Wu v Ling

[2017] HCATrans 209

[2017] HCATrans 209

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S143 of 2017

B e t w e e n -

YAN WU

Applicant

and

ALBERT LING

Respondent

Application for special leave to appeal

GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 20 OCTOBER 2017, AT 11.02 AM

Copyright in the High Court of Australia

MR B.A.M. CONNELL:   I appear for the applicant, if your Honours please.  (instructed by PMF Legal)

MR W.G. MUDDLE, SC:  May it please the Court, I appear with MS E.M. PEDEN and MS J. MEE for the respondent.  (instructed by Solomon Tudehope Solicitors)

GAGELER J:   Mr McConnell - Mr Connell, I am sorry.

MR CONNELL:   My family is Irish, your Honour.  Your Honour, this is a most unusual case in that the Court of Appeal’s decision – one would think it was hearing a different case from the one that was heard by the primary judge.  The primary judge made extremely strong findings, both on the question of special disability, finding not merely that the applicant was misled but finding that she was absolutely incapable of managing her affairs.  The specific finding that ‑ ‑ ‑

KEANE J:   Where you do find that she was absolutely incapable of managing her affairs?

MR CONNELL:   At application book 16 to 17, paragraph 65:

unable to see –

At paragraph 101, application book 23:

incapable of protecting her own best interests; namely, her complete inability –

in a “debilitated position”.  At paragraph 106, application book 24:

incapable of protecting her own financial interests –

and, one might add, paragraph 27 at application book 10:

It took quite some time for the defendant to come to her senses –

There was also the reference at paragraph 65, application book 16 to 17, as to her state of mind with things:

spiralling out of control –

and her:

thoroughly unable to see what would have been apparent to a fully informed, objective onlooker –

Those findings are only emphasised when one also comes to the very firm findings that the trial judge made as to the respondent’s knowledge of that.  At application book 23, paragraphs 100, 101 – on the second loan the respondent:

took advantage of the debilitated position of the –

applicant after he had a chance to reflect on the whole situation.

KEANE J:   Yet at page 16, paragraph 64, the primary judge said:

There can be no doubt that Ms Wu is a highly experienced businesswoman who has found significant success in the aged care industry.  She has also built up a property portfolio that is impressive indeed.  I assessed her in the witness box as having a forceful and determined character.  When she entered into the loans with Mr Ling, she was by no means naive with regard to financial matters; quite the contrary.

However, I do consider that, somewhat surprisingly, this experienced businesswoman had been thoroughly duped by a fraudster.

MR CONNELL:   Exactly.  Your Honour, the point that the primary judge makes as to her being an experienced businesswoman is used by his Honour to contrast what happened to her state of mind afterwards.  It is not stated by him to say she could look after herself.  It is rather stated to contrast with what her state of mind came to be after she was enmeshed in the fraud.  Your Honours, we all know what happens in fraud cases.  It is not just with ‑ ‑ ‑

KEANE J:   A fraud in relation to which the other party was in no way a party to.

MR CONNELL:   Yes, your Honour.  But, if I may ask with great respect, rhetorically, so what?  Amadio was the case where the bank ‑ ‑ ‑

KEANE J:   In Amadio, Mr and Mrs Amadio were getting nothing for the guarantee they gave.  In this case, your client actually got the money to fund her pursuit of a business in relation to which she expected a $16 million profit and in relation to which that was the basis on which she told the other side that she was prepared to pay even twice the interest rate he was seeking because she expected the business that she was involved in to be very successful very quickly.  Is this not a case of a party who makes a bad business deal?

MR CONNELL:   No, your Honour.  We say no because of the findings of the primary judge.  Also, your Honour, aside from the fact that – what I was going to say, your Honour, about victims of fraud, they do go live in the cloud.  They are tricked.  It is not merely a matter of them being misinformed as a simple matter of fact – usually.  This is what - when one reads the trial judge’s assessment, who had a chance to see both witnesses in the box over a period of time, something which is to be considered important not just in cases generally but for instance in Kakavas were some things that this Court considered particularly important.  Also, in Louth v Diprose several of the Judges made comment about that.

When you look at it – compare it to the knowledge - Mr Ling’s, the respondent’s knowledge – look at the situation at the fifth loan.  By the fifth loan, the primary judge said he had a positive belief that she was being defrauded and would never see the money.  So was he doing a favour in lending her the money?  I think not.  He knew that she was going to have to sell up something to give it back.

KEANE J:   As to that, the situation is, is it not, that you accept that the capital amount of the loans has to be repaid? 

MR CONNELL:   Yes.  That concession was made in the ‑ ‑ ‑

KEANE J:   Yes.  It is no longer sought to absolve your obligations to repay the capital – the principal?

MR CONNELL:   No, and it has been repaid.

KEANE J:   Was there evidence before the Court that the loans could have been made at a more favourable rate of – or would have been made to your client at a more favourable rate of interest?

MR CONNELL:   No, your Honour.  There was a remarkable lack of interest and that is something that really I should have adverted to specifically in the written submissions because the law is clear – again, as this Court said in Kakavas – that once you find that the weaker party is in a position of special disadvantage the onus goes upon the stronger party to show that they did not take advantage of it.  Now, particularly in a loan case one would think that what one should be seeing is evidence from the lender to show that the rate is justified – for instance, if they are borrowing, what rate are they borrowing at that they have passed on?  There is no evidence of that.

What one simply sees here is – the first loan, one sees a rate of 9 per cent, 11 on default.  The second loan, by the time the primary judge finds that the respondent has worked out what is happening or at least he says knows it or at least is wilfully blind – that is a very strong finding – suddenly the rate jumps up into the 70s and by the third loan it is at 100 per cent a year.

GAGELER J:   What is wrong with Justice Leeming’s paragraph at the bottom of page 53 where his Honour goes through a number of factors?  Are any of those factors incorrect in fact or are they wrong in principle?

MR CONNELL:   Those factors, your Honour, we would say, no.  When one looks at the evidence, Justice Bergin, for instance, does set out the evidence as to the applicant being warned and she sets that out at application book 69 and 70, which was that he said “be careful”.  When one compares that, one might think, fairly anodyne warning which - when you read his evidence which is reproduced by Justice Bergin – appears to be pretty casual – that there is little resemblance to the grave concerns, if not actual knowledge, that the respondent has.  It bears no resemblance whatsoever.

As for the question of legal and accounting advice, all one had on the evidence was that the letter from Meyer Solomon and Co – the solicitors acting for the respondent on the first loan – said you should take your own advice as to the documentation, not as to the Nigerian venture – it is to the documentation.  As to the second loan, there was a solicitor who acted for both parties.  He was not just acting for Mrs [Wu] and it is quite clear when you read it he was acting for both parties.  Again, if one looks at Louth v Diprose there was a solicitor acting for both parties and the Court did not consider that was a reason for denying relief.

Again, the evidence as to the accountant comes out of Justice Bergin’s judgment, that it was apparent that an accountant was involved in some way in formulating the document which the respondent said to the applicant, well, you should send me something in writing as to what you want and told her what his conditions were and she put that down on a piece of paper.  It really was obviously not enough to remove the risk that she was at and to remove her disadvantage.  If anything, it only reinforced it. 

So, your Honour, what was inevitably absolutely claimed to the respondent was that any warning given and any availability to an accountant or solicitor had done absolutely no good at all.  She was at grave risk.  Your Honours, if a lender can get away with an anodyne warning like this, what we will see is – you will see a standard - something printed at the bottom of any loan documentation which I think they have already – “You should get independent advice”.

GAGELER J:   I do not think we are on a slippery slope with this case, Mr Connell.  They are a rather unique set of facts. 

MR CONNELL:   Yes, your Honour.  But, we say, your Honour, on this set of facts, it is plain that the applicant was – as the primary judge found, who had a chance to see the witnesses – he found she was at a special disadvantage.  He found that the respondent did know about it.  The respondent led no evidence to justify the reasons why – to justify the terms of the transactions with extraordinarily high rates of interest and the Court of Appeal did not set aside any of these findings of fact by the judge.

KEANE J:   The transaction seemed to him to be quite risky.

MR CONNELL:   Yes.

KEANE J:   Risky money is usually expensive money.  Business people understand that.

MR CONNELL:   Yes, your Honour, but it begs the question of whether he should have.  Even though the question of - that relief was not sought in respect of the repayment of capital that does not stop one from asking whether he should have refused the loan.  I mean, it used to be the practice of banks if they had a borrower who they knew was foolish in seeking a loan they would say no, we are not lending it to you.  He was not being a Good Samaritan in lending her the money.

KEANE J:   In their own interest, that is right.  Not being Good Samaritans in their own interest.  They were looking after their own interests as was the respondent in this case.

MR CONNELL:   Yes, but he looked after his own interest in a way which meant that he lent her money knowing that she was not going to get it back from this dodgy venture, knowing that she was going to have sell up assets to get it back.  It was a case of asset lending.  Your Honours, aside from anything else, the Court of Appeal should have dealt with the primary judge’s findings on these facts.  It simply ignored them.  It did not say they were wrong.  It simply ignored them.  They are very strong findings.

GAGELER J:   Thank you, Mr Connell.  Mr Muddle, we do not need to hear from you.

In our opinion there are insufficient prospects of success on any appeal to warrant the grant of special leave to appeal.  In those circumstances, an extension of time to lodge the application for special leave to appeal would be futile.  The application is dismissed with costs.

The Court will now adjourn to 10.15 am on Tuesday, 7 November in Canberra.

AT 11.16 AM THE MATTER WAS CONCLUDED