Yu v Lu
[2023] VCC 1927
•27 October 2023
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-19-05341
| XIN QIANG YU | Plaintiff |
| v | |
| OU LU | First Defendant |
| and | |
| LUOU PTY LTD as trustee of The OuLu Family Trust | Second Defendant |
| and | |
| THE REGISTRAR OF TITLES | Third Defendant |
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JUDGE: | HER HONOUR JUDGE BRIMER | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22-24 February 2023, 28 February, 1-2 March, 27 March, 29-31 March, 3 April, 8 June and 23 June 2023 | |
DATE OF JUDGMENT: | 27 October 2023 | |
CASE MAY BE CITED AS: | Yu v Lu & Ors | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 1927 | |
REASONS FOR JUDGMENT
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Subject:EQUITY – CONTRACTS
Catchwords: ABUSE OF PROCESS – stay of proceeding – whether proceeding unjustifiably oppressive – whether proceeding brings the administration of justice into disrepute – dismissal of prior Supreme Court of Victoria proceeding pursuant to the inherent jurisdiction of the Court for non-compliance with Court orders and pursuant to s29(f) of the Civil Procedure Act 2010 (Vic) – prejudice – delay – absence of evidence – proceeding permanently stayed as abuse of process
CONTRACT – whether parties entered into joint venture agreement – whether parties agreed to pool income and profits and to reinvest in businesses and real estate until the joint venture came to an end – joint venture agreement not established
EQUITY – whether joint venture gave rise to a fiduciary relationship – whether breach of fiduciary duties – whether assets held on trust – equitable compensation
Legislation Cited: Evidence Act 2008 (Vic); Civil Procedure Act 2010 (Vic); Partnership Act 1958 (Vic)
Cases Cited:Baines v Bank of New South Wales (1985) 2 NSWLR 729; Baptcare Ltd v Thomas Ingpen & Anor [2022] VSCA 250; Barnes v Addy (1874) LR 9 Ch App 244; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; Breakfast Investments Pty Ltd v Gravity Ventures Pty Ltd [2015] VSC 497; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Brocx v Hughes (2010) 41 WAR 84; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; UBS AG v Tyne (2018) 265 CLR 77; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; Walton v Gardiner (1993) 177 CLR 378;
Judgment: For the defendants
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Hines | Rose Chai Lawyers & Consultants |
| For the First and Second Defendants | Mr T Mitchell | Tao Jiang Lawyers |
| For the Third Defendant | No appearance | No appearance |
HER HONOUR:
Introduction
1The plaintiff, Mr Xin Qiang Yu (Mr Yu) claims that in June 1998, he and the first defendant, Ms Ou Lu (Ms Lu)[1] started living together and entered into an oral joint venture agreement. The agreement was “to pool income and profits and to re-invest it in businesses and real estate until the joint venture came to an end”[2] (the alleged joint venture). Mr Yu claims that a number of businesses were conducted and properties purchased and sold pursuant to the alleged joint venture until about October 2014, when Mr Yu and Ms Lu’s personal and business relationship broke down and came to an end.
[1] Ms Lu was referred to as “Lucy” during trial.
[2] This formulation of the alleged joint venture was articulated by Mr Hines in final address. The pleaded
joint venture and joint venture term are set out below.
2Mr Yu claims that when the alleged joint venture came to an end in 2014, Ms Lu wrongfully denied he was entitled to any benefits from the joint venture and denied he had any interest in the alleged joint venture assets.[3] Mr Yu claims Ms Lu acted unconscionably in breach of the alleged joint venture agreement and in breach of fiduciary duties.[4] Mr Yu seeks declarations that the defendants[5] hold properties on trust as to a one-half interest in each property for Mr Yu’s benefit, an account of revenue and capital profits, alternatively equitable compensation.
[3] Not legally owned by him.
[4]LuOu Pty Ltd was knowingly involved in or alternatively knowingly received the benefits of Ms Lu’s wrongful conduct.
[5]A reference to the defendants is a reference to the first and second defendants, as the third defendant did not participate in the proceeding.
3Ms Lu denies the existence of the alleged joint venture.
Background to Mr Yu’s claim
4Mr Yu claims he met Ms Lu in 1997. They moved in together at 3/128 Inkerman Street, St Kilda (Inkerman Street property) in June 1998 and agreed the alleged joint venture. They started a tour coach business called “B & Q Tours Co”[6] operated by Mr Yu and Ms Lu and a student intermediary business. They pooled the income from those businesses.
[6] Further Amended Statement of Claim dated 2 March 2023 (FASOC) [4(c)]. Mr Yu also gave evidence the name of the tour coach business was “B & Q Co.” This topic is deal with further below.
5From 1998, Mr Yu and Ms Lu pooled cash from the tour coach business into a metal box kept under the bed at the Inkerman Street property, saving $100,000.[7]
[7] Mr Yu’s evidence as to the amount of money pooled into the metal box departed from the pleaded case that they pooled together $80,000 which they kept as cash in a box at [7] of the FASOC. Mr Yu’s departures from the pleaded case in evidence are dealt with below.
6In or about September 1999 and pursuant to the alleged joint venture, he and Ms Lu purchased a milk bar business using the pooled funds from the alleged joint venture. They moved into the milk bar in October 1999 and lived there until April 2002.
7Mr Yu alleges that the tour coach business, conducted as a joint venture undertaking took several forms:
(a) from in or about June 1998 to April 2000, it was conducted by Mr Yu and Ms Lu under the business name “B & Q Tours Co”;
(b) from April 2000, it was conducted by Mr Yu and Ms Lu under the business name “North Coach Travel”;
(c) from 7 August 2001, it was conducted by North Coach Travel Pty Ltd;
(d) from 2002 to October 2014, it was conducted by Australia North Group Pty Ltd; and
(e) from May 2009 to October 2014, it was conducted by Golden City Coach Travel Pty Ltd.
8“A substantial amount”[8] of the receipts and profits from the tour coach business was paid into Ms Lu’s father’s (Mr Lu) HSBC bank account on behalf of the alleged joint venture.
[8] FASOC [14].
9In or about February 2001 and pursuant to the alleged joint venture, he and Ms Lu entered into a partnership with two other couples to purchase a restaurant business known as “Shun Feng Seafood Restaurant”.
10Mr Yu claims that the purchase price of the Shun Feng Seafood Restaurant was funded with retained business earnings from the alleged joint venture.
11The Shun Feng Seafood Restaurant failed and the partnership with the other couples collapsed. Mr Yu alleges that in late 2002 and on behalf of the alleged joint venture, he paid a debt of approximately $30,000 owing to the landlord, and the restaurant business was re-established. Sun Star Group Pty Ltd operated the restaurant under the business name “Lonsdale Star Restaurant”. Mr Yu was the sole director and shareholder of Sun Star Group Pty Ltd from registration until March 2003, when he alleges Ms Lu removed him as a director and shareholder without his consent. Lonsdale Star Restaurant was sold in in or about early August 2007 and Ms Lu took control of the proceeds.
12Mr Yu claims that he and Ms Lu agreed to purchase properties pursuant to the alleged joint venture, including:
(a) in or about the middle of July 2001, 712/233 Collins Street, Melbourne, Victoria (Collins Street property);
(b) on or about 5 March 2002, 31 Gertz Avenue, Reservoir, Victoria (Gertz Avenue property);
(c) in or about June 2007, 907/L9 “Aquavista”, 397-407 Docklands Drive, Docklands, Victoria (Docklands Drive property);
(d) in or about September 2007, 87 Whitehill Avenue, Sunshine North, Victoria (Whitehill Avenue property); and
(e) on or about 5 December 2009, 98 Doncaster Road, Balwyn North, Victoria (Doncaster Road property).
13Mr Yu says the purchase of each property was funded by profits from the alleged joint venture from HSBC accounts in the name of Mr Lu. Some properties were mortgaged. The registered proprietors were either Ms Lu or LuOu Pty Ltd.
14After the breakdown of the alleged joint venture in October 2014, Ms Lu denied Mr Yu had any entitlement to the assets of the alleged joint venture. The denial was unconscionable, in breach of the alleged joint venture, and in breach of fiduciary duties. LuOu Pty Ltd participated with knowledge in the wrongful conduct, attracting Barnes v Addy[9] liability. Mr Yu is entitled to half of the joint venture assets.
[9] (1874) LR 9 Ch App 244.
Ms Lu’s position
15Ms Lu denies the existence of the alleged joint venture.
16Ms Lu met Mr Yu in late 1998. Ms Lu was living with her then husband, Mr Jian Min Ma (Mr Ma) and their son at the Inkerman Street property. Ms Lu had been operating a travel business and an export/import business since 1995. Mr Ma registered the business name “B & Q Tours” in July 1998. Mr Yu started driving for Ms Lu’s tour coach business at around that time. He was employed as a bus driver.
17Ms Lu purchased the milk bar business with funds from Mr Lu’s HSBC account, some of which were her funds and some her father’s. Mr Yu did not contribute to the purchase of the milk bar business, nor did Mr Yu contribute to the establishment of any of her tour coach businesses. North Coach Travel was Mr Yu’s business for which Ms Lu loaned Mr Yu $30,000. Mr Yu did not contribute to the purchase price of the restaurant business or the properties the subject of the claim.
18Ms Lu contends that the proceeding is an abuse of process and ought to be permanently stayed because the same claims were dismissed by the Supreme Court for want of prosecution (based on inordinate and inexcusable delay and repeated non-compliance with the Court’s orders) and because of prejudice due to the passage of time and the loss of relevant evidence. If not stayed, the claim ought to be dismissed. Ms Lu denies the existence of the alleged joint venture. Even if the alleged joint venture were found to have been concluded, to the extent that it is alleged that there has been a breach of the alleged joint venture, it is statute barred. There is no basis for the implication of the fiduciary duties alleged. The available evidence refutes Mr Yu’s claims that he established or funded any of the businesses. Mr Yu can establish no contribution and therefore no entitlement. Mr Yu has no standing to make any claim in relation to the tour coach business or the restaurant businesses because any claim would belong to corporate entities that have now been deregistered.
Conclusion
19In my view, for the reasons set out below, the proceeding ought to be permanently stayed as an abuse of process of the Court. Had I determined the proceeding on the merits, I would not have been satisfied that Mr Yu and Ms Lu entered into the alleged joint venture. I would have found for the defendants and dismissed the proceeding.
Evidence at trial
20The plaintiff called the following witnesses at trial:
(a) Mr Yu, the plaintiff;
(b) Mr Ian Hone, the plaintiff’s former solicitor; and
(c) Mr Bin Yu, the plaintiff’s son.
21The first and second defendants called the following witnesses at trial:
(a) Ms Lu, the first defendant;
(b) Mr Jian Min Ma (Mr Ma), the first defendant’s ex-husband;
(c) Mr Melvyn Yapp, the first and second defendants’ current solicitor;
(d) Mr Yao Wang (Mr Wang), a former employee of the first defendant’s travel coach business; and
(e) Ms Mui-Chin Yong (Ms Yong), director of Extragreen Travel Group.
Issues for determination
22The parties’ updated agreed summary of key issues is attached as Appendix A. I have determined issues 1 and 3 below,[10] as the answers to these issues determine the proceeding.
[10] Issue 2 was not pressed by the first and second defendants.
23Given my findings in respect of issues 1 and 3, it is unnecessary to address the remaining questions in the summary of key issues.
Issue 1[11]
1. Should the proceeding be stayed as an abuse of process by reason of:
(i) the passage of time since the relevant events occurred;
(ii) inferred and demonstrated prejudice to Ms Lu;
(iii)the dismissal of the prior proceeding for near-identical relief by Derham AsJ under the Civil Procedure Act 2010?
[11] This issue was not pleaded but was the subject of an agreement between counsel on 30 January 2023
that it would be in issue at trial. T 12.11-17.
The stay application
24On the first day of trial, Mr Mitchell raised the making of an application to stay the proceeding as an abuse of process. He did not press the application before commencement of the trial because “…to make good the argument I will need to establish that prejudice [unfairness arising from the passage of time and the absence of documents previously in Ms Lu’s possession] in the course of the trial, including by reference to cross-examining Mr Yu about what has happened to the documents that were previously in my client’s possession. So that’s an argument that I can’t complete, which is part of the abuse of process picture, until closing submissions.”[12]
[12] T 12.28-32.
25At the conclusion of the trial, I raised the apparent artificiality of entertaining a submission that to permit the proceeding to be determined on the merits would be to sanction an embarrassment to the administration of justice, having heard the trial. Mr Mitchell referred to Breakfast Investments Pty Ltd v Gravity Ventures Pty Ltd,[13] in which Judd J stayed a proceeding for abuse of process at the conclusion of the trial. In Breakfast Investments, Judd J observed:
“It may be superficially attractive, or ‘pragmatic’ to overlook the sins of the past, because a trial has now taken place…
Where the court is confronted by such a clear abuse, at so many levels, it has a duty to act. Superficial attraction or pragmatism must be put to one side in favour of principle. A clear message must be sent to the plaintiff in both proceedings, and to the practitioners that the court will remain astute to protect its own processes, the integrity of the administration of justice more generally, and to prevent unjustified oppression.
The primary consideration for the court is, as the plaintiff rightly pointed out, whether this proceeding is unjustifiably oppressive to Voukidis and C &O Voukidis or does it bring the administration of justice into disrepute.”[14]
[13] [2015] VSC 497 (Breakfast Investments)
[14] Ibid [118]-[120].
26Mr Mitchell submitted that for the reasons set out below, the proceeding ought not be determined on its merits and instead permanently stayed as an abuse of process.
Defendants’ submissions
27Mr Mitchell relied on the dismissal of Mr Yu’s Supreme Court proceeding against the Ms Lu and LuOu Pty Ltd in 2019[15] (the Supreme Court proceeding), along with delay and absence of evidence, to submit that this proceeding should be permanently stayed.
[15] Yu v Lu [2019] VSC 576.
Dismissal of prior proceeding
28On 28 August 2019, Derham AsJ of the Supreme Court dismissed Mr Yu’s proceeding against Ms Lu and LuOu Pty Ltd for want of prosecution, based on inordinate and inexcusable delay and repeated non-compliance with the Court’s orders. The Statement of Claim filed in the Supreme Court proceeding claimed a joint venture arising from cohabitation, pooling of funds, purchase of the milk bar business, and an interest in three properties the subject of this proceeding.[16]
[16]The Gertz Avenue property, the Collins Street property, and the Doncaster Road property.
29Within three months of Derham AsJ’s order dismissing the Supreme Court proceeding, Mr Yu commenced this proceeding, on essentially the same basis as the Supreme Court proceeding. Almost four years later, Ms Lu remains vexed by the same claims that were found to be abusive and dismissed by the Supreme Court.
30By bringing this proceeding, Mr Yu has thumbed his nose at Derham AsJ’s order. Allowing a recalcitrant litigant to retry the claims that were deemed unfit for trial in the Supreme Court would involve this Court disregarding the sanction imposed on Mr Yu for contravening his overarching obligations under the Civil Procedure Act 2010 (Vic) and cause embarrassment to the administration of justice. Ms Lu has been vexed three times, having succeeded in a proceeding on near-identical subject matter in the Family Court (the Family Court proceeding),[17] prior to the Supreme Court proceeding.
[17] Ying v Lang [2018] FamCA 784.
Delay and absence of evidence
31The events in question in this proceeding stretch back over 25 years. There is presumptive prejudice (if not actual prejudice) arising from delay and the passage of time, as Ms Lu is unable to produce documents to present the full picture of her financial affairs dating back to 1995.
32Ms Lu gave direct evidence that documents were left at the Gertz Avenue property where Mr Yu was living and she was unable to access them.[18] Mr Yu was able to produce some documents but not others,[19] and accepted that not all relevant documents were before the Court.[20] The Court should conclude that the missing documents did exist, they were last seen in Mr Yu’s possession, and Mr Yu either deliberately concealed or destroyed them. Either way, the financial documents are not available, with the result being that a fair trial for Ms Lu is not possible.
[18] T 415.44-416.15 (Lu XN); T 432.3-433.31 (Lu XN).
[19] T 274.8-278.45 (Yu XXN); CB 8450; T 285.27-286.25 (Yu XXN); SCB 110.
[20] T 275.34-277.10 (Yu XXN); T 278.7-26 (Yu XXN).
33Had the documents been available, Ms Lu could have adduced evidence of the establishment of the B & Q Tours coach business, her import/export business, the source of the deposit for the milk bar business, all business transactions in the period from 1998 to 2002, and presented a full record of the HSBC accounts in the name of Mr Lu.
34Further, Ms Lu’s records of the business activities of the restaurants and tour coach businesses would have given the Court a much better understanding of how the employees were paid (including whether Mr Yu was recorded as a contractor or employee), what income, expenses, and profits were made in each year, and how those profits were allocated.
Plaintiff’s submissions
Dismissal of prior proceeding
35The plaintiff submitted that the dismissal of the Supreme Court proceeding for want of prosecution is no bar to the commencement of a fresh proceeding for the same cause of action. There is no finding on the merits or judgment for the first and second defendants, and so no basis for estoppel by res judicata.[21] Derham AsJ would have had to apply different considerations in determining the proceeding, if the dismissal of the proceeding would have resulted in a further proceeding being statute barred.
[21]D L Bailey, Civil Procedure Victoria at [24.01.115] and [24.01.125] and the cases cited therein; Baines v Bank of New South Wales (1985) 2 NSWLR 729.
Delay and absence of evidence
36To the extent that there was any delay by Mr Yu in bringing this proceeding, any such delay was far from inordinate and there is no proof that any unavailability of documents is a result of such delay.
37The defendants have not proved that Mr Yu withheld or destroyed documents. Mr Yu gave evidence that all business records were stored electronically in a computer since 20 May 2009, which was in the control of Ms Lu. There was no evidence one way or the other as to whether Ms Lu attempted to make this data available.
38Moreover, the defendants did not call any accountants to give evidence. One is left wondering what efforts were made to obtain relevant information from other sources besides the records supposedly left at the Gertz Avenue property.
Legal principles
39A court will stay a proceeding as an abuse of process to prevent a party using the court’s procedures in a way that would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute.
“Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories (55), abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute (56). It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by estoppel.
Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel (57)…”[22]
[22]Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, [25] (French CJ, Bell, Gageler And Keane JJ).
40In Walton v Gardiner,[23] fresh proceedings were stayed because they were substantially the same as earlier proceedings that had been stayed for “appalling” and “inexcusable” delay producing prejudice.
[23] (1993) 177 CLR 378 (Walton v Gardiner).
41In UBS AG v Tyne,[24] the High Court held by majority that an abuse of process may arise by the prosecution of a subsequent proceeding, even when the earlier claim had been voluntarily discontinued and not determined on its merits.[25]
[24] (2018) 265 CLR 77.
[25]Ibid [44] (Kiefel CJ, Bell and Keane JJ), [78] (Gageler J); see also Brocx v Hughes (2010) 41 WAR 84, [14]-[15] (Buss JA), [95]-[98] (Newnes JA, Pullin JA agreeing at [4]).
42In Batistatos v Roads and Traffic Authority of New South Wales,[26] the High Court affirmed a decision to stay a proceeding arising out of a motor vehicle accident that occurred 29 years before the commencement of a negligence proceeding, despite the limitation period not having expired. In concluding that the abuse of process doctrine is not constrained by relevant limitation periods, the High Court held that a stay was justified because the passage of time caused such serious prejudice to the defendant that no fair trial was possible.[27]
[26] (2006) 226 CLR 256.
[27] Ibid [69] (Gleeson CJ, Gummow, Hayne and Crennan JJ).
Conclusion
43Grappling with the primary consideration articulated by Judd J in Breakfast Investments, putting aside superficial attraction or pragmatism in favour of principle, in my view the proceeding ought to be permanently stayed as an abuse of process. In summary:
(a) The proceeding brings the administration of justice into disrepute. Substantially the same claims were dismissed in the Supreme Court for want of prosecution and non-compliance with Court orders; and
(b) The trial was unfairly and unjustifiably oppressive to Ms Lu, who in my view was seriously prejudiced in her defence, given the passage of time, delay, and the absence of relevant documents. [28]
Analysis
[28] Despite there being almost 9000 pages in the Court Book, many relevant financial documents were not
available. This is addressed further below.
Administration of Justice
Dismissal of prior proceeding
44Although the factual merits of the underlying claim in the Supreme Court were not determined, nevertheless, the history of Mr Yu’s inability properly to articulate his claim, the comprehensive opportunities afforded to Mr Yu to rectify defects, his failure to do so, and the underlying rationale for the dismissal of the proceeding, all highlight the features of unfairness and oppression which underpin the finding of abuse in respect of this proceeding. At its core is the vexation of being required to deal again with claims that should have been brought and resolved in the Supreme Court, together with the now further significant delay in the resolution of the dispute.[29]
[29] UBS AG v Tyne (2018) 265 CLR 77.
45Even though the Supreme Court proceeding did not give rise to an estoppel, the observation of the majority in Walton v Gardiner that “[t]he sense of injustice which inspires the doctrine against double jeopardy was, however, plainly present in large measure” is apposite in the present circumstances.[30]
[30] Walton v Gardiner (n 15), 398.
46The chronology of the Supreme Court proceeding sets the context for the finding of abuse now made:
(a) On 19 November 2018, Mr Yu commenced a proceeding in the Supreme Court of Victoria against Ms Lu by generally indorsed writ stating:
“The Plaintiff claims against the Defendant damages for breach of contract and/or constructive and/or resulting trust arising out of joint business ventures between the parties.”[31]
[31] Yu v Lu [2019] VSC 576, [6].
(b) Ms Lu filed an appearance on 4 December 2018.[32] On 10 January 2019, Ms Lu filed a summons seeking summary dismissal of the proceeding pursuant to ss 62 and 63 of the Civil Procedure Act 2010 (Vic) (amongst other things) (the Summons).[33]
[32] Ibid [7].
[33] Ibid.
(c) Because Mr Yu’s writ was generally indorsed, the time specified by the Supreme Court (General Civil Procedure) Rules 2015 (Vic) for Mr Yu to file and serve a statement of claim expired on 21 January 2019.[34] No statement of claim was filed or served within that period.[35]
[34] Ibid.
[35] Ibid.
(d) The Summons came on for hearing on 12 February 2019.[36] The Court adjourned the summons to 28 March 2019 and ordered that Mr Yu file and serve a proposed statement of claim (amongst other things) by 5 March 2019.[37] Mr Yu failed to comply with the order.[38]
[36] Ibid [8].
[37] Ibid.
[38] Ibid [9].
(e) On 12 March 2019, Mr Yu filed a proposed statement of claim, which “did not comply with the rules of pleading, seemed not to disclose a cause of action and was confusing, unclear and embarrassing”.[39]
[39] Ibid.
(f) Whilst the proposed statement of claim was in narrative and improper form it raised essentially the same substratum of facts and substantially the same allegations as those in the present proceeding: that is, an alleged joint venture arising from cohabitation, pooling of funds, the purchase of a milk bar, and an interest in three properties the subject of this proceeding.
(g) When the Summons came on for hearing on 28 March 2019, Mr Yu’s counsel handed up a further proposed statement of claim, which “was also not in accordance with the rules of pleading, was confusing, unclear and embarrassing”.[40] Mr Yu applied for an adjournment in order to put before the Court another further proposed statement of claim (amongst other things).[41] The Court adjourned the Summons to 14 May 2019 and ordered that Mr Yu file and serve (amongst other things) a further proposed statement of claim by 18 April 2019.[42]
[40] Ibid [10].
[41] Ibid [11].
[42] Ibid [12].
(h) On 28 March 2019, Mr Yu attempted to file a further proposed statement of claim in accordance with the orders made, but it was rejected because of differences in the spelling of his name and related issues.[43]
(i) When the Summons came on for hearing on 14 May 2019, Mr Yu’s new counsel handed up a further proposed statement of claim dated 18 April 2019, which made claims against Ms Lu and LuOu Pty Ltd (as trustee for the LuOu Family Trust).[44] The Court adjourned the Summons to 19 June 2019 and ordered that Mr Yu file and serve (amongst other things) an amended writ correcting Mr Yu’s name and adding LuOu Pty Ltd as a second defendant, and second further proposed statement of claim by 28 May 2019.[45] Mr Yu failed to comply with the order.[46]
(j) When the Summons came on for hearing on 19 June 2019, Mr Yu applied for an adjournment and an extension of time to file the second further proposed statement of claim.[47] The Court adjourned the Summons to 25 July 2019 and ordered that Mr Yu file and serve a second further proposed statement of claim by 12 July 2019.[48]
(k) On 12 July 2019, Mr Yu attempted to file a second further proposed statement of claim in accordance with the orders made, but it was not accepted for filing because of an error made by the Court.[49]
(l) When the Summons came on for hearing on 25 July 2019, the second further proposed statement of claim “was analysed and revealed to be no better as a pleading than its predecessor. It was entirely unsatisfactory, in that it failed to plead material facts, pleaded conclusions without there being any underpinning, was confusing, unclear and embarrassing.”[50] The Court did not permit it to be filed.[51] Ms Lu made an application to dismiss the proceeding for want of prosecution, which was refused.[52] The Court adjourned the Summons to 22 August 2019 and ordered that Mr Yu file and serve a third further proposed statement of claim by 15 August 2019.[53] Mr Yu failed to comply with the order.[54]
(m) When the Summons came on for hearing on 22 August 2019, Mr Yu’s further new counsel applied for an adjournment and an extension of time to file a third further proposed statement of claim.[55] Ms Lu opposed the application and again applied for the proceeding to be dismissed for want of prosecution.[56]
(n) Derham AsJ dismissed the proceeding with costs, pursuant to the inherent jurisdiction of the Court for want of prosecution, for non-compliance with the orders of the Court, and pursuant to s 29(f) of the Civil Procedure Act 2010 (Vic). His Honour found:
“Despite new Counsel for Mr Yu appearing to seek a further opportunity to formulate a proper pleading, there is in my view no reasonable prospect that if given further time Mr Yu will be able to formulate a pleading that will be permitted to be filed…
There has been disobedience to peremptory orders of the Court and conduct amounting to an abuse of the process of the Court by Mr Yu. There has been inordinate and inexcusable delay on his part or his lawyers, and that delay is likely to cause or to have caused serious prejudice to Ms Lu.” (emphasis added)[57]
[43] Ibid [14].
[44] Ibid [15].
[45] Ibid [16].
[46] Ibid [18].
[47] Ibid [18], [21].
[48] Ibid [24].
[49] Ibid [27].
[50] Ibid.
[51] Ibid.
[52] Ibid [28]-[29].
[53] Ibid [29].
[54] Ibid [30].
[55] Ibid [33].
[56] Ibid [34], [36].
[57] Ibid [56], [61].
The present proceeding
47On 18 June 2021, the defendants filed a summons in this proceeding seeking orders that the issues were res judicata or subject to issue estoppel and the proceeding was otherwise an abuse of process. The matter was heard by his Honour Judge Cosgrave on 28 June 2021. On 13 July 2021, Judge Cosgrave dismissed the application. The defendants relied on the Family Court proceeding and the judgment of Justice Thornton delivered on 1 October 2018 in making the application. It appears that the Supreme Court proceeding and the judgment of Derham AsJ were not brought to Judge Cosgrave’s attention and were not the subject of argument or consideration in the context of the abuse of process argument.
48Against the backdrop of the finding by Derham AsJ of conduct amounting to an abuse of process of the Court, the trial of this proceeding was marked by changes in the framing of Mr Yu’s case on the run, perpetuating the oppression stemming from the initiation of claims which were not properly formulated or prosecuted in the Supreme Court and then in this Court.
49Mr Hines was briefed late in the matter and worked hard to get on top of the material. In my view, however, the changing case was symptomatic of the irremediable impact of the passage of time and delay, the absence of relevant financial documents, together with an approach marked by backsolving. This is illustrated by the chronology leading up to the application to amend the pleadings on day 5 of the trial, which application was refused in the interests of justice.
50On day 1 of the trial:
(a) In relation to Mr Yu’s claim of breach of fiduciary duty and the remedy sought, Mr Hines opened that:
“…the parties owe fiduciary duties to each other…those fiduciary duties give rise to equitable rights in my client and to a constructive trust. So in effect, my client says…I have an equitable entitlement to half the profits and half the assets that were generated from these businesses, and I can trace – I have a right to trace those profits and assets into anything into which they’ve been converted…”[58]
(b) After discussion in which Mr Mitchell submitted that “…what I heard from my learned friend this morning was the way the case is being run is the constructive trust is sought to be imposed as a remedy”,[59] Mr Hines foreshadowed amendments to the amended statement of claim (ASOC) in respect of “the point made at the beginning of paragraph 6 of my outline of opening, which says the property received by fiduciary is deemed to be received on constructive trust… so the constructive trust arose as soon as the property was received by the [first] defendant on behalf of the joint venture”[60];
(c) Mr Hines submitted: “It’s just like a partnership. It was a joint venture agreement, but, in substance, it’s like a partnership, according to my client, of course”;[61] and
(d) The foreshadowed application to amend the ASOC included further allegations in respect of additional properties owned by the defendants, which application had been made before JR Muller before trial, and withdrawn.[62] After discussion, Mr Hines submitted, “I’ve been given instructions not to press them.”[63] The trial was adjourned to the following day for Mr Hines further to consider proposed amendments.
[58] T 5.27-40.
[59] T 15.14-16.
[60] T 19.3-5, 25-27.
[61] T 20.23-31.
[62] The application before JR Muller included an application to add a further defendant. The parties were
asked to consider whether, if the plaintiff was not in a position to commence the trial on the listed date, it would be appropriate to make orders dismissing the claim for want of prosecution. Mr Hines informed the Court he was instructed to abandon the application to amend the statement of claim and add a further defendant.
[63] T 21.5.
51On day 2 of the trial:
(a) Mr Hines raised a number of amendments he sought to make to the ASOC including a new paragraph 6A, which he read as follows: “It is to be implied from the circumstances alleged in paragraph 5 and the joint venture term…that property and the interests therein originally brought into the joint venture and property bought with moneys belonging to the joint venture… defined as joint venture property was to be held upon trust as to 50 percent for each party.”[64] Mr Hines indicated that as Mr Mitchell had taken issue with the word “belonging” he would be happy to substitute it for “arising from or used in the joint venture”;[65]
(b) Mr Mitchell opposed the proposed amendments on the basis that the pleaded causes of action could not follow from the proposed paragraph 6A. The proposed amendments depended on ignoring other pleaded facts which were not pleaded in the alternative. There was a lack of precision highlighted by the wording of proposed paragraph 43A “including on constructive trust”. Mr Mitchell submitted that the plaintiff needed to pin his colours to the mast and identify the trust which he alleges; and
(c) Mr Hines indicated he would make further amendments over lunch and said, “I suppose the point I’m making is we’re alleging we have a trust, but we’re also alleging we have a remedial constructive trust.”[66] Mr Mitchell’s position was as follows: “Given what my learned friend has just said, that he intends to amend the pleading in a way that will allege that the trust in which instance arose on the acquisition of the property…we can certainly begin the evidence.”[67] I permitted the evidence of Mr Yu to commence.
[64] T 25.24-40.
[65] T 26.35-36.
[66] T 32.17-18.
[67] T 33.8-15.
52On day 3 of the trial, Mr Hines informed the Court: “I spent a good deal of time yesterday evening attempting to formulate a pleading of the trust claim. I really think I need the weekend to do it properly. It’s a complex matter. There are lots of things to consider.”[68]
[68] T 97.4-6.
53On day 4 of the trial:
(a) Mr Hines said, “I think I’m now in the position where I think I want to allege what I think is probably most consistent with the evidence, and that is that there was a partnership or something analogous to a partnership, that is, a sharing or an agreement to share profits”;[69] and
(b) Mr Hines submitted: “I’m trying to overcome my friend’s statute of limitations point. And there are two ways I can do that. One way would be to prove a trust – a resulting or a constructive institutional trust…The other way is to say, well, in fact, the cause of action didn’t start running…the arrangement wasn’t terminated until 2014, as alleged in the statement of claim.” [70] The proposed FASOC was not yet ready, so Mr Hines said he would make the application as soon as he was able.
[69] T 152.43-45.
[70] T 154.37-17.
54On day 5 of the trial, Mr Hines made an application to amend the ASOC. The application was opposed and refused in the interests of justice.[71] Some of the proposed amendments were liable to being struck out. In my view, they would not have facilitated the identification of the real issues in dispute. Others would have resulted in further unacceptable delay and prejudice to the defendants and as such would not have facilitated the just resolution of the proceeding. Some amendments were not opposed in respect of which leave was granted.
[71]Baptcare Ltd v Thomas Ingpen & Anor [2022] VSCA 250 and cases there cited. Some minor amendments were not opposed and were allowed.
The proposed trust pleadings[72]
[72]Paragraphs 5, 6, 6A, 6B, and 6C are set out here. Further consequential amendments were proposed but are not reproduced here.
55The substantive proposed amendments were as follows[73]:
[73] As marked up.
“5. Whilst living together from June 1998, and commencing the businesses referred to above, the Plaintiff and First Defendant commenced pooling their incomes as part of a joint venture (Joint Venture) to:
(a) pay for rent and living expenses;
(b) save money for the purchase of businesses and investments; and
(c) both work in the businesses to derive income and profits for the Joint Venture.
6. It was a term of the Joint Venture (Joint Venture Term) that the Plaintiff and First Defendant would share equally in all savings, investments and businesses and all income and profits derived from these assets.
PARTICULARS
The Joint Venture Term was oral and was constituted by discussions between the Plaintiff and First Defendant from 1998 and throughout the relationship between them, the substance of which was to the effect alleged.
The Plaintiff and First Defendant’s relationship, and the Joint Venture, irretrievably broke down and came to an end in October 2014, as pleaded below.
Further, and alternatively, the Joint Venture Term was implied in order to give business efficacy to the relationship, alternatively it was implied in equity in the circumstances alleged.
6A It is to be implied from the circumstances alleged in paragraph 5 and the Joint Venture Term that the Plaintiff and First Defendant agreed that property and interests therein originally brought into the Joint Venture and that funds derived from those assets (‘the Funds’) were to be held by the legal owner of the property upon trust as to 50% for each party.
PARTICULARS
This is to be implied in order to give business efficacy to the relationship; further and alternatively it is to be implied in equity in the circumstances alleged.
6B It was a term of the Agreement alleged in paragraph 6A that the Funds could be applied in furtherance of the Joint Venture.
6C Further and alternatively the Joint Venture was a partnership for the purposes of s5 of the Partnership Act 1958 and the Plaintiff relies on s32 of that Act.”
56In respect of paragraph 6A, Mr Hines submitted that:
“…it’s pleaded as an implied term…An institutional trust – I don’t think it was a constructive trust, and I think it was an express trust, we would say, that’s implied from…an implied trust. …Well, implied. Express trust. I don’t know the terminology is all that helpful in this instance, but in any event, I’m saying that there’s to be implied an agreement to have a trust over those assets from the circumstances…”[74]
[74] T 202.13-35 (Yu XN).
57In respect of paragraph 6B, Mr Hines submitted, “I would say an implied term as a matter of business efficacy, that the agreement the funds could be taken out in furtherance of the joint enterprise”.[75] As to paragraph 6C, Mr Hines submitted, “[I]t alleges that further and alternatively the joint venture was a partnership… again it’s either good or bad as a matter of law. No new facts being referred to.”[76]
[75] T 203.9-11.
[76] T 203.13-15.
58In respect of paragraph 36A of the proposed pleadings, Mr Hines submitted:
“That relates to the institutional trust and says… in consequence of the agreement to create a trust, assets of the joint venture were held on trust…personalty was held on that express trust, so the money – the joint venture funds were held on a trust…”[77]
[77] T 205.24-26.
59In relation to proposed paragraph 36C, Mr Hines submitted that:
“…as a consequence of that, of those funds being held on an implied express trust…That’s the classic resulting trust, your Honour…”[78]
[78] T 205.37.
60Mr Mitchell submitted that an implied express trust is a concept unknown to the law and internally inconsistent. If the plaintiff wanted to plead that the funds as defined were to be held by the legal owner upon trust, then he would have needed to identify the trustee, the trust property and the beneficiaries, which has not been done. The implication of the “agreement” was said to be “to give business efficacy to the relationship implied in equity in the circumstances alleged.”[79] Equity does not imply terms into contracts, it accords with contracts. Further, it was unclear whether a separate agreement was being alleged. If a separate agreement was being alleged, then it (including the terms of the agreement) was not properly pleaded and particularised. The particulars to paragraph 6A tend to suggest the pleading was directed to a term of the joint venture that ought to be implied.
[79] T 213.29-42.
61Paragraph 6B commences with “It was a term of the Agreement alleged in paragraph 6A”, however, paragraph 6A does not plead an agreement. Paragraph 6A is the “jumping off point” for the allegation of partnership in paragraph 6C.[80] The pleading does not identify the facts upon which the alleged joint venture is said to be a partnership under the Partnership Act1958 (Vic). To the extent it could be said they are the matters pleaded in paragraph 5, it does not support the proposed partnership pleading.
[80] T 214.35.
62In my view, the proposed paragraphs[81] were defective and liable to be struck out for the reasons articulated by Mr Mitchell. It was not possible to know what case was being put. Further, to have allowed the amendments and proceeded with the trial would have denied the defendants procedural fairness by requiring Mr Mitchell to cross-examine Mr Yu in the absence of knowing the case he would have to meet in final address. As Mr Mitchell submitted:
“Mr Yu might have given some evidence I ignored about money being held for a particular purpose”, which, upon the case being articulated in closing, assumed significance which was not apparent at the time.”[82]
[81] Paragraphs 6A-6C together with other related paragraphs including paragraphs 36A, 36B and 36C, 46-
49.
[82] T 218.30-35.
The proposed additional properties pleadings
63In respect of the proposed amendments to plead additional properties alleged to have been purchased with funds from the alleged joint venture, Mr Hines submitted that the purpose of the amendments was to meet an anticipated submission that Mr Yu’s evidence that all of the money in Mr Lu’s bank account was joint venture property is patently incorrect, because Mr Yu also said that rental income from a Glen Waverley property was paid into Mr Lu’s bank account. [83]
“Now, if your Honour doesn’t know that he also says that Glen Waverley was paid for with joint venture properties, then could – the inference could be, well, the first statement about all of the money in the father’s account coming from the joint venture is patently incorrect.”[84]
[83] Also an East Kew property [17A] and [17B], a Braybrook property [27A] and [27B] and a Boronia
property [34A] and [34B]. At this point, it ought to be recalled that the evidence of Mr Yu had commenced.
[84] T 204.4-7.
64Mr Hines conceded that the introduction of evidence about this property at this stage of the trial might cause difficulties, nevertheless, he submitted, “If I can seek to adduce all of that evidence from the – or those two bits of evidence from the defendant, then I don’t need to make the amendments which bring in these other properties and which, as I say, may cause difficulty because they do involve new facts.”[85]
[85] T 204.24-27.
65To have permitted Mr Hines to lead that evidence in the absence of a relevant pleading would have compounded the unfairness by permitting Mr Yu to circumvent the very purpose of pleadings:[86] to put the defendants on notice that the additional properties were alleged to be “joint venture” properties and the rental receipts properly “joint venture” funds for the purpose of establishing Mr Yu’s claim, to enable proper consideration of the allegations, and to allow for preparation to meet those allegations including the taking of instructions. As submitted by Mr Mitchell, should leave to amend have been granted, he could not proceed with the trial. An adjournment would have been needed to take instructions on the acquisition of those properties, seek further discovery, and review the documents that had been discovered.
[86] T 191.36-46 (Yu XN).
66No proper explanation on oath or otherwise was given as to why the amendments were sought so late. On the question of delay and prejudice, when asked, Mr Hines conceded that:
“There’s nothing I can say, I don’t think, your Honour, about any of that. Plainly, the amendments should have been – well, if the amendments have any merit, they should have been made much earlier. Had I been involved in the case, I would have done that.”[87]
[87] T 210.13-16.
Unavailability of documents
67In light of the business and financial records that were discovered by Mr Yu, I am satisfied it is likely that other like financial and business records existed. Mr Yu agreed that the Court Book was missing records from the running of the restaurant businesses[88] and that there were no HSBC bank statements between 1999 and 2002.[89]
[88] T 275.45-49 (Yu XXN).
[89] T 307.44-45 (Yu XXN).
68I am satisfied that it is more likely than not that the missing financial records, including the HSBC bank account records of Mr Lu not discovered, were last in the possession of Mr Yu:
(a) Documents were kept in the garage at the Gertz Avenue property.[90] Mr Yu accepted that the business records and the bank records for Ms Lu and her father were still at the Gertz Avenue property in 2014[91] and that when Ms Lu left the Gertz Avenue property she left behind her notebooks for the tour coach business and the restaurants.
[90] T 433.6-7 (Lu XN).
[91] T 275.22-31 (Yu XXN).
(b) Mr Yu had access to “all of business record” in 2015, the time at which Ms Lu was excluded from the Gertz Avenue property, when Mr Yu took out an intervention order against her.[92] When Mr Yu was questioned on a different topic (that is, his knowledge of when he was removed as a director of Sunstar Group), his answer indicated he had access to business records at that time:
[92] T 433.30-31 (Lu XN).
“I didn’t become aware of this until 2 March 2015…I decided finally – I decided by saying I need to have a look through all of business record.”[93] (emphasis added)
[93] T 187.22-25 (Yu XN).
(c) Mr Yu discovered most of the documents in the proceeding including documents that would be expected to be in Ms Lu’s possession.[94] Mr Yu discovered the milk bar financial records, the contracts for the sale of the milk bar and restaurant business, and the bank statements of Ms Lu and Mr Lu, to the extent they were discovered.[95]
(d) Copies of particular pages of notes from Ms Lu’s “recording books”, or “exercise books”[96] and upon which Mr Yu relied were discovered by him, not the entire notebooks. Mr Yu gave evidence that: “You know, impossible to have the whole book translated. That will cost too much money. That’s why I just pick up this page to have it translated to prove this sale and the – the money received.” [97] At the very least, the inference ought to be drawn that Mr Yu selected or “cherry-picked” pages upon which he wanted to rely from those notebooks.
(e) Only some of the bank statements from Mr Lu’s account were discovered. When asked in cross-examination whether he knew where the missing statements were, Mr Yu’s answer as to how those discovered bank statements were found was unconvincing: “I found some records of this bank account, a very accident occurring, I didn’t know until one day from under the bed in our master bedroom.”[98]
(f) When asked why no bank statements from 1999-2002 were discovered, Mr Yu’s answer did not sit well with his pleaded case that the receipts and profits of the milk bar business[99] were paid into Mr Lu’s account and his evidence of the prolific use of Mr Lu’s bank account:
“MR MITCHELL: Why aren’t there any bank statements in that period, Mr Yu?
THE INTERPRETER: No-no deposit, no-no record.
MR MITCHELL: Are you saying that there was no activity in the accounts, so there’s no statements; is that your answer? Well---
THE INTERPRETER: I – I don’t know about this.”[100]
[94] T 274.43-44 (Yu XXN). Mr Yu agreed he made discovery of documents which filled about 8000 pages of the Court Book (of approximately 9000 pages). Whilst Mr Yu gave evidence that Mr Wang, a former employee of Ms Lu’s travel coach business, put business records into a computer from May 2009 (within Ms Lu’s control), Mr Wang’s evidence was that he did not know about the record system of the travel business changing from paper to an electronic system T 577.21-28 (Wang XXN). I reject Mr Yu’s evidence for the reasons set out under issue 3 and prefer the evidence of Mr Wang.
[95] T 291.1-25 (Yu XXN).
[96] T 69, 85 (Yu XN).
[97] T 289.3-9 (Yu XXN).
[98] T 278.23-36 (Yu XXN).
[99] FASOC [11(b)] and in respect of “a substantial amount” of the tour coach business receipts being paid
into Mr Lu’s account see [14].
[100] T 308.13-20 (Yu XXN).
(g) Mr Yu’s evidence in respect of a document discovered at the end of January, early February 2023,[101] tended to suggest that Mr Yu had access to more documents than he had discovered and was still looking through documents to support his case at that time. When asked when he located the document, Mr Yu said, “At-during Chinese Spring Festival, roughly the end of January to early February, I just cleaned my house and by accident I found this document, which was just inserted in a book.”[102]
(h) In relation to a copy of a tax invoice/statement dated 1 December 2003,[103] when asked in cross-examination whether he had the original, Mr Yu first said, “No… it should be in [Ms Lu’s] possession.”[104] When pressed whether he had photocopied it, Mr Yu said that he had photocopied it and that the original was in his possession.[105]
[101] SCB 110.
[102] T 286.5-7 (Yu XXN).
[103] CB 324.
[104] T 298.30-299.21 (Yu XXN).
[105] T 298.42-299.14 (Yu XXN).
69Ms Lu was unable to produce documents to present the full picture of her financial affairs dating back to 1995. Documents which might have shed light on matters adverse to Mr Yu were not discovered and were not in the Court Book. For example, bank records for the accounts of the Lonsdale Star Restaurant business would likely have shed light on the relationship between Ms Lu and Mr Yu, including for example, whether Mr Yu received any salary or wage for his work in the various businesses. Mr Yu gave evidence that money from the restaurant business was deposited into the business account for “our salary to employees.”[106] Ms Lu’s evidence[107] was that Mr Yu was paid for driving and that his payments were no different to the other drivers for the business.[108]
[106] T 178.29-33 (Yu XN).
[107] Supported by the evidence of Mr Wang and Ms Yong set out below.
[108] T 416.17-28 (Lu XN).
70Given the passage of time (25 years) and the number of relevant payments and receipts in respect of multiple businesses over a 16-year period beginning from 1998, the oppressive impact of the absence of relevant business and financial documents (regardless of blame for their absence)[109] was amplified in circumstances where selective financial and business documents were produced by Mr Yu.
[109] Brisbane South Regional Health Authority v Taylor (1996) 168 CLR 541.
71The oppressive impact of the absence of relevant financial documents was further illustrated by Mr Yu’s evidence estimating the profits of each of the businesses. His evidence was guesswork.[110] Ms Lu disputed Mr Yu’s evidence but was not able to give positive evidence as to the profits of each of the businesses given the passage of time and the absence of documents.[111] The cross-examination of Ms Lu highlighted the lack of meaningful content in the propositions put to her about the profitability of the businesses and assets. For example:
“MR HINES: And you made money, didn’t you?[112]
“MR HINES: Now, in view of your considerable – well, in view of your real estate assets, you would have to agree, wouldn’t you, that the businesses were profitable.”[113]
“MR HINES: But you made money out of the business too, didn’t you? You made money out of the restaurant business?”[114]
[110] This was particularly so in light of his evidence as to Ms Lu’s complete control of the finances during the alleged joint venture (dealt with under Issue 3) and the absence of primary documents. Had it been necessary to determine, in my view, the Court could not rely on Exhibit 2 as reliable evidence of the profits of the various businesses. Should it have been necessary to determine, I would have accepted the submissions made in the first and second defendants’ response to the plaintiff’s claim to relief dated 3 July 2023.
[111] T 431-437 (Lu XN).
[112] T 516.23 (Lu XXN).
[113] T 518.30-31 (Lu XXN).
[114] T 518.36-37 (Lu XXN).
72In my view, for the reasons and in the circumstances set out above, the proceeding ought to be permanently stayed as an abuse of process.
Issue 3
Did the plaintiff and defendant enter into a joint venture agreement?
73Had I not stayed the proceeding as an abuse of process, I would have dismissed the proceeding. For the reasons set out below, I would not have been satisfied that Mr Yu and Ms Lu entered into the alleged joint venture.
Plaintiff’s submissions
74In June 1998, Mr Yu and Ms Lu:
(a) entered into an oral joint venture agreement;
(b) started a small tour coach business called “B & Q Tours Co”;
(c) started a student intermediary business making arrangements for Chinese students to study in Australia, including finding colleges and accommodation;
(d) commenced living together; and
(e) commenced pooling their income as part of a joint venture.
75In the plaintiff’s written opening submissions, Mr Hines described the terms of the joint venture agreement as:
“1.Essentially, the plaintiff (‘Yu’) claims that he and the first defendant (‘Lu’) owned and ran a number of businesses together, agreeing to share the profits equally. …
2.Thus in paras 5 and 6 of the Amended Statement of Claim, he alleges a Joint Venture between them to share equally in all savings, investments and businesses and all income and profits derived from these assets. …
8.The first question, is whether there has been any agreement, arrangement or understanding reached between the parties that the property is to be shared beneficially, however imperfectly remembered and imprecise the terms may have been.”[115]
[115] Plaintiff’s opening submissions dated 21 February 2023, at [1], [2], and [8].
76In the plaintiff’s written closing submissions, Mr Hines described the terms of the joint venture agreement as:
“6.… In substance, the allegations are that Yu and Lu started a small tour coach business and a student intermediary business, pooled their income and agreed to share equally in savings, investments, and businesses. …
45.Pursuant to the alleged agreement, the first defendant was required on the termination of the joint venture to give the plaintiff half of the profits.
49.… The agreement was to pool incomes and profits and to re-invest it in businesses and real estate until the joint venture came to an end. …”[116]
[116] Plaintiff’s opening submissions dated 21 February 2023, at [6], [45], and [49].
77Mr Hines submitted there can be no doubt, in view of the many supporting documents in evidence, that Mr Yu had a significant role in both the Lonsdale Star Restaurant and the tour coach business. For example, he was a director and shareholder of Sun Star Group Pty Ltd, a company associated with the restaurant business, and of Australia North Group Pty Ltd, a company associated with the tour coach business. There was a bank account for the tour coach business in the joint names of him and Ms Lu (with 260 Inkerman Street, St Kilda as the address). He was party to and signed crucial legal documents for all three businesses. For example, he signed the lease for the milk bar and was a tenant under the first lease for the restaurant premises. Various documents, such as the liquor licence, power account application, and trade waste account for the restaurant, and his bus officer accreditation, assignments of vehicle number plates, buying and selling of vehicles and signing a Defence in a Magistrates’ Court matter for the tour coach business show he had important roles in the business.[117]
[117] Plaintiff’s written closing submissions at [10].
78Ms Lu’s evidence that Mr Yu was a casual employee of the tour coach business and had practically no role in the restaurant business cannot withstand scrutiny in light of the documents.
79As Mr Hines accepted, “If there was no joint venture, then we lose our case.”[118]
[118] T 184.37 (Yu XN).
Defendants’ submissions
80The defendants contend that there was no alleged joint venture between Mr Yu and Ms Lu. Mr Yu’s story is:
(a) contradicted by evidence:
(i)Ms Lu denied the alleged joint venture;[119] and
[119] T 414.20-24 (Lu XN).
(ii)Ms Lu denied that she ever told Mr Yu that he would have an interest in any of the five properties the subject of this proceeding;[120]
[120] T 414.26-415.9 (Lu XN).
(b) not objectively verifiable:
(i)The alleged joint venture is said to be wholly oral and not evidenced in writing, meaning Mr Yu’s claims are not objectively verifiable; and
(ii)The key planks of Mr Yu’s story, including the allegation that he and Ms Lu pooled their income in a metal box, depends on the Court accepting Mr Yu’s word over Ms Lu’s;
(c) inherently unlikely in light of contextual factors:
(i)Ms Lu was married to her then-husband, Mr Ma;
(ii)Mr Yu was married to his third wife;
(iii)Ms Lu was living with Mr Ma and their son, albeit across two addresses;
(iv)Ms Lu met Mr Yu in late 1998, through Mr Ma. Mr Yu started driving for Mr Ma’s tour coach business, B & Q Tours, around that time;
(v)Mr Ma registered the business name “B & Q Tours” on 22 July 1998, two months after the alleged joint venture commenced; and
(vi)Mr Yu gave evidence that he purchased a bus from Ms Lu at the time, which is inconsistent with his allegation that they were pooling resources;
(d) inconsistent with the parties’ subsequent conduct:
(i)Events that occurred after the formation of the alleged joint venture render it improbable. A party may point to post-contractual conduct as evidence to prove the existence or absence of a contract.[121]
(ii)The parties did not conduct themselves on the basis that the alleged joint venture existed. For example, the parties organised their affairs under different corporate structures — the Shun Feng Seafood Restaurant business was a partnership with other individuals, and corporate entities began conducting the restaurant and tour coach businesses.
[121] Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 163-4.
81The defendants submitted that because there was no alleged joint venture, it had no terms and it did not come to an end.
Legal principles
82In United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1, Mason, Brennan and Deane JJ stated at 10-11:
“The term “joint venture” is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots’ law, “adventure”) will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a “joint venture” and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to the profits made by the other.”
Conclusion and analysis
83I am not satisfied that in June 1998, or at any time, Mr Yu and Ms Lu entered into the alleged joint venture. I am not satisfied they agreed to “pool income and profits and to re-invest it in businesses and real estate until the joint venture came to an end”.[122]
[122] Or any other version of that formulation pleaded or articulated at trial including “that Yu and Lu started
a small tour coach business and a student intermediary business, pooled their income and agreed to share equally in savings, investments, and businesses. Their agreement was oral and was constituted by discussions throughout their relationship and was put into effect in all they did during its duration.” Plaintiff’s written closing submissions [6].
Inherently improbable
84It is inherently improbable in the following circumstances, that Mr Yu and Ms Lu entered into an agreement, the effect of which was to “lock up” income and profits for purposes of the alleged joint venture until an unknown future date when the alleged joint venture came to an end:
(a) On Mr Yu’s case, he received no income during the alleged joint venture:
“So from the beginning to the end, I have never received any wages. So all the money that I earned were put back to the company, the businesses, to expand the business.”[123]
[123] T 112.24-26 (Yu XN).
(b) This was despite Mr Yu describing the alleged joint venture as follows:
(i)“As we had discussed - as per our previous discussion, it was fifty-fifty”;[124]
[124]T 132.37-38 (Yu XN).
(ii)“You know, half-and-half”;[125]
[125] T 133.6 (Yu XN).
(iii)“You have your half. And I have my half”;[126] and
[126] T 133.6-7 (Yu XN).
(iv)“It’s, like, 50 per cent each.”[127]
[127] T 133.7 (Yu XN).
(c) On Mr Yu’s account, he was the main breadwinner, having built up the business because of his experience:
“... Before I met Lucy, I have been experienced tour coach driver. I also had a share in tour agent. I have built up a wide network in tour industry. What did Lucy contribute to our relationship and the business relationship? Nothing except ..... a worn out car. Only worth $5000.That’s also bought back by me. And I start from here and built up my own business bit by bit. That’s how I – we – we’ve bought more than 10 vehicles later on. So who knows – who knows Lucy. She stayed home. Not any experience. Just because me, because my experience and night work in this – in this industry, that’s how business built up so well.”[128]
(d) In that context, according to Mr Yu, he acquiesced to Ms Lu’s complete control of all the finances:
(i)He agreed Ms Lu would collect money on his behalf since 1998.[129] He handed money to Ms Lu to put into a metal box over which Ms Lu had control and he did not have a key.[130] Mr Yu did not take money out of the box, Ms Lu had control of the box.[131]
(ii)Each year, Mr Yu sat down with Ms Lu and she read through the figures from the businesses, but he did not check them himself. Mr Yu said, “I just listened, but I didn’t look through carefully at all because I trust her. I just said, ‘It’s up to you.’”[132]
(iii)When Ms Lu incorporated a trustee of a family trust for the purchase of properties with funds from the alleged joint venture, Mr Yu agreed because Ms Lu told him that it was to protect their property. When asked whether he consulted a lawyer or accountant, Mr Yu said, “No, I transfer hundred per cent. Whatever she told me, I believe her.”[133]
(iv)In relation to the Docklands Drive property, Mr Yu said, “I entrust her to do everything.”[134] In relation to the Whitehill Avenue property, Mr Yu said, “Yes, I entrust Lucy to deal with everything of purchase property.”[135]
[128] T 374.11-19 (Yu XXN).
[129] T 300.27-39 (Yu XXN).
[130] T 302.1-5 (Yu XXN).
[131] T 302.6-10 (Yu XXN)
[132] T 277.32-34 (Yu XXN).
[133] T 244.11-12 (Yu XN).
[134] T 246.33 (Yu XN).
[135] T 248.16-17 (Yu XN).
85In my view, it is improbable that Mr Yu would have acquiesced to Ms Lu’s control of the finances in the way described by him had they entered into the alleged joint venture, when one considers the following relationship context in which Mr Yu contends the alleged joint venture started and continued:
(a) At the time of the alleged joint venture in 1998, Mr Yu and Ms Lu were both married to other people:
(i)Mr Yu married his third wife in 1996 and they divorced in July 2000.[136]
[136] T 296.7-47 (Yu XXN).
(ii)Ms Lu married her first husband, Mr Ma, in 1983. Mr Ma applied for divorce in August 1999.
(b) I am satisfied that at the time of the alleged joint venture in June 1998, Ms Lu was still living with Mr Ma, contrary to Mr Yu’s evidence that he moved into her place and was living with her from June 1998:[137]
[137] T 37.45-47, 38.28-29.
(i)According to Mr Ma, it was “impossible” that Ms Lu was living with Mr Yu because “she was at home every single day, and she had to look after our son, and our son was staying with us at the time.”[138] They lived across two addresses, Inkerman Street, St Kilda and Lansdowne Street, St Kilda.[139]
[138] T 558.10-20 (Ma XN).
[139] T 561.35-45 (Ma XXN).
(ii)Mr Ma denied that by mid-1998, there were times when he stayed at the Lansdowne Street address and Ms Lu stayed at the Inkerman Street property.[140] Their actual time of separation was after the grant of an Intervention Order in June or July 1999.[141] Then Ms Lu moved to the Inkerman Street property.[142]
[140] T 565.21-24 (Ma XXN).
[141] T 557.37-44 (Ma XN).
[142] T 562.7-8 (Ma XXN).
(c) I prefer the evidence of Mr Ma:
(i)Mr Ma’s evidence was supported by an objective document on a different topic on which Mr Ma and Mr Yu’s evidence was in conflict. Mr Ma gave evidence that he and Ms Lu registered a travel business “B & Q Coach” or “B & Q Tour” in July 1998.[143] That evidence was supported by the business name registration showing that the business name “B & Q Tours” was registered in Mr Ma’s name.[144] Had it been Mr Yu and Ms Lu’s business, as claimed by Mr Yu, it is unlikely Mr Ma would have registered the business in his name, particularly when on Mr Yu’s account, he didn’t meet Mr Ma until August 1999. Mr Yu gave evidence he didn’t “know about Ms Lu’s ex-husband until 16 August 1999.”[145]
(ii)Mr Ma’s account of how he met Mr Yu had a ring of truth about it. He first met Mr Yu at the driver’s rest area at “penguin” or Phillip Island when they were driving tour coach buses. Mr Yu was in fact a bus driver at the time who took coach tours to Phillip Island. Mr Ma could not recall the details of the conversation, but they exchanged details because Mr Ma was looking for drivers. Mr Yu met Ms Lu when he came to pick up a coach.
(iii)This is to be contrasted with Mr Yu’s evidence that he and Ms Lu “just encounter[ed]” each other in Melbourne Chinatown in 1997. Mr Yu said, “She told me she has no job, got Centrelink pay, and she has separated from her husband and she was single…her father was in China…just got some financial issues. Her father only earn, like about – her father only earns about 200 Australian dollars per month…not many assets.”[146]
(d) Both Mr Yu and Ms Lu married other people during the time of the alleged joint venture:
(i)Ms Lu married her second husband in May 1999, and they divorced in January 2008.[147] Mr Yu was aware Ms Lu married her second husband in May 1999.[148]
(ii)Mr Yu married his third wife in 1996 and divorced her in 2000.[149] Mr Yu married Cao Xia, who arrived in Australia in May 2004. They divorced in 2007.[150] In 2008, Mr Yu developed a relationship with Xin Shen and married her on 7 March 2008. They divorced on 22 March 2012.[151]
[143] T 554.36-555.22 (Ma XN). The issue of the B & Q Tours business is dealt with further below.
[144] CB 332.
[145] T 292.25-26 (Yu XXN).
[146] T 35.34-36.45 (Yu XN).
[147]T 512.34-37 (Lu XXN). Ms Lu gave evidence she understood she was divorced at the time she married her second husband, but she later discovered there was a “bit of a time issue regarding the first divorce.”
[148] T 297.3-21 (Yu XXN).
[149] T 296.42-47 (Yu XXN).
[150] Affidavit of Mr Yu dated 16 October 2020 (16 October Affidavit) [211]-[218]. Mr Yu swore in that
affidavit that his marriage to Cao Xia was for migration purposes.
[151] T 429.5-8 (Lu XN); the 16 October 2020 affidavit at [219]-[222].
Mr Yu’s conduct
86Mr Yu’s conduct after the making of the alleged joint venture was inconsistent with its existence:
(a) Had Mr Yu and Ms Lu agreed the alleged joint venture, it is unlikely Mr Yu would have bought a bus from Ms Lu in the same month he alleges they agreed to pool all income:
(i)In June 1998, the month Mr Yu said the alleged joint venture was agreed and he moved in with Ms Lu, Mr Yu bought a bus from her for $5,000.[152] This was at the time when they had, on his account, agreed to pool their money in a metal cash box.
(ii)When it was put to Mr Yu that his conduct was inconsistent with his evidence that they had agreed to pool their money in a metal box in June 1998, Mr Yu shifted his evidence and said he paid Ms Lu before they started living together: “I paid her actually before June, probably just May.”[153]
(iii)Had they entered into the alleged joint venture, in my view Mr Yu would not have bought the bus from Ms Lu, rather it would have been used in the alleged joint venture.
(b) In March 1999, Mr Ma and Ms Lu bought a property in Maidstone in respect of which they were joint borrowers (the Maidstone property):[154]
(i)It is improbable that only two months after Mr Yu and Ms Lu entered into the alleged joint venture, Mr Yu “approved” the purchase of the Maidstone property by Ms Lu and Mr Ma when on Mr Yu’s account, he and Ms Lu were living together. Mr Yu gave evidence he didn’t know about Mr Ma until 16 August 1999.
(ii)I reject Mr Yu’s explanation that he approved the purchase for Ms Lu’s son. It was inconsistent with Mr Ma’s evidence that the property, once completed was for him and Ms Lu to live in.[155] Ms Lu’s son was about 15 years old at the time, having been born in 1984.[156]
[152] T 295.44-45 (Yu XXN).
[153] T 303.16 (Yu XXN).
[154] T 311.10-13 (Yu XXN), T 417.16 (Lu XN). CB 8434.
[155] T 559.19-29 (Ma XN).
[156] T 553.31 (Ma XN).
Mr Yu was not a witness of truth
87Mr Yu gave patently untruthful evidence on a number of topics.
88In relation to the funds used to purchase the milk bar, I am satisfied Mr Yu’s evidence that $100,000 cash from the tour coach business was collected in a metal box and “all money used for the milk bar was from that box”[157] was made up:
(a) Mr Yu’s evidence that $100,000 cash from the tour coach business was collected in a metal box was inconsistent with his pleaded case in the Statement of Claim and ASOC,[158] with an affidavit sworn by him on 16 October 2020 in this proceeding in opposition to an application for summary judgment (the 16 October 2020 affidavit), and as opened by Mr Hines:
(i)In Mr Yu’s ASOC, he pleaded that $35,000 of the purchase price of the milk bar was “contributed by the Plaintiff” and the balance was funded from the pooled funds from the alleged joint venture.[159]
(ii)In the 16 October 2020 affidavit, he deposed, “I paid $35,000 being half share ownership of the milk bar business.”[160]
(iii)Mr Hines opened the case as follows: “[M]y client’s case is, ‘No. We went into the milk bar business together. I paid half the purchase moneys.”[161]
(iv)Mr Yu gave evidence that: “[W]e sharing this business, and I will just pay this amount of money for the purchase of this business out of my own account first.”[162]
(v)When it was put to Mr Yu that he made up his evidence that the cash for the purchase of the milk bar came from the $100,000 pooled funds in the metal box, Mr Yu said that the reference to the $35,000 was to demonstrate how much each of them had contributed to the “joint assets.”[163]
(vi)Mr Yu’s response was disingenuous. The ASOC dealt separately with Mr Yu’s alleged personal contribution and the balance of the purchase price being from pooled funds. Had the true position been that Mr Yu and Ms Lu paid for the milk bar with joint funds pooled in a metal box, in my view, it would have been pleaded and opened in that way, and evidence to that effect would have been given in the 16 October 2020 affidavit.
[157] T 314.30-46 (Yu XXN). “All money used for the milk bar was from that box.” T 321.6-7 (Yu XXN).
[158]Dated 6 November 2020 and in his statement of claim dated 11 November 2019. An amendment was made to [9] of the ASOC on day 5 of trial after Mr Yu had given evidence inconsistent with the pleading, to remove the reference to his alleged personal contribution of $35,000 to the purchase price.
[159] CB 20.
[160] CB 276 at [22].
[161] T 3.39-41.
[162] T 71.20-28 (Yu XN).
[163] T 315.30-33 (Yu XXN).
(b) Mr Hines conceded there was “considerable uncertainty about how the milk bar was paid for.”[164]
(c) I accept Ms Lu’s evidence that the money for the purchase of the milk bar was paid for from withdrawals from Mr Lu’s bank accounts.[165] Her evidence was supported by bank records which show that the balance of the purchase price paid in cash in three instalments on 28, 29, and 30 September 1999 matched the cash withdrawals made by Ms Lu from Mr Lu’s HSBC accounts on the same dates.[166]
(d) The bank statements for Mr Lu’s accounts for the period when the deposit for the milk bar was paid were not in the Court Book. However, I accept Ms Lu’s evidence that the money for the deposit was paid by her in cash and withdrawn from Mr Lu’s account, as that is consistent with the bank records for the payment of the balance.
(e) Given my rejection of Mr Yu’s evidence for the reasons set out above and below, and in the absence of any objective evidence demonstrating any contribution by Mr Yu to the moneys in Mr Lu’s bank accounts or otherwise to the purchase of the milk bar business, I am not satisfied Mr Yu contributed to the purchase of the milk bar business consistent with the existence of the alleged joint venture.
[164] Plaintiff’s closing written submissions [15].
[165] T 318 (Yu XXN). T 420.29-423.33 (Lu XN).
[166] CB 8000-2, 3361-3 and 3366-7.
89Mr Yu’s evidence, when he was first asked about his knowledge of the purchase of the Maidstone property was patently untruthful. When challenged, he shifted his evidence:
(a) When cross-examined about his knowledge of whether the Maidstone property was purchased by Ms Lu and Mr Ma, Mr Yu said, “Yes, I remember, but I don’t know if it were purchased finally or not.”[167] Mr Yu then said, “I remember it seems she told me she didn’t buy it eventually.”[168]
(b) When shown the loan agreement for the purchase identifying Ms Lu and Mr Ma as customers, Mr Yu said, “Yes, I knew about this. She-she told me for their child, she and her husband would buy property for their child. And one year later, it was sold, but I did know about address of this property.”[169]
(c) When the transfer of land was put to Mr Yu showing Ms Lu and Mr Ma as purchasers, Mr Yu said, “Yes, I – I supported her – I – her to buy this for her child…She just need – needed to pay $10,000 as deposit – deposit. That’s not much money. So I – I – I didn’t have any question about where the money from, but it sold a very good price later on and made more than 100,000.”[170]
[167] T 310.24-25 (Yu XXN).
[168] T 310.35-37 (Yu XXN).
[169] T 311.15-17 (Yu XXN).
[170] T 311.28-33 (Yu XXN).
90I reject Mr Yu’s evidence that he and Ms Lu started a tour coach business in July 1998 called “B & Q Tours Co”. Mr Yu said, “We called the business – we – our business – we called this B and Q Tours Co”[171] and that the “Q” represents Mr Yu’s name.[172] I reject Mr Yu’s evidence for the following reasons:
(a) It was at odds with the evidence of Mr Ma that he registered his and Ms Lu’s travel coach business in 1998 called “B & Q Tours”. Mr Ma’s evidence was that “[t]he Chinese name of B and Q stands for Bei Qi.”[173] It is inherently unlikely the name would have been registered by Mr Ma, if the business was that of Mr Yu and Ms Lu.
(b) As set out above, I prefer Mr Ma’s evidence because it was supported by the business name registration in his name. He also gave a plausible explanation of the significance of the letters “B & Q”.
(c) Mr Yu shifted his evidence regarding the name of the business:
(i)Having said that he and Ms Lu called the business “B & Q Tours Co”, Mr Yu later said that he and Ms Lu’s business was “B & Q Co”, which was different from Mr Ma’s business “B & Q Tours”.[174]
(ii)When it was put to Mr Yu whether Mr Ma took his name, Mr Yu said, “My business called B and Q Co, C-o. His called B and Q Tour or something, I’m not sure”.[175]
(iii)There was no evidence of a business registered in the name of “B & Q Co”.
[171] T 58.5-6 (Yu XN).
[172] Ibid.
[173] T 555.1 (Ma XN).
[174] T 158.1-5 (Yu XN).
[175] T 293.6-10 (Yu XXN).
91I am satisfied that the document relied upon by Mr Yu as evidence of a $50,000 term deposit in his name[176] was a fraudulent document, altered for an ulterior purpose:
[176] Exhibit B. Mr Hines accepted that the document had been altered but that “it could have been altered
by her or it could have been altered by him.” T 611.47-48.
(a) In relation to the re-starting of the restaurant business, Mr Yu gave evidence that:
(i)he had a $50,000 term deposit and he withdrew the funds to pay $30,000 to the landlord. The first time he paid $10,000, later he paid another $20,000, and so he paid “a total of $30,000.”[177] The funds were from his “tour business with [Ms Lu] together. Each of us got 50,000 to deal with by each person, by themselves”;[178] and
[177] T 165.25-35 (Yu XN). Although Mr Yu also he paid $50,000 in total to the landlord’s agent.
[178] T 165.25-40 (Yu XN).
(ii)he talked to the landlord’s agent and said, “‘I have money’ and I show my bank term deposit of A$50,000 with HSBC bank… [Ms Lu] didn’t show any intention to pay owing rent, but by comparison, I voluntarily showed my genuine intention to pay owing rent. Also, landlord knew I was working in a tour coach company and I had ability to pay as well.”[179] Mr Yu said Ms Lu was not involved in the negotiations.
[179] T 165.8-21 (Yu XN).
(b) In cross-examination, when Mr Yu was taken to the purported record of his HSBC term deposit with the apparent alteration to the name on the statement, Mr Yu changed his evidence and said:
(i)Ms Lu withdrew $50,000 and gave cash to him;[180]
(ii)He started paying gradually from the $50,000. He and Ms Lu made the payments together;[181]
(iii)Ms Lu gave him the document;[182]
(iv)He didn’t receive the $50,000, the bank cheque was cashed in by Ms Lu;[183]
(v)When asked whether he had a term deposit account with HSBC with $50,000 in it, he said, “No. I-okay. I myself never had the deposit of $50,000 HSBC. When Lucy show me this document, I thought she had put this amount deposit for me in the bank”;[184]
(vi)When it was put to Mr Yu that he fraudulently altered one of Mr Lu’s HSBC bank account records, Mr Yu initially denied that the document was altered: “No. Not altered.”[185] When shown another of Mr Lu’s HSBC bank statements recording a list of Mr Lu’s account numbers including one matching the account number on Mr Lu’s so-called term deposit statement, Mr Yu said, “[T]hat only means altered by Lucy. She was tricking me. That means Lucy provided false document to me to get my trust, and later she brought this document back to bank to cash in money, also – all done by her”;[186] and
(vii)There was no other evidence of any HSBC account held by Mr Yu.
[180] T 350.33-35 (Yu XXN).
[181] T 350.33-34 (Yu XXN)
[182] T 351.1 (Yu XXN).
[183] T 351.13-14 (Yu XXN).
[184] T 351.26-34 (Yu XXN).
[185] T 353.19 (Yu XXN).
[186] T 354.15-19 (Yu XXN).
(c) In the 16 October 2020 affidavit, Mr Yu deposed, “In order to prove that I had financial standing to lease the premises, I provided a term deposit of $50,000 held in my name to prove that I had sufficient assets to cover the liability under the lease.”[187] The evidence before this Court demonstrates that Mr Yu was prepared to use a false document to mislead the landlord and the Court. Mr Yu, on his own admission, accepted that he altered some of the documents before giving them to his solicitor.[188]
[187] CB 293 at [119].
[188] T 287.18-21 (Yu XXN). Albeit he denied he altered this particular document.
92In my view, Mr Yu answered untruthfully when he was cross-examined about three “certificates” on Sun Star letterhead purporting to record his income (the Sun Star employment documents).
93The documents were signed by “Johnny”, a name Mr Yu gave evidence he was known by on the first day of trial. Mr Yu was taken to the Sun Star employment documents[189] in cross-examination:
[189]T 325 (Yu XXN). These documents were produced by the Department of Home Affairs in response to a subpoena that was issued by Ms Lu. T 339.35-37 (Yu XXN).
(a) Mr Yu’s first response was that he didn’t understand English despite having been taken to many documents during his evidence in chief that were in English and answering questions asked of him about those documents. When asked whether one of the names he used was Johnny, Mr Yu answered the question “yes” before it had been interpreted.[190]
[190] T 326.17-19 (Yu XXN).
(b) When taken to the Income Certification[191] which records Mr Yu as having been on a salary of $100 per week ($5,000 per year), Mr Yu responded immediately indicating he had read the document. He said, “How can salary $100 put here? It’s all false document.”[192] Mr Yu said he earned at least $500 to $600 a day driving coaches.[193]
[191] CB 8511.
[192] T 327.15-16 (Yu XXN).
[193] T 327.36 (Yu XXN)
(c) Mr Yu denied that he signed the documents as “Johnny” and gave evidence that he didn’t know about the documents: “I don’t know about this… I never sign like this. Who did it, I don’t know. I never know about this.”[194]
[194] T 326.15-38 (Yu XXN).
(d) However, Mr Yu had been taken to these documents in his Family Court proceeding in which he gave evidence that:
“Because I told her whatever document was needed and you just sign for me. Of course, it’s not possible for me to have only $100 for a week. Any day will be at least 200 or $300. Just according to request from the Immigration Department, that’s all. Yeah, I was the boss at that time. It was a false document.”[195]
[195] T 333.41-334.25 (Yu XXN).
(e) When the above passage was put to Mr Yu, he said:
“I can’t recall exactly but I believe Family Court had much to do or had nothing to do with here with this case. This case is heard here and had different judge…
I don’t want to talk about the – talk about what happened in the past. What was past has been done, and we just need to focus on what’s talk about here.”[196]
(f) In relation to the Income Statement,[197] when Mr Yu was asked in cross-examination who Shan Sin is, he answered, “Yes. Lucy - Lucy knew her. Lucy asked me to help her get residency in Australia as Shan Sin has been studying for three to four years but didn’t get permanent residency.”[198] When it was put to Mr Yu that Shan Sin was his wife and the documents were completed in order to get her residency:
“MR MITCHELL: Mr Yu, she was your wife, wasn’t she?
THE INTERPRETER: In the name, yes, she was my wife. However, this completely sponsorship in order for her to get residency, and then she had very good luck. Immigration even didn’t check on us at all. After getting her permanent residency we just divorced….
The second wife – second wife is Lucy’s cousin. I helped her. I just went back to China and stayed for – at her mum’s place for one day. And also, we’re lucky immigration even didn’t check anything.”[199]
[196] T 334.21-335.6 (Yu XXN).
[197] CB 8512.
[198] T 333.5-7 (Yu XXN).
[199] T 333.22-32 (Yu XXN). This evidence was given under a certificate under s128 of the
Evidence Act 2008 (Vic).
(g) Mr Yu ultimately agreed he had been involved in two sham marriages.[200] Mr Yu made a false declaration in support of his sponsorship applications: “Lucy introduced her cousin to me. All this arrangement actually was false.” His explanation was: “Lucy give me this paperwork. My job was just to sign. So I just did everything upon whatever she request me to do.”[201]
[200] T 340.17-20 (Yu XXN).
[201] T 342.1-30 (Yu XXN).
94Mr Yu was involved in or had knowledge of the appointment of directors for an ulterior purpose:
(a) Ms Lu’s sister-in-law was appointed a director of SunStar Group Pty Ltd. Mr Yu explained, “Because at that time, she need – she need to sponsor Lucy’s brother to come to Australia, Lucy asked me to appoint her. I agreed.”[202]
(b) Ms Lu’s brother was appointed a director of Sun Star Group Pty Ltd, however, he contributed nothing to the business. Mr Yu said, “When his name been put on company record, he was still in China.”[203]
[202] T 166.11-24 (Yu XN).
[203] T 187.27-47 (Yu XN).
95Ms Lu’s evidence was unsatisfactory and lacked credibility in some respects. She demonstrated a lack of candour on occasions and a preparedness to use names on documents for ulterior purposes. For example:
(a) Ms Lu gave evidence she received Centrelink benefits roughly in 2001 or 2002, and she previously swore in an affidavit in 2020 that she received Centrelink benefits only from 10 July 2001 to 30 April 2002.[204] In cross-examination, however, Ms Lu agreed she received Centrelink payments up until 28 February 2007.[205]
(b) Ms Lu answered “no” to a question whether she had ever been a shareholder or officer of any company which had a receiver or liquidator appointed, when at the time she knew North Coach Travel Pty Ltd had gone into liquidation.[206]
(c) In relation to Mr Yu being a director of Australia North Group between 2004 and 2010, Ms Lu said, “It’s just like a – for – just for the work purpose, just to show the document to be shown to the government for the compliance reason”;[207]
(d) In relation to the restaurant businesses, Ms Lu said, “He didn’t even – he didn’t even spend a single day working in the restaurant. He didn’t even contribute money to the restaurant business. It was – his name was on the document only for his migration purpose – for migration purpose.”[208]
(e) Despite Ms Lu’s evidence that North Coach Travel (Mr Yu’s company) and North Coach Travel (Australia) Pty Ltd were different entities, it was not possible to tell from the headings of those documents whether they related to Mr Yu’s business or Ms Lu’s business.[209] Ms Lu’s explanation was that she could tell whose business they related to:
“…some tours around by North Coach Travel, but their clients made phone inquiries to me, so – and for this one, I put the name there because the actual – or fees or a fee deposited to his account. There was several tours were operated by North Coach Travel. Actually old tour fees to me, so that’s why this document is intended to show that the fee that he’s owing to my personal account and then it will be squared out or something.”[210]
[204] CB 80.
[205] T 452.41-46 (Lu XXN).
[206] T 499.22-45 (Lu XXN).
[207] T 486.35-37 (Lu XXN).
[208] T 501.1-4 (Lu XXN).
[209] CB 7669. North Coach Travel (CB 549) and North Coach Travel (Australia) Pty Ltd.
[210] T 467.18-23, 39-44 (Lu XXN).
(f) Ms Lu previously described Mr Yu, as a silent partner of a milk bar business.[211] When this was put to Ms Lu in cross-examination, she answered, “[I]t just meant that his name appears in – for this – for the business purpose. Just his name.”[212]
(g) In respect of documents showing Mr Yu signing documents on behalf of tour company Australia North Group, Ms Lu said, “Since he was my brother-in-law at the time and he had a fairly good working relationship with my manager, so if he handled matters like this on behalf of the company, that’s what it is.”[213]
(h) Ms Lu’s explanation for Mr Yu appearing as a director of North Coach Travel Pty Ltd was: “In the nominal for, yes, but in reality no.”[214]
[211] T 456.45-47 (Lu XXN).
[212] T 457.10-11 (Lu XXN).
[213] T 492 (Lu XXN).
[214] T 492 (Lu XXN).
96Despite Ms Lu’s lack of credibility in some respects, I nevertheless prefer the evidence of Ms Lu over Mr Yu on the question of the existence of the alleged joint venture. Mr Ma’s evidence generally supported the evidence of Ms Lu in key contextual matters as set out above. Mr Ma’s evidence was supported by an objective document and otherwise had a ring of truth about it. On the question of the funds used to purchase the milk bar business, Ms Lu’s evidence was supported by withdrawals recorded on Mr Lu’s HSBC bank account statements, contrary to Mr Yu’s evidence of how the milk bar purchase was funded.
Documents relied on by Mr Yu in support of the alleged joint venture
97As set out above, both Mr Yu and Ms Lu were involved in using documents or names for ulterior purposes.[215] In that context, I am not satisfied that Mr Yu’s name and signature as purchaser on the contract of sale for the milk bar is evidence supporting the existence of the alleged joint venture. It is consistent with the parties’ preparedness to use documents for ulterior purposes:
(a) Ms Lu’s explanation for Mr Yu signing the contract of sale; that Mr Ma wouldn’t approve of the purchase of the milk bar by Ms Lu and “I got into a very – bad…argument with Mr Ma, and then my marriage relationship with Mr Ma was pretty estranged at the time”[216] was supported to an extent by the evidence of Mr Ma that:
“I told her that. “If you insist by purchasing this business as a married couple, I am entitled to 50 per cent of the interest of the business. However, I do not agree purchasing this business, So if that’s your decision, we have to break up.”[217]
[215]Certificates under s128 of the Evidence Act 2008 (Vic) were issued in respect of allegations and evidence of the use of other people’s names for the purpose of sponsoring migration applications, to avoid the payment of tax and for the purpose of claiming Centrelink benefits.
[216] T 418.44-419.2 (Lu XN); T 425.20-23 (Lu XN).
[217] T 557.20-23 (Ma XN).
(b) Although as far as Mr Ma was concerned, no one told him that Mr Yu contributed to the purchase of the milk bar business,[218] Ms Lu’s evidence that Mr Yu was involved in the purchase because he “could use some benefit helping [her] for the future in case his son needed to migrate to Australia”[219] is consistent with Mr Yu’s admission that he participated in sham marriages.
(c) Mr Yu’s admission that he had two sham marriages, renders Ms Lu’s explanation that “At the time Mr Yu entered – marries a girl who was the daughter of my mother’s colleague, and his visa was rejected and then he approached me to help him. So to – putting down his name on this document can help him (sic) to migrate to Australia, so I didn’t think too much at the time”[220] more likely than not to be true. The daughter of Ms Lu’s mother’s colleague was Cao Xia.[221] Mr Yu married Cao Xia.[222]
[218] T 560.13-14 (Ma XN).
[219] T 419.37-39 (Lu XN).
[220] T 426.42-45 (Lu XN).
[221] T 427.4 (Lu XN).
[222] T 429.5-6 (Lu XN).
98The presence of Mr Yu’s signature on the milk bar lease does not, in my view support the existence of the alleged joint venture. Mr Yu gave evidence that: “I signed it because Lucy got a payment from the Centrelink, so she didn’t dare to sign her name on it.”[223] If Mr Yu’s evidence is accepted, that is evidence supporting an inference that Mr Yu’s involvement was for an ulterior purpose, not as a joint venturer.
[223] T 62.11-12 (Yu XN).
99In my view, it is likely that Ms Lu’s handwritten document relied upon by Mr Yu as evidence of his contribution to the milk bar,[224] was created for an ulterior purpose and was not a genuine record of events at the time:
(a) Although the document was relied upon by Mr Yu to show “how much money each of [them] paid to buy [the] milk bar”,[225] that evidence was contrary to his oral evidence that the $100,000 joint cash in the metal box under the bed was used to purchase the milk bar and his pleaded case that he contributed $35,000 personally and the balance of the purchase price was paid from joint funds.
(b) The notation on Ms Lu’s handwritten note to the effect that “Yu has already paid 20,000”[226] could not be a genuine record of a contribution made by Mr Yu from his own funds; “that I take out the 20,000 from myself”[227] as on Mr Yu’s evidence, they pooled the receipts from the travel business in cash in a box and used that to fund the milk bar purchase.
(c) Ms Lu conceded the document was created for an ulterior purpose, albeit for the purpose of trying to fool her husband at the time.[228]
[224] CB 7603-4.
[225] T 322.1-3 (Yu XXN).
[226] T 70.7 (Yu XN). CB 7601.
[227] T 70.25 (Yu XN).
[228] T 445.25-36 (Lu XXN).
100Other documents relied upon by Mr Yu to support the alleged joint venture, such as a Telstra bill in Mr Yu’s name with the milk bar address on it, an Optus tax invoice showing an account in the names of Mr Yee (said to be Mr Yu) and Ms Lu, support an inference he was “involved” beyond Ms Lu’s description of his limited involvement in her evidence. It may be concluded that Mr Yu was an active participant in Ms Lu’s tour coach business and that they were friends and work colleagues.[229]
[229] T 455-456 (Lu XXN) on the assumption that Mr Yee was Mr Yu. For example, the record of the “Business
Partnership Agreement” dated 30 March 2001 for the restaurant business at CB 5864. Mr Yu was a director and shareholder of Sun Star Group Pty Ltd, a company associated with the restaurant business, and of Australia North Group Pty Ltd, a company associated with the tour coach business, and other matters referred to in [10] of the plaintiff’s written closing submissions.
101As Mr Hines opened, documents show that:
“…he was very much involved in these businesses. He was a manager and had all sorts of responsibilities and appears on all sorts of documents. And the question is whether he was just an employee, or whether he was in effect, a partner with the first named defendant.”[230]
[230] T 3.28-32. Mr Hines submitted in closing that those documents and matters show that Mr Yu “had an
important role in the businesses.” Plaintiff’s written closing submissions at [10].
102I am not satisfied that Mr Yu was “in effect, a partner” and that the alleged joint venture existed.[231] I am not satisfied on the balance of probabilities that a finding of the alleged joint venture ought to be made. To the extent documents recording financial transactions were discovered, they were in Ms Lu’s handwriting, consistent with them being her notes of her business transactions. The evidence of payments made by students into Mr Lu’s bank account and from the coach tours business into Ms Lu’s Commonwealth Bank account[232] was consistent with Ms Lu’s evidence that they were her businesses. Mr Yu conceded that:
(a) Ms Lu had control of Mr Lu’s account;[233]
(b) Ms Lu made all of the withdrawals from Mr Lu’s account;[234]
(c) there was another account in Ms Lu’s name into which receipts and profits of the milk bar business were paid;[235] and
(d) records of transactions were made by Ms Lu in her “recording book” in her handwriting.[236]
[231] T 3.31-32.
[232]T 79.41-80.11 (Yu XN). CB 7874, CB 7878. Mr Yu’s evidence that Lucy deposited money into the account and customers of the tour coach business.
[233] T 79.41-43 (Yu XN)
[234] T 81.3 (Yu XN)
[235] T 81.16-23 (Yu XN).
[236] T 89.44-45 (Yu XN). Relating to the year 2000.
103To the extent Mr Yu said that he contributed money, no documents were produced which showed money came from Mr Yu.[237] In respect of whether any documents were produced which showed any profit split between Ms Lu and Mr Yu, Mr Yu said, “Yes. No such record. However, we had discussion and verbal agreement.”[238] For the reasons set out above, I reject Mr Yu’s evidence of such discussions and verbal agreements.
[237] For the reasons set out above, in my view, Ms Lu’s handwritten note relied on by Mr Yu as evidence of contribution was more likely than not created for an ulterior purpose and not a genuine record of contribution by Mr Yu.
[238] T 376.35-40 (Yu XXN).
104To the extent that Mr Yu’s name appears on business related documents, that is consistent with the following:
(a) Mr Yu was a manager in charge of Ms Lu’s coach fleet. This is consistent with Ms Yong’s evidence and perception that Mr Yu was the person whom her personal assistant would contact when she wanted to arrange things.[239] Mr Yu’s driving records tendered by him in re-examination are consistent with Mr Yu having been a driver.[240] This, in turn is consistent with Ms Lu’s evidence of his role. According to Ms Lu, “[E]very driver had the similar record of this…This kind of yellow sheets are – were kept by drivers, but there are other records kept by the company.”[241]
(b) The evidence of Mr Wang (who worked for Australia North Group and Golden City Coach Travel from 2009 to 2018) was also consistent with Mr Yu having been “involved” but not in the way alleged. Mr Wang described “John Yu [as] was one of the driver.”[242] When it was put to Mr Yu in cross-examination that in 2011 and 2012, Mr Yu told Mr Wang that he was a business partner of Ms Lu, that both were his bosses and that he had shares in Ms Lu’s business, Mr Wang responded, “Yes, he talk about – I believe he – he was saying that way…yes, because he always talking rubbish”.[243]
[239]T 580.44-581.16 (Yong XN). Ms Yong ran Extragreen Travel Agency and first met Ms Lu around 2009 when she hired her coaches.
[240] SCB 208-52.
[241] T 438.9-16 (Lu XN).
[242] T 571.13 (Wang XN).
[243] T 574.5-36 (Wang XXN).
105I reject the allegation of the alleged joint venture. In my view, it may be concluded that Mr Yu and Ms Lu were close over many years, as shown by some of the photos tendered.[244] I am not, however satisfied on the balance of probabilities that their relationship was as claimed by Mr Yu.
[244] CB 334-40.
106In my view, Mr Yu constructed the alleged joint venture with the benefit of hindsight in the knowledge of the businesses that had been established and properties purchased from 1998. At the time of the alleged joint venture conversation in 1998, it is manifestly unlikely that he would have foreseen each of a tour coach business, a milk bar business, the setting up of an office in the milk bar, and the purchase of houses as follows:
“I told her that now I’m starting a small business as a travel- like, in charge of the travel buses and it could start very small and I’m planning to have a milk bar and, if she’s willing – if Lucy is willing, she can working in the milk bar. And if she wants, she can also help me with my small bus business and, in the future we can set the office in the milk bar. And we can, together, invest in more real estate – invest money in the real estate in the future. And then we can make the business bigger. We can buy more houses…
Lucy said that from now on, we can slowly – to make business better and bigger, we put money investment of the real estate and also make the travel business bigger. And put our money together.”[245] (emphasis added)
[245] T 44.7-40.
107That Mr Yu constructed the alleged joint venture with the benefit of hindsight was underscored in cross-examination:
MR MITCHELL: Do you say you discussed the milk bar in 1998, Mr Yu?
INTERPRETER: That’s not – not exactly correct. We initially just discussed how to earn money to make a reinvestment…Just it happens on the same street where we were living around in June 1999 a milk bar was on sale, so we start to think about to buy milk bar.”[246] (emphasis added)
[246] T 373.27-34 (Yu XXN).
108Had I not permanently stayed the proceeding, I would have found for the defendants and dismissed the proceeding.
Conclusion
109The plaintiff’s claim is permanently stayed as an abuse of process of the Court.
110Subject to any matters that the parties bring to my attention on the question of costs I propose to order that the plaintiff pay the defendants’ costs of the proceeding (including reserved costs) on the standard basis, in default of agreement.
111I invite the parties to prepare draft orders to give effect to these reasons.
- - -
Certificate
I certify that these 111 paragraphs are a true copy of the judgment of Her Honour Judge Brimer delivered on 27 October 2023.
Dated: 27 October 2023
Sue Ye
Associate to Her Honour Judge Brimer
IN THE COUNTY COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL DIVISION – GENERAL LIST
CI-19-05341
BETWEEN
XIN QIANG YU Plaintiff
and
OU LU AND OTHERS Defendants
UPDATED AGREED SUMMARY OF KEY ISSUES
1. Should the proceeding be stayed as an abuse of process by reason of:
a.the passage of time since the relevant events occurred;
b.inferred and demonstrated prejudice to Ms Yu;
c.the dismissal of the prior proceeding for near-identical relief by Derham AsJ under the Civil Procedure Act 2010?
Not pleaded but the subject of agreement between counsel on 30 January 2023 that it would be in issue at trial
Is the plaintiff estopped by reason of the Family Court judgment fromalleging that:a.Mr Yu and Ms Lu lived together at the Inkerman Street milk barbusiness: J [396]b.Mr Yu contributed $35,000 to the purchase of the milk bar business: J[428];c.Ms Lu did not purchase the Gertz Avenue property and the otherproperties registered in her own name, and in the name of the seconddefendant with her own funds and her father’s funds: J [430], [432],[464]d.Mr Yu was not an employee of Ms Lu and her first husband in B&QTours: J [456]e.the Gertz Avenue property was funded by proceeds from the sale ofthe milk bar business: J [457]f.Mr Yu made financial contributions to the restaurant businesses: J[458]?Not pressed
Did the plaintiff and defendant enter into a joint venture agreement?
Amended statement of claim (SOC) at [5]-[6]
If so:
a. what were its terms?
b. when did the joint venture agreement come to an end?
SOC at [6], [37]
Did the alleged joint venture give rise to fiduciary duties?
SOC at [38]
If so, what was the content and duration of the duties?
SOC at [38]
7.To what extent did Mr Yu contribute to the purchase price of the milk bar business?
SOC at [9]
8.Did Mr Yu and Ms Lu agree to purchase the milk bar business as a joint venture asset?
SOC at [8]
9.How were the profits (if any) and proceeds of sale of the milk bar business dealt with?
SOC at [11], [17], [20]
10.What amount of profits and or proceeds of the milk bar business were retained as joint venture property for the use of any joint venture?
SOC at [17], [20]
11.Were the following coach businesses established, funded or conducted as joint venture undertakings:
a. B&Q Tours Co;
b. North Coach Travel;
c. North Coach Travel Pty Ltd;
d. Australia North Group Pty Ltd;e. Golden City Coach Travel Pty Ltd.
(the coach businesses)?
SOC at [12], [13], [22], [23]
12.To what extent did Mr Yu contribute to the cost of the establishment of the tour coach businesses?
SOC at [12]
13.How were the profits (if any) of the coach businesses dealt with?
SOC at [14], [17], [20], [24], [32], [34], [36]
14.Does Mr Yu have any personal right to any profits of the tour coach businesses?
SOC at [39]-[40], [43]
15.Were the following restaurant businesses purchases or conducted as joint venture undertakings:
a. Shun Feng Seafood Restaurant;
b. Lonsdale Star Restaurant
(the restaurant businesses)?
SOC at [15], [25]
16.To what extent did Mr Yu contribute to the cost of the purchase or establishment of the restaurant businesses?
SOC at [25]
17.How were the profits (if any) and proceeds of sale of the restaurant businesses dealt with? SOC at [29]
18.Does Mr Yu have any personal right to any profits or proceeds of the restaurant businesses?
SOC at [39]-[40], [43]
19.Were any of the real properties purchased as joint venture assets:
a. 712/233 Collins Street, Melbourne;
b. 31 Gertz Avenue, Reservoir;
c. 907/L9 397-407 Docklands Drive, Docklands;
d. 87 Whitehill Avenue, Sunshine North;
e. 98 Doncaster Road, Balwyn North(the real properties)?
SOC at [16], [19], [31], [33], [35]
20.To what extent did Mr Yu contribute to the purchase price of the real properties?
SOC at [17], [20], [32], [34], [36]
21.If so, what is the nature and extent of that interest?
SOC at [43]
22.Has Ms Lu acted unconscionably?
SOC at [40]
23.Has Ms Lu breached any fiduciary duty owed to Mr Yu?
SOC at [40]
24.Has Ms Lu breached a term of any joint venture agreement?
SOC at [40]
25.Insofar as there has been any breach of fiduciary duty, did Luou Pty Ltd receive and become chargeable with property to which a fiduciary obligation attached?
SOC at [41]-[42]
26.Is Mr Yu entitled, by reason of the alleged unconscionability, breach of contract of breach of fiduciary duty, to:
a. a one-half interest in the real properties held for him on a constructive trust;
b. an account of revenue or profits;c. equitable compensation?
SOC at [43]
27. Are Mr Yu’s claims in equity:
a. barred by laches and/or acquiescence;
b. barred by the application of the Limitation of Actions Act 1958 by analogy?
Further Amended Defence (Defence) at [47]
28.Are Mr Yu’s claims to recover alleged trust property barred by s 21(2) of the Limitations Act 1958?
Further Amended Defence (Defence) at [47]
29.Are Mr Yu’s claims based in contract barred by s 5(1) of the Limitations Act 1958?
Further Amended Defence (Defence) at [47]
30.Is Mr Yu entitled to any of the relief that he seeks?
SOC Prayer for relief
0
17
0