FEDERAL COURT OF AUSTRALIA
Ye v Zeng (No 7) [2018] FCA 1478
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Details
- AGLC
- Ye v Zeng (No 7) [2018] FCA 1478
- Case
- [2018] FCA 1478
- Decision Date
CaseChat Overview and Summary
In the case of Ye v Zeng (No 7), Johnson Ye sought to enforce a judgment against the Zengs, who had previously entered into agreements with him to pay off the debt but had failed to fulfill their obligations. The Zengs had argued that the agreements were unconscionable or had been procured through misleading or deceptive conduct, but these arguments were rejected by the Court. Johnson Ye sought to restore the orders that had been set aside by the agreements, allowing him to enforce the judgment against the Zengs' Australian assets.
The central legal issues were whether the Zengs had engaged in misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law and whether this conduct had caused Johnson Ye to enter into the agreements. The Court found that the Zengs had indeed made misleading or deceptive representations about their financial capacity to pay the judgment, and that this conduct had contributed to Johnson Ye entering into the agreements. The Court also found that the Zengs' conduct was in the context of trade or commerce, as it was related to the commercial relationship between the parties.
The Court's reasoning was based on the evidence presented during a six-day hearing, which presented significant challenges due to language barriers and the advocacy of the witnesses. Despite these challenges, the Court was able to follow the critical parts of the evidence and concluded that the Zengs' conduct had been misleading or deceptive and had contributed to Johnson Ye entering into the agreements. The Court also found that the Zengs had not established that the agreements were unconscionable or had been procured through misleading or deceptive conduct.
The Court dismissed Johnson Ye's application to restore the orders that had been set aside by the agreements, leaving him without a means to enforce the judgment against the Zengs' Australian assets. The Court's decision was based on the findings that the Zengs had engaged in misleading or deceptive conduct and that this conduct had contributed to Johnson Ye entering into the agreements, but that the agreements were not unconscionable or had not been procured through misleading or deceptive conduct. The Court's final order was that the proceedings be dismissed.
The central legal issues were whether the Zengs had engaged in misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law and whether this conduct had caused Johnson Ye to enter into the agreements. The Court found that the Zengs had indeed made misleading or deceptive representations about their financial capacity to pay the judgment, and that this conduct had contributed to Johnson Ye entering into the agreements. The Court also found that the Zengs' conduct was in the context of trade or commerce, as it was related to the commercial relationship between the parties.
The Court's reasoning was based on the evidence presented during a six-day hearing, which presented significant challenges due to language barriers and the advocacy of the witnesses. Despite these challenges, the Court was able to follow the critical parts of the evidence and concluded that the Zengs' conduct had been misleading or deceptive and had contributed to Johnson Ye entering into the agreements. The Court also found that the Zengs had not established that the agreements were unconscionable or had been procured through misleading or deceptive conduct.
The Court dismissed Johnson Ye's application to restore the orders that had been set aside by the agreements, leaving him without a means to enforce the judgment against the Zengs' Australian assets. The Court's decision was based on the findings that the Zengs had engaged in misleading or deceptive conduct and that this conduct had contributed to Johnson Ye entering into the agreements, but that the agreements were not unconscionable or had not been procured through misleading or deceptive conduct. The Court's final order was that the proceedings be dismissed.
Orders
Orders of the court
1. The proceedings be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
To give effect to the paction (as constituted by both the English Agreement and also the Chinese Agreement), the Court was approached and orders were made vacating the appointment of the receiver. Again, however, there was a twist. Despite the terms of the agreements, the balance of the judgment sum has not been paid out of assets located in China. Johnson Ye remains out of his money and now contends that the English Agreement and the Chinese Agreement are unjust contracts, were procured by unconscionable conduct or misleading, deceptive or fraudulent conduct and should otherwise be set aside in equity or at law. B THE HEARING AND THE DIFFICULTIES WITH THE ORAL EVIDENCE The hopes of Johnson Ye as to the payment of the debt being, yet again, dashed, he approached the Court for the restoration of the status quo ante. This would allow him to move to enforce the judgment against the Australian assets (some of which have now been sold). The matter was referred to me for the purpose of conducting a hearing as to whether Johnson Ye is entitled to such relief. In order to give some precision to the matters to be determined, I ordered service of Points of Claim and Points of Defence and, when these documents did not prove sufficiently pellucid to indicate the nature of the case advanced, I ordered a further document to be provided specifying the nature of the alleged contravening conduct of the respondents. Evidence in chief was ordered to be adduced orally. The hearing took place over the course of six days with written submissions being provided afterwards. It is an exercise in understatement to remark that the conduct of the hearing presented real challenges. Almost all of the witnesses called did not have fluency in English. Apart from Ms Koh, Mr Zhang, Jacky Ye and an expert, each witness of significance gave evidence through an interpreter. No criticism is, of course, intended by remarking upon the use of interpreters to place the evidence of the witnesses before the Court. The challenge was that with the exception of the solicitors and the expert to which I have just made reference, a general and somewhat troubling tendency was exhibited by each witness (to various degrees) to act as advocates for the side of the record that had called them. Perhaps the lack of easy communication between the cross examiner and the witness heightened this problem, but the case was striking for this feature of the evidence. Additionally, the transcript, at times, is difficult to follow and was not the subject of suggested correction by the parties. This includes the evidence given by the witnesses who gave their testimony in heavily accented English. Despite these challenges, as I will explain, the critical parts of the evidence were able to be followed and emerged quite clearly. By the conclusion of the case, it seemed to me that identifying what had actually occurred leading up to and at the critical events in October 2016 was a relatively straightforward task which accorded with the thrust of the evidence given by Mr Zhang, Johnson Ye and Jacky Ye and also the inherent probabilities.
Decision
Reasons for decision
Having said this, for reasons I have explained, the applicant established that the respondents did not have the financial capacity to pay the judgment by reference to the prima facie evidence of a lack of capacity to pay, together with the inferences able to be drawn contrary to the interests of the respondents, who chose not to respond to the evidence adduced in accordance with the principles explained in Blatch v Archer.C.4.3 Conclusions Mr Ratnam, counsel for the respondents, accepted that if I were to find that if a representation was conveyed that there were three properties not subject to freezing orders that could be sold to discharge the judgment debt, that such a representation would necessarily be misleading and deceptive (T537.23). However, the Capacity Representation was pleaded somewhat differently and less specifically, as I raised with Mr King during the course of final submissions (T538.43). The submission of the applicant was that the references to the three properties in China which were not the subject of freezing orders, were part of the context in which a broader representation was made to Mr Ye, being that the respondents both intended to pay and, more relevantly, had the capacity to pay (T532.12). This submission should be accepted. There is no doubt given the findings I have made as to the true position at the time the Capacity Representation was made, that the conduct in making the Capacity Representation was misleading or likely to mislead or deceive. What the respondents were seeking to do was buy time. In doing so they were seeking to give Johnson Ye comfort that within the foreseeable future there was a real prospect that the judgment would be paid. I have referred above to the commercial context in which the representations were conveyed and the desire on behalf of the respondents to appeal to Johnson Ye’s goodwill. In this context, the Capacity Representation was of signal importance. In this context and having regard to all relevant surrounding facts and circumstances, the Capacity Representation induced or was capable of inducing error.C.5 Causation The essential issue as to causation in this case can be stated as whether the contravening conduct in making the Capacity Representation played some part, even if only a minor part (Gould v Vaggelas (1985) 157 CLR 215 at 236 per Wilson J) in materially contributing (I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41; (2002) 210 CLR 109 at 130 [62] per Gaudron, Gummow and Hayne JJ) to the course of action taken by the applicant in entering into the English Agreement and the Chinese Agreement? I do not consider the issue of causation in this case to be attended by any real doubt. Any suggestion that there is a failure to prove the necessary causal link between the entry into the English Agreement and the Chinese Agreement by reason of the fact that the solicitor for Johnson Ye had advised against the entry into the agreement is misconceived. The issue here, in a case in which no proportionate liability defence was filed and no claim is made for statutory compensation, is whether the decision of Johnson Ye to enter into the English Agreement and the Chinese Agreement was materially contributed to by the proved contravening conduct?
Ratio Decidendi
Legal Principle Established
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