Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd

Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd - [2016] NSWSC 1232 - NSWSC 2016 case summary — Zoe

[3]

The s 459G(3)(a) affidavits

In accordance with the principle derived from Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund [1996] FCA 822; 70 FCR 452, Shaolin's case upon each s 459G application is confined to grounds disclosed by or discernible from the affidavit supporting the application filed in accordance with s 459G(3)(a). It is therefore necessary to review the content of each such affidavit.
The supporting affidavit was, in each case, an affidavit of 4 February 2016 of John Qiang Wang, Shoalin's secretary. He is an accountant in public practice. His firm began providing accountancy services to Shaolin (including his services as secretary) in about July 2015. He has no first-hand knowledge of the matters forming the basis of each statutory demand. He sent the demands to Yongxin Shi and others as soon as they were received. He later had communication with Yongxin Shi by means of WeChat, an instant messaging service.
In the SQPL case, Mr Wang says in his affidavit of 4 February 2016: "I asked the Abbot Yongxin Shi about the Statutory demand and he told me via 'WeChat' that he on behalf of the Plaintiff, had made an arrangement on behalf of the Plaintiff with all of the plaintiff's directors including Mr Kwok Leong Kwok Leong Pang and its company secretary Mr Phillip Balding that they would provide their professional services on a voluntary basis to the plaintiff for the Development."
In the Kwok Leong Pang case, the relevant passage in the affidavit is: "I asked the Abbot Yongxin Shi about the Statutory demand and he told me via 'WeChat' that he on behalf of the Plaintiff, had made an arrangement on behalf of the Plaintiff with all of the plaintiff's directors including the defendant Kwok Leong Pang and its company secretary Mr Phillip Balding that they would provide their professional services on a voluntary basis to the plaintiff for the Development.
In each affidavit, Mr Wang defines the "Development" in a way that refers to obtaining development and other approvals for the temple project and arranging visas for monks visiting from China.
Among the annexures to each of Mr Wang's affidavits of 4 February 2016 were copies of Shaolin's financial statements for the years ended 30 June 2013 and 2014 received by Mr Wang's firm form SQPL following the change in accountants. Mr Wang deposed that he did not receive any cheque butts, bank statements or monthly account reconciliations. He did, however, receive copies of invoices rendered by architects, the auditors and by SQPL for accounting services as such.
At the time of swearing his affidavits of 4 February 2016, Mr Wang was unable to print out Yongxin Shi's WeChat messages referred to therein. They were stored in his mobile phone. He later managed to print them out. He annexed English translations of the printouts to an affidavit of 17 March 2016. There were three WeChat communications. The English translations follow: "The first recording: Hi Mr Li and Mr Wang, how do you do? I have read and heard your messages and the text you have just left. As for the matter that Guoliang Kwok Leong Pang and the accountant hired by Guoliang Pang asked us to request wages, I have reported it to the relevant Chinese authorities in time. At the beginning, the investigation group promised me their assistance, but they have procrastinated since then and we haven't received any documents from them. So what do we hope them to help us with? From 2006 to a couple of years ago, our Shaolin Temple paid the interest of the land mortgage every month, fees of a dozen of documents, and Mr Pang's cost." "The second recording: For several years in a row, we have paid the interest of the land mortgage, fees of a dozen of documents, and Mr Pang's cost, all of which is a big amount. All these things were mainly handled by Jumin Hu, but he has now been remanded in custody and lost freedom for the moment. Without his personal ID, the bank cannot retrieve any information as our evidence. This is a fact. We hope that the relevant authorities can help and support us to obtain some evidence showing that we have wired payments to Mr Pang. Mr Pang himself should know that it is absolutely absurd to request money from us now. Not long ago, he called us requesting two million, three million." "The third recording: in 2005, Mr Pang called me. After discussing with other parties involved, we agreed to pay him one million as compensation. He then requested for two people's costs of 1.2 million Australian dollars through legal means. This is indeed a huge amount. Originally he said that the accountant he hired would provide free service. He made promises in several occasions in the building where that solicitor and accountant worked that we would owe him nothing after paying the money. He also made promises several times in front of the solicitor, the accountant, and you that we would owe no money to him, not anymore. But now all of a sudden, he came out and claimed that we owe him 1.2 million Australian dollars for two people. This is unnecessary, at least difficult for us, a bit like looting a burning house. Anyway, we would like to solve the issue through legal means."
Looking at the three WeChat messages, the following matters of relevance seem to emerge: 1. The fact that Kwok Leong Pang and the accountant hired by him (obviously SQPL) had asked for "wages" (presumably a reference to remuneration or compensation in a more general sense, rather on wages strictly so called) had been reported to Chinese authorities. 2. At the beginning (presumably when the project began), assistance had been promised by the "the investigation group" but they (whoever they were) procrastinated and did not provide any documents. 3. From 2006 to "a couple of years ago", interest was paid on the land mortgage every month as well as "fees" for "dozens of documents" and Kwok Leong Pang's "cost" (which may mean either remuneration or expenses or both). These were substantial. 4. Money had been wired to Kwok Leong Pang and he should know that it was absurd to request money now. 5. Kwok Leong Pang had recently called requesting two or three million. 6. An agreement was made in 2005 (there was a suggestion in submissions that this may be an incorrect reference to 2015) to pay Kwok Leong Pang "one million" (which, Mr Wang later clarified, meant one million Chinese yuan or renminbi or "RMB") "in compensation". He then required $1.2 million for two persons. 7. Kwok Leong Pang originally said that the accountant he hired would provide free services and that "we" would owe him nothing "after paying the money".
These points elaborate and expand upon the proposition stated in each of Mr Wang's affidavits that services were to be provided "on a voluntary basis" although there is, to my mind, a question as to what "voluntary" means here.

[4]

The genuine dispute case advanced against SQPL

It is not disputed that SQPL was retained by Shaolin to provide certain accountancy services (particularly in relation to GST and other tax matters) or that fees for those services would be payable and have been paid. The statutory demand relates to something quite different, the position of SQPL being that it was also retained to provide day to day administration and management services in relation to the overall project of acquiring land for the temple and obtaining various approvals for the temple development.
Mr Balding gave evidence of a meeting in about December 2008 with Kwok Leong Pang, then a director of Shaolin, and Mr Watson (a local councillor) at which a particular GST matter was discussed. Mr Balding deposed that Kwok Leong Pang had accepted Mr Balding's offer of assistance to attempt to obtain a GST refund and that Kwok Leong Pang had later signed an engagement letter addressed by SQPL to Shaolin for the purposes of that assignment. A copy bearing Kwok Leong Pang's signature on a form of acknowledgment by Shaolin is in evidence.
Mr Balding also gave evidence that, at another meeting about a week later, Kwok Leong Pang asked if SQPL could help with the administration of the company and the creation and implementation of the concept design plan for the development. In response to a question by Mr Balding, Kwok Leong Pang said that this would involve Mr Balding's being secretary of the company and taking control of the DA process, including liaising with architects and government agencies. Mr Balding also deposed that Kwok Leong Pang said, "We can't pay you until it's all finalised". In response to a question from Mr Balding whether the board had agreed, Kwok Leong Pang said that he had spoken to Yongxin Shi and Mr Billich and both had agreed, whereupon Mr Balding signified acceptance and said he would have an engagement letter prepared.
Mr Balding says that such a letter was prepared and was signed by Kwok Leong Pang during a short meeting at SQPL's office on 10 February 2009. A copy of that letter is in evidence. The scope of work was described under four headings: "The application for Development Approval of the Shaolin Temple and associated approvals at the property known as Comberton Grange, Falls Creek"; "Act as Company Secretary"; "Immigration Matters"; and "Other Duties". Further detail that need not be set out appears under each heading.
Kwok Leong Pang gave evidence consistent with that of Mr Balding concerning these arrangement and the signing of the engagement letter. He confirmed the arrangement that the fees were not to be payable until the project was complete. In addition, Mr Billich, a director of Shaolin, gave evidence of a conversation with Kwok Leong Pang in February 2009 about retaining SQPL to help with the day to day running of the company on the basis that remuneration would be deferred until the DA was approved and purchase of the land was completed.
Mr Balding referred in his affidavit to a meeting in February 2015 shortly before a ceremony at Shoalhaven City Council's Entertainment Centre at which cheques for the land were handed over and the purchase was completed. According to Mr Balding, Kwok Leong Pang thanked Yongxin Shi for expressions of appreciation for hard work and said, "I hope you can now pay those fees for me, Street Quinn and the architects"; to which Yongxin Shi replied, "Yes of course, they will be paid".
Having regard to the s 459G(3)(a) affidavit filed in the SQPL proceeding, the grounds on which it is said that there is a genuine dispute about the existence or amount of the debt the subject of the SQPL statutory demand is that Mr Balding had made an arrangement with Yongxin Shi that he (that is, Mr Balding and, no doubt, SQPL as well) would provide professional services on "a voluntary basis" for negotiations and dealings with the government, the local council and other agencies and parties in relation to the development project and arranging visas for visiting Chinese monks - plus such expansion or elaboration of that ground as comes from the content of the WeChat messages.
Mr Wang testified that the minute books of Shaolin in his possession contain no resolution that the company enter into any retainer agreement with SQPL. It is noteworthy that annual accounts of Shaolin prepared by SQPL itself (and referred to more fully in discussion of the Kwok Leong Pang case) contain no accruals for the fees provided for in the letter upon which SQPL relies.
Taken as a whole, the grounds articulated by Shaolin are that certain services (additional to accounting services as such) were to be provided by SQPL without remuneration or reward and that the supposed retainer agreement signed for the company by Kwok Leong Pang alone was not binding on the company. Shaolin further says that the basic proposition is borne out by the fact that no liability or accrual for the fees SQPL says are contractually due was included in company accounts that SQPL itself prepared.

[5]

The genuine dispute case advanced against Kwok Leong Pang

In relation to Kwok Leong Pang's statutory demand, Mr Wang gave evidence that a sum of RMB one million was transferred to a bank account of Kwok Leong Pang's wife in China "in reduction of the amount owed to him which is the subject of the statutory demand". Mr Wang also said that other sums had been paid into Kwok Leong Pang's wife's account but he could not ascertain the amounts because the person in China with details was in custody.
It is not in dispute that Kwok Leong Pang considered himself to have claims against Shaolin on two distinct bases: first, for remuneration; and, second, for reimbursement. An invoice rendered by Kwok Leong Pang to Shaolin on 1 December 2015 covered both these claims, with $3 million referable to director's fees (ten years at $300,000 per year) and $638,859.75 for payments made by him on behalf of Shaolin. Although Mr Wang says that the RMB one million referred to in his evidence (and also in the WeChats) was in respect of the latter item, Kwok Leong Pang's position seems to be that this was towards the director's fees.
Kwok Leong Pang gave evidence of a conversation he had with Yongxin Shi in late 2010 in which Yongxin Shi complained that the project was taking too long and said that he was reluctant to continue funding and that Kwok Leong Pang should seek other sources of finance. According to Kwok Leong Pang, he said that he would himself fund the project but would have to be reimbursed, to which Yongxin Shi replied that reimbursement would be made at the end of the project. Kwok Leong Pang further deposed that he provided funding from April 2009 and, in order to do so, sold assets of his own and borrowed money from friends. He did not provide any funding after 30 June 2014, at which point he was entitled to reimbursement of $638,859.75, a sum reflected in audited accounts of Shaolin.
On 22 May 2015, Kwok Leong Pang sent Yongxin Shi a WeChat message saying that he had paid RMB 5 million for consultants' fees and had received RMB one million. He requested prompt payment of the balance as he had to repay the people from whom he had borrowed. The RMB one million had been paid after Kwok Leong Pang had a telephone conversation with Yan Kan, a financial officer in the Shaolin organisation in China, in which Yan Kan told Kwok Leong Pang that Yongxin Shi had instructed him to send that amount.
On 15 November 2015, Mr Wang informed Kwok Leong Pang by WeChat that the board of Shaolin had been reconstituted and set out certain board resolutions. Mr Wang sent a WeChat to Yongxin Shi on 17 November 2015 telling him that Kwok Leong Pang and his wife had no problem with the resolutions and "they just request (the Shaolin Temple) to repay all debts". Mr Wang's WeChat to Yongxin Shi continued: "I told them that the Abbot would pay them the money in the near future (around the Chinese New Year) and he would arrange a time to visit Australia to resolve a series of problems."
Financial accounts of Shaolin for the year to 30 June 2014 prepared by SQPL and put into evidence by both Mr Wang as part of his s 459G(3)(a) affidavit and Kwok Leong Pang show a current liability of $638,859.75 for "Loan Funds - Kwok L. Pang". This corresponds with the amount in the statutory demand. Those accounts carry a signed auditor's independence declaration and a signed audit report but no signature of any director, even though there is a space in the directors' declaration for signing by Kwok Leong Pang who is represented to have been the sole director at 30 June 2014.
However, a different version of accounts for the same period also put into evidence by Kwok Leong Pang shows a corresponding item but for $407,408.54. That version carries the auditor's signature in both the independence declaration and the audit report, plus Kwok Leong Pang's signature in the director's declaration and the director's report.
Financial statements for the year to 30 June 2013 show among current liabilities $405,808.40 for "Loan Funds - Kwok Leong Pang", with a figure of $302,952.30 for the previous year. Accounts for the year to 30 June 2011 contain no reference of indebtedness to Kwok Leong Pang.

[7]

Assessment of the case against SQPL

The basic proposition advanced by Shaolin in the SQPL case is that there was no contractual right for SQPL to charge for the relevant services (that is, services over and above accounting services as such) or, at least, to charge at the time and in the way suggested by the description of the debt in the statutory demand. That, in context, is the meaning of "on a voluntary basis". The "arrangement" to that effect put forward by Shaolin is, on the material presented, a combination of a series of oral communications and absence of authority of Kwok Leong Pang, as only one director out of a board of three, to enter into any contract in terms of the engagement letter. Signing by one director is not a mode of execution within s 127(1) of the Corporations Act. The fact that Kwok Leong Pang and Mr Billich, as two of the three directors may have agreed informally that Shaolin should enter into an arrangement with SQPL does not change this.
SQPL says, in response, that the separate engagement letter for accounting services as such was signed in the same way and that Shaolin has never attempted to disown that agreement. Furthermore, SQPL points to the fact that SQPL obviously did work beyond purely accounting work and that it did so over a long period. The development approval was granted in late 2014 and settlement of the land purchase from Shoalhaven Council followed soon afterwards.
While I have not found this matter easy, I have concluded that there is, in the relevant sense to which I have referred, a plausible contention requiring further investigation (and therefore a genuine dispute) as to the existence of the debt the subject of the SQPL statutory demand. It may well be that SQPL provided relevant services. Shaolin does not deny that SQPL did so. But the invoice of 12 March 2015 is put forward as the basis for the statutory demand. And the engagement letter of 10 February 2009 signed by Kwok Leong Pang alone (and therefore arguably not binding on the company) is in turn put forward as the basis for the invoice. That being so, SQPL maintains that the debt the subject of the statutory demand has its source in an alleged contract which was arguably not made so as to bind the company - with the result that the services must have been provided gratuitously, subject to any quantum meruit entitlement that SQPL may be able to establish. Any such entitlement would be, of course, distinct from the alleged contractual entitlement on which the statutory demand is based.
For these reasons, there is, in my opinion, a genuine dispute about the existence of the debt to which the demand relates (and I emphasise the words, "to which the demand relates"). The statutory demand must therefore be set aside.

[8]

Assessment of the case against Kwok Leong Pang

Counsel for Kwok Leong Pang emphasises that assessment of Shaolin's genuine dispute claim must proceed by reference to the grounds stated in the s 459G(3)(a) affidavit. The main point made in that affidavit is that there was an arrangement under which Kwok Leong Pang would provide his professional services on a voluntary basis. That, if true, would have a bearing on Kwok Leong Pang's claim for director's fees of $3 million. But it can have nothing to do with the alleged indebtedness to which the statutory demand relates, being indebtedness of the kind associated with the common count for money paid by the plaintiff for the defendant's use. Kwok Leong Pang's claim is that, at Shoalin's request and with its consent, he paid debts for which Shaolin was liable and thereby became entitled to recovery as against Shaolin.
The reference in Mr Wang's affidavit to an arrangement for the provision of professional services on a voluntary basis is therefore of no relevance to the claim in Kwok Leong Pang's statutory demand and cannot conceivably ground any argument that the claim is disputed.
Shaolin points to the content of the several financial statements and, in particular, the discrepancy in the loan account figure as between the two versions of the 30 June 2014 accounts and the absence of any like item from the 30 June 2011 accounts. That, however, is not a genuine dispute ground raised in the s 459(3)(a) affidavit. Indeed, Mr Wang annexed to that affidavit a copy of the 30 June 2014 accounts containing the loan item of precisely the amount in the statutory demand. There was no questioning of that amount and no suggestion that it was disputed.
There is, however, another aspect to the genuine dispute claim. It comes from the third WeChat message in which Yongxin Shi said that an agreement had been made with Kwok Leong Pang in 2005 (which may mean 2015) that Kwok Leong Pang would be paid "one million as compensation" (as I have said, Wang makes it clear in his evidence that the reference to "one million" is a reference to Chinese RMB).
If "compensation" is understood in the American sense of remuneration, the agreement is of relevance only to Kwok Leong Pang's claim for $3 million director's fees. But if "compensation" has its more familiar meaning and refers to making good or mitigating loss, the agreement is arguably relevant to Kwok Leong Pang's claim for reimbursement for moneys paid by him for Shaolin's benefit, the implication being that it had been agreed that Kwok Leong Pang, having paid company expenses out of his own pocket, should be the recipient of "compensation" for that personal burden but only to the extent of one million RMB (equivalent, in very rough terms, to A$200,000).
In his second affidavit, at paragraph 6, Mr Wang made it clear that the payment of RMB one million was relevant to the debt claimed in the statutory demand, as distinct from director's fees. This indicates that, at least at a prima facie level, the first of the possibilities just canvassed should be discarded in favour of the second.
On this basis, the WeChat messages referred to in the s 459G(3)(a) affidavit and subsequently put into evidence allege an agreement by Kwok Leong Pang to accept RMB one million in satisfaction of his right to to be compensated for moneys he had paid on Shaolin's behalf and for its benefit. That agreement, if it was in fact made, occurred in the context of a long relationship which might well have to be explored in detail in any debt recovery proceedings. An issue in such proceedings could be whether Yongxin Shi, as one only of three directors, had authority to contract in this way for the company (the issue recognised in relation to Kwok Leong Pang in the SQPL case involving an alleged contractual relationship between Shaolin and an outsider). Any special position that Yongxin Shi might have occupied in relation to dealings as a director because of his spiritual leadership might then arise for exploration.
I am satisfied that, on a basis sufficiently articulated in the third WeChat message referred to in the s 459G(3)(a) affidavit, there is a plausible contention requiring further investigation that Kwok Leong Pang agreed to limit to one million RMB the amount recoverable by him for outlays made by him for Shaolin's benefit. It is not part of the court's function in a matter of this kind to assess the strength of such a case beyond recognising that it raises a need for investigation. That investigation should take place through fully constituted debt recovery proceedings and the statutory demand must be set aside.
It remains to consider briefly the s 459J(1)(a) ground advanced by Shaolin. In that part of its case, Shaolin concentrates on the way the alleged debt is described in the statutory demand and, in particular, the words "as evidenced in the company's financial accounts and verified by Registered Company Auditors RSM Bird Cameron (Canberra) and Mr B Morton".
Given that description, Shaolin refers to the decision of Austin J in LSI Australia Pty Ltd v LSI Holdings Ltd [2007] NSWSC 1406; 25 ACLC 1602. One of the statutory demands under consideration in that case described the debt as follows: "Amount due owing and payable by the Debtor to the Creditor in accordance with the Accounts of the Debtor: $99,825.44."
One of the aspects of that description that was regarded as giving rise to a "defect" in s 459J(1)(a) terms was that the "Accounts" were not identified. Another was that the total claimed was made up of numerous separate items, none of which was identified.
The same objections hold good here. Kwok Leong Pang's allegation is that he paid numerous expenses for the company yet none is specifically identified to enable checking and verification. And with the two sets of apparently audited accounts for the year to 30 June 2014 in evidence showing different amounts for the relevant total, the words "as evidenced by the company's financial accounts" ("verified" by the auditor) is a source of confusion rather than identification and explanation.
The s 459J(1)(a) objection is therefore well taken. There is, in the relevant sense, a defect in the demand and avoidance of injustice requires that it be set aside.

[10]

Procedural history

As I have said, each proceeding was commenced by an originating process filed on 5 February 2016. The first return before the Registrar occurred on 25 February 2016. The Registrar directed, in each case, that any further affidavits to be relied on by the plaintiff be filed and served by 17 March 2016 and that any affidavits to be relied on by the defendant be filed and served by 7 April 2016.
The SQPL matter (but not, it seems, the Pang matter) came before a Registrar again on 6 April 2016 and was stood over to 11 April 2016 "for referral".
On 11 April 2016, both matters came before Black J who directed that an interlocutory process be fixed for hearing on 11 May 2016 and made directions for evidence in relation to the interlocutory process. The interlocutory process had been filed in the SQPL proceeding only. Shaolin sought certain orders regarding production of documents.
When the matter came before Black J on 11 May 2016, his Honour directed that the question of the date of service of the statutory demand served by SQPL and the consequential question of jurisdiction be separately determined before all remaining issues. A hearing on the separate question was appointed for 1 June 2016 and directions regarding evidence were made.
As noted above, Black J determined on 1 June 2016 that SQPL's statutory demand had been served at such a time as to cause the plaintiff's application for an order setting it aside to have been made within the time permitted by s 459G. His Honour stood both matters over to 20 June 2016.
On the last-mentioned date, both matters came before Brereton J who appointed a hearing on 4 August 2016 and made the usual order for hearing. The record of proceedings in each matter on 20 June 2016 contains "notes" as follows: "In each of these matters, on 25 February 2016, the registrar made a direction of that the plaintiff file and serve any additional affidavit evidence by 17 March 2016. The plaintiff now seeks a four week opportunity to file further evidence. As that evidence has been described, it seems to me to be outside the scope of the dispute raised by the section 459G affidavits and would be inadmissible under the Graywinter principle. In those circumstances I see no utility in providing an opportunity for the plaintiff to file further affidavit evidence. The matter should be set down for hearing."
On 14 July 2016, the solicitors for the plaintiff approached the associate to Brereton J by email (with copies to the defendant's legal representatives) asking that both matters be relisted on 18 July 2016 since the plaintiff wished to seek orders "for the filing of responding material". The defendants' solicitors gave notice by email that their clients would oppose this.
Brereton J then made the following directions in chambers on 22 July 2016: "In both proceedings: THE COURT DIRECTS THAT if the plaintiff wishes to rely at the hearing on affidavit evidence not yet served, then it should serve that evidence and any explanation for its lateness at the earliest opportunity (so as to minimise prejudice to the defendant), and seek leave from the trial judge at the hearing to rely on it. It will be a matter for the trial judge whether leave is granted."
It was after Brereton J had made the direction of 22 July 2016 that the solicitors for the plaintiff began the process directed towards the creation of further affidavits.
In the result the purported affidavits of Yongxin Shi and Yan Kan were prepared as a matter of urgency and served on the defendants virtually on the eve of the final hearing.
It is true that there was, at least in the SQPL case, doubt until 1 June 2016 whether a hearing on the merits would be reached. After that date, however, it was clear that both matters would proceed to a final hearing and Shaolin could have taken steps at once to marshal further evidence.

[12]

The document said to be an affidavit of Yongxin Shi

Doubts about the status of the two purported affidavits arose from two simple facts: first, the substantive content of each supposed affidavit (except its jurat) is printed in non-English characters; and second, Mr Grant, the Melbourne solicitor before whom each supposed affidavit is said to have been sworn or affirmed, has no language in common with either of the supposed deponents. It is necessary to describe the two documents and the evidence concerning their creation.
The document tendered as an affidavit of Yongxin Shi consists of a cover page in the usual form identifying the proceedings and headed "Affidavit in Reply of Yongxin Shi". Then follow six pages on which is typewritten in non-English characters one line of introductory material followed by 45 numbered sections or paragraphs. The eighth page commences with the words "SWORN at Dengfeng, Henan Province China" beneath which is a line labelled "Signature of deponent" on which handwriting appears. The balance of the eighth page is as follows (italics below denote handwriting): "Name of witness David Grant Address of witness Level 12, 575 Bourke St. Melbourne, VIC, 3000 Capacity of witness An Australian Legal Practitioner within the meaning of the Legal Profession Uniform Law (Vic) And as a witness, I certify the following matters concerning the person who made this affidavit (the deponent): 1 #I saw the face of the deponent. [OR, delete whichever option is inapplicable] #I did not see the face of the deponent because the deponent was wearing a face covering, but I am satisfied that the deponent had a special justification for not removing the covering.* 2 #I have known the deponent for at least 12 months. [OR, delete whichever option is inapplicable] #I have confirmed the deponent's identity using the following identification document: Chinese Passport no [xxxx] PRC ID NO [xxxx] Identification document relied on (may be original or certified copy)† Signature of witness _____________ David Grant_________________"

[13]

The evidence of Mr Grant and Ms Qin

In circumstances such as the present where there is well-founded doubt whether a purported affidavit is in truth an affidavit, extraneous evidence may be received regarding the circumstances of the document's creation: see Fastling Calling Pty Ltd v Macquarie Telecom Pty Ltd [2008] NSWSC 299; 217 FLR 366. It is necessary to traverse a number of matters in considering such circumstances in the present case.
The person identified as "witness" on the eighth page of Yongxin Shi's supposed affidavit is Mr Grant [1] . He says in an affidavit sworn on 1 August 2016: "3. I was present at the time Yongxin Shi affirmed his affidavit dated 29 July 2016, and was the witness to his signature on the affidavit. 4. I sighted the relevant identification documentation for Yongxin Shi. 5. Crystal Qin was present via Skype at the time Yongxin Shi affirmed the annexed affidavit."
The reference in paragraph 5 to "the annexed affidavit" is obscure since Mr Grant does not otherwise refer to an annexure to his affidavit and nothing is annexed to it.
An affidavit of Crystal Si Qin affirmed on 1 August 2016 is as follows: "1. I have an accreditation from the National Accreditation Authority for Translators and Interpreters Ltd (NAATI). 2. I make this affidavit from my own knowledge except where otherwise stated. 3. I certify that I understand the English language and the Mandarin language. 4. I affirm that I was present via Skype at the time Yongxin Shi affirmed the annexed affidavit. Now produced and shown to me at the time of swearing my affidavit marked 'CSQ-1' is a copy of that affidavit. 5. I refer to the affidavit of David Alexander Grant (Mr Grant) sworn on 1 August 2016 and confirm that I saw him present with Yongxin Shi at the time Yongxin Shi affirmed his affidavit. 6. I confirm that Mr Grant advised me that he had sighted the relevant identification documentation for Yongxin Shi. 7. I verify the content of the affidavit of Yongxin Shi to be a true and correct translation. Now produced and shown to me at the time of affirming my affidavit marked 'CSQ-2' is a document that combines the Mandarin Affidavit exhibited at CSQ-1 to this my affidavit, and the English translation of each paragraph."
The exhibit CSQ-1 to Ms Qin's affidavit is a copy of the document of eight pages containing introductory words and 45 numbered sections in non-English characters. The exhibit CSQ-2 contains both English words and non-English characters. In both the introductory part and each of the following 45 numbered sections of CSQ-2, statements in English are followed by material in non-English characters. I shall refer to this document as a "dual-language" document.
The document of eight pages is put forward as an affidavit of Yongxin Shi taken by Mr Grant. But it is clear that Yongxin Shi does not speak, read or understand English and that Mr Grant does not speak, read or understand Yongxin Shi's language which I take to be Mandarin. That being so, the Court cannot accept the document of 29 July 2016 as Yongxin Shi's affidavit unless it is proved that there was communication between Mr Grant and Yongxin Shi from which it could be deduced that an oath or affirmation had been duly administered by Mr Grant to Yongxin Shi.

[14]

The evidence of Ms Mustafa-Ay

In an attempt to deal with this issue, the plaintiff led oral evidence from Ms Mustafa-Ay, another Melbourne solicitor. Ms Mustafa-Ay testified that she was in Dengfeng, Henan, China on 29 July 2016 and saw the document of eight pages signed by each of Yongxin Shi and Mr Grant. Ms Mustafa-Ay, Yongxin Shi and Mr Grant were in a suite at a hotel at Dengfeng together with Yan Kan, Mr Lanyon (also a Melbourne solicitor) and Jenny He (a person from Mr Grant's firm's China office). The six persons present in the hotel suite had with them a laptop computer by means of which they established a connection through Skype to Ms Qin who, Ms Mustafa-Ay understood, was in Melbourne. I infer that the six persons at the hotel were thereby able to hear and see Ms Qin and that she in turn was able to hear and see them or, at least, the person or persons at any given time captured by the camera on the laptop in the suite.
Ms Mustafa-Ay gave evidence that she wrote the following words on a blank sheet of paper: "I solemnly sincerely and truly affirm this is my name and signature. The content of my affidavit is true and correct in every particular."
Ms Mustafa-Ay then gave the piece of paper to Ms He who, she said, "translated that into Mandarin" and wrote words in non-English characters on the paper on which Ms Mustafa-Ay had already written in English.
For reasons that will become apparent, I shall refer to the paper on which both Ms Mustafa-Ay and Ms He thus wrote as "the aide-memoir".
After Ms Mustafa-Ay and Ms He had written on the aide-memoir, Mr Grant took it and held it up to the laptop camera in the hotel suite in order to show it to Ms Qin via Skype. According to Ms Mustafa-Ay, Ms Qin confirmed via Skype that the non-English writing on the aide-memoir was an accurate translation into Mandarin of the English words Ms Mustafa-Ay had written.
Ms Mustafa-Ay gave evidence of the use to which the aide-memoir was put in connection with the signing of the eight page document put forward as Yongxin Shi's affidavit. Yongxin Shi and Mr Grant sat opposite one another at a table. The aide-memoir was placed on the table in front of Yongxin Shi. Mr Grant spoke aloud in English the words Ms Mustafa-Ay had written on the aide-memoir. Ms Mustafa-Ay's evidence continued: "It was then interpreted by Ms Qin to which the Abbot repeated…"
And then: "Q. When you say it was interpreted by Miss Qin, Mr Grant said the words in English about "do you solemnly and sincerely declare" et cetera? A. Yes. Q. And then Miss Qin said some words in Mandarin? A. In Mandarin, to which we could only assume was a translation. Q. Yes? A. And the Abbot [ie, Yongxin Shi] repeated after her, with the assistance of the paper in front of him as well, but essentially repeated after her and then ultimately the affidavit was signed."
After referring to obtaining an identification document from Yongxin Shi, Ms Mustafa-Ay was asked whether the words spoken by Yongxin Shi when apparently assisted by the aide-memoir were translated orally by Ms Qin into English. She gave a negative answer.
Ms Mustafa-Ay was asked in cross-examination whether Jenny He is a qualified interpreter. She said she did not know and had not seen evidence of any qualification.

[17]

Relevant provisions

Reference was made in submissions to s 27A of the Oaths Act 1900 (NSW): terms: "If it appears to the person before whom an affidavit is made (the authorised person) that the person making the affidavit (the deponent) is blind, illiterate or otherwise unable to read written English, the authorised person must certify, in or below the jurat: (a) that the affidavit was read to the deponent in the presence of the authorised person, and (b) that it appeared to the authorised person that the deponent understood the affidavit, and (c) that the deponent subscribed the affidavit (by signature or mark) in the presence of the authorised person."
Reference was also made to and rule 35.7 of the Uniform Civil Procedure Rules 2005 (NSW): Rule 35.7 provides: "An affidavit made by a blind or illiterate person may not be used unless: (a) the affidavit bears a certificate referred to in section 27A of the Oaths Act 1900, or (b) the court is otherwise satisfied: (i) that the affidavit was read to the deponent in the presence of the person before whom it was made, and (ii) that it appeared to that person that the deponent understood the affidavit."
Each provision is, clearly enough, directed to a case in which the text of an affidavit is prepared in English and the person who is to swear or affirm it cannot read English. The aim, in each case, is to ensure that the court receive assurance, either within the affidavit itself or by some extraneous means, that the deponent, after being taken through the substantive content and had it explained in some way appropriate to his or her capacity to comprehend, has indicated that he or she understands that substantive content.
Neither provision applies directly here. The references to a person who is "illiterate" are references to a person who cannot read the language in which the affidavit is written. In the present case, it seems very likely that the person signing was not "illiterate" because he could in fact read what was written in non-English characters. The concern here is, rather, with the question whether the officiating functionary in truth administered an oath or affirmation and whether there took place, as between the person signing and that functionary, an interchange of words accompanied by apparent comprehension on each side, sufficient to assure the court that the non-English content had been deposed to on oath or affirmation.
The question for the court is whether it has been sufficiently shown that the person whose evidence is tendered through the supposed affidavit understood the content of the document and gave to the officiating functionary contemporaneous acknowledgment of understanding that the signing was occurring in circumstances of formality and solemnity consistent with the swearing of an oath or the making of an affirmation. The necessary assurance can only be achieved by evidence and, as the cases show, a practical approach whould be taken: see, for example, Kazas-Rogaris v Gaddam [2014] NSWSC 1465; Commissioner of the Australian Federal Police v Vo [2016] NSWSC 711. Furthermore, there may be circumstances in which the court will dispense with strict proof because, for example, the affidavit is read without objection and no point is made about the apparent lack of comprehension: Bechara v Bechara [2016] NSWSC 513. This was not such a case.

[18]

Conclusions from the evidence

With those considerations in mind, I return to the evidence. The conclusions to be drawn from it are as follows:
All events relevant to the creation of the supposed affidavits of Yongxin Shi and Yan Kan occurred in a hotel suite in China, with the exception of events involving Ms Qin who was in another location and in contact by Skype with the hotel suite. What was done and said at each location could be seen and heard at the other location to the extent that it was captured on the camera and microphone by which the Skype connection was maintained
Ms Mustafa-Ay gave evidence that the documents of wholly non-English substantive content signed by Yongxin Shi and Yan Kan were printed on a printer in China.
Ms Mustafa-Ay's evidence concerning the preparation of the aide-memoir establishes that the English words she wrote were words which, if spoken by a deponent to the officiating functionary at the time of signing, would cause a document to be an affidavit made on affirmation. Ms Mustafa-Ay saw Jenny He write non-English characters below the English words that Ms Mustafa-Ay herself had written.
Mr Grant gave evidence that he was present when each of Yongxin Shi and Yan Kan "affirmed his affidavit". However, Mr Grant does not share a common language with either Yongxin Shi or Yan Kan, with the result that they did not understand anything said by him and he did not understand anything said by them.
Nor does Mr Grant, by means of annexure or exhibit, identify what, in either case, he refers to as the "affidavit" of either Yongxin Shi or Yan Kan.
Ms Qin gave evidence that she was "present by Skype" when each of Yongxin Shi and Yan Kan "affirmed" what she described as "the annexed affidavit", being the document consisting wholly of non-English substantive content annexed to her affidavit; also that she saw Mr Grant present with each of Yongxin Shi and Yan Kan when he "affirmed his affidavit".
Ms Qin did not depose that she, by means of Skype or otherwise, saw the content of either document signed in the hotel suite in China at the time of its signing.
No witness qualified or able to do so testified that the non-English characters on the aide-memoir were an accurate translation of the English words written there by Ms Mustafa-Ay.
No witness qualified or able to do so testified that the words spoken by either Yongxin Shi or Yan Kan at (or immediately before) his signing represented an accurate translation of the English words written by Ms Mustafa-Ay on the aide-memoir or were otherwise words associated with the swearing of an oath or the making of an affirmation.
No witness qualified or able to do so gave evidence that the documents of non-English substantive content copies of which were annexed to Ms Qin's affidavit were documents that Yongxin Shi and Yan Kan signed.
In these circumstances, it is not shown that either Yongxin Shi or Yan Kan swore an oath or made an affirmation and thereby created an affidavit containing the non-English substantive content of 45 paragraphs in one case and 12 paragraphs in the other. And in the case of Yan Kan, further uncertainty comes from the fact that the dual-language document contains both the words "make oath and say as follows" and the words "SWORN at".
Upon full examination, therefore, my provisional view that the two purported affidavits were not in truth affidavits sworn or affirmed by the respective deponents is confirmed as an additional basis for the decision not to allow the documents to be read into evidence.

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