Chen v Lin; Lin v Chen

Issue 2 - Repayment of the amount of $578,130 given by Mr Chen to Ms Lin on 6 March 2018 for the purchase of 7 Rosetta Avenue, East Killara

1. It was agreed between the parties that Mr Chen provided a bank cheque in the sum of $578,130 made out to the Commonwealth Bank of Australia dated 6 March 2018, the funds from which were used to settle Ms Lin's purchase of a property in East Killara.
2. Mr Chen alleged that this was a loan advanced to Ms Lin that was repayable on demand, that he had made the demand, and that Ms Lin had not repaid the amount advanced.
3. Ms Lin alleged that the payment was the repayment of money advanced by Ms Lin to Mr Chen from time to time from about 2017 to March 2018, amounting to $571,830.
4. An acceptance of Ms Lin's argument requires a finding that Mr Chen was indebted to Ms Lin.
5. There were some contemporaneous records of the relevant transactions, which it is necessary to describe at this point. Ms Lin alleged that the parties adopted a system to record the advance of funds and repayment of amounts that was reflected in statements of bank accounts controlled by Mr Chen. It was agreed that until about mid-2018, Ms Lin permitted Mr Chen to operate a Westpac bank account in the name of Jiang Guo Lin, who was Ms Lin's father (the Guo account). This included having electronic access to the Guo account and the authority to withdraw funds from it for his own use, on the basis that the money would be repaid or set off against amounts owed to Mr Chen by Ms Lin. It was also common ground that at the relevant time, Mr Chen had the authority to operate a Westpac bank account in the name of Nanjing Qi, who was Mr Chen's mother (the Qi account).
6. The following are examples of the payment description system and an explanation of what the entries were intended to mean: 1. Ms Lin alleged that on 2 March 2018, Mr Chen transferred the sum of $10,000 from the Guo account to the Qi account. The payment description inserted by Mr Chen was "47.14 + 1 = 48.14". [1] Ms Lin's evidence was that the number 1 represented a sum of $10,000, so that the payment description recorded that, as at 2 March 2018, Mr Chen owed her $481,400 calculated as a starting balance of $471,400 plus the additional advance of $10,000 made on that day; 2. Ms Lin alleged that on 27 February 2018, the sum of $10 was deposited by Mr Chen from the Qi account into the Guo account. The payment description was "56.54 - 10 = 46.54". Ms Lin's evidence was that the payment description recorded: 1. the repayment of $100,000 by Mr Chen made by a cheque dated 21 February 2018 made out to Ms Lin's father, a copy of which was in evidence; and 2. that as at 27 February 2018, Mr Chen owed her $465,400 calculated as a starting balance of $565,400 less the repayment of $100,000 made on or about that day; and 3. the deposit of $10 was intended to represent a repayment of $100,000, i.e., the reference to 1 was a reference to $10,000. 1. On some occasions, the actual amount of money was transferred from or into the Guo account together with the corresponding payment description giving rise to the following examples: 1. on 27 November 2017, Ms Lin alleged that a repayment of $5,000 made by Mr Chen on that day into the Guo account was accompanied by the payment description "49.04 - 0.5 = 48.54", representing that as at that date, Mr Chen owed Ms Lin $485,400, being $490,400 less $5,000; 2. on 1 March 2018, Ms Lin alleged that a withdrawal of $6,000 was made by Mr Chen from the Guo account in the sum of $6,000 accompanied by the payment description "46.54 + 0.6 = 47.14", representing that as at that date Mr Chen owed Ms Lin $471,400 being $465,500 plus $6,000.

Evidence

1. The parties relied on a number of affidavits filed by them which were conveniently contained in a paginated Court Book. There was only one independent deponent, whose evidence became irrelevant as a result of agreement between the parties as to the relevant issues.
2. There were however a number of contemporaneous documents that were relevant to the resolution of the issues which I will return to when it is necessary to do so.
3. Mr Chen and Ms Lin were called to give evidence and cross-examined.

Mr Chen's credit

1. Mr Chen presented as a witness who was evasive and the evidence that he gave was directly contradicted by the contemporaneous records of the relevant transactions, which were created by him, and by contemporaneous WeChat messages exchanged between the parties. His answers were characterised by long pauses and his recall of the relevant events was so poor that I formed the impression that he was not doing his best to answer the questions put to him.
2. His answer to the allegation that he owed Ms Lin money was that the contemporaneous records of the exchange of money were a fabrication to be used by Ms Lin to justify to her family that she had funds available to complete the purchase of the East Killara property. In my view, this explanation was untrue, because it contradicted Mr Chen's evidence that some of the money referred to in the contemporaneous records was in fact received by or paid by him in accordance with those records, for example the $100,000 cheque made out to Mr Lin's father referred to above. Each of the payment descriptions made by him were admissions that he owed the relevant amounts. Further, this explanation was given for the first time in his evidence before the Court and was not referred to in his affidavit evidence. I am satisfied that it was a recent invention.
3. In addition, Mr Chen's denials that he owed money to Ms Lin were contradicted by the content of the WeChat messages which, individually and in their combined effect, amounted to admissions made by him.

Ms Li's credit

1. Ms Lin was an accountant and presented as a person who was accurate in her business dealings and took care to record the sums advanced by her by introducing the payment description system and making reference to the debt in the WeChat messages.
2. I have taken into account that Rees J found in the Supreme Court proceedings that Ms Lin did not have a caveatable interest in Mr Chen's real property. However, it should be noted that at the hearing before Rees J, sensible concessions were made on the part of Ms Lin and no adverse finding as to her credit was made. Ms Lin's allegation that she was an unsecured creditor of Mr Chen, which was noted by her Honour to be prima facie supported by the WeChat admissions, was transferred to this Court to be adjudicated on.
3. Ms Lin was challenged in the content of the Application for an Apprehended Violence Order (AVO) against Mr Chen, in so far as it sought to summarise the history of financial dealings between them. Taking into account that Ms Lin was not assisted by an interpreter at the time of making her complaint, and that the application was not signed or otherwise adopted by her and that the description on which she was challenged was a summary seeking to provide relationship context, I am not satisfied that this represented a prior inconsistent statement by Ms Lin that adversely impacted her credit as a witness.
4. Ms Lin was taken to later use of the payment description code being used to indicate in WeChat messages that she was indebted to Mr Chen. Ms Lin's evidence was that she did not agree that she owed Mr Chen the money referred to on those occasions. She did not accept the proposition that the code was as meaningless at that time as it was when it appeared in the Guo account bank statements. Ms Lin gave evidence, which I accept, that she used the code at the later time at Mr Chen's insistence because she was scared of Mr Chen by reference to how he had treated her when their relationship started to sour.
5. Overall, I accepted Ms Lin as a witness of credit and where the evidence is in conflict between the parties, I prefer the evidence of Ms Lin.

Issue 1 - Use by Ms Li of Mr Chen's Citibank credit cards

1. This issue comes down to whether or not I accept that Ms Lin made the following payments, for which she has not been given credit: 1. $6,739.20 paid from the Double Wealth Pty Ltd (DW) Commonwealth Bank account (the DW CBA account) on 14 February 2019 by Mr Chen to another CBA account; 2. $3,542.40 paid from the DW CBA account on 25 May 2019 by Mr Chen with the reference "noodle"; 3. $5,760 paid from the DW CBA account on 16 October 2019 by cheque no. 000102; 4. $500 paid from the Guo account to the Qi account on 29 October 2019 with the reference "Citi"; and 5. $1,500 from the Guo account to the Qi account on 29 October 2019 with the reference "Citi".
2. By way of background, DW was a company used by Ms Lin to operate a business exporting goods from Australia to China. Rongxia Fan, Mr Chen's wife, was a shareholder in DW. Mr Chen's primary business was a food business trading under the name "Salad Servers" that provided pre-made salads to food retailers.
3. By the end of the hearing, Mr Chen conceded that the payments in [26(d) and (e)] were made by Ms Lin and that she should have been given credit for them.
4. In cross-examination, on the first day of hearing, Mr Chen accepted that he had the authority to draw cheques on the DW CBA account. He was shown cheque no. 000102 and accepted that the cheque was in his handwriting and the cheque had been paid to a supplier, Mr Peng, who operated a food supply business. He also accepted that the payments in [26(a) and (b)] above were made by him through internet banking and paid into the account of Hakkea Pty Ltd, which operated a business supplying noodles.
5. In his affidavit affirmed on 11 February 2021, Mr Chen acknowledged that the payments referred to in [26(a)-(c)] were made in relation to the food business operated by him, but they were set-off by payments made into that account by a creditor of his business, S&B Gourmet Foods Pty Ltd (S&B). This evidence did not go beyond this assertion by seeking to reconcile the monthly payments received by DW from S&B.
6. In his cross-examination on 18 February 2021, which was a week after his last affidavit was affirmed, Mr Chen alleged that the payments referred to in [26(a) -(c)] were made on DW's behalf, which was a company in which he had an interest because his wife was a shareholder of DW. He denied the proposition that DW did not have an interest in any food business. His evidence was very confused. He stated that he did not have a precise memory of the transactions because they had happened more than 18 months ago.
7. I accept Ms Lin's evidence that DW operated an export business sending goods to China and that it did not have any interest in a food business operating in Australia.
8. Mr Chen, in his oral evidence, sought to characterise the payments differently than he did one week earlier in his affidavit. In my view, his affidavit evidence was contradicted by his oral evidence. His oral evidence was evasive and confusing. I am satisfied that I should not accept his evidence on this claim.
9. I am not satisfied on the evidence that DW had a beneficial interest in Salad Servers or that it received payments that were not subsequently paid to Mr Chen.
10. I am satisfied that the payments made by Mr Chen from the DW CBA account were made for Mr Chen's or Salad Server's benefit and that Ms Lin is entitled to credit for those payments to set off against her use of Mr Chen's Citibank credit cards.
11. The result is that I find that Ms Lin has repaid the vast majority of the money owed to Mr Chen for the use of his Citibank credit cards. There may be some small discrepancy in the amounts (approximately $188), and I will order the parties to bring in Short Minutes of Order to give effect to my decision.

Issue 2 - Repayment of the amount of $578,130 given by Mr Chen to Ms Lin on 6 March 2018 for the purchase of 7 Rosetta Avenue, East Killara

1. Mr Chen's case was that the payment made by him of $578,130 via the bank cheque presented at the settlement of the purchase of the East Killara property was a loan from him to Ms Lin.
2. Ms Lin's case was that she required the repayment of the funds advanced by her to Mr Chen so that she could settle the purchase of the East Killara property on 8 March 2018.
3. Mr Chen's case was that he recorded the payment descriptions consistent with the fact that he owed Ms Lin about $600,000 so that she could tell her father that she could fund that part of the purchase of the East Killara property, and therefore her father would lend or give her the balance of the funds required to settle the purchase.
4. It was common ground that Mr Chen provided a bank cheque to Ms Lin in the sum of $578,130 on or about 6 March 2018.
5. Ms Lin alleged that Mr Chen in fact overpaid the amount he owed, which was $571,830.
6. Ms Lin contended that Mr Chen had made admissions in the contemporaneous records of their dealings that he was indebted to her as she alleged.
7. The evidence contained two sources of admissions by Mr Chen as to the amount of money he owed to Ms Lin; the first being the payment descriptions made by him in the records of dealings in the Guo account and the second being the WeChat messages passing between them in the period of December 2017 until 5 March 2018 when the payment by Mr Chen was made.

Evidence of the payment descriptions made by Mr Lin

1. The payment descriptions can be summarised in the following table: Date Transaction [2] Balance Reference in the evidence 09.10.2017 First reference to balance $461,400 Guo account CB 396 noting a starting value of 46.14 09.10.2017 $12,000 $449,400 Guo account CB 396 deposit of $1.20 20.10.2017 ($48,000) $497,400 None identified by Ms Lin 27.11.2017 $7,000 $490,400 Guo account CB 396 deposit of $0.70 27.11.2017 $5,000 $485,400 Guo account CB 395A deposit of $5,000 into that account 27.11.2017 ($150,000) $635,400 Guo account CB 395A deposit of $15 27.11.2017 $5,000 $630,400 Guo account CB 396 deposit of $0.50 27.11.2017 $20,000 $610,400 Guo account CB 396 deposit of $2 27.11.2017 $5,000 $605,400 Guo account CB 396 deposit of $5,000 into that account 05.12.2017 ($55,000) $660,400 WeChat message re adjustment to figure CB 400 11.12.2017 $5,000 $655,400 Guo account CB 395A withdrawal of $5 19.12.2017 $90,000 $565,400 Guo account CB 395A deposit of $9 22.02.2018 $100,000 $465,400 Guo account CB 395 deposit of $10 (on 27 February 2018), the copy of cheque no 000102 at CB 394, which was deposited into the Guo WBC account on 22 February 2018 and recorded at CB 395A 01.03.2018 ($6,000) $471,400 Guo account CB 395 withdrawal of $6,000 02.03.2018 ($10,000) $481,400 Guo account CB 395 withdrawal of $10,000 04.03.2018 ($40,000) $521,400 None 04.03.2018 ($50,430) $571,830 Transfer of $950,450 by Mr Chen to himself on 4 March 2018 in repayment of a loan from Mr Chen to Ms Lin of $900,000 08.03.2018 $578,130 ($6,300) Bank cheque drawn in favour of CBA and tendered at settlement of East Killara property CB 469

1. In relation to the advance of funds on 20 October 2017, no record was identified by Ms Lin for an advance of $48,000. However, there was a withdrawal of $5 from the Guo WBC account on that date which would have represented an advance by Ms Lin to Mr Chen in the sum of $50,000, but there was no corresponding payment description for this entry. I am satisfied that this withdrawal was intended by Mr Chen to represent the receipt by him of a further $50,000 because this was consistent with the code and with his previous pattern of conduct, and it would have been otherwise highly unusual to transfer the paltry sum of $5 between the bank accounts controlled by the parties. There was evidence that sometimes the parties provided funds to each other in cash. I infer that it is likely that the $2,000 discrepancy in these figures was probably accounted for through some other means such as a cash payment by Ms Lin.
2. In relation to the entry for 11 December 2017, the withdrawal by Mr Chen of $5 would have usually represented the receipt by him of $50,000 from Ms Lin. This roughly coincided with a $55,000 adjustment referred to in a WeChat message from Ms Lin to Mr Chen on 5 December 2017 at CB 400, which read: Change Westpac number now its 61.04 + 5 so 660400, owe me. It looks not in order now.
3. On 19 December 2017, Mr Chen represented in the payment description for the repayment of $90,000 by him that he owed Ms Lin $655,400, which coincided with what Ms Lin alleged was owed to her.
4. It was common ground that Mr Chen provided the sum of $900,000 to Ms Lin for the purpose of demonstrating to a financier that she had funds of $1,000,000 in a bank account. On 5 February 2018, the sum of $900,000 was deposited by Mr Chen into Ms Lin's HSBC account ending in 412. It was also common ground that this money was repaid to Mr Chen. The evidence of the further advances made to Mr Chen by Ms Lin on 4 March 2018 was a little unclear. Objection was taken to some potentially relevant evidence in Ms Lin's affidavits that was not pressed by her. Ultimately, this is of no concern because I am satisfied that by reference to other evidence, which I will come to, that the advance of these funds was established.
5. I am satisfied that the payment descriptions made by Mr Chen when dealing with funds going into and leaving the Guo account were representations by him that he was advanced funds by Ms Lin from time to time and that he was taking steps to repay the money borrowed from her. I am satisfied that the payment descriptions were admissions by him of his indebtedness to Ms Lin at various times.

Evidence of the WeChat admissions

1. Ms Lin contended that the content of the WeChat messages passing between the parties in the period leading up to the provision of the bank cheque dated 6 March 2018 by Mr Chen, amounted individually, and when taken as a whole, to admissions of his indebtedness to Ms Lin as she alleged.
2. The relevant messages are set out as follows.
3. On 4 December 2017, the following exchange took place on WeChat: Chen: Are you worried that I won't pay you back the money? Lin: I am not worried about that you don't repay it. I am worried that you won't be able to collect that much money at once and you also need to repay lot of people. I am afraid you won't have enough money to repay. I don't want this matter to be delayed. I don't have much money now. My family keeps asking me but I don't know what to say. I am thinking you are settled so you can give me the money in lump sum. Don't repay it little by little. I can't wait. I have lent you more than $600,000 again. I am speechless. I think I will never end money to anyone else. LOL. 1000 AUD lending. Chen: I will pay you back the money once I have it, just within this month or next month. Your parents should know you lent money to me, right?
4. On 5 December 2017, the following exchange took place on WeChat: Lin: Change Westpac number now its 61.04 + 5 so 660400, owe me. It looks not in order now. Chen: You really help me a lot a lot. I will remember this for my whole life. Lin: Because I treat you like my real brother. I am willing to help you. I will only lend other people 1000 at most. It is none of my business.
5. On 10 December 2017, the following exchange took place on WeChat: Lin: Remember to pay back the money to me when you have the money. I have lent you more than 650000: 200 is 2.1M. My mum will give me another 150000. I will settled the property first and sell homebush and rockdale property after. Then I can change furniture with the money back. And my dad is preparing to sell the house in china. And I can use these money to pay another 10% deposit for the rouse hill house because I have only paid 10% and the stamp duty. Chen: I know I mean if you borrow 90%, the money ban more flexible
6. On 11 December 2017, the following exchange took place on WeChat: Lin: You got some money back last week. Do you have some to give back to me? You should change the balance to 65.54. I have changed.
7. This message was followed by the posting of a copy of a payment receipt which was illegible in the evidence.
8. On 16 January 2018, the following exchange took place over WeChat, after Ms Lin sent a screenshot of a query from her bank, which was illegible in the evidence: Chen: Are you asking me when the money will be returned to you? It's about mid or end of February Lin: The banker is asking I gave you the screenshot directly Chen: The problem is that this has nothing to do with his loan approval Lin: Settlement date is 8th Mar Chen: I know that it won't be delayed for you Lin: Settlement should take about 2 weeks. Settlement day is 8th March My father has prepared money for me in China. I may be a little short of it so I'm doing it as well Chen: It needs 550000 in the account And stamp duty Lin: I have only paid 110000 Total 220000 You owe me 56.54 and my parents gave me 50000 yesterday. I will get another 50000 these days. Chen: Before as soon as possible Lin: 700000 is needed 20th is too late. He said it would take at least two weeks to settle. Chen: I'll pay the penalty interest. Lin: It is not the problem of interest. The problom is they will not approve. Settlement day is 8th March. Chen: I'll pay back you the money as soon as I get it. It is on 8th, right? Lin: He said settlement needs 2 weeks and asked me to prepare 700000 in the account this month.
9. On 5 March 2018, Ms Lin and Mr Chen had the following exchange on WeChat: Lin: What do you say. I have to reply to the bank. Chen: It has nothing to do with me, just let the lawyer make an appointment. Lin: If you're ready I'll make an appointment. If you're not OK, I'll postpone it, so I have to ask you. Then I have a problem. Thanks Joke is joke. I won't delay you on purpose. Lin: I never thought that you would deliberately delay me. I said yesterday that I would not borrow money in the future deliberately. If I didn't, I would not ask my friend for you. But I just don't like it when you keep saying less contact. Chen: It's your business that you don't like, and I there are many things I don't like about you. Lin: If you really don't care about this feeling I have nothing to say. 481400 + 50000 HSBC transferred + 430 (RMB 1800) was 531830. You can transfer it to my mother's account so that she can write cheque together (Fen Li's bank account details provided) Be happy be happy You see it's better to be a little son. No matter how big things are, you'll be fine after a fight. LOL. Be happy. Be happy. I'll bring you cash tomorrow, If not happy, scold me a few words, you will feel better. Don't cooperate with them when you are rich. Chen: It has nothing to do with [indecipherable]. Lin: Should I bring all the cash tomorrow? 47000 Chen: 4 Lin: OK then I will use 7000 to pay invoice. 531830 + 40000= 571830. Transfer 24000 to my father's Westpac. Transfer 547830 to my mother's HSBC. Chen: Ok Lin: My god. Just enough for settlement. (Screenshot attached)
10. There were some further exchanges on 5 March 2018 as to how the money was to be transferred, but they are not important. The contemporaneous evidence demonstrated that Mr Chen made available a bank cheque drawn in favour of the CBA that was tendered at settlement of the purchase of the East Killara property.
11. The overall effect of the WeChat messages is simply that when Ms Lin alleged that Mr Chen owed her money, he did not take objection to that suggestion but sent messages consistent with the fact that he was indebted to her, as alleged, and that he would pay her back so the funds were available to settle the purchase of the East Killara property. There was no evidence in the WeChat messages that supported Mr Chen's argument that the provision of the bank cheque was pursuant to a loan agreement between the parties in which he was the lender of the funds.

Conclusion on Issue 2

1. Mr Chen submitted that there was no evidence of how the alleged debt of $461,400 was calculated before 9 October 2017 and that Ms Lin bore an onus to prove each and every transaction that gave rise to that initial debt, to be able to prove her case. I reject that argument.
2. At the time when the payment descriptions were made by Mr Chen, he understood what they were meant to represent, and I reject his evidence to the contrary. The payment descriptions were not the only admissions made by Mr Chen that he was indebted to Ms Lin and the WeChat admissions were entirely consistent with the payment description admissions. I am also satisfied that Mr Chen acted consistently with the payment description admissions and the WeChat admissions by providing the bank cheque in time for the scheduled settlement of the East Killara property.
3. Ms Lin was entitled to rely on Mr Chen's admissions in arranging her financial affairs as well as in the course of this litigation.
4. Taking into account all of the evidence, I am satisfied on the balance of probabilities that the parties conducted themselves on the basis that there was a loan agreement between Ms Lin and Mr Chen, that Ms Lin advanced money to Mr Chen pursuant to that agreement and that he made repayments consistent with the existence of the agreement: Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 78; Técnicas Reunidas SA v Andrew [2018] NSWCA 192 at [50] (Leeming JA) and Lawrence v Ciantar [2020] NSWCA 89 at [114] (Bathurst CJ).
5. From Mr Chen's perspective, taking into account all of the evidence, I am not satisfied on the balance of probabilities that Mr Chen established that his payment of $578,130 was made pursuant to a loan agreement between himself and Ms Lin, in which Ms Lin was required to repay that sum.
6. The result is that I am satisfied that Mr Chen was indebted to Ms Lin in the sum of $571,830 and that his payment of $578,130 was made to extinguish that debt. Mr Chen should be given credit for the over payment of $6,300. I will order the parties to bring in Short Minutes of Order to give effect to my decision.

Orders

1. The orders I make are as follows: 1. I note that the parties have agreed that Mr Chen was indebted to Ms Lin in the sum of $226,448.00. 2. I find that Ms Lin should have credit for the payments made referred to in [26] of this judgment. 3. I find that Mr Chen's payment of $578,130 made on 6 March 2018 was made to satisfy the debt of $571,830 he owed to Ms Lin and that he should have credit for $6,300 for the over payment made by him. 4. I direct that the parties provide to my Associate agreed Short Minutes of Order on or before 4pm on 7 July 2023 to give effect to my decision, that includes a calculation of pre-judgment interest pursuant to s 100 Civil Procedure Act 2005 and the appropriate order as to costs. 5. If agreement cannot be reached on any aspect of the Short Minutes of Order, the parties have leave to approach my Associate to list the matter for further argument.

Endnotes

1. The equals symbols in the examples have been inserted by me to make the evidence easier to understand.
2. Advances to Mr Chen are in parentheses, Repayments by Mr Chen are not. 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: 21 June 2023