Auslink Investment Co Associates Pty Ltd v Sackl

Outline of claims

1. In a nutshell, the plaintiff seeks damages for 13 payments that were made by the plaintiff to the defendant or to his associated companies.
2. The payments were made pursuant to a purported agreement (partly written and partly oral) entered into by the plaintiff and Sino Singapore, whereby it was agreed that the following would occur: the plaintiff would refer clients seeking to migrate to Australia from China to the services of Sino Singapore; the applicants would pay the plaintiff; and Sino Singapore would provide visa and employment services to the applicants, in exchange for payments forwarded on their behalf by the plaintiff.
3. In fact, at the time of the purported contract, the evidence shows that Sino Singapore was in no position to enter into any contract, because it had been deregistered.
4. The 13 payments sought to be recovered found a claim for unliquidated damages arising from for misleading and deceptive conduct, pursuant to s 236 of the ACL, which is said to be applicable by way of ss 5A and 28 of Fair Trading Act 1987 (NSW). Ten of these payments were paid to an Australian corporation, Sino Australia (which, as I have said above, has been wound up), and three of these payments were paid into the personal bank account of the defendant.
5. With regard to the assessment of damages for the first cause of action, the plaintiff's claim is limited to the extent that the plaintiff was "out of pocket" by way of the 13 payments themselves, plus interest thereon; the plaintiff does not seek further damages on any more indirect or extended basis. In other words, the plaintiff quantified its claim for damages in accordance with all the moneys that were paid from the plaintiff at the behest of the defendant; that is, the 13 payments. Pursuant to its primary cause of action, the plaintiff therefore seeks judgment for $361,000, plus interest calculated from the date of the final payment (26 April 2018).
6. The plaintiff also pleads an alternative cause of action which is a claim under restitution for liquidated damages. This alternative seeks to recover the three payments that were paid straight into the bank account of the defendant, amounting to $176,000. It was explained at the hearing that, with regard to seeking restitution from Sino Australia (the recipient of the other 10 payments) there are obvious substantive and procedural difficulties in proceeding against that wound-up company.

Background

1. The undisputed evidence placed before me at the ex parte hearing by way of affidavits and annexures thereto establishes the following factual propositions.
2. On 6 February 2017, the director of the plaintiff, Ms Chen, met with the defendant and his colleague, Ms Susan Weng. Ms Weng introduced the defendant to Ms Chen as the CEO of Sino Singapore. At the time, Ms Chen was unaware that Sino Singapore had been struck off.
3. During that meeting, the defendant or Ms Weng or both indicated that they operated a "migration division", with branches all over the world. They also spoke of collaborating with the plaintiff in the provision of migration services, and that there was a 100% refund policy for unsuccessful migration applications.
4. In essence, it was agreed that the plaintiff would advertise its services and identify applicants who wished to migrate to Australia; the plaintiff would thereafter introduce them to the defendant; and the defendant would engage migration agencies to organise visas, and would also find Australian employers to support the visa applications. The plaintiff was therefore to become a kind of "intermediary" between the prospective migrants and Sino Singapore. The plaintiff would pay the rates set out in the Referral Agents Agreement (RAA), to be entered into by the plaintiff and Sino Singapore.
5. On 28 February 2017, Ms Chen signed the RAA. The defendant, as CEO of Sino Singapore, signed that agreement on 6 March 2017. Accordingly, the parties to the RAA were the plaintiff and Sino Singapore. The RAA contained the following: enumeration of payments for the services at each stage, a refund policy, various other terms, and a list of other expenses.
6. Upon receiving the draft RAA and before signing it, Ms Chen asked either the defendant or Ms Chen why Sino Singapore and not Sino Australia was the signatory to the RAA. Ms Weng said that Sino Singapore was the parent company of Sino Australia, and that both companies were managed by the defendant. When either Ms Weng or the defendant spoke, neither of them disagreed with each other.
7. Ms Chen remained unaware at the time of signing the RAA that Sino Singapore had been struck off. She only became aware of that from around April 2018.
8. Between March 2017 and March 2018, the plaintiff duly carried out marketing campaigns in China. The plaintiff introduced nine clients to the defendant, all of whom duly advanced money to the plaintiff to be forwarded into the accounts nominated by the defendant.
9. The date of the first payment into a nominated account was 28 March 2017, and the last of the 13 payments was made on 26 April 2018.
10. Beginning in June 2018, the clients received letters from the Department of Immigration (the Department) stating that, after it had carried out checks, it came to the conclusion that the employer designated in the visa application was not genuine, as the employer had not lodged any nominations listing the client as an employee.
11. Shortly after the plaintiff received these letters, Ms Chen telephoned the defendant seeking an explanation. The defendant said that the employers were "nervous", that they had made some mistakes when speaking to the Department, and that he would speak to the employers.
12. On 23 July 2018, a solicitor for the plaintiff contacted one of the purportedly nominated employers, who denied that he was involved in any employment arrangement with the defendant.
13. On 6 August 2018, Ms Chen met with the defendant and his wife. The defendant said that he could resolve the issues, but would require extra payment. Ms Chen declined and demanded a refund instead. The defendant said that refund application forms would need to be filled out in order to process the refunds. He also indicated that he had "some assets" and would be able to meet the refund demands.
14. On 12 September 2018, the plaintiff sent the refund request forms to the defendant by email, also stating that the total amount to be refunded was $361,000.
15. On 27 September 2018, the defendant responded to the demand for payment by confirming that in "usual circumstances", refunds were processed immediately after a 30-day review; however, at that time, the defendant was "forced to await the sale of properties" due to ongoing divorce proceedings.
16. On 12 October 2018, Sino Australia was wound up.
17. The plaintiff commenced proceedings in this Court by filing a statement of claim on 26 October 2018.
18. The defendant has not filed a defence or a notice of appearance.
19. On 17 April 2019, by way of notice of motion, the plaintiff sought default judgment for unliquidated damages. It is that motion ancillary to the statement of claim that this judgment determines.

Submissions

1. In written submissions, counsel for the plaintiff first dealt with the topic of default judgment. It was said that the defendant failed to file a defence within 28 days of service on 5 November 2018, and in accordance with rr 16.2 and 16.3 of the Uniform Civil Procedure Rules (NSW), the plaintiff was entitled to apply for default judgment.
2. Secondly, the plaintiff turned to the claim pursuant to the ACL, and the assessment of damages if it were established on the balance of probabilities.
3. Counsel submitted that the crux of the claim for damages arising from misleading and deceptive conduct is that the defendant represented to the plaintiff that Sino Singapore had the capacity to enter into the oral agreement and the RAA, and that the defendant knowingly failed to disclose the true position of Sino Singapore: it was deregistered and did not possess the capacity to enter into any of the agreements.
4. With regard to the establishing the elements of a claim for misleading and deceptive conduct, counsel referred to four elements: 1. Conduct; 2. in trade or commerce that is; 3. misleading or deceptive (or likely to mislead or deceive); whereby 4. a plaintiff has suffered loss or damage because of the conduct.
5. Concerning the first element of conduct, it was submitted that the defendant's conduct comprised of misrepresentations arising from the defendant informing the plaintiff that Sino Singapore would be entering into the agreement; signing the RAA with Sino Singapore as the named other party; and purporting to cause that company to enter into the RAA by signing the RAA as CEO of Sino Singapore or by providing a draft version of the RAA to the plaintiff, or both.
6. The misrepresentations that flowed from this were that Sino Singapore had the capacity to enter into an agreement; was trading and conducting business; that the defendant was the CEO of Sino Singapore; that he was authorised to enter into the agreements; that Sino Singapore could comply with the refund policy in the RAA; and that the defendant had provided all relevant information with regard to the agreements (the representations).
7. With regard to the second element, it was simply stated that the conduct was in trade or commerce as the conduct involved commercial arrangements for the provisions of services in return for money.
8. In relation to the third element, counsel argued that, through the representations, the defendant had engaged in conduct that was misleading and deceptive because the counter-party, Sino Singapore, was deregistered even though Ms Chen thought the company was reputable and able to enter into a contract; and the defendant had implied that all relevant information had been provided, but that in fact had not occurred.
9. Regarding the fourth element, counsel submitted that loss or damage was patently caused by the conduct of the defendant, in that one can readily infer that the misrepresentations as to the ability of Sino Singapore to enter into a contract caused the plaintiff to make the fruitless payments to the defendant and to Sino Australia.
10. At the commencement of oral submissions, counsel for the plaintiff readily accepted that, as the moving party in ex parte proceedings, he owed a duty to the Court to place before me any reasonable countervailing arguments contrary to his claim, and I respectfully consider that he complied with that obligation.
11. Counsel submitted that, in a nutshell, the defendant had engaged in "self-evidently" misleading and deceptive conduct because he had caused the plaintiff to contract with a corporate entity that in truth did not exist, and thereafter had caused the plaintiff to pay over moneys pursuant to that purported contract.
12. It was submitted that it is clear that the plaintiff relied upon representations by the defendant, because it certainly would not have entered into the basal arrangements if it had known that Sino had been deregistered. Accordingly, it was said, the conduct of the defendant was misleading and deceptive.
13. Furthermore with regard to the primary claim, it was said that the destination of the payments - some of them to the defendant himself, and some of them to the company now wound up - was not to the point. It was submitted that the cause of action is founded upon the conduct of the defendant occasioning loss to the plaintiff, not upon discernment of the destination of the expenditure embodying that loss.
14. Finally with regard to the first claim, it was accepted that in some senses the plaintiff was merely an intermediary between the applicants and the recipients of the payments. It was also conceded, in evidence and in submissions, that the plaintiff remains liable to repay the applicants. It was accepted that, if I were to enter judgment in favour of the plaintiff based upon those payments, there should be a written undertaking provided by Ms Chen to the effect that moneys ultimately received pursuant to any such judgment should, in appropriate measure, be paid on to the out-of-pocket applicants. Shortly after the hearing concluded, I was provided with a written undertaking to that effect.
15. In support of the ancillary claim, counsel for the plaintiff explained that the claim for restitution was maintained only against the defendant, and only with regard to the last three payments said to have been deposited into his personal bank account. But because of my comfortable satisfaction that the primary claim should be upheld, I shall not pause to recount his submissions in that regard more deeply.

Determination

1. In my opinion, the undisputed evidence soundly establishes on the balance of probabilities that the defendant engaged in misleading and deceptive conduct, in that he gave the plaintiff to understand that it was entering into a valid contract with Sino Singapore, when in fact Sino Singapore was disentitled from doing any such thing.
2. In similar vein, I am satisfied that it was that conduct that occasioned loss to the plaintiff, in that it is inconceivable that the payments would have been made by the plaintiff without the seeming foundation of that contract.
3. And without delving into detail, I accept the proposition that an action pursuant to this section of the ACL focuses upon the loss to the plaintiff occasioned by the conduct of the defendant, not the precise destinations of the various payments constituting that loss.
4. Furthermore, as I have recounted, the claim for damages is appropriately measured, in that it does not go beyond the payments themselves, and does not seek recompense for any ancillary expenditure.
5. The claim for interest is also appropriately measured, in that it latches upon the date of the last payment, as opposed to any earlier one.
6. In all the circumstances, I am affirmatively satisfied that the primary claim should succeed, and that the quantum of the judgment, including with regard to interest, should be in accordance with the draft order with which I was helpfully provided by counsel for the plaintiff.
7. In the circumstances, there is no need for me to analyse the alternative claim in restitution against the defendant for a lesser sum.

Costs

1. As for costs, there is no basis upon which I should decline to proceed ex parte with regard to this question as well. Nor is there any basis to depart from the ordinary approach that costs should follow the event. Finally, counsel for the plaintiff did not seek to be heard with regard to any special costs order.

Orders

1. I make the following orders: 1. Judgment for the plaintiff against the defendant for damages as referred to in the statement of claim to be assessed. 2. Verdict and judgment for the plaintiff against the defendant in the sum of $361,000 together with interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 26 April 2018 to 30 June 2019 in the amount of $23,445.22 as calculated in the Schedule, and interest thereafter continuing at the daily rate of $54.40 until the date that this judgment is entered. 3. The defendant must pay the plaintiff's costs of the proceedings.

Schedule Start Date End Date Days Rate Amount Per Day Total 26/Apr/2018 30/Jun/2018 66 5.5% $54.3973 $3,590.22 01/Jul/2018 31/Dec/2018 184 5.5% $54.3973 $10,009.10 01/Jan/2019 30/Jun/2019 181 5.5% $54.3973 $9,845.90 Total 431 $23,445.22

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 October 2019