Australia Successful Holdings Pty Limited v Shen; Shen v Australia Successful Holdings Pty Limited

Background

1. Mr Chen is a property developer and a national of the People's Republic of China. Through the relevant period he came to Sydney only occasionally as his principal business was in China. He also came to develop business interests in other countries in the region, which affected the amount of time he spent in Australia, and had ongoing issues in obtaining an Australian visa that would permit him to reside in Australia.
2. The defendant, Ms Shen, is a manager, who migrated to Australia in 2007 and became an Australia citizen in 2012. She received a Master of Accounting degree from the University of Technology Sydney in 2009, although she has never worked as an accountant. She is completely proficient in English. Together with business partners, Ms Shen ran other businesses before and during the relevant period.
3. Weimin Jiang, also known as "John" and sometimes referred to by Ms Shen as "Uncle" or "Uncle John", is an old friend of Mr Chen. Ms Shen had leased premises from Mr Jiang in Darling Harbour where she operated a restaurant. In about 2013, Mr Jiang introduced Mr Chen to Ms Shen. Mr Jiang was employed by ASH in November 2014 and verified the Statement of Claim on its behalf.
4. Mr Jiang was present in court but did not make an affidavit or give evidence. He was frequently referred to in Ms Shen's affidavit evidence (and the evidence of Mr Chen) as having been present during certain conversations and meetings involving Mr Chen, and having been party to several private conversations with Ms Shen. Having verified the Statement of Claim, he is plainly in the plaintiff's camp. In accordance with Jones v Dunkel (1959) 101 CLR 298, I infer that his evidence would not have assisted ASH.
5. ASH was registered in 2008 and Mr Chen is its sole director.
6. ASP was incorporated on 7 July 2015. Mr Chen was its sole director from registration to 15 February 2016 and from 4 October 2016 to 1 August 2018. Mr Jiang was its sole director from 15 February 2016 to 4 October 2016 and has also held that role from 1 August 2018 to date. He is also ASP's company secretary.
7. Australia Successful Investment Pty Ltd ("ASI") was also incorporated on 7 July 2015 as a family trust for Mr Chen and his girlfriend, Yanhua Jin.

Employment relationship

1. A key factual contest between the witnesses was whether Ms Shen was ever an employee of ASH. That this emerged as an issue during the hearing was surprising in light of the pleaded cases of the parties and the affidavit evidence read by them. Ms Shen alleged that she had been employed by ASH in an administrative support role, as an executive assistant or "administrator/operations support" continuously from 15 May 2014 to 20 January 2019. In its Defence to Cross-claim, ASH admitted that Ms Shen had been employed by ASH pursuant to a written employment contract, but only for the period from 1 July 2015 to 31 December 2015. Although Mr Jiang verified the Statement of Claim, Mr Chen verified the Defence to Cross-Claim where Ms Shen's allegations as to the employment contract were addressed.
2. That Ms Shen was employed at least during this six-month period was also admitted in Mr Chen's affidavit evidence and supported by the written employment agreement itself, which in its terms was for a period of three years from 1 July 2015. Mr Chen had sworn in his affidavit that he "did execute an employment agreement with the plaintiff (sic) when she commenced work on 1 July 2015" and that Ms Shen was working full time at the plaintiff's office only between 1 July 2015 and 31 December 2015.
3. It was also admitted that ASH paid Ms Shen at the rate of $50,000 per annum during the period 1 July 2015 to 31 December 2015.
4. The only issue as to Ms Shen's employment on the pleadings and affidavits, therefore, appeared to be whether Ms Shen was an employee and entitled to wages, superannuation and leave for the periods prior to 1 July 2015 and after 31 December 2015.
5. In cross-examination, however, Mr Chen disavowed his sworn affidavit evidence and ASH's position in its Defence to the Cross-Claim. He repeatedly asserted that Ms Shen had never been an employee of ASH, at one point stating "She had never been employed for ASH. Not for even one day." He stated that all of the work performed by Ms Shen was essentially performed gratuitously as a friend. He did not explain the basis for his departure from his affidavit evidence.
6. When asked to explain the written employment agreement, Mr Chen gave the following evidence: Q. She was an employee as of-- A. INTERPRETER: No, not employee. Just a friend and in partnership. Lending a hand. Q. She was never an employee? A. INTERPRETER: No, that's why we set up a new business later. She was learning how to do business from me at that time. Q. Sir, is it your evidence that Ms Shen signed an employment contract with ASH on 1 July 2015? A. INTERPRETER: Yes. That was for the purpose of immigration because I was applying for visa subclass 457 and one of the requirements were employees, so we had some employment. Q. And so the employment contract was for six months [sic], wasn't it? A. INTERPRETER: Yes. Q. So, at the very least, she was an employee for six months? A. INTERPRETER: This was only for the purpose of immigration. Her true identity was - sorry, her true-- INTERPRETER: Sorry, can I ask Mr Chen to rephrase his words? HIS HONOUR: Yes. A. INTERPRETER: So, for ASH I was a sole director, and there was no employment agreement whatsoever, but for the purpose of immigration one of the requirements was employment, and employees. That's why we had an employment agreement with Melisa at that time for this purpose.
7. It is impossible to reconcile Mr Chen's affidavit evidence, his verification of the Defence to Cross-Claim and the existence of the employment agreement, on the one hand, with his repeated insistence that Ms Shen was never an employee of ASH, on the other. His explanation with respect to the written employment agreement is indicative of deliberate dishonesty, either in his sworn evidence before the Court or in his arrangement of the affairs of ASH so as to mislead immigration authorities for the purpose of obtaining a visa for residency in Australia. Either way, this indicates a level of deliberate dishonesty that impacts adversely on his credit as a witness.
8. I found Mr Chen to be an unsatisfactory witness in other respects as well. On a number of occasions, his evidence was contradicted by the objective, contemporaneous documents, which he failed to acknowledge or explain. He was argumentative and defensive and often gave speculative evidence. In all, I have found him to be a witness of little credit and do not accept his uncorroborated evidence on any factual issue in contest.
9. On the other hand, I found Ms Shen to be a generally honest and cooperative witness who was genuinely trying to assist the Court. I preferred her to Mr Chen and generally accept Ms Shen's accounts of conversations between her and Mr Chen, key elements of which I have summarised in my factual findings below. Ms Shen's account of the work she performed was generally supported by contemporaneous documentary evidence.
10. While I consider that Ms Shen gave honest evidence, I am mindful of the approach to assessing oral evidence in the authorities collected by Davies J in Coote v Kelly; Northram v Kelly [2016] NSWSC 1447 at [165] to which his Honour referred in The Nominal Defendant v Cordin [2017] NSWCA 6. In that judgment, his Honour referred to a number of authorities that provide assistance in dealing with credibility issues and the fallibility of human memory. In assessing the credit of Ms Shen, I have taken into account not just her demeanour in the witness box but the corroborative effect of any contemporaneous documents or records and the extent to which her evidence accords with the probabilities. I also proceeded on the basis that human memory is inherently fallible, fades with time and can be distorted by self-interest and by the litigation process itself.
11. Ms Shen's evidence as to her employment comprised, first, evidence of conversations and documents which she submits establish the relationship of employer and employee between her and ASH and its parameters. Secondly, Ms Shen sets out a substantial body of evidence of the tasks she performed for, or at the direction of, ASH, over the period from May 2014 to the end of 2018. Almost all of Ms Shen's account of the work she performed was corroborated by contemporaneous documents exhibited to her affidavits.
12. ASH generally took the position that such work was either performed gratuitously, or otherwise was for the benefit of ASP or Mr Chen, personally, and therefore not properly work for ASH. Accordingly, it was submitted, ASH was never liable to pay wages or superannuation to Ms Shen, other than the period of six months from 1 July to 31 December 2015 for which she was, in any event, paid.

Formation of an oral employment agreement: May 2014

1. Mr Chen and Ms Shen met in 2013, having been introduced by Mr Chen's friend, Mr Jiang. Ms Shen gave an account of a conversation in early May 2014 in which Mr Chen asked her to work for ASH. Mr Chen said words to the effect, "Melisa, will you come to work for me full-time as my executive assistant, and I will pay you the salary of $50,000 a year, plus superannuation?" Mr Chen also said, "You help me to buy as many assets as I can because I have got lots of money from China," and "I am going to buy a farm at three point six million in cash".
2. I accept that Mr Chen spoke words to this effect. Mr Chen generally made no distinction between his private interests and those of ASH. On this occasion, when Mr Chen referred to his acquisition of a farm, he was in fact referring to ASH, which was the principal vehicle for his business operations in Australia. The farm that he said he was acquiring was the farm at 380 Green Valley Road, Bendemeer, New South Wales (the "Bendemeer property"), on which ASH had exchanged contracts at the time of the conversation.
3. Ms Shen responded, "That's good. Do we need to sign any employment agreement?" Mr Chen responded that he normally did not sign agreements and, in any event, regarded Ms Shen's salary as a very small sum for him.
4. While Mr Chen denied that this conversation occurred, he did not provide any alternative account of how Ms Shen came to provide services for ASH or the basis of any agreement for her to do so gratuitously. I prefer the evidence of Ms Shen in this regard. I have assessed Ms Shen as the more believable of the two witnesses who gave evidence on this issue.

Work performed 15 May 2014 to 30 June 2015

1. Although I have not set out the whole of Ms Shen's evidence of the work she performed for ASH, I accept that she did perform the work described in her affidavits and the copious contemporaneous documents annexed to them.
2. Ms Shen's role was primarily administrative, rather than executive. This was reflected in the nature of the tasks she undertook and her comparatively modest salary of $50,000 per annum for a full time role.
3. I accept that Ms Shen worked full time at ASH's offices. To the extent that she continued to conduct other businesses, there was no evidence that those businesses distracted Ms Shen from her work for ASH or took up any significant time that interfered with her working full time for ASH. As an indicium of her employment, business cards describing Ms Shen as an Executive Assistant at ASH were issued to Ms Shen in March 2015.
4. Ms Shen was granted unrestrained access to ASH's bank accounts in November 2014, by use of Mr Chen's login details, and in March 2015, when she was given her own login details and could access the accounts in her own name. The grant of such access demonstrates Ms Shen had responsibility to manage payments out of the accounts on ASH's behalf.
5. Without seeking to recite the whole of the evidence, the following is indicative, rather than exhaustive, of the tasks I have found were performed by Ms Shen pursuant to the oral employment agreement between 15 May 2014 and 30 June 2015: 1. Ms Shen performed a substantial amount of work in relation to ASH's acquisition, ownership and proposed exploitation of the Bendemeer property. This included correspondence with various parties in connection with the purchase, including with ASH's solicitors and the outgoing vendors, with whom ASH fell into dispute arising from a post-sale venture between them. The precise nature of the transaction and parameters of that dispute are not relevant to the matter before the Court, however, it is clear from the correspondence in evidence that Ms Shen provided translation services to Mr Chen and undertook much of the correspondence with the vendors from about May 2014. This also included attending meetings of the directors of Sunnyside Enterprises Pty Ltd, which appears to have been a venture between Mr Chen and the outgoing vendors of the Bendemeer property. 2. Mr Chen had indicated that he wished to use the Bendemeer property to secure funding from Australian financiers for other projects in Australia. Ms Shen was involved in communicating with those lenders (described in the evidence as a "refinancing" notwithstanding that it was acquired without any debt finance). Some of those communications involved Ms Shen collating and providing information to lenders, as well as translating communications for Mr Chen. Whereas Mr Chen gave evidence that Ms Shen's role was minimal, I find that the communications themselves demonstrate a substantial continued role for Ms Shen as a facilitator of communications with Mr Chen, a correspondent in her own right and an administrator of ASH's affairs. 3. Ms Shen was also involved in efforts by ASH to develop the Bendemeer property, amongst other things by seeking to establish a water factory, tourist centre and petrol station on the site. Ms Shen prepared marketing material, was involved in discussions with Council and assisted with exploring the feasibility of the water project, including by obtaining chemical analysis of the water available on the property. Ms Shen was also involved in steps to commence a meat exporting venture contemplated by ASH. 4. Ms Shen attended to various other administrative tasks on behalf of ASH, such as setting up an email account for ASH, managing ASH's ASIC records and managing ASH's trademark application lodged in January 2015, for which she paid the filing fee from her own resources. I accept that she did so because ASH's bank account did not have sufficient funds when the application was lodged. Indeed, at about this time, Ms Shen had lent $6,000 to ASH to assist it to meet its financial commitments at the time. 5. Ms Shen was involved in the identification and purchase of further properties by ASH, Mr Chen, other entities associated with him and members of his family. Those properties included the property at 504, 45 Lime Street, Sydney, which was purchased by ASH in September 2014 (the "first Lime Street property"). Other properties, being the property at 41-49 Abercorn Street, Bexley, which was purchased by ASP (the "Bexley property"), Suite 8, 26A Lime Street, Sydney, which was purchased by ASH (the "second Lime Street property") and Unit 307, 35 Shelley Street, King Street Wharf, Sydney, which was purchase by Mr Chen (the "Shelley Street property") were acquired after 1 July 2015. 6. Some of Ms Shen's tasks were purely administrative, such as collecting a bank cheque. Other tasks involved communicating with agents, brokers and lenders, such as James Wang and Clytie Feng at "Sam Loans". Other tasks required Ms Shen to facilitate communications between Mr Chen and third parties. On other occasions, Ms Shen drafted correspondence on Mr Chen's behalf. Ms Shen also liaised with the strata agents for the first Lime Street property during this period. 7. Ms Shen performed tasks that were not directly for the benefit of ASH but for the benefit of Mr Chen, personally, or for members of his family. In early May 2015, for example, Ms Shen provided assistance to Mr Chen by preparing and providing to a migration agent documents in support of a visa application for Mr Chen. Ms Shen also acted as a facilitator of communications between solicitors, Mr Chen and his daughter concerning a power of attorney in respect of the proceeds of sale by her of a property in September 2014. 8. Ms Shen continued to inspect properties and development sites in Sydney which Mr Chen considered might be appropriate projects for ASH. She liaised with estate agents and interpreted for Mr Chen. She liaised with solicitors in relation to FIRB applications for other properties.
6. On a number of occasions, Mr Chen told Ms Shen that she ought treat his personal financial commitments and those of ASH as essentially one and the same. This was borne out by the nature of many of the tasks she was asked by Mr Chen to perform, which included looking after his personal interests with respect to his immigration status, residence and the financial affairs of his family. I accept that the agreement entered into between ASH and Ms Shen in May 2014 embraced the performance of work for Mr Chen, personally, and members of his family, and that ASH would nevertheless be liable to pay Ms Shen the agreed remuneration notwithstanding that some of the tasks would not benefit ASH directly.
7. Mr Chen sought to minimise Ms Shen's role throughout this period. However, Ms Shen's evidence was supported by voluminous contemporaneous documentary evidence, which I accept.

Whether there was a contract of employment for the period 15 May 2014 to 30 June 2015

1. A contract of employment may be wholly oral: Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; [2009] 261 ALR 382 at [90]. Like any contract, for any communication to constitute an offer, it must be in sufficiently clear terms to be capable of acceptance: Lewandowski v Mead Carney-BCA Pty Ltd [1973] 2 NSWLR 640. Acceptance must be unqualified and must correspond with the terms of the offer: Crown v Clarke (1927) 40 CLR 227.
2. In the present case I accept that there was a conversation in the terms alleged by Ms Shen in May 2014, and that it constituted the offer and acceptance of an oral contract of employment.
3. I, therefore, accept that Ms Shen became an employee of ASH from no later than 15 May 2014. I accept her evidence that she was employed pursuant to the oral contract struck with Mr Chen on ASH's behalf in or about mid-May 2014, and remained employed on that basis until the parties entered a written contract on 1 July 2015. The relevant terms of her oral contract of employment were that Ms Shen would work full time providing administrative support to ASH for a wage of $50,000 plus superannuation per annum.
4. Further, a contemporaneous amendment to the online lease agreement between ASH and Regus Citigroup in respect of ASH's Park Street office records a change from one occupant to two as at 28 May 2014. I accept that the second person to work in that office was Ms Shen, who commenced working there on a full time basis at about that time.
5. Finally, Ms Shen's account accords with the probabilities: Mr Chen says that Ms Shen performed minimal services gratuitously as a friend. Mr Chen said that Ms Shen only provided some interpreting services, which I find she had done on a previous visit to Bendemeer with Mr Chen and Mr Jiang in 2013. This was not the case, however, from May 2014. The evidence did not support a finding that they were sufficiently close for her to perform any work at all for ASH as a favour to him.
6. The evidence also did not support a conclusion that the work she performed from May 2014 was minimal. As discussed below, Ms Shen had access to ASH's bank accounts, which is a further indicium of her being an employee.

Written contract 1 July 2015

1. By June 2015, Mr Chen was experiencing difficulties in obtaining a visa for permanent residence in Australia. In about late June 2015, Mr Chen told Ms Shen that he had been to see a new migration agent, who had advised him that his prospects would improve if he could demonstrate that he was providing employment to Australian residents. Accordingly, Mr Chen was advised to organise written employment agreements between ASH and each of Ms Shen, Mr Jiang and Mr Chen, personally. According to Ms Shen, contracts were then executed to provide the required evidence. For this reason, on Ms Shen's case, a genuine, continuing employment relationship that had been formed orally was documented for a period of three years. The contracts were not a sham as they reflected existing arrangements between ASH and each of Ms Shen, Mr Jiang and Mr Chen.
2. Although Mr Chen resiled in his oral evidence from his own affidavit evidence and ASH's admission of a contract between it and Ms Shen, ASH remains bound by that admission, at least in respect of the period 1 July 2015 to 31 July 2015. On the evidence, I would have found this to be so in any event.
3. Ms Shen's written employment agreement with ASH relevantly included the following terms: 1. Ms Shen was employed in the position of "administrator/operations support". Ordinary work hours were 38 hours per week from Monday to Friday between 9:00am and 5:30pm. 2. Among Ms Shen's many duties described in the agreement were reception services, administration, scheduling appointments, maintaining personnel records, maintaining stationery, supplies and general facilities and providing any other ad hoc administrative or operation support as required. Translation and interpretation were not expressly mentioned. 3. The term of employment was for three years, commencing on the date of contract, being 1 July 2015. Ms Shen would therefore be employed according to its terms until 30 June 2018 unless terminated earlier. There is nothing in the terms of the agreement that suggests it would terminate on 31 December 2015. 4. Ms Shen's remuneration was to be $50,000 per annum plus superannuation in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth) and any regulations made pursuant thereto. 5. Ms Shen was entitled to four weeks' annual leave in accordance with the Fair Work Act 2009 (Cth).
4. Although Mr Chen admitted executing the employment agreement, the copy in evidence was executed on behalf of ASH by Mr Jiang.
5. I accept Ms Shen's evidence that the written contract served to place on a documented footing the terms of the oral contract entered in May 2014. There was no change to Ms Shen's duties or the structure of her remuneration. As I find below, the work performed by Ms Shen in the period 1 July 2015 to 31 October 2016 was within the terms of Ms Shen's duties under the written employment agreement.
6. In its Defence to Cross-Claim, ASH alleged that the term of the contract was only six months from 1 July 2015 to 31 December 2015. In his affidavit, Mr Chen says that Ms Shen worked full time during that period and her duties were to manage the development program for the land in Bexley. It follows that Mr Chen, as ASH's sole director, considered the Bexley development was properly an ASH project and that ASH would pay Ms Shen for the work she provided in respect of it.
7. However, ASH does not explain why a written contract with a term of three years, on its face, should be found to have been terminated after six months. Mr Chen gives no evidence of when or how that termination was communicated to Ms Shen.
8. It seems that the only basis for the allegation that the contract was of only six months' duration is that Ms Shen was only paid for that six-month period. While Ms Shen was paid for the period 1 July to 31 December 2015, the evidence did not establish that this accorded with full payment for the whole of the period of her employment. The mere fact that part payment has been made does not displace my finding of an obligation on ASH to pay wages and superannuation to Ms Shen for the whole of the term of its contract with her.
9. I therefore reject the allegation that the written agreement was terminated after six months.

Work performed 1 July 2015 to 31 October 2016

1. As for the work performed by Ms Shen during this period, I am satisfied that it was within the terms of, and pursuant to, her written contract of employment. That work is set out in some detail in her affidavit evidence, supported by contemporaneous documents. As with the period from 15 May 2014 to 30 June 2015, I do not propose to traverse the whole of that evidence, which is largely uncontradicted. Mr Chen does deny many (but not all) of the conversations alleged in Ms Shen's affidavits and again seeks to minimise the extent and significance of the work she sets out. Having regard to the detail of her evidence, the probabilities and my findings as to the comparative credit of Ms Shen and Mr Chen, I accept that Ms Shen continued to work full time for ASH throughout the period 1 July 2015 to 31 October 2016 and I accept her affidavit evidence in this regard.
2. The work between 1 July 2015 and 31 October 2016 included the following: 1. Ms Shen assisted ASH in the purchase of further properties, such as 8/26A Lime Street, King Street Wharf (the "second Lime Street property") in respect of which Ms Shen attended the auction and submitted a bid on ASH's behalf, pursuant to a power of attorney granted to her by ASH. Ms Shen was responsible for meeting architects about the fit out for the new premises and presented options to Mr Chen, who made the final decision. 2. Ms Shen played a significant role in the progress of the Bexley project. This included: 1. Ms Shen arranged conferences with advisors (such as solicitors and accountants) concerning the structure of the acquisition of a development site at Bexley; 2. Ms Shen performed administrative tasks such as delivering ASP's tender to the estate agent with whom the property at 41-49 Abercorn Street, Bexley (the "Bexley property") was listed. The vendor's acceptance of the tender was communicated to her; 3. Ms Shen assisted ASH to procure finance for the acquisition of the Bexley property in September 2015 by approaching third party lenders as set out in paragraph 96 below; 4. In February 2016, Ms Shen conducted communications with the architect of the proposed development on the Bexley property (the "Bexley project") in relation to the drawings and Development Applications for that project as well as arranging meetings with builders, which she generally attended; and 5. In May 2016, Ms Shen met with the builder for the Bexley project. In July 2016, she corresponded with Sydney Wyde Mortgage Management ("SWWM") and Mr Chen about ASP's indebtedness to it. 1. In February and March 2016, Ms Shen engaged in communications in respect of visa applications for Mr Chen and his wife. 2. In February 2016, Ms Shen assisted in the settlement of the purchase of Mr Chen's new residence at 307/35 Shelley Street, King Street Wharf. 3. In April 2016, Ms Shen met with a real estate agent in connection with the sale of Mr Chen's wife's property at Vaucluse. She also had further communications with the architect of the Bexley project and followed up with Mr Chen's solicitor in relation to his visa application.
3. I am satisfied that during this period, Ms Shen continued to work for ASH on a full time basis and that she was entitled, under the terms of the written contract of employment, to wages, superannuation and annual leave that accrued during that period.

Oral agreement and work performed: 1 November 2016 to 20 January 2019

1. According to Ms Shen, on 29 August 2016 she and Mr Chen had a conversation at ASH's office at 26A Lime Street in which Mr Chen said words to the effect: "Melisa, I want you to reduce the number of hours you are working for ASH, but your role will not change and the authority I gave you to use the bank accounts will not change. I will still keep you as the contact person for ASH's and ASP's bank accounts in Westpac, for ASH's bank account in NAB and ASH's bank account in ANZ." Ms Shen said, "Ok," and then enquired about repayment of the money she had lent to ASH, salary and guardianship fees.
2. This conversation constituted agreement that Ms Shen's obligations and entitlements under the written contract of 1 July 2015 would come to an end when she ceased working full time for ASH. Applying the same framework of offer and acceptance outlined at paragraph 37 above, I find that this conversation also constituted an offer to continue to work for ASH on a part time basis, with Ms Shen's remuneration to be calculated on an hourly basis. That offer was accepted orally.
3. Mr Chen denies that this conversation occurred at all, stating that Ms Shen's employment was terminated in December 2015, and three new staff were employed following her termination. Assuming that Mr Chen sought to imply that the new employees were hired at the time that Ms Shen's employment was terminated, there was no evidence to corroborate the date of their hiring. I have already found that Ms Shen's employment was not terminated on that date. In any event, the hiring of new staff does not establish that Ms Shen's employment was terminated. I prefer the account of Ms Shen.
4. Ms Shen continued to work for ASH, gradually handing over her duties to Yanhua Jin and Jiaojiao Peng, who may have been the new employees hired by ASH. Ms Jin already had an interest in the Bexley project as she was a member of ASI. By the end of October 2016, Ms Shen had divested herself of most day to day responsibilities, but continued to work on a casual basis for ASH. Critically, and in accordance with the 29 August 2016 conversation, she retained access to each of the bank accounts that she had operated for ASH, ASP and Mr Chen. Mr Chen did not ask her to return her token or remove her authorisation to operate the accounts.
5. In late November 2016, Mr Chen and Ms Shen had another conversation at Mr Chen's residence at Shelley Street. Mr Chen asked Ms Shen to continue to perform work for ASH and ASP on an "as needs" basis, to which she agreed. Mr Chen denies this conversation and gives the basis that Ms Shen had ceased to work for ASH from 31 December 2015, which allegation I have rejected. I prefer Ms Shen's account.
6. Over the next few months, Ms Shen performed further tasks for the benefit of ASH, Mr Chen and his family. The evidence is consistent with the volume of work being much reduced. The work Ms Shen performed in the period included: 1. Ms Shen continued to perform tasks in relation to the Bexley project. For example, in March 2017, she liaised with the architects for the Bexley project in respect of the Development Application for that site. She continued to liaise with financiers, such as Stacks, in relation to default interest and passed those communications on to Mr Chen as late as November 2018. She continued to liaise with the architects for the Bexley project and updated Mr Chen on its progress from time to time. 2. In February 2017, Ms Shen took steps to list for sale the Vaucluse property of Mr Chen's wife. 3. In April 2017, Ms Shen calculated land tax payable in respect of the Bexley property. This was a substantial task, involving research, communications with the Office of State Revenue and communications with Mr Chen. 4. In September 2018, Ms Shen continued to assist with Mr Chen's visa application
7. I am satisfied that Ms Shen remained an employee of ASH during this period. In particular, I am satisfied that she continued to have authority to operate ASH's bank accounts. It may be noted that Ms Shen does not seek to recover any wages, superannuation or entitlements in lieu of leave over this period.

Guardianship

1. Ms Shen gave evidence that in early December 2014, Mr Chen asked her to be the guardian of his son, Cheng Chen (also known as James) from January 2015. According to Ms Shen's account of the conversation, Mr Chen said words to the effect: "Melisa, besides working for my company, can you please be my son Cheng Chen's guardian from January 2015? My son is only 11 years old and I want him to come to study in Australia. My company will pay you $1,000.00 every month for being his guardian". Ms Shen asked why he could not be the guardian and he responded that he was unable to do it but that it was necessary for his son to have a guardian otherwise he would be unable to obtain a student visa in Australia. Ms Shen said, "Ok but what do I need to do?" Mr Chen responded that he would put her in touch with his migration agent and that she would need to look after Cheng when he finishes school, that Cheng would stay at Ms Shen's place and that she would cook for him. When Mr Chen was in Australia, Cheng could stay with him. Ms Shen responded, "Ok".
2. Ms Shen did perform the tasks described in the alleged conversation referred to in the previous paragraph. Cheng enrolled in the Sydney College of English, which notified Ms Shen that underage students were required to have a guardian and that their proposed accommodation was required to be satisfactory. To this end, Ms Shen completed the paperwork and her premises were inspected. In the College's materials for intending guardians, it specifically refers to payment for guardianship services.
3. Approval was given by that school in April 2015 for the period May 2015 to January 2016. Ms Shen was also involved in arranging health insurance for Cheng, as an overseas student, at about that time.
4. Ms Shen and Cheng exchanged many WeChat messages between 2015 and 2017. The evidence shows that not only was she was appointed guardian for the purposes of Cheng's schooling, but that she looked after Cheng at least until he started boarding school.
5. Ms Shen also had many communications with Mr Chen by WeChat between January 2015 and February 2017. These included communications about Sydney College of English's inspection of her apartment, ensuring that Cheng obtained necessary certificates, identifying text books, receiving text books on Cheng's behalf, assisting to prepare Cheng for his commencement at a boarding school in 2016, taking him out to dinner, buying him new shoes, after school pickups, and her attendance at parent-teacher interviews (which Mr Chen did not attend).
6. Mr Chen denies that Ms Shen was ever Cheng's guardian or that agreement was reached that she would be paid to act in that role. He states that either he or Mr Jiang attended to pickups and drop offs, and that Ms Shen only assisted him once by asking for leave for Cheng. Mr Jiang does not corroborate Mr Chen's evidence. The evidence is inconsistent with the contemporaneous records. I do not accept it.
7. I am satisfied that Ms Shen acted as Cheng's guardian, as the parties understood that term, between January 2015 and February 2017, and that she did so in consideration of Mr Chen's promise in December 2014 that ASH would pay her $1,000 per month to do so.
8. Although on the evidence it appears Ms Shen only notified Cheng's boarding school that she ceased to be Cheng's guardian in February 2017, she only claims guardianship fees up until November 2016, which would accord with the end of the 2016 school year.
9. ASH submitted that Ms Shen's account, even if it was established that she performed the role that I have found she performed in respect of Cheng, did not establish that ASH could be liable for the payment of any guardianship fees. In its submissions, ASH noted that this was not a proper company expense and if Ms Shen was being paid by ASH for work performed for Mr Chen's family and other associated entities, claiming an additional sum for guardianship was double dipping and ought not be found to have been agreed.
10. The issues can best be analysed as the identification of the correct party to a contract and its terms.
11. The identity of contracting parties is to be determined objectively, by examining and construing any relevant documents in the factual matrix when they were created and ascertaining between whom the parties objectively intended to contract: Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299 at [28]. Where documents are silent or ambiguous (or, it may be added, non-existent), but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: Air Tahiti Nui at [28], Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174. See also the comments of Kourakis CJ in Davies v Apted [2013] SASCFC 92 at [4] and [5].
12. Post-contract conduct can be considered to ascertain the identities of the parties, as the issue is one of contractual formation, rather than construction: Dennis Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 at [59], Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509; [2012] VSCA 262 at [31]. The legal onus is on the party asserting that a particular party is, in fact and law, a party to the contract: Dennis Pethybridge at [59].
13. In the present case, Ms Shen's evidence clearly identifies ASH as the party on whose behalf Mr Chen made the offer. As found above at paragraph 27, Mr Chen often identified his own interest with that of ASH, which was his main vehicle for his Australian business. His reference to "my company" in the conversation at paragraph 62 above was plainly a reference to ASH.
14. I accept Ms Shen's evidence in this regard. I also accept that she accepted the offer orally and went on to perform the role of guardian for Cheng in consideration of the promise made by Mr Chen, on ASH's behalf, to pay her $1,000 per month during the guardianship.
15. So far as ASH relies on the submission that payment for Cheng's guardianship would be a form of double dipping, I do not accept that submission. Taking responsibility for a minor is a different obligation in kind to managing the financial and business affairs of a corporate entity, even where the responsibilities embrace that entity and its associates. It was a wholly new and distinct obligation that arose for the first time in January 2015.

Access to Accounts

1. As indicated above, in early November 2014, Mr Chen gave Ms Shen access to his online banking login for ASH's bank accounts as well as his personal accounts and those of his wife. In a conversation at ASH's office, Mr Chen expressly empowered Ms Shen to pay ASH's expenses and his own expenses from any of the accounts. He directed Ms Shen to ensure that there was always sufficient money in his wife's account to pay her mortgage each month. Mr Chen authorised Ms Shen to pay ASH's expenses from ASH's accounts, his own accounts and his wife's.
2. Ms Shen thereafter used her online access to the ASH accounts to make many payments of ASH's debts. The debts included the reimbursement of monies expended on ASH's behalf by Mr Jiang and Mr Jiang's girlfriend, Fengping Pan. Ms Shen did so without obtaining any further express authority from Mr Chen. Ms Shen also made transfers at Mr Chen's direction to third parties, such as Zedu Deng, in circumstances where Mr Chen indicated that Ms Shen could make the transfer from any account of ASH or Mr Chen, indicating that he made no distinction between the financial affairs of ASH and himself, personally.
3. In March 2015, Mr Chen and Ms Shen had a conversation at ASH's office in which Mr Chen indicated that he wanted Ms Shen to have administrator access to all of ASH's Westpac accounts in her own name rather than simply using Mr Chen's login details.
4. The following day, in March 2015, Ms Shen, Mr Jiang and Mr Chen attended the Westpac Haymarket Branch. The bank officer made clear to them that the arrangements being entered would allow Ms Shen to transfer money out of any ASH or Mr Chen accounts. Mr Chen responded in words to the effect, "Yes. That's what I want her to be able to do. We are running a million dollar business." He also requested that he and Ms Shen be issued with security tokens as a secondary security device. The tokens were issued and Ms Shen also received her own online access to the ASH accounts as well as to Mr Chen's personal accounts.
5. From later that month, Ms Shen used her online access to reimburse herself for stationery and other expenses she incurred on ASH's behalf. Ms Shen made many transfers from ASH's accounts and managed their operation over the whole of the term of her employment with ASH. She did so without requiring pre-authorisation, although she was in frequent contact with Mr Chen about the status of the accounts, whether additional funds were required and when payments to debtors could be made without exhausting the accounts' funds. This was all within the terms of her employment.
6. As indicated above, Ms Shen's administrator access to ASH's accounts was not revoked prior to the events of December 2018. Mr Chen said, and ASH submitted, that this was an oversight. I do not find it to have been so. I accept that Mr Chen indicated to Ms Shen on 29 August 2016 that she would continue to have access to ASH's accounts. Thereafter, Mr Chen continued to rely on Ms Shen to perform services for ASH and for his family, which could require her to operate those accounts. I find that her continued access to ASH's accounts was, in fact, authorised as at 21 December 2018.

Payment of salary, requests for payment

1. Ms Shen was paid salary for the period 1 July 2015 to 31 December 2015. Payment was not regular. On 7 October 2015 Ms Shen paid each of Mr Chen, Mr Jiang and herself three months' worth of salary for the period July to September 2015, in her and Mr Jiang's cases calculated at a rate of $3,434.67 per month, which is consistent with an annual salary of $50,000. On each of 4 November 2015, 4 December 2015 and 24 December 2015 she paid herself one month's salary for the months of October, November and December 2015 respectively. That sum did not include superannuation, which was not paid into any superannuation fund on Ms Shen's behalf. She also paid the same amount to Mr Jiang and a higher amount to Mr Chen, which reflected the higher salary that he was paid by ASH.
2. It was forcefully submitted on behalf of ASH that the Court should reject Ms Shen's assertion that she was an employee of ASH at any other time because, from November 2014, she had access to ASH's bank accounts. If she was an employee, it was submitted, she could have transferred monies to herself at any time when there were sufficient funds standing to ASH's credit for her to do so.
3. Ms Shen's response is twofold: first, she says that during this she asked Mr Chen on several occasions when she would be able to pay herself (and Mr Jiang) and that Ms Chen invariably asked her to wait because he wanted to ensure that ASH could pay its other expenses and acquire further properties. Secondly, Ms Shen disputes ASH's allegation that there were sufficient funds in ASH's bank accounts to pay her salary, at least from time to time.
4. On Ms Shen's account, she and Mr Chen had many conversations in which she asked about payment of her own salary. Those conversations commenced in mid-2014 and took place from time to time over the remainder of Ms Shen's employment. Without being exhaustive, such conversations also took place in March 2015, June 2016, October 2016 and November 2016. Typically, Mr Chen, when responding to Ms Shen's enquiries about when she would be paid her salary and other entitlements, said words to the effect, "Yes, that's an ASH expense and it's guaranteed, but for the time being, I want you to help me build up some cash flow business or get me a property project". I am satisfied that on many occasions Ms Shen asked about when she would be paid and that Mr Chen expressly and repeatedly asked her to suborn her own interest in payment of monies owing to her in order to preserve ASH's financial position and that she did so. Mr Chen denies these conversations.
5. Ms Shen was cross-examined on ASH's accounts on the basis that there were at least, on occasion, sufficient monies. It was put to Ms Shen that at least for part of the time there were sufficient monies in the ASH accounts for her to pay herself if she honestly believed that she was entitled to those monies. In light of Ms Shen's conversations with Mr Chen, I do not consider this issue needs to be considered in detail. Nevertheless, I am not satisfied that ASH had the resources throughout the period of Ms Shen's employment to pay her as well as Mr Jiang the whole of their salaries and entitlements.
6. Accordingly, I do not find that Ms Shen's failure to transfer monies to herself on account of wages is indicative of her not being an employee or not entitled to the monies claimed by her.

Advance of funds

1. In addition to the administrative work that Ms Shen performed in relation to the Bexley project as an employee of ASH, Mr Chen asked her and Mr Jiang to be the majority shareholders in ASP, which was the special purpose vehicle that would own the Bexley property. This appears to have been on legal advice that local shareholders were necessary for the acquisition of a development project.
2. The purchase price for the Bexley property was $5,130,000. The deposit was 10% of that sum, being $513,000. Stamp duty on the purchase was $68,010. Mr Chen did not have the deposit available on 28 July 2015, when contracts were due to be exchanged. On 28 July 2015 Mr Chen, Mr Jiang and Ms Shen had a conversation in which Mr Chen asked Mr Jiang and Ms Shen to lend the deposit monies to ASH. He said words to the effect of, "Can you two lend some money to ASH for the deposit? I will pay you a minimum of twelve per cent annual interest rate and I will give you the principal back as soon as I get the finance from the bank in Australia or get money transferred from China". Mr Jiang and Ms Shen both agreed, each saying, "Ok".
3. That same day, Ms Shen lent $130,000 to ASH by attending her own bank and procuring the transfer of funds to ASH's Westpac account. Mr Jiang also lent $100,000 to ASH. He also paid $150,000 directly to the vendor's agent by way of contribution to the deposit. Ms Shen was present when Mr Chen asked him to do so, offering him interest of 12% per annum, which appears to have been the standard rate of interest that Mr Chen offered to pay to private lenders.
4. On 30 July 2015 ASH paid the balance of the deposit, the sum of $363,000 to the vendor's agent in respect of the Bexley property. The money was drawn from ASH's account and included the $250,000 deposited by Ms Shen and Mr Jiang in the previous two days. Thus, even though it was ASP that eventually acquired the property, it was ASH that borrowed and paid the deposit moneys.
5. In September 2015, proposed finance from the National Australia Bank for the acquisition of the Bexley property by ASP collapsed. At about the same time, the proposed debt finance from NAB for the "refinancing" of the Bendemeer property also collapsed. When NAB notified Mr Chen of the failure of the funding applications, it noted the application names for the funding of the Bexley property were both ASH and ASP.
6. As settlement on the Bexley property was imminent, Mr Chen, Mr Jiang and Ms Shen sought alternative finance in respect of the Bendemeer property and for the acquisition of the Bexley property.
7. In mid-September 2015, Mr Chen told Ms Shen that the mechanism through which he had previously been able to bring funds into Australia from China was no longer available to him. Mr Chen asked Ms Shen and Mr Jiang to advance further funds. He sought funds from other private lenders and asked Mr Jiang to approach his girlfriend and his ex-wife to lend funds as well. He offered to pay interest at 12% per annum to each of them. Ms Fengping Pan lent ASH $200,000 on 25 September 2015. On 30 September 2015 Ms Shen lent ASH a further $20,000 by deposit into ASH's bank account. She did so following a request from Mr Chen and his promise to pay her interest at 12% per annum. In his evidence, Mr Chen did not deny the request or the advance, and Mr Jiang did not give evidence. Again, the payment was made to ASH, not ASP.
8. Ms Shen, at Mr Chen's direction, approached a number of other possible lenders through Universal Financial Group to obtain funds. She approached H&H Mezz and Sydney Wyde Mortgage Management ("SWMM"), both of whom ultimately provided funds to ASH and ASP to help ASP to settle the purchase of the Bexley property. ASH also borrowed $500,000 loan from a friend of Mr Chen, Mr Larry Wan, at 36% interest per annum. While Mr Chen denied in his affidavit that ASH borrowed money from Ms Shen, Mr Jiang, Ms Pan and Mr Wan, he did not deny that ASH borrowed the alleged monies from H&H Mezz.
9. Also on 30 September 2015 Ms Shen paid a shortfall of $68,010.00 in stamp duty on the purchase of the Bexley property directly to the Office of State Revenue. She did so in response to a request from Mr Chen to lend that sum to ASH. According to Ms Shen, Mr Chen said, "Melisa, can you lend ASH $68,010.00 for the stamp duty for Bexley?" Ms Shen asked why, whereupon Mr Chen said, "I need to pay the stamp duty, and I have the rest of the money but I am short for that amount. The loan will be with the same conditions as before, of twelve per cent annual interest rate". Ms Shen agreed. Mr Chen then added, "For me ASP is part of ASH. So both myself and ASH will guarantee you the return of the money, plus the interest." While Mr Chen denies this conversation, I prefer Ms Shen's account. ASP's acquisition of the Bexley property settled on that day.
10. The course of events showed that the acquisition of the Bexley property therefore was funded by monies received by both ASH and ASP: 1. ASH received $218,000 from Ms Shen (including for stamp duty), $280,000 from Mr Jiang, $200,000 from Ms Pan and $500,000 from Mr Wan. ASH also borrowed $1,400,000 from H&H Mezz at 24% per annum and using the Bendemeer property as security. 2. ASP borrowed $3,420,000 from SWMM at 10.95% per annum and using the Bexley property itself as security as well as $250,000 from SWMM using Fengying Xu's (Mr Chen's wife) property at Vaucluse as security.
11. Similar to the question of liability for Cheng Chen's guardianship fees, the question of which entity borrowed, and was responsible for repayment, of the monies contributed by Ms Shen to the acquisition of the Bexley property is a question of identification of the parties to it. It must be determined objectively, by examining and construing the relevant communications in their factual matrix and ascertaining between whom the parties objectively intended to contract.
12. In the present case, Ms Shen was employed by ASH and her duties included working on the Bexley project. It was, in practical terms, a project undertaken by ASH. Further, the principal was advanced to, and (as addressed below) ultimately repaid by, ASH. To some extent the identity of the recipient of the funds is less probative than it otherwise may have been, given that ASP appears not to have had a bank account of its own, at least in July 2015. The evidence does not disclose when an account was opened, but it is likely to have been in late 2015 as an ASP bank statement from early 2016 was in evidence.
13. ASH correctly submits the property was to be acquired by ASP, not ASH. It would ordinarily make little sense for ASH to borrow funds to secure the acquisition by another entity of the property. This, however, overlooks the looseness with which Mr Chen managed the separation of the financial affairs of his companies and his family.
14. At the same time that Mr Chen asked Ms Shen to advance funds, Mr Chen, Mr Jiang and Ms Shen were trying to raise funds from a number of sources. The objective evidence shows that both ASH and ASP entered into loan agreements in which each was a principal obligor: Mr Chen did not dispute that ASH borrowed a substantial sum from H&H Mezz secured against the Bendemeer property. Ms Shen, in the course of her duties, was aware of this at the time.
15. The conversations to which Ms Shen deposed were clear in their terms that ASH would be the borrower. They are consistent with ASH seeking and borrowing funds from other lenders. ASH was the main trading entity for Mr Chen in Australia. I accept that the conversations took place in the terms alleged by Ms Shen to the effect that ASH was agreed to be the borrower of $218,000 from her, on which interest accrued at a rate of 12% per annum.
16. The advances by Ms Shen to ASH were corroborated by ASH's own accounts. An ASH ledger report for the year ending 30 June 2016 records as a "shareholder loan" to ASH credits to Ms Shen's loan account on 28 July 2015 ($130,000), 18 August 2015 ($75,000), $24,000 on 30 September 2015 and $68,101.00 also on 30 September 2015. A debit of $75,000 was recorded on 11 September 2015, leaving a balance as at 30 June 2016 of $221,510.00 owing to Ms Shen.
17. While Mr Chen attempted in his evidence to cast doubt on the reliability of the accounts because of Ms Shen's role in preparing them, it was not put to her, and I do not accept, that she misrecorded ASH's liability to her in its 2016 accounts.

Repayment of principal

1. ASH relies on a number of other documents created after the Bexley property was acquired that characterise the payments by Ms Shen and Mr Jiang differently. Those documents all proceed on the basis that Ms Shen was an equity investor in ASP and that she was entitled to payment for her shares on their transfer to Mr Chen. None of them were created contemporaneously with the advance of the monies.
2. They are inconsistent with the case put by ASH in these proceedings that Ms Shen lent the sum of $223,810 to ASP and that ASP repaid the principal sum of that loan to her on 19 December 2017.
3. A resolution of a meeting of the shareholders of ASP dated 6 October 2015 purports to record proposed equity investments by each of them as not being accurately recorded by ASIC. Although Mr Jiang and Ms Shen were recorded as being beneficially entitled to the whole of their shares in ASP (in Ms Shen's case, initially 39% and later 38% of the shares), the resolution records that the "total amount of investment" was $6,000,000, their beneficial shares being held by Mr Chen as to $5,400,000, Mr Jiang as to $300,000 and Ms Shen as to $300,000. It goes on to state: The three parties agree: when the funds invested by the three parties in the company do not generate profits, the annual payment of 12% shall be paid to the shareholders for the financial costs of the funds. Time of payment: annual payment.
4. This document does not record a loan to ASP but treats the payment of interest as compensation for a failure to generate profit on an investment. It is at odds with ASH's case in the proceedings. ASH contends that Ms Shen lent the sum of $223,810.00 to ASP, it does not contend in these proceedings that it was an equity investment. I am not persuaded that the 6 October 2015 minutes reflect the anterior transaction between Ms Shen and ASH or ASP, as the case may be, on either party's case.
5. ASH also relied on documents executed in December 2017, when ASH repaid to Ms Shen the $223,810 she had advanced in 2015. The context in which those documents were signed and the payment was made by ASH was that Ms Shen continued to press for payment of monies in numerous conversations and messages with Mr Chen. In October 2017, Ms Shen and Mr Chen met at a Starbucks in Shanghai, at Mr Chen's suggestion, to discuss Ms Shen's requests for payment of the monies she claimed to be owed. At that meeting, Mr Chen asked Ms Shen to sign a Deed of Agreement that had been provided to her in July 2016, as well as a further agreement to be written in Chinese in which she was to agree to transfer her 38% of the shares in ASP to Mr Chen. Mr Chen indicated that Ms Shen would be repaid all of her principal first and the balance would be paid later, when Mr Chen asked for Ms Shen to execute a transfer in respect of her shares. In the meantime, Mr Chen wished to ensure that there were sufficient funds in ASH for it to continue to operate.
6. Although Mr Chen denies this conversation, I accept it occurred in accordance with Ms Shen's account.
7. On 12 December 2017, in an exchange of voice messages, Mr Chen reiterated that Ms Shen would only recover her principal if she signed the Deed of Agreement and Chinese language acknowledgement. Mr Chen expressly acknowledged that Ms Shen would be paid interest on the funds she had provided for the Bexley project. In a telephone call with Ms Shen on 17 December 2017, Mr Chen reiterated that on signing the Deed, ASH would repay the principal Ms Shen had lent.
8. Ms Shen met with Mr Jiang and Peichen Ni on 19 December 2017. At that meeting, Mr Ni hand wrote a document in Chinese, dated 19 December 2017, which the three of them then signed. The English translation of that document is agreed to be as follows: I have received a transfer for A$223,810 from Australian Successful Property Pty Ltd today. Upon receipt of this payment, I Melisa Shen shall be deemed to have transferred all of my shares in Australian Successful Property Pty Ltd to Chen Zhihua.
9. At the same time, Ms Shen executed a Deed in the form that had been first circulated by Ms Jin in July 2016. That Deed provided as follows: 1. It was recited that ASP resolved to raise $6,000,000 from its shareholders by the issue of shares. No new shares, however, were ever issued. 2. It was further recited that Ms Shen's contribution in the fund raising would be $2,280,000, but that Mr Chen provided for the purchase of 34 of her 38 shares and would invest $2,056,190 in ASP in lieu of her. 3. Ms Shen would thereupon hold 34 shares in ASP on trust for Mr Chen and would execute an instrument of transfer in favour of him or his nominee as directed.
10. As with the 6 October 2015 minutes and the handwritten document of 19 December 2017, the predicate of the Deed is that Ms Shen was liable as a shareholder to contribute equity to ASP and her payments of $223,810 were an equity contribution in ASP. This was not how ASH conducted its case. The documents together provide no real assistance in determining the question of whether Ms Shen lent $223,810 to ASH (in which case ASH is liable to pay interest) or whether she lent $223,810 to ASP (in which case ASP is so liable) because they assume the monies were an investment and not a loan at all.
11. In any event, I accept the evidence of Ms Shen as to the conversations at the time the advances were made in the factual matrix as it existed at that time.
12. Immediately on execution by Ms Shen of the Deed and Chinese language acknowledgement on 19 December 2017, ASH - not ASP - transferred the sum of $223,810 to Ms Shen. While this is not dispositive of the question, it lends some support to Ms Shen's allegation that ASH was the true borrower of the funds. Similarly, ASH and not ASP repaid $200,000 to Ms Pan in August 2017.

Transfer of monies

1. In November 2018, Mr Chen invited Ms Shen and her new husband to dinner at Dragonboat in Darling Harbour. Present at the dinner were also Mr Chen's wife, Mr Jiang, Fengping Pan, Bing Yu (Mr Chen's accountant) and Bing Yu's wife. The dinner was ostensibly a social occasion to make up for Mr Chen's inability to attend Ms Shen's recent wedding, nevertheless the conversation turned to Mr Chen's financial affairs.
2. Although the Dragonboat dinner purported to be a social occasion, on 29 November 2018, Ms Shen received from Mr Jiang a minute of what purported to be a meeting of the directors of ASP at the dinner approving the transfer of Ms Shen's 38 shares from her to Mr Jiang. That minute was invalid for any number of reasons. It is unnecessary to address them all. Suffice to say that Ms Shen was not a director of ASP and there had been no discussion on 24 November at which the approval of a transfer of Ms Shen's shares to Mr Jiang was discussed. In terms it did not purport to be minutes of a meeting of the company. Ms Shen had not been given notice that the dinner was to be a meeting of the company in any event.
3. By this stage, Ms Shen appeared to despair over ever recovering the remaining monies which she believed she was owed. On 19 December 2018 she sent Mr Chen a spreadsheet setting out the amounts to which she claimed to be entitled for unpaid salary, interest and guardianship fees.
4. Also on 19 December 2018 Ms Shen sent two voice messages on WeChat to Mr Chen. In those messages she said that she had taken advice from her accountant and was ready to transfer her ASP shares to Mr Chen, but that she wanted all of the outstanding salary, interest and guardianship fees to be paid to her. Mr Chen responded shortly afterwards in which he not only resiled from earlier representations that he would pay the balance of monies claimed on transfer of the shares, but demanded Ms Shen pay further monies "to cover the loss we have had."
5. Ms Shen called Mr Chen the following day, on 20 December 2018, but he did not take the call. He sent a voicemail demanding that Ms Shen make a further contribution to pay "the company's debt" on the basis that she was still a shareholder. He told Ms Shen to talk to Mr Jiang about what to do next.
6. Ms Shen called Mr Jiang later that day. They had a conversation to the following effect: Shen: As you are aware that ASH owes me interest payments on my loan, my unpaid salary, and the fees for being the guardian for Cheng Chen. Jiang: Yes, I know. Shen: I asked Mr Chen to pay me all the money owed to me, Mr Chen said I need to talk to you about it. Jiang: But those money has nothing to do with ASP, it has to do with ASH. By the way, you are lucky, as until now I haven't even got my principal back from ASH. I doubt I will get the interest on my loan or my wages.
7. Mr Jiang directed Ms Shen back to Mr Chen to talk about payment.
8. At 11:42 a.m. on 21 December 2018, Ms Shen sent Mr Chen a spreadsheet in English and Chinese in which she set out the sums she claimed. The English component of the table was as follows: Item Period Period Rate Total Already Paid Remaining Balance Needs to be paid Wages 15/05/2014-30/9/2016 28 months $50,000 per year $119,615.38 $20,608.02 $99,007.36 Annual leave 9.33 weeks $9,201.18 0 $9,201.18 Superannuation 2.33 years $11,363.46 0 $11,363.46 Interest on $223,810.00 7/2015 - 12/2017 29 months $64,904.90 0 $64,904.90 Guardian for Cheng Chen 1/2015 -11/2016 22 months $1,000 per month $22,000 0 $22,000 $206,476.90

1. It might be noted that Ms Shen did not seek to recover any sum on account of wages, leave or superannuation for the period after 30 September 2016. At the time, ASH's bank account was in credit in the sum of $276,860.56 so that after the transfer of $206,476.90, it would remain in credit in the sum of $70,383.66.
2. Ms Shen immediately thereafter sent Mr Chen a further WeChat message in which she said, "Hi Mr Chen, I just sent you the total amount which your company, Australian Successful Holdings Pty Ltd, needs to pay me, also with the breakdown figures. As agreed, your company owes me $206,476.90".
3. Without waiting for a response from Mr Chen, three minutes later Ms Shen transferred the sum of $206,476.56 to herself from ASH's Westpac bank account.
4. Mr Bell for ASH submitted that Ms Shen deliberately gave Mr Chen inadequate notice of her intention to transfer the funds and I could infer that she knew she was no longer authorised to operate the account and that she had no entitlement to the monies. It may well be that Ms Shen was not prepared to take the chance that Mr Chen would revoke her access to ASH's accounts if he was notified that she proposed to transfer the monies. There is some force to Mr Bell's submission that this indicates Ms Shen was aware she was no longer authorised.
5. On balance, however, I do not accept the submission. By this time, there was little trust or goodwill in the relationship between Mr Chen and Ms Shen. She may well have anticipated that Mr Chen would unilaterally revoke her access. This is not inconsistent with a belief that she still had lawful access at that time or that such a belief was wrong.
6. Ms Shen tried to log on to the bank account on 19 January 2019 but access was denied. She inferred from that deprivation of access that her casual employment was terminated.

Money had and received

1. The plaintiff's claim is advanced solely on the basis of the common law count of money had and received by the defendant to the use of the plaintiff.
2. The elements of the cause of action, which the plaintiff must establish are: 1. The defendant received a definite and ascertained sum of money; 2. The money received was the plaintiff's money or money in which he was interested; and 3. The defendant cannot in good conscience retain the money by reason of the presence of some qualifying or vitiating factor which gives rise to a prima facie obligation to make restitution.
3. The last of these elements is sometimes treated as a more general principle that restitution is available where the retention of the money by the defendant would be unconscionable: e.g. JZ Lee Interiors Pty Ltd v Smith [2015] VSC 693 at [24]. While the question of unconscionability is clearly relevant, it is not part of proof of the elements of the cause of action that retention of the money in all the circumstances is unjust: see David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-9; [1992] HCA 48 and Coshott Family Pty Ltd v Lyons [2022] NSWCA 216 at [20].
4. Rather, the plaintiff must prove the existence of some qualifying or vitiating factor which gives rise to a prima facie obligation to make restitution. The defendant may then seek to establish some responsive defence which displaces that prima facie obligation: Coshott at [21]. It is in this sense that the overall question of unconscionability arises.
5. The vitiating factors are well known, having been collected by Lord Mansfield in Moses v Macfarlan (1760) 2 Burr 1005 at [1012]; (1760) 97 ER 676 at 681, and debated ever since: see K Mason, JW Carter and G J Tolhurst, Restitution Law in Australia (4th ed, 2021, LexisNexis) at [120]-[132].
6. In the following passage, his Lordship stated that the action for money had and received: … lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, express or implied or extortion; or oppression; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.
7. The categories of vitiating factor are not closed: Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 at 681; [2001] HCA 68 at [93]-[95]; Coshott at [22].
8. In this case, ASH says that the vitiating factor is established because Ms Shen did not lawfully have access to ASH's accounts as at December 2018 and was not entitled to the monies in any event. Ms Shen says that she remained an employee, on at least an ad hoc basis, and her access to the ASH accounts had not been terminated because she continued to play a role in the administration of ASH. As she was entitled to make transfers to herself by way of payment of her entitlements and reimbursement of monies spent by her, she was entitled to the monies transferred to herself on 21 December 2018. The transfer, therefore, was lawful.
9. On the evidence before me, I find that Ms Shen did continue to hold lawful authority to access ASH's bank accounts as at 21 December 2018. On the evidence as to conversations as to the creation and continuation of that relationship and the work performed by Ms Shen for ASH and for the benefit of Mr Chen and other entities related to him and ASH, I have found that Ms Shen was continuously employed by ASH from 15 May 2014 until at least that date. Ms Shen's duties included making payments from ASH's accounts without needing specific authority from Mr Chen on each occasion.
10. Ms Shen's authority to transfer money to herself was limited in only two ways: first, there was an implicit but obvious requirement that the money be truly owing; secondly, there needed to be sufficient funds in the account after any such transfer to pay ASH's other expenses.
11. The question then becomes whether Ms Shen was entitled to the money that she transferred to herself on 23 December 2018. That money, as set out in her WeChat message to Mr Chen of 21 December 2018., was comprised in three components: wages and superannuation, interest on loans to ASH, and guardianship fees.
12. As I have found that Ms Shen was continuously employed on a full time basis from 15 May 2014 to 31 October 2016, ASH was liable for her salary and superannuation for the whole of that period. Ms Shen was only paid for a six-month period, being part of the period during which the written employment agreement applied.
13. While Ms Shen's entitlement to wages was disputed, the arithmetic of her calculation was not. I accept her calculation is correct. Ms Shen only sought to recover unpaid wages that accrued during the period of her full time employment, that is from 15 May 2014 to 30 June 2015 and from 1 January 2016 to 31 October 2016. On her calculation, this amounts to $119,572.00. ASH did not proffer any alternative calculation as it denied her continued employment, notwithstanding the copious evidence of work she performed for the benefit of ASH and at the direction or request of Mr Chen during that period.
14. I have also found that Ms Shen advanced the sum of $223,810.00 to ASH. Those funds were advanced to ASH and not ASP. ASH was the borrower of funds for the Bexley project from a number of sources. Interest was agreed between ASH and Ms Shen at 12% per annum. Neither the fact that ASP was the proposed developer nor the various subsequently created documents that purported to regulate and manage Ms Shen's contribution on the basis of an equity investment alter this fact. When ASH repaid the principal in December 2017, it did so on its own account and not on behalf of ASP.
15. Ms Shen calculates the interest payable as only accruing to December 2017, when ASH repaid the principal. As ASH does not proffer any alternative calculation, I accept Ms Shen's calculation as correct.
16. Finally, I accept that Ms Shen undertook the guardianship responsibilities in respect of Mr Chen's son on the basis that ASH would pay her $1,000 per month to do so. The responsibilities were substantial and she only came to perform them after, and in consideration of, the promises made by Mr Chen that she would be paid by ASH for doing so.
17. Mr Bell submitted that Ms Shen's failure to transfer the monies she claimed were owing to her was consistent only with her not being an employee, to her knowledge. I have not accepted that submission. Ms Shen gave evidence that Mr Chen asked her to delay making such payments to preserve ASH's cashflow. Even if some payments could have been made without exhausting ASH's funds, I accept that Ms Shen was honouring Mr Chen's request. She did so to Mr Chen's knowledge. It would be unfair for her patience to be held against her as evidence that she held no such right.
18. For the sake of completeness, I should point out that if I am wrong about Ms Shen's continued employment as at 21 December 2018, it would follow that Ms Shen did not have lawful access to ASH's account at that time. In that case, I consider ASH would have made out a prima facie case that that it would be entitled to restitution on the basis of money had and received.
19. However, even if I were to make that finding, I would nevertheless have still found that Ms Shen was owed the monies she transferred to herself. It may well be arguable that a claim for money had and received could succeed even where the defendant had an entitlement to the money where she made the transfer without authority. In light of my findings as to Ms Shen's continued authority, however, this issue does not arise.
20. In any event, Ms Shen relies on the alternative defence of set-off. As the sum claimed by her, if she did not have authority to make the transfer, would be a mutual debt in a liquidated sum, s 21 of the Civil Procedure Act 2005 (NSW) applies to permit her claim to be set-off against liability to make restitution of the monies transferred on 23 December 2018. She would therefore succeed in her defence of set-off or on her cross-claim for the same sum. Either way, ASH is not entitled to recover the monies sought on its principal claim.
21. As I have found that Ms Shen has succeeded in her defence of the principal claim, her cross-claim has become redundant. The appropriate order is therefore that it be dismissed, although this obviously does not reflect any failure on Ms Shen's part to make out the allegations made therein.

Costs

1. Finally, as Ms Shen has succeeded in her defence of ASH's claim, she would be entitled to her costs of the proceedings on the ordinary basis. I propose to make an order to that effect. In the event that either party seeks a special costs order, I will grant liberty to them for a period of seven days to apply to vary that order.

Orders

1. The orders of the Court, therefore, are: 1. Judgment for the defendant on the plaintiff's claim. 2. The cross claim is dismissed. 3. The plaintiff/cross-defendant pay the costs of the defendant/cross-claimant on the ordinary basis as assessed or agreed. 4. Grant liberty to the parties to make an application to vary order (3) herein by email to my associate within 7 days setting out the order they seek, any evidence in support and submissions of no more than five pages in length.

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: 20 October 2023