Zou v Yang; Wei v Yang; Yang v Zheng
[2024] QDC 21
•13 March 2024
DISTRICT COURT OF QUEENSLAND
CITATION:
Zou v Yang; Wei v Yang; Yang v Zheng [2024] QDC 21
PARTIES: BD 3972/18
JIANGMIN ZOU
(Plaintiff)v
JUN YANG
(Defendant)And
BD 3973/18
GUIRONG WEI
(Plaintiff)
v
JUN YANG
(Defendant)And
BD 2771/19
JUN YANG
(Plaintiff)
v
YOULIN ZHENG
(Defendant)FILE NOS:
BD 3972/18
BD 3973/18
BD 2771/19
DIVISION:
Civil
PROCEEDING:
Claim
ORIGINATING COURT:
Brisbane District Court
DELIVERED ON:
13 March 2024
DELIVERED AT:
Brisbane
HEARING DATES:
17 to 21, 24, 26, and 28 April 2023 and 5 May 2023.
JUDGE:
Porter KC DCJ
ORDERS:
In proceedings BD 3972/18:
1. The parties provide submissions as to the proper form of judgment in favour of the plaintiff along with submissions as to interest and costs.
In proceedings BD3973/18:
1. The parties provide submissions as to the proper form of judgment in favour of the plaintiff for her debt claim and dismissing the claim for statutory sale, along with submissions as to interest and costs.
In proceedings 2771/19:
1. The proceedings are dismissed.
2. The parties provide submissions as to costs.
CATCHWORDS:
CONTRACT – Agreements – Loan – Where the plaintiff in 3972/18 seeks to recover RMB 2m lent to the defendant – Where the defendant contends the loan was repaid – Where the plaintiff contends that the repayment should be characterised as payment of a dividend to the plaintiff as a shareholder – Whether the defendant’s payment comprises a dividend or repayment of the loan – Whether a dividend could have been lawfully paid under Chinese law – Whether if unlawful, the payment would still be characterised as a dividend under Chinese law – Whether if payment was a dividend but was a mistaken payment or unlawful payment, it can give rise to a defence or counterclaim when not pleaded in the proceeding.
CONTRACT – Proper construction – Performance – Mode of performance – Where the plaintiff in 3973/18 seeks to recover RMB 2.5 to the defendant – Where a third party company contracted with the plaintiff to transfer car spaces in a building in Guilin and executed a purported transfer of specific car spaces– Whether, by those agreements, the debt was immediately discharged or was discharged only the transfer of the car spaces – Whether, if performance was a condition of discharge, the car spaces had been transferred so as to discharge the loan – Whether in construing the purported transfer, “right to use” should be given a legal technical meaning.
CONTRACT - SECURITIES – Proper construction – Alleged promise to include future property in security – Where a Debt Receipt recording the loan in 3973/18 provides that the defendant is willing to use assets equivalent to the Wei loan under his name as collateral – Where the plaintiff alleges those words create an equitable charge over future property of the defendant located in Queensland – Where the proper law of the loan agreement and Debt Receipt was Chinese law – Whether on the proper construction of the Debt Receipt, the defendant gave security over future property located in Queensland – Where expert evidence of Chinese law provides opinions on the issue before the Court rather than providing evidence of Chinese law principles applicable to construction.
CONFLICT OF LAWS – CHOICE OF LAW RULES – Characterisation of the issue to be determined – Proper law of substantive validity of security over land situated in Queensland – Where the proper law of the contract creating the security is Chinese law – Whether the proper law of substantive validity of the security is the proper law of the contract or the lex situs – Whether, if the proper law of substantive validity is Chinese law, the doctrine of renvoi applies – Whether if renvoi applies, Chinese statutory choice of law rules would resolve the question of substantive validity of a security over land located in Queensland by the proper law of the contract creating the alleged security or by the lex situs.
CONTRACT – Misrepresentation – Where the plaintiff in 2771/19 purchased a unit, with the assistance of the defendant – Where the plaintiff claims that he purchased that unit in reliance on misrepresentations overstating the market value of the unit, and overstating the price paid by the registered owner – Whether the defendant made the representations alleged – Whether the plaintiff relied on the alleged misrepresentations in purchasing the unit.
CASES
British South Africa Co v De Beers Consolidated Mines Ltd [1910] 2 Ch 502
Commonwealth v Yarmirr (2001) 208 CLR 1 at 207
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78
Gardiner v Agricultural & Rural Finance Pty Ltd [2007] NSWCA 235
Haque v Haque (No 2) (1965) 114 CLR 98
Landel Pty Ltd v Insurance Australia Limited [2021] QSC 247
Murakami v Wiryadi (2010) 109 NSWLR 39
Neilson v Overseas Projects Corporations of Victoria Ltd (2005) 223 CLR 331
SECONDARY SOURCES:
COUNSEL:
Collins et al, Dicey & Morris; The Conflict of Laws (16th Edn)
LexisNexis Australia, Cross on Evidence (online at 12 March 2024)
Davies, Bell, Brereton and Douglas, Nygh’s Conflict of Laws in Australia (10th Edn)
D O’Brien KC and G Yates for the plaintiffs in 3972/18 and 3973/18 and the defendant in 2771/19
C Truong KC and J Leung and for the defendant in 3972/18 and 3973/18 and the plaintiff in 2771/19
SOLICITORS: Enyo Lawyers for the for the plaintiffs in 3972/18 and 3973/18 and the defendant in 2771/19
Herald Legal for the defendant in 3972/18 and 3973/18 and the plaintiff in 2771/19
Contents
SUMMARY
CHRONOLOGICAL OVERVIEW
Ms Zou and Mr Zheng
Mr Yang
Initial dealings
The Yang visa applications
The Zou loan
The 161 visa is approved
The unit
The payments to Ms Zou
The Feiyang loan
The Wei loan
Mr Zheng working for Feiyang?
Sale of the unit
The car space transfer agreements
Awkward communications
The Feiyang litigation in China
The litigation in Queensland
THE PRINCIPAL WITNESSES
Mr Yang
Mr Zheng
Ms Zou
CONFLICTS OBSERVATIONS
Sources of Chinese law
Construction and performance
Limits on scope of expert evidence
The experts
THE ZOU LOAN
Repayment or Dividend?
Dividend under Chinese law
Dividend issue irrelevant
The dividend issue
Conclusion on the Zou loan
THE WEI LOAN
The issues in dispute
Conditional or immediate discharge?
The parties’ submissions
General observations on construction
The Offset agreement granted a conditional discharge
Have the car spaces been transferred?
Nature of property rights to be transferred
No transfer of rights of has occurred
Conclusion on the Wei loan
THE WEI SECURITY
Proper construction
Proper law of validity of security
Parties submissions
Characterisation for Queensland conflict of laws purposes
The proper law of substantive validity
Application of Chinese domestic law
To renvoi or not to renvoi? That is the question.
Conclusion on proper law issue
A claim for equitable relief?
Conclusion on the Wei security
THE MISREPRESENTATION CLAIM
Introductory comments
The alleged representations not proved
The direct evidence
Other evidence
Other issues
Conclusion on the misrepresentation claim
Loss
FINAL OBSERVATIONS
SUMMARY
The plaintiff in 3972/18 is Jiangmin Zou[1] (Ms Zou). She is the wife of the defendant in 2771/19 (Mr Zheng). The plaintiff in 3973/18 is Guirong Wei (Ms Wei). She is Mr Zheng’s mother. Mr Zheng is her litigation guardian in that proceeding. She took no part in the trial. The defendant in the claims by Ms Zou and Ms Wei, and the plaintiff in the claim against Mr Zheng, is Jun Yang (Mr Yang).
[1] The Chinese names in the proceeding appear to have been presented mostly with the personal name first and the family name second, although on some occasions the Chinese convention is used. There is also occasions where the parties refer to persons by reference to what appears to be their first name (Ms Ning for example). I have adopted the style of address used by the parties.
For some years prior to the events the subject of this trial, Mr Zheng and Mr Yang were business associates and friends. From about 2010, they had several business and personal dealings. Amongst those dealings, Ms Zou lent RMB[2] 2m to Mr Yang (the Zou loan), and Ms Wei lent RMB 2.5m to Mr Yang (the Wei loan). By proceedings 3972/18, Ms Zou seeks to recover the Zou loan with contractual interest at 24% per annum. By proceedings 3973/18, Ms Wei by her litigation guardian Mr Zheng, seeks to recover the Wei loan with contractual interest limited to 24% per annum.
[2] RMB is an abbreviation which refers to the currency of the People’s Republic of China, Renminbi or sometimes Renminbi Yuan, with Yuan being the principal unit of that currency.
Also during their dealings, with the assistance of Mr Zheng, Mr Yang purchased a unit at 23001/5 Lawson Street Southport (the unit) from Ning Yang (Ms Ning) in August 2013. Mr Yang claims by proceedings 2771/19 that he purchased that unit in reliance on misrepresentations as to value and price by Mr Zheng. The three proceedings were heard together.
At trial, four principal issues arose:
(a)Whether the Zou loan was discharged by a payment of RMB 2m on 16 April 2014;
(b)Whether the Ms Wei loan was discharged by entry into agreements for the transfer of certain car spaces located in a building in Guilin, China;
(c)If not, whether the Wei loan was secured by a charge over a property owned by Mr Yang at Logan in Queensland; and
(d)Whether Mr Zheng made the representations alleged and if so, whether Mr Yang relied on them in purchasing Ms Ning’s unit.
For the reasons which follow I find:
(a)The Zou loan has not been repaid;
(b)The Wei loan has not been discharged;
(c)There is no charge over Mr Yang’s Logan property which secures the Wei loan; and
(d)Mr Yang has not established that Mr Zheng made any representations in relation to Mr Yang’s purchase of the unit.
Accordingly, I conclude:
(a)Ms Zou is entitled to judgment against Mr Yang in 3972/18, including contractual interest at 20%;
(b)Ms Wei is entitled to judgment against Mr Yang in 3973/18, including contractual interest limited at 20% but her claim for orders for sale of Mr Yang’s Logan property must be dismissed; and
(c)Mr Yang’s claim in proceedings 2771/19 must be dismissed.
I will hear the parties as to the proper form of orders to give effect to these conclusions, along with issues of costs.
CHRONOLOGICAL OVERVIEW
The three separate proceedings were the subject of separate pleadings, witness summaries and submissions. However, the events relevant to each proceeding arose from the relationship between the parties, particularly the relationship between Mr Zheng and Mr Yang. Further, there is an overlap in the chronology of events directly relevant to each proceeding. Understanding the specific events and assessing the likelihood and consistency of the disparate evidence on key issues requires a consolidated, chronological narrative. Although there are occasional references to conflicting evidence, the following overview is based on facts which were either accepted by all parties or were not materially challenged at the trial.
Ms Zou and Mr Zheng
Ms Zou was born in China. She moved to Queensland in about February 2000. She is an Australian citizen. She can read and speak English fluently. She also speaks Mandarin.
Mr Zheng was born in Guangxi Province in China. He moved to Australia in February 2000. He is an Australian citizen. He speaks Mandarin fluently. He is not fluent in English. Observing him in the witness box, I formed the view he has only limited facility in English. He gave evidence that he reads English. While it is not unknown for a person to have much greater capacity in reading a language than in speaking it, I was unable to assess the extent to which Mr Zheng read English.
Ms Zheng and Ms Zou are married. They live at Sunnybank Hills. The couple have been involved together in two businesses for many years.
The first is Australia Olin Pty Ltd (Olin) trading as Olin Migration and Education, which carries on the business of assisting migrants to obtain visas to study in, or migrate to, Australia. It appears to have operated continuously since about 2001. Most of its clients are Chinese. Mr Zheng and Ms Zou were and are the directors of Olin, though Mr Zheng ceased to be a director between 2007 and 2013. Ms Zou is a licensed immigration agent. Mr Zheng is not. Mr Zheng’s role was described by him as responsibility for the business administration of Olin. He also described himself as an employee of Olin. Ms Zou described his role as marketing manager. My impression from the evidence overall was that his role in Olin is not formally defined, and that he assists in the activities of the business as and when he can do so.
Olin Realty Pty Ltd (Olin Realty) carries on a real estate business. Again, Ms Zou is a director of that company, with Mr Zheng being a director from time to time. Ms Zou is the licensee of Olin Realty. Mr Zheng said he was an employee of Olin Realty and that he held a real estate agent sales licence, but again his role appeared to be rather fluid.
Although Mr Zheng is not a plaintiff in either of the claims against Mr Yang, he is the principal protagonist on his family’s side of the record in all three proceedings. He was for a time close friends with Mr Yang. He had all relevant conversations with Mr Yang; he was responsible for the commercial dealings with Mr Yang; and caused at least his mother, Ms Wei, to make the Wei loan. For convenience, I sometimes refer to the Zheng parties to include Mr Zheng, Ms Zou and Ms Wei.
Mr Yang
Mr Yang was also born in China. While in China, he was involved with business in Guilin City in Guangxi Province. In 2005 he incorporated a company named Lingui County Yijang Tourism Development Pty Ltd (Lingui, sometimes referred to at trial also as Yijang). Lingui owns a tourism site in Lingui County. Lingui County is a popular tourism area in Guangxi region. It is close to the city of Guilin, which is frequently mentioned in these reasons. The precise nature of the enterprise carried on by Lingui was not fully explained. At the least, however, it seem to involve some form of tourism or leisure site for which an entrance fee is paid.
Mr Yang is also involved in at least one further property business, called the Feiyang Project. The Feiyang Project was commenced in about October 2012 as a joint venture between two companies, sufficiently identified as Xincheng and Liangchung (and together, the joint venturers or Feiyang). Mr Yang owns 49% of Liangchung, and the majority shareholding in that company is held by Xincheng, which is in turn owned by two other persons. In broad terms, the venture was originally one pursued by Mr Yang and the two persons who own Xincheng, though ultimately Mr Yang came to control the whole project, as we shall see.
The Feiyang Project is a large residential and property development project on 36 acres of land located in Guilin (as I understood it, anyway). It comprises six buildings (designated T1 to T6) around a large, elevated courtyard area or atrium. Xincheng was the main developer and Liangchung was said to deal with investment. My impression was that Liangchung’s role was marketing and sales, though the matter was never fully explained.
There are photographs of the Feiyang Project taken in or about early 2015 and it appears that all the six buildings had been constructed at least to a substantial degree by then,[3] (though there is a dispute on the evidence as to whether, at least as at that time, all six buildings were complete and able lawfully to be used[4]). There are also photographs in evidence taken around the time of trial showing all but T5 apparently completed (T5 did not appear clearly in those photographs).
[3] Ex. 5.
[4] TS2-52 from.36.
The layout of the car park for the Feiyang Project is relevant to the Wei loan because Mr Yang contends that that loan was discharged by the transfer of ownership of some car spaces in the Feiyang Project car park in lieu of repayment of the sum due. There are photographs taken recently showing the entrance to the car park for the Feiyang Project and showing numbered car spaces in the car park. There is also in evidence a plan of the car park which was attached to the car space transfer agreements relied upon by Mr Yang.[5] I accept that those photographs are accurate and depict the car park entrance and the car park for the Feiyang Project as it was at the end of 2015. I further accept that the car park plan is a plan of the Feiyang Project car park (or at least, one level of it) as built as at the end of 2015.[6]
[5] Ex. 4.
[6] Mr Zheng does not really dispute any of those conclusions and, in any event, it does not seem possible that T1 to T4 could have been built (as shown in the 2015 photographs) without the construction of the basement car park, because it appears to have been a common basement level to those four buildings TS6-32 to 33, STB163 – 175 and Ex. 4.
Initial dealings
Mr Yang met Mr Zheng (and presumably Ms Zou) in about 2009 or 2010. They were introduced by an immigration client of Olin, who was a friend of Mr Yang’s. The meeting most likely occurred in Guilin. Mr Zheng and Ms Zou were frequently visitors to China and, specifically, Guilin. I infer that Mr Yang was at that time considering his options for living in Australia.
Several events then occurred in relatively quick succession in the commercial relationship of the three people. The details and order of the events are a little uncertain, but the overall picture is clear.
In 2010 or perhaps 2011, Mr Yang came to Brisbane, either at the invitation of Mr Zheng and Ms Zou or by arrangement with them, seemingly with the intention of buying a residential property. Mr Zheng had properties to show Mr Yang, none of which he liked. However, at the end of his inspections, Mr Yang saw a house he liked at 8 Hawthorn Circuit, Stretton (the Stretton house). Mr Zheng knocked on the door and spoke to the owners (who I infer were Chinese) and ultimately Mr Yang purchased that property.
Also in 2011, Lingui purchased land with the intention of expanding its existing site and developing a project called the Yijiangyuan Leisure Villa. Mr Zheng and Ms Zou agreed to invest in Lingui. They acquired shares in Lingui for RMB 6,135,000 (about AUD 1.2m). It appears that these shares were purchased rather than issued. Although the details are not agreed, it is uncontentious that once those share had been acquired:
(a)Initially, the shares in Lingui were held by the Yang, Zheng, Zou and a Mr Liu; and
(b)Thereafter, Mr Liu departed as a shareholder in about March 2012, leaving Mr Yang the majority shareholder with 67% and Mr Zheng and Ms Zou together holding the balance, seemingly 13% and 20% respectively.
The Yang visa applications
At around the same time as their commercial relationship was blossoming, Mr Yang also seemingly decided to seek Mr Zheng and Ms Zou’s help to obtain Australian residency. He retained Olin to assist him to obtain a visa.[7] Olin lodged two visa applications for Mr Yang. In January 2011, Olin applied on Mr Yang’s behalf for a subclass 163 visa. This is a visa designed to facilitate residence in Australia by a foreign passport holder for the purpose of establishing a business. It does not lead directly to permanent residency.
[7] The events surrounding the visa applications have some substantive relevance to Mr Yang’s claim against Mr Zheng and were also the subject of cross examination of Mr Zheng and Ms Zou as to credit. However, despite the extensive evidence about them, they were not central to the resolution of any of the proceedings.
While the precise circumstances are not agreed,[8] all parties accept that pending the determination of the 163 visa, it was decided to seek a subclass 121 visa. A 121 visa is a visa based on employment of the applicant in a specialist area of work by a sponsoring Australian employer. An employer was required to employ Mr Yang and to sponsor his visa application. For that purpose, Mr Zheng introduced Mr Yang to Ms Ning, who was an old classmate of Ms Zou and who ran a real estate business called Antaeus Property Group (Antaeus) through a company called UQIE Services Pty Ltd (UQIE). [9] There is no evidence Mr Yang knew Ms Ning before he was introduced to her, nor that he ever communicated directly with her until August 2013. Communications between potential employer and potential employee appear to have been through Mr Zheng and Olin.[10]
[8] Reasons suggested or hinted at in the evidence include that the 121 visa was seen as more directly leading to permanent residency, and that the 121 visa was a fall back in case the 163 visa was refused.
[9] Ex. 15.
[10] TS2-22 to 24 and TS6-45.
In May 2012, Olin applied on Mr Yang’s behalf for the 121 visa. The application form stated that Mr Yang was to be employed by Antaeus for three years on a salary of some $250,000 as a marketing manager. These terms appear to have met the requirements for the 121 visa, which was concerned with facilitating the employment of foreign persons with specialist skills. It appears an employment contract was signed by Mr Yang on 21 May 2012. The application was premised on Mr Yang working substantially in China,[11] rather than in Australia, which would prove problematic.
[11] TB1886.
After the 121 visa application was lodged, Mr Zheng sent an email with two attachments to Mr Yang. The email was dated 1 June 2012 and was in Chinese characters, as were its attachments. The covering email provided (in translation):[12]
Mr. Yang, Hou,
Greetings! I am now sending you the questions that the Department of Immigration (Department of Home Affairs) may investigate. These are simply based on our speculation and for your reference only. Wish you all the best! Have a good weekend!
Zheng
[12] TB1763.
The “questions” attachment provides draft answers to specific questions. Much of the content of the answers is wrong. It is sufficient to set out questions 1 and 2 and the proposed answers:[13]
[13] TB1771.
1. Who is your sponsor?
(1) Ning Yang, female, 41 years old (English name: Nina Yang)
(2) Trading name: Antaeus Property Group
(3) Company name: EQIE Services Pty Ltd
(4) Telephone: 0408778308 (we usually contact each other by mobile phone)
(5) …
2. How did you get to know each other?
During the Real Estate Expo in Guilin, Guangxi Zhuang Autonomous Region, China, in later September 2010, Ms. Yang was promoting properties and businesses in Australia and I came to know her at the exhibition. After getting to know each other, we engaged in a very cordial conversation and established consensus on property development and marketing. Ms. Yang hoped that I could recommend more clients to her to purchase properties in Australia. From then onwards, we kept in touch with each other frequently and exchanged information on the property markets in China and Australia. At the same time, I used my connections with tour agencies, business survey groups, tour groups for visiting friends and relatives, golf tours to Australia, etc. to recommend clients with the intent to buy properties in Australia to Ms. Yang. Since the end of 2010 until now, I have recommended more than 50 individuals to Ms. Yang and all of them from Guangxi. As far as I understand, some of the people that I recommended have purchased properties in Australia through Ms. Yang and they include Chunsu Wang, Yibiao Lu, Hingxius Jin, Qing Wan, Jialin Jin, Ruiqi Liu, Jinmei Zhang, etc. They have already purchased shopping centres, land and residential properties.
On 19 August 2011 and 17 October 2011, I travelled to Brisbane, Australia, to meet up with Ms. Yang, mainly to discuss about how to collaborate together in promoting Australian properties. I held the opinion that the development of the property market in China had been impeded by the restrictions imposed on property purchase and loan approval, whereas the property market in Australia was relatively stable. The Australian properties also had the advantage of very steady return on investment and freehold ownership. As such, there was huge potential in developing the Australian property market in China. Therefore, I proposed to Ms. Yang to work for her company and she was very willing to act as my sponsor so that I could work at her company.
The answer in parenthesis in point (4) in question 1 is wrong. There is no basis to conclude Mr Yang and Ms Ning ever contacted each other by mobile phone at that time. Further, almost everything in the draft answer to question 2 is wrong. Mr Yang was introduced to Ms Ning as a possible 121 visa sponsor through Mr Zheng in 2012, and had no direct dealings with her until, at the earliest, August 2013. These statements were written by a novelist, not a journalist. Someone wrote this piece of fiction. Mr Zheng and Ms Zou were challenged extensively about this document in cross examination and each claimed ignorance of its preparation and content. Whatever about that, it is not in dispute that the document was sent to Mr Yang by Mr Zheng under the cover of Mr Zheng’s email.
Although the details are contentious, it is common ground that in about mid-2012, Mr Yang paid $250,000 in relation to the 121 visa application. Both Mr Zheng and Mr Yang also agree that:
(a)The purpose of the payment was to fund, at least in part, the set up of an office of Antaeus in Shanghai;
(b)The payment was conditional on the success of the 121 visa application; and
(c)The payment was paid directly to Antaeus (though Mr Yang says without his knowledge or consent).
Mr Zheng was the middleman between Mr Yang and Ms Ning in relation to this payment. Both Mr Zheng and Mr Yang agree that Mr Yang did not speak directly to Ms Ning about the matter. It was negotiated through Mr Zheng.[14]
[14] TS2-24.
The 121 visa was refused by the Department on 25 September 2012 because the position proposed would not be based substantially in Australia. There was no appeal. Although the particulars of when and how the demand for repayment of the $250,000 was made are contentious, it is common ground that it was not paid back by Ms Ning or Antaeus at that time.
The Zou loan
The next significant event was the making of the Zou loan. It is uncontentious that:
(a)An oral agreement was reached between Mr Zheng, on behalf Ms Zou, and Mr Yang for Ms Zou to lend Mr Yang RMB 2,000,000, repayable on demand, at an interest rate of 24% per annum;
(b)The oral agreement was reached between the two men in Guilin in March 2013; and
(c)Ms Zou caused the funds to be transferred to Mr Yang’s account in China pursuant to that oral agreement, with the funds being received into Mr Yang’s personal account on 3 April 2013.
By his defence, Mr Yang disputed his liability inter alia on the basis that the borrower was Lingui, not him personally. He gave evidence in support of that contention, explaining that the discussions with Mr Zheng leading to the loan were about Lingui’s need for capital. However, in final submissions Mr Yang accepted that the loan was made to him personally.[15] The parties also agree that the proper law of the Zou loan is the law of the People’s Republic of China. In the absence of some agreement to the contrary, that must be correct. The agreement is an oral agreement, to lend money in Chinese currency, reached in China, between persons speaking Mandarin, with the loan to be advanced by payment to a Chinese bank account located (presumably) in China. Chinese law is plainly the system of law most closely connected to the loan agreement.[16]
[15] See para. 107 of Yang trial submissions.
[16] Davies, Bell, Brereton and Douglas, Nygh’s Conflict of Laws in Australia (10th Edn) at 19.28 to 19.32.
The 161 visa is approved
Not long after the Zou loan was advanced, Mr Yang’s 161 visa application was successful. Mr Zheng was in Guilin with Mr Yang at that time. He gave Mr Yang the good news on 20 May 2013. On 28 May 2013, Mr Zheng and Mr Yang went out to celebrate. About that time, Mr Zheng told Mr Yang that he could stay in Australia for four years under the 163 visa, and that he had to establish his business in that time.
The unit
Hot on the heal of his successful 161 visa application, Mr Yang travelled to Queensland. He arrived in Brisbane on 6 August 2013 and was picked up by Mr Zheng. At this time the $250,000 in relation to the 121 visa remained outstanding. Mr Yang’s purpose for travelling on that occasion is not entirely agreed. However, it is agreed that at least one matter he informed Mr Zheng about was that he wanted to resolve the issues of the outstanding $250,000. Mr Yang said that was his primary concern. Mr Zheng said Mr Yang also said his purpose was to plan his steps to comply with the business requirements of the 163 visa. That seems both logical in the circumstances, and likely.
Oddly, neither witness said that Mr Yang foreshadowed buying a unit on the Gold Coast with an ocean view when he first arrived. However, by about 12 August 2013, Mr Yang was at Southport inspecting two units with ocean views owned by Ms Ning. How that situation came about, and what happened in the subsequent brief negotiations, is disputed. For present purposes it is sufficient to focus on the uncontentious events.
Prior to about 12 August 2013, Mr Zheng had arranged with Ms Ning for Mr Yang to inspect two apartments owned by Ms Ning in Lawson Street Southport with ocean views. On or around 12 August 2013, at least Mr Zheng and Mr Yang travelled down to inspect those units. Mr Yang negotiated through Mr Zheng with Ms Ning to buy one of the units over the next day or so.
On 15 August 2013, Mr Yang entered a contract to buy the unit for $808,000.[17] The contract was not subject to finance. It also appears that Foreign Investment Review Board approval was required but not obtained.)[18]
[17] TB1579-1592.
[18] TB1553 para. 31.
Ms Ning bought the unit in November 2005 for $680,000 and it is common ground that the market value of the unit as of August 2013 was $430,000. Yang’s case is that he was misled by Mr Zheng into believing that the unit was worth the price he paid by overstating the market value of the unit (though that surely was a matter of opinion, rather than a representation of fact) and overstating the price paid by Ms Ning to acquire the unit.
The contract recorded a deposit of $208,700. Next to this handwritten figure, appears the notation “Paid N Y”.[19] No funds were actually paid by Mr Yang as a deposit. Rather, the funds paid by Mr Yang for the 121 visa were credited by Ms Ning as the deposit. The difference between the deposit and the $250,000 advance is $41,300. Mr Yang said he permitted this deduction because Mr Zheng had told him costs of the 121 visa application amounted to that sum.[20] Mr Zheng was not asked about this.
[19] TB1584
[20] TS6-64.
The contract provided for settlement on 21 August 2013.[21] It therefore required Mr Yang to pay some $600,000 plus stamp duty of about $30,000 at short notice. The contract apparently settled on or about the settlement date, given that Ms Ning signed the transfer on 21 August 2013 and it was lodged by 4 September 2013. It seems Mr Yang was able to pay $630,000 on barely one week’s notice,[22] and he did so while owing Ms Zou RMB 2m and paying interest at 24%, as we will now see.
[21] TB1586.
[22] While I could not locate the historical certificate of title in the material, there is no suggestion that Mr Yang obtained finance for the acquisition (or at least finance from a financier who required a registered mortgage), something which tends to be confirmed by the fact the settlement statement of the subsequent sale provided for the balance sale price to be paid to Mr Yang.
There is a peculiar incident alleged following settlement. Mr Yang gave evidence that around the time of settlement of the contract, Mr Zheng came to Mr Yang’s home and offered him $8000 in cash which he told Mr Yang was a commission Ms Ning had paid Mr Zheng for the sale of her unit. He said Mr Zheng told him he “was unable to receive the money” and seemingly offered it to Mr Yang. Mr Yang said that he could not receive the money either and came up with the solution of using the money for a vacation. He said he used the money to pay for a vacation at the Versace hotel for both families from the 30th to the 31st of August 2013.[23]
[23] TS6-77 to 78. The transcript says 13th to 31st but must be mistaken. It is far more likely that Mr Yang said 30th to 31st. That is consistent with the document in the exhibits and 18 days is an extremely improbable event, especially as it predates settlement by nearly a week.
Each of Mr Zheng and Ms Zou denied that they and their daughter went on a holiday to Versace with Mr Yang and his family. A receipt in Ms Zou’s name, issued by the Versace Hotel for two rooms on the night of 30 August 2013 was tendered. Ms Zou accepted in cross examination when shown the document that she had probably been there that night, but maintained it was not to stay with Mr Yang’s family.
The payments to Ms Zou
Mr Yang transferred payments to an account of Ms Zou held with a bank in China on account of monthly interest due on the Zou loan in the amount of RMB 40,000 starting on 2 May 2013. Those payments continued, more or less monthly, until April 2014. Each of those payments were recorded in the translation of Ms Zou’s bank statement as being made by (or perhaps related to) Mr Yang, who is identified as the ‘other person’ in the translated account statement. Each payment also contained the odd description ‘payment for goods’. Each identified the account number related to the payment (presumably this records a transfer from that account). Four different account numbers are recorded.[24] Ms Zou gave unchallenged evidence that the description included for the payment was entered by the payer, not by her.[25] It is reasonable to infer that the account number and payer details are also sourced from the payer rather than Ms Zou.
[24] TB47 to 53.
[25] TS4-88 to 89.
On 16 April 2014, there was a payment to Ms Zou’s Chinese account of RMB 2,000,000. It is again recorded as being ‘payment for goods’ and Mr Yang is identified as the ‘other person’. This is of course the same amount as the Zou loan. Ms Zou contends however that it was a dividend paid on her investment in Lingui. Mr Yang contends it was repayment of the loan. Whether it was or not is the central issue in Ms Zou’s proceedings.
There are uncontentious text exchanges between Ms Zou and Mr Yang which are relevant to this issue. They are notable as direct contemporaneous communications between Ms Zou and Mr Yang and are a contrast with the usual course in these events where communications were between Mr Zheng and Mr Yang.
They proceed as follows, with some factual observations added to give context:[26]
[26] TB74.
(a)On 9 March 2014, Ms Zou sent to Mr Yang the:
Excuse me Yang Zong, the money for this month hasn’t been credited to the account
(b)Some time later, Mr Yang responded:
Apologies Saozi, I’ve been too busy these days and just forgot. Will arrange within a couple of days. All the best!
(c)Ms Zou responded “Thanks!”;
(d)On 17 March 2014, an interest instalment was paid in the amount of RMB 40,000;
(e)On 11 April 2014, Ms Zou texted:
Yang Zong, the interest for this month hasn’t been received, sorry for bothering you.
(f)There was no response but an interest instalment was paid on that date;
(g)On 16 April 2014, the RMB 2m payment was made;
(h)On 17 April 2014, the following texts were exchanged:
Zou: Greetings Yang Zong, the 2 million Yuan of company dividend has been received. Thanks a lot! It’s been a correct move to invest on you!
Yang: My pleasure!
Zou: Thanks again. Youlin Zheng mentioned that you planned to come on 23rd. Have you decided?
Yang: Yes, looking forward to meeting you!
Despite Mr Yang’s contention that that payment comprised repayment of the Zou loan, payments continued to be made to Ms Zou’s account consistent with a monthly interest obligation of RMB 40,000; however, on occasions months were missed, then several payments were made at once. So for example, there was a payment of RMB 40,000 on 8 May 2014 (about a month after the last such payment), then no payments for three months. On 18 June 2014, Ms Zou texted Mr Yang pointing out that the interest for that month had not been paid. There was no text reply. However, there was a payment of RMB 120,000 on 28 August 2014, and another 80,000 Yuan payment on 14 October 2014. All the payments made after 17 April 2014 are recorded as being made by Wen Haolin, who is Mr Yang’s brother-in-law and was at that time involved in Mr Yang’s affairs. Those payments stopped after 14 October 2014.
The Feiyang loan
At some stage, probably around December 2013 or January 2014, Mr Zheng and Ms Zou became involved in the affairs of the Feiyang Project. Although it was not much explored at trial, the unchallenged (and credible) evidence is that over that period, Mr Zheng and Ms Zou lent RMB 10,390,000 to the joint venturers (the Feiyang loan) repayable after one month, in February 2015.[27]
[27] It appears they might initially have lent the money to Lingui which on lent it to the joint venturers, with Lingui subsequently assigning its claim to them: see the finding of the Intermediate People’s Court of Guilin at TB168.
The Wei loan
The next significant event was the Wei loan. In about mid-December 2014 at a meeting in China, probably in Guilin, an oral agreement was reached between Mr Zheng on behalf of his mother Ms Wei and Mr Yang for Ms Wei to lend Mr Yang RMB 2,500,000, for one month at an annualised interest rate of 36% per annum. It was also agreed that the sum would be repaid a month after the advance was made. Although not formally conceded by Mr Yang, it is very likely Mr Yang also made some form of oral offer of security.
In contrast with the Zou loan, there is a written memorandum of the loan terms. On 19 December 2014, Mr Yang and Mr Zheng signed a document written in Chinese with the translated heading ‘Debt Receipt’ (the Debt Receipt). It stated:[28]
I, Yang Jun, now borrow RMB2,500,000 from Wei Guirong only. The loan period is one month starting from the date when Wei Guirong’s final loan amount being transferred into my personal account. I promise to pay interest at 3% per month (RMB75,000). If I cannot repay the loan within the time limit, I am willing to use the assets or ownership equivalent to the loan under my name as collateral in addition to the interests calculated according to the actual daily occurrence.
[28] TB722.
The original document has a handwritten note which provides Mr Yang’s account details. The account number is one of those from which payments of interest were made to Ms Zou (the account number ending 5951). The translation includes a further handwritten note that is translated to “each payment of RMB500,000 was made, and the last payment was made on 23 December 2014”. It is unclear when that note was added and by whom. However, what it records is uncontentious. The Wei loan was made in five instalments of RMB 500,000 starting on 19 December and ending on 23 December 2014.
Again, it is common ground that the proper law of the Wei loan and the Debt Receipt is Chinese law, and as with the Zou loan, that position seems, respectfully, to be correct. Whether that choice of law applies to the alleged security in the debt receipt and whether that choice of law includes Chinese choice of law rules is another matter. Those issues are dealt with below.
Mr Yang did not repay the Wei loan one month after 23 December 2014. He paid the monthly interest amount of RMB 75,000 on 23 January 2015 and paid the interest for February 2015 by two instalments, and then paid no further interest on the Wei loan, nor did he repay the principal. Notably, at about this time the joint venturers were due to repay the Feiyang loan as well. They did not.
Mr Zheng working for Feiyang?
Mr Yang said that Mr Zheng acted in an executive role in management of the Feiyang Project from April 2015 to April 2016. He relies on a single meeting minute from 23 November 2015 as corroboration. That was a minute of a meeting of representatives of the joint venturers, the builder and the financing bank for the Feiyang Project to discuss the cashflow problems facing the project at that time.[29] Mr Zheng accepts he was at that meeting but denies any formal role in management of the Feiyang Project. He says he attended that meeting at the request of Mr Yang as a favour to listen to what occurred. He said Mr Yang was not in Guilin at the time but Mr Zheng was, and that is why he attended.[30] I deal further with this below.
[29] TB1486.
[30] TB795.
What is uncontentious (and is confirmed by the minute), is that the Feiyang Project was in significant financial difficulty at the time, consistent with Mr Zheng’s evidence of a call he had with Mr Yang on 11 November 2015, just prior to the meeting.[31] Mr Yang was in turn under financial pressure, not only because he owed money to the Zheng parties accruing interest at a high rate, but also because he was a creditor of Feiyang for very substantial sums (some RMB 20m, at least).
[31] TS2-48.33 to .43.
One would assume unequivocal evidence would exist if Mr Zheng acted as a senior officer of the Feiyang Project for any period. On the other hand, the meeting in question was a crucial one in the life of the development, seemingly attended by very senior people from all parties. It might seem odd that Mr Zheng showed up just to listen to the discussion solely based on his friendship with Mr Yang. However, such an act by Mr Zheng is in my view broadly consistent with the seemingly close relationship, personal and financial, between he and Mr Yang at that time. And of course, the Zheng parties had a financial interest in the Feiyang Project’s ability to generate funds to repay the loan they had made (whether directly or indirectly) to the joint venturers. For these reasons (and for the other reasons dealing with Mr Yang’s reliability set out below), I accept Mr Zheng’s evidence on this issue.
Sale of the unit
It was presumably the financial pressure on the Feijang Project which led Mr Yang to try to mortgage the unit and, when that was not possible (because the bank would not advance a loan secured by the unit unless FIRB approval was obtained), to sell the unit. That process was started well before November 2015. But then financial pressures do not appear without warning. In any event, Mr Yang had decided to sell the unit at the latest by mid to late September 2015. This can be inferred from his appointment of an agent to sell the unit by a Form 6 Appointment of Agent dated 24 September 2015.
Mr Yang sold the unit on 23 December 2015 for $468,000. This is some $340,000 below the price he paid Ms Ning just over two years earlier. It is accepted that the market price of the unit at the time he purchased it from Ms Ning (August 2013) was $430,000,[32] so the contract price in December 2015 reflected market value. There was no suggestion to the contrary.
[32] Yang trial submissions at [195]; Zheng parties trial submissions at [301].
Mr Yang consulted with three different agents before accepting a sale at that price. He said once he discovered the likely true value of the unit, he understood he had been deceived by Mr Zheng as to the value of the unit. It is unclear exactly when he says he made that discovery.[33] However, by reference to the Form 6, I can infer that it was at the latest by 24 September 2015. That inference flows from the price of $480,000 inserted in Part 4 Section 3.[34] Given there would have been some lead time prior to final acceptance of that figure as reflecting a realistic market price, it can be inferred that, if Mr Yang had indeed been misled by Mr Zheng, he knew that by about mid-September 2015, just over 2 years after the alleged misleading conduct. He says he did nothing about discovering the deception because of his on-going relationship with Mr Zheng.
[33] TS6-66 to 67 and Ex. 25.
[34] Ex. 18.
At about the same time as the sale of the unit, Mr Zheng and Mr Yang were involved in another property transaction. In late 2015, Mr Yang sold the Stretton Road property (see paragraph [22] above) and acquired a residence at 599 Logan Reserve Road, Logan Reserve (the Logan property). Mr Yang said that in December 2015 he inspected the Logan property with Mr Zheng and sought his opinion, and that he purchased the property just after Christmas (though the transfer was registered in February 2016[35]).[36] It is odd that Mr Yang would seek Mr Zheng’s opinion on value if he believed he had been misled over the unit, though perhaps he thought that was a one-off piece of deception.
[35] TB792.
[36] STB14 (Yang affidavit, paras 16 and 17).
The Logan property is the subject of a caveat arising out of the charge alleged by Ms Wei to arise from the Debt Receipt set out in [52] above.
The car space transfer agreements
As at late 2015, the Wei and Feiyang loans were well overdue. It also appears (despite Mr Yang’s contrary oral evidence[37]) that he recognised that Feiyang Project owed the Feiyang loan.[38] By this time Mr Yang was no longer the junior partner in the Project. During the financial crisis which overtook the Project in late 2015, Mr Yang’s partners appear to have effectively handed over control of the Feiyang Project and its assets to him.[39] This appears to have given him control over, inter alia, some car spaces in the Feiyang Project.
[37] TS6-20.23 to .25.
[38] STB87 at para. 5.
[39] TB734 Yang 2 para. 19 and minutes at TB1486; TS 2-48.33; STB 86 Yang paras 2 and 3 (I note here that though Mr Zheng’s evidence was difficult to understand when it was given, in hindsight he was merely explaining the difficulties which are consistent with the uncontentious minute of the meeting just 12 days later).
Mr Yang sought to discharge his liability under the Wei loan by transferring the ‘rights’ (exactly what those rights comprised is contested) to 12 car spaces in the Feiyang Project to Ms Wei. The genesis of this idea, and the way it came to be documented, is disputed.[40] However, it is not disputed that Mr Zheng agreed to this proposal on his mother’s behalf. There were two documents executed on 9 November 2015 which documented the transaction. The first set out the agreement to offset the loan by the transfer of the car spaces and the second provided for the ‘transfer’. The meaning and effect in Chinese law of both documents is hotly contested. However, the text is not.
[40] Mr Zheng’s version TS2-49; Mr Yang’s version at TS6-18 to 19.
The first document is headed ‘Agreement’ and records the agreement to accept car spaces to offset the Wei loan (the Offset agreement). It provides:[41]
WEI Guirong has lent money to Feiyang International Property Project totalling two million and five hundred thousand RMB, which was advanced in 5 transactions made between 19 December 2014 and 23 December 2014.
Given that it is now difficult for [Feiyang] to sell its properties, it has become unable to repay the loan. After negotiations between the parties, [Feiyang] has agreed to give Wei Guirong twelve parking spaces to offset[42] the debt.
[41] TB768.
[42] Considerable emphasis is placed on the word ‘offset’ by both parties. It is the word used in translation put forward by Mr Yang. There is a different translation in Mr Zheng’s evidence at TB724, but both parties proceeded on the acceptance of the Yang translation: see esp. Yang trial submissions at [147]. I could see no reason to go behind that common approach. Professor Liu proffered a further definition, at TS5-18, where he said “I believe the Chinese word simply means that you’re going to use the car parks to repay the debt” but he did not give evidence as an expert translator nor was the definition he volunteered propounded by either side, nor was it advanced as a translation of the text as a whole.
The Wei offset agreement has the seals of both the joint venturers. It is signed by Wei Guirong but it is uncontentious that it was so executed by Mr Zheng on his mother’s behalf.
The second document deals with the transfer of the car spaces (the Transfer agreement). It relevantly provides:[43]
[43] TB769 -771.
Lianchuang Feiyang International
Agreement for Transfer of Right to Use Parking Space
Party A: Guilin Xincheng Property Development Co., Ltd.
Guilin Lianchuang Industry & Trade Co., Ltd.
Party B: WEI Guirong ID Card No.:45213193308123429
With regard to the matter of Party B purchasing from Party A the right to use parking spaces, Parties A and B have unanimously reached the following agreement in accordance with the Contract Law and other relevant laws and regulations, as well as on the basis of amity, voluntariness and equality, which are the principles of negotiation:
Party A has obtained via transfer the right to use the plot at the intersection of Xicheng Boulevard and Shiji Boulevard in Lingui County, which has been numbered as Lin Guo Yong 2008 No. 718. The contract for the aforementioned transfer of right to use is numbered as Lin Guotu Zirang [2007] No. 3. The planned usage for this plot of land is commercial and residential. Party A has obtained approval for and has constructed commercial housing on the aforementioned plot, which is currently named “Lianchuang-Feiyang International”.
1. Party A hereby transfer to Party B the right to use parking spaces from no. 050 to 058 and
those from no. 061 to 063, which are 12 (twelve) parking spaces in total, in the carpark on Level B1 of Stage 1 of Lianchuang-Feiyang International, which has been independently developed and constructed by Party A. The above parking spaces as purchased by Party B can only be used for the parking of vehicles and cannot be used for other purposes. Party B cannot change the nature, appearance, structure and various facilities of the above parking spaces at will. Should there be damage to the above parking spaces, or accidents resulting from this, Party B shall compensate for the loss suffered by other people and bear the consequences, in addition to paying the cost of restoration. Usage of the parking spaces must be in compliance with rules imposed by property management as well as the parking management system. Relevant management fees must also be paid.
2. The above parking spaces are calculated at Renminbi two hundred and eight thousand
yuan each. The total price for the above parking spaces is exactly Renminbi two million and five hundred thousand yuan (¥2500000).
3. Payment
The total price that is to be paid by Party B on (year)(month)(day) for the purchase of the
parking spaces is exactly Renminbiyuan (¥ ).
Should Party B fail to pay the price in full within the time prescribed by this Agreement, Party A has the right to unilaterally terminate this agreement and sell the abovementioned parking spaces without having to notify Party B. Any interesting arising out of the transfer of the parking spaces belongs to Party A. If Party B has paid a deposit, it will not be refunded.
4. Handover
Once Party B has paid the price for the parking spaces in full, Party A shall transfer the right
to use the abovementioned parking spaces to Party B on 3 November 2015, and Party B shall have the right to use the abovementioned parking spaces (property) rights are not transferred).
Both parties agree that Party A has, on the basis of the above handover date, an extension period of 30 days to perform the handover, i.e. the handover would be deemed to have been performed within the time limit prescribed by this Agreement whether it is performed 30 days ahead of or after the above date.
5. Period of Use
The number of years available to use the parking spaces transferred to Party B is the time
remaining in the right to use the above plot. Party B promises that they will not enter a dispute with Party A in the future over the issue of ownership of the above parking spaces. In the event that the laws or policies of China have specific regulations governing the amount of time available for rights to use parking spaces, the number of years available for using the parking spaces transferred to Party B will be the period as provided in the laws and policies of China.
6. Other relevant matters
a. The sale price does not include property management and service fees for carpark access.
Upon obtaining the right to use the above parking spaces, Party B promises to do the following: to adhere to relevant rules imposed by the property management company for the “Feiyang International” neighbourhood; to use the parking spaces in a civilised manner; and to pay property management fees and their share of electricity and water charges for the above parking spaces as prescribed. Should property management fees be adjusted to market conditions, Party B needs to pay management fees and their share of electricity and water charges for the above parking spaces as adjusted and on time.
b. The above parking spaces can only be used for parking by vehicles of relevant models.
Party B must not change the structure or use of the parking spaces at will.
c. In the event of Part A or the property management company requiring access to Party B’s
parking spaces for service or maintenance work of ducts, Party B must cooperate unconditionally.
7. At the time of signing this Agreement, Party B has already personally inspected the premises on-site and is clear about the location, size and other relevant circumstances of the parking spaces.
8. This Agreement is signed in triplicates – two copies for Party A and one copy for Party B, which will into effect once Party B has signed and Party A has affixed company seals to the documents.
[underlining and interlineation included; blank spaces are blank in original]
The Wei transfer agreement is executed in the same manner as the Wei offset agreement and dated on the same date as the Wei agreement. It had attached to it the plan of the Feiyang Project car park.[44] An enlarged and legible version of that plan is Exhibit 4.[45] Both parties acted on the basis that the proper law of both agreements was Chinese Law. That was plainly a correct approach.
[44] TS2-58.
[45] The relevant parks are highlighted in pink, but that highlighting was mine added during the trial.
There were other similar agreements entered into at the same time with the Zheng parties. The most directly relevant is in favour of Mr Zheng and Ms Zou and relates to the Feiyang loan. Once again it comprises two documents, a repayment agreement, and a contemporaneous transfer agreement. The Feiyang repayment agreement provides:[46]
[46] STB92.
Agreement
Due to capital shortage for the Feiyang International real estate project, a total amount of RMB 31,500,000 was borrowed from Lingui County Yijiang Tourism Development Co., Ltd. on separate occasions from the end of Dec 2013 to the end of Jan 2014. Among the loans, shareholder Youlin Zheng and Jiangming Zou lent RMB 10,390,000 to the Feiyang International Real Estate project.
At present, the sales of the Feiyang International real estate project are difficult, and the loans cannot be rapid. After mutual agreement by the two parties, they agree that 60/80 (Translator’s note: this may be a typo for the number of 68 in the original document) parking bays of Feiyang International real estate project are used to repay Youlin Zheng and Jiangming Zou.
The transfer agreement (the Feiyang transfer agreement) provides:[47]
[47] STB96 to 98.
Agreement on Transfer of Use of Right Parking Bays in [Lianchuang Feiyang International]
Party A: Guilin Xincheng Property Development Co., Ltd.; Guilin Lianchuang Industrial and Trading Co., Ltd.
Party B: Youlin Zheng, Jiangming Zou; ID No.: 450102195810181013, 310107196903241244
In accordance with Contract Law and other relevant laws and regulations and based on the principle of friendly, voluntary, and equal negotiation, Party A and party B have reached the following agreement on the purchase of the use of parking bays by Party B from Party A.
Party A acquires the land use right of the land parcel, Lin Gui Yong 2008 No.718, located at the intersection of Xicheng Avenue and Shiji Avenue in Lingui Country through land transfer. The No. of the contract for transfer of land use right is Lin Guo Tu Zi Ran g[2007] No.3. The planned usage of the land parcel is for commercial and residential purposes; through approval, Party A has developed commodity property project on the above-mentioned land, which is now name [Lichuang Feiyang International].
1. Party A now transfers Party B the use rights of the 30 parking bays which include No.070-086 & No.090-No.102 in the car park under the raised ground floor of Lianchuang Feiyang International (Stage 1) which independently developed and constructed by Party A. The above parking bays purchased by Party B can only be used for vehicle parking and shall not be used for other purposes. The nature, appearance, structure and various facilities of the parking bays shall not be arbitrarily changes, if Party B’s violation of the aforesaid causes damage or accidents, Party B should compensate for the losses caused to others and bear the consequences in addition to the expenses to recover the condition to the original. The daily use should be in line with the property management convention and the parking bay management system with payment of the corresponding management fees.
2. The price of the parking pays is RMB 152,000 each and the total price of the parking bays is RMB 4,560,000.00
3. Payment
Party B should pay off the amount for the parking bays RMB /by/.
If Party B fails to pay the full amount within the time stipulated in the agreement, Party A has the right to unilaterally terminate this agreement and sell the parking bays otherwise without prior notice to Party B where all the interest of the parking bays arising from the transfer belongs to Party A. If Party B has paid the deposit, the deposit will not be refunded.
4. Handover
After Party B pays off the full amount of the parking bays, Party A transfers the use rights of the parking bays to Party B on 9 Nov 2015 and Party B then owns the use rights of the parking bays (no transfer of ownership).
Both parties agree Party A may hand over the parking bays within 30 days of the above-mentioned handover date before or after, any date of which is deemed within the handover period stipulated in the contract.
5. Period of use
The use right of the parking bays transferred to Party B lasts for the period same as the remaining years of the land parcel, and Party B promises not to have any disputes with Party A over the rights of the parking bays in the future; The period of the use right of the parking bays shall be in line with the provisions of the state laws and policies.
6. Other relevant issues
1)The sales price does not include the property management service fee for the car parking bays. After Party B obtains the use right of the parking bays, Party B promises to abide by the relevant regulations by the “Feiyang International” compound’s property management company and use it in a civilized manner and to pay the property management fee and the apportioned water and electricity fee for the parking bays. If the property management service fees are adjusted according to the market conditions, Party B shall also pay the property management service fee and the apportioned public water and electricity fee for the parking bays on time based on the adjusted charging standard.
2)The parking bays can only be used for vehicles of eligible models, and Party B shall not change the structure and purpose of the parking bays without authorization.
3)Party B must cooperate unconditionally when Party A and the property management company need to use Party B’s parking for overhauling and maintaining pipelines.
7. When signing this agreement, Party B has been to the site for investigation, and clearly knows the locations, sizes, and other conditions of the parking bays.
8. This contract is made in triplicate, two for Party A and one for Party B, which will become effective after signed by Party B and sealed by Party A with its official stamp.
There was another such purported transfer of two car spaces to Mr Zheng personally, though I do not consider this transaction sufficiently important to rate further mention.
Whether, and to what extent, the Offset agreement and Transfer agreement together are sufficient, in the circumstances as I find occurred, to extinguish the obligation to repay the Wei loan is the central issue in the Wei proceeding.
It is common ground that Mr Yang was not in Guilin at the time these car space agreements were signed. However, Mr Yang’s sister was a senior officer of the Feiyang Project, and she produced the agreements and caused them to be executed by the two joint venturers.
That amount deducted was not minimal, it amounted to some $41,300. It is inconsistent with Mr Yang’s pleading which is premised on the basis that no disbursement of the funds was lawful: see paragraphs 16 to 22A of the statement of claim. It is inconsistent, at least in substance, with his oral evidence, which was that the money could only be treated as an investment if the 121 visa application was successful.[122] Why, in those circumstances, he would allow a credit of over $40,000 was never explained.
[122] TS6-42 to 43: money paid as an investment in Ms Ning’s company; TS7-79: only permitted for investment on success of application.
Second, Mr Yang’s counsel placed weight on Mr Zheng’s evidence as to how he came to suggest that Mr Yang inspect one of Ms Ning’s units. That evidence certainly was peculiar. Mr Zheng said that, once told of Mr Yang’s interest in units with an ocean view at the Gold Coast, he asked some agents and they had nothing of the kind for sale. Incredibly, that did not include contacting agents located on the Gold Coast. Rather, Mr Zheng appears only to have contacted agents that he knew. I accept that this is odd behaviour, as I thought when hearing it at trial. However, I am not persuaded that it provides a foundation for the alleged conspiracy. Mr Zheng presented to me as someone who does business almost exclusively through personal contacts. It is unusual, but consistent with his approach to commerce as I assessed it watching the whole of his evidence, that he would look to personal contacts to solve this problem. Ms Ning was a personal contact and she had two units which met Mr Yang’s requirements. That Mr Zheng would put Ms Ning and Mr Yang together is not surprising.
Third, Mr Yang relied on the text messages between Mr Zheng and Ms Ning on the evening of 12 August 2013. That exchange was as follows:[123]
12 August, 2013, 10:42
A: 8 hawthorn, Stretton
B: Received, with thanks.12 August, 2013, 21:34
B: Sorry boss. My phone ran out of battery so the call was interrupted. Just charged the phone.
B: Please ask Yang Zong (polite way to address the head of a company) to make an offer based on the actual transaction price : )
B: Thanks for your hardwork boss : )B: Thanks a lot : )
[123] TB1722.
Mr Yang submits that this shows that Mr Zheng knew what the actual transaction price was. That indeed might be so. However, Mr Zheng’s evidence about the circumstances of that text message overall is more consistent with its content than Mr Yang’s evidence. Mr Zheng said:[124]
[124] TS2-34.9 to .46.
MR O’BRIEN: Yes. Mr Zheng, I was asking you about the discussion that you had with Ms Ning about the purchase of the unit by Mr Yang. What did Ms Ning - what can you recall Ms Ning saying about the purchase - the potential purchase of the unit by Mr Yang?
INTERPRETER: She actually said quite a lot. On the 12th of April [sic August], in the evening, I received a text message from Ling and then I passed on the information to Mr Yang and asked the Yang to make an offer based on the valued purchase price. So the second day, I contacted Mr Yang over the phone. The second day, I passed the conversation between me and Ning to Mr Yang. First issue is that I informed Mr Yang, “Ning agrees to the property. Secondly, Ning also agrees to use the balance of the A$250,000 to - and make it as part of the purchase price for the property. And, thirdly, please ask - Mr Yang, please make an offer based on the valued purchase price.” Yang replied, “Regarding making an offer - Mr Yang said, “Regarding making an offer, yesterday, while I was inspecting the unit, Mr Chen Ling Jay searched for me and informed me that the purchase price for this unit is 68,000” - sorry “680,000.” I said, “I don’t know as I didn’t search that information myself.” Yang - Mr Yang asked me, “What’s your opinion on a suitable offer?” I said, “I don’t know. You decide.”
MR O’BRIEN: And did Mister - did Mr Yang make an offer?
INTERPRETER: Then Mr Yang told me that “please tell Ning I would make an offer of 680,000.”
MR O’BRIEN: What did you say in response?
INTERPRETER: The - then I just passed the offer to Ning and informed Ning that Mr Yang is willing to make an offer of 680,000.
MR O’BRIEN: Now, was that conversation on the phone or in person with Ms Ning?
INTERPRETER: All in phone calls. Ning said, “What? So yes, it is true that I purchased this unit for 680,000. However, I spent a lot of money on this unit, including the interest payable to the loan, management - building management fees, city council fees and other legal costs. So I almost spent, like, 900,000 on this - on this unit.” Ning said, “Please tell Mr Yang this information.”
MR O’BRIEN: Now, did you subsequently tell Mr Yang that information in a discussion?
INTERPRETER: Yes. Of course, I told Mr Yang.
Although some caution should be exercised in relation to Mr Zheng’s evidence generally, once again his evidence on this point is more consistent with the content of the text exchange than Mr Yang’s version. Also, Mr Yang gave evidence that Ms Ning did refer to that sum ($900,000) as the value of the unit at the inspection, as explained in [117](c). If that evidence was not a reconstruction in the witness box, it does tend to support Mr Zheng’s version because it shows Ms Ning giving the figure Mr Zheng recalled. I recognise that part of Mr Zheng’s version is inconsistent with Mr Chen’s version as to who obtained the search. I do not think this is sufficient, however, to reject that version.
Fourth, for the reasons given in [129] and [130] above, I am not satisfied of Mr Yang’s version of events relating to the Versace visit. It does not assist the conspiracy inference.
Fifth, at no point was the conspiracy directly put to Mr Zheng in cross examination.
Finally, I accept that it is possible that Mr Zheng might have been embarrassed over Ms Ning’s failure to repay Mr Yang and it is possible Mr Zheng he saw a deal with Ms Ning as a convenient way for Mr Yang to also achieve his objective of recovering money paid on the 121 visa. But it was uncontentious that Mr Zheng and Mr Yang were friends and business associates. Their falling out was well in the future. The proposition that Mr Zheng would deliberately defraud Mr Yang in that context is improbable.
I am not satisfied that the evidence makes good the conspiracy alleged by Mr Yang, much less that it supports the particular representations alleged.
Other issues
Mr Chen’s evidence
Although there was no direct challenge to Mr Chen’s evidence, he had a surprisingly detailed recollection of the minutiae of events relating to the particular days in question, and the particular unit. These events would have been long in the past by the time it appears Mr Chen was asked for his first account. Mr Chen does now have a commercial and personal relationship with Mr Yang. Without intending to question his honesty, one might suspect that some of the detail of his recollection might have been affected by that link.
However, even accepting his evidence, it is not sufficient to address the problems with Mr Yang’s evidence. It gives one cause to question the details of Mr Zheng’s and Ms Zou’s account of the day of the inspection. It gives one cause to question whether Mr Zheng at some point did a search of the unit on the relevant database. But neither consideration provides evidence that the alleged representations were ever made, much less that there was a conspiracy to trick Mr Yang.
No reliance on value representation
There is one further matter to bear in mind. I refer to [118] above. Not only is that inconsistent with his pleaded case but it is also evidence which makes any purchase price representation irrelevant, as Mr Yang says it was not relied on.
Failure to call Ms Ning
Mr Yang relies on a Jones v Dunkel inference arising from the failure of Mr Zheng to call Ms Ning. However, I doubt that a Jones v Dunkel inference arises and even if it does, I am not persuaded it assists Mr Yang in the state of the evidence.
As to the former point, I could not identify any evidence from either side dealing with the failure of Mr Zheng to call Ms Ning in his case. There was no evidence of the current nature of Mr Zheng and Ms Zou’s relationship with Ms Ning. Ms Ning had, until the settlement, been a separately represented party in the misrepresentation proceedings, at least if the settlement deed is anything to go by.[125] Further, the Deed of Settlement of Mr Yang’s proceedings against Ms Ning included a payment of $100,000 by Ms Ning. Mr Zheng’s case was that he had no liability to Ms Ning. Why then should I infer Ms Ning was in Mr Zheng’s camp?
[125] Ex. 3.
As to the latter point, even if Ms Ning was not called and should have been, it makes no difference in this case. As is explained in Cross on Evidence:[126]
Secondly, the rule in Jones v Dunkel permits an inference that the untendered evidence would not have helped the party who failed to tender it. It entitles the trier of fact to take that into account in deciding whether to accept any particular evidence which relates to a matter on which the absent witness could have spoken. It entitles the trier of fact the more readily to draw any inference fairly to be drawn from the other evidence by reason of the opponent being able to prove the contrary had the party chosen to give or call evidence. But the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it. The rule does not create any admission…
[footnotes omitted]
[126] LexisNexis Australia, Cross on Evidence (online at 12 March 2024) [1215].
The other evidence before me fails to make out any aspect of Mr Yang’s misrepresentation case. In that circumstance, Jones v Dunkel will not assist Mr Yang.
Mr Yang’s complaint
Having dealt with all the above matters, I am not persuaded that Mr Yang’s complaints in his April 2016 text is evidence which assists him. It does not refer to any statement or conduct of Mr Zheng. It could just as easily be complaint about Ms Ning’s conduct, as the 1 May 2016 text suggests. Further, those emails were sent nearly three years after the events. Texts sent about that time also showed grave errors of fact by Mr Yang. There is no reason to think he was any more reliable on this issue.
Conclusion on the misrepresentation claim
There are some oddities about the purchase of the unit. However, oddities are not sufficient to make good Mr Yang’s case. I do not accept his evidence about the circumstances of the purchase of the unit generally, nor his evidence of the alleged representations in particular. The misrepresentation case must therefore fail.
Loss
The parties were able to reach agreement on the proper measure of loss by Mr Yang in the event he was successful on the misrepresentation case. That sum was ultimately agreed at $76,000.[127]
[127] TS9-48.
FINAL OBSERVATIONS
I record my thanks for the efficient way counsel conducted the trial, seeking to narrow the issues wherever reasonably possible, and providing helpful and direct submissions on the issues which remained. Without their efforts, the trial and these reasons would have been significantly longer. I record thanks to the indefatigable interpreter, Ms Di, whose resilience and diligence contributed significantly to the efficient conduct of the proceedings.
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