT are owned by Shandong Ruyi Scientific and Technology Group Co‑Ltd (‘Ruyi’), a private company incorporated in the People’s Republic of China whose business includes textiles and clothing manufacturing. In 2012 Ruyi was ranked in the top 5 of the top 100 in China’s textile and garment industry.

The directors of CSTT upon its incorporation were Mr Yafu Qiu and Mr Choon Seng Lim. Mr Qiu was at all relevant times, and remained, a director of Ruyi.

On 4 July 2012 Ruyi and an Australian company unrelated to Ruyi, Lempriere Pty Ltd (‘Lempriere’), executed a non‑binding term sheet for the proposed purchase by them of farm land and cotton industry assets known as the ‘Cubbie Station’ in Queensland. The purchase was to occur by the incorporation of an Australian special purpose company (‘SPV’) which was to be owned as to 80% by Ruyi and as to 20% by Lempriere.

The term sheet, which was signed by Mr Qiu as ‘authorised signatory’ for Ruyi and by Mr William Lempriere (‘Mr Lempriere’) as ’director’ for Lempriere, included a key term that 30% of the purchase price would be funded by equity provided from the existing cash reserves of Ruyi and Lempriere, with the remaining 70% funded from debt to be provided by EXIM or such other bank nominated by the parties. The term sheet recorded a key term that the execution of definitive transaction documents was conditional on Ruyi or the SPV receiving Foreign Investment Review Board (‘FIRB’) approval. The stated intention of the parties was that financial close would happen by no later than 1 September 2012.

The SPV called C S Agriculture Pty Ltd (‘CSA’) was incorporated in Australia on 5 October 2012. On incorporation 80% of the shares in CSA were owned by CSTT and the remaining 20% of the shares were owned by Lempriere.

On 11 October 2012 CSA as purchaser entered into a land and business sale agreement for the purchase of land and business assets including water licences, known as Cubbie Station for a purchase price of AUD $230,000,000 (‘sale agreement’). The obligations of CSA, as purchaser, under the sale agreement were guaranteed by Ruyi.

Debt funding to enable completion of the sale agreement was provided by EXIM, but not funds which EXIM lent directly to CSA.

In anticipation of completion of the sale agreement, on 21 January 2013 EXIM as Lender and Ruyi as Borrower entered into a loan facility agreement (‘loan facility agreement’) for the stated purpose of acquiring the Cubbie Cotton Field project, with the Ruyi banner stamp affixed and signed by Mr Qiu as the ‘legal representative or authorised signatory’ on behalf of Ruyi. On the same day US $74,800,000 was advanced by EXIM to Ruyi.

Following the receipt by Ruyi of funds from EXIM, Ruyi provided equity funding to CSTT. In turn, CSTT lent AUD $176,500,000 to CSA pursuant to a loan agreement (‘CSA Loan Agreement’).

On 21 December 2021 Ruyi failed to pay interest due under the loan facility agreement. Default by Ruyi continued thereafter. Ruyi has not made any further payments to EXIM since.

In this proceeding EXIM seeks an order that CSTT pay amounts due to it by reason of Ruyi’s failure to repay the US $74,800,000 loan and interest. EXIM seeks relief including a declaration that it has a mortgage over the shares in CSA held by CSTT. EXIM seeks injunctive relief restraining CSTT from dealing with those shares and an order for the delivery of the share certificates. In addition, EXIM seeks an order that CSTT pay it an amount equal to all dividends paid or payable to CSTT on the shares it held in CSA.

EXIM relies upon various causes of action in contract and in estoppel in support of the relief it claims against CSTT. CSTT denies the existence of the contracts alleged and the estoppel claim.

In respect of the primary contract relied upon by EXIM, the 2016 Security Agreement, CSTT alleges there was no consideration for the contract and that the person who signed the contract on its behalf was not authorised to do so. CSTT contends that contrary to EXIM’s pleaded case, there was no effective ratification of that contract by CSTT.

For the reasons that follow I have determined that the claims made in the proceeding by EXIM fail. The proceeding must be dismissed.

B. The transactions and the competing cases

The pleadings relied on at trial comprise:

(a) EXIM’s amended statement of claim (‘ASOC’) dated 23 August 2023;

(b) CSTT’s defence to the ASOC dated 12 February 2024 (‘Defence’); and

(c) EXIM’s amended reply dated 18 November 2024 (‘Reply’).

EXIM began its closing submissions by stating that CSTT is bound, and should be held to, the promise it made to pledge and then mortgage its shares in CSA. That promise was made in return for EXIM providing the US $74,800,000 loan to CSTT’s parent company, Ruyi, for the purpose of financing the acquisition of Cubbie Station by CSA, the entity in which CSTT has an 80% shareholding.

In answer to EXIM’s case, CSTT submitted this proceeding is a paradigm example of what occurs when a company fails to protect its own interests by not ensuring the proper drafting and execution of key documents. By reason of the circumstances surrounding the execution of key documents, any reasonable person would have been on notice that there were serious questions about the authority of the individuals who signed documents on behalf of CSTT to bind CSTT.

B.1 The pleaded Facility Agreement

As part of its pleaded case EXIM alleges, and CSTT denies, that on 21 January 2013 EXIM and Ruyi entered into a ‘Facility Agreement’ which was constituted by more than the loan facility agreement dated 21 January 2013 (‘Facility Agreement’). EXIM alleges the Facility Agreement was partly in writing and partly oral. It alleges, and CSTT disputes, that in addition to the loan facility agreement itself, the Facility Agreement was constituted by the ‘Ruyi Letter of Undertaking’ and the ‘CSTT Letter of Undertaking’, both dated 18 January 2013, and by conversations between representatives of EXIM, Ruyi and CSTT.

The ASOC alleges there were terms and conditions of the Facility Agreement said to be expressly contained within the CSTT Letter of Undertaking and implied from both the passing of a resolution on 18 January 2023 (‘CSTT Resolution’) and the provision of a copy of that resolution to EXIM. The CSTT Resolution provided that:

m. CSTT in its capacity as a wholly owned subsidiary of Ruyi and an entity providing security for the loan to Ruyi, its parent company, would pledge (mortgage) its 80% equity in CSA and enter into the Security Agreement to secure the entry into the Facility Agreement; and
n. CSTT in its capacity as a wholly owned subsidiary of Ruyi and an entity providing security for the loan to Ruyi, its parent company, would pledge (mortgage) its 80% equity in CSA and enter into the Security Agreement to secure the provision of the loan to Ruyi.

In its Defence, CSTT admits that Mr Qiu signed the Ruyi Letter of Undertaking and the CSTT Letter of Undertaking. It admits there was the loan facility agreement but disputes there was the Facility Agreement as alleged. CSTT pleads that it was not a party to the Facility Agreement as alleged. It pleads that it did not guarantee and has not assumed the obligations of Ruyi under the Facility Agreement. CSTT denies the terms referred to in the previous paragraph were terms of the Facility Agreement. It pleads that any ‘pledge’ made by Ruyi was not a pledge made by CSTT, and that any board resolutions made by Ruyi were not board resolutions of CSTT.

Under the loan facility agreement signed for Ruyi by Mr Qiu as its legal representative, EXIM advanced funds to CSTT’s parent company, Ruyi (of which Mr Qiu is the chairman and a director). CSTT submits that EXIM cannot get around the fact that a company has its own legal personality regardless of whether it is one in a group of companies.

No evidence was led at trial by EXIM from any person involved in any conversations alleged to form part of the Facility Agreement. No document recording or evidencing any such conversations were in evidence. In closing submissions, counsel for EXIM confirmed that EXIM no longer presses for relief in reliance on the Facility Agreement.[1] For the avoidance of doubt I find there was no Facility Agreement as alleged.
[1]Transcript of hearing on 1 April 2025 in The Export‑Import Bank of China v CSTT Co Holdings Pte Ltd, 314–315.

B.2 The CSA Loan Agreement

Pursuant to the CSA Loan Agreement dated 21 January 2013 CSTT as Lender lent AUD $176,500,000 to CSA as Borrower for the purpose of the acquisition by CSA of all of the business and assets of Cubbie Group Pty Ltd and for working capital for the purposes of owning, operating and managing its assets. The CSA Loan Agreement was signed for CSTT by its two directors, Mr Qiu and Mr Lim.

The CSA Loan Agreement was amended in 2019 by a Deed of Amendment between CSTT and CSA (‘2019 Deed of Amendment’). The 2019 Deed of Amendment was signed for CSTT by two of its directors, Mr Qiu and his daughter Chenran Qiu who, by that time, was also a director of CSTT.

No party seeks relief in the proceeding by reference to the CSA Loan Agreement.

B.3 The 2016 Security Agreement

The primary claim upon which EXIM relies to seek relief against CSTT is the ‘2016 Security Agreement’.

EXIM alleges that three years after the date of the Facility Agreement, EXIM, CSTT and Ruyi entered into a document entitled ‘Security Agreement – Shares dated 25 July 2016’ (‘2016 Security Agreement’).

The 2016 Security Agreement is between EXIM as Lender and CSTT as Grantor. EXIM alleges that pursuant to the 2016 Security Agreement, CSTT granted EXIM a ’security interest’ and mortgage over its 80% shareholding in CSA.

The 2016 Security Agreement was signed for EXIM by Mr Jingxin Li, at that time Vice‑President of the Shandong branch of EXIM. The agreement was signed by Ms Fengmei Gu, described as ‘executive director’ and an ‘authorised representative’ of CSTT. Ms Gu is not, and in 2016 was not, a director of CSTT.

In its Defence, CSTT seeks to impugn the validity and enforceability of the 2016 Security Agreement. CSTT pleads that the agreement was not supported by consideration provided by EXIM to CSTT, Ruyi or any other party. The agreement was not executed as a deed. CSTT alleges that due to an absence of consideration, the 2016 Security Agreement, if otherwise enforceable, is void and unenforceable as against CSTT.

CSTT submits that EXIM’s answer to the no consideration submission, that is, to rely on the CSTT Letter of Undertaking and to say that the CSTT Letter of Undertaking forms part of the Facility Agreement entered into more than three years earlier, to which CSTT was not a party and in which CSTT was not mentioned, must be rejected.

CSTT contends there is a separate reason why it is not bound by the 2016 Security Agreement. That is because Ms Gu, who signed the agreement purportedly on behalf of and to bind CSTT, was not a director of CSTT and was not otherwise authorised by CSTT or at law to enter into the 2016 Security Agreement.

CSTT pleads that no officer or representative of CSTT executed the 2016 Security Agreement. It pleads that Ms Gu has never been a director or employee of CSTT, that she was not authorised to enter into the agreement on its behalf and that CSTT has not, at any time since the 2016 Security Agreement was executed, adopted the 2016 Security Agreement or otherwise endorsed or approved the actions of Ms Gu in executing the 2016 Security Agreement. For those separate reasons, it alleges the 2016 Security Agreement is void and unenforceable as against CSTT.

In the Reply EXIM alleges that both EXIM and CSTT executed the 2016 Security Agreement. EXIM alleges that Ms Gu was specifically authorised by CSTT to execute the agreement on its behalf by a directors’ resolution dated 25 July 2016 (referred to by EXIM in submissions as the ‘Gu delegation’). EXIM relies upon an ‘Authorisation Letter’ dated 21 July 2016 signed by Mr Qiu as ‘duly appointed representative’ of Ruyi, in favour of Ms Gu, which describes Ms Gu as the ‘Executive President’ of Ruyi.

EXIM pleads that if it is found that CSTT did not specifically authorise Ms Gu to execute the 2016 Security Agreement, the agreement was nonetheless validly executed by CSTT because CSTT held Ms Gu out and represented to EXIM that Ms Gu was authorised to execute the agreement on its behalf. In those circumstances Ms Gu was acting as agent for, and on behalf of, CSTT. Further, Ms Gu, as director, CEO and/or Executive President of Ruyi, the owner of 100% of the shares in CSTT who was then acting as agent for and on behalf of CSTT, was authorised to sign the 2016 Security Agreement for and on behalf of CSTT.

CSTT submitted the application of established principles means that EXIM cannot enforce the 2016 Security Agreement against CSTT. The 2016 Security Agreement is an agreement that CSTT did not sign. CSTT submitted that in an attempt to get around that problem, EXIM advanced a complicated case which alleged that Mr Qiu, one of CSTT’s three directors, somehow had the capacity to confer authority on himself and on Ms Gu to bind CSTT, despite CSTT’s Memorandum and Articles of Association (‘CSTT Constitution’) expressly forbidding such a possibility.

B.4 Registration on the PPSR

On 26 July 2016 EXIM registered a security interest in Australia over the shares held by CSTT in CSA on the Personal Property Securities Register (‘PPSR’) maintained under the Personal Property Securities Act 2009 (Cth).

B.5 Ruyi’s Financial Difficulties

In 2020 Ruyi encountered financial difficulties.

On 25 February 2020 a meeting of 33 banking creditors of Ruyi, including EXIM, was held in Shandong in the People’s Republic of China (‘first creditors meeting’).

After the first creditors meeting, the banking creditors of Ruyi, including EXIM, entered into a Creditors Agreement with Ruyi (‘Creditors Agreement’). CSTT is not a named party to the Creditors Agreement. However, clause 5 of the Creditors Agreement states that ‘Ruyi Group refers to all the enterprises controlled by the group’. CSTT is such an enterprise.

On 26 March 2021, EXIM attended a second meeting of the creditors committee of Ruyi (‘second creditors meeting’).

EXIM submitted that to the extent CSTT seeks to rely on the Creditors Agreement, to which it is not a party, and meetings between Ruyi and its creditors on 25 February 2020, 15 December 2020 and 26 March 2021 in which it did not participate, to found a further alternative defence in contract law, estoppel or Chinese law, on the facts and the law, these defences cannot succeed.

B.6 The 2020/2021 Agreements

EXIM alleges that in 2020/2021 it entered into three separate agreements with CSTT. The three agreements are:

(a) the Extension Agreement dated 20 March 2020 (‘2020 Extension Agreement’);

(b) the Supplementary Agreement dated 20 November 2020 (‘Supplementary Agreement 1’); and

(c) the Supplementary Agreement dated 19 May 2021 (‘Supplementary Agreement 2’)

(collectively ‘the 2020/2021 Agreements’).

Each of the 2020/2021 Agreements is between EXIM and Ruyi and, among other parties, entities related to Ruyi. CSTT is referred to in each of the 2020/2021 Agreements as ‘Pledgor B’/’Party I’. Mr Qiu is personally named as a party to each of the 2020/2021 Agreements. He is named as ‘Mortgagor D’/’Guarantor B’/’Party F’. Each of the 2020/2021 Agreements provide for the ‘seal’ of ‘Party I’ (being, CSTT) below which appears the words ‘legal representative or authorized signatory’. In the case of each of the agreements no CSTT seal is affixed. The signature of Mr Qiu appears as ‘legal representative or authorized signatory’ of CSTT.

EXIM contends that Mr Qiu who signed the 2020/2021 Agreements and the CSTT Letter of Undertaking on behalf of CSTT and Ms Gu who signed the 2016 Security Agreement did so with CSTT’s actual or ostensible authority. EXIM also relies on the indoor management rule and the principles of ratification in further aid of its case.

CSTT denies the validity and enforceability of the 2020/2021 Agreements. It seeks to avoid these agreements by contending that they, too, were not authorised by CSTT. It alleges that none of the 2020/2021 Agreements were executed by CSTT in accordance with clause 105 of its constitution which provides for two directors to sign.

CSTT submitted that under the loan facility agreement EXIM obtained a personal guarantee from Mr Qiu, being the same person who purported to confer authority on himself and Ms Gu in an attempt to create an additional security provider, the natural consequence of which would have been to diminish his own personal exposure to enforcement action. Combined with the fact that no consideration was conferred on CSTT, alarm bells should have rung for EXIM before it accepted Ms Gu’s signature on the 2016 Security Agreement as sufficient. EXIM was content however to proceed imprudently by not ensuring the 2016 Security Agreement was valid and enforceable.

CSTT submitted that in the face of these problems, EXIM claims that CSTT ratified the 2016 Security Agreement by Mr Qiu signing subsequent agreements, again without CSTT’s authorisation in accordance with the CSTT Constitution. However, EXIM did not explain how a person who lacks authority to do something can somehow confer authority on himself by simply repeating his own unauthorised behaviour.

CSTT pleads in the alternative that if the 2016 Security Agreement and 2020/2021 Agreements are valid and enforceable, which is denied, by agreeing to resolutions of the creditors committee of Ruyi and any entering into binding Creditors Agreements concerning Ruyi that EXIM represented to CSTT that it would not enforce any terms of any of those agreements in any manner that is consistent with the binding Creditors Agreements. CSTT alleges that by reason of such representation EXIM is estopped from enforcing any of the terms of the 2016 Security Agreement and the 2020/2021 Agreements and, separately, was not entitled to commence or maintain this proceeding without the approval of or a resolution from the creditors of Ruyi which EXIM has not obtained.

B.7 Default by Ruyi

On and from 21 December 2021 Ruyi failed to pay interest to EXIM as required by the loan facility agreement.

EXIM seeks to recover the amounts outstanding and unpaid by Ruyi from CSTT and to enforce security held by CSTT over the shares it holds in CSA. EXIM asserts it has a right under clause 6.2 of the 2016 Security Agreement to the payment by CSTT of amounts which remain owing on the US $74,800,000 loan to Ruyi and for an order that CSTT deliver up its share certificates in CSA so that EXIM can exercise its rights under clause 6.6 of the 2016 Security Agreement.

Mr Lei Chen gave evidence about the amounts due to EXIM. During the trial Mr Chen updated his evidence on witness statement about those figures including in reliance on an extract from EXIM’s systems recording the current amounts outstanding. That evidence establishes that at the date of trial there was principal outstanding and overdue on the US $74,800,000 loan of US $21,400,000, what Mr Chen referred to as ‘regular normal’ interest and what is referred to in the English translation of the loan account to which Mr Chen referred in his evidence as ‘normal’ interest unpaid of US $4,272,727.97, compound interest unpaid of US $1,119,300.33, penalty interest unpaid of US $5,155,362.92 and penalty interest repayable compounded of US $657,862.40. There was no challenge to Mr Chen’s evidence on these matters. If EXIM is entitled to relief, those are the amounts for which it is entitled to judgment.

B.8 EXIM’s alternative 2013 CSTT Undertaking Case in contract and estoppel

EXIM advanced two further substantive cases in the alternative in its Reply. CSTT did not take a pleading point. The trial was conducted on the basis that if one or both of the causes of action alleged in the Reply was made out, that EXIM would be entitled as a result to the substantive relief that it seeks.

To the extent that any of CSTT’s defences regarding the 2016 Security Agreement are accepted, in the Reply, EXIM seeks to hold CSTT to an alleged agreement made on 21 January 2013 when EXIM provided the loan to Ruyi for the purchase of Cubbie Station and entered into the Facility Agreement in consideration for the provision by CSTT of the CSTT Letter of Undertaking (‘the CSTT Undertaking Agreement’).

The foundations for the alternative CSTT Undertaking Agreement case lie in the CSTT Letter of Undertaking, and the 18 January 2013 CSTT Board Resolution (‘the CSTT Board Resolution’). EXIM alleges a signed copy of CSTT Board Resolution was provided to it by CSTT.

Related to the CSTT Undertaking Agreement, in its Defence CSTT’s admits that on or about 18 January 2013 the board of CSTT passed the CSTT Board Resolution. It alleges the CSTT Board Resolution does not constitute a delegation of authority to Mr Qiu to sign the CSTT Letter of Undertaking (in CSTT’s Defence called the ‘CSTT Commitment Letter’).

In its submissions CSTT denies the existence of the alleged CSTT Undertaking Agreement. CSTT submits the loan facility agreement does not refer to the CSTT Letter of Undertaking, let alone embody the offer alleged by EXIM to be contained within it.

In its Reply, further or in the alternative EXIM contends by reference to representations made in the CSTT Letter of Undertaking and the CSTT Board Resolution that CSTT should be estopped from denying the validity and enforceability of the 2016 Security Agreement and the 2020/2021 Agreements or that they were authorised by CSTT, or from denying that it pledged its shareholding in CSA as collateral and security for the loan under the Facility Agreement (‘EXIM Estoppel Case’).

In response to the EXIM Estoppel Case, CSTT submitted that the estoppel alleged is premised on alleged representations by Mr Qiu (without CSTT’s authorisation), made prior to the loan facility agreement being executed. While EXIM claims that CSTT agreed to pledge its shareholding in CSA in consideration for a loan being advanced to Ruyi, EXIM’s November 2012 internal Pre‑Approval Report (‘EXIM Pre‑Approval Report’) undermines its own case. The EXIM Pre‑Approval Report expressly recommended ‘that this form of guarantee is not a condition for lending’. Consistent with its own internal recommendation, EXIM did not impose such a condition for lending in the loan facility agreement. Instead EXIM obtained personal guarantees from Mr Qiu and another company only.

C. The trial

The parties filed an agreed statement of facts and at trial tendered a revised agreed statement of facts for the purposes of s 191 of the Evidence Act1958 (Vic). They provided a joint chronology setting out matters agreed and disagreed. The chronology was revised at trial to include court book references, including references to documents in Chinese characters and to the English translations of those documents. Although in some cases there were competing translations of documents, the parties reached agreement concerning which translation should be acted upon. I proceed accordingly.

CSTT does not dispute many of the critical matters that would ordinarily entitle a plaintiff such as EXIM to relief under its primary case based on the 2016 Security Agreement, including that:

(a) EXIM granted and advanced a US $74,800,000 loan to Ruyi, under the loan facility agreement;

(b) CSA, the Australian entity which is 80% owned by CSTT, paid the purchase price under the sale agreement and became the owner of Cubbie Station;

(c) On and from 21 December 2021, Ruyi failed to pay any interest to EXIM and has not made any further payments to EXIM in respect of the loan the subject of the loan facility agreement;

(d) On 13 January 2022, EXIM sent Ruyi a letter of demand requesting that it remedy its failure to pay moneys due under the loan facility agreement (as amended by the 2020/2021 Agreements that had adjusted certain repayment terms of the Loan);

(e) On 9 September 2022 and again on 1 December 2022, EXIM issued letters of demand for payment on CSTT in reliance on the 2016 Security Agreement; and

(f) CSTT has not made any payment to EXIM of the sum demanded in its letter of 1 December 2022, nor delivered up to EXIM its original share certificates in CSA.

The trial concerned events that for the most part took place a long time ago. For that reason, and due to the nature of the issues and the evidence, the determination of the contested issues primarily turns on the documents.

D. The key issues

At the commencement of the trial, EXIM submitted three key questions would need to be answered to resolve all of the issues based on the validity and enforceability of the 2016 Security Agreement:

(a) Is the 2016 Security Agreement binding on CSTT?

(b) If the 2016 Security Agreement is valid and enforceable, do its terms support the relief EXIM seeks?

(c) If the 2016 Security Agreement is not valid and enforceable, is EXIM otherwise entitled to relief based on its alternative case in contract or estoppel founded on the CSTT Letter of Undertaking?

EXIM submitted that critical to the first question are the issues of authorisation, ratification, consideration, and whether there is any bar on litigation enforcing the 2016 Security Agreement or CSTT Undertaking Agreement.

EXIM submitted that critical to the third question is whether the CSTT Undertaking Agreement as pleaded exists, and the legal effect of representations made in the CSTT Letter of Undertaking. The CSTT Undertaking Agreement is also relevant to the question of whether the 2016 Security Agreement was supported by consideration.

Following completion of the evidence, the following questions were identified by CSTT:

(a) Did CSTT execute or ratify the 2016 Security Agreement?

(b) Did EXIM give good consideration to CSTT under the 2016 Security Agreement?

(c) Is CSTT estopped from resiling from a promise said to be contained in the CSTT Letter of Undertaking?

(d) Did the CSTT Letter of Undertaking constitute a promise by CSTT that was accepted by EXIM entering into the Facility Agreement, such that CSTT is then bound by the 2016 Security Agreement said to have been executed in performance of the agreement?

(e) Is EXIM estopped, by reason of the application of Chinese law, when read in conjunction with the resolutions of the Ruyi creditors committee and the Creditors Agreement, from commencing and maintaining this proceeding?

(f) Alternatively, does Chinese law operate so as to preclude EXIM from commencing and maintaining this proceeding?

E. The witnesses

Two lay witnesses and two expert witnesses gave evidence and were cross‑examined.

Mr Chen, the branch manager of the Shandong branch of EXIM, employed in that role since July 2013, gave evidence that he was in Singapore in July 2016 at around the time the 2016 Security Agreement was signed. As earlier mentioned, Mr Chen also gave evidence about the amounts outstanding under the loan facility agreement.

Mr Wayne Materne who is currently the Australian representative of CSTT and CSA gave evidence on behalf of CSTT. Mr Materne’s first involvement with CSTT, CSA and with Ruyi was in March 2019 when he joined the Ruyi Australia Group as the Chief Financial Officer of CSA and Lempriere.

Two witnesses gave expert evidence concerning Chinese law. That evidence was directed to meetings between Ruyi and its banking creditors including EXIM that took place in Shandong beginning on 25 February 2020, to resolutions of the creditors committee of Ruyi, to the Creditors Agreement and to Regulatory Notices issued in the People’s Republic of China in the context of financial difficulties encountered by Ruyi. The expert evidence relates to the estoppel case pleaded by CSTT in the alternative in its Defence and to CSTT’s pleaded claim that EXIM was not entitled to maintain this proceeding against it because EXIM did not obtain the approval of the banking creditors of Ruyi to do so.

Both expert witnesses travelled to Australia to give their evidence. Each prepared separate reports and both participated in and prepared a joint report.

Mr Xiao Chen, who practices as a lawyer in Beijing, was called as an expert witness by EXIM. Ms Yongmei Wang (‘Ms Yang’), who is qualified as a lawyer in the People’s Republic of China and has previously practiced there but currently resides in Canada, was called as an expert witness by CSTT.

There were some objections to the expert evidence. The expert evidence was received in accordance with a joint proposal prepared by the parties. As I have determined it is unnecessary to rule on the alternative case raised by CSTT in its defence that would have involved a consideration of the expert evidence concerning Chinese law it is unnecessary to set out the terms of the joint proposal.

F. The witnesses not called
F.1 EXIM’s submissions

EXIM was highly critical of CSTT’s failure to call Mr Qiu or any of CSTT’s directors.

It submitted that Mr Qiu is the critical person, that EXIM understood he was the ‘actual controller’ of the Ruyi Group, that he held 51% equity in the holding company and that members of his family occupied important positions within the group including as president and as two of the vice presidents of the Ruyi Group. It submitted that Mr Qiu was perceived by EXIM not to be in want of authority but ‘teeming with it’.

EXIM submitted that Mr Qiu remains the legal representative of Ruyi, a director of Ruyi and of CSTT and that his daughter, Ms Qiu, is one of the other two current directors of CSTT. Ms Qiu affirmed an affidavit regarding CSTT’s discovered documents as recently as 23 February 2024. The other director, Mr Lim, is based in Singapore. EXIM submitted there is no evidence of Mr Lim having taken an active role in the business of CSTT after he signed the CSA Loan Agreement dated 21 January 2013.

EXIM submitted that Mr Qiu’s signature is on almost every critical document in the case. Yet he has not been called to give evidence, including of his involvement, if any, in conversations or negotiations referred to in the EXIM Pre‑Approval Report, a copy of which was disclosed to CSTT in February 2024.

EXIM submitted that in the absence of any evidence from Mr Qiu or anyone from CSTT involved in the original loan application in 2012, the EXIM Pre‑Approval Report and the minutes of the EXIM Credit Approval Committee meeting of December 2012, when taken with the CSTT Letter of Undertaking, the CSTT Board Resolution and various agreements responding in almost mirror terms to the internal EXIM records remain the best evidence of the loan conditions that EXIM imposed on Ruyi and its entities, and the security for the loan that CSTT promised to provide.

EXIM submitted that critically, neither Mr Lim nor Ms Qiu have been called to explain what they knew or did not know about the various documents signed by Mr Qiu in 2013, 2016, 2020, or 2021 when they were directors of CSTT, including the 21 July 2016 Authorisation Letter signed by Mr Qiu in favour of Ms Gu and Mr Qiu’s execution of the 2020/2021 Agreements.

EXIM accepts that it bears the onus of establishing the ratification by CSTT of any previously unauthorised acts. Given the key documents which bear Mr Qiu’s signature only, EXIM invited the Court to draw appropriate inferences from the failure to call CSTT’s directors to provide evidence of:

(a) what they knew or did not know about the actions of Mr Qiu, and when they knew it;

(b) what they knew or did not know about the registration of security interests on the PPSR and the Singapore Accounting and Corporate Regulatory Authority (‘ACRA’) registers, and when they knew it; and

(c) if and when that information was known, why no action was taken to remove Mr Qiu as a director, disabuse third parties of understandings they may have had from Mr Qiu’s unilateral actions, or correct the information contained on public registers.

EXIM submitted that Ms Qiu and Mr Lim could have given the evidence as to the limits of Mr Qiu’s authority, and how those limits were in practice enforced by CSTT’s directors. They could have given evidence as to their level of involvement in the operations of CSTT, in circumstances where the current state of the evidence points to them only being involved in the execution of three documents (two of which are internal to the Ruyi Group) over the whole period covered by the litigation:

(a) the CSTT Board Resolution authorising CSTT’s pledge of shares in CSA, if such a pledge is able to be made, if not CSTT will not pledge the shares to others until the loan from EXIM is repaid. CSTT admits this resolution was signed both by Mr Qiu and by Mr Lim, but contends the document was merely an ‘internal’ resolution. No director from the time was called to explain why CSTT ‘internally’ passed a resolution, seemingly for no obvious purpose, which found its way into EXIM’s Ruyi loan archives;

(b) the CSA Loan Agreement, an agreement internal to the Ruyi Group and was never provided to EXIM until discovery. This document confirms the last time Mr Lim signed a document on behalf of CSTT was in January 2013. In so doing, Mr Lim agreed that all notices under that agreement should be directed to the attention of Mr Qiu. This document speaks to the centrality of Mr Qiu’s authority over and within CSTT. Mr Lim is entirely absent in the evidence from this point on. This absence is not explained, when evidence from a director of CSTT might have explained it; and

(c) the 2019 Deed of Amendment between CSTT and CSA, another document which is internal to the Ruyi Group and which was never provided to EXIM until discovery. The 2019 Deed of Amendment confirms that Ms Qiu had the opportunity in 2019 to direct notices under the CSA Loan Agreement to a person other than Mr Qiu. Instead, this deed confirms that no other term of the 2013 Loan Agreement is to be altered. In so doing, Ms Qiu affirmed the ongoing centrality of her father in the affairs of the company.

EXIM submitted the inference the Court may draw is that any evidence the directors could have given on these matters would not have assisted CSTT. The failure to call the directors means that the Court would be more confident in finding that Mr Qiu had actual implied authority to act as a de facto managing director of CSTT.

EXIM submitted that set against the three documents signed by two directors of CSTT there are several agreements and documents which are signed only by Mr Qiu. These documents span a period of eight years, some made their way to EXIM and some to the public at large.

EXIM submitted the absence of evidence from any director of CSTT would give the Court greater confidence in finding what appears obvious from the documents: that Mr Qiu acted in the way he did, including in executing numerous internally and externally facing documents spanning at least eight years, because he had the actual implied authority to do so. The absence of signatures from other directors on key documents only serves to confirm rather than contradict Mr Qiu’s authority. He did not need the signatures of other directors, because he was authorised, at least impliedly, to act alone.

F.2 CSTT’s submissions

CSTT submitted that much of EXIM’s Jones v Dunkel[2] submission is directed to a case not pleaded by EXIM. The Court cannot draw inferences against a party because it has not adduced evidence in respect of a case that was never put against it.[3] The rule only applies where a party is ‘required to explain or contradict’ something.[4] Three matters should be borne in mind:
[2]Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 (‘Jones v Dunkel’).
[3]Woolworths Ltd v Ryder [2014] NSWCA 223; (2014) 87 NSWLR 59 [35].
[4]Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 321.

(a) Having regard to the issues as defined by the pleadings, there was nothing to explain or contradict by any person not called by CSTT.

(b) EXIM bore the onus of establishing that CSTT executed or ratified documents. It was not CSTT’s onus to disprove.

(c) CSTT’s defence relied on contemporaneous documents. It disavowed the actions and conduct of Mr Qiu and Ms Gu.

For the rule in Jones v Dunkel to apply, it must be demonstrated that the evidence of the missing witness would have elucidated a matter.[5] In this case there are no contested conversations in issue between the parties. Nor is credibility of any witness in issue. Given this is principally a documentary case, there would have been no point in CSTT adducing oral evidence from any person to make good CSTT’s disavowal – it is for EXIM to prove otherwise.
[5]Payne v Parker [1976] 1 NSWLR 191, 202 (Glass JA in dissent).

These matters serve as an explanation such that it would not be appropriate for any Jones v Dunkel inference to be drawn adverse to CSTT.[6]
[6]Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.

Addressing the position of Mr Qiu specifically, he could not have given self‑serving evidence so as to confer authority on himself. Authority can only be conferred on Mr Qiu by CSTT in accordance with the CSTT Constitution, which requires resolutions in writing. CSTT gave full discovery, and EXIM has not suggested otherwise. There is not one document that confers any authority on Mr Qiu. Accordingly, any oral testimony from him would not have served any purpose.

To the extent EXIM submits that CSTT should have called evidence from another director, the same point arises. How would evidence from another director have resolved the real issues in dispute between the parties?

For these reasons, no Jones v Dunkel inference can or should be drawn against CSTT. Further, even if the Court were inclined to draw inferences (which it ought not) this does not enable the Court to supply facts where EXIM has not discharged its burden in the first instance.

F.3 Consideration: The principles and their application

Whether a party is required to call a witness to contradict a proposition or to explain something that did or did not occur is guided by the issues raised on the pleadings and by the evidence adduced at trial. The rule only applies where a party is required to explain or contradict something.[7] Disputed questions of fact are to be decided by reference to the evidence that has been adduced at trial and not by reference to speculation about what other evidence might possibly have been led.[8]
[7]Woolworths Ltd v Ryder [2014] NSWCA 223; (2014) 87 NSWLR 593 [35] (Sackville AJA).
[8]ASIC v Hellicar [2012] HCA 17; (2012) 247 CLR 345, 348 (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

A Jones v Dunkel inference does not operate to supply a gap in the evidence.[9] It can only make evidence that has been adduced more or less probable.
[9]Coles Supermarkets Australia Pty Ltd v Tormey [2009] NSWCA 135 [72] (Ipp JA).

The unexplained failure by a party to call a witness may support an inference that the evidence of that witness, if called, would not have assisted that party’s case.[10] The failure to call a witness may also permit an inference that is unfavourable to the party who did not call the witness to be drawn with greater confidence.[11] That is the case if the inference is open on the evidence and the uncalled witness appears to be in a position to cast light on whether the inference should be drawn.[12]
[10]Coles Supermarkets Australia Pty Ltd v Tormey [2009] NSWCA 135 [72] Ipp JA citing Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308, 312, 320–321.
[11]HML v R [2008] HCA 16; (2008) 235 CLR 334 [303] (Heydon J).
[12]Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361, 384–385 (Heydon, Crennan and Bell JJ).

It cannot be said in this case that some general inference adverse to CSTT must be drawn due to the failure to call Mr Qiu, Ms Qiu, Mr Lim or any of them.

Concerning the failure to call Mr Qiu:

(a) There was no issue in contest on the pleadings concerning the role of Mr Qiu in relation to Ruyi. Ruyi is not a party to the proceeding.

(b) There was no issue on the pleadings about whether Mr Qiu was ‘perceived by EXIM … to be in want of authority’, except in relation to EXIM’s Estoppel Case in the Reply. The various EXIM claims founded in contract depend on objective not subjective intent.

(c) Although there was no evidence of any document signed by Mr Lim after 2013, he remained a director. EXIM did not adduce evidence that Mr Lim did not sign any documents after January 2013 or to show that Mr Lim played no active role in the affairs of CSTT after that date. EXIM did not adduce evidence concerning Mr Lim’s role which Mr Qiu or Ms Qiu might have been expected to address in evidence. The important evidence relating to Mr Lim is that he was a director, his name appeared on the ‘Gu delegation’ with provision for him to sign in July 2016 and his signature was not affixed. That fact must have been obvious to any representative of EXIM who read the document at the time. No witness on behalf of EXIM gave evidence concerning the absence of Mr Lim’s signature that he or another witness on behalf of EXIM might be expected to explain or rebut.

(d) No such inference is properly drawn concerning EXIM internal documents, including the EXIM Pre‑Approval Report. There is no evidence Mr Qiu was ever provided with a copy of the report or consulted as to its contents.

(e) Where documents signed by Mr Qiu alone are in issue, the failure to call Mr Qiu to explain why he alone signed those documents might be the subject of a Jones v Dunkel inference if it were not for the pleaded reliance by CSTT on article 105 of its constitution — two directors to sign. There was no evidence that the Board of EXIM passed a resolution permitting Mr Qiu alone to sign documents where his authority to do so was in issue in the proceeding.

(f) The inference EXIM seeks to be drawn from the failure to call Mr Qiu goes beyond making an existing inference more probable and seeks to fill a gap in the evidence adduced by EXIM, that gap being that Mr Qiu was given authority.

(g) It cannot be seriously contended that Mr Qiu, Mr Lim or Ms Qiu should have been called in response to the July 2016 Authorisation Letter. That was a letter on Ruyi letterhead signed by Mr Qiu on behalf of Ruyi. It was not a letter on CSTT letterhead.

(h) The 2020/2021 Agreements signed by Mr Qiu bear the description ‘seal’. Some of the persons signing those documents such as Ruyi in the case of Supplementary Agreement 1 affixed the seal of the company. Although there was provision for the seal of CSTT to be affixed that did not occur. Mr Qiu alone signed. It was for EXIM to prove the document was validly executed by CSTT and binding on it as a result. It was not for Mr Qiu or CSTT to prove the agreement was not validly executed and not binding.

(i) In the same way, it was not for CSTT to prove what it did and did not know about Mr Qiu’s actions. Whether CSTT was bound by those actions is a matter to be determined by reference to its constitution.

G. The Chronology

The events relevant to this dispute occurred over a decade, between 2012 and 2022.

When considering the events in chronological order I have been assisted by the revised chronology.

I have also been assisted by an aide memoire provided by EXIM which identifies, for critical documents in the proceeding, whether that document is a CSTT document or another party’s document, the named parties (both internal and external to the Ruyi Group), whether documents signed on behalf of CSTT were signed by Mr Qiu only or by two directors, and whether the documents were produced by the plaintiff or the defendant, or both as part of discovery in the proceeding.

Since the events in question cover period of approximately 10 years, it is convenient to separately identify particular time periods relevant to the issues in dispute. As various of the events are identified in their chronological context I have included some references as to how the parties contend those events should be viewed as part of their respective cases.

G.1 Events prior to January 2013

In September 2009 EXIM granted Ruyi a ‘highest comprehensive credit line of RMB 1.5 billion’.

On 4 July 2012 Ruyi and Lempriere signed a term sheet regarding the proposed acquisition of Cubbie Station.

The parties agree that on 27 September 2012, CSTT adopted the CSTT Constitution. On 4 October 2012 CSTT was incorporated in Singapore. Mr Qiu and Mr Lim were appointed as directors.

On 5 October 2012 CSA was incorporated.

On 11 October 2012 CSA as purchaser and Ruyi as guarantor entered into the sale agreement for the purchase of Cubbie Station.

In November 2012 the Corporate Banking Department of the Shandong branch of EXIM prepared the lengthy and apparently comprehensive EXIM Pre‑Approval Report in relation to a proposed loan for a term of 12 years from EXIM to Ruyi.

EXIM placed considerable reliance on the EXIM Pre‑Approval Report which includes the following passages to which attention was directed during the trial:

On May 20, 2009, Qiu Yafu, Chairman of Ruyi Group, together with Academician Yao Mu, went to the head office to make a special report to President Ruogu, and the main persons in charge of the head office, risk management department, evaluation and review department, business development and innovation department, and Qingdao branch participated.
…
In September 2009, the Bank granted Ruyi Group the highest comprehensive credit line of RMB 1.5 billion, and in November, the first policy loan was launched.
…
On May 7, 2010, President Li Ruogu came to Shandong Ruyi Technology Group for inspection. After listening to the report on the development ideas and development blueprint of Ruyi Group …
…
The Export‑Import Bank of China will spare no effort to support Ruyi Group’s projects in line with national policies …
…
On November 2, 2012, the company’s business department reported the “Report on the Progress of Ruyi Group’s Acquisition of Australian Cubbie Cotton Field Project” to the assistant to the president of Xingyong and the president of Chongqing Branch after countersigning Qingdao Branch and Chongqing Branch, which made it clear that with Ruyi Group as the main body of financing, Qingdao Branch organized backbone forces to carry out pre‑loan investigation, and the company’s business department provided technical support for it. In view of the tight time and heavy tasks, in order to ensure that the loan approval work is completed within the time limit, the meeting agreed that the loan officers involved in the project of Qingdao Branch and the Corporate Business Department will review the materials at the same time and establish a regular communication mechanism.
…
Part 2 Ruyi Group
First, the basic situation
(1) Overview
Ruyi Group is located in Ruyi Industrial Park, Jining High‑tech Development Zone, established in December 2001 with a registered capital of 192.87 million yuan, and the legal representative Qiu Yafu. The company is a large‑scale comprehensive textile industry with complete industrial categories and outstanding technical advantages in domestic textile‑related fields, covering wool worsted, cotton spinning, woven garments, printing and dyeing, denim, fiber, knitted garments, etc., ranking 397^th among the top 500 Chinese enterprises, 211th among the top 500 manufacturing enterprises in China, 5th among the top 500 Chinese textiles, and the top 5 among the top 100 in China’s textile and garment industry.
…
Third, the level of management
Ruyi Group implements the president responsibility system under the leadership of the board of directors, and has a president, an executive president and a vice president, responsible for the implementation of the objectives set by the Board of Directors and the day‑to‑day operation and management.
…
(1) Management profile
The management of Ruyi Group is composed of the chairman, president, secretary of the party committee, executive president and vice president, including 1 chairman, president and secretary of the party committee, 6 executive presidents, 11 vice presidents and 1 chief accountant. The relevant situation is as follows:
Position   name
Chairman   Yafu Qiu (Director)
…
Vice President  WANG QIANG, MA HAITAO, LI AIYING, GU FENGMEI, …

…
First, the project plan
Ruyi Group and Lempiere plan to form a joint venture to acquire Australian Cubbie Cotton Field, with a total investment of 293,254,900 Australian dollars, of which Ruyi Group will invest 234,603,900 Australian dollars, accounting for 80 Lumpiere will invest 58,651,000 Australian dollars, accounting for 20 target assets Cubbie Cotton Field includes 93,483 hectares of land, 6,876 square meters of ancillary buildings, and 513 million cubic meters of water rights.
THE SPECIFIC PROCEDURES ARE: RUYI GROUP REGISTERED A WHOLLY‑OWNED COMPANY IN SINGAPORE CSTT CO HOLDINGS PTB LTD (HEREINAFTER REFERRED TO AS “CST”); CSTT AND LEMPIERE INCORPORATED A JOINT VENTURE COMPANY CSS AGRICULTURE PTY LTD (“CS”) IN AUSTRALIA, WITH CSTT HOLDING 80% AND 20% Lempiere. CS invested in the acquisition of Cubbie cotton field assets and built a ginning production line. The agreed closing date of the project is December 21, 2012.
…
(c) CSTT situation
CSTT is a wholly‑owned subsidiary of Ruyi Group in Singapore, registered on October 4, 2012, registration number 201224508M, and registered capital of S$1.
(iv) CS case
CS is a joint venture company established by CSTT and Lumpiere in Australia, CSTT holds 80 shares of Lumpiere holds 20 shares, registered on October 5, 2012, Australian company number 160516594, address is Murphy, Victoria, Australia
…
(4) Analysis of repayment ability
… Considering that the project is an overseas agricultural investment project, there are many uncertainties after the acquisition, and the enterprise needs to continue to invest liquidity to maintain normal operation, the other two projects of the Bank will be repaid next year, out of prudent consideration, it is recommended to give the enterprise a loan term of 12 years. … The specific repayment plan is shown in the conclusion part), and the average debt repayment performance ratio is 1.95, which is in line with the relevant regulations of our bank.

9. Future management measures
After the completion of the project, Ruyi Group will take a series of operation and management measures, mainly including the following …
…
(7)According to the requirements of the Australian Foreign Investment Review Board for the approval conditions of the project, Ruyi Group will hold the equity of the target company from 80% to 51 within three years …

…
Part IV Guarantees
1. In order to set up a reasonable guarantee plan, in the case of limited time, our department investigated the real estate of Ruyi Group with legal procedures and the equity of listed companies, and learned that the relevant situation is as follows:
(1) The status of real estate.

…
(3) Cubbie cotton field assets

According to the application submitted by Ruyi Group to FIRB, the acquisition loan was applied for without using Australian assets as collateral. Lawyers from Norton Rose attorneys noted that this is a must requirement for FIRB to approve the project.
Therefore, Ruyi Group stated that it was unable to provide our bank with a mortgage guarantee for the assets of Cubbie Cotton Field.
2. Guarantee and Guarantee Program
In the event that the delivery date is approaching and Ruyi Group is unable to provide elective asset collateral, after discussion, it is proposed to support the project by way of exempting the guarantee, and after repeated negotiation and communication with Ruyi Group, it is proposed to provide additional guarantees and safeguards as set out below:
(1) Add the Three Gorges Textile Joint and Several Liability Guarantee.
(2) Add Qiu Yafu’s personal joint and several liability guarantee.
(3) With regard to the additional pledge of CSTT’s entire shareholding, our office has consulted Norton Rose on the relevant procedures and legal issues. Norton Rose indicated that it had enquired with the relevant Singaporean organisations about the specific procedures and would reply later. It was learnt from the Head Office that the Corporate Services Department had handled the equity pledge in Singapore in April this year, and that it would take about three months from the preparation of the equity pledge agreement to the completion of all the formalities. Therefore, it is recommended that this guarantee is not a condition for lending (the rest is ineligible)
(4)Additional CS 80% equity pledge, Norton Rose said that CS equity pledge faces three problems: firstly, the pledge of equity in an Australian company to a Chinese stateowned bank needs to be reported to the government of Australia for approval, which may be rejected; secondly, the approval time is more than one month; and thirdly, it needs to be agreed by Lempiere. Therefore, it is recommended that this form of guarantee is not a condition for lending. If the CS equity pledge is not approved by the Australian government or Lempiere’s consent, Ruyi Group and CSTT are required to undertake not to pledge 80% of the rights held by Ruyi Group without our bank’s consent until the loan is repaid by our bank.
(5)The second mortgage on the real estate under partial equity interest of the project in Japan Rena Co., Ltd.
(6)Additional second mortgage on the real estate under the Ruyi 50 million metres Spun High Grade Shirt Fabric Project.
(7)Ruyi Group, CSTT and CS are required to promise not to mortgage the assets of Cubbie Cotton Field without the consent of our bank before the loan is repaid.
(8)Ruyi Group is required to mortgage the relevant collateral to the project after repaying the working capital loan of our bank when it is due in the future.
(9)CSTT is required to give priority to the repayment of the loan with the proceeds from the reduction of CS equity. CSTT holds 80% of the CS shares, and will reduce its holdings to 51% in the next three years according to the requirements, and Ruyi Group and CSTT promise that the proceeds from the reduction will be used to repay the loans of our bank first; If the shareholding is reduced by way of equity replacement, the obtained equity will be pledged to our bank.

…
2. Affiliates control risks Qiu Yafu, the chairman of the board of directors of the borrower, currently holds 51% of the equity of Ruyi Investment and is its actual controller … [The directors] ARE ALL RELATIVES OF QIU YAFU. The actual controller can use its dominant position to exert influence on the personnel, finance, production and operation of the enterprise, and may make decisions that are unfavorable to the enterprise, bringing certain risks to the development of the enterprise.
…
(emphasis added)

On 24 December 2012 the Credit Approval Committee of EXIM met and agreed to provide a loan to Ruyi for an amount not to exceed RMB 1.072 billion or its equivalent in foreign currency. The minutes of the meeting include:

Guarantee measures: 1. Chongqing Three Gorges Technical Textile Co., Ltd. joint and several liability guarantee; 2. Qiu Yafu’s personal joint and several liability guarantee; 3. Occupy the borrower’s guarantee‑free credit line in our bank according to the amount of loan disbursement; 4. Within 6 months, the second mortgage of real estate under the 50 million meters of Ruyi Textile high‑grade shirt fabric project will be completed; 5. The acquisition will be completed within 6 months of the second mortgage of real estate under part of the equity project of Japan Rena Co., Ltd.; 6. Within 6 months, the pledge of 51% equity of Jining Ruyi Investment Co., Ltd. held by Qiu Yafu was completed; 7. In the future, after the two working capital loans are recovered at maturity, the real estate mortgage under the working capital loan (including the personal commercial real estate of Qiu Yafu, the actual controller of the borrower); 8. After the pledge conditions are met, the pledge of all the shares of CS and 80% of the shares of CS will be added.
Safeguard measures: 1. The borrower promises in writing to pledge all the equity of CSTT in a timely manner when the conditions are met; 2. The borrower and CS promise in writing to pledge 80% of the equity of CS in a timely manner when the conditions are met, and if they cannot pledge our bank, they shall not pledge others before the loan of our bank is repaid;
— 3 —
3. The borrower and CS promise in writing that the funds obtained from the reduction of the equity of CS company will be used to repay the loan of our bank first, or the equity obtained by way of replacement will be pledged to our bank; 4. The borrower and CS promise in writing that they shall not mortgage the land assets of Cubbie Station cotton field to a third party without the consent of our bank before the loan is repaid; 5. The borrower and the owner of the mortgage property under the loan of the 50 million meters Ruyi Textile Fabric Project and the acquisition of Rena Project promise in writing to complete the second mortgage of the relevant collateral within 6 months after the loan is disbursed; 6. The owner of the mortgage property under the two working capital loans promises in writing to complete the additional mortgage for the project in a timely manner after the loan is recovered when the loan expires in the future; 7. Qiu Yafu promised in writing to complete the procedures for pledging 51% of the equity of Ruyi Investment held by him to our bank within 6 months after the loan; 8. The borrower shall issue a written undertaking to notify the Bank of the issues before the board meeting, and the Bank shall choose to attend the meeting; 9. The borrower shall issue a written undertaking that the borrower shall obtain the opinion of the Bank for its future major investment behaviours.
Loan conditions: 1. Complete the approval procedures of the National Development and Reform Commission, the Ministry of Commerce and the State Administration of Foreign Exchange. 2. The borrower’s own funds are in place in the same proportion in advance. 3. Complete the legal and executive guarantee procedures of Chongqing Three Gorges Technical Textile Co., Ltd. and Qiu Yafu. 4. Complete all the above safeguard measures.
(emphasis added)

G.2 January 2013

In January 2013 there were seven directors of Ruyi, including Mr Qiu. I was informed that Ruyi has a written constitution, however Ruyi’s constitution was not in evidence.

On 18 January 2013 the board of Ruyi passed a resolution signed by all seven directors in relation to the proposed loan. A copy of the resolution was discovered by both parties. The Ruyi Board Resolution includes the following:

Shandong Ruyi Technology Group Co., Ltd.
Board Resolution
1.Approval to pledge using the entire share of our wholly‑owned subsidiary ‑ CSTT CO Holdings Pte Ltd (Singapore), and the 80% share of its subsidiary CS Agriculture Pty Ltd(Australia), for our company and Lempriere (Australia) Pty Ltd jointly to apply to China EXIM Bank for a loan of CNY 1.1 billion or its equivalent in foreign currency of the acquisition of the Australia Cubbie Station Project. If a pledge cannot be made, our company will not pledge it to others until the loan from China EXIM Bank is repaid.
…
5.Prior to convening a board meeting, our company will provide written notice of the agenda to China EXIM Bank, and China EXIM Bank will have the option to attend.

On 18 January 2013 the board of CSTT passed the CSTT Board Resolution. The Chinese language version of the CSTT Board Resolution was signed by the two directors of CSTT, Mr Qiu and Mr Lim. The CSTT Board Resolution, a copy of which was discovered by both parties was in the following terms:

1.We agree to take 80% equity of CS AGRICULTURE PTY LTD (Australia Company) held by our company, To provide collateral guarantee for the one hundred and one billion RMB or equivalent foreign currency loan applied by Shandong Ruyi Technology Group Co., LTD. (the parent company of our company) and Lumpley (Australia) Co., LTD to the Export‑Import Bank of China for the joint acquisition of the Kabi cotton field project in Australia. If the loan cannot be pledged, it shall not be pledged to any other person until the loan is repaid.
2.We agree not to pledge the cottonfield land assets of the cottonfield to any third party without the consent of the Import and Export Bank of China before the payment of the one hundred and ten million yuan or equivalent foreign currency loan applied by Shandong Ruyi Technology Group Co., Ltd. to the Export‑Import Bank of China for the acquisition of the cottonfield project in Australia.
3.We agree to the funds obtained from reducing the shares held by our subsidiary CS AGRICULTURE PTY LTD (Australia company) from 80% to 51%. Give priority to repay the one hundred and one billion yuan or equivalent foreign currency loan applied to the Export‑ Import Bank of China for the acquisition of the Australian Kabi Cotton Field Project or pledge the equity obtained by the replacement method to the Export‑Import Bank of China.

On 18 January 2013 Mr Qiu signed what is referred to in the ASOC as the ‘Ruyi Letter of Undertaking’.

On 18 January 2013 one of the two directors of CSTT, Mr Qiu, signed the CSTT Letter of Undertaking, copies of which were discovered by both parties. Reproduced in full, the CSTT Letter of Undertaking states:

CSTT CO HOLDINGS PTE. LTD.
Commitment Letter
To China EXIM Bank:
Regarding the matters related to the loan application to your institution for the joint acquisition of the Australia Cubbie Station project by our parent company, Shandong Ruyi Technology Group Co., Ltd. and Lempriere (Australia) Pty Ltd, our company undertakes the following:
1. Using an 80% share of our subsidiary, CS Agriculture Pty Ltd (Australia), our company pledges to provide collateral for the CNY 1.1 billion or its equivalent in foreign currency loan applied by Shandong Ruyi Technology Group Co., Ltd. for the acquisition of Australia Cubbie Station project. If a pledge cannot be made, our company will not pledge it to others until the loan is repaid to your institution.
2.Without the prior consent of your institution, our company will not pledge Cubbie Station land assets to any third party until the settlement of the CNY 1.1 billion or its equivalent in foreign currency loan applied by Shandong Ruyi Technology Group Co., Ltd. for the acquisition of the Australia Cubbie Station project.
3.The funds obtained by our company from reducing the shares from 80% to 51% in CS Agriculture Pty Ltd (Australia) will be prioritized for the repayment of the CNY 1.1 billion or its equivalent in foreign currency loan applied for the acquisition of the Australia Cubbie Station project to your institution or pledging the share acquired by way of exchange to your institution.

This commitment is hereby made.
Signature
18 January 2013
(emphasis added)

On 21 January 2013 EXIM as Lender and Ruyi as Borrower entered into the loan facility agreement for the US 74,800,000 loan. On the same day EXIM advanced the loan funds to Ruyi.

The evidence does not include a letter of offer in relation to the loan facility agreement as would be common in Australia in relation to loan transactions of this magnitude. It is also the case that there is no evidence of email, WeChat or other communications between EXIM on the one hand and all or any of Ruyi, CSTT or CSA on the other hand between the EXIM Pre‑Approval Report in November 2012 and the signing of the loan facility agreement on 21 January 2013 and the making of the advance on the same date.

On 21 January 2013 CSTT as Lender and CSA as Borrower entered into the CSA Loan Agreement pursuant to which AUD $176,500,000 was lent by CSTT to CSA for the purpose of the acquisition by CSA of all the business and assets of Cubbie Group Pty Ltd and working capital for the purposes of owning, operating and managing its assets.

Although not part of its pleaded case EXIM submitted the signing of documents on 18 January 2013 by Ruyi, CSTT and CSA, a suite of agreements, supports a finding that CSTT authorised the agreements as it shows the transaction was comprised of multiple agreements. EXIM submitted that from the execution of those documents by the entities in the Ruyi Group, if CSTT was not authorised, it was entirely proper for EXIM to assume that it was.

G.3 The 2013 loan facility agreement

It is convenient at this point to mention some aspects of the 2013 loan facility agreement.

The express terms of the loan facility agreement, include that:

(a) any amendment or supplement to any provision of the loan facility agreement shall be in writing and shall come into effect once signed and sealed by the Borrower [Ruyi] and the Lender [EXIM], and constitute an integral part of the loan facility agreement (article 38);

(b) any extension or delay granted by the lender to the Borrower in connection with the performance of obligations under the loan facility agreement shall not restrict any right or interest of the Lender in accordance with the agreement, laws and regulations and shall not be deemed as a waiver and nor shall it affect the performance by the Borrower of any of its obligations under the agreement (article 42);

(c) notices pursuant to the agreement shall be given or made in writing and shall be delivered to the relevant addresses of the parties as stated at the beginning of the agreement, namely Mr Qiu on behalf of Ruyi and to Mr Ruogu Li on behalf of EXIM (article 47);

(d) the agreement shall be governed by and construed in accordance with the laws of the People’s Republic of China (article 43).

Chapter 9 of the loan facility agreement headed ‘Securities’ contains article 32, which states that the loan is secured by joint and several guarantees given by each of Chongqing Sanxia Technology Textile Co., Ltd (‘Sanxia’) and Mr Qiu and his spouse. The guarantees are identified by reference to specific separate ‘Guarantee Contracts’.

Article 32 is in the following terms:

Chapter 9 Securities
Article 32 The Loan is secured in the following manner:
þ Chongqing Sanxia Technology Textile Co., Ltd. provides a _joint and several liability guarantee, and will enter into a separate Guarantee Contract, the number of which is 2070001062013210156BZ01.
þ Qiu Yafu and his spouse provides a _joint and several liability repayment guarantee, and will enter into a separate Guarantee Contract, the number of which is 2070001062013210156BZ02.
The above documents are collectively referred to as the ‘Security Contracts’.

It is the case for EXIM that article 32 cannot be read to be exhaustive concerning securities, it is part of a loan document only as between Ruyi and EXIM which deals only with the position of EXIM vis‑à‑vis Ruyi. EXIM submitted the loan facility agreement does not include all involved parties and nor does it involve or even refer to the board resolutions outlined earlier in the chronology.

Article 36 of the loan facility agreement listing the events of default is picked up as the definition of an event of default under the 2016 Security Agreement.

CSTT drew attention to features of the loan facility agreement which it submitted to be matters of significance in the context of EXIM’s reliance on the later 2016 Security Agreement:

(a) the loan facility agreement was entered into between EXIM and Ruyi, together with Sanxia and Mr Qiu and his spouse as security providers;

(b) CSTT was not a party to the agreement and nor is it mentioned in the agreement;

(c) the parties to the loan facility agreement did turn their mind to security for the loan as is evident from chapter 9, specifically the joint and several guarantees given by Sanxia and Mr Qiu and his spouse pursuant to article 32. Despite security being mentioned in the loan facility agreement, there is nothing on the face of the loan facility agreement to suggest that CSTT would in any way be required to provide security for the loan at some time in the future;

(d) none of the ‘safeguard measures’ or written pledges referred to in the EXIM Pre‑Approval Report are referred to in the loan facility agreement; and

(e) Mr Qiu’s role as a personal guarantor of the loan in favour of Ruyi has special significance when it comes to assessing whether EXIM was put on inquiry in terms of the potential application of the indoor management rule.

In closing CSTT referred to submissions by EXIM that this Court should have regard to Chinese law, and should ignore the common law of Australia, in relation to the interpretation of the loan facility agreement and also in relation to the CSTT Letter and the CSTT Board Resolution.

The loan facility agreement is expressed to be governed by the laws of the People’s Republic of China, was signed in China and is between two Chinese corporations. During the trial CSTT placed reliance on article 32 of that agreement concerning authority. CSTT did not expressly refer to article 32 in its Defence, however in response to the Facility Agreement plea, CSTT stated that it would rely on the full terms and effect of the Facility Agreement. In those circumstances, as submitted by EXIM, CSTT put article 32 in issue. Questions relating to the interpretation of the loan facility agreement including concerning article 32 are to be answered to the extent necessary in accordance with Chinese law.

There is no plea that the Court should have regard to Chinese law in relation to the CSTT Letter of Undertaking or the CSTT Board Resolution. The parties agreed in their joint expert evidence proposal that the existence and interpretation of the 2016 Security Agreement and the CSTT Undertaking Agreement are matters to be decided according to Victorian law.

G.4 August 2015 – 25 July 2016

No attention was directed during the trial to communications that occurred between EXIM on the one hand and any or all of Ruyi, CSTT or CSA on the other between the end of January 2013 and July 2016.

In August 2015, following a proposal from EXIM to the Foreign Investment Review Board (‘FIRB’) to acquire and enforce security interests over the shares held by CSTT in CSA, FIRB wrote to Corrs Chambers Westgarth on behalf of EXIM. The FIRB advised it had no objection to the proposal.

(c) Third, EXIM alleges CSTT ratified the 2016 Security Agreement on 27 July 2016 registering a charge over CSTT’s present and future interests in its shares in CSA. However, Mr Chen confirmed in his witness statement that EXIM registered the charge is not clear. There is no evidence that CSTT authorised or permitted this registration.

So far as EXIM relies on the 2020/2021 Agreements as constituting acts of ratification of the 2016 Security Agreement, CSTT contended that submission should be rejected:

(a) Mr Qiu was not authorised to unilaterally ratify the 2016 Security Agreement on behalf of CSTT. He cannot therefore unilaterally ratify that agreement by signing subsequent agreements in a manner contrary to the requirements of the constitution.

(b) Each of the 2020/2021 Agreements provide that they will only come into effect on the date when they are ‘signed and sealed by all parties’. There is no evidence this ever occurred.

(c) CSTT is identified in each of the 2020/2021 Agreements as a ‘pledgor’, rather than a ‘mortgagor’. This is not a mere trifle. A pledge and a mortgage are different things.[59]

(d) The 2020/2021 Agreements are not by way of deed and, pursuant to clause 9.1 of the 2016 Security Agreement, cannot amend that agreement.

[59]Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249 [16]–[17] (McHugh, Gummow, Hayne and Heydon JJ).

L.3.2 EXIM’s submissions

EXIM submitted that the 2016 Security Agreement and each of the 2020/2021 Agreements were actually or ostensibly authorised by CSTT and bind it. Alternatively, that each such agreement was subsequently affirmed or adopted by the later acts and omissions of CSTT.

EXIM contended that Ms Gu, who signed the 2016 Security Agreement, and Mr Qiu, who signed the 2020/2021 Agreements, did so with CSTT’s actual or ostensible authority. EXIM called upon the indoor management rule and the principles of ratification in further aid of its case.

EXIM submitted that it entered into the 2020/2021 Agreements with Ruyi and others to implement the outcomes from the Creditors Committee meetings. CSTT was a party to these agreements, which refer to, affirm and re‑adopt the 2016 Security Agreement.

EXIM urged the Court to find that Mr Qiu had the actual implied authority of CSTT to:

(a) delegate to Ms Gu the authority to sign the 2016 Security Agreement, and

(b) execute each of the 2020/2021 Agreements himself.

Mr Chen’s evidence was that: ‘In my memory, when this document [the 2016 Security Agreement] was signed, their director gave Ms Gu some letter of authorisation’.[60] When asked whether he was referring to the Authorisation Letter, Mr Chen’s response was that there was ‘there was another letter which was similar to a resolution letter’.[61] Later, he said: ‘I seem to recall that there was a resolution or some sort of documents, I can’t recall exactly, of CSTT which clearly gave the authority to Ms Gu’.[62] He indicated that he had mentioned this document in his affidavit, but could not recall its exact name.
[60]Transcript of hearing on 25 March 2025 in The Export‑Import Bank of China v CSTT Co Holdings Pte Ltd, 163.
[61]Transcript of hearing on 25 March 2025 in The Export‑Import Bank of China v CSTT Co Holdings Pte Ltd, 163.
[62]Transcript of hearing on 25 March 2025 in The Export‑Import Bank of China v CSTT Co Holdings Pte Ltd, 164.

EXIM submitted that Mr Chen’s second statement does refer to a document he describes as the ‘Directors’ Resolution in Writing Pursuant to the Company’s Constitution and dated 25 July 2016. This is the document referred to as the Gu Delegation. The effect of this evidence is to place a document specifically referring to a CSTT Board resolution authorising Ms Gu to sign the 2016 Security Agreement as having been exchanged when the 2016 Security Agreement was signed.

EXIM relied on Mr Qiu’s authority to bind CSTT on what it described as overwhelming evidence of Mr Qiu’s control and power within the Ruyi Group and the circumstances in which the 2016 Security Agreement and CSTT as an entity came to exist including:

(a) Mr Qiu was and remains a director of CSTT;

(b) CSTT is wholly‑owned by Ruyi, an entity in which Mr Qiu is a significant beneficial owner. Mr Qiu held and continues to hold the position of director, Chairman and legal representative of Ruyi;

(c) Mr Qiu was himself, until 8 June 2022, a director of CSA. His daughter remains so;

(d) CSTT has always owned 80% of the issued share capital in CSA;

(e) CSTT was specifically incorporated alongside CSA as a special purpose vehicle to facilitate the Cubbie Station acquisition, which was the purpose for the US $74.8 million loan being secured by the 2016 Security Agreement;

(f) CSA purchased Cubbie Station with the loan provided by EXIM to Ruyi, via an intra‑company loan between CSTT and CSA;

(g) CSTT had no other employees who could execute documents for it;

(h) there is no evidence that CSTT had any other significant business; and

(i) the CSTT Letter of Undertaking and CSTT Board Resolution already contemplated the pledging of CSTT’s shares in CSA which the 2016 Security Agreement would bring about. EXIM submitted that Mr Qiu signed almost every significant document in the proceeding – all except a witness statement explaining his actions. No other CSTT director gave evidence to offer a different account. EXIM submitted in the alternative that CSTT held out Mr Qiu as having the authority to execute the 2020/2021 Agreements, which confirmed the validity of the 2016 Security Agreement.

EXIM submitted that CSTT is seeking to convert the legal fiction of separate corporate personality into an objective fact. CSTT was nothing more than a vehicle for manifesting the Ruyi Group’s plans to acquire an Australian cotton fields property that would support its business. Mr Qiu was the Ruyi Group, and the Ruyi Group was Mr Qiu.

Concerning the indoor management rule, EXIM submitted the Court should find it was entitled to rely on the assumption that CSTT’s house was in order and Mr Qiu and Ms Gu were authorised to act as they did.

Ruyi, CSTT and CSA had already furnished letters and accompanying board resolutions to EXIM on 18 January 2013 signed by all directors indicating a pledge of the CSA shares to EXIM would occur if it could. There was nothing which would put EXIM on inquiry that something was amiss.

Contrary to the position adopted by CSTT, the fact Mr Qiu was a personal guarantor of the Loan serves to reinforce rather than contradict the impression left with EXIM that he was a man so intricately involved with the Ruyi Group that the two could not be separated. EXIM submitted that to say it was put ‘on inquiry’ as to irregular internal management processes within CSTT because Mr Qiu provided a personal guarantee for the loan, would be to draw a conclusion which ignores the objective facts. Nothing was irregular in how EXIM would have seen Mr Qiu to be behaving given his position as corporate patriarch for the Ruyi Group.

EXIM submitted that unlike the transaction in Northside, the transaction here went to the core of CSTT’s business. The transaction was the very reason for CSTT’s incorporation. CSTT clearly obtained a benefit from the Loan extended to Ruyi. It submitted nothing was irregular in how EXIM would have seen Mr Qiu to be behaving, as Mr Qiu was and had acted as the corporate patriarch for the Ruyi Group throughout the relationship with EXIM dating back to 2009.

EXIM submitted that if Mr Qiu did not have the implied authority to authorise Ms Gu to execute the 2016 Security Agreement, then he must have had it by the passage of time and further acts which occurred between 2016 and 2020/2021. In this time, Mr Qiu presented to the Creditors’ Committee meetings as Chairperson for the Ruyi Group and a clause now reflects that group status in the same Creditors’ Agreement that CSTT seeks to rely on in this litigation.

EXIM submitted the Court should find the 2016 Security Agreement to have been actually or ostensibly authorised by CSTT, as is the case concerning each of the 2020/2021 Agreements. If those agreements were ostensibly authorised, as EXIM submitted is the case, it follows that CSTT agreed to be bound by the Security Agreement from 20 March 2020.

EXIM submitted the Court should find that Mr Qiu was held out by CSTT as having the authority to sign the subsequent agreements, which he did. Those agreements refer to and confirm the validity of the 2016 Security Agreement, making CSTT bound to its terms.

Alternatively, if the 2016 Security Agreement was not authorised at the time of its execution, the Court should find that the agreement was otherwise affirmed and adopted by CSTT’s acts or failures to act since 2016, including:

(a) the failure to revoke or correct, at any time before this litigation commenced, the PPSR registration on 26 July 2016 of EXIM’s security interest in the CSA shares, and apparently, also on 25 July 2016, the ACRA reference from 25 July 2016 to the 2016 Security Agreement;

(b) the failure until 30 September 2022 to disabuse EXIM from proceeding on the basis that CSTT was a party to the 2016 Security Agreement,

in circumstances where:

(c) its very existence as an entity was bound up in the Cubbie Property transaction partly financed by the Loan from EXIM;

(d) on 26 July 2016, a PPSR Registration document was created showing EXIM as a secured party;

(e) in 2019, Mr Qiu and Ms Qiu signed a deed extending the repayment date on an A$176.5 million loan granted to CSA by CSTT, which was initially financed by the US $74.8 million Loan to Ruyi;

(f) CSTT’s director, Mr Qiu, signed each of the 2020/2021 Agreements which each refer to, affirm and re‑adopt the Security Agreement;

(g) CSTT produced each of the above documents on discovery, along with numerous documents showing Mr Qiu signing documents relating to the 2016 Security Agreement unilaterally on behalf of CSTT; and

(h) CSTT led no evidence from any of its current directors as to when CSTT first knew of the existence of these documents or the registrations with PPSR and ACRA, such that the Court is invited to infer that any evidence it could have led would not have been assisted its case.

If Ms Gu did not have the requisite authority to sign the 2016 Security Agreement, but Mr Qiu did have the actual implied authority to sign the subsequent agreements, then his execution of the subsequent agreements which refer to, affirm and re‑adopt the 2016 Security Agreement would also ratify the earlier unauthorised acts of Ms Gu.

At all times since the execution of the 2016 Security Agreement until CSTT’s response to the letter of demand on 30 September 2022, EXIM had proceeded on the basis that CSTT was bound by the 2016 Security Agreement. Over those 6 years, 2 months and 5 days, CSTT took no steps to disown the 2016 Security Agreement nor to notify EXIM that Ms Gu did not have authority to sign it, nor the subsequent agreements signed by Mr Qiu which refer to it. CSTT’s failure to act occurred in circumstances where it must be inferred that its directors (of which Mr Qiu was one) had full knowledge of all the material circumstances in which the so‑called unauthorised transactions were made.

EXIM submits the Court should find that CSTT knew of all the material facts relating to the 2016 Security Agreement and adopted it as its own. The contrary proposition would be for the Court to accept that over a period between 25 July 2016 and 19 May 2021, no less than four different agreements were entered to in CSTT’s name, three of which were signed by its current director (who it has not called to give evidence), and all of which were unknown to it in circumstances where the company was itself established to facilitate the purchase of a property financed by the Loan that the 2016 Security Agreement and subsequent agreements relate to.

L.4 The CSTT Constitution

Attention was directed to the following articles of the CSTT Constitution relevant to questions of authority:

(a) Article 81 enables the directors to exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and to issue debentures and other securities whether outright or as security for any debt, liability, or obligation of the Company to or of any third party.

(b) Article 83 provides that the directors may exercise all the powers of the Company in relation to any official seal for use outside Singapore.

(c) Article 85 provides that the directors shall cause minutes to be made of all appointments of officers, of names of directors present at all meetings, and of all proceedings at all meetings of the Company and of the directors.

(d) Article 91 provides that the quorum necessary for the transaction of the business of the directors shall be two unless, unless the directors agree on some other number.

(e) Article 88 provides that, for the purposes of despatching business, any question arising at any meeting of directors shall be decided by a majority of votes.

(f) Article 99 provides that a resolution in writing signed by a majority of the directors and constituting a quorum shall be as effective as a resolution duly passed at a meeting of the directors.

(g) Article 103 provides that the directors may entrust to and confer upon a managing director any of the powers exercisable by them.

(h) Article 105 reproduced at paragraph 142 above concerns the execution of documents by application for the company seal.

L.4.1 EXIM’s submissions regarding the CSTT Constitution

EXIM submitted that CSTTs’ reliance on its constitution was a ‘red herring’. EXIM was entitled to rely on the indoor management rule in assuming that CSTT had its house in order and that Ms Gu and Mr Qiu were properly authorised to execute the agreements that they executed.

When EXIM had a contemporaneous document signed by Mr Qiu which certified (or purported to certify) that the CSTT Board had passed resolutions authorising Ms Gu to sign the 2016 Security Agreement, EXIM had no reason to look for the CSTT Constitution.

In any case, article 81 of the CSTT Constitution clearly gave the CSTT directors the power to execute security agreements.

EXIM drew attention to the purported amendment to the CSTT Constitution by Mr Qiu in 2016.

L.4.2 CSTT’s submissions regarding the CSTT Constitution

CSTT rejected EXIM’s submission that the CSTT Constitution is a ‘red herring’ and that CSTT should somehow not be entitled to rely on its constitution. CSTT submitted that as a matter of fact and law, CSTT is restrained by its constitution in terms of its powers.[63]
[63]Virtgel Ltd v Zabusky [2006] QSC 066 [65].

CSTT submitted its constitution makes clear what is required for actual express authority. The constitution does not make provision for CSTT to enter into binding agreements without the application of the company seal and the signature of two directors or a director and secretary.

The directors must resolve, at a meeting constituting a quorum, to confer authority on a person for any particular thing (articles 83, 99). Where such a resolution is made, it must be reflected in minutes (article 85). CSTT submitted that it did not at any time confer actual authority, by way of a minuted resolution of directors (or by way of a general meeting of the company) on any person to enter into the 2016 Security Agreement.

Responding to EXIM’s contention that Mr Qiu amended the CSTT Constitution in 2016 and that this amendment was significant in relation to the authority of Mr Qiu to bind CSTT, CSTT submitted that contention is misconceived:

(a) the purported amendment was made by Mr Qiu acting alone. Mr Qiu did not have the authority to make unilateral amendments to the CSTT Constitution;

(b) the amendments did not concern any of the articles relevant to this dispute; and

(c) the amendments did not ratify the 2016 Security Agreement, which was not mentioned. The amendments related to security over shares owned by Ruyi in CSTT that were charged in favour of EXIM under a different security agreement than the 2016 Security Agreement the subject of this proceeding.

L.5 Authority issues: findings

I accept the proposition that the starting point is the CSTT Constitution.

As is CSTT’s pleaded case, neither the 2016 Security Agreement nor any of the 2020/2021 Agreements, or for that matter, any document relied on in the proceeding by EXIM, was executed by CSTT by the application of the company seal, as provided for in accordance with article 105 of the CSTT Constitution.

Each of the 2020/2021 Agreements provided for the seal of the parties to be affixed. That took place in the case of some of the parties who entered into the agreements. It did not occur in relation to CSTT.

I accept the submission by CSTT and find that on 25 July 2016 the CSTT Constitution was available to any person who sought to obtain a copy of it from ACRA. The amendments to the CSTT Constitution concerning which Mr Qiu signed documents on 25 July 2016 are amendments that relate to security provided by Ruyi over the shares it held in CSTT. Those amendments do not concern security given or to be given by CSTT over its shares in CSA. If there is a ‘red herring’ concerning the CSTT Constitution, it is the reliance by EXIM on that amendment to the constitution.

Although EXIM and CSTT made submissions about evidence given by Mr Chen and by Mr Materne concerning the CSTT Constitution, such evidence provides no assistance when determining the contested issues relating to authority and the CSTT Constitution.

Not all documents to be executed by CSTT are required by its constitution to be executed under seal in accordance with article 105. Articles 81 and 91 permit the directors, plural, to exercise all powers of the company including borrowing money and granting security for any debt liability or obligation of the company. Article 85 requires the directors of CSTT to cause minutes to be made of all meetings of the company and of the directors.

I find that Ms Gu was not authorised to bind CSTT. She had no authority to do so. The two documents relied on by EXIM, the Authorisation Letter and the Gu delegation do not support a finding that Ms Gu had actual implied authority to bind CSTT.

Ms Gu is not and was not a director of CSTT.

There is no evidence the directors of CSTT resolved to sign the 2016 Security Agreement or that they resolved to sign all or any one of the 2020/2021 Agreements. There is no evidence that in accordance with articles 83, 91 and 99 of the CSTT Constitution the directors authorised Ms Gu to sign, or that they authorised CSTT to enter into the 2016 Security Agreement signed by Ms Gu. There is similarly no evidence the directors of CSTT passed a resolution providing for entry into, or for Mr Qiu to sign all or any one of the 2020/2021 Agreements.

The Authorisation Letter upon which EXIM relied concerning Ms Gu’s signing of the 2016 Security Agreement on behalf of CSTT provides no evidence that is capable of supporting a finding that CSTT authorised Ms Gu to sign on its behalf and to bind CSTT to the 2016 Security Agreement. The Authorisation Letter was an authorisation of Ms Gu by another company, Ruyi, a company of which Ms Gu was a Vice President. The Authorisation Letter is nothing to do with CSTT.

The Gu delegation is in a different category. It purports to be a delegation by CSTT. The problem so far as EXIM is concerned is that Mr Lim, at that time one of the two directors of CSTT, whose name appears on the document, did not sign the document. It must have been clear to any person who read the document that while two directors of CSTT were expected to sign, only one had done so. There is no evidence from EXIM of any conversation or communication with CSTT enquiring when Mr Lim was to sign or why he had not done so.

I do not accept the submission by EXIM that Mr Qiu had CSTT’s actual implied authority to act as its agent in authorising Ms Gu to execute the 2016 Security Agreement. The matters relied on to found that submission are matters that relate to Ruyi and Ruyi Group rather than to CSTT.

To the extent EXIM contends Ms Gu had ostensible authority to bind CSTT:

(a) Ms Gu had no ‘actual authority’ to make such a representation.

(b) EXIM adduced no evidence to support a finding that it relied on a representation by Ms Gu, or by Mr Qiu, as a result of which it was induced to enter into the 2016 Security Agreement.

(c) It is also significant that while on 25 July 2016 Mr Qiu signed a ‘Certified Extract of Directors Resolutions in writing dated 25 July 2016’, the resolutions that he certified did not include the two resolutions relating to Ms Gu included in the Gu delegation signed by Mr Qiu and not by Mr Lim.

In light of the matters to which I have referred, I am not persuaded that Ms Gu had ostensible authority to bind CSTT to the 2016 Security Agreement.

I consider the reliance by EXIM on the indoor management rule concerning the signing by Ms Gu of the 2016 Security Agreement is problematic.

Mr Chen gave evidence that he asked the lawyers acting for EXIM to ensure the 2016 Security Agreement was properly executed. Those lawyers, in Singapore, as he was at the time the documents were signed, could have accessed the ACRA database. If they had done so they would have known that the 2016 Security Agreement was not executed in accordance with the CSTT Constitution and that it was not ‘properly executed’.

There have been submissions about Jones v Dunkel and the inferences that should be drawn. Those submissions were not directed to evidence from the Singapore lawyers. However, it is the fact that EXIM did not lead evidence from its Singapore lawyers about the inquiries that they made and the searches they undertook in 2016.

Accepting the accuracy of Mr Chen’s evidence which I do, the Singapore lawyers should have done what Mr Chen instructed them to do on behalf of EXIM. They should have insisted upon execution of the 2016 Security Agreement under seal or the provision of a resolution signed by the directors of CSTT authorising a delegation in favour of Ms Gu. While Mr Chen gave evidence that there was ‘another letter which was similar to the resolution letter’ apart from the Authorisation Letter, EXIM did not adduce evidence of a letter from CSTT which gave authority to Ms Gu. Faced with the Gu delegation document with provision for Mr Lim to sign but not signed by him, EXIM was put on enquiry.

It is not to the point that based on the documents tendered at trial, the last document Mr Lim signed was in 2013. He remained a director of CSTT in 2016 and his name and a space for him to sign appeared on the incomplete Gu delegation.

The fact that Mr Qiu was a significant beneficial owner of the Ruyi Group and known by EXIM to be the main driving force behind the loan and the acquisition of a controlling interest in Cubbie Station by CSTT did not mean that EXIM was entitled to act without regard to the CSTT Constitution. EXIM was put on enquiry by the reference to Mr Lim in the Gu delegation document and the fact the loan transaction to which the 2016 Security Agreement related had taken place and been completed and documented three years earlier between parties that did not include CSTT.

EXIM was not entitled to proceed on the basis that because CSTT was part of the Ruyi Group that as long as Mr Qiu signed, there was no need to look further and it could rely on the indoor management rule. EXIM was not entitled to ignore the fact that each entity in a corporate group is a separate corporation, the conduct of whose affairs is governed by its own constitution. I agree with the submission that the fact that the agreement was one for which there was no consideration and which was in respect of a loan that had been advanced to Ruyi three years earlier of which Mr Qiu was a pre‑existing personal guarantor are matters that would have put a reasonable person on inquiry.

As Brennan J said in Northside, a creditor will ordinarily be put on inquiry when his debtor offers as security a guarantee given by a third party company whose business is not ordinarily the giving of supporting securities for the liabilities of a third party. In 2016, and also in 2020/2021, CSTT was such a company.

I do not accept that the asserted acts of ratification relied on by EXIM have been established by EXIM to be acts of ratification or of adoption by CSTT undertaken by it with full knowledge. The acts of ratification relied on were acts undertaken by Mr Qiu.

Documents relied on by EXIM to establish ratification were discovered by CSTT several years later as part of this proceeding. However the fact that copies of the documents were discovered by CSTT falls short of establishing that CSTT had full knowledge of all of the material circumstances or that CSTT engaged in clear and unequivocal acts of adoption in circumstances where there was no benefit that flowed to CSTT from entry into the 2016 Security Agreement.

The 2020/2021 Agreements were signed by Mr Qiu alone. Those agreements also were not executed in accordance with the CSTT Constitution. No resolution of directors or delegation from the directors of CSTT authorising or entitling Mr Qiu to sign the documents on behalf of CSTT formed part of the evidence.

The 2020/2021 Agreements were signed in the context of financial difficulties encountered by Ruyi and meetings of its banking creditors in Shandong. That provides the factual context in which each of the agreements provided for the parties proposed to be bound by them to affix their seal. Not only did the agreements provide for each company to affix their seal, the seal for a number of companies in the Ruyi Group was in fact affixed to these documents. That did not occur on any of the documents in the case of CSTT. Mr Qiu signed, but no seal was affixed.

When it comes to EXIM relying on the indoor management rule concerning the 2020/2021 Agreements, it is telling that in contrast to the method of execution of the agreements by other companies, not just companies in the Ruyi Group, but also EXIM, in the case of CSTT no seal was affixed. What occurred in the case of CSTT was that Mr Qiu simply signed as ‘authorised representative’. Once again, if EXIM had checked the CSTT Constitution, it would have known that the 2020/2021 Agreements had not been validly executed by Mr Qiu so as to bind CSTT.

As was the case in 2016, CSTT received no benefit from entering into the 2020/2021 Agreements, or any of them. It was not bound by the 2016 Security Agreement. To repeat what Mason CJ said in Northside:[64]

… to hold that a person dealing with a company is put upon inquiry when that company enters into a transaction which appears to be unrelated to the purposes of its business and from which it appears to gain no benefit is, in my opinion, to strike a fair balance between the competing interests.
Indeed, there is much to be said for the view that the adoption of such a principle will compel lending institutions to act prudently and by so doing enhance the integrity of commercial transactions and commercial morality.

[64]Northside Developments Pty Ltd v Registrar‑General [1990] HCA 32; (1990) 170 CLR 146, 396.

Both in respect of the 2016 Security Agreement and in respect of the 2020/2021 Agreements, EXIM failed to act in accordance with that observation.

I do not accept the submission by EXIM that CSTT held out Mr Qiu as having the authority to execute the 2020/2021 Agreements. As held by the High Court in Crabtree‑Vickers, a representation of authority cannot be made by a person who only has apparent authority themselves. It was Mr Qiu who held himself out as having authority, not CSTT. Contrary to EXIM’s submissions, nothing about the passage of time between 2016 and 2020/2021 altered the position.

For the same reasons discussed concerning the 2016 Security Agreement, there was no ratification by CSTT of the 2020/2021 Agreements.

I find that the lack of authority defences pleaded by CSTT both in respect of the 2016 Security Agreement and in respect of each of the 2020/2021 Agreements are made out.

M. CSTT’s Estoppel Case

CSTT pleaded that in the event the Court finds that the 2016 Security Agreement or the 2020/2021 Agreements or any of them are binding as against CSTT, which CSTT denies, that EXIM is estopped from enforcing those agreements other than in accordance with the resolutions agreed to by the creditors committee of Ruyi (of which EXIM is a member).

Because I have found the 2016 Security Agreement and each of the 2020/2021 Agreements are not binding on CSTT it is unnecessary to deal with the CSTT Estoppel Case.

N. Disposition

For completeness, the answers to the questions identified by CSTT in paragraph 67 above are as follows:

(a) No.

(b) No.

(c) No.

(d) No.

(e) Not necessary to answer.

(f) Not necessary to answer.

For the reasons set out above I order the proceeding is dismissed.

The plaintiff is to pay the defendant’s costs including reserved costs. If the defendant contends those costs should be paid other than on a standard basis:

(a) the defendant is to file and serve submissions of no more than 4 pages by 4:00pm on 15 August 2025; and

(b) the plaintiff is to file and serve submissions in reply of no more than 4 pages by 4:00pm on 22 August 2025.

If it is necessary to determine contested costs issues I will do so on the papers.

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[2025] VSC 475

6 August 2025