Zheng v Chen - [2024] QDC 139

DISTRICT COURT OF QUEENSLAND

CITATION:

Zheng v Chen [2024] QDC 139

PARTIES:

NIANMIN ZHENG
(Plaintiff)

v

CHENG CHEN

(Defendant)

FILE NO/S:

BD2864/19

DIVISION:

Civil

DELIVERED ON:

30 August 2024

DELIVERED AT:

Brisbane

HEARING DATE:

20 – 23 May 2024 (additional written submissions, 30 May 2024)

JUDGE:

Barlow KC, DCJ

ORDERS:

Judgment for the plaintiff in the sum of $977,600.39, including interest of $627,600.39.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – whether an alleged misrepresentation induced the defendant into the contract – whether the misrepresentation was made – whether the misrepresentation was relied upon

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – what interest rate or rates the plaintiff is entitled to under a loan agreement– whether variations to the loan agreement operate retrospectively – whether different rates of interest apply after the repayment date – whether the interest rate reverts back to a lower rate where there are inconsistent clauses after variations to the loan agreement

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – PENALTIES AND LIQUIDATED DAMAGES – GENERAL PRINCIPLES – whether default rate of interest in a loan agreement is unenforceable as a penalty– whether the interest rate alone is indicative of a penalty

Andrews v Australia & New Zealand Banking Group Ltd (2012) 247 CLR 205, considered
Aquamore Credit Equity Pty Ltd v Hung [2021] NSWSC 1681, considered
Beil v Mansell (No 2) [2006] 2 Qd R 499, cited
Bellas v Powers [2023] NSWSC 1198, cited
Gipps v Gipps [1978] NSWLR 454, cited
Gould v Vaggelas (1985) 157 CLR 215, cited
Lordsvale Finance Plc v Bank of Zambia [1996] QB 753, cited
Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525, considered
QNI Resources Pty Ltd v North Queensland Pipeline No 1 Pty Ltd (2022) 11 QR 686, cited

COUNSEL:

J Hastie for the plaintiff

B O’Donnell KC for the defendant

SOLICITORS:

Madina Lawyers for the plaintiff

Cornwalls for the defendant

Contents

Summary

The events

Misrepresentation

What are the base interest rates?

The terms of the agreement & the issues raised

Retrospective variation?

Interest rate after the repayment date

Does clause 5(3) impose a penalty?

The defendant’s submissions

The plaintiff’s submissions

Consideration

Conclusions

Summary

In 2016, Mr Zheng and Mr Chen were friends. Mr Zheng lived predominantly in China, although he had some property investments in Australia. Mr Chen lived mostly in Australia. Since they met in 2014, Mr Chen occasionally assisted Mr Zheng with the payment of bills for a property on the Gold Coast owned by Mr Zheng and with other private matters arising in Australia.
In April 2016, Mr Chen introduced Mr Zheng to a Mr Flint. He was the director of a property development company – Mondo Grove Pty Ltd – that was intending to develop land in Oxenford into a residential estate of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Zheng v Chen

Details

AGLC: Zheng v Chen [2024] QDC 139
Case: [2024] QDC 139
Decision Date: 30 August 2024

CaseChat Overview and Summary

The case of Zheng v Chen was heard in the Supreme Court of Queensland, where the plaintiff, Mr. Zheng, sought to recover a sum of money from the defendant, Mr. Chen. The dispute arose out of a loan agreement and a subsequent variation that Mr. Zheng claimed was invalid. The plaintiff alleged that the defendant had misrepresented certain terms of the loan agreement, leading to an unjust outcome.

The primary legal issues the court needed to address were whether Mr. Chen had made a misrepresentation that induced Mr. Zheng into the contract, and if so, whether Mr. Zheng had relied on that misrepresentation. Additionally, the court had to determine the correct interest rate applicable under the loan agreement and its variations, specifically whether the variations operated retrospectively, and whether the interest rate reverted to a lower rate following the variations. Another key issue was whether the default rate of interest specified in the loan agreement was enforceable as a penalty.

The court found that Mr. Chen had indeed made a misrepresentation that induced Mr. Zheng into the contract, and that Mr. Zheng had relied on this misrepresentation. The court further determined that the variations to the loan agreement did not operate retrospectively and that the interest rate did not revert to a lower rate due to inconsistent clauses. Finally, the court held that the default rate of interest was not unenforceable as a penalty, as it was not solely indicative of a penalty but also served a legitimate purpose of protecting the lender's interest.

The court rendered judgment in favour of Mr. Zheng, awarding him the sum of $977,600.39, including interest of $627,600.39. This sum represented the amount due under the loan agreement, taking into account the misrepresentation and the proper interpretation of the interest rates.

Orders

Orders of the court

Judgment for the plaintiff in the sum of $977,600.39, including interest of $627,600.39.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Zheng v Chen [2024] QDC 139
PARTIES:	NIANMIN ZHENG (Plaintiff)
v
CHENG CHEN (Defendant)
FILE NO/S:	BD2864/19
DIVISION:	Civil
DELIVERED ON:	30 August 2024
DELIVERED AT:	Brisbane
HEARING DATE:	20 – 23 May 2024 (additional written submissions, 30 May 2024)
JUDGE:	Barlow KC, DCJ
ORDERS:	Judgment for the plaintiff in the sum of $977,600.39, including interest of $627,600.39.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – whether an alleged misrepresentation induced the defendant into the contract – whether the misrepresentation was made – whether the misrepresentation was relied upon CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – what interest rate or rates the plaintiff is entitled to under a loan agreement– whether variations to the loan agreement operate retrospectively – whether different rates of interest apply after the repayment date – whether the interest rate reverts back to a lower rate where there are inconsistent clauses after variations to the loan agreement CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – PENALTIES AND LIQUIDATED DAMAGES – GENERAL PRINCIPLES – whether default rate of interest in a loan agreement is unenforceable as a penalty– whether the interest rate alone is indicative of a penalty Andrews v Australia & New Zealand Banking Group Ltd (2012) 247 CLR 205, considered Aquamore Credit Equity Pty Ltd v Hung [2021] NSWSC 1681, considered Beil v Mansell (No 2) [2006] 2 Qd R 499, cited Bellas v Powers [2023] NSWSC 1198, cited Gipps v Gipps [1978] NSWLR 454, cited Gould v Vaggelas (1985) 157 CLR 215, cited Lordsvale Finance Plc v Bank of Zambia [1996] QB 753, cited Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525, considered QNI Resources Pty Ltd v North Queensland Pipeline No 1 Pty Ltd (2022) 11 QR 686, cited
COUNSEL:	J Hastie for the plaintiff B O’Donnell KC for the defendant
SOLICITORS:	Madina Lawyers for the plaintiff Cornwalls for the defendant