Wang v Liu; Liu v Wang - [2021] NSWSC 1193

Supreme Court

New South Wales

Medium Neutral Citation: Wang v Liu; Liu v Wang [2021] NSWSC 1193
Hearing dates: 23-25 and 27 August 2021, further written submissions 31 August and 1 September 2021
Date of orders: 20 September 2021
Decision date: 20 September 2021
Jurisdiction: Equity - Technology and Construction List
Before: Stevenson J
Decision:
Plaintiff entitled to judgment against the defendant.
Cross-claim to be dismissed

Catchwords:
CONTRACT – proper construction – whether document executed by the parties in the Chinese language constituted a binding promise by the defendant to repay the plaintiff as a debt money that plaintiff paid the defendant to invest in a company that the defendant stated would develop property in Sydney – whether the document did not come into effect as an agreement because not all persons alleged to be parties to it executed the document – whether any contract evidenced by the document was void for uncertainty – where plaintiff paid large sums to the defendant for the purpose of investment in the company – where defendant had in turn paid large sums to the plaintiff in purported repayment of the funds advanced
RESTITUTION – where defendant contended he executed the document under the mistaken belief that it was enforceable – where defendant sought to recover the payments he made to the plaintiff on that basis

Legislation Cited:
Corporations Act 2001 (Cth)

Cases Cited:
Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52

Texts Cited:
J D Heydon, Heydon on Contract (2019, Thomson Reuters)
M Davies, A S Bell, P L G Brereton and M Douglas, Nygh’s Conflict of Laws in Australia (10th ed, 2020, Lexis Nexis Butterworths)

Category: Principal judgment
Parties: Ruifa Wang (Plaintiff/Cross-Defendant)
Wensheng Liu (Defendant/Cross-Claimant)
Representation: Counsel:
D Cook SC with J D Little (Plaintiff/Cross-Defendant)
H K Insall SC (Defendant/Cross-Claimant)
Solicitors:
Lin Tang & Co Lawyers (Plaintiff/Cross-Defendant)
Hugh & Associates Lawyers (Defendant/Cross-Claimant)

File Number(s): 2018/375643

Judgment

The plaintiff, Mr Ruifa Wang, seeks to recover from Mr Wensheng Liu $3.5 million, together with interest on that sum, being a total of $3.73 million. [1]
1. As at 31 August 2021, with interest accruing at $70,000 per month.
Mr Wang contends that these amounts are due pursuant to a document called “Repayment Agreement (Supplement)”, dated 13 April 2016 and executed by Mr Wang, Mr Liu and a third person, Mr Xiguo Li, to whom I will return. As there is a dispute about the enforceability of this agreement, I will refer to it as the “13 April 2016 Document”.
The 13 April 2016 Document was written in the Chinese language. It provided that it be translated into English “but the Chinese version shall prevail”. [2] Both sides adduced English translations of the document, and of other documents, that led to the 13 April 2016 Document. There are some differences between those translations but only one of any consequence. [3] There is also some grammatical awkwardness in some of the translations of the documents to which I later refer. I have not attempted to correct or otherwise highlight those matters and have reproduced the documents as written in translation.
2. Article 5(4).
3. See [194] below.
The 13 April 2016 Document is expressed to be subject “to the laws of Australia and the People’s Republic of China”. [4] As neither party adduced evidence to show that Chinese law is different to Australian law, I must presume that it is not. [5]
4. Article 5(1).
5. See generally M Davies, A S Bell, P L G Brereton and M Douglas, Nygh’s Conflict of Laws in Australia (10th ed, 2020, Lexis Nexis Butterworths) at [17.37] – [17.40].
At the heart of the dispute in these proceedings is the proper construction of the 13 April 2016 Document. The key question is who Mr Wang, Mr Liu and Mr Li intended to be the parties to that document.
Although only Mr Wang, Mr Liu and Mr Li executed the 13 April 2016 Document, its opening words were:

“Party A: Ruifa WANG (Yang WANG)
Party B: Wensheng LIU (Lan LIU)
Party C: Xiguo LI (Xiuju SHI, Kai LI)”.

The persons referred to parenthetically are:

Ms Yang Wang (Mr Wang’s daughter);

Ms Lan Liu (Mr Liu’s wife);

Ms Xiuju Shi (Mr Li’s wife); and

Mr Kai Li (Mr Li’s son).

The critical issue is whether, as Mr Liu contends, the description of “Party A”, “Party B” and “Party C” that I have set out at [6] bespoke an intention by Mr Wang, Mr Liu and Mr Li that the other persons named (Ms Wang, Ms Liu, Ms Shi and Mr Kai Li) were also to be parties to the agreement, such that the document did not come into effect as a binding agreement by reason of them not signing the document.
For the reasons that follow, my conclusion is that this was not the intention of any of Mr Wang, Mr Liu and Mr Li.
From 2011, Mr Wang, Mr Liu and Mr Li engaged in various business activities following the execution by them on 12 April 2011 of a “Cooperation Agreement”. Those dealings concerned, amongst other things, the development of a site in Hurstville (the “Petrol Station Site”) as a residential strata development and the possible purchase of a car park site then owned by Hurstville Council (the “Car Park Site”). There was also discussion of the possible purchase of a property at Airlie Beach. Mr Wang, Mr Liu and Mr Li arranged for a company called GR Capital Pty Ltd to be incorporated to carry out those activities. Much of the evidence adduced in the proceedings concerns those business dealings and the parties’ involvement in GR Capital but is not directly relevant to the issues I must determine. However, the documents executed by Mr Wang, Mr Liu and Mr Li prior to the 13 April 2016 Document are available to cast light on the manner in which the 13 April 2016 Document should be construed.
It is common ground that between April 2011 and July 2013, Mr Wang advanced RMB 41 million to Mr Liu, and a further amount of some $950,000 to GR Capital, for the purposes of those business activities.
It is also agreed that between August 2015 and November 2017 Mr Liu caused some $6.2 million to be paid to Mr Wang, following execution by him of a number of documents that Mr Wang contends evidenced a promise by Mr Liu to repay those advances. The last of those documents was the 13 April 2016 Document. Mr Liu now contends that none of those documents is enforceable and that he made the payments under the mistaken belief that they were. By his cross-claim, Mr Liu seeks to recover those funds as monies paid under a mistake of fact or law.

Decision

The 13 April 2016 Document is enforceable as a legally binding agreement between, relevantly, Mr Wang and Mr Liu. Mr Wang is entitled under that agreement to recover the money he claims.
Mr Liu made no mistake and his cross-claim must be dismissed.

The events leading to execution of the 13 April 2016 Document

It is necessary to set out, in some detail, the events leading to the execution of the 13 April 2016 Document.
Mr Wang and Mr Li have been friends for some 30 years. They are both Chinese nationals and businessmen living in China.
Mr Liu was born in China but has lived in Australia since 1989. He became an Australian citizen in around 1996.
Mr Liu caused a company called WDL International Investments Pty Ltd to be incorporated in March 2007. At all times Mr Liu controlled WDL International. Contrary to representations Mr Liu later made to Mr Wang and Mr Li, Mr Liu caused WDL International, not GR Capital, to acquire and develop the Petrol Station Site and to acquire the Airlie Beach property. Mr Liu later represented to Mr Wang and Mr Li that WDL International had somehow become a subsidiary of GR Capital. This was not true. WDL International did not ever become a subsidiary of GR Capital.
Mr Li met Mr Liu in 2008. At that time, Mr Li wanted his family to migrate to Australia. Mr Li gave evidence that Mr Liu said to him:

“I am an Australian citizen. I run a supermarket with my wife in Sydney. I can assist you with your migration plan. I have assisted many people to successfully migrate”.

A short time later, also in 2008, Mr Li introduced Mr Wang to Mr Liu at a business banquet in Shijiazhuang.
At that dinner, Mr Liu and Mr Wang had a conversation. Mr Wang’s account of the conversation was as follows:

“[Mr Liu]:   [Mr Li] and I have been discussing establishing a real estate development company in Australia. I have identified a potential real estate development project in Hurstville, Sydney, Australia which [Mr Li] and I were planning to develop. [Mr Li] is enthusiastic and wants to use it as a vehicle to help his wife for her immigration and you could use it for your family too. I can help you both to immigrate to Australia. I have a shortage of funds so I need another investor so I wanted to see if you might be interested.
[Mr Wang]:   What is the development?
[Mr Liu]:   The development will be residential apartments and a sports centre built on a council car park. I wanted to raise the possibility of the three of us doing this together by jointly setting up a real estate development company. As I am in Australia, I can take care of things there. I have strong relationships with the local Councillors of Hurstville.
[Mr Wang]:   I am interested but I will need comfort that the project has government support and that is feasible. Let’s discuss further when you have put together a plan and have more details.”

Mr Liu’s reference to a “potential real estate development project in Hurstville” was a reference to the possible development of the Petrol Station Site and the Car Park Site.
Mr Liu gave a slightly different account of this conversation but agreed that he said:

“My weak point is I do not have enough funds and my strong point is my connections and resources in Australia”.

Matters progressed and in September 2010, Mr Liu arranged for councillors from the then Hurstville Council, including the Mayor, to travel to China to meet Mr Wang as well as a number of Shijiazhuang city government officials.
Later in 2010, Mr Wang travelled to Australia to have further discussions with Mr Liu and Mr Li.
Ultimately these discussions led to the execution of the Cooperation Agreement by Mr Wang, Mr Liu and Mr Li.

The discussions leading to the Cooperation Agreement

Mr Wang, Mr Liu and Mr Li agreed that each would nominate a family member to be a director and shareholder of the proposed joint venture company, ultimately GR Capital, which they intended would acquire and develop the Petrol Station Site and the Car Park Site. Mr Wang thought that this would assist his daughter, Ms Wang, to obtain residency in Australia. Ms Wang was then a student in Melbourne. Evidently, Mr Li thought these arrangements would also assist his wife, Ms Shi, and his son, Mr Kai Li, to migrate to Australia.
There was no suggestion in those discussions that the nominated family member would contribute any money to the venture or play any role in the decisions that the three men, and the joint venture company, made.
Thus, Mr Wang deposed to this discussion with Mr Liu:

“[Mr Liu]:   The first step, after registration of the company, is for the company to buy the car park which will cost approximately $8 million. I would therefore suggest that the $20 million is paid in tranches with the first $10 million due now so as to cover the acquisition cost and the balance to follow later. This will allow us to acquire the car park property quickly.
[Mr Wang]:   And the migration arrangements?
[Mr Liu]:   We will register the Australian company with your nominated family member as the directors and the shareholders, so that they can use the company’s operations to support their business visa applications and we will include in the Agreement between us that each is your representative. This way, we can still make the decisions for the company, sign on its behalf and attend the board meetings. I can also advise as to the other documentation for the visa office at the Australian Embassy in due course.
[Mr Wang]:   My nominated family member is my daughter – Yang Wang. She is studying in Australia at the moment so she can easily sign things for you for the visa application and migration matters.
[Mr Li]:      As for me – you should include my wife, Xiuju Shi.
[Mr Liu]:   I will also include my wife. I will distribute a draft agreement consistent with what we have discussed. I will also prepare a plan of action for the car park project to make what I have said clear.” (Emphasis added.)

In her affidavit, Ms Wang said:

“11. In 2010, my Father first mentioned [Mr Liu] to me … At this time, I wanted to migrate to Australia permanently. My Father and I had a conversation which included words to the following effect:
‘I have been speaking with a businessman called [Mr Liu]. He is Chinese but has migrated to Australia and helps others do the same. [Mr Li] has recommended him as he is helping with Kai Li’s immigration. He says he can help you stay in Australia. There is a property development in Sydney that I am speaking to him about.’

12.   I knew [Mr Li] and his son Kai Li through my parents as they were family friends.
13.   The first time I met [Mr Liu] was in 2011 when he came to Shijiazhuang, China while I was visiting my family.
14.   Around the time of meeting [Mr Liu], my Father and I had numerous conversations one of which included words to the following effect:
[Mr Wang]:   ‘[Mr Liu] is going to set up a company and I have asked him to make you a director. Kai Li and [Ms Liu] will be the other directors. The company is established to develop the property I mentioned so as to support your migration application. I can act as your representative for company business. [Mr Liu] will advise as to the other documentation for the visa office and you will need to meet with [Mr Liu] from time to time to facilitate all of this’.
[Ms Wang]:   ‘Ok. What is the development?’
[Mr Wang]:   ‘A car park in Hurstville into units and a sports centre.’

15.   I later came to know that the company which was registered of which I was a director was GR Capital Pty Ltd.
16.   My involvement with the company was primarily by way of my Father acting as my representative. I trusted my Father who I consider to be a successful businessman, so I was happy for him to act in this capacity.
17.   From time to time, my Father would discuss with me his dealings with [Mr Liu] and from time to time, I attended [Mr Liu’s] offices to collect documents or discuss certain issues with him. While this happened from time to time, the vast majority of the work was completed by my Father as my representative.
18.   My meetings with [Mr Liu] were occasionally the two of us; or if my Father was in Australia, he would attend; or most of the time there were others depending on the substance of the meeting.” (Emphasis added.)

Mr Liu gave evidence to the same effect. He deposed that in February 2011 he had this conversation with Mr Wang:

“[Mr Wang]:   I want to use my daughter’s name as the shareholder and director of the company to help her obtain a permanent residency visa to live in Australia. [Mr Li] wants to use his wife’s name as a director and shareholder.
[Mr Liu]:   That should be no problem. If you use your daughter’s name and [Mr Li] uses his wife as the director and shareholder, I can put my wife as the director and shareholder of the company too. What do you want to call the company?
[Mr Wang]:   Why don’t we call it ‘GR Capital’, G being the initial for [Mr Li’s] middle name, Guo, and R being the initial for my middle name, Rui?
[Mr Liu]:   That sounds good to me but I will need to check with the accountant about the name. When can I expect the initial contributions so I can start the process?
[Mr Wang]:   I will try and make a payment to you around the Chinese New Year. I will get the money ready and send it to your account in China and then you can transfer the funds to Australia.” (Emphasis added.)

In fact, Mr Wang’s first payment was made to Mr Liu for RMB 5 million, on 3 April 2011, a little over a week before Mr Wang, Mr Liu and Mr Li executed the Cooperation Agreement. This payment, and all subsequent payments made to Mr Liu, were made to an account Mr Liu maintained in China.

The 12 April 2011 Cooperation Agreement

On 12 April 2011, Mr Wang, Mr Liu and Mr Li signed the “Cooperation Agreement”. The document was drafted by Mr Liu.
The Agreement recited that the three men had “reached an agreement on the cooperation of real estate and mining projects in Australia” and named one project as the development of the Car Park Site.
The men agreed to establish a “cooperative company” to “develop the real estate projects” [6] and to make a “capital contribution” of 35% in the case of each of Mr Wang and Mr Li, and 30% in the case of Mr Liu. [7]
6. Article 7.
7. Article 9.
The document provided that the board of directors of the “cooperative company” would “be composed of three directors” being Mr Wang, Mr Liu and Mr Li, with Mr Wang to be chairman of the board and Mr Liu to act as general manager. [8] This reflected the reality of the proposed arrangement, as the three men saw it.
8. Articles 16 and 17.
However, to reflect their agreement that a “nominated family member” would stand in their stead as directors and shareholders of the “cooperative company”, the document also provided that “[w]hen registering the company” Mr Wang’s representative would be his daughter, Ms Wang, Mr Liu’s representative would be his wife, Ms Liu, and that Mr Li’s representative would his wife, Ms Shi.
Thus, it was recorded, under the heading “Note”:

“When registering the company, Ruifa WANG’s representative is Yang WANG …
Xiguo LI’s representative is Xiuju SHI …
Wensheng LIU’s representative is Lan LIU …
The Company will assist investors to handle relevant procedures to immigrate to Australia …
The project land funds are jointly contributed by three parties …
It’s hereby provided that, due to the need of immigration or work purpose in Australia, if the shareholding ratio of each party needs to be changed, it can be negotiated and determined by three parties, and the shareholding ratio shall reinstate to the original proportions of the parties after such needs are no longer required.”

The latter provision reflected the potential immigration benefits the parties hoped for.

The incorporation of GR Capital Pty Ltd on 3 May 2011

As discussed prior to execution of the Cooperation Agreement, the “cooperative company” was named GR Capital Pty Ltd.
GR Capital was incorporated on 3 May 2011. Ms Wang, Ms Liu and Ms Shi were appointed as the only directors of GR Capital and were allotted shares as follows:

Ms Wang, 35 shares;

Ms Liu, 30 shares; and

Ms Shi, 35 shares.

Thus, the shares were allotted to the three women in the same proportion as, in the Cooperation Agreement, the three men had proposed that the shares in the proposed “cooperative company” be allotted to them.
In the meantime, after execution of the Cooperation Agreement, Mr Wang made two further payments [9] to Mr Liu totalling RMB 5 million.
9. On 13 and 21 April 2011.
Mr Liu described the steps leading to the incorporation of GR Capital as follows:

“Following the execution of the Cooperation Agreement, I began taking steps to incorporate the joint venture company referred to in the Cooperation Agreement. I requested [Ms Liu], and my accountant, David Lin of DGK & Associates …, to incorporate the company on the basis that the shareholders and directors would be [Mr Wang’s] daughter, Yang Wang, [Mr Li’s] wife, [Ms Shi] and [Ms Liu].”

Mr Liu said that in late April or early May 2011 he said to his wife:

“… I have spoken to the accountant in relation to the establishment of GR Capital company. He will prepare the paperwork to open the company. [Mr Wang] and [Mr Li] and I will be setting up a joint venture company to redevelop the Gloucester Road car park and invest in a mining business. [Mr Wang’s] daughter, [Ms Wang] will be a director and she will hold his shares. [Mr Li’s] wife will also be a director and hold [Mr Li’s] shares. I want you to also be a director and shareholder. They will each have 35% shares and we will have 30%. As you will be the only local director, you will need to sign the paperwork. We agreed that we will establish the company with up to $50 million capital so that we can have the ability to raise that money and deal with the Australian and Chinese mining companies. Can you go and see [Mr Lin, the accountant] to sign the paperwork as soon as possible?” (Emphasis added.)

This evidence shows Ms Wang, Ms Liu and Ms Shi became directors and shareholders of GR Capital at the instigation, indeed direction, of Mr Wang, Mr Liu and Mr Li and were regarded by the three men as their nominees. Mr Wang, Mr Liu and Mr Li did not intend that Ms Wang, Ms Liu or Ms Shi play any role in GR Capital or make any decisions concerning GR Capital’s activities. Subsequent events show that they did not.
The Form 201 lodged with the Australian Securities and Investments Commission stated that each of Ms Wang, Ms Liu and Ms Shi owned their shares beneficially. This may have been true in the sense that Ms Wang, Ms Liu and Ms Shi had not, so far as the evidence reveals, signed a document recording that they held their shares on behalf of their father or husband, as the case may be. But it did not reflect the reality of the situation which was, as they knew, that they were acting as mere nominees. I need not decide whether Ms Wang, Ms Liu or Ms Shi thereby committed an offence. [10] I will, however, invite submissions as to why I should not refer these reasons to the Australian Securities and Investments Commission so that it can consider what, if any, further action should be taken about this.
10. For example, under s 1308 of the Corporations Act 2001 (Cth).

23 August 2011 GR Capital board meeting

On 23 August 2011, Mr Wang, Mr Liu and Mr Li attended a meeting which they described, in a document they signed, as “The Second Board Meeting … of [GR Capital]”.
The minutes of a “First Board Meeting” are not in evidence. It may be that Mr Wang, Mr Liu and Mr Li saw the occasion on which they signed the Cooperation Agreement as being a “First Board Meeting”.
The fact that Mr Wang, Mr Liu and Mr Li described this meeting, and later meetings to which I will come, as “board” meetings reflects the reality as they saw it: they were the directors and controllers of GR Capital.
The meeting was held at Airlie Beach in Queensland. Each of Mr Wang, Mr Liu and Mr Li signed the minutes.
The minutes record that the following matter was approved:

“Complete the registration and equity structure portfolio of GR Company as soon as possible. The shareholding ratio is as follows: Yang WANG 35% contributing A$ 7 million; Xiuju SHI, 35% contributing A$ 7 million; Wensheng LIU, 30%, contributing A$ 6 million. Total contribution amount A$ 20 million.”

The reference to Mr Liu holding 30% of the shares in GR Capital was a mistake. In fact, it was his wife, Ms Liu that held that shareholding. But the slip is revealing and reflects the reality as Mr Liu saw it: Ms Liu held her shares on his behalf.
Although the minutes recorded Ms Wang and Ms Shi as each “contributing” $7 million, Mr Wang, Mr Liu and Mr Li knew they had not, and that the $7 million had, or was to be, contributed by each of Mr Wang and Mr Li. The minutes correctly recorded that Mr Liu had, or was to, contribute $6 million. [11]
11. There is a dispute, not necessary for me to resolve, whether Mr Liu ever himself actually contributed any money to the project.
The minutes concluded:

“In the above shareholders, Yang WANG represents Hebei Zhongke Industrial Co., Ltd., [12] either Yang WANG or Ruifa WANG’s signature is a valid signature; for the shareholder Xiuju SHI, either Xiguo LI or Xiuju SHI’s signature is a valid signature; for shareholder Lan LIU, Wensheng LIU’s signature is a valid signature.”
12. A steel company with which Mr Wang had some association, not explained in the evidence.

This clause reflected the nominal role Mr Wang, Mr Liu and Mr Li intended that Ms Wang, Ms Liu and Ms Shi were to play in GR Capital.
On the same day, 23 August 2011, Mr Wang paid a further RMB 5 million to Mr Liu.

24 December 2011 GR Capital board meeting

On 24 December 2011, Mr Wang, Mr Liu and Mr Li attended a “Third Board Meeting”.
This meeting took place in Shijiazhuang. Each signed the minutes, which were headed “End-of-Year Review”.
The minutes recited:

“Capitals contributed by the shareholders of [GR Capital] are as follows:
Ruifa WANG 35% - contributing A$ 7 million; Xiguo LI 35% - contributing A$ 7 million; Wensheng LIU 30% - contributing A$ 6 million.”

This, of course, reflected what had, or was to occur. The three men intended that they would contribute the required capital.
So far as concerns the development of the Car Park Site, the minutes recorded (with handwritten additions shown in italics):

“Hurstville Project (… Car Parking Lot): A$ 8,600,870.00, land certificate to be issued. Land transactions and pre-construction preparation are to be completed in early 2012. (… The land is $12 million, and also need to give the government additional $4 million construction fee, total approximately $16 million.)”

19 October 2012 GR Capital board meeting

On 19 October 2012, Mr Wang, Mr Liu and Mr Li attended a “Fourth Board Meeting” of GR Capital.
In the meantime, Mr Wang had paid a further RMB 7 million to Mr Liu. [13]
13. RMB 3 million on 11 May 2012, RMB 2 million on 24 May 2012 and RMB 2 million on 31 May 2012.
This meeting was also held in Shijiazhuang.
The minutes recorded:

“The shareholders still jointly contribute A$ 20 million to establish [GR Capital] according to the original resolution. This decision remains unchanged. All parties should make contribution according to the proportion of investment. As of 1 October 2012, the shareholder Yang WANG (Ruifa WANG) shall contribute A$ 7 million, and the paid-in capital calculated based on the exchange rate on the date when the capital arrives was A$ 3,299,965.75; the shareholder Xiuju SHI (Xiguo LI) shall contribute A$ 7 million, and the paid-in capital calculated based on the exchange rate on the date when the capital arrives was A$ 6,832,899.46; the shareholder Lan LIU (Wensheng LIU) shall contribute A$ 6 million, and the paid-in capital was A$ 6,000,000.00.”

This passage of the minutes reflects that part of the $20 million “joint contribution” remained to be provided: hence the references to what the parties “shall contribute”. The minutes referred to the shareholders of GR Capital as being Ms Wang, Ms Liu and Ms Shi. The parenthetical references, after each of their names, to Mr Wang, Mr Liu and Mr Li was, evidently, the means by which the parties chose to reflect their “representative” status.
The minutes went on to refer to the development of the Petrol Station Site. The Petrol Station Site was ultimately developed in the name of WDL International using funds that Mr Wang had sent Mr Liu for investment in GR Capital. Mr Liu characterised WDL International as GR Capital’s “subsidiary company”. That was not true. WDL International at all times remained under Mr Liu’s control. Development of the Petrol Station Site was completed by WDL International by March 2015.
The 19 October 2012 minutes also referred to the development of the Car Park Site. In regard to that development, the minutes read:

“The land is under the name of [GR Capital]. A deposit of A$ 7.5 million has been paid. After the delivery of the land and construction funds following the completion of company’s fundraising, the commencement date of construction will be further determined.”

This appears to reflect what Mr Liu told Mr Wang and Mr Li. However, it was not true. GR Capital had not then, and did not ever, acquire the Car Park Site. No deposit was ever paid.

9 December 2012 GR Capital board meeting

Mr Wang, Mr Liu and Mr Li attended a further meeting on 9 December 2012, described in the minutes as an “End-of-Year” meeting.
The minutes recited:

“Capital Contribution and Shareholding Ratio
Ruifa WANG should contributed $7 million Australian dollars, accounting for 35% of all company shares. Xiguo LI should contributed $7 million Australian dollars, accounting for 35% of all company shares. Wensheng LIU should contributed $6 million Australian dollars, accounting for 30% of all company shares. Shareholders receive dividends according to shareholders ratio.”

This passage referred to what amount each of Mr Wang, Mr Liu and Mr Li “should” have contributed and reflected the real nature of the arrangements between the three men: they had or were to contribute the capital. The passage also reflected how the three men saw the shareholding in GR Capital. Ms Wang, Ms Liu and Ms Shi were not mentioned. In substance, the three men saw themselves as being the shareholders.
The minutes also recorded that GR Capital owned “3 projects” being the Car Park Site, the Petrol Station Site and the Airlie Beach property. Evidently, this was something that Mr Liu told Mr Wang and Mr Li. It was not true. GR Capital did not own, and would never acquire an interest in any of these projects.

Further payments

The day after this meeting, 10 December 2012, Mr Wang paid Mr Liu a further RMB 10 million.
On 16 July 2013, Mr Wang paid Mr Liu a further RMB 9 million. This was the last payment Mr Wang made directly to Mr Liu. The total amount Mr Wang paid Mr Liu between April 2011 and July 2013 was RMB 41 million.

15 September 2013 meeting

On 15 September 2013, Mr Wang, Mr Liu and Mr Li attended another meeting in Shijiazhuang in which they conducted a “Review of the Work for Past Year”. In a document called “Summary of [GR Capital] of the Year 2013”, Mr Wang was noted as chairman, Mr Liu as general manager and Mr Li as director. This reflected the reality as the three men saw it: they were the controllers of GR Capital.
On 4 and 14 November 2013, Mr Wang paid $700,000 and $247,077.76 to GR Capital.
These were the last payments that Mr Wang made, and the only two made to GR Capital. As I have said, all the other payments were made by Mr Wang personally to Mr Liu’s bank account in China.
Overall, the value of the payments Mr Wang made was a little over $7 million.

Mr Wang’s “growing unease”

By early in 2014, Mr Wang was becoming concerned as to the fate of the funds he had advanced. He deposed:

“It appeared to me in early 2014 that while I had transferred AU$7 million to accounts controlled by [Mr Liu], it was only the last two payments that had been transferred to an Australian account in the name of GR [Capital] and the majority of the funds had been transferred to [Mr Liu’s] personal account in China. This was not of concern to me when I trusted [Mr Liu] but as my doubts grew, so did my concerns about the lack of documentation”.

Thus, in April 2014, Mr Wang asked Mr Liu for written confirmation that “the amounts paid to your Chinese account were part of this investment”.

The April 2014 documents

This led to the creation of two documents.
First, Mr Liu, under the “official seal” of GR Capital and WDL International signed a document dated 4 April 2014 and headed “GR Capital’s Confirmation of Receipt of Investments from Shareholders” which stated:

“According to the Articles of Association and shareholders’ resolution of GR Capital, shareholder YANG WANG (Ruifa WANG) owns 35% shares of the company, shareholder Xiuju SHI (Xiguo LI) owns 35% shares of the company, and shareholder Lan LIU (Wensheng LIU) owns 30% shares of the company. All shareholders jointly invested AUD 20 million in proportion to their shares to carry out real estate projects in Australia. The capital investment of each shareholder is reported as follows:
Shareholder Yang WANG shall invest AUD 7 million in proportion to its 35% shares. We hereby certify that Yang WANG’s investment funds have been fully paid.
(Attached: Details of capital contribution and remittance attached as confirmation)”.

The attachment was headed “Details of Receipt on Fund from Ruifa Wang” and acknowledged receipt of the three amounts totalling RMB 10 million that Mr Wang paid into Mr Liu’s Chinese bank account in April 2011. [14] For reasons unexplained and unexplored in the evidence, it did not refer to the other payments Mr Wang had made.
14. See [32] and [43] above.
Second, on 11 April 2014, Mr Liu made a statutory declaration in which he stated:

“As at 8^th of April 2014, Xiguo LI and Ruifa WANG have invested 7.2 million Australian Dollar each into WDL and GR Capital respectively.
I hereby guarantee the security of the capital under any circumstances excluding force majeure events.”

Although Mr Liu’s statutory declaration referred to Mr Wang’s and Mr Li’s investment in WDL International and GR Capital, the true position was that Mr Liu had caused the funds Mr Wang had sent to Mr Liu’s Chinese bank account for the purposes of investment in GR Capital to be paid to WDL International. As I have said, although Mr Liu had told Mr Wang and Mr Li that WDL International was a subsidiary of GR Capital, [15] this was not true. Mr Liu used the funds paid into WDL International’s account to acquire the Petrol Station Site and the Airlie Beach property.
15. For example, at the 19 October 2012 board meeting: see [68] above.

6 March 2015 shareholders meeting

On 6 March 2015, Mr Wang, Mr Liu and Mr Li attended a “2014-2015 Annual Shareholders Meeting” of GR Capital, the minutes of which record Mr Wang as “Chairman”, Mr Liu as “General Manager” and Mr Li as “Director”.

19 March 2015 GR Capital board meeting

On 19 March 2015, each of Mr Wang, Mr Liu, Mr Li as well as Ms Wang, Ms Liu, Ms Shi and Mr Kai Li signed a document entitled “Resolutions in the Board meeting”.
Mr Wang said the meeting took place Mr Kai Li’s home in Hurstville and that he, Mr Liu and Mr Li had finalised the draft of the resolution before the meeting and the purpose of this meeting was to confirm this final version with everyone and to sign the resolution.
Ms Wang described the circumstances in which she signed the document as follows:

“40. On 19 March 2015, I attended Kai Li’s home. [Mr Liu], my Father and [Mr Li] were there. Mrs Liu …, Kai Li and [Ms Shi] … were also there but [Ms Liu] and/or [Ms Shi] may have come a little bit late.
41. I understood the meeting was to sign documents to agree profit distribution and future cooperation which was a result of the negotiations that had been happening over the past week or so and the agreements reached at those meetings. I signed the documents when asked to and I saw the other signatories do the same. The meeting was not a formal one and after signing the documents, we had lunch. To the best of my recollection, everyone stayed for that lunch as it was a farewell lunch for my Father who was going back to China. The mood was one of relief and happiness.” (Emphasis added.)

The document records the “participants” as being “Ruifa WANG (Yang WANG), Xiguo LI (Kai LI) and Wensheng LIU”.
The notes recorded, under the heading “Basic Situation of [GR Capital]”:

“GR Company was registered and established on 3 May 2011, composed of shareholders Yang WANG, Kai LI and Lan LIU. As of 31 December 2013, the three parties contributed a total of A$ 20 million, among which Yang WANG contributed A$ 7 million, accounting for 35% of company shares; Kai LI contributed A$ 7 million, accounting for 35% of company shares; Lan LIU contributed A$ 6 million, accounting for 30% of company shares. All shareholders entitle company interests and undertake risks according to the proportion of investment.”

But everyone present at the meeting knew that the “three parties” that had contributed or were to contribute the $20 million referred to were, or were to be, Mr Wang, Mr Liu and Mr Li, and not Ms Wang, Ms Liu or Mr Kai Li. [16] Everybody present also knew that Ms Wang, Ms Liu and Ms Shi had been made shareholders in GR Capital at the direction of Mr Wang, Mr Liu and Mr Li. Everyone present at the meeting knew that the three men had at all times acted as if they were directors of GR Capital and had conducted the affairs of the company without reference to the nominal directors.
16. The reference to Mr Kai Li was a mistake; the reference was intended to be to his mother, Ms Shi.
The English translation of the document that the seven individuals signed comprises four closely typed pages and refers in some detail to the development of the Petrol Station Site, the Airlie Beach property, the Car Park Site as well another project in Hurstville called the “Haolifang Project”.
Mr Cook SC and Ms Little, who appeared for Mr Wang, described the meeting at which this document was signed as “the last attempt to try and salvage the joint venture”.
One matter the minutes record is that one unit in the development constructed on the Petrol Station Site was to be transferred to each of Ms Wang, Ms Liu and Ms Shi. This occurred and unit 702 was later transferred to Ms Wang. Although Mr Liu seeks to recover the money he paid to Mr Wang between August 2015 and November 2017, he makes no application to recover this property from Ms Wang.
Another matter the minutes record is that GR Capital had paid $8.8 million to the “land owner” of the Car Park Site, that is Hurstville Council. That was not true.
Only Mr Liu had dealings with Hurstville Council about the Car Park Site. It must have been Mr Liu who told the meeting that GR Capital had made the “pre-payment” of $8.8 million to the “land owner”. Nonetheless, Mr Liu gave this evidence in cross-examination:

“Q. … You told the meeting that $8.8 million had been paid to the council in respect of the purchase of the carpark; that’s correct, isn’t it?
HIS HONOUR: Before 2011.
COOK: Yes, before 2011, your Honour is correct.
A. INTERPRETER: No.
Q. Who told the meeting that the amount of 8.8 million had been paid before 2011 to the council to acquire the carpark, if it wasn’t you?
A. INTERPRETER: It wasn’t me.
Q. Who it was it, Mr Liu, then?
A. INTERPRETER: Mr Wang.
Q. How would Mr Wang know that $8.8 million had been paid to the council in respect of the acquisition of the carpark, Mr Liu?
A. INTERPRETER: At the beginning it was mentioned that the land purchase price was 8 million. There was no mention ever about 8.8 million.
Q. I asked you, Mr Liu, how Mr Wang would go that 8 million or 8 by 8 million, for that matter, had been paid to the council in respect of the acquisition of the carpark?
A. INTERPRETER: I have no idea.
Q. You were the only person that was dealing with the council in respect of the purchase of the carpark, correct, Mr Liu?
A. INTERPRETER: No.
Q. Who do you say was dealing with the council?
INTERPRETER LUM: I missed the last bit.
A. INTERPRETER: Both Li and Wang had met with council to discuss about the purchase of the land and to provide an understanding as how - an undertaking as to when money would be paid and that they would be paying in full as opposed to what other local companies might do. They, by contrast, will pay in full.
…
Q. You knew, at the time that you signed the document, that $8.8 million had not been paid to the council before 2011?
A. INTERPRETER: That's right.
Q. So if his Honour were to believe you when you say it was Mr Wang who told the meeting this statement, that there was $8.8 million paid, why didn't you correct Mr Wang at the meeting?
A. INTERPRETER: This document is in Chinese. It was meant to be used in China, not meant to be used here.
Q. Mr Liu, that's not an answer to my question. If Mr Wang had said what we have in this document about the 8.8 million, why did you not correct him and say, ‘That's not true, we haven't paid $8.8 million to the council’?
A. INTERPRETER: I did say so, but he said that this document was meant to be used in China to show other companies, to show that we have purchased the project. That's for this purpose.
Q. Mr Liu, what you've just said now is a lie; do you accept that?
A. INTERPRETER: Not right. I disagree.
Q. The truth is that you told Mr Wang that you had used his money to pay for the acquisition of the council car park; correct?
A. INTERPRETER: Disagree.
Q. And you were lying when you told Mr Wang this because you knew that no money at all had been paid to the council for the car park?
A. INTERPRETER: That's not true.
Q. You offered at the meeting to provide a receipt for the payment of the $8.8 million when Mr Wang asked for it; correct?

A. INTERPRETER: He asked me to.
Q. He asked you to provide a receipt, did he not?
A. INTERPRETER: He did.
Q. You could never provide him with a receipt, could you?
A. INTERPRETER: That’s right.”

I do not accept Mr Liu’s evidence that it was Mr Wang who told the meeting that GR Capital had paid $8.8 million for the Car Park Site nor that he contradicted Mr Wang by saying anything to the effect that the money had not been paid.
That evidence led me to ask Mr Liu this question:

“HIS HONOUR:
Q. Mr Liu, you told me, I think, just then that you told Mr Wang at this meeting that the $8.8 million had not been paid; is that correct?
A. INTERPRETER: I did.
Q. But you agree that Mr Wang asked you to show him a receipt for the payment?
A. INTERPRETER: He asked me if I could provide such a receipt, and I said no, not possible.”

Evidently, Mr Liu was unable to see any tension between his statement that he had said at the meeting that the money had not been paid and his statement that, nonetheless, Mr Wang asked him to show a receipt for the payment (that he said had not been made).
In relation to Mr Liu’s evidence that the document was “meant to be used in China, not meant to be used here”,[17] Mr Liu gave this evidence:
17. See [99] above.

“COOK:
Q. Mr Liu, you will see there that it records that, ‘The three shareholders continue to operate and develop the project.’ There is nothing in the document that suggests that Mr Wang is withdrawing from the joint venture; do you agree?
A. INTERPRETER: This document was made so he can sell the business in China. So that’s the purpose of the document.
…
A. INTERPRETER: So, this document was made for him to use in China.
COOK:
Q. By that answer, are you suggesting that the document is not an accurate record of what was discussed at the meeting on 19 March 2015?
A. INTERPRETER: Not really, but he had another purpose for it.
Q. Why did you not tell his Honour in your affidavit when you dealt with this minute that there was another purpose behind the preparation of this document, at least on the part of Mr Wang?
A. INTERPRETER: I think that might not work to his benefit. It might work against him.
HIS HONOUR:
Q. Mr Liu, are you saying that this document contains statements that you knew to be false?
A. INTERPRETER: That’s right.
Q. You understood that Mr Wang would use that document in China for some commercial purpose, did you?
A. INTERPRETER: Yep.
Q. You agreed he would use the document containing statements you knew to be false for commercial purposes in China, did you?
A. INTERPRETER: Yes.”

I am unable to make any finding about whether the 19 March 2015 minutes were used in China for any commercial purpose. It certainly contained a statement, that GR Capital had paid $8.8 million for the Car Park Site, that Mr Liu must have known to be false. But Mr Liu’s statement that he agreed that a document he knew to be false could be used in China for a commercial purpose speaks poorly about his commercial morality and credit generally.

The agreements leading to the 13 April 2016 Document

It is against this background that two agreements leading to the execution by Mr Wang, Mr Liu and Mr Li of the 13 April 2016 Document were created. Those agreements were dated 25 May 2015 and 11 December 2015. I will refer to these as the “25 May 2015 Document” and the “11 December 2015 Document”. Each was originally written in the Chinese language and was expressed to be governed by the “laws of Australia and the People’s Republic of China”. Each recited that the agreement would be translated into English “but the Chinese version shall prevail”. [18] So far as concerns the proper construction of these agreements, and the question of ascertaining whether each came into effect, I must assume Chinese law to be the same as Australian law, as neither party adduced evidence of Chinese law. [19]
18. Both Mr Wang and Mr Liu proffered English translations of the agreements. As I said at [3] above, there were some minor differences only one of significance: see [194] below.
19. See [4] above.
As to the proper construction of the agreements, the principles are well established and were summarised by the High Court of Australia in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [20] as follows:

“The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context … and purpose.
In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice.” [21] (Citations omitted.)
20. (2015) 256 CLR 104; [2015] HCA 37.
21. At [46] - [49].

The context in which the 25 May 2015 Document and the 11 December 2015 Document, as well as the 13 April 2016 Document itself, were executed includes the facts, known to each of Mr Wang, Mr Liu, Mr Li, as well as Ms Wang, Ms Liu, Ms Shi and Mr Kai Li, that, as I have set out:

the monetary investments referred to in the earlier board minutes and in the documents themselves had been made by Mr Wang, Mr Liu [22] and Mr Li and not by any of Ms Wang, Ms Liu, Ms Shi or Mr Kai Li;

although the shares in GR Capital has been issued to Ms Wang, Ms Liu and Ms Shi, each held their shares as representative or nominee of the investing parties, Mr Wang, Mr Liu and Mr Li respectively; and

although Ms Wang, Ms Liu and Ms Shi were appointed as directors of GR Capital, they played no active role as directors and acted as directed by Mr Wang, Mr Liu and Mr Li who made all decisions concerning the conduct of GR Capital.

22. Assuming that Mr Liu in fact made any investment.

The 25 May 2015 Document

The 25 May 2015 Document is not the agreement on which Mr Wang relies in these proceedings. Mr Wang sues on the 13 April 2016 Document. However, the circumstances of the 25 May 2015 Document provide vital context for the proper construction of the 13 April 2016 Document. It provides particularly relevant context for Mr Liu’s contention that the 13 April 2016 Document only became “valid” if executed by the three shareholders of GR Capital (Ms Wang, Ms Liu and Ms Shi) or alternatively by all seven persons named as Party A, Party B and Party C to the 13 April 2016 Document (Mr Wang, Ms Wang, Mr Liu, Ms Liu, Mr Li, Ms Shi and Mr Kai Li). [23]
23. As alleged in the List Response at C25 to C27.
The events leading to the execution of the 25 May 2015 Document provide context relevant to the construction of its text.
Mr Wang said that in early May 2015, shortly before Mr Liu executed the 25 May 2015 Document, he had a conversation with Mr Liu that included:

“[Mr Wang]:    [Mr Liu], I do not think we can continue my co-operation … is not what was agreed when we set this all up. I believe it is fair to describe your treatment of my investment as if those funds were your own. Because that is the case, we should treat my funds as if they were a loan to you to be repaid with interest. This way we need not discuss the profits on any of the projects ... It is much more simple – We make it a loan and calculate the interest.
[Mr Liu]:    I think that is fair. What is the interest rate you propose?
[Mr Wang]:    In China the interest rate per month is 3%, let’s only calculate 2% per month for us. The profit you will earn on all the projects will definitely be more than that.
[Mr Liu]:    That is very reasonable. But all my funds are in use in the projects. Can I just pay you principal first from 1 June 2015? Don’t set up a deadline yet for repayment of interest calculated before 1 June and please allow me some flexibility in the manner of payment.
[Mr Wang]:    Ok, pay me principal first. The Hurstville property should be transferred to Yang Wang first as part of the repayment of previous interest. We can discuss when and how you make payment of interest.
…

[Mr Wang]: This will need to be documented. I will prepare an agreement.
[Mr Liu]: Thank you Ruifa. I appreciate your understanding.” (Emphasis added.)

Mr Li said that at about this time Mr Wang telephoned him, and that they had this conversation:

“[Mr Wang]:    Look, I cannot do business like this. I have decided to withdraw from GR. I propose to change the $7 million I invested to a loan and [Mr Liu] is responsible for the repayment. I think that is fair as he has used my funds as if they are his own. I will require the repayment of the principal $7 million and also 2% per month interest. No matter how much profits you guys make from past projects or future projects, I will not be in any part of profit sharing. What do you think?
[Mr Li]:    I think that’s reasonable. I agree.
[Mr Wang]:    Also, I would ask that because you introduced [Mr Liu] to me and asked me to join your business cooperation, you should guarantee [Mr Liu’s] repayment.
[Mr Li]:    Yes. I can provide the guarantee, but just for the principal part.
[Mr Wang]:    No problem.” (Emphasis added.)

Thus, both Mr Wang and Mr Li deposed that Mr Wang had proposed to Mr Liu that because, as Mr Wang saw it, Mr Liu had used the funds that Mr Wang had advanced to Mr Liu “as his own”, Mr Wang’s investment in GR Capital should be treated, as between them, as a loan.
Mr Liu gave a different account of his conversation as follows:

“[Mr Wang]:    I have bought a property in China and I need my funds for the re-development of that property into residential units. This means I can no longer make the further contributions to GR Capital and I do not want to continue with the re-development project or the mining project. I want the money that I invested back.
[Mr Liu]:    That will be very hard because the money has been used to advance the two projects.
[Mr Wang]:    I know but I need my money back.
[Mr Liu]:    How do you propose that we do that?
[Mr Wang]:    I am concerned that because we opened up the company with $50 million equity and I have only contributed $7 million, I don’t want to be in a situation where you can require me to pay the other $10.5 million for my shares. I have spoken to Yang and she said the best way to deal with this is to return my capital by converting the $500,000 shares into $1.00 shares.
[Mr Liu]:    I will discuss it with my wife and the accountant and see if we can do that but, in any event, we will not be able to return the capital to you straight away. We will need time.”

Ms Wang said that she received a telephone call from Mr Wang in which he said:

“I cannot continue with [Mr Liu]. We have agreed that we are to treat my investment for the shares as debt. Can you help by drafting the agreement? I can discuss the details with you further but I will be in China so you will need to make arrangements to execute it once finalised.”

Ms Wang said that she drafted the 25 May 2015 Document with the assistance of Mr Wang and that, on 25 May 2015, she met Mr Liu and Mr Li at Mr Kai Li’s apartment. Ms Wang said that on that occasion, she and Mr Liu and Mr Li signed the document. Ms Wang said that, at the time, she had this conversation with Mr Liu:

“[Ms Wang]:    My Father believes this reflects your agreement.
[Mr Liu]:    Yes. I have seen the draft. [Mr Li] and I have discussed it.
[Ms Wang]:    It records you returning the funds my Father invested by treating those funds as a loan.
[Mr Liu]:    Yes. That is what we agreed.” (Emphasis added.)

Although Mr Liu denied this conversation, Ms Wang was not cross-examined about it. Mr Insall SC, who appeared for Mr Liu, did not ask any questions of Ms Wang.
I do not accept Mr Liu’s account of his conversation with Mr Wang, set out at [113] above, for a number of reasons. First, for the reasons set out at [104] above, I have doubts about Mr Liu’s credibility generally. Second, Mr Wang’s account of his conversation with Mr Liu is consistent with Mr Li’s account and Ms Wang’s account of their contemporaneous conversations with Mr Wang. Third, Ms Wang’s unchallenged evidence, set out at [115] above, is that Mr Liu accepted that he had agreed to repay “as a loan” the funds Mr Wang had advanced. Fourth, the fact was that Mr Wang had advanced all of his payments, except for the last two made to GR Capital, to Mr Liu personally. And fifth, Mr Liu had in fact treated the funds that Mr Wang had advanced to him as his own, and had used them for purposes other than those for which they were advanced: to enable GR Capital (not WDL International) to make the investments discussed.
I find that in May 2015, Mr Liu agreed with Mr Wang that he, personally, would repay to Mr Wang the funds that Mr Wang had advanced him, as well as the two payments that Mr Wang made to GR Capital. It was in these circumstances that, as Ms Wang deposed, Mr Liu signed the 25 May 2015 Document at Mr Kai Li’s apartment.
The 25 May 2015 Document recited:

“Through friendly negotiation among Party A, Party B and Party C, the following agreement on share withdrawal and capital return has been reached based on the principles of equality, mutual benefit, honesty and credibility, and the three parties must abide by it together.”

“Party A”, “Party B” and “Party C” were described as follows:

“Party A: Yang WANG, Ruifa WANG
Party B: Xiguo Li, Xiuju SHI
Party C: Wensheng LIU, Lan LIU”.

A critical question is whether the manner in which the parties described Party A, Party B and Party C in this document, and also later documents including the 13 April 2016 Document, bespoke their intention that the 25 May 2015 Document and those later documents would only come into effect as an agreement if all the persons so named executed the document.
In fact, only Ms Wang, Mr Liu and Mr Li executed the 25 May 2015 Document.
Mr Liu’s case, as set out in his Cross-Claim List Statement, is that:

“13.    On a true construction of the 2015 Document:
(a)    it only became valid on the joint signatures of the three shareholders of the Company or their representatives; and
(b)    alternatively, it only became valid on the joint signatures of each of the persons named as Party A, Party B and Party C or their representatives.
14.    The 2015 Document:
(a)    was signed by Ms Wang herself, and not as a representative;
(b)    was not signed by [Mr Wang];
(c)    was signed by Mr Li himself and not as a representative;
(d)    was not signed by Mrs Shi;
(e)    was not signed by Ms Liu; and
(f)    was signed by [Mr Liu] himself and not as [a] representative.
15.    Therefore, the 2015 Document never took effect as an agreement.”

Before dealing with the question of whether Mr Liu’s construction of the 25 May 2015 Document and his contention that the document never took effect as an agreement is correct, and the related question of whether the parties’ subsequent conduct sheds light on whether a contract was formed, I turn to the text of the document.
“Article 1” of the document was headed “Basic Information” and read:

“Party A made investment to Party B and Party C in May 2011, and the three parties jointly established [GR Capital] to invest in Australian real estate project, in which Party A contributed A$ 7.2 million (all have been received, of which A$ 200,000 has been returned), accounting for 35% shares of [GR Capital] and its subsidiary [WDL International]. Under the management of Party C over the past few years, the company has enjoyed a good momentum of development and achieved considerable economic benefits.”

Although this passage refers to “Party A” as being Mr Wang and Ms Wang, and as having “contributed” $7.2 million “accounting for 35%” of the shareholding in GR Capital, Mr Wang, Ms Wang, Mr Liu and Mr Li knew that it was Mr Wang and not Ms Wang that had made this “contribution”. They also all knew that, although the corresponding 35% shareholding was in Ms Wang’s name, Ms Wang held her shares as a nominee or “representative” of her father, Mr Wang.
Thus, it is apparent that Mr Wang, Mr Liu and Mr Li adopted the convention or drafting device of naming their “representative” as being included as a “Party” notwithstanding that they were not, in substance, the relevant actors. Why the men adopted this drafting device was not in terms explained in the evidence and not explored in cross-examination.
This passage also records that WDL International was a “subsidiary” of GR Capital. As I have said, this was what Mr Liu told Mr Wang and Mr Li. Mr Liu prepared these minutes and there is no suggestion that Mr Wang or Mr Li made this comment. As I have said, WDL International was at all times under the control of Mr Liu and was not, at any time, a subsidiary of GR Capital.
Under the heading “Article 2 Withdrawal of share and return of capital” the agreement continued:

“1.    Party A, Party B and Party C have agreed through negotiation that Party A will withdraw its entire equity in [GR Capital] and its subsidiary [WDL International]. Party B and Party C will return Party A’s capitals invested in [GR Capital] and its subsidiary [WDL International]. Since the two companies are under the sole and full management of Party C, Party C will be responsible for the capital return and the implementation of the return, while Party B will be responsible for providing guarantee.
2.    The three parties confirm to return the investment principal of A$ 7 million to Party A. …
3.    After signing this agreement, Party A will not receive dividends from [GR Capital] and its subsidiary [WDL International], and the profit returning and compensation for use of funds during the period of using Party A’s fund will be paid by Party B, Party C and their investment companies in Australia to Party A. This amount is calculated by paying a fixed amount of 2% per month according to the actual time of receipt of each investment fund tranche. …
4.    After returning all investment funds, profit returning on investment and compensation for the use of funds to Party A, Party B and Party C shall be entitled to all shareholders’ rights and assume all creditor’s rights and debts of [GR Capital] and its subsidiary [WDL International], and Party A shall not be entitled to relevant shareholders’ rights nor assuming obligations.” (Emphasis added.)

The passages I have emphasised are expressed in terms of Party A withdrawing “equity” in GR Capital, having “capitals” returned and foregoing dividend entitlements and of Party B and Party C assuming “all shareholders’ rights” and liabilities. This reflects the fact that Mr Wang, Mr Liu and Mr Li knew that Mr Wang had advanced his funds to Mr Liu on the basis that Mr Wang, by his daughter Ms Wang, would acquire the 35% shareholding in GR Capital earlier referred to.
“Article 3” then provided under the heading “Payment methods”:

“The investment funds shall be returned in cash by two instalments. The payment method shall protect the interests of Party A. Party C shall bear all relevant expenses arising from the repayment, including consulting fees, legal fees, handling fees, taxes, etc.
1. Party C shall first return A$5 million in cash to Party A before 1 August 2015.

2. The rest A$ 2.28 million shall be returned by Party C before 31 December 2015. For the unpaid principal part (A$ 2 million), the compensation fee for use of funds for the period from 1 August 2015 to 31 December 2015 when the repayment is completed shall be calculated at 2% of the unpaid principal per month according to the actual repayment time.” (Emphasis added.)

In the passages I have emphasised, Party C assumed personal liability to pay $7.2 million to Party A by the dates mentioned. Although “Party C” was expressed to be both Mr Liu and Ms Liu, I find that Mr Liu understood that this was intended to be his obligation, not shared with Ms Liu, to pay the money to Mr Wang, and not to Mr Wang’s representative, Ms Wang; notwithstanding the fact that it was Ms Wang and not Mr Wang that executed this document.
In “Article 4”, under the heading “Liabilities for breaching of agreement”, the document provided:

“1. This agreement is signed on the basis of friendly negotiation among the three parties. After the agreement is signed the three parties shall not do anything harmful to either party and shall safeguard all interests of the company.
2. Party B and Party C shall repay on time without delay. Party C shall be solely and fully responsible for the repayment, and Party B and relevant persons’ all assets in Australia are used as guarantee for the repayment. If full repayment cannot be made before the agreed repayment date, Party B and Party C shall pay 2.5% of Party A’s principal every month as compensation for the use of funds and losses caused to Party A. This calculation starts from 1 January 2016 and the principal means actual unpaid amount.” (Emphasis added.)

Finally, “Article 5” provided, under the heading “Applicable law and dispute resolution”:

“1.    This agreement shall be governed by the laws of Australia and the People’s Republic of China.
2.    The date when all the investment funds are returned to Party A is the date when Party A withdraws its equity. Party C may change the register of shareholders accordingly and apply to the registration authority for the registration of relevant change.
3.    This agreement is made in triplicate, with each of the three shareholders holding one copy. It will come into effect after being signed jointly by shareholders of Party A, Party B and Party C or their representatives. The text of the contract of each copy has [the] same legal effect.
4.    This agreement will be translated into English and notarized by the lawyer, but the Chinese version shall prevail.
5.    Matters not covered shall be settled through friendly negotiation between both parties.” (Emphasis added.)

The reference in the passage I have emphasised to the agreement being made in “triplicate” with each of the “three shareholders holding one copy” shows that the parties understood there to be but three parties to the agreement, notwithstanding the fact that six persons were named as being included in Party A, Party B and Party C. The reference to the agreement coming into effect after being signed by those three shareholders “or their representatives” shows further that the parties intended that only three signatories were required before the agreement came into effect.
The later conduct of Mr Wang, Mr Liu and Mr Li, to which I will return below, makes clear that they each understood that they had reached a binding agreement between themselves in the terms of the 25 May 2015 Document, notwithstanding the fact that Ms Wang rather than Mr Wang had executed the document and notwithstanding the fact that the other persons included in the descriptors Party B and Party C (Ms Shi and Ms Liu) had not.
Post-contractual conduct is admissible on the question of whether a contract was formed. [24]
24. For example, Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] (Heydon JA) and see J D Heydon, Heydon on Contract (2019, Thomson Reuters) at [4.170] and [9.1560].
Included in such post-contractual conduct is the cross-claim that Mr Liu has brought in these proceedings. By that cross-claim, Mr Liu seeks to recover the $6.2 million he paid Mr Wang between August 2015 and November 2017 on the basis of mistake of fact or law. In support of that claim, Mr Liu has given evidence as to his state of mind concerning his execution of the 25 May 2015 Document and the 13 April 2016 Document.
As to the 25 May 2015 Document, Mr Liu deposed:

“When I executed the [document], I did not have the benefit of any legal advice. The [document] was not executed by [Ms Wang], [Ms Shi or Ms Liu]. [25] I believed at that time that I personally had an obligation to return the capital contributed by [Mr Wang] to GR Capital because I did not have a proper appreciation of the obligations of GR Capital as a company and my personal obligation as an individual. When I executed the [document], I was acting under a mistaken belief that I had a personal obligation to [Mr Wang] or his daughter, Ms Wang, to return the capital contributed to GR Capital”. (Emphasis added.)
25. Mr Liu was correct to say that Ms Shi and Ms Liu did not sign this document. But he was wrong to say Ms Wang did not sign it.

Thus, Mr Liu’s evidence was that when he executed the 25 May 2015 Document, he mistakenly believed that he had a personal obligation to Mr Wang or Ms Wang “to return the capital contributed to GR Capital” and that he executed the document for that reason. That is, Mr Liu contends, he assumed an obligation under the 25 May 2015 Document under the mistaken belief that he was otherwise personally liable to repay Mr Wang. I do not accept that evidence as it cannot be reconciled with the conversations that I find Mr Liu had with Mr Wang as set out at [110] to [113] above nor with the terms of the documents Mr Liu executed. But Mr Liu’s contention accepts, indeed asserts, that he had obligations under the terms of the 25 May 2015 Document and shows that, inconsistently with the pleading set out at [123] above, he understood that the 25 May 2015 Document did take effect as an agreement. His conduct in prosecuting his cross-claim is consistent only with a contract having been formed in terms of the 25 May 2015 Document.
There is further conduct of each of Mr Wang, Mr Liu and Mr Li, post 25 May 2015, consistent only with a contract having been formed in terms of the 25 May 2015 Document, to which I refer below.
That conduct includes Mr Liu paying the $6.2 million to Mr Wang. That conduct shows that whether or not, prior to his execution of the 25 May 2015 Document, he understood that his obligation to Mr Wang was personal to him, he understood that the 25 May 2015 Document had taken effect as an agreement binding on him.
Further, if it be relevant, Mr Liu did not suggest that at the time he signed the 25 May 2015 Document that he understood that the fact that the document was executed by Ms Wang, Mr Liu and Mr Li and not by the other persons named as being included in Party A, Party B and Party C (Mr Wang, Ms Liu and Ms Shi) had the result that the document never took effect as an agreement.

The payments made by Mr Liu

The 25 May 2015 Document required Party C to pay $5 million in cash to Party A before 1 August 2015. The “rest” of $2.28 million was to be “returned” before 31 December 2015.
Mr Liu did not pay the $5 million by 1 August 2015, or at all. On 26 August 2015, Mr Liu caused $420,000 to be paid to Mr Wang. On 30 November 2015, Mr Liu caused a further $140,000 to be paid to Mr Wang.
On 11 December 2015, Mr Wang, Mr Liu and Mr Li met in Beijing.
Mr Wang deposed that on that occasion he had this conversation with Mr Liu:

“[Mr Liu]:   I am sorry I did not pay the principal but I can pay the 7 million plus interest by 15 January 2016 but I would ask that we modify the interest arrangements and apply only 2% rather than 2.5% on $5 million between 1 August 2015 and 15 January 2016 and $2 million between 1 December and 15 January 2016.
[Mr Wang]”    We can agree to that. If you repay on time, it’s ok for me even to reduce some of the interest. But if you again fail to repay on time, I want to charge penalty interest at 0.1% per day from 15 January.
[Mr Liu]:    I can accept that. I will pay on time.”

Although Mr Liu denied this conversation, I accept Mr Wang’s evidence that it occurred.

11 December 2015 Document

On 11 December 2015, Mr Wang, Mr Liu and Mr Li signed the 11 December 2015 Document. It was a called “Repayment Agreement”.
The 11 December 2015 Document described the parties as follows:

“Party A: Ruifa WANG
Party B: Wensheng LIU
Party C: Xiguo Li”.

Thus, Party B was identified as being Mr Liu himself (he and Ms Liu were “Party C” in the 25 May 2015 Document) and Mr Li (but not Ms Shi, as in the 25 May 2015 Document) became “Party C”.
The signature block on the document nonetheless referred to Ms Wang, Ms Liu, Ms Shi and Mr Kai Li, albeit only parenthetically, as follows:

“Party A: Ruifa WANG (Yang WANG)
Representative’s signature: /Signature Affixed: Date: 11 December 2015
Party B: Wensheng LIU (Lan LIU)
Representative’s signature: /Signature Affixed: Date: 11 December 2015
Party C: Xiguo LI (Xiuju SHI, Kai LI)
Representative’s signature: /Signature Affixed: Date: 11 December 2015”.

Again, there is no evidence explaining, in terms, why the parties adopted this drafting device. The matter was not explored in cross-examination.
However, the context I have described suggests that this was the method adopted by Mr Wang, Mr Liu and Mr Li to reflect their role as the principal actors in the transaction and the role they saw Ms Wang, Ms Liu and Ms Shi playing; namely as their “representatives” in GR Capital, as anticipated in the Cooperation Agreement.
The 11 December 2015 Document was signed only by Mr Wang, Mr Liu and Mr Li. The original Chinese language version of the document made provision only for three signatures, thus:

That points to the conclusion that Mr Wang, Mr Liu and Mr Li intended the 11 December 2015 Document to be binding as an agreement once each had signed, and without the necessity of Ms Wang, Ms Liu or Ms Shi also signing.
Turning to the text of the 11 December 2015 Document, after reciting the identity of the parties as set out at [150] above, the document provided:

“Through further negotiation among the three parties, the specific matters concerning the repayment of Party A’s investment funds by Party B and its company in Australia are determined as follows for mutual compliance.”

As these words follow immediately after the recitation of the parties as being Mr Wang, Mr Liu and Mr Li, the “three parties” referred to must be those three men.
“Article 1” followed and provided, under the heading “Reasons and terms of the original agreement”:

“1)   In May 2011, Party A invested to Party B, jointly established [GR Capital] with Party C in Australia, and also made [WDL International], which had been established in Australia by both Party B and Party C and their family members, the subsidiary company of [GR Capital]. The company is acquired jointly by contributions from the three parties. The three parties have contributed a total of A$ 20 million (all have been received), of which Party A has contributed A$ 7 million, accounting for 35% of shares of [GR Capital] and its subsidiary [WDL International]. All the funds contributed by the three parties have been used by [GR Capital] and [WDL International] to purchase land for real estate development projects. Under the management of Party B over the past few years, the company has developed well and achieved considerable economic benefits.
2)    The three parties have reached an agreement on 24 May 2015, [26] agreeing Party A to withdraw all its 35% shares in [GR Capital] and its subsidiary [WDL International]. Since the two companies are under the sole and full management of Party B, Party B will be responsible for the return of A$ 7 million invested by Party A in [GR Capital] and its subsidiary [WDL International] and also the compensation for profits generated during the investment period, while Party C will be responsible for Party A’s capital security and repayment guarantee.
3.    The three-party has confirmed via agreement to return the investment principal of A$ 7 million to Party A on 1 June 2015.” (Emphasis added.)
26. Obviously intended to be a reference to the 25 May 2015 Document.

The repeated references here to the “three parties” must be to Mr Wang, Mr Liu and Mr Li, and point again to the conclusion that the three men intended the 11 December 2015 Document to be an agreement between only them.
“Article 2” provided, under the heading “Implementation of the original agreement”:

“1)   After the repayment was due on 1 August 2015, Party B failed to repay A$ 5 million to Party A and to transfer the real estate located at 27/1-3 Railway Pde, Hurstville NSW 2220 under the name of [WDL International] to the name of Party A’s representative as committed earlier, but Party B has paid 4 months (4 months * 140,000/month) of compensation for the use of funds generated by the delay in payment of funds. Till 31 December 2015, there would be a total of 3 months of compensation for the use of funds still remaining unpaid.
2)   During the months when Party A urged repayment, Party B proposed to raise funds by means of selling, mortgaging [WDL International’s] real properties and transferring land projects, but none of them were achieved.
3)    The use of funds by Party A’s company is based on the repayment plan in the original agreement. Since Party B failed to fulfill the commitment, it has caused great losses to Party A’s production and operation. Especially being failure to properly pay salaries to workers at the end of the year has breached the law and constituted a crime.” (Emphasis added.)

The emphasised reference to the “original agreement” is obviously a reference to the 25 May 2015 Document and represents an acknowledgement by Mr Wang, Mr Liu and Mr Li that they intended the 25 May 2015 Document to be an agreement binding on them.
The emphasised reference to “Party A’s representative” is obviously to Ms Wang and shows the distinction the parties saw between the active actors in the project and their “representative”.
“Article 3” was entitled “Agreement on repayment” and provided:

“1) In consideration of the situation, the three parties discussed in accordance with the terms of the agreement and listened to Party B’s arrangement on project, use of funds and repayment. Party B promised to pay the principal of A$ 7 million to Party A or the account designated by Party A before 15 January 2016. At the same time, a total of 420,000 will be paid to Party A in one lump sum for the difference in compensation for the use of funds due for deferred repayment (3 months * 140,000/month).
2) Party B confirms to transfer its real estate located at 27/1-3 Railway Pde, Hurstville NSW 2220 under the name of [WDL International] to the name of Party A’s representative before YYMMDD (This property will partly offset profit returning and repayment of compensation for the use of funds to Party A).” (Emphasis added.)

The further reference in Article 3(a) to the “three parties” is, again, necessarily a reference only to Mr Wang, Mr Liu and Mr Li. Thus, the promise in the second sentence by “Party B” to pay $7 million to “Party A” can only be a promise by Mr Liu himself to pay that sum to Mr Wang.
Article 5, entitled “Applicable law and dispute resolution” was in the same terms as Article 5 of the 25 May 2015 Document.
Mr Liu said:

“I did not get a proper chance to read the Mandarin document [Mr Wang] handed to me on 11 December 2015 and did not have a chance to obtain any legal advice about it. Because [Mr Wang’s wife], [Mr Li] and [Ms Shi] were all present, we were all at the airport and I did not want to embarrass [Mr Wang] I signed the document … When I signed this document, I did so under the mistaken belief that I had a personal obligation to repay the capital [Mr Wang] had contributed to GR Capital.”

Thus, Mr Liu did not contend that the 11 December 2015 Document did not impose any obligation on him by reason of the fact that its signature block made parenthetical reference to Ms Wang, Ms Liu, Ms Shi and Mr Kai Li, or by reason of the fact that those persons had not signed the document.
The mistake under which Mr Liu contends he laboured was not that the 11 December 2015 Document was binding, despite not having been signed by Ms Wang, Ms Liu, Ms Shi or Mr Kai Li. Rather the alleged mistake was that he hitherto had had a personal obligation to “repay the capital” that Mr Wang “had contributed to GR Capital”. But Mr Liu was not mistaken. By reason of his execution of the 25 May 2015 Document he had assumed such a personal obligation. That was the whole point of the 25 May 2015 Document.
In any event, Mr Liu had now signed the 11 December 2015 Document which, according to its terms, clearly imposed on him a personal obligation to pay $7 million to Mr Wang by 15 January 2016. If it is true that Mr Liu “did not get a proper chance” to read the document before he signed it, that is irrelevant. He does not seek to set aside the agreement constituted by the 11 December 2015 Document. Assuming, as I must, that Chinese law is the same as Australian law, having signed the document, knowing (as he must have) that it contained contractual terms, Mr Liu is bound by those terms, whether or not he read the document before signing it. [27]
27. Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [57] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

The 13 April 2016 Document

Although the 11 December 2015 Document required Mr Liu to pay Mr Wang $7 million by 15 January 2016, Mr Liu made no payments to Mr Wang between January and April 2016.
In April 2016, Mr Liu again met Mr Wang and Mr Li in Beijing.
Mr Wang deposed, and I accept, that he had this conversation with Mr Liu on 13 April 2016:

“[Mr Liu]:   I need additional time to make payment without penalty interest.
[Mr Wang]:    I will agree to this but it is conditional upon payment by the revised date of 31 May 2016. If you keep to your promise that you will repay everything by 31 May 2016, I will charge only 2% interest and won’t charge the 0.1% per day penalty interest for the period from 15 January 2016 to 31 May 2016. I’ll only apply penalty interest from 31 May 2016. But if you don’t pay by 31 May 2016, I’ll be entitled to charge penalty interest back to 15 January 2016.
[Mr Liu]:   Ok. I promise that I will be able to meet the new deadline.”

Mr Liu’s account of this conversation was as follows:

“[Mr Liu]   I have started returning your original investment, but I need more time. It took you 3 years to pay your original investment. I cannot return it overnight. I don’t know how long it will take to repay it, but I will repay it.
[Mr Wang]:   I need you to pay it by 31 May 2016 with an extra 2% per month in interest. If you pay it by then, I will not charge you penalty interest of 0.1%.
[Mr Liu]:    I will try to return your capital by 31 May but I can’t pay interest.
[Mr Wang]:    That will be a good start. Return the capital by then and we’ll discuss the interest again.”

I see no significant difference between the accounts given by Mr Wang and Mr Liu of the conversation. On Mr Liu’s own account of the conversation, he acknowledged his obligation to Mr Wang and agreed to pay “your capital” by 31 May 2016.
Mr Wang, Mr Liu and Mr Li then signed the 13 April 2016 Document.
To repeat,[28] the 13 April 2016 Document described the parties as follows:

“Party A: Ruifa WANG (Yang WANG)
Party B: Wensheng LIU (Lan LIU)
Party C: Xiguo LI (Xiuju SHI, Kai LI)”.
28. See [6] above.

The signature block on the document described the parties in the same way and, like the opening description of the parties, described the parties as being Mr Wang, Mr Liu and Mr Li and referred, parenthetically to their “representatives” Ms Wang, Ms Liu and Ms Shi; and also, for some reason Mr Kai Li.

Once again, for reasons unexplained in terms in the evidence and unexplored in cross-examination, the parties adopted this drafting device.
As with the 25 May 2015 Document, Mr Liu pleaded in his Cross-Claim List Statement that because the persons referred to parenthetically in the signature block of the 13 April 2016 Document (Ms Wang, Ms Liu, Ms Shi and Mr Kai Li) had not signed the document it did not take effect as an agreement.
Mr Liu pleaded:

“25. On the true construction of the 2016 Document:
(a)   it only became valid on the joint signatures of the three shareholders of the Company or their representatives;
(b)    alternatively, it only became valid on the joint signatures of each of the persons named as Party A, Party B and Party C or their representatives.
26. The 2016 Document:
(a)    was not signed by Ms Wang;
(b)    was not signed by [Mr Wang] as a principal;
(c)   was not signed by Mrs Shi;
(d)    was not signed by Mr Li as a principal;
(e)   was not signed by Ms Liu; and
(f)    was not signed by [Mr Liu] as a principal and [Mr Liu] was not and had no authority to sign the document as a representative of Ms Liu.”

Like the 11 December 2015 Document, the 13 April 2016 Document was signed only by Mr Wang, Mr Liu and Mr Li. Further, like the 11 December 2015 Document, the original Chinese language version made provision only for three signatures, those of Mr Wang, Mr Liu and Mr Li, thus:

This suggests that it was the intention of Mr Wang, Mr Liu and Mr Li that the 13 April 2016 Document was an agreement between them only, that it became binding on them once their signatures were appended, and without Ms Wang, Ms Liu, Ms Shi and let alone Mr Kai Li also signing.
Immediately after describing the parties in the manner I have set out, the document read:

“After re-negotiation among the above three parties, the matter [of] the delayed repayment of investment loans to be made from Party B and his Australian company to Party A is determined as follows”. (Emphasis added.)

The “re-negotiation” referred to was obviously the conversation I have set out at [173] and [174] above between Mr Wang and Mr Liu in which, on his own version of it, Mr Liu acknowledged his obligation to Mr Wang and agreed to pay the “capital” by 31 May 2016.
The reference to the “above three parties” should be construed as a reference to those of the persons referred to “above” as had participated in the “re-negotiation”: Mr Wang, Mr Liu and Mr Li.
In Article 1, under the heading “Reason and original agreement terms” the document provided:

“1) Party A invested fund[s] to Party B in May 2011, and established [GR Capital] jointly with Party C and made [WDL International], established by Part[y] B and Party C and their family members in Australia, a subsidiary of GR Capital. In GR Capital Party A invested AUD$7 million … (Party B have received all these funds), and held 35% shares of [GR Capital] and its subsidiary [WDL International] …
2) The three parties signed a resolution of the board of directors on 19 March 2015, and unanimously made agreement in relation to the conclusions and settlement of the parties’ first successfully developed project since the cooperation, and also the separate cooperative operation in the next step. One of the agreed matters was that Party B, Wensheng LIU, was willing to transfer [a unit in the Car Park Site development] to Ruifa WANG and Xiguo LI … The early-stage land purchasing fund of this project [development of the Petrol Station Site] would be paid by Party A and Party C from their principals and dividends received after the settlement of [the development of the Petrol Station Site]”. (Emphasis added.)

On the proper construction of the document, the reference to the “three parties” that signed the 19 March 2015 resolution must be a reference to the “above three parties” referred to in the opening words of the document, and thus, again, to Mr Wang, Mr Liu and Mr Li. Mr Wang, Mr Liu and Mr Li did sign the 19 March 2015 resolution. Ms Wang, Ms Liu, Ms Shi and Mr Kai Li also signed that document. But the words used in the 13 April 2016 Document make clear that, here, the reference is only to Mr Wang, Mr Liu and Mr Li.
Further, in Article 1(2), there is, in the passage I have emphasised, a specific reference to “Party B, Wensheng LIU”. This bespeaks the parties’ intention that “Party B” was Mr Liu alone and not Mr and Ms Liu. This also shows that the parenthetical reference to Ms Wang, Ms Liu, Ms Shi and Mr Kai Li in the opening recitation of the parties and in the signature block, was not intended by those that signed the document, Mr Wang, Mr Liu and Li, to render Ms Wang, Ms Liu, Ms Shi or Mr Kai Li parties to the agreement.
Then, after setting out some details concerning the proposed development of the Petrol Station Site, Article 1 continued:

“2) … However, because Party B considered the interests and some other issues and objected Party A and Party C to operate of this project, disputes therefore arose. As a result, Party A proposed to withdraw from the cooperation. The three parties reached an agreement on 25 May 2015 to agree Party A to withdraw all of its 35% shares in [GR Capital] and its subsidiary [WDL International]. The original investment amount was changed to a loan, therefore, Party B should be fully responsible for returning to Party A a total investment amount of AUD$7.2 million, which was invested to [GR Capital] and its subsidiary [WDL International] by Party A, and also its interest compensation during the investment period. Party A would recover the original investment funds and compensations for interest. The original company should be operated by Party B and Party C. Party C should be responsible for the Party A’s fund security and provide guarantee on repayment.
3) The three parties signed an agreement on 25 May 2015, which confirmed that the date of returning the investment amount totalling AUD$7.2 million to Party A would be 1 June 2015 …
…

It’s also stipulated in the agreement that Party A would no longer participate in the profit distribution of [GR Capital] and its subsidiary [WDL International] after withdrawing from the cooperation company, and the compensation to Party A’s investment should be paid in the way of interest by Party B and Party B and Party C’s joint venture company in Australia. This amount should be calculated at a fixed amount of 2% per month based on the actual receiving time of Party A’s investment funds, and based on this principle, the parties will entered into a separate repayment agreement to stipulate the total amount of compensation and the method of payment.” (Emphasis added.)

In the passage I have emphasised, the parties recite the agreement reached in the conversation between Mr Wang and Mr Liu in May 2015 that I have set out at [110] above.
The latter part of Article 1(3) recorded the parties’ agreement that “Party A”, that is Mr Wang, would “no longer participate in the profit distribution” of GR Capital. I do not find that provision to be inconsistent with the construction of the 13 April 2016 Document as an agreement by Mr Liu to pay a debt to Mr Wang. The evidence I have set out above shows that in May 2015, Mr Liu and Mr Wang agreed that, as between themselves, Mr Wang’s investment in GR Capital should be treated as a debt due by Mr Liu to Mr Wang. That is consistent with the fact that all of the payments that Mr Wang made, except for the last two, were made by him directly to Mr Liu. It was the corollary of that agreement that Mr Wang would cease to be involved in GR Capital or to receive any benefit from it.
The parties then recorded, in Article 2, under the heading “Execution process of the agreement”, what had occurred since 25 May 2015:

“1) After the repayment date 1 August 2015, Party B failed to repay AUD$5 million to Party A, failed to repay AUD$2 million due on 31 December 2015 to Party A … In addition, for the delayed repayment of funds, Party B only paid the compensation fees for fund use for four months (4 months * 14,000/month). As of 31 March 2016, there is six months’ compensation fees remain unpaid.
2) While Party A urged the repayment in the past few months, Party A, Party B and Party C signed an agreement on 11 December 2015, in which Party B promised to pay the principal of AUD$7 million to Party A or Party A’s designated account before 15 January 2016, and at the same time to pay the unpaid compensation fees for the use of fund arising from deferred repayment to Party A.”

The reference to “compensation”, that is interest, being calculated at “14,000” per month is a mistranslation. As set out in the passage at [190], the agreed interest rate was 2% per month (reflecting the conversation at [173] and [174] above). The reference should be to “$140,000 per month”. [29] Mr Liu’s translation of this document referred to “0.14 million”.
29. $7 million x 2% = $140,000.
The parties thus recited, accurately, the events I have set out above. The references here to “Party A”, “Party B” and “Party C” can only be to Mr Wang, Mr Liu and Mr Li as only those three men participated in the acts described; particularly the signing of the 11 December 2015 Document.
The operative part of the 13 April 2016 Document is contained in Article 3, which is headed “Repayment agreement” and which provided:

“(1) Under this situation, the three parties negotiated according to the terms of the agreement, and once again listened to Party B’s arrangements for the project, the use of funds and repayment. Party B promised to pay the principal of AUD$7 million to Party A or Party A’s designated account before 31 May 2016, and pay outstanding compensation fee for the use of fund[s] arising from [the] deferred repayment to Party A. Party A will no longer pursue the penalties about delayed repayment as stipulated in the original agreement …
(3) The three parties confirmed that, after Party A withdrew from the joint venture company and received the investment principal, the investment returns to Party A would be made in the way of interest according to the period of using the funds, to be paid by Party B and the joint venture company of Party B and Party C in Australia. Since Party C fully guaranteed the investment funds of Party A, the proportion of undertaking this compensation fees for the use of funds should be negotiated between Party B and Party C themselves.” (Emphasis added.)

Again, the “three parties” referred to must be those that “negotiated according to the terms of the agreement”. “Party A”, “Party B” and “Party C” can only be Mr Wang, Mr Liu and Mr Li as only they participated in the negotiations described.
Article 3(1) obliged “Party B”, that is Mr Liu, to pay “Party A”, that is Mr Wang, $7 million before 31 May 2016 together with “compensation fee for the use of fund[s] arising from [the] deferred repayment”.
Although this is not stated in terms, I construe the reference to “compensation fee” as meaning the payment of interest at the rate that the parties accurately recited in Article 1(3) as being payable under the 25 May 2015 Document and recited in Article 2(1) as being the “compensation fees” payable: 2% per month.
Article 4(2) provided, relevantly:

“Party B shall repay on time without delay. Party B is still solely and fully responsible for the repayment, which is guaranteed by all assets in Australia controlled by Party B and its family and company. If the loans is not paid off at the agreed repayment date again, Party B shall pay the penalty of 1% of the principal to Party A on a daily basis.”

Article 5(2) provided:

“The date when the investment funds are all returned to Party A is the time when Party A withdraws its equity from [GR Capital] and [WDL International]. Party B may change the register of shareholders at the same time and apply to the registration authority for registration.”

The reference here to “investment funds” must be a reference to the $7 million referred to in Article 3(1). The evident purpose of Article 5(2) was to make clear that once Mr Liu had repaid the $7 million to Mr Wang, Mr Liu was at liberty to alter the records of GR Capital to remove reference to Mr Wang’s “investment” in GR Capital represented by Ms Wang’s shareholding.
Article 5(3) provided:

“This agreement is in triplicate and each of the three shareholders holds one copy. The agreement takes effective after Party A, Party B, and Party C or their representatives sign on it …”.

This clause draws a distinction between the “three shareholders” (who were in fact Ms Wang, Ms Liu and Ms Shi) and “Party A, Party B, and Party C” and again points to the conclusion that the latter descriptor referred only to Mr Wang, Mr Liu and Mr Li.
Overall, taking all these matters into consideration, I think it clear that, on the proper construction of the 13 April 2016 Document, it was intended by Mr Wang, Mr Liu and Mr Li to be an agreement between only them and came into effect as an agreement once each signed it. I do not accept the construction posited by Mr Liu, as set out at [181] above.
For those reasons, my conclusion is that there are only three parties to the 13 April 2016 Document.
In any event, and if it be relevant, Mr Liu did not in his evidence suggest that he understood that it was necessary for anyone other than he, Mr Wang, and Mr Li to sign the 13 April 2016 Document before it became binding.
As he said in relation to the 25 May 2015 Document, he also said in relation to the 13 April 2016 Document that:

“When I had the conversation on 13 April 2016 [set out at [173] and [174] above] and when I signed the [13 April 2016 Document], I did not have the benefit of legal advice and I believed I had a personal obligation to return the capital contributed by [Mr Wang] to GR Capital.”

Again, the mistake that Mr Liu asserted was as to whether he, rather that GR Capital, was obliged to return Mr Wang’s investment in GR Capital and executed the 13 April 2016 Document labouring under that mistake. As I said in relation to the 25 May 2015 Document, it is necessarily implicit in that assertion that the 13 April 2016 Document binds him.
In closing submissions, Mr Insall accepted that if what I have said at [206] were the correct conclusion, the claim hitherto made on behalf of Mr Liu, that the 13 April 2016 Document failed to take effect for want of consideration, could not be sustained. [30]
30. T141.28.

The payments made by Mr Wang following his execution of the 13 April 2016 Document

Mr Liu agreed that, following his execution of the 13 April 2016 Document, he made the following payments in cash to Mr Wang:

Date

Amount

07/06/2016

$440,000.00

28/06/2016

$1,000,000.00

08/07/2016

$1,000,000.00

04/11/2016

$100,000.00

02/12/2016

$100,000.00

27/04/2017

$300,000.00

01/05/2017

$200,000.00

05/05/2017

$800,000.00

08/05/2017

$700,000.00

14/11/2017

$828,000.00

15/11/2017

$200,00.00

In his Cross-Claim List Statement, Mr Liu alleged that he made those payments “in the mistaken belief that the [13 April 2016 Document] gave rise to binding obligations on [Mr Liu] to make payments to [Mr Wang]”.
But, for the reasons I have set out, there was no mistake. Mr Liu was bound to make those payments. Rather than evidencing a mistake by Mr Liu, they represent post-contractual conduct pointing unmistakably to the existence of an anterior binding agreement.

The 12 November 2017 “acknowledgment”

Mr Wang and Mr Li gave evidence that on 12 November 2017 Mr Liu signed a document in which he acknowledged his debt to Mr Wang.
Mr Liu denied that he signed the document and, in effect, alleged that what appeared to be the writing of his name on the document was a forgery.
In view of my conclusions as to the 13 April 2016 Document, it is not necessary for me to resolve this dispute.
This document constituted a table which was followed by an “Explanation”.
The table was headed “Statistical proof of Australian Wensheng LIU’s debts (repayment of principal and interest)” and was in the following form (with each figure representing $10,000):

The “Explanation” set out at the foot of the table read as follows (with the hand written addition made by Mr Wang in italics):

“1.   [On] 30 May 2015, the two parties signed an agreement to convert Ruifa Wang’s investment fund in the amount of $7 million AUD to a loan borrowed by Wensheng Liu in the amount of $7 million, with the term of loan for half year.
As of 30 October 2017, a total of $3.21 million interest had been incurred. So far $5.2 million has been repaid, including $3.5 million principal repayment and $1.7 million interest repayment.
2.    At present, Wensheng LIU still owes Ruifa WANG the principal of 3.5 million RMB and interest of $1.51 million, totalling $5.01 million.
3.    During over two years since signing the loan agreement, Wensheng LIU has repeatedly postponed the repayment due date and promised to pay the penalty if failed to repay on time.
4.    The above repayment record is not made in accordance with the usual practice of repaying any interest before the principal, but in a way of repaying principal as well as interest. Compound interest and penalty have not been counted.
(…It does not include a suite of real property allocated to Yang WANG previously [valued] at $800,000 AUD. A total of $5.2 million AUD has been repaid. The above information is true and accurate.)”

Whether or not Mr Liu signed this document, he agreed that in November 2017 he had a meeting with Mr Wang and Mr Li in which a document “like” the “acknowledgment” was given to him.
Mr Liu said he had this conversation with Mr Wang:

“[Mr Wang]:   I want you to sign this Statistical Summary [while handing me an unsigned copy of a document resembling the document annexed to [Mr Wang’s] Affidavit as Annexure B] to record how much you have repaid and how much you still have to pay.
[Mr Liu]:   I need to review the amounts. I don’t have the information with me but, in any event, I can’t repay you the amounts you want until I sell Airlie Beach. [31]
[Mr Wang]:   I am happy to wait until you sell Airlie Beach to pay the balance, but I want you to sign this summary to acknowledge what you owe.
[Mr Liu]:   I am not going to sign this. I want you to confirm in an agreement that you will wait until the sale of the Airlie Beach property before seeking repayment of the balance.
[Mr Wang]:   Okay.” (Emphasis added.)
31. A reference to one of the investments that Mr Liu had discussed with Mr Wang and Mr Li.

The emphasised passages show that, on his own account of it, Mr Liu acknowledged that he owed Mr Wang “the amounts you want”. His point was, he said, that Mr Wang should wait for the sale of the Airlie Beach property “before seeking repayment of the balance”.

Was the 13 April 2016 Document void for uncertainty?

Mr Insall contended that the 13 April 2016 Document was, nonetheless, void for uncertainty because of what he submitted was a tension between the provisions in Article 5(2) and Article 3(1).
As I have set out above, I see no tension between these provisions.
Article 3(1) was directed to implementing the agreement that Mr Liu had entered into with Mr Wang in May 2015 to pay, as a debt between he and Mr Wang, the amount of Mr Wang’s investment in GR Capital. Article 5(2) is directed to the different question of the changes that Mr Liu could make to the “register of shareholders” once he had discharged his personal obligation to pay Mr Wang the $7 million.
Mr Insall also submitted that there was uncertainty as to what was meant by the reference in Article 3(1) to the payment of an “outstanding compensation fee for the use of fund[s]”.
As I have set out above, in my opinion, on the proper construction of the 13 April 2016 Document, the “compensation” payable was the amount of 2% per month referred to earlier in the document.

The cross-claim

By the cross-claim, Mr Liu contends that the money he paid Mr Wang was paid under a mistake of fact or law.
The mistake alleged is Mr Liu’s alleged “mistaken belief” that the 13 April 2016 Document “gave rise to binding obligations” on Mr Liu to make the payments to Mr Wang.
For the reasons I have set out, there was no mistake. The cross-claim must fail for that reason.

Conclusion

For these reasons, Mr Wang’s claim against Mr Liu succeeds. Mr Liu’s cross-claim should be dismissed.
The parties should bring in short minutes to give effect to these reasons. The parties should also provide any submissions as to the matter at [47] above.

**********

Endnotes

Decision last updated: 20 September 2021

Medium Neutral Citation:	Wang v Liu; Liu v Wang [2021] NSWSC 1193
Hearing dates:	23-25 and 27 August 2021, further written submissions 31 August and 1 September 2021
Date of orders:	20 September 2021
Decision date:	20 September 2021
Jurisdiction:	Equity - Technology and Construction List
Before:	Stevenson J
Decision:	Plaintiff entitled to judgment against the defendant. Cross-claim to be dismissed
Catchwords:	CONTRACT – proper construction – whether document executed by the parties in the Chinese language constituted a binding promise by the defendant to repay the plaintiff as a debt money that plaintiff paid the defendant to invest in a company that the defendant stated would develop property in Sydney – whether the document did not come into effect as an agreement because not all persons alleged to be parties to it executed the document – whether any contract evidenced by the document was void for uncertainty – where plaintiff paid large sums to the defendant for the purpose of investment in the company – where defendant had in turn paid large sums to the plaintiff in purported repayment of the funds advanced RESTITUTION – where defendant contended he executed the document under the mistaken belief that it was enforceable – where defendant sought to recover the payments he made to the plaintiff on that basis
Legislation Cited:	Corporations Act 2001 (Cth)
Cases Cited:	Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
Texts Cited:	J D Heydon, Heydon on Contract (2019, Thomson Reuters) M Davies, A S Bell, P L G Brereton and M Douglas, Nygh’s Conflict of Laws in Australia (10th ed, 2020, Lexis Nexis Butterworths)
Category:	Principal judgment
Parties:	Ruifa Wang (Plaintiff/Cross-Defendant) Wensheng Liu (Defendant/Cross-Claimant)
Representation:	Counsel: D Cook SC with J D Little (Plaintiff/Cross-Defendant) H K Insall SC (Defendant/Cross-Claimant) Solicitors: Lin Tang & Co Lawyers (Plaintiff/Cross-Defendant) Hugh & Associates Lawyers (Defendant/Cross-Claimant)
File Number(s):	2018/375643

Date	Amount
07/06/2016	$440,000.00
28/06/2016	$1,000,000.00
08/07/2016	$1,000,000.00
04/11/2016	$100,000.00
02/12/2016	$100,000.00
27/04/2017	$300,000.00
01/05/2017	$200,000.00
05/05/2017	$800,000.00
08/05/2017	$700,000.00
14/11/2017	$828,000.00
15/11/2017	$200,00.00