Wu v Yu; Yu v Wu

Case [2019] QCA 175

SUPREME COURT OF QUEENSLAND

CITATION:

Wu & Anor v Yu; Yu v Wu [2019] QCA 175

PARTIES:

In Appeal No 9479 of 2018:

XINGANG WU
(first appellant)
YANYAN GAO
(second appellant)
v
HONGBO YU
(respondent)

In Appeal No 10252 of 2018:

HONGBO YU
(appellant)
v
XINGANG WU
(respondent)

FILE NO/S:

Appeal No 9479 of 2018
Appeal No 10252 of 2018
DC No 826 of 2017

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Brisbane – [2018] QDC 169 (Richards DCJ)

DELIVERED ON:

6 September 2019

DELIVERED AT:

Brisbane

HEARING DATE:

22 February 2019

JUDGES:

Morrison and McMurdo JJA and Burns J

ORDERS:

In Appeal No 9479 of 2018:

1.   Appeal dismissed.

2.   Order that the appellants pay to the respondent his costs of the appeal.

In Appeal No 10252 of 2018:

1.   Appeal allowed.

2.   Set aside the order made in paragraph 1 of the orders made on 24 August 2018.

3.   Set aside the order made in paragraph 1 of the orders made on 17 October 2018.

4.   Order that the disputed amount held from the sale of the house at 14 Gagarra Street, Eight Mile Plains, together with accretions, be paid to the appellant.

5.   Set aside order number 1 of the orders made on 9 November 2018.

6.   Order that the respondent pay to the appellant his costs of the claim.

7.   Order that the respondent pay to the appellant his costs of the appeal.

CATCHWORDS:

REAL PROPERTY – TORRENS TITLE – UNREGISTERED INTERESTS – EQUITABLE ESTATES AND INTERESTS – OTHER MATTERS – where the respondent successfully claimed at first instance an unregistered equitable interest in a property of which the appellant was the registered owner – where the funds used to purchase the property came from a foreign company of which the parties were the exclusive shareholders – where the respondent submits that those funds belonged to him in a 60 per cent share and therefore he has the same percentage interest in the property on the basis of an express trust, proprietary estoppel, or a constructive trust – where the appellant submits that those funds belonged to him exclusively and therefore the respondent has no interest in the property – where there was fault or lack of disclosure on both sides, and neither side’s witnesses were assessed as clearly more credible than the other side’s witnesses – where there was some evidence about the acquisition, occupation and mortgaging of the property, and the distribution of funds by the company – whether there was sufficient evidence to overcome the presumption that the appellant had an exclusive interest in the property, as its registered owner – whether the trial judge’s decision to accept the respondent’s claim for a share of the property lacked a proper evidentiary foundation

APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – FUNCTIONS OF APPELLATE COURT – WHERE CONFLICT OF EVIDENCE – where the respondent successfully claimed at first instance…

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Details
AGLC
Wu v Yu; Yu v Wu [2019] QCA 175
Case
[2019] QCA 175
Decision Date

CaseChat Overview and Summary

The appeals involved a dispute between Mr Wu and Mr Yu, who were the sole shareholders of a company, over an equitable interest in a property owned by Mr Wu. Mr Yu claimed an interest in the property based on an express trust, proprietary estoppel, or a constructive trust, while Mr Wu argued that the funds used to purchase the property belonged to him exclusively. The trial judge had found in favour of Mr Yu, but Mr Wu appealed this decision. The court was required to decide whether there was sufficient evidence to overcome the presumption that Mr Wu had an exclusive interest in the property, as its registered owner, and whether the trial judge’s decision to accept Mr Yu’s claim for a share of the property lacked a proper evidentiary foundation.

The court found that there was no clear and convincing evidence that the funds used to purchase the property belonged to Mr Yu, and that the trial judge’s decision was not supported by the evidence. The court noted that there was some evidence about the acquisition, occupation, and mortgaging of the property, and the distribution of funds by the company, but there was a lack of documentation and conflicting evidence from both parties. The court also found that there was insufficient evidence to support a claim based on proprietary estoppel or a constructive trust. The court concluded that the trial judge’s decision to accept Mr Yu’s claim for a share of the property lacked a proper evidentiary foundation.

The court dismissed Mr Wu’s appeal and ordered him to pay Mr Yu’s costs of the appeal. The court also allowed Mr Yu’s appeal and set aside the orders made in favour of Mr Wu. The court ordered that the disputed amount held from the sale of the house be paid to Mr Wu, together with accretions, and that Mr Yu pay Mr Wu’s costs of the claim and appeal.

Orders

Orders of the court

In Appeal No 9479 of 2018:

1. Appeal dismissed.

2. Order that the appellants pay to the respondent his costs of the appeal.

In Appeal No 10252 of 2018:

1. Appeal allowed.

2. Set aside the order made in paragraph 1 of the orders made on 24 August 2018.

3. Set aside the order made in paragraph 1 of the orders made on 17 October 2018.

4. Order that the disputed amount held from the sale of the house at 14 Gagarra Street, Eight Mile Plains, together with accretions, be paid to the appellant.

5. Set aside order number 1 of the orders made on 9 November 2018.

6. Order that the respondent pay to the appellant his costs of the claim.

7. Order that the respondent pay to the appellant his costs of the appeal.

Background

Background to the litigation

Consequently, the trial judge had to assess these claims and counterclaims by considering, in the context of some facts which were or ought to have been uncontroversial, which version of events was the more probable. I go then to those facts, before considering the claim in respect of the house and then the counterclaim for monies owing.Uncontroversial facts Mr Wu and Mr Yu met when they worked together in the mid 1990’s for a state-owned company in China. In 2000, they and others established a company which became known as Qingdao Lianchuan Shipping Services Company Pty Ltd (“Bright Shipping”), but to which the parties referred as Pan Union. By 2004, Mr Wu and Mr Yu had become the only shareholders of Pan Union, Mr Yu holding an 80 per cent interest and Mr Wu holding the balance of the shares. Mr Yu was then the “legal representative” and the chairman of the board, and Mr Wu was the general manager of the company. In December 2006, the two men bought a company called Bright Shipping. They became its only directors and shareholders. Mr Yu held 40 per cent of the shares and Mr Wu held the remaining 60 per cent. In April 2008, Pan Union sold its 25 per cent interest in a company called Qingdao Hailufeng International Logistics Co Ltd to a Korean company which already held the other shares, for which the Korean company paid Pan Union USD 2 million. There was in evidence a contemporaneous record of the payment of USD 1,199,995 by the purchaser to Pan Union, as reported to a relevant agency in China on 7 July 2008. It was part of Mr Yu’s case that his 80 per cent interest in these funds (through his shareholding in Pan Union) was the ultimate source of the funds which he used to purchase the property at Gagarra Street in 2010. The evidence contained some documents which were contemporaneous records of payments between Pan Union and Bright Shipping in late 2008, but they did not present a complete picture. The documents evidenced the following payments:·USD 670,000 transferred by Pan Union to Bright Shipping on 6 November 2008;·USD 610,000 transferred by Pan Union to Bright Shipping on 11 November 2008;·USD 2 million transferred by Bright Shipping to Pan Union on 18 December 2008;·USD 851,000 transferred by Pan Union to Bright Shipping on 23 December 2008;·USD 674,000 transferred by Pan Union to Bright Shipping on 25 December 2008. There was evidence of property dealings in China in which the parties had been involved. But again the picture was incomplete, and it could not be concluded that any of the funds used to purchase Gagarra Street had been derived from these dealings. They included the purchase of houses in 2006, which were next or near to each other, one of which was purchased by Ms Zhao and the other by Ms Gao. Both properties were mortgaged. The trial judge found that by the time the two men became the sole shareholders of Pan Union, it appeared that their lives and the lives of their families were “enmeshed” and that there was evidently “a high degree of trust between the two men.”[7][7]Ibid at [8].

Evidence

Evidence Before The Court

In that way the case for Mr Yu went as far as alleging that, in the hands of Bright Shipping, there were funds to which he was entitled and that the money used to purchase Gagarra Street could be seen to have been derived from those funds. Part of that case was that Bright Shipping really had no business of its own, and was used by its owners simply to hold monies, in various accounts, for each of them. That last mentioned element in Mr Yu’s case was disputed by Mr Wu, by reference to the documents which appeared to evidence some business undertaking by that company.The evidence about the acquisition and occupation of the property Mr Wu and Mr Yu gave evidence which, in each case, was broadly consistent with their pleaded cases. The trial judge had to consider the relative probabilities of the two versions against the evidence of Mr Lam and Mr Fung and some limited evidence as to the circumstances in which the two families lived in this property from 2010 until 2014. Mr Lam was a real estate agent conducting business from an office at Sunnybank. He testified that both men came to his office in March 2010, indicating “that they … decide[d] to acquire a house either in Robertson, Sunnybank or Eight Mile Plains”, and that “they have acquired a temporary visa which enabled them to purchase existing house.” He showed them a list of properties which they could inspect. Mr Lam gave this evidence, which the trial judge quoted in the Reasons:[20]“[T]hey indicate that they desired a house to a three minimum, or of four bedrooms within two levels and that it would be … a brick … construction or masonry construction, and the size of the … land would be 600 square metres or above and also – it must be a standalone building – house.…I’m very sure from my point of view, they walk in and ask me to show them a number of houses or a number of properties, and also they indicate a number of suburbs in the conversation. So I’m very sure they were looking at more than one.”Mr Lam said that at no stage did either of them say something to the effect that they were looking to buy a house in which both families were to live.[21][20]Reasons at [29].[21]Ibid. After Mr Wu returned to China, Mr Yu inspected Gagarra Street and signed the contract to purchase the house. Mr Lam recalled then receiving a telephone call from Mr Wu from China, in which he was asked to provide a floor plan for Gagarra Street. This was after the contract had been signed but before it had been settled.[22] Mr Lam said that Mr Wu then told him that “the two families intend to stay in that property together because they are friends.”[23] Mr Yu said that Mr Wu had asked for the floor plan because Mr Wu and Ms Gao planned to bring their own furniture and wanted to see how it could be located.[22]Ibid.[23]T5-43. The evidence was an English version of an email sent by Mr Lam to Mr Yu, dated 21 April 2010, attaching a hand drawn floorplan for the property, which was forwarded on to Mr Wu on 26 April 2010.[24] There was also an English version of an email dated 30 April 2010, from Mr Lam to Mr Yu’s email address, but addressed to both men, attaching another floorplan and describing the rooms by reference to what items could be placed within them. Mr Lam there wrote that the ground floor office was big enough for a double bed, all rooms on the first floor could accommodate double beds, the laundry had room for more than one washing machine, a sofa in the lounge room was “best to be angular, near the dining and the supporting wall in the family room”, there was room for a 50 inch television along a certain wall, and the kitchen had particular dimensions such that it could accommodate certain appliances. This email was sent only a few days before the date for settlement, when the contract was unconditional. The content of the email supported Mr Yu’s testimony that Mr Wu was wanting to see a floorplan, so that he would know what furniture and appliances could be accommodated within the house, rather than to consider whether the house should be purchased.[24]AR 229.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Her Honour’s reasoning concluded as follows:“[48] However, in my view, there is evidence from which it can and should be found that the money from Bright Shipping was a distribution paid as a dividend into Yu’s account on behalf of both men for the purchase of the property. Mr Wu says that there was a conversation about buying a house together and his reason for this, namely that they were unsure whether they would stay in Australia and whether they could get a loan are sound. He said in cross-examination that the money was a distribution to buy the house. The fact that there is no documentation is not surprising given the way in which the parties seem to have conducted their business. The defendant says that the detail of the conversations are so sparse that they shouldn’t be accepted and that his recollection should be rejected for that reason, however, given the passage of time it’s not unusual for the discussions to be lacking in detail and in any event this is not the only piece of evidence which the plaintiff relies on as proving a joint endeavour.[49]The conduct of the parties after the purchase of the property support a case of joint endeavour. The fact that Mr Wu looked at other properties in Queensland does not mean that this particular house was not owned jointly. The evidence of Mr Fung is not necessarily consistent with the joint endeavour case however, given the passage of time between the conversation and his evidence in court, I do not place a lot of weight on his recollection.[50]In my view the objective evidence favours the plaintiff’s case and I find that the property was held as a joint endeavour in accord with the respective shareholdings in Bright Shipping.”Consideration of the trial judge’s reasons The submissions for Mr Wu support the reasoning of the trial judge, and need not be detailed here. The submissions for Mr Yu are that the trial judge upheld a case which had not been pleaded and which lacked a proper evidentiary foundation. It is submitted that there was no pleading that the amount of AUD 920,000 transferred from Bright Shipping to Mr Yu’s account was, in part, the money of Mr Wu. That submission cannot be accepted. In paragraph 5A of the statement of claim, it was pleaded that the two men agreed that money would be transferred by Bright Shipping to an account held by Mr Yu, to be used for, amongst other things, the purchase of a house to be held in the shares of 60/40 in Mr Wu’s favour. The submission seems to be that the case was not pleaded as one in which there was a formal resolution to pay that amount to Mr Yu’s account, by way of the distribution of dividends to the two shareholders. Be that as it may, Mr Wu’s case was sufficiently clear: the parties had agreed that this amount would be paid by Bright Shipping to Mr Yu’s account for the purpose of buying a house that would belong to both of them. On that basis, there was a trust attaching to the money in Mr Yu’s account and in turn to the house. The critical question raised on the pleadings was whether the parties had so agreed, or instead had agreed that this would exclusively be Mr Yu’s money.