Zhao v Chen

[2023] VCC 1252

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

General List

Case No. CI-22-02503

JIKANG ZHAO	Plaintiff
V
YUQIN CHEN	Defendant

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JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	19 July 2023
DATE OF JUDGMENT:	25 July 2023
CASE MAY BE CITED AS:	Zhao v Chen
MEDIUM NEUTRAL CITATION:	[2023] VCC 1252

REASONS FOR JUDGMENT
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Subject:CONTRACT

Catchwords:              Debt claimed under a loan agreement as varied – alternative claim for moneys had and received – conversion of judgment debt in RMB ¥ to Australian dollars

Legislation Cited:      Supreme CourtAct 1986; Penalty Interest Rates Act 1983

Cases Cited:Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135; Weatherbeeta Limited v Hammersmith Nominees Pty Ltd (No 2) [2019] VSC 713

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J D S Barber KC	TNS Lawyers
For the Defendant	No appearance

HER HONOUR:

1By this proceeding, the plaintiff seeks to recover funds which he lent to the defendant. The plaintiff paid the sum of RMB ¥3,000,000 to the defendant on 12 June 2020. It was a term of the loan agreement reached that the defendant would repay this amount by 3 July 2020. It was also agreed the defendant would pay the plaintiff interest on the borrowed funds which was fixed in the sum of RMB¥30,000, representing one percent of the principal debt. The date for repayment was later extended by agreement to 30 April 2021. Despite demand, the defendant has failed to repay any of the moneys advanced or the agreed interest sum.

2The proceeding was listed for trial on 19 July 2023. There was no appearance by or on behalf of the defendant at the hearing. Solicitors formerly acting on her behalf were given leave to file a notice of ceasing to act on 28 June 2023. The defendant submitted a request for interlocutory determination on 12 July 2023 seeking to adjourn the trial. The defendant was ordered to provide an affidavit setting out the grounds for her adjournment application by 4pm on 17 July 2023. The application for an adjournment was listed on 18 July 2023. Due to the failure of the defendant to provide an affidavit in support of her application for an adjournment, the adjournment application was vacated. The defendant was notified that the trial would proceed as listed on 19 July 2023.

3On 17 and 18 July 2023, the defendant forwarded correspondence to the Court, informing the Court that she was seeking to obtain the assistance of an insolvency practitioner with a view to entering into either a scheme of arrangement or bankruptcy. In her second letter she stated, inter alia:

“… I am currently without legal representation and have no statements to make. Instead, I will be entrusting my case to an Insolvency practitioner.”

Despite the matter being called inside and outside of court on 19 July 2023, the defendant did not appear. The trial then proceeded with the plaintiff giving evidence via an interpreter.

Background

4The plaintiff is aged 77 and resides in China. He is the chairman of a Chinese company which manufactures various items of mechanical equipment, such as lifts and air-compressors. He has been the chairman of this company for some 45 years and is a shareholder. The plaintiff also owns a property at Templestowe in Victoria where he was living prior to the Covid pandemic.

5The plaintiff first dealt with the defendant in around 2015. She acted on his behalf as a migration agent. The plaintiff engaged her to pursue a visa on his behalf. The other matter in which she acted for him was in respect of an investment of $250,000. This investment was made in an entity known as Oakhill High Income Fund. The defendant arranged the investment for him and signed a contract on his behalf. The plaintiff then provided her with the investment money to invest in the fund. This took place in 2018.

6The plaintiff gave evidence that in April 2020, the defendant sent him a WeChat message. She said she was in urgent need of money in the sum of RMB ¥3,000,000. The defendant told him she needed it for approximately three weeks, but did not tell the plaintiff why she needed to borrow the sum in question. The plaintiff was willing to advance her the money because he trusted her as she was his migration agent. He also thought that if he assisted her it would speed up the completion of his migration application.

7The terms of the advance were recorded in a document described by the plaintiff as an IOU certificate dated 11 June 2020.[1]  This document was prepared by the defendant at the plaintiff’s request. The plaintiff gave evidence that he had asked the defendant to prepare the document so he would have written proof that the defendant had borrowed moneys from him. The borrowing date is stated as 12 June 2020 and the loan amount is RMB ¥3,000,000. It was a term of the loan agreement that interest would be paid in the fixed amount of RMB ¥30,000, being one percent of the principal debt. The repayment date for the principal debt and interest is stated as 30 June or by 3 July 2020. That date was worked out according to the plaintiff, on the basis that it would be about three weeks from the date of the advance. The document bears the defendant’s signature which the plaintiff said he recognised and was executed by her as a deed.

[1]Court Book (“CB”) 150 – translation at CB148

8On 12 June 2020, the plaintiff transferred the loan funds to the defendant’s Industrial and Commercial bank account in Shanghai. He was assisted in that task by one of his accountants, as he was not able to do it himself. He confirmed in his evidence that the money paid over to her was from his own funds. The plaintiff also confirmed that it was never mentioned to him by the defendant that this loan was to be an investment by him and/or a joint venture with her or an equity investment. This evidence rebutted allegations which had been pleaded in an amended defence filed on behalf of the defendant dated 26 May 2023 concerning the nature of the advance.

9The plaintiff gave evidence that the defendant did not repay any moneys to him by 3 July 2020. Thereafter, he and the defendant engaged in various messages by way of WeChat. The plaintiff said he was concerned that the money would not be repaid and also because in China, money borrowed and owed for over two years cannot be recovered. Under the circumstances, he asked the defendant to write another IOU certificate. He did receive a further IOU certificate from the defendant which was posted to him by her. The plaintiff identified an original document written in Chinese, as being the IOU that he had received from the defendant.[2] This document is dated 20 January 2021. (A copy of this document appeared at CB 179 and an English translation at CB 178.) The difference with this document was that it had extended the date for repayment to 30 April 2021 (or as early as possible before this date). This document bore the signature of the defendant which the plaintiff said he recognised when giving his evidence. The defendant did not repay any moneys by 30 April 2021.

[2]        Exhibit P-2

10After 30 April 2021, the plaintiff engaged in further WeChat messages with the defendant. The parties exchanged further WeChat messages in 2022. Despite making suggestions in the messages that she would repay the moneys owed from the proceeds of sale of a property which she owned or possibly repay by instalments, the defendant never made any payments to the plaintiff.

11Thereafter, there were further messages between the plaintiff and the defendant. On 16 May 2022, the defendant forwarded a long voice file to the plaintiff which contained a lengthy message. Amongst other things, the defendant said that she had been deceived and that there was a court case in Beijing concerning her own investment, which was a failure. She said she had made a loss. She also referred to the fact that her mother had been deceived and scammed by someone in Shanghai. The defendant referred to her various difficulties but told the plaintiff not to worry as she was not someone who wants to default. A translation of this message is at CB 233-236. Counsel for the plaintiff pointed out that the accuracy of the translation was admitted by reason of the defendant’s failure to respond to a notice to admit dated 28 June 2023. No notice to dispute the contents of the notice to admit was ever served by the defendant.

12The plaintiff’s solicitors sent a formal letter of demand to the defendant on 25 May 2022.

13Subsequently, this proceeding was commenced by writ filed 29 June 2022.

14The plaintiff gave evidence that he had not been repaid any of the moneys that he had advanced to the defendant, nor had he been paid any interest on the loan.

15The plaintiff seeks judgment upon the principal sum advanced, together with the interest which was fixed at RMB ¥30,000. The plaintiff seeks judgment in Australian dollars, relying upon the decision of  Byrne J in Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2).[3] The plaintiff relied upon this judgment as being authority to the effect that he was entitled to seek to have the debt in RMB currency converted to Australian currency upon the entry of judgment.

[3] [1998] VSC 135

16In respect of the interest claimed under the Penalty Interest Rates Act 1983 the plaintiff seeks interest from the date of the writ in accordance with s60 of the Supreme Court Act 1986, but solely upon the principal amount. The plaintiff does not seek interest upon the fixed interest component claimed of RMB ¥30 million, on the basis that it is not permissible to claim interest upon interest.[4]

[4]See Connock J re Weatherbeeta Limited v Hammersmith Nominees Pty Ltd (No 2) [2019] VSC 713

Analysis and conclusion

17Having regard to the oral evidence that was given together with the documents tendered in the Court Book[5], I am satisfied that the plaintiff proved there was a loan made by him to the defendant in the sum of RMB ¥3,000,000. The defendant admitted in paragraph 2 of her amended defence that she received this money into her bank account. I am further satisfied that the plaintiff advanced the moneys personally to the defendant and that those funds remain outstanding.

[5]        Exhibit P-1

18I find it was also an agreed term of the loan agreement that the defendant would pay interest to the plaintiff on the moneys borrowed, fixed in the sum of RMB ¥30,000.

19Although the plaintiff relies upon the loan agreements executed by the defendant as the primary cause of action, it is clear that the plaintiff would also have been entitled to judgment on the alternative cause of action pleaded, namely, moneys had and received.

20I will therefore order judgment be entered against the defendant in the amount of RMB ¥3,000,000 being the principal debt, together with interest fixed in the sum of RMB ¥30,000. I accept that the plaintiff is entitled to have the judgment debt converted into Australian dollars as at the date of entry of the judgment. The plaintiff’s lawyers will be directed to provide a calculation of the relevant sum in Australian dollars so that judgment can be entered in that currency. I will also ask the plaintiff’s lawyers to provide a calculation of interest claimed under s60 of the Supreme Court Act from the date of the writ to the date of entry of judgment.

21Unless the parties bring to my attention any reason why the usual order that costs should follow the event should not apply, I will further order that the defendant pay the plaintiff’s costs of and incidental to the proceeding, including any reserved costs, to be taxed on the standard basis in default of agreement.

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Certificate

I certify that these 6 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 25 July 2023.

Dated: 25 July 2023

Associate to Her Honour Judge A Ryan