Xie v Moshav Financial Wholesale Pty Ltd
[2025] FCA 250
•26 March 2025
FEDERAL COURT OF AUSTRALIA
Xie v Moshav Financial Wholesale Pty Ltd [2025] FCA 250
File number: NSD 656 of 2021 Judgment of: MARKOVIC J Date of judgment: 26 March 2025 Catchwords: CORPORATIONS – where representative of a holder of an Australian financial services licence (“licensee”) alleged to have contravened provisions in the Corporations Act 2001 (Cth), Australian Securities and Investments Commission Act 2001 (Cth) and/or the Australian Consumer Law – whether licensee liable for conduct of representative – where representative made false and misleading representations and engaged in conduct that was misleading and deceptive – where licensee liable for conduct of representative – orders for damages
CONTRACTS – where representative of licensee alleged to have breached employment agreement and/or fiduciary duties and/or engaged in misleading and deceptive conduct – where representative breached employment agreement and fiduciary duties – orders for damages
Legislation: Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) ss 4, 18, 236
AustralianSecurities and Investments Commission Act 2001 (Cth) ss 12BAA, 12BAB, 12BB, 12DA, 12DB, 12DF, 12GF, 12GH
Corporations Act 2001 (Cth) ss 9, 766C, 769B, 769C, 917A, 917B, 917D, 917E, 917F, 1041E, 1041H, 1041I, 1041N
Federal Court of Australia Act 1976 (Cth) s 51A
Cases cited: ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1
Australian Competition and Consumer Commission v ACM Group Ltd (No 2) [2018] FCA 1115
Australian Competition and Consumer Commission v Woolworths Ltd [2019] FCA 1039
Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208
Australian Securities and Investments Commission v Dover Financial Advisers Pty Ltd [2019] FCA 1932; 140 ACSR 561
Australian Securities and Investments Commission v HCF Life Insurance Company Pty Ltd [2024] FCA 1240
Australian Securities and Investments Commission v Mercer Superannuation (Australia) Ltd [2024] FCA 850
Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 2) (2022) 162 ACSR 1; [2022] FCA 786
Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35
Cascalang v WealthSure Pty Ltd [2015] FCA 761
Combulk Pty Ltd v TNT Management Pty Ltd (1993) 41 FCR 59
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640
Kumova v Davison (No 2) [2023] FCA 1
Latol Pty Ltd v Gersbeck (2015) 303 FLR 298; [2015] NSWSC 1631
Lin v Zheng [2023] NSWCA 174
Pegela Pty Ltd & Ors v National Mutual Life Association of Australasia Ltd [2006] VSC 50
Self Care IP Holdings v Allergan Australia [2023] HCA 8; 97 ALJR 388
Selig v Wealthsure Pty Ltd (2015) 255 CLR 661; [2015] HCA 18
Smith v Leveraged Equities Ltd [2020] WASCA 122
Watson v Foxman (1995) 49 NSWLR 315
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 297 Date of hearing: 4-7 March and 19 April 2024 Counsel for the Plaintiff: Mr M Cleary Solicitor for the Plaintiff: Dong & Partners Counsel for the First Defendant: Ms M Castle and Ms V Chan Solicitor for the First Defendant: Swaab Attorneys Counsel for the Second Defendant: The Second Defendant appeared in person. There was no appearance for the Second Defendant on 19 April 2024. ORDERS
NSD 656 of 2021 BETWEEN: MR XINWEN XIE
Plaintiff
AND: MOSHAV FINANCIAL WHOLESALE PTY LTD
First Defendant
MR JINYANG (RAYMOND) YU
Second Defendant
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
26 MARCH 2025
THE COURT ORDERS THAT:
1.Subject to Order 2 below, by 9 April 2025 the parties are to provide draft short minutes of order for the disposition of the proceeding.
2.In the event that the parties cannot agree on the form of orders or any party wishes to vary the proposed orders as to costs:
(a)by 9 April 2025 they are to inform the Associate to Markovic J of the nature and extent of the disagreement between them or of the proposed variation of the costs orders; and
(b)the proceeding will be listed for case management hearing to allow all outstanding matters in dispute to be determined and for final orders to be made.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MARKOVIC J:
In May 2018 Xinwen Xie, the plaintiff, invested in the Hyperbuild Unit Trust. As a result of making that investment Mr Xie brings this proceeding against Moshav Financial Wholesale Pty Ltd and Raymond Yu as first and second defendants respectively.
Mr Xie claims damages from Mr Yu who he alleges made certain representations to him in relation to his investment into the Hyperbuild Unit Trust. In making those alleged representations, Mr Xie asserts that Mr Yu breached the Corporations Act 2001 (Cth), the AustralianSecurities and Investments Commission Act 2001 (Cth) (ASIC Act) and/or the Australian Consumer Law which is Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL).
At the time of the alleged representations Mr Yu was an employee of Moshav and, it is contended, of AXL Financial Pty Ltd, which was, in turn, an authorised representative of Moshav. Mr Xie alleges that Moshav is responsible for the loss and damage he suffered which was caused by Mr Yu and for the actions taken by Mr Yu as an employee of Moshav or, in the alternative, as a representative of Moshav within the meaning of Pt 7.6 of the Corporations Act.
Moshav has filed a cross-claim against Mr Yu. It contends that Mr Yu was acting as Moshav’s agent in carrying out investor responsibilities, in that capacity he owed fiduciary duties to Moshav and, in the event that Moshav is found liable to Mr Xie, Mr Yu breached those duties and his employment contract with Moshav. As a result Moshav claims that it has suffered loss and damage.
THE PLEADED CASE
Mr Xie relies on a further amended originating process (FAOP) and a further amended statement of claim (FASOC) each filed on 5 March 2024.
As against Mr Yu, Mr Xie alleges that:
(1)in about May 2018 Mr Yu made the following Representations to him:
(a)Oliver Roths, who was at all material times the controller of AXL in the role of Group Chief Risk Assessment Officer, planned for AXL, an authorised representative of Moshav, to acquire 51% of the shares in PLC Financial Solutions Limited through Hyperbuild Pty Ltd as trustee for the Hyperbuild Unit Trust. The board of PLC would then be changed so that AXL could control PLC through a backdoor listing by selling the Hyperbuild operations at a combined value of $60 million to PLC (collectively, Hyperbuild Transaction);
(b)the Hyperbuild Transaction would be complete by the end of 2018;
(c)PLC would raise $100 million in a fund for property development;
(d)upon a new unit holder purchasing 500 units in the Hyperbuild Trust (representing 5%) from Hyperbuild for a consideration of $700,000, the new unit holder would be provided with a 5% shareholding in PLC which would lead to a forecast return of at least 6-8 times on its investment; and
(e)the investment was safe because of:
(i)the financial position and management of the Hyperbuild Trust;
(ii)the Hyperbuild Transaction being sure to be “100% successful” as any outstanding matters were “formalities only”; and
(iii)a guaranteed refund of investment if the Hyperbuild Transaction failed;
(2)on or about 8 May 2018 Mr Xie agreed to borrow $170,000 from Mr Yu to invest in the Hyperbuild Trust;
(3)on or about 9 May 2018 Mr Xie invested $700,000 (which included the sum borrowed from Mr Yu) in the Hyperbuild Trust and signed a unit subscription agreement in relation to that investment (Unit Subscription Agreement);
(4)Mr Xie relied upon the Representations, which he believed on reasonable grounds to be true, in agreeing to invest in the Hyperbuild Trust and in transferring funds and signing the Unit Subscription Agreement. If the Representations had not been made and/or if they had not been misleading or deceptive, Mr Xie would not have agreed to invest in the Hyperbuild Trust, transfer the funds or sign the Unit Subscription Agreement;
(5)on or about 17 May 2018 Mr Roths on behalf of Hyperbuild, and without Mr Xie’s knowledge, transferred $150,000 of Mr Xie’s investment in the Hyperbuild Trust into PLC’s solicitors’ trust account;
(6)on 18 May 2018 three million shares in PLC were allotted to Mr Xie and on 13 July 2018 500 units in the Hyperbuild Trust were allotted to Mr Xie;
(7)on or about 15 June 2018 PLC issued 50 million new shares causing Mr Xie’s shareholding to be significantly diluted;
(8)by 16 August 2018 Mr Xie had repaid the loan from Mr Yu, including accrued interest;
(9)the Hyperbuild Transaction did not complete and contrary to the Representations, Mr Xie’s investment in the Hyperbuild Trust was not refunded to him;
(10)on or about 27 August 2019 Hyperbuild went into external administration; and
(11)on or about 6 October 2020 PLC was removed from the official list of the Australian Securities Exchange.
Mr Xie further alleges that:
(1)the making of all or some of the Representations was conduct in relation to a financial product or financial service, or both, within the meaning of the Corporations Act and the ASIC Act;
(2)all of the Representations were made with respect to future matters within the meaning of s 769C of the Corporations Act, s 12BB of the ASIC Act and/or s 4 of the ACL and, for the purposes of those sections, Mr Xie relies on the presumption that Mr Yu is taken not to have reasonable grounds for making the Representations unless evidence is adduced to the contrary;
(3)the making of each, some or all of the Representations was conduct in this jurisdiction within the meaning of s 1041H of the Corporations Act and s 12DA of the ASIC Act;
(4)the Representations were misleading or deceptive, likely to mislead or deceive or false in a material particular or materially misleading or were misleading representations that an investment in the Hyperbuild Trust was of a particular standard, quality, value or grade, or was conduct liable to mislead the public as to the nature, characteristics, suitability for purpose or quantity of an investment in the Hyperbuild Trust;
(5)in the alternative, the Representations were likely to induce Mr Xie to apply for or acquire a financial product within the meaning of s 1041E of the Corporations Act and Mr Yu did not care, or ought to have known, that they were false in a material particular or materially misleading. Therefore, in making the Representations Mr Yu engaged in conduct in contravention of s 1041E of the Corporations Act;
(6)further or in the alternative, in making the Representations, Mr Yu engaged in conduct in contravention of s 1041H of the Corporations Act by engaging in conduct in relation to a financial product or financial service that was misleading or deceptive or likely to mislead or deceive; and
(7)further or in the alternative, in making the Representations, Mr Yu engaged in conduct in contravention of ss 12DA, 12DB(1)(a) or 12DF of the ASIC Act or s 18 of the ACL.
As against Moshav, Mr Xie alleges that:
(1)Mr Yu’s conduct in making the Representations and contravening s 1041E and/or s 1041H of the Corporations Act was undertaken by Mr Yu as Moshav’s employee, on Moshav’s behalf and within the scope of Mr Yu’s actual or apparent authority and thus is taken, for the purposes of a proceeding under Ch 7 of the Corporations Act, also to have been engaged in by Moshav pursuant to s 769B of that Act. Mr Xie makes the same allegation in respect of the contravention of ss 12DA, 12DB(1)(a) or 12DF of the ASIC Act, relying on s 12GF and s 12GH of that Act; and
(2)further or in the alternative, Moshav was responsible and liable for Mr Yu’s conduct as he was its employee and therefore its representative within the meaning of ss 917B, 917E and 917F of the Corporations Act.
Mr Xie claims damages from Mr Yu pursuant to s 1041I of the Corporations Act, s 12GF of the ASIC Act and/or s 236 of the ACL and, further or in the alternative, seeks an order that Moshav pay compensation or damages pursuant to s 917E and s 917F of the Corporations Act.
Both Mr Yu and Moshav have filed defences in relation to the allegations raised by Mr Xie, albeit the most recent defence filed by Mr Yu (who at the time of the hearing was not legally represented) was dated 3 September 2021 and responded to the statement of claim filed on 6 July 2021. That defence was prepared with the assistance of a barrister. I do not intend to set out the effect of Mr Yu’s and Moshav’s respective defences at this stage.
Consideration of the relief sought by Moshav set out in its cross-claim only arises if Mr Xie is successful in his claim against Moshav. In summary, in its amended notice of cross-claim filed on 19 April 2022 Moshav contends that:
(1)Mr Yu was an employee of Moshav from 18 September 2015 to 31 July 2020 and in the same period was an employee of AXL (or at least performed tasks for AXL at the direction of Mr Roths);
(2)in the course of Mr Yu’s employment with Moshav he was responsible for identifying potential investors willing to invest in mortgage products in Australia and for communicating with potential investors about those financial products (Investor Responsibilities);
(3)by reason of his employment with Moshav and the Investor Responsibilities Mr Yu owed a fiduciary duty to Moshav to:
(a)act in its best interests in his communications with AXL and third parties;
(b)not place himself in a position of conflict;
(c)differentiate any communications he had with AXL and third parties that were in his own capacity from those that were in his capacity as an employee of Moshav; and
(d)act within the scope of his actual or ostensible authority and avoid any personal communications which could give the incorrect impression to a third party that such communications were on behalf of Moshav;
(4)Mr Yu’s contract of employment with Moshav contained certain express and implied terms;
(5)if the Court finds that Moshav is liable to Mr Xie on a cause of action pleaded by him and the cause of action is not apportionable, such that Moshav’s share in the loss and damage is not reduced because it is not found to be a concurrent wrongdoer with others, then Mr Yu is in breach of his fiduciary duties to Moshav and in breach of his contract of employment with Moshav in the ways particularised; and
(6)further and in the alternative, if the Court finds that Mr Yu made the Representations and that Mr Xie has established certain facts pleaded in his statement of claim filed on 6 July 2021 then Mr Yu, in trade or commerce, represented that Moshav was offering an investment opportunity, that representation was misleading or deceptive or likely to mislead or deceive and, in the premises, Mr Yu breached s 18 of the ACL. As a result of that breach, Moshav has suffered loss and damage to the extent of the relief and costs orders which Mr Xie obtains against it in this proceeding.
Mr Yu filed a defence to the amended notice of cross-claim at a time when he was legally represented. Once again, I do not intend to set out the contents of that defence at this stage.
WITNESSES
Mr Xie relied on:
(1)his own evidence. Mr Xie gave his evidence in chief orally and was cross-examined by Moshav’s counsel, in both cases through an interpreter. Although Mr Xie can write and understand everyday conversations in English, he cannot understand complex language or concepts expressed in English. I found Mr Xie to be an honest witness who attempted to assist the Court by giving considered and frank answers to the questions posed;
(2)evidence given by David Stuart Watt, a chartered accountant, accredited forensic accounting specialist and partner of Hall Chadwick. Mr Watt prepared a report in which he assessed the fair market value of 3 million shares in the business and assets of Irich Financial Solutions Limited (formerly PLC). Mr Watt was not cross-examined; and
(3)evidence given by Wenfu Liu, a National Accreditation Authority for Translators and Interpreters (NAATI) certified translator in Chinese languages. Ms Liu translated a series of WeChat messages from Chinese into English. Ms Liu was not cross-examined.
Moshav relied on evidence given by:
(1)Tal Silberman, a director of Moshav. Mr Silberman gave his evidence in chief orally and was cross-examined. Mr Xie submits that I would find Mr Silberman to be an unsatisfactory witness. I do not accept that submission. While there were some aspects of Mr Silberman’s evidence which lacked clarity or required further probing, on balance I found him to be a satisfactory witness; and
(2)Zhuzi Lin, a NAATI certified translator in Chinese languages including Chinese Mandarin. Ms Lin translated a series of documents from Chinese Mandarin to English. She was not cross-examined.
Mr Yu gave evidence in his own case. As Mr Yu was self-represented, rather than give his evidence in chief orally, he relied on an outline of his evidence dated 29 July 2022 which had been prepared pursuant to Orders made on 8 June and 13 July 2022 and notified to Mr Xie and Moshav. Mr Yu had legal assistance at the time of the preparation of his outline of evidence.
Mr Xie filed and served his FAOP and FASOC after Mr Yu had prepared his outline of evidence. By the FAOP and the FASOC Mr Xie alleges, among other things, that the representations made by Mr Yu were made in relation to future matters within the meaning of s 769C of the Corporations Act, s 12BB of the ASIC Act or s 4 of the ACL and that he relies on the statutory presumption that Mr Yu did not have reasonable grounds for making the representations unless Mr Yu adduces evidence to the contrary.
To permit Mr Yu to give evidence relevant to the issues raised by that aspect of the FAOP and the FASOC, counsel for Mr Xie prepared a series of questions designed for that purpose (Additional Questions). The Additional Questions were provided to Mr Yu to consider prior to giving evidence. Mr Yu agreed to proceed with his evidence including by providing answers in the witness box to the Additional Questions. At the hearing I asked each of the Additional Questions and Mr Yu provided answers. Mr Yu was then cross-examined.
Mr Yu was not a satisfactory witness. Although he answered the questions put to him, at times his answers were seemingly intentionally vague and at other times he changed his evidence, either in an attempt to place himself in a better light or to meet what he perceived to be a weakness in his defence.
THE FACTS
Mr Xie
Mr Xie is a Chinese citizen. He graduated from high school in China in 2008. Mr Xie then attended Shandong Finance and Economics University and, upon graduating, came to Australia to further his studies. Between July 2013 and December 2015 Mr Xie undertook post graduate study in accounting at Macquarie University. When Mr Xie completed his studies, he returned to China to visit his family before returning to Australia in March 2016.
Mr Xie presently resides in Australia on a subclass 485 visa. He is sponsored by his current employer, described as a construction materials company, for whom he works as an accountant.
Moshav
Moshav is a fund manager. It raises and lends money for the purpose of investing in real property.
As a fund manager Moshav derives its capital for investment by issuing units in various managed investment schemes. Upon investment in a scheme and once the scheme is fully subscribed Moshav on lends the funds for commercial property transactions and derives income via interest payments. It returns interest to investors in the relevant scheme. The managed investment schemes are typically secured by a registered first or second mortgage over real property or via general security arrangements.
Moshav holds Australian Financial Services Licence (AFSL) no. 439903 (Moshav AFSL). The Moshav AFSL permits Moshav to carry on a financial services business, among other things, to:
(a)provide general financial product advice only, for the following classes of financial products:
…
(iv)interests in managed investment schemes excluding investor directed portfolio services; and
…
(b) deal in a financial product by:
(i)issuing, applying for, acquiring, varying or disposing of a financial product in respect of the following classes of financial products:
(A) interests in managed investment schemes limited to:
(1) own managed investment scheme only; and
(B) securities; and
…
AXL
AXL was registered on 16 December 2014. At the time of AXL’s registration, Derek Errol Ziman and Alexander Harmstorf were its directors. Mr Ziman ceased to be a director on 11 May 2015 and Mr Harmstorf ceased to be a director on 24 March 2016 but was reappointed for two further periods: 12 May 2016 to 13 July 2016: and 20 January 2017 to 30 September 2019. AXL has had various other directors since its registration. Relevantly, Mr Roths was appointed a director of AXL on 10 September 2019 and has, since 25 January 2020, been AXL’s sole director.
One of the shareholders in AXL was A.C.N. 117 688 356 Pty Ltd, a company of which Mr Silberman is sole director, secretary and shareholder. Mr Silberman explained that A.C.N. 117 688 356 was issued the shares in AXL, at no cost to it, as part of the arrangement for AXL to become an authorised representative of Moshav, as explained below.
AXL was an authorised representative under the Moshav AFSL. AXL was issued with a limited authorisation to source investors for Moshav’s funds and for that purpose, on a collaborative basis, Moshav and AXL issued a white label information memorandum to invite investors, via AXL, to invest in one of Moshav’s funds called “premium fund series”. Mr Silberman also described the funds in this series as white label products.
In order to put the authorisation in place, by letter dated 15 July 2015 addressed to AXL (Authorisation Letter), Moshav set out the terms on which it had agreed to appoint AXL as its authorised representative under the Moshav AFSL. The Authorisation Letter relevantly provided:
1 Appointment
1.1[Moshav] agrees to appoint [AXL] as our authorised representative of [Moshav] under the [Moshav AFSL].
1.2[AXL] accepts the appointment as an authorised representative of [Moshav] under the [Moshav AFSL].
2 Authorisations
[Moshav] authorises [AXL] to provide the financial services as our representative under the authorisations in the [Moshav AFSL] set out in Schedule 1
(the Financial Services).
3 Term
The term of the Agreement shall be 3 year [sic] from the date of this Agreement. Renewal of the Agreement shall be for further terms as agreed between the parties.
4 Sub-authorised Representatives
4.1[Moshav] gives its consent and authorises [AXL] to appoint the following natural persons to act as sub-authorised representatives so that they may provide one or more of the Financial Services under the [Moshav AFSL] held by [Moshav] (the Sub-Authorised Representatives):
(a)Alexander Gordon Johann Harmstorf
…
Schedule 1 to the Authorisation Letter was headed “Authorisation of Authorised Representatives” and provided:
Moshav Financial Wholesale Pty Ltd (ACN 163 365 937) appoints AXL Financial Pty Ltd (ACN 603 393 317) to act as its Authorised Representative for the purposes of providing the following financial services:
1
(a)provide general financial product advice only, for the following classes of financial product:
(i)interests in managed investment schemes excluding investor directed portfolio services,
to wholesale clients.
Schedule 2 to the Authorisation Letter was titled “Written Notice to be issued by [AXL] authorising a person to act as a Sub-Authorised Representative of [Moshav]”. Mr Silberman explained that Mr Harmstorf, who he understood was a lawyer who represented Chinese investors looking to invest in Australian funds and who was the person with whom he negotiated in relation to selling the premium fund series, was the only person who signed a letter in accordance with the Authorisation Letter. That is, Mr Harmstorf was the only person AXL appointed as a sub-authorised representative of Moshav.
The information memorandum for the premium fund series was issued by AXL. It set out an investment offer to wholesale investors in two funds, a premium mortgage fund and a high yield mortgage fund and included:
(1)information about Moshav, the trustee and custodian of the funds, including its board of directors. At the time its directors were Mr Silberman and Bao Cheng Luo, the latter of whom was described as an executive director;
(2)information about AXL. The information memorandum noted that AXL is “an authorised representative of [Moshav], and is the Manager of the AXL Financial Premium Fund Series”; and
(3)corporate organisation charts for each of AXL and Moshav.
Mr Silberman says that when AXL applied to be an authorised representative of Moshav, he would have undertaken a company search to identify its directors and shareholders and completed a credit check. He recalls that he undertook a reasonable amount of due diligence including requiring AXL to complete “know your own client” documents. Mr Silberman’s understanding was that AXL’s only business was the sale of the premium fund series products.
At the time that AXL became an authorised representative of Moshav, Mr Harmstorf asked if he could use some of the space in Moshav’s office situated in Double Bay, New South Wales, on a temporary basis. Mr Silberman agreed. Mr Silberman understood that AXL had staff which it temporarily needed to house and Moshav had some capacity to enable what Mr Silberman described as some temporary “hot desking”. The number of AXL staff working from Moshav’s Double Bay office changed but at a maximum it was four to five people. Moshav did not receive any rental or other payment from AXL for the use of its office space.
One of the AXL staff members who worked from Moshav’s Double Bay offices from time to time was Izabela Kwoka, Mr Roths’ wife. Ms Kwoka was a registered auditor and, from time to time, she did some work for Mr Silberman. Occasionally, when Ms Kwoka was in the office, Mr Silberman spoke with her, but his discussions did not relate to AXL’s business.
Mr Silberman was not aware of AXL’s business interests other than its role as an authorised representative of Moshav and was not aware that it was involved in matters outside of that role, for example, property development. At no stage did Mr Silberman have any form of management role in AXL and he was never a director of AXL. In the absence of a specific business need to do so, including for example for the purpose of AXL introducing prospective borrowers to Moshav (see [38] below), he only spoke with Mr Harmstorf on an ad hoc basis and speculated that over a period of six months he probably spoke to Mr Harmstorf three times.
Mr Silberman terminated AXL’s status as an authorised representative of Moshav on about 9 April 2019 because of AXL’s lack of performance. That is, there had been no investors introduced by AXL in its capacity as an authorised representative.
AXL was placed into voluntary administration on 18 August 2021 and into liquidation on 22 September 2021.
Mr Silberman and Mr Roths
Mr Silberman first met Mr Roths in about 2003. He was aware that Mr Roths had a role in AXL between about 2015 and 2019. He did not know exactly what that role involved but believed that Mr Roths had undertaken credit analysis for Mr Harmstorf.
Between about 2015 and 2020 Mr Silberman met with Mr Roths on an ad hoc basis usually in relation to the introduction of potential borrowers from Moshav. Mr Silberman understood that Mr Roths was acting as a finance broker looking to introduce potential borrowers. If there was a particular deal that Mr Roths was seeking to introduce, Mr Silberman might see Mr Roths two to three times per week but otherwise he might not see Mr Roths for several months.
Mr Silberman understood that when Moshav was dealing with Mr Roths, he was acting in his capacity as an agent or employee of one of Mr Harmstorf’s companies, of which there were a number, other than AXL.
Mr Silberman was unaware of the extent of the businesses in which Mr Roths was involved beyond his involvement in introducing clients to Moshav and undertaking some work with Mr Harmstorf on the credit side.
Mr Silberman does not recall when he first became aware of Hyperbuild but he recalls that it was involved in construction on the south coast of New South Wales. He does not recall Hyperbuild ever being the subject of specific discussions between him and Mr Roths, although it was possible that Mr Roths may have sought to introduce Hyperbuild as a potential borrower but no transaction eventuated.
Mr Silberman first heard about the Hyperbuild Transaction when he received a letter from Mr Xie’s solicitors, WB Legal.
Mr Yu
Mr Yu was born in Shandong Province in 1988. He came to Australia in 2008 to attend university.
In 2013 Mr Yu obtained a Bachelor of Accounting from Central Queensland University and in 2014 he obtained a Master of Applied Finance from the University of Western Sydney.
In 2014, after Mr Yu had completed his studies, he joined AusLink Investment and, in early 2015, one of his colleagues introduced him to Mr Harmstorf as “the boss of AXL Legal”. At one stage, while in the employ of AusLink, Mr Yu attended AXL Legal’s offices where he met Mr Roths for the first time.
During 2015 and 2016 Mr Yu developed a friendship with Mr Roths. They would often go out for a drink or a meal. According to Mr Yu, during their discussions Mr Roths told him that he and Mr Silberman were business partners, and their businesses were “50-50” but he did not specify which business. Mr Roths also told Mr Yu that he was preparing to set up AXL so that the AXL brand could expand from legal, at the time there was a business in existence called AXL Legal, to financial.
Mr Yu’s employment with Moshav
In 2015 Mr Yu informed Mr Roths that he needed a new job and an employer sponsor for his visa. Mr Roths later contacted Mr Yu indicating he may have a job opportunity for him and, at the time, mentioned Moshav.
At Mr Roths’ instigation in mid to late 2015 Mr Yu attended a meeting with Messrs Silberman and Roths at the Intercontinental Hotel in Double Bay. Mr Yu recalls that at that meeting he was asked questions about his qualifications and his experience. Mr Silberman recalls that he was introduced to Mr Yu but cannot now recall if Mr Roths was at the initial meeting.
A few days after the meeting referred to in the preceding paragraph, Mr Roths contacted Mr Yu to inform him that he was successful in obtaining a role with Moshav in sales and marketing focussing on the Chinese market. Mr Roths did not “offer” Mr Yu the job at Moshav, he just told Mr Yu that he got the job.
On 18 September 2015 Moshav as “Employer” and Mr Yu as “Employee” entered into an employment agreement (Yu Employment Agreement). The terms of the Yu Employment Agreement relevantly include:
1. ENGAGEMENT
1.1.The Employee is hereby employed by the Employer. The Employee's employment commences on 5 October 2015. The Employee must report for work on 5 October 2015 at 8:30 am at the Employer's premises at 442 New South Head Road Double Bay NSW. The Employee must report to Tal Silberman. In the course of employment the Employee's place of employment may change.
1.2The Employee is employed in the position of Sales and Marketing Manager (ANZSCO 131112).
1.3The Employee's duties and responsibilities (“Duties”) in this position include all the duties and responsibilities that would normally attach to that type of position. The Employer may change these Duties during the course of the Employee's employment after consultation with the Employee.
1.4In addition to the Duties, the Employee is required to fulfill the list of duties and responsibilities set out in Attachment No 1.
…
3.EMPLOYEE’S OBLIGATIONS
3.1The Employee must at all times in the course of the Employee’s employment:-
(a)act honestly and always in the best interests of the Employer;
(b)promptly follow all lawful and proper directions of the Employer in respect to the carrying out of the Duties;
(c)punctually attend each work day at the designated place of work at the times stipulated by the Employer;
(d)carry out all the Duties carefully, responsibly and competently; and
(e)co-operate and assist management and other employees as and when required.
3.2Except with the prior consent of the Employer, the Employee must also use computers, telephones, equipment, machinery and vehicles (“Items”) belonging to the Employer for proper and legitimate purposes of carrying on the Employer’s business and in fulfilling the Duties. The Employee must not use any of the Items for the Employee’s personal benefit without the prior written permission of the Employer.
…
18. CONFIDENTIALITY AND TRUST
18.1During the term of employment the Employee must not work for a competitor of the Employer.
I pause to note that in cross-examination Mr Yu accepted that his Moshav email was part of the equipment that belonged to Moshav and that, pursuant to cl 3.2 of the Yu Employment Agreement, he could only use his Moshav email address with Moshav’s prior consent.
Attachment 1 to the Yu Employment Agreement is headed “Employee’s duties and responsibilities” and includes:
Sales and Marketing Manager ANZSCO Code 131112
Reporting to: This position reports to the Director
Direct Reports: Future Sales Representatives will be reporting to this position
Tasks Include:
1.The Employee is tasked with developing a product distribution channel for Moshav Financial investment products throughout Chinese speaking markets in Australia, Hong Kong and China.
2.His predominant target product range will be the Moshav Financial and AXL Financial Mortgage Fund Series and direct investments into Property investments as facilitated by Moshav.
…
5.The Employee will be required to promote the Moshav and AXL product range through the WeChat application and other popular media/ advertising solutions in accordance with guidelines set by the Directors from time to time.
Mr Yu commenced work at Moshav in about October 2015. His role was to source onshore and offshore Chinese investors to invest in Moshav managed funds. Upon commencing his employment he was trained by Mr Silberman in relation to Moshav’s information memoranda. He was also informed that Moshav held an AFSL, the terms of which were explained to him by Mr Silberman. Mr Yu understood that Moshav was licensed to sell managed investment schemes to wholesale investors but not to retail investors.
During the course of Mr Yu’s employment, Mr Silberman met with Mr Yu to discuss marketing to Chinese investors, both Moshav’s products and the AXL premium fund series. As an employee of Moshav, these were the only products that Mr Yu was authorised to sell.
Mr Yu also came to learn that AXL was an authorised representative of Moshav, he thinks at about the time AXL obtained that status. Mr Yu understood that as authorised representative of Moshav, AXL was limited to selling the products that Moshav was licensed to sell and that it could not go beyond the terms of its authorised representation.
Mr Yu worked at Moshav’s Double Bay office. About four to six weeks after commencing his employment, Mr Yu was given a business card which appeared (both front and back) as follows:
Mr Yu attended Moshav’s office almost every morning. However, as Mr Yu’s role was to introduce investors, Mr Silberman’s preference was for him to be “out seeing clients”, rather than in the office. When Mr Yu was in the office Mr Silberman spoke with him regularly about his work in progress and answered any specific questions Mr Yu may have had in relation to particular investors and day to day business matters.
Apart from sourcing investors for Moshav’s managed investment schemes, which was his principal role, Mr Yu was, as set out above, also able to facilitate investment in the AXL premium fund series that Moshav was trying to sell. However, Mr Yu only worked for Moshav and, given that his 457 visa was sponsored by Moshav, he was not able to work for any other entity. Despite, Mr Yu believed that his 457 visa did not restrict him from incorporating a company and registering for an Australian Business Number, which he did on multiple occasions for the purpose of doing business in Australia.
According to Mr Yu, in late 2015 and early 2016 he often attended AXL’s offices at 1 Market Street, Sydney to meet with Mr Roths. At the time he believed that both Messrs Silberman and Roths were his bosses.
Mr Yu said that at times, although not often, Messrs Yu, Silberman and Roths met to discuss how to market products to Chinese investors. In 2015 Mr Yu was, at Mr Roths’ request, marketing products which were not offered by Moshav. According to Mr Yu he did not do so in a secretive way and, while he cannot clearly recall, he thinks he mentioned what he was doing to Mr Silberman.
Mr Xie meets Mr Yu
In March 2016 Mr Xie returned to Australia to undertake a NAATI course for translation from Mandarin to English in Sydney. It was at that time that Mr Xie first met Mr Yu in the circumstances described below.
Whilst still in China Mr Xie saw a room for rent advertised online. He responded to the advertisement and arranged for rental of the room, dealing at the time with Mr Yu’s then partner. Upon his return to Australia in March 2016 he moved into the room as arranged which was in an apartment located in Epping, New South Wales in which Mr Yu and his then partner lived. Mr Xie continued to lease the room from Mr Yu and his partner until June 2016 (although nothing turns on it, I note that Mr Yu said that he lived in the same apartment as Mr Xie until the end of 2016).
After Mr Xie moved out of the room he sublet from Mr Yu, they continued to keep in touch on WeChat.
Mr Xie works for Hyperbuild and AXL
Mr Xie did not complete the NAATI course and by September 2016 he had commenced working for Anderson Recruitment, a labour hire company. He continued to work for Anderson Recruitment until the end of 2018.
In September 2016 Anderson Recruitment placed Mr Xie at Hyperbuild in the role of assistant accountant, working three to four days per week. In that role, Mr Xie undertook accounting and bookkeeping work for Hyperbuild and AXL. From September 2016 until about April 2017 Mr Xie worked at Hyperbuild/AXL’s office located at New South Head Road, Double Bay, New South Wales and from April 2017 to November 2017 Mr Xie worked at Hyperbuild/AXL’s office located at Shellharbour. In November 2017 Mr Xie returned to China to marry.
I pause here to note that there was scant evidence about Hyperbuild. A company search in evidence before me showed that it was registered on 7 January 1998, was placed into external administration on 4 July 2019 and subsequently into liquidation on 1 September 2021. It was deregistered on 11 August 2023. It is apparent that AXL or what appear to be related companies and companies associated with Mr Roths jointly held parcels of different classes of shares in Hyperbuild.
Mr Xie understood, from his discussions with Mr Yu in the initial months of his employment with Hyperbuild/AXL, that Mr Roths was “the boss” of AXL and Hyperbuild, AXL was a developer, Hyperbuild undertook building projects for AXL and AXL used Moshav’s AFSL to raise funds for its development projects.
In his curriculum vitae Mr Xie describes his duties while working at Hyperbuild/AXL as follows:
•Documenting, reviewing and providing assurance about accuracy and timing of financial transactions by entering account information, creating and updating database and excel spread sheets.
•Applied mathematical abilities on daily basis to calculate and check figures in all areas of accounting systems
•Preparing financial reports, BAS and tax return.
At the time Hyperbuild and AXL used MYOB to record transactions. Mr Xie explained that while he was working there, all moneys in Hyperbuild came from AXL by way of loan. As Hyperbuild was a builder, the loan funds were used to pay its expenses. Hyperbuild did not make any profits prior to finalisation of a project.
Mr Xie knew that AXL had funds available in its accounts. However, he did not know whether AXL ever made a profit and he did not know from where it sourced its income.
As part of Mr Xie’s duties he worked on and did book entries in relation to staff credit cards and staff reimbursement. As a result of that work, Mr Xie knew that AXL reimbursed Mr Yu for his travel costs to China. Mr Xie understood that Mr Yu worked for AXL and Moshav at the same time.
Mr Xie reported to Ms Kwoka who was the chief accountant and, as set out above, Mr Roths’ wife. At the end of each week Mr Xie reported by email to Mr Roths in relation to payment of wages, banking reconciliation, credit card usage and bank statements.
According to Mr Xie, Hyperbuild/AXL shared its Double Bay office with Moshav. At the time that Mr Xie worked from the Double Bay office there were approximately four staff working for Moshav, one of whom was Mr Yu, who he understood worked as a marketing manager for Moshav, and approximately three staff working for Hyperbuild/AXL.
Mr Xie recalls that Mr Roths attended the Double Bay office approximately once per week and that Mr Silberman attended the Double Bay office daily but he rarely spoke to him.
Mr Xie often spoke with Mr Yu when he was in the Double Bay office. There were periods of time when Mr Yu was absent in China sourcing investors for Moshav’s project development, including from September to December 2016. Messrs Xie and Yu had lunch together about once a month when Mr Yu was in the Double Bay office, on some occasions, with other staff members.
Mr Roths asks Mr Yu to market products for AXL
At a time between 2016 and 2018, Mr Yu can no longer recall precisely when, Mr Roths told Mr Yu to market products not offered by or through Moshav to Chinese investors. Mr Yu recalls that at the time Mr Roths said words to the following effect:
AXL has now become a sub-licensee under Moshav. There will be two lines of products. The original Moshav line is less risky but less reward. The new line will be more risky and more reward. I would like you to try to market some of the new products to Chinese investors.
Mr Yu explained that the “new line” referred to by Mr Roths was the premium fund series and, because the return on those products was higher than on the Moshav products, he considered them to be more risky.
At the time Mr Yu understood that it was not Moshav asking him to promote the non-Moshav products. This was because Mr Roths offered him 1% commission on successful investment in those products. Mr Yu did not expect to be paid, and was not paid, a salary (in addition to the 1% commission) by AXL or Mr Roths.
In cross-examination by Ms Castle, counsel for Moshav Mr Yu gave the following evidence about the request by Mr Roths that he market products for AXL to Chinese investors:
Ms Castle:You gave some evidence yesterday about – and it’s in your outline – about Mr Roths saying that now that AXL was an authorised representative, he had in mind two products. Do you remember that evidence?
Mr Yu:Yes.
Ms Castle:One, the Moshav product, which was less risky, and the other products which were more risky?
Mr Yu:Yes.
Ms Castle:Did you understand the more risky products to be part of the authorised representation that AXL had?
Mr Yu:Yes.
Ms Castle:And did Mr Roths tell you what products they were?
Mr Yu:Yes.
Ms Castle:Was it just what we’ve been referring to as the white-label product?
Mr Yu:Yes.
Ms Castle:And if Mr Roths had wanted AXL to invest in, let’s say, a soft drink bottling plant, did you – would you have considered something like that to be under the terms of the authorised representation?
Mr Yu:No.
Ms Castle:What was your understanding of the products that you saw AXL involved in? So which of the products that you saw AXL involved were authorised as part of its representation?
Mr Yu:From my memory, it’s only the white-label premium fund series. That’s the only products being offered by Moshav to AXL to sell.
Ms Castle:And you were aware, were you, that AXL was involved in doing things other than trying to promote that product?
Mr Yu:Yes.
Ms Castle:Is it true to say that it was your understanding that AXL was involved in a number of separate business interests?
Mr Yu:Yes.
Ms Castle:And was it your understanding that the only one that it was doing as a representative of Moshav was the white-label product?
Mr Yu:Yes.
Ms Castle:And so when you were asked by Oliver to promote other products to investors, was it your understanding that you were doing that outside of the authority of the licence?
Mr Yu:Yes.
Ms Castle:And when you accepted an arrangement to receive a one per cent commission in relation to Hyperbuild, was that – you didn’t tell Mr Silberman about that, did you?
Mr Yu:I didn’t tell Silberman.
In about March 2018 Mr Roths arranged an AXL email address for Mr Yu: [email protected]. Mr Yu also had an AXL business card, in addition to his Moshav business card. He does not know if Mr Silberman was aware of his AXL email address, he did not inform Mr Silberman about it . When Mr Yu travelled overseas he gave out either his Moshav or his AXL business card depending on the product he was promoting at the time.
In May or June 2018, Mr Yu went to China to seek out investors for the Hyperbuild Transaction. He did not tell Mr Silberman that he was going to China for that purpose as this was an occasion during which Mr Yu was on a period of annual leave.
January 2018
On the evening of 13 January 2018 Mr Xie and his wife met with Mr Yu in the lobby of the Star Casino in Sydney for approximately 15 to 30 minutes. Mr Xie explained that the meeting was arranged for two reasons: first, because his wife wanted to meet with Mr Yu as she had not seen him for two or three months; and secondly, because Mr Yu had previously mentioned an investor who came from Mrs Xie’s home town who she might know.
At the time of their meeting Mr Xie recalls that he and Mr Yu had a conversation to the following effect (as recounted by Mr Xie through the interpreter):
Mr Xie:Mr Yu long time no see. Where have you been for the past few months?
Mr Yu:I went back to China to look for investors. AXL has borrowed the AFSL to assist with its fundraising for its project development.
Mr Xie recalls that Mr Yu showed him a screenshot of a bank transfer of a large sum exchanged from RMB into Australian dollars.
Mr Yu has no recollection of meeting with Mr and Mrs Xie at the Star Casino in early 2018 and disagrees that he had a conversation to the effect set out in the preceding paragraph. Nor does Mr Yu recall ever having any conversation with Mr Xie about the arrangement between Moshav and AXL in relation to Moshav’s AFSL.
Despite the fact that Mr Yu cannot recall it, I am satisfied that he did meet with Mr and Mrs Xie on the evening of 13 January 2018 at Star City Casino and that Messrs Yu and Xie had a conversation to the effect set out at [83] above. That finding is reinforced by the exchange of the following WeChat messages between Mr Yu and Mrs Xie on 13 January 2018 between about 6.48 pm and 9.29 pm (as translated):
Mr Roths introduces the Hyperbuild Transaction to Mr Yu
According to Mr Yu, Mr Roths first told him about the Hyperbuild Transaction in early 2018. Mr Yu recalls that it was one of the products that Mr Roths asked him to market to Chinese investors. On 20 April 2018 Mr Roths sent Mr Yu two emails, the first of which had a series of attachments, in relation to the Hyperbuild Transaction.
According to Mr Yu at some point he mentioned the Hyperbuild Transaction to Mr Silberman, although he cannot recall when he did so or what he said to Mr Silberman about it. Mr Silberman denies ever having a discussion with Mr Yu, or indeed at all, in relation to the Hyperbuild Transaction. The first he heard of the Hyperbuild Transaction was when he received a letter from Mr Xie’s solicitors.
May 2018 – Mr Yu introduces an investment opportunity to Mr Xie
At the end of April 2018 Mr Xie’s wife learned that Mr Yu’s new wife was coming to Australia for the first time and so extended an invitation to Mr and Mrs Yu to come to their home, at the time in Epping, New South Wales, on 1 May 2018.
Mr and Mrs Yu arrived at Mr and Mrs Xie’s house on 1 May 2018 at about 3 pm. After greeting them at the door Mr and Mrs Xie took Mr and Mrs Yu into their backyard where they had tea. Mr Xie recalls that his wife was sitting at one end and he and Mr and Mrs Yu were sitting on the other side with Mr Yu next to him.
Mr Xie recalls that he and Mr Yu had a conversation to the following effect (as recounted by Mr Xie through the interpreter):
Mr Yu:Oliver plans to list his company.
Mr Xie:Which company is that?
Mr Yu:Hyperbuild wants to become a listed company through a backdoor listing. Previously Hyperbuild and AXL borrowed an AFSL from Moshav to do development projects and now Oliver wants to purchase 50% of the shares of a listed company which has a financial services licence. That way he can provide financial services using the listed company’s licence.
Mr Xie:When would Hyperbuild become a listed company?
Mr Yu:Oliver has already acquired over 30% of a listed company’s shares and Oliver will continue to acquire more shares from this company up to 51% before the shareholders’ meeting this week. The whole listing plan will be finalised before September 2018 and Oliver said that if this plan goes successfully, the share price would increase tenfold. According to my estimates even if it’s not as high as tenfold at least six to eight fold is guaranteed.
Mr Xie:How much do I need to invest?
Mr Yu:5% of the original shares of Hyperbuild amounts to $700,000 and you will be given as a gift 5% of the shares of the listed company. When the shareholders’ meeting is held next week if the stock purchase is finalised and if the contracts are signed then there is no more chance for you to purchase so you have to act quickly if you want to make this investment.
Mr Xie:How many shares has Hyperbuild issued so far?
Mr Yu:Because Hyperbuild is not a listed company yet its shares are called units. Currently it has issued 10,000 units and 500 units equals $700,000.
Mr Xie:What is the name of the listed company?
Mr Yu:This is confidential. What I can tell you is the value of the company is not very big. The market value is only $2 million but this company holds a financial services licence which is the most precious thing.
Mr Xie:So how many shares has this listed company issued?
Mr Yu:About 70 million. You will be given as a gift 3 million stocks which is about 5%.
Mr Xie:Have you invested yourself?
Mr Yu:Yes. I purchased 5% of the shares. This is a very rare universe-opportunity. Only internal could have a chance to invest. Oliver asked me to keep this confidential, but because Oliver knows you that it’s ok to let you know about it. But you have to make a decision quickly because time is tight.
Mr Xie:What is the deadline for the investment?
Mr Yu:Next Tuesday because the shareholders’ meeting is going to be held next week.
Mr Xie:I see. But I need to discuss this with my family. Can you guarantee this listing plan will go successfully, 100%?
Mr Yu:Yes. Because the purchase price of the stocks has already been discussed what needs to be done next week is just signing the contract and then the money used to purchase the stocks will be transferred to the listed company. After that Oliver will change the shareholders of the listed company to his people and he will sell the assets of Hyperbuild into the listed company to finalise the listing process. But these are all formalities, if the listing plan fails Oliver will return all of your money invested.
Mr Xie:Do you confirm that if this fails the money will be returned?
Mr Yu:Yes. Oliver states so in his email and I will forward it to you later.
Mr Xie:Okay. Can you tell me the profit situation of Hyperbuild for the past few years?
Mr Yu:Not including its subsidiaries, Hyperbuild for this financial year – the profits are $3 million.
Mr Xie:Okay. So can you send those documents you just mentioned to me for me to have a look at?
Mr Yu:I will bring those to you in the next few days. Do you know Oliver is working on something big? Oliver has acquired a block of land, a very big block of land, in Sydney and he is going to raise $100 million for developments. So it is trustworthy. If this listing plan goes successfully then the stock will increase tenfold.
Mr Yu recalls that the conversation set out above occurred on 2 May 2018 at a meeting which took place at AXL’s Milsons Point offices (see [94] below). Whether it occurred on 1 or 2 May 2018 is in my view of little consequence. Both Messrs Xie and Yu agree that they had an initial conversation about the Hyperbuild Transaction on one of those days. Insofar as Mr Xie’s version of the conversation recorded in the preceding paragraph is concerned, Mr Yu:
(1)denies that:
(a)he said “previously Hyperbuild and AXL borrowed an AFSL from Moshav to do development projects”;
(b)he said “Oliver has already acquired over 30% of a listed company’s shares”. Rather Mr Yu recalls that he said words to the following effect:
Next week, 4 May, the shareholders meeting will be held. We’ve got to take 51% of the shares. Then we will get control of the company”.
(c)he said “according to my estimates even if it’s not as high as tenfold at least six to eight fold is guaranteed”;
(d)he said “5% of the original shares of Hyperbuild amounts to $700,000”. Mr Yu said that he referred to the Hyperbuild Trust, not Hyperbuild shares;
(e)Mr Xie said “[h]ow many shares has Hyperbuild issued so far?” and that he responded “[b]ecause Hyperbuild is not a listed company yet its shares are called units”;
(f)he said: “[w]hat I can tell you is the value of the company is not very big. The market value is only $2 million” or that he described the financial services licence held by the company as “the most precious thing”;
(g)Mr Xie said: “[s]o how many shares has this listed company issued?” and that he responded “[a]bout 70 million” or that 3 million shares was “about five per cent”;
(h)he said “I purchased 5% of the shares”. Mr Yu said that he used the word “invest” not “purchase” and accepted that at that time he had an agreement with Mr Roths about a 5% investment but that no moneys had yet passed to implement the investment;
(i)he said “[t]his is a very rare opportunity. Only internal staff have an opportunity to invest. Oliver asked me to keep this confidential, it is because Oliver knows you that he told me about it. But you have to make a decision quickly because time is tight”;
(j)Mr Xie said “[c]an you guarantee this listing plan will go successfully, 100%?” and he replied “[y]es. Because the purchase price of the stocks has already been discussed what needs to be done next week is just signing the contract and then the money used to purchase the stocks will be transferred to the listed company. After that Oliver will change the shareholders of the listed company to his people”. As to the last sentence, Mr Yu said that he recalls that he said that Mr Roths would change the chairman of the company to his person, not the shareholders;
(k)he said “[b]ut these are all formalities, if the listing plan fails Oliver will return all of your money invested”. Mr Yu recalls that he used the Chinese word “kai shi” which in English means “begin” or commence”. He recalls telling Mr Xie that if the acquisition of PLC was not commenced then his $700,000 investment would be returned and, in that event, Mr Xie would have to return his 3 million shares. However, Mr Yu also gave evidence in cross-examination that at the time of his meeting with Mr Xie, whether on 1 or 2 May 2024, Mr Roths must have already purchased shares in PLC because he was attending a shareholders’ meeting the following week and needed to hold 51% of the shares in PLC before attending that meeting. That is Mr Yu agreed that by the time of his conversation with Mr Xie on 1 or 2 May 2018, Mr Roths had commenced purchasing shares in PLC. In my view it follows that by that time the acquisition of PLC had commenced. When this proposition was put to him in cross-examination, Mr Yu changed his evidence saying that “commenced” means 51% or control of the company. According to Mr Yu, if Mr Roths could not get control of the company, by acquiring 51% of its shares, the acquisition had not commenced and the $700,000 investment would be returned. Mr Yu’s evidence on this issue should be rejected. I accept Mr Xie’s evidence that Mr Yu told him that “if the listing plan fails”, Mr Roths would return his money to him. Indeed, Mr Yu made a similar representation to another investor, Ms Gu (see [98] below);
(l)Mr Xie said “[w]ill you confirm that if this fails the money will be returned?” and that he responded “[y]es. Oliver says so in his email”;
(m)Mr Xie said “Okay. Can you tell me the profit situation of Hyperbuild for the past few years?”;
(n)he said “do you know Oliver is working on something big? Oliver has acquired a block of land, a very big block of land, in Sydney and he is going to raise $100 million for developments. So it is trustworthy” but says that he said something about “raising $100 million through the listing company in the future”; and
(2)cannot recall saying:
(a)“[w]hen the shareholders’ meeting is held next week if the stock purchase is finalised and if the contracts are signed then there is no more chance for you to purchase so you have to act quickly if you want to make this investment”; and
(b)“[n]ext Tuesday because the shareholders’ meeting is going to be held next week”.
There were parts of the conversation with Mr Xie which took place on 1 or 2 May 2018 which in cross-examination, Mr Yu agreed that either he or Mr Xie said. For ease I have underlined those parts in the extract at [90] above.
After having tea Mr and Mrs Xie and Mr and Mrs Yu dined at a Japanese restaurant. There was no further discussion during the dinner about the investment opportunity.
Mr Xie next met with Mr Yu on Wednesday, 2 May 2018. Mr Yu organised the meeting via WeChat. Mr Xie drove to AXL’s Milsons Point office to meet with Mr Yu at about midday. He met Mr Yu downstairs and was taken up to a meeting room. The purpose of the meeting was for Mr Xie to obtain documents about the investment opportunity he had discussed with Mr Yu the previous day. The meeting lasted for about 30 minutes.
At the meeting Mr Yu provided two documents to Mr Xie. One was an email from Mr Roths to Mr Yu sent on Friday, 20 April 2018 at 7.18 am with subject “ASX: … Confidential” (20 April 2018 Email) and the other was a letter dated 30 April 2018 on AXL letterhead from Mr Roths, group chief risk assessment officer, to Mr Yu in relation to “The Hyperbuild Unit Trust” (30 April 2018 AXL Letter). In both documents parts of the text had been redacted. Mr Xie’s evidence was that in each case the redacted portions were the parts that identified the company in which Hyperbuild anticipated acquiring a 50% share to achieve its backdoor listing. Mr Yu provided the two documents to Mr Xie by way of further introduction to the investment. Mr Xie recalls that Mr Yu also showed him a draft unit subscription document at the meeting.
About halfway through the meeting Mr Roths joined. Mr Xie recalls that Mr Roths asked him if he had any further questions. Mr Xie responded that he did not “because Raymond told [him] everything”.
Mr Yu’s dealings with another potential investor in the Hyperbuild Transaction
This was not the first backdoor listing in which Mr Yu was involved. He had earlier been involved in a backdoor listing concerning BIR Financial Limited with Mr Silberman for which he sourced one investor, Ms Yinghua Gu, who invested $1 million.
Mr Yu also offered Ms Gu the opportunity to invest in the Hyperbuild Transaction. Set out below are screenshots taken from Mr Yu’s WeChat account on 13 April 2018 (which have been translated into English) of text exchanges with Ms Gu which clearly relate to Mr Yu introducing the Hyperbuild Transaction to Ms Gu:
Mr Yu explained that he referred to Ms Gu as “Boss GU” because she is the director of a company.
Mr Xie considers investing in the Hyperbuild Transaction
On the evening of 2 May 2018 Mr Xie telephoned his father in China to discuss the investment opportunity. He recalls that during the conversation he said words to the following effect to his father:
There is a rare investment opportunity. The amount required is $700,000. If the company is successfully listed the profit will be tenfold. The backdoor listing approach will be successful 100%. The boss has already said that if the listing doesn’t work, if it’s not successful, the investment amount will be returned 100%.
At the time Mr Xie did not have $700,000 but was able to borrow $530,000 from his parents for the purposes of making an investment.
On 3 May 2018 Messrs Yu and Xie exchanged the following WeChat messages (as translated):
Mr Xie:(at 00:17am) Hi Boss Yu, are you asleep yet?
Mr Yu:(at 8:22am) I was asleep last night.
Mr Xie:(at 10:31am) Ohh.
Mr Xie:(at 1:12pm) Boss Yu, if you and Oliver have made a decision, could you please send me a copy of the contract?
Mr Yu:Yes the decision has been made, and he is preparing the contract.
Mr Xie:(at 1:29pm) Ok (emoji).
Mr Xie:(at 7:25pm) Has the contract been finalised?
Mr Yu:Oliver is working overtime on it.
Mr Xie:Oh god …
Mr Xie next spoke with Mr Yu by telephone on 4 May 2018. According to Mr Xie they had a conversation to the following effect:
Mr Yu:Good morning. Have you made a decision about the investment?
Mr Xie:I am very interested in this project. The problem is that the total amount required is $700,000. Well, I currently only have $530,000.
Mr Yu:How about this? You can find another investor or other investors who will jointly hold this 5% of shares with you.
Mr Xie:It’s impossible for me to find another investor in such a short timeframe.
Mr Xie recalls that there was a short pause in the conversation after which it continued to the following effect:
Mr Yu:I have $190,000 at hand currently and I can lend you $170,000 but you have to return this money to me in time because I have a property to settle in September.
Mr Xie:Can I pay it back to you over a three month period?
Mr Yu:Would that be June, July and August?
Mr Xie:Yes.
Mr Yu:Okay but you have to return the money to me on time because I need to settle my property.
Mr Xie:That’s no problem.
And:
Mr Xie:Since I’ve made a decision to invest can you disclose the listed company’s name to me?
Mr Yu:The ASX code for this company is PLC.
Mr Xie:Okay. I will look it up online.
Mr Yu does not recall the conversation set out in the preceding paragraph. However, he recalls that Mr Xie told him that he only had $530,00 available and was short $170,000. Mr Yu says that he did not offer to loan Mr Xie the balance of $170,000. Rather, Mr Xie asked whether Mr Yu could loan him $170,000 to make up the funds required for the investment.
On 4 May 2018 commencing at 1.29 pm Messrs Yu and Xie also exchanged WeChat messages. As translated the exchange was as follows:
Mr Xie:I have checked it. The market cap for this company is indeed 2 million, with shares worth 75 million.
Mr Yu:Yes.
Mr Yu:It is not a remarkable company.
Mr Yu:Just using it as a shell company.
Mr Xie:Then we merge HB into it.
Mr Xie:Yes, then 3 million shares would equal 4%.
Later on 4 May 2018 Mr Yu forwarded three emails with attachments to Mr Xie:
(1)the first email was at 4.24 pm and attached an unredacted version of the 30 April 2018 AXL Letter that had been provided to Mr Xie at the 2 May 2018 meeting. The 30 April 2018 AXL Letter was now addressed to Mr Xie and its date updated to 4 May 2018. That letter provided:
We confirm that we have acquired Hyperbuild Pty Ltd on 1 July 2015 which structure has changed as of 1 July 2016 when the Hyperbuild Units Trust was formed and that we are the majority unit holder in the Hyperbuild Unit Trust since formation.
Hyperbuild Pty Ltd, now acting as trustee of the Hyperbuild Unit Trust, carries on the business know as “Hyperbuild” and effectively controls, through a majority shareholding, the subsidiaries of GLFB Pty Ltd trading as Harvest Homes, Harvest Homes Properties, Hyperbuild Holdings Pty Ltd and HOLZ DC.
It is proposed that all assets of the Hyperbuild Unit Trust will be sold to PLC Financial Services Limited in due course.
Yours faithfully
AXL FINANCIAL PTY LTD
(2)Mr Yu sent the second email to Mr Xie at 4.26 pm. It, in turn, forwarded an email from Mr Roths to Mr Yu dated 20 April 2018 with subject “Commercial in confidence – Hyperbuild Unit Trust”. Mr Roths’ email provided (as written):
Raymond,
As requested please find attached consolidated summary for Hyperbuild and Harvest Homes for the current financial year. We are unable to provide any financial information for Barrington Homes (as we do not own them yet) but we can say that the operation is comparable to our two operations in all aspects and numbers.
I have also attached the proposed unit holder agreement for the issue of units in the Hyperbuild Unit trust which effectively owns GLFB Pty Ltd trading as Harvest Homes, Harvest Homes Properties Pty Ltd, Holz DC Pty Ltd and Hyperbuild Pty Ltd. (The attached ASIC company searches confirm the shareholding of the various companies).
It is proposed that a new unit holder will effectively obtain 5% of unit trust. In the event we proceed with ASX:PLC we will also a lot them 5% on issue in PLC.
If you have any further questions please do not hesitate to call.
With kind regards
Oliver Roths
(3)the third email was also sent by Mr Yu at 4.26 pm. That email forwarded the 20 April 2018 Email, the second of the two documents given by Mr Yu to Mr Xie at the 2 May 2018 meeting, in unredacted form. It provided:
Raymond,
As discussed, following of us obtaining 51% of shares on issue in ASX:PLC on 7 May we anticipate that the board of directors will be changed.
As a shareholder it is my plan to sell into PLC the Hyperbuild operation (including Harvest Homes) together with the Barrington Homes operation at a combined value of $60 million based on a 10x earnings rational which is accepted by the market.
I anticipate this transition will take 3-6 months and should be completed by the end of 2018. I also anticipate that PLC will raise a further $100 million in a development funds which will be used for strategic land purchases south and north of Sydney which will be developed by either of our operations hence maximising profits for shareholders over the next 3-5 years.
With kind regards
Oliver Roths
Each of the emails sent by Mr Yu on 4 May 2018:
(1)was sent by Mr Yu from his email address at Moshav, [email protected]; and
(2)included the following sign off by Mr Yu:
Mr Yu accepted that it was common for him to use his Moshav email address for non-Moshav business and that he did so throughout the course of his employment with Moshav. He used his Moshav and AXL email addresses interchangeably, without thinking much about their respective use. Mr Yu also accepted that at the time he sent the emails described at [104] above he had no authority from Moshav to use his Moshav email address other than for the business of Moshav.
Mr Silberman said that the use by Mr Yu of the Moshav logo and contact details was highly irregular. Mr Silberman’s evidence, which I accept, is that investment in the Hyperbuild Transaction was not a product that Mr Yu was authorised to sell, that to do so was outside Mr Yu’s job description and it was a transaction or product with which Mr Yu should not have been dealing.
As set out at [104(2)] above, the second email provided by Mr Yu to Mr Xie attached, among other things, a consolidated financial summary for Hyperbuild and GLFB Pty Ltd trading as Harvest Homes for the period July 2017 to March 2018 (consolidated financial summary). Mr Xie was cross examined about the consolidated financial summary:
(1)in relation to Hyperbuild, it disclosed that its profit to date was $1,277,833. This was contrary to Mr Xie’s evidence that Mr Yu had told him that Hyperbuild had made a profit of $3 million. Despite this, Mr Xie did not raise the difference between the profit figure as disclosed by Mr Yu and that included in the consolidated financial summary with Mr Yu or raise any query with Mr Yu about that matter; and
(2)in relation to Harvest Homes, it showed that its shareholders were Hyperbuild Holdings Pty Ltd as to 51% and Steve Taylor and Dean Turner as to 49%. Mr Xie said that he did not pay attention to this information and, while he read the consolidated financial summary carefully, he may have missed some information that did not seem important to him at the time. He was focussed on the valuation figures, the progress of projects and total values.
Mr Xie decides to invest in the Hyperbuild Trust
On 4 May 2018, after his telephone conversation with Mr Yu, and with the knowledge that Mr Yu would loan him $170,000 required to make up the total $700,000 investment, Mr Xie decided that he would invest in the Hyperbuild Transaction. He decided to do so for the following reasons:
(1)the project involved AXL which was a representative of Moshav. For that reason, Mr Xie assumed that the project “would be legal” and “protected by law”;
(2)Mr Yu told him that this was a “rare and precious opportunity” which was only going to be provided to internal staff members;
(3)Mr Yu invested himself;
(4)Mr Yu had often spoken to him about how he successfully sourced investors to make investments into AXL and Moshav projects. Mr Xie was aware that since 2017 Mr Yu had undertaken many successful cases, so he trusted his expertise and advice; and
(5)most importantly Mr Yu told him that the project would be 100% successful and, if it was not, his investment would be returned. Mr Xie trusted Mr Yu and had reason to believe that his investment would be safe.
Mr Xie was cross-examined about his conversation with Mr Yu on 1 or 2 May 2018 (see [90] above) and his decision to invest in the Hyperbuild Transaction. He had the following exchange with counsel for Moshav:
Ms Castle:Did you ask for a contract setting out your rights and any promises that you thought had been made to you?
Mr Xie (through interpreter): On 1 May, I requested from him some relevant documents, including the unit subscription agreement to buy original shares from Hyperbuild. But Yu told me the reasons for his confidentiality, and he only showed me two emails from Oliver, and also a draft agreement without Hyperbuild or my personal information.
Ms Castle:And did you read the agreement when a copy was given to you?
Mr Xie (through interpreter): I did, but because it’s not my expertise, so I couldn’t fully understand its clauses.
Ms Castle:And did you ask Mr Yu or a solicitor or anyone else to explain it to you?
Mr Xie (through interpreter): Firstly, I very much trusted Yu. Secondly, it was the end of the week, and by next Monday/Tuesday, I need to get the money ready, because after the shareholders meeting I had no chance to make the investment any more. So I didn’t have sufficient time during that one two-day period to find a lawyer to read this to me.
Ms Castle:Is – was the amount of 700,000 a significant amount to you?
Mr Xie (through interpreter): Of course. I don’t have that available to me. I borrowed it from my parents.
Ms Castle:And so you would take care to ensure that you were comfortable with what – with the investment that was being offered, wouldn’t you?
Mr Xie (through interpreter): Yes, because I triple confirmed with him that this project will be successful. If not, the investment amount will be returned to me 100 per cent. Also, Yu talked to me before, often about the successful stories of his investments. Also, he introduced Anderson to me and through that I got my 457 visa. Plus, his successful investment stories. I trusted him a lot.
Ms Castle:And after hearing successful investment stories, you wanted to get in on a good investment, didn’t you?
Mr Xie (through interpreter): Yes. But this is the first investment in my life. Also, this money was borrowed from my parents. If he didn’t tell me this investment is guaranteed to be 100 per cent successful, if not, it will be returned to me in full, I would have rejected the opportunity.
Ms Castle:And I put it to you that he didn’t say that it would be 100 per cent successful and he didn’t say that if unsuccessful it would be returned to you.
Mr Xie (through interpreter): I’m positive he said those things to me, because I triple confirmed with him. Because this was my first – very first investment and I would like to ensure the risks involved were not very high.
Ms Castle:And anyone who was trying to ensure the risks weren’t high would have done more due diligence; don’t you agree?
Mr Xie (through interpreter): Because Yu told me before next week I need to get the money ready and I need to borrow money in a very short period of time. I had very little time and too much trust in him.
Mr Yu and Mr Xie enter into a loan agreement
At some time after 4 May 2018 and before 8 May 2018, probably on 7 May 2018, Mr Xie met with Mr Yu in a café downstairs from AXL’s office in Market Street, Sydney. Mr Xie recalls that during that meeting he had a conversation with Mr Yu to the following effect:
Mr Xie:Raymond I have already decided to make the investment like we discussed on the phone. Can you lend me $170,000?
Mr Yu:Okay. I will draft a loan agreement in between friends.
Mr Yu opened his mobile banking app to show Mr Xie his bank balance and informed Mr Xie that he would bring the agreement to his house for signature.
On 8 May 2018 Mr Yu came to Mr Xie’s house. Mr Yu telephoned Mr Xie upon his arrival and asked him to come out to his car, where they met. Once Mr Xie was in the car Mr Yu took out a loan agreement which already included Mr Yu’s signature, address and, as described by Mr Xie, “some of his basic information” (Yu Loan Agreement). Mr Xie recalls that at the time Mr Yu said to him: “this is a standard version of a loan agreement”. Pursuant to the terms of the Yu Loan Agreement, Mr Yu agreed to loan $170,000 to Mr Xie repayable in three instalments.
Mr Yu asked Mr Xie to provide a copy of his passport photo page and for him to sign each page of the Yu Loan Agreement. As Mr Yu had informed Mr Xie that it was a standard template, Mr Xie looked at it briefly, signed it and provided Mr Yu with a copy of his passport photo page. In doing so, when Mr Xie saw the payment schedule he discussed with Mr Yu whether he could change the order of payment so that the largest payment would be the final, rather than the first, payment. Mr Yu agreed to that change and it was made in handwriting.
Mr Xie makes his investment in the Hyperbuild Trust
Mr Yu next arranged to meet with Mr Xie at 9 am on 9 May 2018 in Double Bay. They met in the public carpark next to Moshav’s Double Bay office. Mr Yu had a unit subscription agreement with him. Mr Xie recalls that Mr Yu informed him that this was “the investment agreement”, asked Mr Xie to sign it and told him that he could only return it after it was signed by other shareholders. Mr Yu says that he described the document as a “unit subscription agreement” not an “investment agreement”. Mr Xie signed the agreement.
At approximately 10 am, Mr Xie accompanied Mr Yu to the ANZ bank in Double Bay where Mr Xie and Mr Yu transferred $530,000 and $170,000 respectively to Hyperbuild’s solicitors’, Piper Alderman, trust account held with the ANZ, the details for which Mr Yu provided to Mr Xie.
On 14 May 2018 Mr Yu sent Mr Xie photos of two share transfer forms which respectively referred to the transfer of 1 million and 2 million shares in PLC to Mr Xie.
On or about 17 May 2018 $150,000 was transferred into the trust account of Nicholas James lawyers, the solicitors for PLC. The narrative in the trust account statement records that those moneys were received from “Xie”.
On 15 June 2018 PLC issued 50 million fully paid ordinary shares in PLC, thereby diluting the percentage of shares acquired by Mr Roths or entities associated with him in PLC as at that date. Neither Mr Yu nor Mr Roths told Mr Xie that this had occurred.
Mr Xie repays the loan from Mr Yu
On 29 June 2018, 23 July 2018 and 15 August 2018 Mr Xie transferred funds from his account held with Westpac Banking Corporation Limited in the sums of $50,000, $50,000 and $70,000 respectively in repayment of the loan from Mr Yu to Mr Xie in accordance with the terms of the Yu Loan Agreement. Mr Xie borrowed the funds to make those repayments from his parents.
The Hyperbuild Trust
On or about 13 July 2018 Mr Yu provided Mr Xie with a letter dated 13 July 2018 from AXL which enclosed an original unit trust certificate for 500 units, a circular resolution by the directors of the trustee company, Hyperbuild, and a unit subscription agreement. The letter included:
Advanced Share Registry, on behalf of the issuer, will be issuing 3,000,000 shares in ASX:PLC in the name of Xinwen Xie. The shareholding certificate will be mailed to you directly by the Registry when available.
The enclosed unit certificate provided that Mr Xie was the registered holder of 500 units in the Hyperbuild Trust which are subject to the terms and conditions in the unit trust deed dated 1 July 2016 and to the terms and conditions, if any, annexed to the unit certificate. The enclosed circular resolution of the directors of the trustee included the following resolution:
2.It is resolved that, subject to approval from the existing unit holders of the Trust by special resolution]:
(a)the Trustee be authorised to allot and issue to each Subscriber 500 New Units at an issue price of $1,400 per New Unit on the terms that each New Unit ranks equally with existing units of the Trust on issue; and
(b)any two directors or director and secretary of the Trustee be authorised to execute under section 127(1) of the Corporations Act and despatch to each Subscriber a new unit certificate for its proportion of the New Units.
Nor does the fact that Mr Silberman had dealings with Mr Roths over a period of time assist Mr Xie. The evidence before me is that Mr Silberman did not know about the Hyperbuild Transaction until he received a letter from Mr Xie’s solicitors.
Even if I accepted that in sending the emails to Mr Xie on 4 May 2018 from his Moshav email address, Mr Yu was acting on behalf of Moshav, I am not satisfied that Mr Yu acted within the scope of his actual or apparent authority. The only matters or evidence connecting Moshav to the Hyperbuild Transaction is the fact that that Mr Yu worked for Moshav and Mr Yu’s use of his Moshav email address to despatch the emails on 4 May 2018. That Mr Yu worked for Moshav is not sufficient to demonstrate that he was acting within the scope of his actual or apparent authority, particularly when viewed in light of Mr Xie’s knowledge of the separate business of AXL and Hyperbuild, on the one hand, and Moshav, on the other. Nor does the fact that Mr Yu used his Moshav email to despatch correspondence about the transaction assist me in reaching the conclusion contended for by Mr Xie. There is no evidence that Moshav was involved in the Hyperbuild Transaction and the documents which Mr Xie signed did not include or refer to Moshav.
The second claim: ss 917A-917F of the Corporations Act
Mr Xie submits that Moshav as Mr Yu’s employer is responsible for any loss or damage he suffered as a result of its “representative” Mr Yu, whether or not Mr Yu’s conduct was within authority. Mr Xie relies in particular on s 917E of the Corporations Act (see [8(2)] above).
In Cascalang v WealthSure Pty Ltd [2015] FCA 761 the applicants claimed that the respondent, WealthSure, should pay damages for losses caused by the conduct of Colin Oberg, who previously was an authorised representative of WealthSure, the holder of an AFSL. Mr Oberg, who was not a party to the proceeding, was an accountant, tax adviser and financial planning representative who it was alleged, recommended certain investments to the applicants and, in one case, took money under a power of attorney. The funds were lost and the applicants claimed that WealthSure was liable to compensate them for their respective losses.
Among others, the applicants relied on ss 917A, 917B, 917E and 917F of the Corporations Act. In considering the application of these sections, Buchanan J observed (at [199]) that subject to the limitation in s 917F(3) of the Corporations Act “the provisions in Division 6 apply according to their plain terms to give effect to an evident statutory intent that for all purposes (but without extending liability) conduct of a representative within or without authority is also the responsibility of a licensee for which a licensee is directly liable to a client”.
Mr Xie relies in particular on Cascalang at [204]-[207] where Buchanan J said:
204Within the boundaries I have identified, s 917B assigns responsibility to WealthSure for the conduct of Mr Oberg while he was an authorised representative even if he was (as Barrett J said in Zhang v Minox Securities Pty Ltd; Liu v Minox Securities Pty Ltd [2008] NSWSC 689 at [33]) on a “frolic of his own”. The colloquial content of this phrase is not without importance in an understanding of this issue at the heart of the present case. The phrase appears to have its origins in a summing up by Parke B, recorded in Joel v Morison (1834) 6 C & P 501; 172 ER 1338; [1834] EWHC KB J39, where he said:
5. … This is an action to recover damages for an injury sustained by the plaintiff, in consequence of the negligence of the defendant’s servant. There is no doubt that the plaintiff has suffered the injury, and there is no doubt that the driver of the cart was guilty of negligence, and there is no doubt also that the master, if that person was driving the cart on his master’s business, is responsible. If the servants, being on their master’s business, took a detour to call upon a friend, the master will be responsible. If you think the servants lent the cart to a person who was driving without the defendant’s knowledge, he will not be responsible. Or, if you think that the young man who was driving took the cart surreptitiously, and was not at the time employed on his master’s business, the defendant will not be liable. The master is only liable where the servant is acting in the course of his employment. If he was going out of his way, against his master’s implied commands, when driving on his master’s business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master’s business, the master will not be liable. …
205In the present case, Mr Oberg may be said to have been, to a substantial extent, engaged on an enterprise of which WealthSure neither knew or would have approved. He may truly be said, in those respects, to have been on a frolic of his own, well outside his authority. Nevertheless, s 917B makes WealthSure responsible, and intendedly so.
206Under this scheme the “client” need have no relationship with WealthSure. The client is simply a third party who could reasonably be expected to rely on the conduct of the representative (s 917A(1)(b)).
207If s 917B applies, then s 917E is engaged to make WealthSure liable for any loss or damage suffered by any of the applicants as a result of Mr Oberg’s conduct (at least while he was an authorised representative) and s 917F(1) gives the applicants the same remedies against WealthSure as they have (under the Corporations Act and otherwise) against Mr Oberg.
At the time of the Proved Representations, s 910A of the Corporations Act (now repealed and replaced) defined a representative of a person to mean, if the person is a financial services licensee, relevantly “an employee or director of the licensee” (that definition is now found in s 9 of the Corporations Act). Mr Yu was thus a representative of Moshav.
Section 917A sets out the conditions to be met before Div 6 will apply to the representative’s conduct. They include that a third person (referred to as the client) could reasonably be expected to rely on the conduct: s 917A(1)(b). Moshav submits Mr Xie’s claim under Div 6 fails because he has not established that requirement.
The question that arises is whether Mr Xie could reasonably be expected to rely on Mr Yu’s conduct. Moshav says that the requirement in s 917A(1)(b) effectively mirrors the general law requirement that ostensible authority will only be established where it was reasonable for the third party to rely on the representation of authority and that, in that context, there is no reasonable reliance where the party knows that the conduct of the agent was for its own benefit rather than the benefit of its employer, relying on Combulk Pty Ltd v TNT Management Pty Ltd (1993) 41 FCR 59 at 66-68; Lysaght Bros & Co Ltd v Falk (1905) 2 CLR 421 at 430-431.
Combulk was an appeal from orders dismissing a claim for damages alleging contravention of s 52(1) and s 53(g) of the Trade Practices Act 1974 (Cth) (now repealed). In issue in the appeal was whether Mr Gardin, manager, resources and development of TNT Roadfast, a division of the respondent, had the respondent’s express or implied actual authority to make the representations found by the primary judge. A Full Court of this Court (Neaves, Beaumont and Burchett JJ) found that Mr Gardin had no authority to bind the respondent. At 66 the Full Court said:
It is well established that it is not within the scope of an agent's authority to bind his or her principals by a contract which, although made ostensibly on their behalf, is, to the knowledge of the other party, really made for his or her own benefit, even though the contract is of a kind which he or she had general authority to make; and that, therefore, when an agent purports to make such a contract, and the party with whom he or she is dealing is aware of the circumstances, the principal is not bound (see Lysaght Bros & Co Ltd v Falk (1905) 2 CLR 421).
In Cascalang Buchanan J deferred discussion of the proposition put by the licensee in that case that certain of the applicants could not “reasonably be expected to rely” on Mr Oberg’s conduct and dealt with the question in the context of addressing the particular representations. In other words, his Honour considered that the question was one aligned to the facts.
Moshav urges a somewhat narrow approach to determination of whether in this case Mr Xie could reasonably be expected to rely on Mr Yu’s conduct. The problem with its approach is that it seems to be contrary to the otherwise liberal approach taken to construction of consumer protection provisions such as those found in Div 6 of Pt 7.6, Ch 7 of the Corporations Act and, indeed to the express provisions, in particular s 917B which confers liability whether or not the representative’s conduct is within authority.
In my view having regard to the facts in this case, the requirements of s 917A(1)(b) are met. I am satisfied that Mr Xie could reasonably be expected to rely on Mr Yu’s conduct for the same reasons as I have found that he was entitled to and did rely on the Proved Representations. Mr Xie trusted Mr Yu and was entitled to rely on the statements he made in relation to the proposed investment. As Buchanan J observed in Cascalang (at [206]) under the scheme in Div 6 there is no requirement for the client to have any relationship with the AFSL holder, the client is simply a third party who could reasonably be expected to rely on the conduct of the representative. That Moshav was not named as part of the Hyperbuild Transaction does not lead me to a different conclusion.
There was no dispute that the requirements of s 917A(1) were otherwise met. That is that Mr Yu’s conduct related to the provision of a financial service and that Mr Xie relied on Mr Yu’s conduct in good faith, and thus that the provisions in Div 6 apply. It follows that, subject to the application of s 917D of the Corporations Act, Moshav is responsible for the conduct of Mr Yu, whether or not his conduct was within authority, and that Moshav is responsible for any loss or damage suffered by Mr Xie as a result of Mr Yu’s conduct. Mr Xie has the same remedies against Moshav as it has against Mr Yu (whether under the Corporations Act or otherwise): see Cascalang at [207].
Moshav relies on s 917D which provides that a financial services licensee is not responsible under, relevantly, s 917B for the conduct of its representative if the conduct is not within authority in relation to the licensee, the representative disclosed that fact to the client before the client relied on the conduct and the clarity of the disclosure was such as a person would reasonably require for the purpose of deciding whether to acquire the relevant financial service.
In Dover Financial O’Bryan J summarised the provisions found in Pt 7.6 of the Corporations Act noting that Div 6 sets out general rules governing the responsibility of financial services licensees for the conduct of their authorised representatives. His Honour noted (at [20]) that “[t]he Division applies to any conduct of an authorised representative that relates to the provision of financial services on which a third person (the client) could reasonably be expected to rely and on which the client in fact relied in good faith” and set out the “the general rules of responsibility” by reference to s 917B and s 917C. His Honour then turned to s 917D saying at [21]:
However, s 917D provides that a financial services licensee is not responsible under ss 917B or 917C for the conduct of an authorised representative if:
(a)the conduct is not within authority in relation to the licensee (that is, for a representative that is an employee, not within the scope of employment or, for a representative that is not an employee, not within the scope of the authority given by the licensee); and
(b)the representative disclosed that fact to the client before the client relied on the conduct; and
(c)the clarity and the prominence of the disclosure was such as a person would reasonably require for the purpose of deciding whether to acquire the relevant financial service.
In Smith v Leveraged Equities Ltd [2020] WASCA 122, the West Australian Court of Appeal (Buss P, Beech and Vaughan JJA) after summarising the legislative scheme in Div 6 of Pt 7.6 of the Corporations Act observed at [257]:
Subject to s 917D and s 917F(3), the responsibility and liability cast on the financial services licensee is strict and unyielding. Section 917B makes the licensee responsible even if the representative is on a frolic of his or her own, well outside his or her authority. In this way div 6 of pt 7.6 serves a purpose of providing protection for clients.
Moshav submits that it has satisfied s 917D.
The requirements of s 917D are cumulative. That is, to succeed Moshav must establish each of the requirements in subss (a), (b) and (c).
While for the reasons set out at [235] above, Moshav can, as it submits, establish that it is not responsible for Mr Yu’s conduct because the conduct was not within authority as required by s 917D(a), I am not satisfied that it can establish the remaining requirements in subs 917D(b) and (c).
Section 917D(b) requires that the representative must have disclosed the fact that he or she was acting outside of authority before the client relied on the conduct. Moshav submits that s 917D(b) does not require the disclosure to be express or in any particular form and that the only requirement is, as set out in s 917D(c), that it be sufficiently clear and prominent. Moshav submits that the Court can be satisfied that such disclosure was made in this case because on Mr Xie’s evidence Mr Yu expressly stated that the PLC backdoor listing was only for “internal staff”, a select group of people at AXL, not connected with his role at Moshav.
I do not accept that a statement by Mr Yu that the PLC backdoor listing was only available to “internal staff” was a disclosure by Mr Yu that he was acting outside his authority, let alone that it was clear and prominent. The statement that the transaction was only available to “internal staff” or as Moshav put it, “a select group of people at AXL” would signify its exclusivity, that it is not open to the public generally and possibly that Mr Xie is being invited to be part of that select group. But it does not in my view amount to a statement that it was not connected to Mr Yu’s role at Moshav. There was no mention that the offer to participate in the Hyperbuild Transaction was not an offer provided by Moshav and no clear statement by Mr Yu that he was acting outside of his authority as an employee of Moshav.
It follows that Moshav cannot rely on s 917D of the Corporations Act and is therefore responsible for Mr Yu's conduct.
Moshav is therefore liable to Mr Xie for any loss or damage suffered by him as a result of Mr Yu’s conduct, Mr Xie has the same remedies against Moshav as he does against Mr Yu and Mr Yu and Moshav are jointly and severally liable in respect of those remedies: see s 917E and s 917F of the Corporations Act.
Apportionment and contribution
Moshav relies on s 12GF of the ASIC Act and s 1041L of the Corporations Act (see [152] and [176] above) as those sections respectively apply to findings of contravention of s 12DA of the ASIC Act and s 1041H of the Corporations Act: Selig v Wealthsure Pty Ltd (2015) 255 CLR 661; [2015] HCA 18 at [24]-[25], [37].
It was not in dispute that s 12GF permits reliance on the proportionate liability provisions in s 12GR of the ASIC Act (as was the case in Latol Pty Ltd v Gersbeck (2015) 303 FLR 298; [2015] NSWSC 1631 at [51]) and that s 1041L of the Corporations Act by its terms allows for an apportionable claim if the claim is a claim for damages made under s 1041I for economic loss caused by conduct done in contravention of s 1041H.
However, the proportionate liability regime in Pt 7.10 of Div 2A of Ch 7 of the Corporations Act (which includes s 1041L) and, by analogy, subdiv GA of Div 2 of Pt 2 of the ASIC Act (which includes s 12GP and s 12GR), does not apply to other statutory claims including those under s 1041E of the Corporations Act and s 12DB of the ASIC: see ABN AMRO at [1589]-[1590].
Given that I have found that Mr Yu contravened both s 1041H and s 1041E of the Corporations Act and s 12DA and s 12DB(1)(a) of the ASIC Act it is not necessary for me to consider the question of proportionate liability or the application of s 1041L of the Corporations Act or s 12GF(1B) of the ASIC Act. For the same reasons I do not need to consider the question of proportionate liability insofar as it applies to a claim under s 18 of the ACL: see s 87CB of the Competition and Consumer Act 2010 (Cth).
Causation and Damages
The evidence establishes that Mr Xie relied on the Proved Representations in entering into the Hyperbuild Transaction. It is clear that if Mr Yu had not made the Proved Representations, Mr Xie would not have invested in the Hyperbuild Transaction. In particular, Mr Xie gave evidence that Mr Yu’s representation to the effect that if the Hyperbuild Transaction failed his investment would be returned was important to his decision to invest and, had the representation not been made, he would not have entered into the transaction (see [109] and [110] above).
As Mr Xie submits, he relied on the Proved Representations, which he believed on reasonable grounds to be true, in agreeing to invest in the backdoor listing of AXL, through the Hyperbuild Trust, signing the Yu Loan Agreement and the Unit Subscription Agreement and transferring $700,000 to Hyperbuild. Had the Proved Representations not been made, or had they not been false, misleading or deceptive, Mr Xie would not have agreed to invest in the Hyperbuild Transaction and enter into the Yu Loan Agreement and/or the Unit Subscription Agreement and, it follows, would not have transferred the sum of $700,000 to Hyperbuild.
Mr Xie seeks damages on a “no transaction" basis, namely he seeks as damages the difference between what he paid for his investment in the Hyperbuild Transaction and the true value of that investment.
On that basis Mr Xie seeks the difference between what he paid for his units in the Hyperbuild Trust, $700,000, and their value when he acquired them less the value of the shares in PLC which were transferred to him as a gift. Mr Xie submits that his 500 units in the Hyperbuild Trust were worthless either from:
(1)9 May 2018, when he acquired them on the basis that AXL’s liquidator formed the opinion that AXL was likely insolvent from 30 June 2017 or the unit agreement was merely executory as there was no evidence that any of the other unit holders in the Hyperbuild Trust ever agreed to allow Mr Xie to become a unit holder;
(2)30 June 2019 when AXL ceased to trade;
(3)4 July 2019 when Hyperbuild went into administration;
(4)27 November 2019 when this Court made orders dismissing the claims made by investors with the support of Mr Roths in the PLC Proceeding;
(5)1 September 2021 when Hyperbuild was wound up; or
(6)11 August 2023 when Hyperbuild was deregistered.
Mr Xie submits that the Court should use the date he acquired the 500 units or, alternatively, either of the dates referred to in the preceding paragraph or the trial date as the valuation date for the purpose of calculating damages and that on either of those dates the value of his 500 units in the Hyperbuild Trust is nil. Mr Xie still owns three million shares in PLC which does not trade. Mr Xie acknowledges that there must be a credit for the value of those shares but relying on the valuation of those shares carried out by Mr Watt notes that their value is nil.
In HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 the High Court set out the principles to be applied when assessing damages in a case such as this at [34]-[40]. The usual approach, although not inflexible or rigid, is to subtract value from price paid. The High Court identified two qualifications to the rule which prevented it from being inflexible: HTW Valuers at [36]-[37]. The first is that the test does not depend on the difference between price and market value but on the difference between price and “real value” or “fair value” or what the asset was “truly” or “really worth”. The second is that the distinction between a value which answers one of those tests and market value means that market value can be disregarded if it is “delusive or fictitious” because it is the result of, for example, “manipulation of the market or some other improper practice on the part of the defendant”. In relation to shares the Court observed that it is common to refer to shares as overvalued or undervalued and continued at [38]:
The last point is supported by another matter to which Dixon J referred, in the context of shares:
“[T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.”
He referred to Sir James Hannen's observation in Peek v Derry:
“[S]ubsequent events may shew that what the shares might have been sold for was not their true value, but a mistaken estimate of their value."
Dixon J continued:
“[L]ooking back from subsequent events to the earlier state of the company it may appear that at the time the shares were taken the assets of the company did not correspond in value to the money paid.”
(Footnote omitted.)
After noting that in many fields of law assessments of value are made taking into account all matters known at the later date when the assessment is carried out, the Court said at [40]:
Finally, although the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. “If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be ‘independent’, ‘extrinsic’, ‘supervening' or ‘accidental’, then the additional loss is not the consequence of the inducement.”
(Footnote omitted.)
I turn to the assessment to be undertaken in this case. The task requires a comparison between the price Mr Xie paid for his 500 units in the Hyperbuild Trust, $700,000, and the real value of those units which in my view is to be assessed as at 4 July 2019, the date on which administrators were appointed to Hyperbuild. Given that event and that Mr Xie has not received any return or value for his units, I accept that their true value is nil.
Mr Xie’s contended that his units in the Hyperbuild Trust may have had nil value at the date of their acquisition. However, there was no evidence to support a finding as to true value at that date. That AXL, a shareholder in Hyperbuild, was likely insolvent from 30 June 2017 does not establish the value of units in the Hyperbuild Trust. Nor am I satisfied on the evidence that the units in the Hyperbuild Trust were not infact issued to Mr Xie.
Mr Xie also claims the interest he paid on the loan from Mr Yu. That amount, $1,022.76, should be added to the amount assessed. As set out above, if Mr Yu had not made the Proved Representations, Mr Xie would not have entered into the Yu Loan Agreement and incurred the interest expense.
A credit should be allowed for the value of Mr Xie’s PLC shares. However, the unchallenged evidence before me establishes that as at 19 February 2024 the shares issued to Mr Xie in PLC had a nil value.
It follows that Mr Xie’s damages are assessed at $701,022.76. Mr Xie has claimed, and should be allowed, interest on that amount pursuant to s 51A(1) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). Interest should be calculated from 4 July 2019.
THE CROSS-CLAIM
Given my findings on Mr Xie’s claim, Moshav’s cross-claim against Mr Yu arises for resolution. A summary of the claims made by Moshav in its amended notice of cross-claim is set out at [11] above.
In summary, in his defence to the amended notice of cross-claim, Mr Yu contends that he:
(1)was acting as Moshav’s agent and owed fiduciary duties to Moshav only to the extent he was communicating with any potential investors about products offered by Moshav;
(2)was not Moshav’s agent in identifying potential investors, and that he was not communicating to Mr Xie as Moshav’s agent;
(3)owed Moshav fiduciary duties in communicating with potential investors about Moshav’s products, but did not owe Moshav fiduciary duties at large;
(4)was not prohibited from using his Moshav email account to offer products and services not authorised by Moshav to investors or potential investors if there were circumstances where the email communication would pose no or minimal risk of creating a misunderstanding that the products were authorised by Moshav;
(5)differentiated communications sent by him in his capacity as an employee of Moshav from communications sent by him in other capacities; and
(6)did not exceed his actual or ostensible authority, did not breach any fiduciary or other duties and did not breach the Yu Employment Agreement.
Moshav brings two claims in the alternative against Mr Yu. The first is an allegation that Mr Yu was acting as Moshav’s agent in carrying out the Investor Responsibilities and owed fiduciary duties to Moshav and, in the event Moshav is found liable to Mr Xie, Mr Yu breached the Yu Employment Agreement and his fiduciary duties owed to Moshav, as a result of which Moshav has suffered loss and damage. The second is an allegation that Mr Yu, in trade or commerce, represented that Moshav was offering an investment opportunity, that representation was misleading or deceptive or likely to mislead or deceive and, in the premises, Mr Yu breached s 18 of the ACL as a result of which, in the event Moshav is found liable to Mr Xie, Moshav has suffered loss and damage.
In response to the first allegation Mr Yu admits that he was acting as Moshav’s agent and that he owed fiduciary duties to Moshav at least to the extent that Mr Yu was offering Moshav products.
Mr Yu also admits that the Yu Employment Agreement contained the express terms in cll 1.2, 1.3, 3.1, 3.2 and attachment 1 (see [50] and [52] above) and certain implied terms, namely that he would act in Moshav’s best interest, would act within the scope of his authority and would not represent to investors or potential investors that Moshav offered products or services which it did not offer. In addition, as Moshav points out, it was a condition of Mr Yu’s 457 visa that he could work only for Moshav.
Mr Yu does not accept that there was an implied term in the Yu Employment Agreement that he would not use his Moshav email account to offer products and services to investors or potential investors which were not products authorised by Moshav. Rather, he contends that the Yu Employment Agreement did not prevent him from using his Moshav email account to offer products and services not authorised by Moshav to investors or potential investors where the circumstances were such that the email communication would pose no or minimal risk of creating a misunderstanding that the products were authorised by Moshav.
In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 a majority of the Privy Council held that, for a term to be implied, it must be reasonable and equitable, necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it, so obvious as to go without saying, capable of clear expression and not contradict an express term of the contract.
I accept Moshav’s submission that, given the nature of Moshav’s business described at [21]-[23] above, and the need for it to comply with its AFSL and the nature of the term which clearly meets the requirements specified by the Court in BP Refinery, the term as to use by Mr Yu of his Moshav email account would be implied into the Yu Employment Agreement. That is, that Mr Yu could only use that account to offer products and services to investors or potential investors which were products authorised by Moshav.
As to Mr Yu’s conduct, the following facts are established:
(1)during Mr Yu’s employment, he was trained and instructed by Mr Silberman about the Moshav products he was authorised to sell (see [53] above);
(2)the document entitled “Premium Fund Series Information Memorandum” dated 1 June 2015 describes these products which, in turn, Mr Silberman described as Moshav’s products and the AXL “white label” product authorised by Moshav (see [26] and [54] above). There is no mention of the Hyperbuild Transaction or PLC backdoor listing or anything of that nature in that document;
(3)Mr Yu only had authorisation to sell Moshav products and the AXL white label product (see [54] above);
(4)despite that, Mr Yu did the following without informing Moshav or seeking its prior consent:
(a)incorporated two companies to do business (see [58] above);
(b)entered into an arrangement with Mr Roths that he would receive 1% commission on the sale of non-Moshav products (see [78] above);
(c)marketed the Hyperbuild Transaction to potential investors; and
(d)used his Moshav email account on about 20 April 2018 to correspond with Mr Roths about the Hyperbuild Transaction and on or about 4 and 9 May 2018 to send Mr Xie information about that transaction (see [86], [95] and [104] above).
By that conduct Mr Yu breached cl 3.1 and cl 3.2 of the Yu Employment Agreement in that he did not act in the best interests of Moshav, failed to follow the directions given to him by Moshav as to the products he was authorised to offer to investors and used his email account other than in accordance with the terms of that agreement without prior written consent. Further, as Moshav submits, Mr Yu’s actions were not within the scope of his authority (actual or otherwise).
It is clear that Mr Yu’s conduct summarised above was not in the best interests of Moshav. Moshav did not gain any benefit from the Hyperbuild Transaction. In fact, as Moshav says, it has been exposed to liability through this proceeding. Further, Mr Yu agreed in cross-examination that, in using his Moshav email account for products which were not authorised by Moshav, he was not acting in Moshav’s best interests.
Given the Proved Representations, Mr Yu also represented to potential investors that Moshav offered products which it did not in fact offer and thus breached an implied term of the Yu Employment Agreement, namely that he would not represent to investors or potential investors that Moshav offered products that it did not offer.
I turn to consider the question of whether Mr Yu owed Moshav fiduciary duties.
While Mr Yu denies that he owes fiduciary duties to Moshav at large, he admits that, to the extent he was communicating with any potential investor about mortgage products offered by Moshav, he owed fiduciary duties to Moshav including a duty not to place himself in a position where his duties to Moshav were in conflict with his own interests.
In my opinion Mr Yu owed fiduciary duties to Moshav as his employer. Given his position marketing Moshav products to Mandarin speaking clients and his ability to communicate with those clients, he had the ability to exercise power or discretion to the detriment of Moshav. This was particularly so in circumstances where Mr Silberman does not speak Mandarin: see Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96- 7.
The conduct described at [284]-[286] above equally establishes that Mr Yu breached his fiduciary duty owed to Moshav.
In those circumstances I am satisfied that Moshav has made out its claim against Mr Yu for breach of the Yu Employment Agreement and breach of the fiduciary duties he owed to Moshav. As a result of those breaches, Moshav has suffered loss and damage to the extent and for the amount that it has been found liable to Mr Xie and there should be judgment in its favour against Mr Yu for that amount. Given this finding, it is not necessary for me to consider Moshav’s alternate claim that Mr Yu, in trade or commerce engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL as a result of which Moshav suffered loss and damage.
CONCLUSION
It follows from the above that:
(1)Mr Xie has made out his claim against Mr Yu for breach of s 1041E and s 1041H of the Corporations Act, s 12DA and s 12DB(1)(a) of the ASIC Act and s 18 of the ACL. He is entitled to an order for damages under each of the relevant provisions of the Corporations Act, ASIC Act and ACL in the sum of $701,022.76 plus interest pursuant to s 51A of the Federal Court Act from 4 July 2019;
(2)Mr Xie has made out his claim against Moshav for breach of s 917E of the Corporations Act and pursuant to s 917F is entitled to the same remedies as against Moshav as he is entitled to against Mr Yu. Accordingly, Mr Xie is entitled to an order that Moshav pay the sum of $701,022.76 plus interest pursuant to s 51A of the Federal Court Act from 4 July 2019; and
(3)Moshav has made out its cross-claim against Mr Yu and is entitled to an order for damages suffered by it as a result of Mr Yu’s breach of the Yu Employment Agreement and for breach of his fiduciary duties. Those damages are equal to the amount for which Moshav is found by the Court to be liable to Mr Xie (although in fact will be limited to the amount which it is ultimately required to pay Mr Xie).
As Mr Xie has been successful, he should have his costs of the proceeding. Accordingly, Mr Yu and Moshav should pay those costs. Moshav seeks its costs of the cross-claim. As it has been successful on its cross-claim, Mr Yu should pay those costs.
As discussed with the parties present on the final day of the hearing I will hear from any party that wishes to vary the proposed orders as to costs.
The parties should provide draft orders necessary to give effect to these reasons. To the extent the parties cannot agree, or any party wishes to apply to vary the costs orders, the parties or party should notify my Associate of that fact explaining the nature of any disagreement or the basis for variation of the proposed costs orders.
I will make orders accordingly.
I certify that the preceding two hundred and ninety-seven (297) numbered paragraph are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate:
Dated: 26 March 2025
ANNEXURE A
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