Wan v Ji

[2022] NSWDC 269

District Court

New South Wales

Medium Neutral Citation:

Wan v Ji [2022] NSWDC 269

Hearing dates:

23 and 24 June 2022

Date of orders:

18 July 2022

Decision date:

18 July 2022

Jurisdiction:

Civil

Before:

Judge Levy SC

Decision:

See paragraph [72] for orders

Catchwords:

TORTS – action variously framed in the alternative, alleging deceit; misleading and deceptive conduct; and monies had and received – whether provisions of Australian Consumer Law are engaged; CONTRACT – enforceability of alleged guarantee of capital losses in an investment scheme

Legislation Cited:

Australian Consumer Law

Cases Cited:

Derry v Peek (1889) 14 App Cos 337; [1889] UKHL 1

In the matter of Caernarvon Canobolas Pty Ltd (In Liq) [2022] NSWSC 382

Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR635, [2008] ChR 27

Pavey & Matthews Pty Ltd v Paul [1987] 162 CLR 221

Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177

Category:

Principal judgment

Parties:

Chi Jian Wan (Plaintiff)
Hong Lan Ji (aka Honglan Ki, Margrete Ji, Marger, Margery Ji) (Defendant)

Representation:

Counsel:
Mr M Langenheim (Plaintiff)
Mr K Tang / Mr M Morgan (Pro Bono representation) (Defendant)

Solicitors:
Di Lizio & Associates (Plaintiff)
LLL The Law Firm (Pro Bono representation) (Defendant)

File Number(s):

2020/184306

Publication restriction:

None

Judgment

Table of Contents

Nature of case	[1] – [2]
Falconaire scheme	[3] – [5]
Claim	[6] – [9]
Defences	[10] – [13]
Evidence overview	[14]
The plaintiff	[15] – [18]
The defendant	[19] – [20]
The connection between the parties	[21]
Plaintiff’s submissions	[22] – [24]
Defendant’s submissions	[25] – [27]
Credit findings	[28] – [32]
Issues	[33] – [34]
Issue 1 – Agency	[35] – [36]
Issue 2 – Whether the Australian Consumer Law applies	[37] – [43]
Issue 3 – Whether misleading and deceptive conduct established	[44] – [47]
Issue 4 – Claim of money had and received	[48] – [56]
Issue 5 – Enforceability of the claimed guarantee	[57] – [64]
Issue 6 – Quantification of damages	[65] – [68]
Interest	[69]
Disposition	[70]
Costs	[71]
Orders	[72]

Nature of case

1. These proceedings arise out of a speculative investment that went awry. The plaintiff, Mr Chi Jian Wan, and the defendant, Ms Hong Lan Ji, also known as Margery Honglan Ji, are the naïve victims of a sophisticated scam which has been euphemistically described as a high-risk investment in the nature of a Pyramid or Ponzi scheme, which allegedly involved petroleum and oil, energy futures, and notional coins, promoted by an overseas company known as Falconaire (“the Falconaire Scheme”).

2. That company, which no longer exists, had offices in Shenzhen in China, in Dubai in the United Arab Emirates, and in Sydney. The undisputed facts in these proceedings reveal that as a result of their respective investments in Falconaire, both parties have unfortunately suffered significant monetary losses that each could ill-afford. In these proceedings, the plaintiff seeks to recover his losses from the defendant.

The Falconaire Scheme

3. Persons who invested significant funds in the Falconaire Scheme were led to expect, depending upon the extent of the funds they invested, that they would be rewarded by the company assigning them certain benefits and incentives associated with VIP status. Those benefits included being provided with gold coins, notional coins, imitation Rolex watches, mobile telephones, and free overseas travel and accommodation to Hong Kong and to Dubai.

4. Falconaire’s promotional brochure (Exhibit “B”, Tab 11, pp 152 – 161), appears to suggest that at some stage Falconaire was a successful business that operated for several years trading in crude oil and petroleum before it encountered financial difficulties and losses. In 2017, it ultimately ceased to trade, which resulted in both parties to this litigation, and others, losing their invested capital.

5. I accept that the plaintiff was encouraged by the defendant to pay her, and other persons connected to Falconaire, in successive tranches, for those funds to be passed on to Falconaire for investment on his behalf. The defendant’s role was in the nature of a conduit for the transmission of those funds to Falconaire, through the use of her bank account. In those events, although the defendant stood to obtain some VIP status benefits from Falconaire by introducing investors such as the plaintiff, there is no reliable evidence to suggest the defendant obtained any monetary gain by introducing the plaintiff as an investor to the scheme.

Claim

6. The plaintiff variously frames his claim against the defendant for alleged misleading and deceptive conduct, for which he invokes the provisions of the Australian Consumer Law (“ACL”). In the alternative, he makes a claim for the return of his monies had and received by the defendant. He claims to have paid her a total of $262,300. The plaintiff has conceded that, of those monies, a total of $32,207 has been returned to him. He therefore claims the unpaid outstanding balance of $229,103, being the amount of his capital loss.

7. Essentially, the plaintiff’s claim is that over time, acting on inducements made by the defendant, he progressively made payments to her, or at her request, in the total amount of $262,300 for investment in Falconaire. He claims that as a result of her representations to him, which he alleges were deceitful, and which amounted to misleading and deceptive conduct, he was induced or lured into providing his funds for an investment that either did not exist, or which was not performing as well as she had represented to him.

8. The plaintiff therefore claims he should be compensated for his capital losses in accordance with a guarantee he claims the defendant provided to him to the effect that he would not lose his principal in his Falconaire investment.

9. In their dealings with each other, the plaintiff and the defendant communicated in the Shanghainese Chinese dialect.

Defences

10. The defendant’s explanation of the events which have led to the dispute is somewhat different to that provided by the plaintiff. She claims that she simply introduced the plaintiff to the knowledge that it was possible to invest funds in Falconaire. She concedes that out of friendship she had, to a limited degree, assisted him to invest in that company, but she maintains that the plaintiff was at all relevant times an independent actor, who on his own admission, made imprudent investment decisions, and that he did so carelessly, without due diligence, or proper due enquiry.

11. The defendant claims that she too was a co-investor in the Falconaire Scheme, and that she too had been duped into investing substantial funds in Falconaire, and that she has, like him, incurred a significant loss of her capital. She maintains that in the factual circumstances of the case, the losses claimed by the plaintiff are unrecoverable from her.

12. The defendant also maintains that the proper defendants, Falconaire and its representatives, Ms Liewen Cai (also known as Mill), and an associated person named Bobby, employees of Falconaire, who have absconded, are the ones that should have been sued.

13. The defendant claims that the consumer protection provisions of the ACL do not apply to the circumstances of this case as neither of the parties to this litigation are corporate entities and the circumstances did not involve trade or commerce. She therefore maintains that the plaintiff cannot sustain his claimed remedies against her.

Evidence overview

14. The plaintiff and the defendant were the only persons to give oral evidence. The parties produced a joint 2 volume Court Book comprising 598 pages behind 18 Tabs, which contained affidavits that comprised their respective evidence in chief: Exhibit “B”. The plaintiff relied on his own affidavits respectively sworn on 29 April 2020 and 4 May 2022: Exhibit “B”, Tabs 6 and 11. The defendant relied upon her own affidavits, respectively sworn on 23 September 2021 and 26 May 2022: Exhibit “B”, Tabs 10 and 12. Exhibit “B” also contained other materials of peripheral relevance, the bulk of which was not referred to either in oral evidence or in submissions.

The plaintiff

15. The plaintiff gave his evidence with the assistance of a Shanghainese interpreter. He is a retired machine operator. He is now aged 71 years. He is a cancer survivor. During his working life he had worked hard in multiple jobs to accumulate property and savings to sustain him in his retirement years. Before investing in Falconaire, those assets had become substantially depleted after an acrimonious divorce.

16. Against those background circumstances, the plaintiff became attracted to the idea of investing his residual funds in Falconaire by the lure of the prospect of high profits. He was an unsophisticated investor. As a result, he has lost his life’s savings, his superannuation, as well as some additional monies borrowed from family members. He now lives in rented public housing, in parlous circumstances. He is very distressed by the events in question, and has considerable anger towards the defendant, claiming that she has cheated him out of his monies.

17. The plaintiff said he invested his funds in Falconaire because he had assumed, on trusting the defendant, and without substantive further inquiry on his part, that his payments to that company represented a safe investment for him. Before those events he lived in Sydney in a suburban apartment where, in 2017, he occupied the living room of those premises, and to augment his income, he rented his two bedrooms to lodgers. Between 2014 and 2015, one of those lodgers was the defendant.

18. It is plain from the circumstances in which the plaintiff parted with his money for investment in Falconaire, that he had developed an appetite for pursuing what he anticipated would be high profit returns and other benefits, including the prospect of free overseas travel that he understood to be available and was associated with what he perceived was a good investment.

The defendant

19. The defendant works as a pathology collector in a hospital. She also has some other jobs. She was trained as an oncologist in China but is not registered to practise medicine in Australia. She described herself as being a “barefoot doctor” in China. She is now aged 61 years. She is divorced. She too is a cancer survivor. She has also invested in Falconaire and has lost the proceeds of the sale of her house, the proceeds of her divorce settlement, said to be over $1M, in the same scheme in which the plaintiff invested and lost his funds.

20. In these proceedings, the defendant has received the generous benefit of pro bono legal representation. This has been made available to her in accordance with the best traditions of the legal profession where otherwise she could not have afforded or obtained legal representation.

The connection between the parties

21. The defendant and the plaintiff became acquainted over the course of a period of two years when she was a rent paying lodger at his home. Over that time, a relationship of platonic friendship and trust developed between them, and as friends, they kept in contact after she ceased to be his lodger. The plaintiff had in the past made loans of money to the defendant, which she had repaid. Their friendship extended to assisting each other during the course of their respective illnesses. The present proceedings arose out of that friendship, which has since become soured as a result of the plaintiff’s losses in the Falconaire Scheme, and his inability to recover his capital from that investment.

Plaintiff’s submissions

22. On behalf of the plaintiff, it was submitted that in her evidence, the defendant had considerably understated the extent of her role in encouraging him to invest in Falconaire; that she had prevaricated over the details of some of the financial arrangements; and that the effect of the payments the defendant had made to him, said to be reimbursements, were inconsistent with her overall account of the events.

23. The plaintiff further submitted that the defendant should be held liable to him for damages because of allegedly misleading and deceptive representations she had made to him, which he claims engaged the consumer protection provisions of the ACL, and on account of a guarantee which she had given him against any loss of his capital.

24. On behalf of the plaintiff, it was further submitted that the defendant should not be permitted to benefit by unjust enrichment from the monies she had received from him, and that he is entitled to a judgment in the amount claimed.

Defendant’s submissions

25. On behalf of the defendant, it was submitted that she had not made the investment inducements or representations as claimed by the plaintiff, and at all times, he had acted as an autonomous independent investor.

26. The defendant further submitted that in her dealings with the plaintiff, she was not acting as the agent of Falconaire, and it is not open to the plaintiff to obtain the claimed claw-back redress he now seeks from her. Furthermore, she asserts that her dealings with the plaintiff cannot be properly characterised as being in the course of trade or commerce so as to engage the consumer protection provisions of the ACL.

27. The defendant also disputes the extent of some of the monetary transactions that allegedly passed between them. The defendant also denies the claimed effect of the guarantee relied upon by the plaintiff. In short, she claims the plaintiff is without a legal remedy as against her.

Credit findings

28. The plaintiff gave his evidence through an interpreter. It was therefore difficult to assess the actual content of his answers. He appeared sincere and spontaneously open in his responses to questions. Some of those responses were expressed with apparently vehement and elevated emotion. He conceded he was angry with the defendant about the events that are the subject matter of the litigation.

29. I accept that at the various times when the plaintiff paid moneys to the defendant and to others acting on behalf of Falconaire, he believed those funds would be invested on his behalf in Falconaire. I also accept that the plaintiff sincerely believed that the defendant had, on several occasions, given him a guarantee that had served to whet his appetite for his further investment in Falconaire, in the expectation that such investments would be highly profitable for him. The factual basis for those beliefs and the timing of any such guarantee requires consideration.

30. I gained the impression that the defendant gave her evidence somewhat hesitantly, in English. In coming to that view, I have made due allowance for the fact that English was her second language. My assessment of the defendant as a witness was that she has significantly understated the extent of her involvement in encouraging the plaintiff to invest in Falconaire. I found her to be an unsatisfactory witness on critical matters in dispute.

31. Both the plaintiff and the defendant made admissions against their respective interests in the litigation. The plaintiff conceded that in the events in question, he had been imprudent and careless in his approach to investing in Falconaire. The defendant conceded that she had made several expressions of guarantee to the plaintiff at the various times he had expressed doubts about Falconaire as an investment. The terms and the effect of such expressions of guarantee require consideration.

32. A factual dispute to be determined is the total amount the plaintiff paid to the defendant or other persons purporting to represent Falconaire, where the defendant disputes some elements of the plaintiff’s claim as to the extent of the payments he actually made to her, as distinct from the payments that he had made to others for investment in Falconaire. For reasons that will be identified in the course of dealing with the quantum of damages, I considered that distinction to be irrelevant and not requiring further analysis.

Issues

33. On examination of the pleadings, the evidence, and the submissions of the parties, the issues calling for determination may be conveniently identified as follows:

1. Whether, in her dealings with the plaintiff, the defendant was the agent of Falconaire and its promoters when she encouraged the plaintiff to invest in Falconaire;

2. Whether the consumer protection provisions of the ACL are engaged by the factual circumstances of the case;

3. Whether the defendant engaged in misleading and deceptive conduct that successfully invokes an available legal remedy in these proceedings;

4. Whether the plaintiff has made good his claim for money had and received on the basis that otherwise, there would be an unjust enrichment of the defendant;

5. Whether the defendant gave the plaintiff guarantees as claimed by him, to cover his capital in the event he incurred capital losses;

6. Findings on the quantification of damages.

34. I now turn to the consideration of those issues.

Issue 1 – Agency

35. The plaintiff claims that at the time he made the payments for the investment of his funds in Falconaire, the defendant was acting as the agent for Falconaire. My assessment of the evidence is that there is no satisfactory oral or documentary evidence to reliably suggest that the defendant was acting as the agent of Falconaire at the times when she had discussions or financial dealings with the plaintiff.

36. In my view, the allegation of the defendant’s alleged agency on behalf of Falconaire arises from an unfounded perception to that effect on the plaintiff’s part. I find that the evidence does not permit a satisfactorily reasoned conclusion to the effect that in her dealings with the plaintiff, she had acted as the agent of Falconaire.

Issue 2 – Whether the Australian Consumer Law applies

37. The plaintiff claims the benefit of the consumer protection provisions of the ACL. Those provisions are only engaged if the events in question can be shown to have occurred in the course of trade or commerce.

38. The plaintiff submitted that the defendant had engaged in the activity of encouraging people, including him, to pay money to her on the promise that she would invest it for them in Falconaire. The plaintiff pointed to the fact that the defendant’s bank account showed a deposit of $130,000 in the quarter 28 April 2016 to 28 July 2016, which was unexplained, and which was by far in excess of her earnings from NSW Health as a pathology collector, equating to about $10,000 per quarter: Exhibit “B”, p 270. It was submitted this indicated the defendant was engaged in the activity of trade or commerce.

39. The defendant submits that none of the representations alleged by the plaintiff as against the defendant could be reasonably or accurately characterised as having occurred in the course of trade or commerce: Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177, at [36]-[38].

40. In my view, the state of the evidence provides an insufficient foundation upon which to base a finding that the defendant was engaged in trade or commerce. In my view, for the reasons that follow, the defendant’s submission must be accepted.

41. The plaintiff’s trade and commerce submission was based on an unwarranted speculation that does not constitute satisfactory proof on the balance of probability. It is speculative to assume, as the plaintiff has submitted, that the defendant’s communications to her on her WeChat group amounted to conduct in trade or commerce. It is also speculative to assume that the unexplained activity shown in her bank account amounted to conduct in the course of trade or commerce.

42. In my opinion, the evidence does not reasonably establish that the parties were engaged in mutual communications, negotiations, bargains and transactions that, by their nature, constituted commercial arrangements that separate the activity in question from the immense array of circumstances in which money changes hands in society: Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177, at [36]-[37].

37. I therefore reject the plaintiff’s submission that his transactions with the defendant constituted conduct in trade or commerce that attract the consumer protection provisions of the ACL.

Issue 3 – Whether misleading and deceptive conduct is established

44. I accept that before the defendant came to the realisation that she had been duped into investing in Falconaire, she was a committed and enthusiastic investor in that company.

45. I find that the defendant shared her enthusiasm for that investment with the plaintiff and others in her WeChat group, out of friendship, to give them, and him in particular, the opportunity to benefit from that investment. I find that in doing so, at those times, the defendant was unaware that investment in Falconaire involved a scam of any kind. The defendant’s realisation that she had become embroiled in a financial scam came to her gradually, over time, and only after the plaintiff came to that conclusion.

46. Consequently, the plaintiff’s claim framed in deceit must fail. I do not accept the defendant made inducements to the plaintiff to hand over his funds in the knowledge that Falconaire was a fraudulent scam, and that he would as a result be wrongfully deprived of his money by deceitful means: Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337.

47. In the described circumstances, I find that the defendant was not a wrongdoer, either by being misleading or deceptive, as alleged by the plaintiff. She was innocently caught up in an elaborate scheme which deprived both her and the plaintiff of their invested funds.

Issue 4 – Claim of money had and received

48. The plaintiff claims that the defendant should not be permitted to be unjustly benefitted or enriched at his expense on account of her having received his money without reimbursing him for his losses in the form of a restitutionary quantum meruit award for damages: Pavey & Matthews Pty Ltd v Paul [1987] 162 CLR 221.

49. In contrast, the defendant submits that the plaintiff’s claim of unjust enrichment cannot be sustained on the evidence in this case. In my view, for the reasons that follow, that submission must be accepted.

50. There are three essential elements required to establish the plaintiff’s claim of unjust enrichment, namely, a benefit received by the defendant, at the plaintiff’s expense, involving an unjust element.

51. Whilst I accept that the defendant stood to receive the benefit of conferral of Falconaire VIP status, the gift of mobile telephones and travel entitlements as a consequence of the plaintiff being introduced to Falconaire and agreeing to channel his funds to Falconaire, I find that because the plaintiff received the valuable consideration of travel benefits for himself, he has not established the essential element of an unjust factor that would otherwise mandate the conclusion of a failure of consideration requiring a reversal of the transactions in question.

52. I am satisfied that the plaintiff entered into the transactions in question with an eager willingness, in the expectation that he would benefit from free overseas travel, which he commenced to receive, and for the benefit of anticipated high profits, but which did not eventuate. Those expectations, although they involved elements of gamble or risk, nevertheless amounted to good, valuable and therefore valid consideration.

53. I find that the plaintiff had, by his admitted imprudence, allowed himself to be lured into investing in Falconaire, which has ultimately been shown to have been a Pyramid or a Ponzi scheme. I find that he did so in the expectation of receiving the described benefits.

54. The fact that the plaintiff received the benefit of overseas travel and accommodation as an incident of his investment in Falconaire is of determinative significance. In those events he was admittedly careless and allowed himself to be wilfully blinded to the risks in that he failed to act with the caution of due diligence. I do not accept that the defendant knew the investment was flawed or fraudulent at the time when she encouraged him to invest in Falconaire.

55. The plaintiff received the benefit of the real or tangible consideration comprising free overseas travel, accommodation and sustenance, despite having overall, incurred a loss. That was the risk he took. Therefore, the necessary and essential element of unjust enrichment has not been satisfied: In the matter ofCaernarvon Canobolas Pty Ltd (In Liq) [2022] NSWSC 382, at [250]; following Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR635, [2008] CLR 27, at [80].

56. Accordingly, the plaintiff’s claim that the defendant has been unjustly enriched in respect of monies had and received from him must be rejected.

Issue 5 – Enforceability of the claimed guarantee

57. By the defendant’s affidavit of 26 May 2022, she denied that in September 2016 she told the plaintiff she would guarantee his capital investment in Falconaire: Exhibit “B”, Tab 13, pp 206 – 207, paragraphs 12 to 13.

58. However, the defendant later conceded that on 28 October 2017, she said words to him to the effect that she would guarantee and cover any capital loss that he might incur as a consequence of investing in Falconaire: T80.36; T81.33; Exhibit “B”, Tab 6, p 66. Her affidavit of 26 May 2022 was to the same effect: Exhibit “B”, Tab 13, pp 227 – 228, paragraphs 50 to 51.

59. The issue of whether or not the defendant provided the plaintiff with an enforceable guarantee to cover any capital losses that might arise from his investment in Falconaire stands to be evaluated and determined on the basis of the conversations that proceeded between the parties and in light of their limited written and oral communications as recorded on their telecommunication devices, including their use of the WeChat platform. In those circumstances, it is convenient and appropriate to consider the conflicting testimony in light of the contemporaneous WeChat and other communications as translated and annexed to the affidavit evidence.

60. Those exchanges are set out in chronological order, as follows:

1. At 19:16 hours on 22 October 2017, contrary to the defendant’s denial of any knowledge that the company had no funds, in her affidavit, she sent a contrary message to the plaintiff in the form of a 36 second voicemail which has been translated as follows:

“The has (sic) company no more money. … Anyway, the company will not give you a single cent. About this, you better keep silent for the moment. This is what they told me. I guess nobody in the group knows about it and I am the only person who knows it. There are only a few hours left anyway. Will you be at home this evening? I shall come to your home after work.”

[Exhibit “B”, Tab 6, p 60]

2. At 13:17 hours on 26 October 2017, after some earlier WeChat exchanges on 23 October 2017 and 24 October 2017, the plaintiff sent a message to the defendant, translated as follows:

“Have read Bobby’s speech you have transmitted. The whole thing is a scam. You have drawn me into this scam. I will no more believe any next step.”

[Exhibit “B”, Tab 6, p 63]

[Emphasis added]

3. At 9:59pm on 28 October 2017, the defendant left a 59 second message on the plaintiff’s telephone, which has been translated as follows:

“Ji Hong Lan: Wan, I asked Mill just now, but I feel that they, the checker company seems to be doing checkered coin business indeed. Then ... because this is what was said. I have asked them whether we should reach an agreement. That is: Jiu Ying reaching an agreement with us. That is: repaying them the principal, because she didn't … … that. I have just heard Bobby say so. Then, I am personally telling you that the principal you have invested, of course (which is) mine, that is: if I can get my money back, I will help you operate. Just let me know if you are not happy and feel that theirs is a fraud company. Then I promise you that I shall gradually repay you, return your principal from what I have in my hand, my wages. I will settle all the accounts with you. But your principal is rather large, I will not repay you the whole lot at once. So I don't know how to reach an agreement with you. You will either report to the police or....”

[Exhibit “B”, Tab 6, p 66]

[Emphasis added]

4. At 3:01pm on 3 November 2017, the plaintiff left a voice message on the defendant’s mobile telephone which, translated, was as follows:

“Jane Jian: For such a long time, you haven't given a word of comfort to your lower line, not a single word of apology. Instead you are redoubling efforts to protect the company. How much of the checkered coin has the company given you while you are protecting the company? Have a look at how much. I have had a look at it that it has dropped down to such a level, but you are still wishing to make money for it. You are making money from your lower line. You must have made quite an amount of money! How would you calculate your conscience? Can that be measured with money? You are still making money from your lower line.”

[Exhibit “B”, Tab 6, p 78]

5. At 5:56pm on 3 November 2017, the plaintiff left a voice message on the defendant’s mobile telephone which, when translated, was as follows:

“Jane Jian: For that investment of checkered coin, the White Bone Demon has shown it real shape. Bring out the demon detecting mirror and arrest that White Bone Demon. Whoever prevents people upholding justice is a ringleader.”

[Exhibit “B”, Tab 6, p 78]

6. At 7:39pm on 3 November 2017, the plaintiff left a voice message on the defendant’s mobile telephone which, translated, was as follows:

“Jane Jian: She is leading that team into a quagmire, into a pity of mud. You are cheating us out of money. Probably you are part of it, I am telling you. Don't pretend. You will be punished upside down In Australia in the end. Just have a look at your virtue.”

[Exhibit “B”, Tab 6, p 78]

[Emphasis added]

7. At 18:29 hours on 8 November 2017, the plaintiff sent the defendant a WeChat message which, as translated, was to the effect that he was in need of funds as he was in debt, and he was seeking the return of his money from her: Exhibit “B”, Tab 6, p 69;

8. At 7:45am on 11 November 2017, the plaintiff sent the defendant a WeChat message which, as translated, was to the effect that he was still waiting for her to reply to his request for payment: Exhibit “B”, Tab 6, p 72;

9. At 18:53 hours on 21 November 2017, the defendant left a voice message on the plaintiff’s mobile phone, which translated as follows:

“I will be paid wages next time before 8^th. You will be given $1,000 for sure. I believe that Mill doesn’t have any money. Ah! You just said what you want. Didn’t this BOBBY of ours – Didn’t I say that I have transmitted it in the (WeChat) group? By the end of this month. If he can withdraw money this month, everybody will be liberated.”

[Exhibit “B”, Tab 6, p 72]

[Emphasis added]

61. The defendant’s message to the plaintiff on 22 October 2017, as recorded at sub-paragraph (1) of paragraph [57] above was of ominous portent. It obviously concerned the plaintiff. By 26 October 2017, the plaintiff realised he had been drawn into a scam and he was blaming the defendant for that predicament, as is evident from his message to the defendant on that date, as recorded at sub-paragraph (2) of paragraph [57] above.

62. It was against that background that on 28 October 2017, the defendant was concerned that the plaintiff might make a report to the police about the fraud which had affected them. In those circumstances, the defendant made a promise to pay out the plaintiff’s principal once she had the funds to do so, provided he did not make a report to the police, as is evident from the terms and effect of the defendant’s telephone message cited at sub-paragraph (3) of paragraph [57] above.

63. Significantly, in her oral evidence, and consistent with the plaintiff’s account, the defendant agreed that on 28 October 2017, the effect of her telephone call to the plaintiff was that she had agreed to guarantee the repayment of his principal: T81.33. I do not accept the defendant’s bland denial to the contrary as set out in her last affidavit: Exhibit “B”, Tab 13, pp 227 – 228, paragraph 51.

64. I find that in those circumstances, the promise of a guarantee of the plaintiff’s principal, as outlined above, was given to him by the defendant for good consideration. This meant the defendant guaranteed to the plaintiff that he would not lose his capital. The effect of that finding is that the plaintiff can enforce his claim against the defendant for reimbursement of his capital loss after offset for the payments that have already been made by the defendant.

Issue 6 – Quantification of damages

65. The defendant disputes the total of the amount of money the plaintiff gave to her to invest on his behalf in Falconaire, claiming that the plaintiff gave some of those funds to Ms Cai or the person known as Bobby to invest in Falconaire.

66. In that regard, I am satisfied that the plaintiff has paid funds for investment in Falconaire in the total amount of $262,300. I am also satisfied that the plaintiff has received partial reimbursement from the defendant in the form of a series of payments totalling $32,207.

67. As the plaintiff’s claim for reimbursement is for his loss of capital paid to Falconaire, and as the existence and enforceability of that guarantee has been established, it is not necessary to proceed to dissect or separate the payments the plaintiff made to the defendant as distinct from the payments he made to Falconaire through Ms Cai, or the person named Bobby. This is because all the funds paid by him were for capital investment in Falconaire and it is that total sum, found to be the capital balance of $229,103 which the defendant has guaranteed.

68. Therefore, the plaintiff is entitled to a verdict and judgment in his favour on the guarantee in the sum of $229,103, plus interest.

Interest

69. The plaintiff makes a claim for interest. Within 48 hours the parties are required to bring short minutes that calculate the interest due for the period between the effective date of the defendant’s guarantee on 28 October 2017 and the date of these reasons. If the parties agree, orders as to interest may be made on the papers in chambers.

Disposition

70. For the above reasons, I conclude that the plaintiff has established his right to enforce the guarantee the defendant gave him to cover his loss of capital in the Falconaire investment in the total balance of account sum of $229,103 plus interest.

Costs

71. It follows that the defendant must pay the plaintiff’s costs of the proceedings unless a party is able to demonstrate the basis for some other costs order.

Orders

72. I make the following orders:

1. Subject to order (2) below, verdict and judgment for the plaintiff in the sum of $229,103 plus interest to be calculated;

2. Within 48 hours the parties are to bring short minutes that calculate interest in accordance with these reasons;

3. The defendant is to pay the plaintiff’s costs on the ordinary basis unless a party can show an entitlement to some other costs order;

4. The exhibits may be returned;

5. Liberty to apply on 3 days’ notice if further or other orders are required.

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Decision last updated: 18 July 2022