CPF Group Pty Ltd v Everest Index International Pty Ltd (Receivers and Managers Appointed)

Medium Neutral Citation: CPF Group Pty Ltd v Everest Index International Pty Ltd (Receivers and Managers Appointed) [2026] NSWSC 416

Hearing dates: 16 – 20 March 2026

Date of orders: 24 April 2026

Decision date: 24 April 2026

Jurisdiction: Common Law

Before: Wright J

Decision: (1) Judgment for the plaintiff against the first, second, third and fourth defendants in the sum of $21,621,915.54, as at 31 March 2026 with interest at the rate applicable under s 101 of the Civil Procedure Act 2005 (NSW) thereafter.
(2) Judgment for the plaintiff against the third and fourth defendants for possession of land contained in certificate of title folio identifier A/403100 known as 7 Vaucluse Road, Vaucluse, New South Wales.
(3) The plaintiff has leave to issue a writ of possession in respect of the land referred to in order (2) above.
(4) The first defendant is to pay the plaintiff’s costs on the ordinary basis.
(5) The second, third and fourth defendants are to pay the plaintiff’s costs, including costs of the First Cross-claim, on an indemnity basis.
(6) The third and fourth defendants are to pay interest on the costs incurred by the plaintiff in relation to enforcement of the mortgage dated 25 May 2023 as varied by the supplemental deed of variation dated 14 July 2023 on from the date of payment of those costs, compounding daily at 16% per annum.
(7) The First and Second Cross-claimants on the First Cross-claim are to pay to the Second Cross-defendant to the First Cross-claim’s costs of that Cross-claim on the ordinary basis.
(8) There is no order as to costs in respect of the Second Cross-claim.
(9) Otherwise, all claims and cross-claims are dismissed.

Catchwords: CONTRACTS – Unconscionable conduct – Statutory unconscionability – s 12CB of the Australian Securities and Investment Act 2001 (Cth) (ASIC Act) – Meaning of “financial service”, “financial product” and “credit facility” – attribution of knowledge under s 12GH(1) of the ASIC Act – whether conduct “unconscionable” within s12CB – in all the circumstances no unconscionability
CONTRACTS – Unjust contracts – Contracts Review Act 1980 (NSW), s 7 – Whether loan and mortgage contracts were unjust in the circumstances at the time made – contracts not unjust
MORTGAGES AND SECURITIES – Real property mortgage to secure repayment of loan – Claim by mortgagee for possession of land following default by mortgagors – Whether mortgage liable to be set aside based on unconscionable conduct on the part of the mortgagee/lender or the mortgage contract being unjust within the Contracts Review Act 1980 (NSW) – Where no unconscionable conduct and mortgage not unjust – Judgment for possession – Leave to issue writ of possession
EQUITY – Fiduciary duties – Fiduciary relationships – Solicitor and client – Conflict of duties – Where solicitor for acted for both borrower and lender without obtaining fully informed consent – Where breach of fiduciary duty admitted – Equitable compensation –whether principle in Brickenden v London Loan & Savings Co [1934] 3 DLR 465; [1934] UKPC 25 applicable – Causation of loss not established – Equitable compensation not ordered
EQUITY – Fiduciary duties – Professional standards – Professional Standards Act 1994 (NSW) – application of Law Society of New South Wales Professional Standards Scheme – Whether “breach of trust” in s 5(1)(c) of the Professional Standards Act includes any breach of fiduciary duty – “Breach of trust” limited to where there is a formal trust relationship – “Damages” in s 5(1) of the Professional Standards Act includes equitable compensation

Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth)
Australian Securities and Investments Commission Regulation 2001 (Cth)
Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005 (NSW)
Contracts Review Act 1980 (NSW)
Professional Standards Act 1994 (NSW)

Cases Cited: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43
Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18
Auto Group Ltd v England [2008] NSWSC 402; 6 ABC(NS) 72
Beach Petroleum NL v Kennedy (1998) 48 NSWLR 1; [1999] NSWCA 408
Brickenden v London Loan & Savings Co [1934] 3 DLR 465; [1934] UKPC 25
City Garden Australia Pty Ltd (in liq) v Meng Dai (2024) 115 NSWLR 468; [2024] NSWCA 238
Council of the City of Broken Hill v Redenbach Group Pty Ltd trading as Redenbach Legal [2026] NSWSC 262
CPF Group Pty Ltd v Everest Index International Pty Ltd, 6 March 2026 unreported
DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16 (DC Rd)
GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd [2025] NSWSC 975
Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232
Huynh v Ledinh Sovereign Super Pty Ltd [2024] NSWCA 78
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23
Mao v Bao (2023) 113 NSWLR 26; [2023] NSWCA 278
Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236; 29 ACLC 11-018
Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198
Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50
Perpetual Trustee Company Limited v Albert and Rose Khosaba [2006] NSWCA 41; (2006) 14 BPR 26,639
Pittmore Pty ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344
Productivity Partners Pty Ltd v Australian Competition and Consumer Commission (2024) 281 CLR 338; [2024] HCA 27
Pronto Funds Pty Ltd ACN 669796847 v Zhuang [2025] NSWSC 641
Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211
Short v Crawley (No 30) [2007] NSWSC 1322
Tekin v Stratford [2025] NSWSC 541
Tekin v Stratford [2026] NSWCA 54
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15

Texts Cited: Meagher, Gummow and Lehane Equity Doctrines and Remedies (Fifth Ed, 2015, Sydney)
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 21 September 1994

Category: Principal judgment

Parties: CPF Group Pty Limited (Plaintiff, First Cross-defendant to First Cross-claim and Cross-claimant to Second Cross-claim)
Everest Index International Pty Ltd (Receivers and Managers Appointed) (First Defendant and Third Cross-defendant to First Cross-claim)
Richie Lin Ze Wang (Second Defendant and Fourth Cross-defendant to First Cross-claim)
Li Qing Zhuang (Third Defendant and First Cross-claimant to First Cross-claim)
Ding Sen Wang (Fourth Defendant and Second Cross-claimant to First Cross-claim)
Mark Francis Green (Second Cross-defendant to First Cross-claim and First Cross-defendant to Second Cross-claim)
David Patrick Baxter (Second Cross-defendant to Second Cross-claim)
Ryan John Bennett (Third Cross-defendant to Second Cross-claim)
Rebecca Maree Darr (Fourth Cross-defendant to Second Cross-claim)
Roslyn Mary McCulloch (Fifth Cross-defendant to Second Cross-claim)
Joshua Robert Palmer (Sixth Cross-defendant to Second Cross-claim)
Robert John Tassell (Seventh Cross-defendant to Second Cross-claim)
Brian Astley Walton (Eighth Cross-defendant to Second Cross-claim)

Representation: First Defendant and Third Cross-defendant to First Cross-claim (No appearance)
Second Defendant and Fourth Cross-defendant to First Cross-claim (Self-represented)
Counsel:
D Krochmalik (Plaintiff, First Cross-defendant to First Cross-claim and Cross-claimant to Second Cross-claim)
N Kabilafkas (Third and Fourth Defendants, First and Second Cross-claimants to First Cross-claim)
T Kane (Second Cross-defendant to First Cross-claim, First to Eighth Cross-defendants to Second Cross-claim)
Solicitors:
HWL Ebsworth (Plaintiff, First Cross-defendant to First Cross-claim and Cross-claimant to Second Cross-claim)
Juris Cor Legal (Third and Fourth Defendants, First and Second Cross-claimants to First Cross-claim)
Moray & Agnew Lawyers (Second Cross-defendant to First Cross-claim, First to Eighth Cross-defendants to Second Cross-claim)

File Number(s): 2024/00123073

JUDGMENT

Introduction

1. The plaintiff, CPF Group Pty Limited (CPF), as the lender, entered into a loan transaction by way of a loan deed, a security deed and a mortgage all dated 25 May 2023, as varied by a supplemental deed of variation dated 14 July 2023. The first defendant, Everest Index International Pty Ltd (Everest) was the borrower and the second defendant, Mr Richie Lin Ze Wang (who without any disrespect will be referred to as Richie), the third defendant, Li Qing Zhuang (Ms Zhuang) and the fourth defendant, Ding Seng Wang (Mr Wang) were the guarantors. Ms Zhuang and Mr Wang, who are Richie’s parents, were also the mortgagors who gave the mortgage over their property in Vaucluse to secure repayment of all amounts due to CPF. The transaction is, for convenience, referred to as the CPF loan and mortgage.

2. The purpose of the CPF loan and mortgage was to discharge the obligations owed by Ms Zhuang, Mr Wang and Richie, as guarantors, and another company, as borrower, under a loan transaction between them and ALS428 Pty Ltd (ALS) secured by first registered mortgage over the Vaucluse property (the ALS loan and mortgage).

3. Everest, of which Ms Zhuang and Mr Wang were directors and the only shareholders, has not repaid the amounts due under the CPF loan and mortgage. Everest is under external administration following the appointment of a receiver and manager on 23 September 2024.

4. In order to understand the issues that arise in this matter, it is necessary to review the pleaded cases.

The statement of claim

5. By a statement of claim filed on 3 April 2024, CPF in substance alleges that Everest, Ms Zhuang, Mr Wang and Richie have defaulted on their obligations under the CPF loan and mortgage and seeks the following:

6. against Everest:

(a) judgment in the sum of $15,732,819.73; (b) interest on that sum at the rate of 16% per annum or in accordance with s 100 of the Civil Procedure Act 2005 (NSW) from 30 March 2024 to the date of judgment; and (c) costs on the ordinary basis.

2. against Richie, Ms Zhuang and Mr Wang:

(a) judgment in the sum of $15,732,819.73; (b) interest on that sum at the rate of 16% per annum or in accordance with s 100 of the Civil Procedure Act 2005 (NSW) from 30 March 2024 to the date of judgment; and (c) costs on an indemnity, or alternatively the ordinary basis.

3. in addition, against Ms Zhuang and Mr Wang:

(a) an order for possession of the Vaucluse property and for leave to issue a writ of possession; and (b) interest on costs incurred from the date of payment of those costs compounding daily at 16% per annum.

Everest has not filed a defence

6. Everest has not filed an appearance or a defence. It was not in dispute that the receiver and manager did not wish to take any part in the proceedings.

Ms Zhuang’s and Mr Wang’s defence and the first cross claim

7. Ms Zhuang and Mr Wang filed their amended defence on 18 July 2024. That amended defence includes admissions as to the entry into the CPF loan and the mortgage of the Vaucluse property as varied with non-admissions as to the precise effect of certain documentation in relation to the CPF loan and mortgage. They admit that a notice of demand was sent on 1 March 2024 but in substance deny any alleged defaults under the CPF loan or the mortgage or any liability as alleged in the statement of claim. These denials are made on the basis set out in the first cross claim in these proceedings which has been brought by Ms Zhuang and Mr Wang against:

8. CPF, the first cross defendant;

9. Mark Francis Green, the second cross defendant, who acted as the solicitor for CPF and for Everest, Ms Zhuang, Mr Wang and Richie in relation to the CPF loan and mortgage;

10. Everest, the third cross defendant; and

11. Richie, the fourth cross defendant.

12. Ms Zhuang and Mr Wang’s further amended statement of cross claim in respect of the first cross claim was filed in court on 17 March 2026 and seeks relief which can be summarised as follows:

13. orders under s 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) or s 243 of the Australian Consumer Law (ACL) declaring that the loan deed, the security deed, the mortgage and the supplemental deed of variation are void ab initio or refusing to enforce them;

14. orders under ss 7 and 9 of the Contracts Review Act 1980 (NSW) (the CRA) declaring that the loan deed, the security deed, the mortgage and the supplemental deed of variation were unjust and are void or refusing to enforce them;

15. declarations that the loan deed, the security deed, the mortgage and the supplemental deed of variation have been rescinded by Ms Zhuang and Mr Wang;

16. equitable compensation from Mr Green including loss suffered by Ms Zhuang and Mr Wang and disgorging of profits made by Mr Green; and

17. interest and costs against Mr Green.

18. The basis for claiming this relief can be summarised as follows:

19. Mr Green was retained by Richie, on his own behalf and on behalf of Everest, Ms Zhuang and Mr Wang, to act as their solicitor with respect of refinancing the ALS loan and mortgage;

20. Mr Green acted for Everest, Ms Zhuang, Mr Wang and Richie in relation to advising concerning the refinancing and the negotiation and execution of the CPF loan documentation and the mortgage;

21. Mr Green owed Everest, Ms Zhuang, Mr Wang and Richie a fiduciary duty not to allow his duty to another party to conflict with his duties to them;

CPF’s defence to the first cross claim

10. CPF’s defence to the first cross claim was filed on 10 October 2024 and this was taken by the parties as dealing adequately with that cross claim notwithstanding that a further amended statement of cross claim in respect of the first cross claim was filed in court on 17 March 2026. In substance, CPF’s defence to the first cross claim raised the following:

11. Mr Green acted for CPF in relation to the CPF loan and the mortgage and he informed CPF that he was also acting for Everest, Ms Zhuang, Mr Wang and Richie;

12. CPF did not know whether Mr Green disclosed his conflict of interest to Everest, Ms Zhuang, Mr Wang and Richie, any knowledge of Mr Green that he did not disclose that matter cannot be attributed to CPF and CPF had no duty to disclose that matter to them;

13. The only knowledge of Mr Green that could be attributed to CPF was knowledge obtained by him in the course of his retainer with CPF;

14. Given the circumstances relating to the refinancing of the ALS loan and mortgage and the fact that the terms of the CPF loan and mortgage were more favourable to Everest, Ms Zhuang, Mr Wang and Richie, it was denied that, if they had been aware of Mr Green’s breach of his fiduciary duty, they would not have signed the CPF loan documentation and mortgage;

15. By entering into the CPF loan and mortgage Everest, Ms Zhuang, Mr Wang and Richie suffered no loss or damage but actually received a benefit and, if they were found to be entitled to any relief, that relief should be conditioned on their accounting to CPF for the benefit they received; and

16. If the CPF loan and mortgage were set aside, CPF would be subrogated to the rights of ALS428 Pty Ltd under the ALS loan and mortgage.

Mr Green’s defence to the first cross claim

11. Mr Green’s further amended defence to the first cross claim was filed on 17 March 2026 and raised in substance the following:

12. Mr Green’s firm, Pikes & Verekers was retained by Everest, Ms Zhuang, Mr Wang and Richie to act in relation to refinancing the ALS loan and mortgage;

13. Mr Green was an officer of Vereker Administration Pty Ltd (VAPL) which assisted CPF in the management of funds which were advanced under the CPF loan but VAPL did not manage the CPF loan and mortgage;

14. Mr Green acted on behalf of CPF in respect of the CPF loan and mortgage and was an agent of CPF for the purposes of negotiation and execution of the loan deed, the security deed, the mortgage and the supplemental deed of variation;

15. Mr Green did not adequately disclose (2) and (3) and on that basis admitted that he failed to disclose to Everest, Ms Zhuang, Mr Wang and Richie his undisclosed conflict in breach of his fiduciary duty not to allow his duty to another party to conflict with his duty to Everest, Ms Zhuang, Mr Wang and Richie;

16. Mr Green denied that if Everest, Ms Zhuang, Mr Wang and Richie had been aware of the undisclosed conflict they would not have executed the CPF loan and mortgage documentation;

17. Mr Green denied any entitlement on the part of Everest, Ms Zhuang, Mr Wang and Richie to the relief sought by them including on the basis that they suffered no loss in light of the terms of the ALS loan and mortgage being more onerous than the terms of the CPF loan and mortgage; and

18. In addition, if relief were to be granted, Mr Green also relied on proportionate liability under the Civil Liability Act 2002 (NSW), contributory negligence, failure to mitigate loss and the limitation of liability under the New South Wales Professional Standards Scheme under the Professional Standards Act 1994 (NSW).

Richie’s defence and reliance on the first cross claim

12. Richie is self-represented and only belatedly decided to participate actively in these proceedings in the circumstances outlined in the judgment of Faulkner J delivered shortly before the hearing (CPF Group Pty Ltd v Everest Index International Pty Ltd, 6 March 2026 unreported). Richie filed his defence on 3 March 2026. Faulkner J, however, refused him leave to rely on his affidavit sworn on 3 March 2026 for the reasons given by his Honour on 6 March 2026. There has been no appeal against the orders made by Faulkner J on 6 March 2026. Nor did Richie renew his application for leave to rely on his affidavit during the hearing which commenced on 16 March 2026 before me.

13. Richie’s defence includes essentially the same admissions, non-admissions and denials as his parents’ amended defence and says that he repeats various paragraphs of the pleading in his parents’ first cross claim as if they were set out in his defence.

CPF’s second cross claim

14. CPF also brought a second cross claim against the partners of Pikes & Verekers (P&V), including Mr Green. The statement of cross claim was filed on 11 October 2024. In this second cross claim, CPF claimed damages or equitable compensation as well as costs against P&V. The claim was essentially based on the following:

15. CPF retained Mr Green of P&V to act for CPF in relation to CPF providing funds to Everest, Ms Zhuang, Mr Wang and Richie for them to refinance the ALS loan and mortgage;

16. As a result of the retainer, Mr Green owed CPF duties including not to allow his duty to CPF to conflict with his duty to another party and a duty to exercise reasonable skill and care to avoid CPF’s rights and entitlements under the transaction documents being jeopardised or lost;

17. While Mr Green informed CPF that he was acting for Everest, Ms Zhuang, Mr Wang and Richie in relation to refinancing their ALS loan and mortgage, Mr Green did not inform CPF that there was a potential conflict of interest, that he had not made disclosure to Everest, Ms Zhuang, Mr Wang and Richie and obtained their fully informed consent or that CPF should retain other solicitors in relation to the refinancing;

18. Assuming the allegations in the first cross claim were made out, and Mr Green did breach his duty to Everest, Ms Zhuang, Mr Wang and Richie and the loan deed, the security deed, the mortgage and the supplemental deed of variation are void, unenforceable or liable to be set aside, if CPF had known that there was a risk of this occurring, CPF would not have executed those documents, or entered into the transactions or advanced the funds under the CPF loan and mortgage;

19. If the CPF loan deed, the security deed, the mortgage and the supplemental deed of variation are void, unenforceable or liable to be set aside, CPF will suffer loss and damage as a result of Mr Green’s breach of the duties identified above. Further since Mr Green’s conduct was engaged in in the course of P&V’s partnership business, Mr Green and the partners of P&V are liable for any loss and damage suffered by CPF.

P&V’s defence to the second cross claim

15. In general terms, P&V’s defence to the second cross claim essentially admitted that Mr Green acted for both CPF and Everest, Ms Zhuang, Mr Wang and Richie for the purposes of the refinancing of the ALS loan and mortgage and that he breached his duties to CPF as alleged. P&V deny, however, that CPF would not have entered into the transaction if there had been no breach of duty and deny any loss or damage being suffered by CPF. In addition, it was admitted that Mr Green’s conduct was engaged in in the course of P&V’s partnership business. Finally, P&V relied on the limitation of liability under the New South Wales Professional Standards Scheme under the Professional Standards Act.

Evidence and factual findings

16. In this matter, the evidence included most significantly the documentary evidence admitted without objection as well as oral evidence from:

17. Mr Gregory Reed a director of the plaintiff, CPF, who affirmed three affidavits dated 18 December 2024, 17 June 2025 and 13 March 2026 and who was cross examined;

18. Mr Wang, the third defendant, who affirmed an affidavit dated 10 April 2025 and who was cross examined with the assistance of a mandarin interpreter; and

19. Ms Zhuang, the fourth defendant, who affirmed an affidavit dated 10 April 2025 and who was cross examined with the assistance of a mandarin interpreter.

20. There were also two witnesses called by CPF whose evidence was not challenged:

21. Mr Michael Guest, who affirmed an affidavit dated 16 May 2024 which gave evidence of service of the statement of claim on, inter alios, Everest and service of copies of the notice to occupier of the Vaucluse property on 18 April 2024; and

22. Ms Rhea Sanchita Bhargava, who affirmed an affidavit dated 18 December 2024 which gave evidence of service of notice of demand and notices of default on Everest, Ms Zhuang, Mr Wang and Richie on 1 and 6 March 2024.

Assessment of witnesses and some findings of a general nature

18. Mr Reed was a director of CPF at the relevant times and gave evidence of how the CPF loan and mortgage came to be entered into as well as providing evidence of default and calculations of amounts due under the CPR loan and mortgage at various times and on various bases and other similar information.

19. Mr Reed was cross examined but was not effectively challenged as to any of his evidence. There was nothing of substance in the documentary evidence which was inconsistent with his affidavit or oral evidence. Mr Kabilafkas of counsel who appeared for Mr Wang and Ms Zhuang did put to Mr Reed that it was his father rather than Mr Reed who was the final decision maker in relation to whether the transaction to refinance the ALS loan and mortgage was entered into by CPF in light of correspondence such as Mr Green’s letter of 26 May 2023 addressed to Mr Reed’s father rather than Mr Reed. Mr Reed’s evidence was to the effect that both he and his father decided to go ahead with the CPF loan. Although Mr Reed was a director of CPF and his father was not at the relevant times, both Mr Reed and his father, as well as others, were shareholders in CPF. Having regard to the evidence as a whole, there did not appear to me to be any basis for not accepting Mr Reed’s evidence in relation to decision making. Generally, Mr Reed’s evidence was inherently credible and consistent with the documentary evidence. In the witness box, he appeared to be straightforward in his answers and genuinely responding to the questions asked. I accepted Mr Reed’s evidence as honest and reliable.

20. In respect of Mr Wang and Mrs Zhuang’s evidence, it was submitted that due to the circumstances, including age and the proximity between the relevant events and the present, “their memory of dates and events was not very good”, and that these and related proceedings were causing “great stress”. I have considered these matters among others in assessing their evidence.

21. Particular care was also required in assessing Mr Wang’s evidence as it was given through an interpreter. In addition, Mr Wang is senior in years and the difficulties in communication through an interpreter requiring significant concentration over long periods should not be underestimated. Watching and hearing Mr Wang give evidence, I formed the view that he was intelligent and generally seeking to be precise in his understanding of the question and in his answers. This meant that on some occasions questions were required to be asked a number of times before a responsive answer was given.

22. On other occasions, however, it appeared to me that Mr Wang was trying to make a point which he believed assisted his case rather than attempting to answer the question he was asked. For example, the transcript records: [1]

“Q. No, just you didn’t listen to my question please, listen to and answer my question. Do you remember signing your affidavit in this proceeding?

A. INTERPRETER: Are you talking about the current one we’re in, yes I did sign something.

Q. Do you remember signing it?

A. INTERPRETER: Yes.

Q. Was it translated before you signed it?

A. INTERPRETER: I couldn’t recall.

Q. So you don’t know whether it was translated?

A. INTERPRETER: I couldn’t recall.

Q. Is it the case that your affidavit in this proceeding was prepared by your lawyers and they asked you to sign it, is that what happened?

A. INTERPRETER: The lawyers have prepared so many documents for me to sign.

Q. That included your affidavit, correct, in this case?

A. INTERPRETER: Mark has told me to sign a lot of documents, I trust Mark then I sign on it.

Q. I’ll just be clear with you, I’m not asking about Mark Green, I’m asking about your affidavit in this case? In this case your lawyers are Juris Cor Legal, correct?

A. INTERPRETER: I don’t understand.”

23. On other occasions, Mr Wang’s answers indicated that he was attempting to avoid answering when he thought the answer might harm or not assist his case. For example: [2]

“Q. Do you use email at the moment, Mr Wang?

A. INTERPRETER: No, I don’t use email.

Q. Do you know whether your wife uses email?

A. INTERPRETER: Her English is similar level to mine.

Q. Listen to my question, please, Mr Wang. My question is do you know whether your wife uses email?

A. INTERPRETER: My wife, I’m not sure.

Q. You don’t know whether your wife uses email?

A. INTERPRETER: Correct.

Q. That’s an honest answer, is it, Mr Wang?

A. INTERPRETER: Yes.

Q. How long have you been married for?

A. INTERPRETER: I’ve been married for almost 50 years.

Q. You’ve lived together with your wife that whole time?

A. INTERPRETER: No, out of those years, there were six years we were apart.

Q. When were they?

A. INTERPRETER: I came to Australia first, so that was six years apart. Later on, she arrived to Australia.

Q. So, at least for the last, what, 20 years you’ve lived together, is that right?

A. INTERPRETER: Yes.

Q. You’re saying on your affirmation to tell the truth, that you don’t know whether your wife uses email?

A. INTERPRETER: So, put this way, when my wife was working or dealing with the business back then, when she was young, so she probably used email. But now, I don’t know.

Q. Again, I’m going to say to you in 2022 and 2023 and 2024, you must have known, one way or the other, whether your wife was using email to communicate with other people. Do you accept that or not?

A. INTERPRETER: I’m not sure, I really don’t know this regarding my wife because she has very poor eye vision so I’m not - I don’t know.

Q. I’m going to say to you that that’s just untrue, you must know whether your wife uses email or not?

A. INTERPRETER: I really don’t know so how do you want me to put it.”

24. On another occasion Mr Wang’s answers in cross examination appeared to be inconsistent with his affidavit evidence. Mr Wang had said in par 9 of his affidavit, “I have always relied on my family, especially Richie, to help with financial matters”. In cross examination, his evidence was: [3]

“Q. Do you agree that you relied on Richie to help you with financial matters?

A. INTERPRETER: Incorrect.

Q. What about legal matters? Did you rely on Richie to help you with legal matters?

A. INTERPRETER: Impossible.

Q. So, is the third sentence of paragraph 9 of your affidavit wrong, and if you need it, I’ll read it out to you?

A. INTERPRETER: I’m not saying it’s incorrect. What I’m saying it’s Richie, in terms of legal matters or interpreting documents. He’s not a lawyer, so how can he be liable or responsible for all the things?

Q. I’ll read out the third sentence of paragraph 9, Mr Wang. It says, “I have always relied on my family, especially Richie, to help with financial matters.” Is that true or false?

A. INTERPRETER: Sorry, your Honour, I just have to ask the witness to repeat.

A. INTERPRETER: This is very general, that’s why I can’t give a yes or no answer. But the thing is, in terms of anything to do with legal matters, and he couldn’t provide any help.

Q. Did you rely on him in relation to legal matters?

A. INTERPRETER: No, legal matters I rely on Mark [Mr Green].

Q. And financial matters?

A. INTERPRETER: Financial matters, also Mark.

Q. I’m going to suggest to you, Mr Wang, that these answers are untrue. You obviously relied on Richie to help you with legal and financial matters?

A. INTERPRETER: I don’t want to reply. There’s nothing I can say.

Q. So, you agree or don’t agree with my proposition?

A. INTERPRETER: Disagree.”

25. Passages such as these from the cross examination caused me concern as to whether Mr Wang’s evidence was entirely reliable. They illustrated Mr Wang attempting to avoid giving answers which he perceived at the time might not assist his case and to give answers which he perceived might assist his case even if not responsive to the question. It was based on this type of evidence from Mr Wang together with observing him give evidence, his lengthy pauses when an answer might not assist his case and his drawing distinctions which were not responsive to the question asked that I formed the view that Mr Wang’s evidence should not be accepted in toto.

26. In particular, as a result of this type of evidence, I did not accept Mr Wang’s evidence where he denied that he relied on Richie to assist him and his wife by translating from English into Mandarin correspondence, documents and conversations relating to refinancing the ALS loan with CPF.

27. I was confirmed in the view that Richie did assist Mr Wang with translating correspondence, documents and conversations not only by par 9 of his affidavit but also by earlier evidence Mr Wang gave in cross examination such as the following: [4]

“Q. Yes. Will you assume from me that the third sentence of paragraph 9 of your affidavit says in English, [‘]I have always relied on my family, especially Richie, to help with financial matters[‘]?

A. INTERPRETER: He just helped me with translation, not in terms of dealing with the financial matters. If it’s a dealing itself, it’s me and my wife.

Q. Richie helped you to understand financial matters, is that right?

A. INTERPRETER: Sometimes.

Q. Richie spoke better English than you, yes?

A. INTERPRETER: Yes.”

28. As I understood it, part of what Mr Wang was saying was that he and his wife did rely on Richie to help with financial matters by translating English documents or conversations into Mandarin. When it came, however, to the financial rationale for a deal or transaction and whether or not to enter into the transaction, Mr Wang and his wife relied on their own judgment and experience rather than receiving financial advice from Richie. Thus, I accepted Mr Wang’s evidence when he said, “He just helped me with translation, not in terms of dealing with the financial matters. If it’s a dealing itself, it’s me and my wife.” This was consistent with Mr Wang and his wife being involved with various companies including Everest for a number of years, with his evidence that he had worked in business until about 2016 when he had retired, and with his evidence that his wife worked in and dealt with the business, including using email, when she was working. It was also confirmed by their circumstances including their owning the Vaucluse property.

29. I also accepted other parts of Mr Wang’s evidence where he acknowledged making financial decisions based on his own experience and understanding about matters such as interest rates, fees and charges associated with refinancing the ALS loan and mortgage, offers for the sale of the Vaucluse property and similar matters. [5] I did not accept his evidence where Mr Wang effectively denied that he understood the substance of relevant transactions or denied that correspondence and documentation concerning the CPF loan and mortgage were explained to him in Mandarin by Richie. On the contrary, on the whole of the evidence including Mr Wang’s acceptance that there was a general practice that where letters were sent to Mr Wang and his wife by Mr Green, Richie either translated the letters or told them the substance of what was in them, [6] I was satisfied that Richie did explain to his parents in Mandarin the substance of the relevant transactions and in particular he explained to them the correspondence and documentation concerning the CPF loan and mortgage which was sent to Mr Wang and Ms Zhuang by email or by letter.

30. I also find that Mr Wang and Ms Zhuang authorised Richie to communicate on their behalf with Mr Green concerning the refinancing of the ALS loan and mortgage. [7] I was also satisfied that Mr Wang would not sign legal documentation without knowing the substance of what that documentation contained. This was confirmed to a certain extent by his evidence in relation to a different loan by Vereker Administration Pty Limited (VAPL) to another company of which Ms Zhuang and Mr Wang were directors, Harvestone Wellmas Pty Ltd (Harvestone), entered into on 20 December 2022, which was guaranteed by Mr Wang, Ms Zhuang, Richie and Everest, and which was to refinance a loan to Harvestone from PCL Money Pty Limited. His evidence was: [8]

“Q. Can I ask you to have a look please at page 769? It’s your signature about hallway down the page, is that right?

A. INTERPRETER: Yes.

Q. I suggest to you that you would not have signed this document unless you understood what kind of agreement or arrangement you were entering into?

A. INTERPRETER: What do you mean?

Q. I’m suggesting to you, you would not have signed this document and entered into this agreement or this deed unless you knew the nature of the transaction, do you agree with that?

A. INTERPRETER: At the time when it was explained then I signed the document but now if you ask me I couldn’t remember the details.

Q. So is this the position, it’s likely that when you signed this document you understood that Harvestone Wellmas was borrowing money from Vereker Administration and that you guaranteed the obligations of Harvestone Wellmas even though you say you can’t remember now?

A. INTERPRETER: Yes.”

31. Finally, I accept the non-controversial parts of Mr Wang’s evidence but otherwise I treated his evidence with caution, especially when it was not supported by contemporaneous documentation.

32. As to Ms Zhuang’s evidence, once again caution was required to be exercised in reaching any negative view concerning her evidence because of the difficulties with interpretation, the length of the cross examination and her senior years. From seeing her give evidence and the answers she gave, I formed the view that she also was an intelligent woman with some experience in, and understanding of, business matters including interest rates, fees and charges relating to refinancing the ALS loan and mortgage and similar matters. [9] I also formed the view that she could be forthright and was not acting under the influence of Richie or her husband. Indeed, she was clear that Richie was to do what she instructed him to do. Ms Zhuang said: [10]

“INTERPRETER: So basically I tell Richie what my instructions are and he would follow.

…

Q. You trusted Richie, yes?

A. INTERPRETER: Yes. If he didn’t do it, I wouldn’t ask him.

Q. You knew, didn’t you, that Richie was writing to Mark Green on your behalf in relation to the ALS loan?

A. INTERPRETER: In general this was under my instructions.”

33. Similar to Mr Wang, however, Ms Zhuang also at times appeared to be attempting to avoid answering questions where the answer might not assist her case or to give an answer that was unresponsive but she thought assisted her case. Nonetheless, on occasion Ms Zhuang eventually did answer the question. An example of this type of evidence is: [11]

“Q. My question was you left it to Richie to write on your behalf to Mark Green about your legal and financial matters in 2022 and 2023, do you agree?

A. INTERPRETER: I repeat the same. Regarding legal matters Richie wouldn’t write. It’s whatever I told Richie then Richie would send.

Q. When you were given an important legal document did you ask Richie to translate it into Mandarin or to explain it to you before you signed it?

A. INTERPRETER: If he explained any legal documents to me I don’t trust him because he doesn’t have the expertise. It’s only the lawyers who have the expertise to do it so I would authorise my lawyers to do so.

Q. I suggest to you that Richie did from time to time explain to you the substance of transactions that you entered into in 2022 and 2023. Do you agree with that?

A. INTERPRETER: I don’t understand.

Q. I suggest to you that Richie explained to you in Mandarin the substance of transactions that you were proposing to enter into before you signed legal documents. Do you agree?

A. INTERPRETER: If he explained to me then I would know. If he didn’t explain then I wouldn’t be aware of it.

Q. But he did explain to you most of the time, didn’t he?

A. INTERPRETER: What are you referring to?

Q. Legal transactions that you entered into in 2022 and 2023?

A. INTERPRETER: What did I enter into? I don’t understand. Can you repeat?

Q. You know that you entered into certain transactions in 2022 and 2023, correct?

A. INTERPRETER: You didn’t say clearly. So 2023, is it from January until when?

Q. I’ll do it another way. In 2022 and 2023 you entered into various loans, guarantees and mortgages, correct?

A. INTERPRETER: You have to be specific. If the question is too general I won’t be able to answer. I won’t answer.

Q. Why can’t you answer the question?

A. INTERPRETER: Because what you said was too general. One year has 12 month. In which month?

Q. I’m asking generally. In 2022 and the first six months of 2023 you signed lots of different loan documents, guarantee documents and mortgage documents, didn’t you?

A. INTERPRETER: Yes.

Q. Before you entered into those transactions and signed those documents you asked Richie to explain to you the substance of the transactions you were entering into, correct?

A. INTERPRETER: You repeat.

Q. Before you entered into those transactions and signed the documents you asked Richie to explain to you the substance of the transactions you were about to enter into, correct?

A. INTERPRETER: Yes.

Q. He did do that, he did explain to you the substance of those transactions, correct?

A. INTERPRETER: Yes.”

34. Another example of this type of evidence where Ms Zhuang attempted at first to advance her case by her answers but eventually conceded what was being put to her was: [12]

“Q. I want to direct you to a particular clause of the deed on page 1292, I want to read to you part of clause 5(a)(ii), “Li Qing Zhuang and Ding Sen Wang as the mortgagors shall properly, diligently and with all expedition take all necessary steps to effect the sale of [the Vaucluse property].” I suggest to you that you knew that you had that obligation when you signed this document, do you agree with me?

A. INTERPRETER: At the time I signed the document but no-one explained to me in details, clause by clause, because there was no interpreter at the time.

Q. I suggest to you that at the time you signed the documents you knew that it was a condition of the loan that you had to sell [the Vaucluse property], do you agree with me?

A. INTERPRETER: Because I trusted Mark as a solicitor and I assumed he would know my requirements or my intention that’s why I guaranteed and I signed on the documents.

Q. My question was that at the time you signed the documents you knew that it was the condition of the loan that you were required immediately after the loan was signed to sell [the Vaucluse property], correct?

A. INTERPRETER: No. No I didn’t know at the time, at the time when I signed it I was told by Mark it’s a standard process, that’s why I signed on it.

Q. Before you signed the documents you knew that you had an obligation to CPF to forthwith sell [the Vaucluse property], do you agree with me?

A. INTERPRETER: Yes.”

35. In addition, I find that Ms Zhuang generally did not sign legal documentation without knowing the substance of what the documentation contained. I was also concerned that Ms Zhuang’s command of English may not be as limited as she said. At one point in cross examination, she put on her reading glasses apparently to read a document in English to which her attention had been directed. [13] In this regard, Mr Kabilafkas submitted that this did “not mean she could read English”. Taking that into account, from my observations, I formed the view that her gesture was inconsistent with her being totally unable to read English. This conclusion was supported by her husband’s observation that while Ms Zhuang was working in the garment manufacturing business in Australia she would use emails which I infer would at least on some occasions be written in English.

36. In summary, I accepted parts of Ms Zhuang’s evidence, especially those parts that were not in controversy, but I did not accept that she did not understand the nature or effect of the transactions that she entered into or that Richie did not translate or explain the substance of the correspondence and documentation that was sent to her and others by Mr Green concerning financial transactions including the CPF loan and mortgage. Otherwise, I treated her evidence with caution, especially when it was not supported by contemporaneous documentation.

37. It can be observed here that Mr Green, having admitted breach of fiduciary duty, did not give evidence in the proceedings. Thus, for example, apart from what is recorded in Mr Green’s correspondence to Ms Zhuang and Mr Wang and others, there was little evidence of what Mr Green said to Ms Zhuang and Mr Wang in conference or what occurred when relevant documentation was signed. Nor, for example, could Mr Green be cross examined as to his knowledge or disclosure. Mr Kabilafkas of counsel, on behalf of Ms Zhuang and Mr Wang, raised the issue of what consequences the failure to call Mr Green should have in light of the principle in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8. As explained in Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17, by French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [167], Jones v Dunkel stands for a proposition which can be cast in the following terms: any inference favourable to a party for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the opposing party and the evidence provides no sufficient explanation of the absence of that person.

38. In the present case, one inference that Ms Zhuang and Mr Wang sought to have drawn was that the details of the various transactions they entered into, including the CPF loan and mortgage, were not explained to them in a way which allowed them to understand the transactions. They did not, however, generally deny that what was recorded in Mr Green’s correspondence occurred or that the advice and information provided in that correspondence was not given in English. Their principal contentions, and the inferences that they sought to have drawn, were that the advice and information was not explained to them in Mandarin by a qualified interpreter and that Richie was not qualified to explain those matters.

More specific factual findings

40. In addition to the more general findings made above in relation to the evidence of the witnesses who were cross examined, my findings include what is recorded in the letters, emails, records, contractual documentation and other similar primary documentation in evidence. I made these findings on the basis that none of that material, to the extent that it recorded factual matters or events, was challenged as being inaccurate or false. Similarly, where that material included opinions or reflected the state of mind of the author of a document, that material was not challenged and I also accepted that these were opinions or states of mind that the author held. I shall not set out in full all of that material. For present purposes, my findings can be adequately summarised as also including what is set out in the paragraphs which follow.

41. Mr Wang was born in 1946 and has been married to his wife Ms Zhuang who was born in 1947 for almost 50 years. In around 1990, Mr Wang began working in a garment trading business in Australia. Mr Wang’s role was to oversee production schedules and quality control at the garment factory. Ms Zhuang came to Australia in about 1993 and also worked in the garment business overseeing quality control.

42. In September 2007, Everest was incorporated with Mr Wang and Ms Zhuang as the only two shareholders and directors. They have remained the directors and shareholders ever since. In addition, between January 2022 and March 2023, Richie was also a director of Everest. From the material in Mr Wang’s and Ms Zhuang’s affidavits I infer that Everest was, at least for some of the time from September 2007, the company through which the garment manufacturing business was operated.

43. Since about early 2016, both Mr Wang and Ms Zhuang have been effectively retired.

44. Mr Wang and Ms Zhuang have at all material times been the registered proprietors of the Vaucluse property. They gave a number of mortgages over the Vaucluse property to secure the repayment of loans in the years preceding 2023.

45. Mail addressed to one or more of Mr Wang, Ms Zhuang and Richie relating to loans and related transactions involving them sent either by post or by email was received by them at Vaucluse. Since at least about 2022, and probably before, the general practice in respect of such mail was that Richie would translate the correspondence and any documents enclosed into Mandarin for his parents or explain the substance of them in Mandarin to his parents. When required, Richie helped his father with using a computer. Ms Zhuang had used emails while she was working and I am satisfied that Ms Zhuang did not lose the ability to use emails to any significant extent after retiring. At relevant times, both Richie and Ms Zhuang had personal email addresses identified by their names to which correspondence was sent.

ALS loan and mortgage

46. In late December 2021 and early 2022, Mr Green acted for Everest, Mr Wang, Ms Zhuang and Richie in relation to a loan of $13.325 million from ALS428 Pty Ltd (ALS) to Everest to refinance existing borrowings, with Richie and his parents as guarantors and the loan secured by a registered first mortgage over the Vaucluse property. Summer Lawyers acted for ALS.

47. Richie was authorised by his parents to deal with Mr Green on their behalf in relation to the ALS Loan and mortgage and he did so as their agent.

48. On 11 January 2022 Mr Green sent letters by email to Ms Zhuang and Richie attaching a letter addressed to Everest and to Mr Wang and Ms Zhuang, as the directors of Everest, outlining details of the ALS loan and mortgage and providing advice in relation to that transaction. The letter of advice outlined the parents’ obligations as guarantors and gave an explanation of the proposed loan. Mr Green also stated:

“I have previously given you advice on mortgages to which you have been parties and in reliance upon such advice, you have in the past been prepared to sign mortgages charging property owned by you as security for the repayment of loans. In that context I proceed on the assumption that you have the experience to raise any questions you have regarding the scope of you obligations as guarantors providing Everest with a mortgage on you[r] home as security for the guarantee you have offered to Everest to secure the Lender to make such loan to Everest. That notwithstanding I invite you to raise any questions you have with me prior to or at the time you decide to sign the documents.”

49. Mr Green also noted that based on his knowledge of the directors’ past commercial experience he obtained from the lender agreement to release the directors from the requirement to obtain independent financial advice and separate legal advice. Mr Green’s assessment of Mr Wang’s and Ms Zhuang’s financial experience and understanding manifested by that approach accords with the view I have formed that Mr Wang and Ms Zhuang had considerable commercial understanding and experience by 2022.

50. On 25 January 2022, Mr Green sent an email to Summer Lawyers who acted for ALS attaching a number of documents including:

(a) A mortgage of the Vaucluse property executed by the parents as the registered proprietors; and (b) Schedules A and B executed by Everest, Richie and his parents.

51. Schedule A stipulated the terms of the loan, with the principal amount being $13,325,000, the lower interest rate being 7.35%, the higher rate being 13.50%, the term of the loan being 12 months and the security being a first registered mortgage over the Vaucluse property. It was also a term of the loan that the lender might in its discretion agree to extend the final payment date by not longer than 36 months provided certain conditions were met.

52. On 31 January 2022, ALS advanced the funds, National Australia Bank was paid out $8,050,923.58, PCL Money Pty Ltd was paid out $3,800773.68 and the previous mortgage of the Vaucluse property was discharged. On that same day, Mr Green wrote to Everest, copied to Richie and his parents, informing them that the settlement was effected on 31 January 2022 and noting the amelioration of the terms of the ALS loan and mortgage obtained by Mr Green as a result of his submissions to the lender. Nonetheless, Mr Green continued and said, “[a]s I have advised, the terms of this loan are onerous” and he provided further legal and commercial advice as to the options available to Everest, Mr Wang, Ms Zhuang and Richie during the term of that loan.

53. On 8 February 2022, Mr Green wrote another letter to Everest, Mr Wang, Ms Zhuang and Richie in which he provided further legal and commercial advice concerning the ALS loan and mortgage together with a Chinese translation of the letter. In the covering email by which that letter was sent, Mr Green said:

“Finally it is essential that you and your parents very carefully read the report letters sent with this email and if there are any questions raise them with me and in this regard I trust the Chinese translation assists.” (emphasis in original).

54. In the attached letter, Mr Green said that:

“[i]n the current environment, the terms of this loan are onerous and the fees to procure the loan (effectively amounting to nearly 3% of the loan; close to $400,000.00) were high, even allowing for the concession obtained on the original approval.” (emphasis in original)

55. He went on to suggest that the debt should be repaid on or before 14 December, with the loan repayment date being 28 December 2022. Additionally, Mr Green said he understood there were discussions about selling the Vaucluse property, and if this were to occur, he advised the completion of the sale should be after 28 June 2022 but before 28 November 2022 to keep costs to a minimum.

56. On 1 August 2022, Richie emailed Mr Green requesting he prepare a sale contract for the Vaucluse property, with the vendors being Mr Wang and Ms Zhuang as registered proprietors.

57. On 2 August 2022, Mr Green emailed a letter, together with a Chinese translation of the letter, to Ms Zhuang and Mr Wang, copied to Richie, advising that subject to their providing the name of their proposed selling agent, a draft contract had been prepared for the sale of the Vaucluse property and providing advice as to various options for them to consider.

58. On 19 August 2022, Mr Green received an email from ‘conveyancing@juriscorlegal.com.au’ which purported to make several requests for the alterations to the contract of sale for a prospective purchaser of the Vaucluse property. This email was forwarded to Richie and copied to Ms Zhuang’s email. In responding to this email Richie indicated that that a potential buyer had made an offer of $18.5 million but that his parents said this amount was “too lower [sic]”. In a subsequent email on the same day, Richie said:

“Hi Mark

The potential purchaser made offer of $20.00m with 5% deposit cheque for my parents later this afternoon. my parents ask for $23.888m but this buyer do not want made any more, so the deal did not closed today. …”

59. The Vaucluse property was not sold at that time.

60. On 11 October 2022, Mr Chrisp of Summer Lawyers emailed Mr Green requesting that he remind his clients that the term of the ALS loan and mortgage expires on 28 December 2022, and advise as to whether arrangements for the discharge of the ALS mortgage were in place. Mr Green forwarded the email shortly after receiving it to Richie, with queries as to how they proposed to pay out the ALS loan and mortgage. Mr Green advised that penalties were likely to be high if they did not put in place a plan to deal with it.

61. On 9 November 2022, Richie responded to the 11 October email and said that they “were refinancing” the Vaucluse property and requested Mr Green inform ALS. Mr Green responded to Richie requesting details as to the loan approval and the identity of the lender and advised of risks and timing difficulties. The same day, Mr Green emailed Mr Chrisp of Summer Lawyers and informed Richie that he had done so by email copied to Ms Zhuang.

62. On 17 November 2022, Mr Chrisp advised Mr Green that his client’s indicative payout figure for 20 December 2022 was $13,340,529.87. This email was forwarded by Mr Green to Richie and copied to Ms Zhuang. Mr Green sought information as to an approval letter relating to any refinancing that Richie and his parents had secured. He also expressly warned:

“Also be careful what you sign because some of past loan offers you signed had very disadvantageous terms for you (eg date interest starts to run regardless of settlement) and so very costly and you do not want to repeat that experience if you can avoid it.”

63. On 18 November 2022, Richie emailed Mr Green indicating that they were working on refinancing at that time and saying that he was fully aware of the 28 December 2022 date. That same day, Mr Green responded to Richie advising that because of the close of business over the Christmas period he should be working towards 20 December or possibly negotiating an extension. Richie responded saying that he was aware of that and was aiming to get refinancing done by 16 December.

64. The refinancing that Richie and his parents were trying to put in place at that time did not come to fruition.

Urgent interim finance for Harvestone Wellmas Pty Ltd

65. Furthermore, by about 20 December 2022, Harvestone Wellmas Pty Ltd (Harvestone), another company of which the parents were directors, required funds to repay a debt to PCL Money Pty Ltd. This debt was guaranteed by Mr Wang, Ms Zhuang, and Richie.

66. On very short notice, Mr Green organised for Vereker Administration Pty Ltd (VAPL), a company of which Mr Green was an officer and which was associated with his firm, Pikes & Verekers, to make funds available for the benefit of Mr Wang, Ms Zhuang and Richie which were said to be going to be used to repay the existing debt to PCL Money Pty Ltd and make payment of then overdue amounts to ALS.

67. On 20 December 2022, a deed of loan was executed between VAPL and Harvestone as borrower, with Mr Wang, Ms Zhuang, Richie and Everest as guarantors. The facility limit of the loan was $550,0000, with the “higher rate” of interest being 23.4% per annum, the “lower rate” being 16.1% per annum and security being a mortgage over a property in Strathfield. On that same day, Mr Green wrote to Harvestone, copied to Mr Wang, Ms Zhuang and Richie, reporting on this interim finance facility. Mr Green noted that he was initially instructed to represent them in respect of a loan of $2,170,000 in order to secure the required funds to complete the sale of another property in Strathfield but this loan could not be completed given the proximity of the dealings to Christmas and instead, Mr Green raised “short term of finance” of $550,000 for them. In that letter Mr Green also noted:

“the possible need for additional funding to enable you to [e]ffect a refinance of the debt owed to ALS 428 Pty Ltd or extension of that facility.”

68. Given the distinctive name “Vereker” in VAPL’s name and the name of Mr Green’s firm, Pikes & Verekers, which appeared on the letterhead of Mr Green’s letters and in the signature block on Mr Green’s emails, the circumstances in which the funds were made available by VAPL and the fact that Mr Wang, Ms Zhuang and Richie signed documentation with VAPL named as the lender or financier in order to obtain funds for their benefit, I find on the balance of probabilities that they were aware that VAPL was associated with Mr Green and his firm but that this was not a matter of particular concern to them. Their principal concern was that sufficient funds were raised at that time to repay the loan to PCL Money Pty Ltd.

Extension of the ALS loan and mortgage

69. By 28 December 2022, Mr Wang, Ms Zhuang, Richie and Everest did not have the means or capacity to repay the ALS Loan, to service the ongoing interest obligations or fund payment of any forbearance fees as were then sought by ALS, except by sale of the Vaucluse property or refinancing.

70. On 30 December 2022, Summer Lawyers sent an email to Everest, Richie, Ms Zhuang and Mr Wang stating that those lawyers had received instructions that an extension of the ALS mortgage’s final repayment date was being sought. The letter proposed extending the initial final repayment date from 28 December 2022 to 28 March 2023 with various conditions including a variation payment of $204,861.46 due on 5 January 2023 and an increase of the lower interest rate from 7.35% to 9.35% for the relevant period as well as a new special condition 8 which permitted ALS in its sole discretion at any time to vary the higher rate of interest or lower rate of interest by the amount of any increase in the Bank Bill Swap Rate and/or ALS’s costs of making, funding or maintaining the ALS mortgage. The letter also contained a form of acceptance which was to be signed by Everest as the borrower, Mr Wang, Ms Zhuang, Richie and Everest Capital Index International Pty Ltd as the guarantors.

71. On 3 January 2023, Mr Green had a conference with Richie and his parents at which he provided advice to them concerning the loan extension. At Mr Green’s office, Everest as the borrower, and Mr Wang, Ms Zhuang, Richie and Everest Capital Index International Pty Ltd (Everest Capital) as the guarantors, executed the acceptance page of the extension letter. All of the signatures were witnessed by Mr Green. Mr Green wrote a letter to Richie and his parents on 9 January 2023, in which he noted that during the conference on 3 January 2023, he touched on the fact that:

“[their] ability to keep costs and the undoubted foreseeable losses to a minimum depends on two things firstly getting Lindfield sale settled on 1 February and secondly a clear plan on sale of Vaucluse with this second matter the most important because of the large loan it supports.”

72. Between 4 and 9 January 2023, Richie and Mr Green exchanged emails concerning the extension of the ALS loan and mortgage and Richie thanked Mr Green for his assistance in relation to his family’s financial situation.

73. On 9 January 2023, Mr Green emailed Richie, copied to Ms Zhuang and Mr Wang, in which he referred to the conference on 3 January 2023, provided some additional commercial advice or comments concerning the sale of a property in Lindfield and “your working capital” of $40,000 and continued:

“That is if you need some more $$$ in addition to taking back the $40K, to pay [ALS] interest on 28 January I may be able to get you that for you.

In parallel you have to repay the [ALS] loan in full on 28 March. In this respect it seems that unless you have a sale plan then you have to work with Baxter and do the 9 month loan he organised as per email of 19 December BUT it is very expensive (as an example it would be mathematically cheaper to take a 4% cut in your Parents sale price to sell Vaucluse and settle by 28 March than to hold out on price and borrow the money on the terms offered). In addition if you get an exchange to sell before 28 March but don’t settle by 28 March will be cheaper to pay [ALS] penalty interest for a month than to do the loan.

…

All matters for you and your parents to consider and so in light of significant costs confronted on the mortgage front if Vaucluse sale not done sooner rather than latter.

Finally Richard this is private and confidential to your parents and you and any questions from you or them please send them, noting I am unlikely to be in office until tomorrow afternoon.”

74. On 14 February 2023 and as permitted by new special condition 8, ALS updated the lower interest rate on the loan by 0.25%, increasing it from 9.35% to 9.60%. Subsequent increases in March, May and June 2023 resulted in interest accruing at 14.45% per annum by the time the ALS loan and mortgage were ultimately repaid.

75. On 20 March 2023, Mr Green and Richie made arrangements for the Vaucluse property to be valued. In the email sent by Richie, Richie informed Mr Green that ALS “is initially asking for funds of $1,500,000 in repayment of the extension of the loan, after negotiation they will consider around $1,000,000 for the exten[sion] of the loan”. Apparently, Richie had been in direct contact with ALS.

76. The ALS loan and mortgage were not repaid by 28 March 2023, the extended final repayment date, and no further extension had been agreed by that date.

77. On 5 April 2023, Summer Lawyers issued a Notice of demand for $13,828,768.28 to Richie, Ms Zhuang, Mr Wang and Everest Capital. On the same day they also issued a Notice of Default to Everest. By that time, Ms Zhuang and Mr Wang were each aware that ALS had issued a demand and they understood that, if the amount claimed was not repaid, they would lose the Vaucluse property and it would be sold. Everest, Ms Zhuang, Mr Wang and Richie did not have the ability to repay the amounts payable to ALS under the ALS loan and mortgage unless funds were made available by a third party by way of refinancing or by selling the Vaucluse property.

78. On 28 April 2023, ALS offered to forbear from enforcement of the ALS loan and mortgage on certain terms. To this end, on that day, Ms Azar of Summer Lawyers emailed Richie a proposed deed of forbearance with regards to the ALS loan and mortgage for signature and the same document was also sent to Mr Green. It was said that the signed deed was to be returned by no later than 3 May 2023. In a letter of the same date, addressed to Everest and marked to the attention of Richie, Ms Zhuang and Mr Wang, Mr Green outlined the principal terms of the deed as follows:

“1. It is providing you with an extension of time to repay the debt owed.

2. There is a Forbearance Fee payable of $293,150.00.

3. It is prepared on the basis that the debt owed to ALS 428 Pty Ltd as at the close of business 28 April is not less than $13,834,279.80.

4. Forbearance is offered on the basis of the Security Property held as principal security, [the Vaucluse property] is placed on the open market for sale prior to 29 May 2023 with a sales agent appointed by 4 May 2023.

5. In consideration of the payment of a Forbearance Fee and subject to complying with its terms, the date for repayment of the debt owed is varied to 28 August 2023.

6. Interest is to increase effectively from 3 May on the assumption the Forbearance Deed is dated by such date and returned to the lawyer to 16.02% - I discern from this condition that interest has continued to accrue at the interest rates provided in the original loan. Is that your understanding?

Once you have had the opportunity to consider this letter, I ask that you confirm acceptance of the essential terms set out above and then it will be necessary for you to make arrangements to meet with me for the purpose of me advising you in greater detail on the terms of the Deed of Forbearance and you then signing such so that I can return returning it to Summer Lawyers representing ALS428 Pty Ltd prior to close of business on 3 May next.”

79. At that time, each of Mr Wang and Ms Zhuang:

80. was aware that the forbearance proposal would result in an increase to the interest rate to more than 16% per annum;

81. believed that the increased interest rate would make a big difference for them;

82. was particularly sensitive about the interest rate as they knew it would erode their equity in the Vaucluse property; and

83. wanted to achieve the lowest interest rate possible when refinancing the ALS loan and mortgage.

Mr Green’s assistance is sought to refinance the ALS loan and mortgage

80. In late April or early May 2023, Richie on behalf of his parents reached out to Mr Green for assistance and support to refinance the ALS loan and mortgage with another lender.

81. From about 3 to 10 May 2023, Mr Green and Mr Chrisp, Ms Azar and Mr Reese of Summer Lawyers engaged in discussions via email as to the proposed deed of forbearance and related arrangements. Summer Lawyers towards the end indicated that Mr Green’s clients had until 11 May 2023 to sign the deed, failing which ALS would exercise all or any of its rights.

82. On 4 May 2023, Mr Green discussed with officers of CPF a proposed arrangement where they would provide a short-term loan to be secured by a first registered mortgage over the Vaucluse property. After those discussions, Mr Green sent an email to Geoff Reed, Mr Reed’s father, and copied to Mr Reed attaching a valuation for the Vaucluse property and outlining possible terms of the refinancing arrangement. Mr Reed responded indicating he knew the house well and that CPF would be interested in contributing along with others to an offer to the borrower on the following terms:

“- Loan amount: $13,500,000

- E[stablishment] Fee: 1.5% + GST

- Term: 12 months

- Rate: 13% serviced

- Min Term: 3 months

- Legal Fees: Paid by borrower

- Personal Guarantee from property owners and any other security arrangements VA deems appropriate…”.

I infer that “VA” is a reference to Vereker Administration Pty Ltd, with whom Richie, Ms Zhuang and Mr Wang had previously dealt in relation to the Harvestone transaction.

83. Also on 4 May 2023, Mr Green emailed Richie saying:

“I may be able to get you funding to repay ALS428 and on terms which result in lower fees and interest and avoid risk of your parents being forced to vacate property before sale as is presently in the Forbearance Deed ALS428 require your parents to vacate on its direction.

Let us just wait now till I hear from Summer Lawyers but I may need to get orders in Family Court and I will do relevant letter to impose losses on your ex and its lawyers if she disagrees.

Do not sign anything with anyone without talking to me.

By the way client I spoke to about possibly providing loan knows the Vaucluse Property and thinks properly marketed a price better than recent valuation is possibility.”

84. The reference to “client” in that email indicated to Richie that the proposed lender was a client of Mr Green.

85. On 8 May 2023, Richie responded to Mr Green’s 4 May 2023 email saying:

“Just checking that, it refinancing commerce. As you mentioned you find the lower fee and interest rate in the below email [of 4 May]. what interest rates and fees are you offering? I just need to pass it on to my parents. Thanks!”

86. From this email, I infer that this was an example of Richie passing on to his parents the information he received from Mr Green in relation to the refinancing proposal in this and other regards, in accordance with their general practice outlined above.

87. On 10 May 2023, Mr Green emailed Richie sending him a draft letter he was proposing to send to the lawyers for ALS and also saying:

“As to the loan I am organising I need you to send me copy of agency agreement so I can show lenders [CPF] that house is on the market and so demonstrate intentions to sell. I have got this over line on basis it is being sold and will be sold with sale completed before November / December at the latest.”

88. From this it was clear that Mr Green was organising the lenders and the loan which was to be used to refinance the ALS loan and mortgage.

89. Later on 10 May 2023, Richie sent Mr Green a copy of the agency agreement for the sale of the Vaucluse property signed by his parents and the agency in August 2022. That agreement stated that the then current estimated selling price of the Vaucluse property was $20 to 22 million.

The CPF loan and mortgage

90. On 11 May 2023, Mr Reed indicated that CPF should be the mortgagee for the transaction.

91. On 16 May 2023, Mr Green advised Ms Zhuang, Mr Wang, Richie and Everest that he had arranged a new loan for them, being the proposed loan from CPF, which was possible on the basis that they had given an irrevocable commitment to sell the Vaucluse property and that the loan was at a lower cost than dealing with the forbearance demands of ALS. More particularly, on 16 May 2023, Mr Green wrote a letter addressed to Everest care of Ms Zhuang and Mr Wang addressing the refinancing of the ALS loan via a new loan from CPF. That letter included the following:

“I have had extensive discussions with Richie about default notices issued by ALS because neither the Borrower nor you can pay interest and costs claimed by ALS. I have been able to raise alternative finance from CPF Group Pty Ltd (CPF) which is to be used to pay out the debt owed to ALS. The securities for this new loan will be the same as presently held by ALS.

This new loan is possible on the basis that you have given an irrevocable commitment to sell [the Vaucluse property] and so the loan is interim finance at a lower cost than trying to deal with the demands of ALS but provided on the basis that you have no financial ability to pay interest on the loan or to refinance the loan other than the sale of [the Vaucluse property]. The advantages of the proposed loan include:-

1. An establishment and management fee significantly lower than the Forbearance Fee of near $300,000 that ALS demanded

2. An interest rate lower than the 16.02% demanded by ALS.

3. The willingness of the lender to allow interest to be capitalised at a lower rate of interest at 13% for the term of the loan provided that you enter into a contract to sell the property on or before 1 September. If you do not enter into a contract prior to that date an interest rate of 15% will be applied if you continue to capitalise interest as opposed to paying it when due.

The objective is to be in a position to settle the refinance within seven days, failing which you risk incurring further interest to ALS on 28 May. Please review this letter carefully and advise if you have any queries.”

92. In a further letter to Everest, care of Ms Zhuang and Mr Wang, of the same date Mr Green outlined proposed provisions of the proposed deed of loan, drawing attention to the following aspects:

“Further to my earlier letter of 16 May which I note was sent to you by email and also copied to Richie Wang who has confirmed receipt. Subject to questions you may want to ask me about the financing, as part of progressing the refinance to deal with ALS428 Pty Ltd I provide herewith a proposed Deed of Loan. In respect of the Deed of Loan I advise you to review it carefully and in addition draw your attention to the following aspects of it:-

1. It needs to be read and you are invited to ask any questions you have concerning its terms.

2. At present it is prepared on the assumption that $13,750,000.00 should be more than sufficient to enable the debt owed to ALS428 Pty, exclusive of any forbearance fee, to be repaid provided settlement takes place prior to close of business on 28 May.

3. The establishment and management fee is set as previously disclosed and if not paid at the time of the advance is to represent secured monies with interest at 13% accruing thereon until paid. Any part payment will reduce interest that will accrue.

4. The loan is a six month facility but the Lender agrees that if you are able to exchange a contract for the sale of [the Vaucluse property] before 28 August 2023 such that settlement date takes repayment past six months the interest will continue to accrue on a daily basis at the lower rate.

5. The agreement provides for a higher rate of interest at 15%, as I have discussed with Richie, but the 15% rate will only become payable if there is no contract exchanged by close of business on 31 August 2023. Otherwise, the interest rate is the lower rate of 13% as previously disclosed and the lower rate will be payable even if the loan is not repaid within the six month period provided an unconditional contract for sale of [the Vaucluse property] has been entered into with a prospective settlement date prior to December.

6. The permitted purpose of the loan is to clear the debt owed to ALS428 Pty Ltd plus pay any outstanding land tax, water rates, council rates and other charges. I have previously asked you for council rates, water rates and land tax but you are yet to send those certificates to me.

7. The security for the loan will be a mortgage on [the Vaucluse property] plus a Deed of Security over all the assets and undertaking of the Borrower. These securities replicate the existing securities provided to ALS428 Pty Ltd.

8. Conditional upon there being no default, interest can, at your election be capitalised albeit you should appreciate that capitalisation of interest whilst beneficial in terms of cashflow can be costly because of the effect of compounding. I mention this because the sale of the Strathfield property is in prospect and if that sale produces a material surplus you may consider it to be to your financial advantage to apply some of the surplus to reduce this debt and consequential cost arising from capitalised interest and expenses under this loan and by doing so reduce the cost burden of the loan to you.

I invite your comments on the enclosed draft Deed of Loan so that such can be put to the Financier with a view to finalisation.” (emphasis in original)

93. As reported to Mr Reed and his father by email dated 17 May 2023, Mr Green struck some resistance from Richie, Ms Zhuang and Mr Wang on the condition that interest would increase to 15% on 1 September if Ms Zhuang and Mr Wang did not have an unconditional exchanged contract for the sale of the Vaucluse property by that time. This confirmed my view that Ms Zhuang and Mr Wang were aware of the proposed transaction in some detail and were concerned about the impact of higher interest rates on their financial position in relation to the Vaucluse property.

94. In light of the evidence as a whole, I am satisfied on the balance of probabilities that Richie translated for his parents these documents and letters and communicated to them in Mandarin the substance of the proposed transaction as set out in the documents and letters including that, inter alia, the loan was only for six months and that the loan was advanced on the basis that Ms Zhuang and Mr Wang would sell the Vaucluse property in order to repay the loan.

95. On 17 May 2023, Mr Green sent Everest, care of Ms Zhuang and Mr Wang, two letters, one providing a security deed for Everest to execute and the other providing a draft mortgage and accompanying advice. In respect of the mortgage, Mr Green drew attention to the following:

“…

1. You, Li Qing Zhuang and Ding Sen Wang are mortgaging your home to pay a debt owed by Everest.

2. The arrangement arises to refinance an existing facility with ALS428, which is secured by a Mortgage on [the Vaucluse property] and in serious default.

3. If there is default by Everest in paying money when due under the Deed of Loan, that will constitute default under the terms of this Mortgage. However as you know there are some concessional factors in the Deed of Loan which limit your default risks and basically rendered them irrelevant if you exchange contracts to sell the Property on or before 1 September 2023.

4. In requesting this loan, you have done so on the basis that the financial affairs of Everest and you as the Mortgagors are intertwined and devoted to commercial matters and the debts in question being refinance are sourced in commercial dealings.

5. The advantage in this loan is that the costs payable are less than will otherwise be payable if the present facility with ALS428 were to be extended and therefore the amount that will be appropriated from the sale proceeds from selling your home will be less.

It is noted that under the terms of the Loan and the Mortgage, there is also a lower interest rate payable on monies owing provided the unconditional Contract for Sale exchanged for the sale of a home prior to 1 September 2023.

…[Mr Green raised the potential impact of Richie’s family law proceedings on the transaction] …

I await any queries you have regarding the enclosed Mortgage.”

96. There was no suggestion in the evidence that any of the statements in Mr Green’s letter concerning the mortgage were incorrect and I accept that they accurately represent the circumstances in which Ms Zhuang, Mr Wang and Richie entered into the CPF loan and mortgage. In light of the evidence as a whole, I am also satisfied on the balance of probabilities that Richie translated for his parents these documents and communicated to them in Mandarin the substance of the proposed transaction as set out in Mr Green’s letters including that, inter alia, the loan was only for six months and that it was a requirement that the Vaucluse property be sold within the term of the loan.

97. On 25 May 2023, Ms Zhuang, Mr Wang and Richie attended Mr Green’s office and executed the initial CPF loan and mortgage documentation. Ms Zhuang and Mr Wang wanted to complete the refinance of the ALS Loan and mortgage at this time. The deed of loan which was executed included as the parties:

(a) CPF as the Financier; (b) Everest as the Borrower; (c) Richie, Ms Zhuang and Mr Wang as the Guarantors.

98. The deed contained recitals or “Background” which I accept were accurate and which were as follows:

“A The Guarantors have requested that the Financier advance funds to the Borrower.

B In response to the said request by the Guarantors the Financier has agreed to provide the Facility to the Borrower.

C The Facility is provided by the Financier, at the request of the Guarantors for the purpose of repaying an existing facility that the Borrower has with ALS428 Pty Ltd (ACN 656 198 748) that was due for payment on 28 March 2023 and was not repaid when due.

D The Financier has agreed to provide the Facility to be used for the Permitted Purpose as an interim facility in reliance upon the representation and warranty by those of the Guarantors that own the Property being , Li Qing Zhuang and Ding Sen Wang that the Property is listed for sale and they intend to sell the Property.

E The Borrower and the Guarantors have represented to the Financier that they will use their best endeavours to sell the Property and enter into an unconditional Contract for Sale prior to 1 September 2023 and in reliance upon such representation the Financier has agreed to permit capitalisation of interest calculated at the Lower Rate conditional upon and exchange of contract by 1 September 2023.

F The Guarantors have represented to the Financier that all money, not otherwise repaid by the Borrower or the Guarantors and remaining owing to the Financier pursuant to this Deed shall be repaid to the Financier from the proceeds derived from the sale of the Property.”

99. Various aspects of the facility were set out in cl 2 as follows:

2.1 Facilities

Subject to the Borrower paying any and all costs incurred by the Financier to advance the Facility on the terms provided for in the Transaction Documents to secure the repayment of Secured Money and the terms of this deed, the Financier will make the Facility available to the Borrower in a single draw.

2.2 Facility Limit

The maximum amount of financial accommodation available to the Borrower under this deed is the Facility Limit.

2.3 Purpose

The Borrower may utilise the Facility only for the Permitted Purpose.

2.4 The Establishment Fee

In consideration of the Financier procuring the Facility, for the benefit of the Borrower, the Borrower agrees to pay to the Financier the Establishment Fee with such Establishment Fee due and payable as of the date of this Deed and by agreement to form part of the Facility.

100. Clause 1.1 defined the following relevant terms:

(a) “Facility” as the cash advance facility provided or to be provided by the Financier to the Borrower under this deed for the purpose of discharging the debt owed by the Borrower to ALS428 Pty. Ltd. (b) “Facility Limit” as the aggregate amount not to exceed $13,750,000.00, as reduced, increased or otherwise varied in accordance with this deed and applied for the purpose of discharging the debt owed by the Borrower to ALS428 Pty. Ltd and securing release of any and all securities held by ALS428 Pty. Ltd to secure the debt it claims from the Borrower and the Guarantors. (c) “Permitted Purpose” as the purpose of assisting:

(a) To repay debts owed to the ALS428 Pty Ltd (ACN 656 198 748) being debts otherwise charged against the Security; (b) to pay outstanding Land Tax, Council rates and other charges levied against the Secured Property; and/or (c) for such other purpose as the Financier may in writing permit or is otherwise rendered permissible pursuant to any Transaction Documents.

101. Terms dealing with “interest payment and repayment of all financial indebtedness” were contained cl 4, extracted in full below.

“4.1 Rate

The Borrower agrees to pay interest on the Secured Money from time to time at the Higher Rate provided however that if interest calculated as hereafter provided is paid within 3 business days of each Interest Payment Date and at the date of such payment the Borrower is not otherwise in default of compliance with its obligations under any Transaction Document then the Financier agrees to accept interest at such Interest Payment Date calculated at the Lower Rate, in lieu of the Higher Rate. For the purpose of this condition, Interest:

(a) accrues daily in arrears;

(b) is calculated on the basis of the actual number of days on which interest has accrued

and of a 365 day year; and

(c) is payable in arrears to the Financier:

(i) on each Interest Payment Date; and

(ii) if a repayment or prepayment is made on a date other than an Interest Payment Date, on that repayment or prepayment date.

4.2 Repayment and prepayment

Notwithstanding the Borrower’s obligation to pay interest as stipulated in clause 4.1, the Financier agrees that, provided that there is no default by the Borrower, the Mortgagor, or the Guarantors in the discharge of any of the obligations on their part to be performed pursuant to any Transaction Document, then the Lender will accept interest so calculated in the manner provided for in clause 4.1, but subject to the following variations:

(a) interest payable shall be calculated at the Lower Rate, payable monthly in arrears and the Borrower, at its election, shall be entitled to require the interest so calculated and payable at the end of each month to be capitalised, in whole or in part and any amount so capitalised shall form part of the Secured Monies upon which interest which will be payable and accrue;

(b) PROVIDED HOWEVER that the benefit to the Borrower sub-clause 4.2(i) shall only apply until close of business on the 31st of August 2023, from which date interest shall be payable at the Higher Rate unless the Mortgagor has exchanged an unconditional contract for the sale of the Property with a prospective date for completion not later than the 31st of October 2023 in which event interest shall be calculated and payable at the Lower Rate.

4.3 Final repayment

The Borrower must repay the Secured Money to the Financier on the Final Repayment Date.”

102. Clause 1.1 defines the following relevant terms:

(a) “Lower rate” as 13% per annum. (b) “Higher rate” as 15% per annum. (c) “Interest payment date” as the last day of each consecutive month for which Secured Money is owed by the Borrower to the Financier with the first Interest Payment Date HOWEVER that if otherwise agreed in writing and the Borrower is not otherwise in default in the performance of any obligations under this Deed of Loan then interest calculated at the Lower Rate may be capitalised on the last day of each. (d) “The final repayment date” as the date which is six months from the Drawdown Date PROVIDED HOWEVER the Financier, in the event that the Contract for Sale of the Property has been exchanged prior to 1 September 2023, extend the Final Repayment Date to the date being the earlier of, the date of completion of the sale of the Property, or two (2) months from the date a contract is exchanged for the sale of the Property. (e) “Drawdown Date” as the first to occur of:

(a) that date which is two (2) days after the Borrower requests that the Advance be made; and (b) the date upon which the Advance is or is to be made.

103. The terms of the mortgage, dated the same day as the deed of loan, incorporated a mortgage memorandum registered number Q860000. Mr Wang and Ms Zhuang were listed as mortgagors, and CPF as the mortgagee.

104. Clause 3, later varied by the supplemental deed of variation of loan dated 14 July 2023, noted that, for the purpose of the mortgage, the parties acknowledged and agreed that:

“(a) the Deed of Loan means a Deed of Loan dated 25 May (as varied by the Supplemental Deed of Variation of Loan dated 14 July 2023) 2024 made between the Mortgagee as the financier, Everest Index International Pty Ltd as the Borrower and the Mortgagor together with Richie in Ze Wang as the Guarantors, being a deed of Loan between the said parties relied upon by the Mortgagee as the financier to advance, at the request of the Guarantors, a maximum advance as principle sum of 13,750,000 14,150,000 dollars $13,750,000.00 ($14,150,000.00) to the Borrower.

…

(c) this Mortgage secures to the Mortgagee any and all money that may become payable by the Borrower to the Mortgagee pursuant to the Deed of Loan.”

105. Clause 5 was an acknowledgement of the borrower and Guarantors that:

“(a) The Facility provided pursuant to the Deed of Loan, the repayment of which is secured by this Mortgage, is a Facility provided by the Mortgagee to the Borrower for the purpose of the Borrower repaying a debt owed to ALS428 Pty Ltd pursuant to an agreement by which ALS428 Pty Ltd lent money to the Borrower, the repayment of which money was guaranteed by the Guarantors and the property mortgaged in favour of ALS428 Pty Ltd as security for such repayment to ALS428 Pty Ltd;

(b) Each of the Borrower and the Mortgagor have received from ALS428 Pty Ltd notice of default in response to their failure to comply with a loan agreement entered into with ALS428 Pty Ltd and neither the Borrower nor the Mortgagor have any present financial capacity to repay ALS 428 Pty Ltd other than from funds raise pursuant to the Mortgagor having agreed to sell the property charged by this Mortgage; and

(c) Each of the Borrower and the Mortgagor have entered into the Deed of Loan with the Mortgagee and the Mortgagor has charged the Property by this Mortgage as security for repayment of the Secured Money on the basis that the Deed of Loan provides the Borrower and the Mortgagor with an interim facility to enable the Mortgagor to procure the sale of the Property without incurring the Forbearance Fee demanded by ALS428 Pty Ltd as a precondition to refrain from exercising powers in default under the existing Loan Agreement between the Borrower and ALS428 Pty Ltd at a rate of 16.02%, as demanded by ALS428 Ltd as at date of the Deed of Loan.”

106. Notwithstanding that Ms Zhuang and Mr Wang were very keen for the refinancing to be completed, this was delayed because of an injunction in family law proceedings involving Richie and his ex-partner which in effect prevented the mortgage over the Vaucluse property being given in favour of CPF.

107. On 13 June 2023, ALS capital updated the lower variable interest rate on the loan by 0.21% increasing it from 10.180% to 10.390%.

108. On 16 June 2023, ALS commenced proceedings in this Court against Ms Zhuang and Mr Wang seeking an order for possession of the Vaucluse Property and leave to issue a writ of possession forthwith. Ms Zhuang and Mr Wang were aware of the commencement of those proceedings.

109. On 3 July 2023, the injunction in the family law proceedings involving Richie and his ex-partner was dissolved and Richie and his parents were able to pursue the refinancing of the ALS Loan and mortgage with CPF. In the circumstances and given the passage of time, adjustments to the documentation for the CPF loan and mortgage signed on 25 May 2023 were required.

110. As at 9 July 2023, Ms Zhuang and Mr Wang as well as Richie were very keen to have the ALS loan and mortgage refinanced and understood that they would need Mr Green’s support to do so. This was reflected in Richie’s email to Mr Green on that day which included:

“Yes, we need to get the refinancing done before this coming Friday. You need to support me to get extra funds to pay out ALS428. Otherwise, everything will fall over.

The agent tells me that the inspection is tomorrow afternoon at 2 pm. I hope it will sort out your lenders’ issue then.

We all understand that all financial and legal damages are recoverable from your [sic, my] ex and her stupid lawyer. but need to get refinance done first. we are 99% done. Just need the last 1% support from you. please assist with this.

I will call you tomorrow afternoon after 3:00 pm. Thanks!”

111. On 11 July 2023, Mr Green wrote a letter to Everest, care of Mr Wang and Ms Zhuang, and Richie enclosing a draft supplemental deed of variation of loan, and provided advice as follows:

“1. It is intended to vary the original Deed of Loan by increasing the Facility Limit to $14,150,000.00.

2. It retains the existing securities that have been signed but details agreed amendments to those existing securities.

In respect of the agreement amendments, the material ones are that:

(a) There is an agreed holding fee of 5% on daily balance from the date of 26 May to the settlement of the refinance - this has to be paid and I am proposing that it can come out of the proceeds of sale of [one of the Strathfield properties];

(b) The interest rate is slightly increased with the Lower Rate increased by 0.3%, the Higher Rate is increased by 1% - the Higher Rate will only be incurred if you fail to enter into a contract for the sale of the property by the agreed date.

2. The Facility Limit is increased to $14,150,000.00 - I am unclear that this will be enough to satisfy ALS428 Pty Ltd, but am proposing that any shortfall might come out of [Strathfield property] proceeds.

3. At condition 3 you will see that the Securities for the loan remain the Existing Securities but with such varied to reflect the increased Principal Sum.

The balance of the Deed is otherwise on terms consistent with standard drafting practice. Please carefully review the Deed and give me instructions as to any matters you think need to be amended, or any matters which you do not understand.

I thank you in anticipation of your early reply and note the objective has to be to settle this within the next 2 or 3 days, but I am still awaiting some advice from the outgoing mortgagee.”

112. On 12 July 2023, Richie, Ms Zhuang and Mr Wang attended Mr Green’s office to execute the supplemental deed of variation with respect to the CPF loan and mortgage, as well as a deed of release in respect of the proceedings commenced by ALS. While Richie, Ms Zhuang and Mr Wang were at Mr Green’s office to sign the documentation, there was a conference during which Mr Green gave advice to Richie and his parents. As usual, Richie translated the substance of that advice into Mandarin for his parents during the conference. That advice was also confirmed in writing by Mr Green the next day, 13 July 2023, in a letter to Everest, care of Ms Zhuang and Mr Wang. That letter confirmed that the advice given at the time Ms Zhuang, Mr Wang and Richie signed the supplemental deed of variation was as follows:

“I reiterate the advice given in the conference when you signed the Supplemental Deed of Variation of Loan that:

1. The original loan of $13,750,000.00 could not be settled on 26 May 2023 because of steps taken by Richie’s former partner in the Family Law Court.

2. The failure to settle on 26 May resulted in additional costs, expenses, and losses and that result is what necessitates the increase in the loan from $13,750,000.00 to $14,150,000.00.

3. The loan is provided on the basis that it is a short-term facility provided solely to give you sufficient time to market and sell your property at Vaucluse. If you do not sell it, then the new Lender, CPF Group Pty Ltd, will take steps to get possession of the property and sell it.

4. The terms of the loan provide that interest is payable but can be capitalised at the reduced rate provided you enter into a Contract to sell [the Vaucluse property] prior to 1 October 2023. If you do not enter into a Contract prior to that date, you will be in default and interest can be recovered at the higher rate of 16% stipulated in the Deed of Loan and Supporting Securities as a result of you having signed the Supplementary Deed of Variation of Loan. If you can pay any money on account of interest, you should, because capitalising interests is expensive and increases your losses pending a sale and it is very unlikely that that the value of this property can improve at a rate any near the losses you are incurring with the holding costs, inclusive of interest, that you have to pay.

5. You can avoid the higher rate of interest being applied if you pay interest monthly at the lower rate but at your request interest is being capitalised because your present cash flows do not enable you to pay the full amount of interest at either the higher rate or the lower rate. And in fact, it is that circumstance that created the problems that you experienced with the outgoing mortgagee, ALS428 Pty Ltd.

Referable to the matter and because of the delay in settling, there is a holding fee on the loan which is the amount calculated at 5% on the daily balance of the original facility of $13,750,000.00 from 26 May 2023 to settle it. At this stage, I am proposing that that amount of money might be paid from settlement proceeds from [the Strathfield property] because the payment of such produces a material financial advantage to you.

In respect of this loan, I reiterate the advice I gave in the conference, that it’s a special loan but it comes with risk and you should actively seek to sell your property at Vaucluse as soon as possible because as stated above the holding costs, referable to the loan and the property, will materially exceed any benefit from a deferred sale in the hope of some additional price above one can be historically seen in the market consistent with the valuation obtained by the property and relied upon by the Lender to make this loan.”

113. Also on 12 July 2023, Mr Green sent a letter to Ms Azar of Summer Lawyers enclosing the executed deed of release to be held in escrow pending settlement as proposed for 14 July 2023.

114. The Background or recitals to the supplemental deed of variation provides information which confirmed the circumstances giving rise to the supplemental deed. It provided:

“BACKGROUND

A The Parties are parties to a Deed of Loan dated 25 May 2023.

B At the request of the Guarantors made in response to the Family Court Orders, the Borrower requested that the Financier defer the drawdown of the Facility but hold the Facility available for future drawdown.

C The Financier, conditional upon the Borrower agreeing to pay the Holding Fee agreed that it would not otherwise withdraw its offer to provide the Facility.

D The Family Court Orders have been set aside and the Borrower, with the consent and at the request of the Guarantors, has agreed to pay the Holding Fee and requested in consideration therefore that the Financier provide the Facility, albeit upon and subject to the terms of this Supplemental Deed of Variation of Loan.

E The purpose of this Deed is for the Borrower and the Guarantors to irrevocably and unconditionally affirm that they are bound by the Deed of Loan and the Securities as hereby varied and in reliance upon such irrevocable and unconditional request, the Financier enters into this Supplemental Deed of Variation of Loan.

F At the date of this Deed, ALS428 Pty Ltd, which holds a registered first mortgage on title to the property owned by Li Qing Zhuang and Ding Sen Wang at [Vaucluse], has initiated proceedings in the Supreme Court of NSW having case reference 2023/00193191 for the purpose of taking possession of that property and selling it for the purpose of recovering the debt owed to it and secured by the said first mortgage (the Supreme Court Proceedings) .

G The Guarantors have requested the Borrower to enter into this Supplemental Deed of Variation of Loan for the purpose of enabling funds to be raised to enable the said Supreme Court Proceedings to be discontinued.”

115. In these circumstances, the supplemental deed of variation provided in cl 1.1 as follows:

“(a) In this Supplemental Deed of Variation of Loan, except as otherwise hereinafter varied, all words and phrases defined in the Deed of Loan and all rules of interpretation set out in the Deed of Loan apply to this Supplemental Deed of Variation of Loan.

(b) The “Deed of Loan” means a Deed of Loan between the parties hereto, executed and dated 25 May 2023 entered into by the parties hereto with the intention that the facility thereunder was to have been advanced to the Borrower on 26 May 2023.

(c) The “Facility Limit” means the aggregate amount increased from the sum provided for in the Deed of Loan to an amount not to exceed $14,150,000.00 , as reduced , increased or otherwise varied in accordance with this deed and applied for the purpose of discharging the debt owed by the Borrower to ALS428 Pty Ltd and securing release of any and all securities held by ALS428 Pty Ltd to secure the debt it claims from the Borrower and the Guarantors.

(d) “Family Court Orders” means Orders made on the application of Yunyun Yu in the Federal Circuit and Family Court of Australia (Division One) in respect of which the respondents named were the guarantors as the first, second and fourth respondents and Harvestone Wellmas Pty Ltd as the third respondent.

(e) The “Higher Rate” is 16%

(f) The “Holding Fee” means interest on the Facility from and including the 26th of May until the Drawdown Date calculated on daily balance of the Facility (such $13,750 ,000.00 being the amount agreed provided in the Deed of Loan) to the date the varied Facility is drawn down.

(g) The “Lower Rate” is 13 .3%”

116. As to the payment of interest and repayment, cl 4 provided: [14]

“(a) The Parties hereto irrevocably acknowledge and agree that the Higher Rate and the Lower Rate as herein stipulated applies and sets the Interest Rate which the Borrower must pay on Secured Money.

(b) The Parties agree that provided an unconditional contract for the sale of [the Vaucluse property] has been exchanged by 1 October 2023 and there is otherwise no default by the Borrower or the Guarantors, of any obligations on their part to be performed pursuant to the Securities, then the Borrower shall continue to be entitled to pay interest at the Lower Rate.”

117. Clause 8 (b) provided:

“The Borrower and the Guarantors for the benefit of the Financier acknowledge that the Facility provided to enable the Supreme Court Proceedings to be terminated and the debt to ALS428 Pty Ltd repaid and so provided on terms which allow interest to be capitalised for a period which enables the marketing for sale of [the Vaucluse property] provides a material financial benefit to the Borrower and the Guarantors.”

118. Clause 9.1 of the supplemental deed of variation provided:

“(c) The Mortgagor covenants and agrees to:

(i) actively market for sale [the Vaucluse property]; and

(ii) cause the listing estate agent retained by the Mortgagor to sell [the Vaucluse property] to provide a monthly report to the Financier detailing particulars of inspections of the property and any offers made to purchase the property.”

119. On 13 July 2023, Mr Green sent an email to Richie, Ms Zhuang and Mr Wang in which he noted that settlement of the refinancing was scheduled for the following day. Attached to that email was the letter to Everest, care of Ms Zhuang and Mr Wang, confirming the advice he had provided the previous day when they had signed the supplemental deed of variation, which has already been quoted above. Richie confirmed receipt of this letter by email on 14 July 2023 and in effect instructed Mr Green to go ahead with settlement of the refinancing.

120. In summary, at the time of execution of the supplemental deed of variation and completion of the CPF loan and mortgage:

121. the ALS loan and mortgage was in default and about $14 million was owing;

122. none of Everest, Ms Zhuang, Mr Wang or Richie could repay the ALS loan and mortgage except by refinancing or by selling the Vaucluse property;

123. no other offers of finance were available to Everest, Ms Zhuang, Mr Wang or Richie to repay the debt owed to ALS and the proposed CPF loan and mortgage was the only finance offer on the table to allow Ms Zhuang and Mr Wang to refinance the debt owed to ALS and they knew that that was so;

124. ALS had commenced proceedings against Ms Zhuang and Mr Wang seeking possession of the Vaucluse property and they knew about those proceedings;

125. Ms Zhuang and Mr Wang knew that ALS was seeking to obtain possession of the Vaucluse property, so that the property could be sold by ALS to repay the debt owed to ALS;

126. Ms Zhuang and Mr Wang did not want ALS to take possession of the Vaucluse property;

127. Ms Zhuang and Mr Wang wanted to refinance the ALS loan and mortgage so that they could have time to sell the Vaucluse property themselves and the only way that that could be done was by refinancing the ALS loan and mortgage with funds from CPF; and

128. Ms Zhuang and Mr Wang knew that the loan from CPF was at a lower interest rate than what was being demanded by ALS to forebear on enforcement.

129. On the evidence as a whole and based on my findings set out above, I was also satisfied on the balance of probabilities that:

130. Ms Zhuang and Mr Wang knew that the interest rate under the CPF loan and mortgage would increase if the Vaucluse property was not sold by October 2023;

131. Ms Zhuang and Mr Wang knew that they needed to sell the Vaucluse property in the coming months, especially in light of cl E of the Background or recitals and cl 9.1(c) of the supplemental deed of variation; and

132. Ms Zhuang’s and Mr Wang’s principal concern was to have the ALS loan and mortgage refinanced so that the Vaucluse property would not be sold by ALS and they would be enabled to sell it.

“Q. The next letter from Mr Green is at pages 1282 to 1283.

A. INTERPRETER: Can I say something?

Q. Yes, of course, Mr Wang.

A. INTERPRETER: I only know it was one of Mark’s clients, but I didn’t it was a CPF company. So, now you mention about CPF, I only came to know about CPF around February 2024. So, it was Mark made the arrangement or explained to me.

Q. I think you just said, Mr Wang, that you knew that it was one of Mark’s clients. Is that right?

A. INTERPRETER: Yes.

Q. You knew that at the time?

A. INTERPRETER: No, no, Mark said another company would do it, but I didn’t know it was CPF.

Q. But knew it was one of Mark Green’s clients, correct?

A. INTERPRETER: Mark was my solicitor.

Q. No, listen please. You knew that the proposed lender was a client of Mr Green, yes?

A. INTERPRETER: At the time, Mark was my solicitor. So, Mark was assisting me refinancing. But I didn’t know the lender’s company or who the other company is. You keep mentioning CPF, CPF, CPF. You’re actually misleading me.

Q. I don’t intend to mislead you, Mr Wang. I just want you to answer my questions, if that’s all right. I’ll ask it again. At the time of the transaction, what you seem to be saying now is that you didn’t know the name, CPF, but you say you knew it was a company of which Mr Green was the lawyer, is that right?

A. INTERPRETER: No, I didn’t know.”

123. As I understood Mr Wang’s last answer it was to the effect that he did not know the name of the lender was CPF. Thus, in this evidence, Mr Wang was saying that at the time of entry into the CPF loan and mortgage he knew that the financier or lender who would provide the funds to refinance the ALS loan and mortgage was a client of Mr Green but he did not find out that the lender’s name was CPF until February 2024. Nonetheless, in order to avoid any misunderstanding, I asked the following questions: [16]

“Q. You volunteered some information not in answer to a question. As I understand it, you said, “I only know it was one of Mark Green’s clients, not know it was CPF. I only know about CPF in February 2024.”

A. INTERPRETER: Yes.

Q. Is that correct?

A. INTERPRETER: Yes.”

124. This reinforced my view as to what Mr Wang was saying. In subsequent questions by Mr Krochmalik of counsel who appeared for CPF, Mr Wang appeared to resile from that evidence as follows: [17]

“Q. So it’s correct, isn’t it, that you knew that the funder was a client of Mr Green, correct?

A. INTERPRETER: I didn’t know.

Q. You just told his Honour that you did know that the funder was a client of Mr Green. Isn’t that what you just told his Honour?

A. WITNESS: I can speak? I can talking?

HIS HONOUR

Q. If you want to speak English, feel free.

A. WITNESS: Well, no, no, English, no.

Q. But if you want to speak Mandarin.

A. INTERPRETER: So, what I meant, at that time, I only knew that Mark, Mark introduced a funder or the company, and, at the time, Mark was acting as my solicitor. I don’t know whether, whatever client.

KROCHMALIK

Q. I suggest to you, Mr Wang, that you also knew that Mr Green was the solicitor for the prospective funder?

A. INTERPRETER: No.

Q. I suggest to you that you realised that when you answered his Honour’s question, you told the truth and now you’re trying to backtrack from that answer. That’s what I suggest to you?

A. INTERPRETER: No, I didn’t.

Q. You knew full well that the prospective lender was a company called CPF Group, correct, at the time of the transaction?

A. INTERPRETER: No, no, I don’t know.

Q. You knew full well that Mr Green was also CPF’s lawyer at the time?

A. INTERPRETER: No.”

125. Having seen Mr Wang giving his evidence, I formed the view that his evidence that was initially volunteered and confirmed in answer to my questions was correct and his later evidence in response to Mr Krochmalik of counsel who appeared for CPF to the extent to which it was to the contrary should not be accepted. The later evidence appeared to me to be the result of Mr Wang realising that the evidence he volunteered would not assist his case.

126. Furthermore, I accept that at the time of execution of the supplemental deed of variation and completion of the CPF loan and mortgage, Ms Zhuang and Mr Wang both considered the transaction was more favourable for them compared to obtaining a further extension from ALS in relation, inter alia, to the interest rate and the fees to be charged, as Mr Green had explained in his letters to them. They also understood it was more favourable to them compared to ALS pursuing and succeeding in its proceedings for possession because they would control the sale of the Vaucluse property rather than ALS. Accordingly, they were keen to enter into the refinancing transaction with CPF, as it gave them breathing space in which to sell the Vaucluse property themselves rather than there being a mortgagee sale.

127. On 14 July 2023, the CPF loan and mortgage was settled. It was not in dispute that, as set out in the spreadsheets at annexure A to Mr Reed’s 13 March 2026 affidavit:

128. the total amount advanced to Everest under the CPF loan and mortgage on that date was $14,362,250.00, which included the principal sum of $14,150,025.00 and an establishment fee;

129. out of the sum advanced, $14,103,895.63 was paid to discharge the obligations owed by Everest, Ms Zhuang, Mr Wang and Richie under the ALS loan and mortgage.

130. There appear also to have been other small amounts relating to charges such as PEXA fees which were also paid out but it was not suggested that anything turned on this.

131. ALS’s registered first mortgage over the Vaucluse property was discharged and CPF’s first mortgage over the Vaucluse property was registered.

132. As to when the CPF loan and mortgage were due for repayment, it can be noted at this point that cl 1.1 of the loan deed defines the “Final Repayment Date” as the date which is six months from the “Drawdown Date”. The clause however provides that in the event that the contract for sale of the Vaucluse property has been exchanged prior to 1 September 2023, the Final Repayment Date will be the earlier of, the date of completion of the sale of the property or, two months from the date a contract is exchanged for the sale of the property. Given no contract for sale of the property was exchanged at all, the final repayment date was 6 months after the Drawdown Date.

133. The “Drawdown Date” was defined as the first to occur of the date two days after the borrower requests that the advance be made and, the date upon which the advance is or is to be made.

“I refer to our telephone discussion and confirm that attributable to issues arising in the Family Court of Australia concerning one of the guarantors, settlement of the present loan cannot take place today.”

133. In a letter addressed to Richie and the parents dated 3 July 2023, following ALS initiating proceedings in this Court to gain possession of the Vaucluse property, Mr Green again stated:

“As you know the New Lender was in a position to provide a loan to repay ALS 428 Pty Ltd and settle the advance on 26 May, but you were restrained from settling the loan pursuant to ex-parte orders obtained in the Family Law Court.”

134. In these circumstances, it might be considered that the “Drawdown Date” was 26 May 2023, that is the date upon which the advance was to be made. If so, the Final Repayment Date, 6 months later, would be 26 November 2023. Alternatively, if the Drawdown Date was the date on which the advance was actually made on 14 July 2023, the Final Repayment Date would be 14 January 2024. It does not appear that anything turns on this as, in either case, the loan was not repaid by the relevant date.

Events after the settlement of the CPF loan and mortgage

135. On or about 17 July 2023, ALS’s proceedings in the Supreme Court against Ms Zhuang and Mr Wang were discontinued.

136. On 17 July 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang and Richie providing advice on the sale of the Vaucluse property in light of the refinancing. The letter included the following:

“There is a positive obligation under your new mortgage to actively promote the sale of this property and to provide to the Lender monthly reports on the sale process, I also propose to update the Contract with a current Planning Certificate.

….

As to active marketing, I remind you of the covenant in the security documents for your agent to provide a monthly report regarding the sale process. In this respect, I remind you that

1. The interest rate on the loan increases by 16% if you have not been able to exchange Contracts by 1 October. Such an increase in the interest rate results in additional monthly costs of $31,837.50 on your mortgage.

Accordingly, there are significant savings on the now existing finance by achieving a sale prior to 1 October in the period of slightly more than 10 weeks from the date of the refinancing.”

(emphasis in original)

137. On 29 August 2023, Mr Green sent a letter to Mr Wang, Ms Zhuang and Richie, referring to his letter of 17 July and providing an update as to the accrual of interest on loan with CPF:

“… you will see that the enclosed Statement therefore provides that:

1. Interest from 14 July (31 July inclusive) calculated at the non-default rate of 13.3% was $92,808.49.

2. The amount of the debt then owing effective close of business 31 July with interest capitalised at the non-default rate amount to $14,242,808.49.

3. Interest has accrued in the month of August at the non-default rate of 13.3% on the sum of $14,242,808.49. The amount of such interest for the month of August is $160,885.20.

4. The above noted, the balance closed in the Statement of Account as due and payable on close of business 31 August is $14,403,693.70.

In respect of the matter, I refer you to my recent email in which I advised that the Lender was concerned that you are yet to provide a report on the marketing of the property for sale and this concern was the greater because it is the Lender’s understanding that the security property at Vaucluse is not yet opened and available for public inspection.

As you know this loan was a short-term facility provided on terms which resulted in some concession to you and enabled you to have terminated, the proceedings initiated in the Supreme Court for the prior lender, ALS428 Pty Ltd, to obtain possession of the property and sell it.

The loan was negotiated on the basis that the lower rate of interest only applies to the close of business on 30 September unless there is a binding contract for exchange of contracts on or before 1 October. In the circumstances, it is very much in your financial interest to have the property being actively marketed by your agent and particularly so given the level of holding costs incurred which will escalate if no contract is entered into by close of business 30 September.”

138. At some time prior to 1 September 2023, Richie indicated to Mr Green that his parents may decide not to sell the Vaucluse property and would seek an extension of time for repayment of the CPF loan and mortgage subject to a payment of $1,000,000 in reduction of the debt.

139. On 1 September 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang regarding the sale of the Vaucluse property. He relevantly included the following:

“4. At your request I procured a short-term finance facility to enable ALS428 Pty Ltd to be repaid and was in a position to do that on 26 May 2023. As you know and as is clear from the loan documents such new facility was procured in reliance upon your stated intention to sell [the Vaucluse property] for the purpose of repaying the finance that was raised to repay ALS428 Pty Ltd.

5. It has now been indicated by Richie that you may decide not to sell [the Vaucluse property]. In this respect Richie has requested that the new and now current financier prospectively agree to extend the time for the repayment of its short-term facility which must otherwise be repaid by 30 November unless there is a Contract for Sale exchanged prior to 1 October with a 10% deposit having been paid.

CPF Group Pty Ltd, the financier that provided funding to pay out ALS428 Pty Ltd is entitled to interest at a higher rate if no contract is exchanged by 1 October. At this time and subject to payment prior to the end of November of $1,000,000.00, as proposed by Richie, CPF Group Pty Ltd has indicated it may be prepared to consider and agree to what Richie has requested but for reasons you appreciate cannot commit to such until the offered paydown of deferred interest is done.

Pending payment of such sum of $1,000,000.00 and signing of formal variation you need to assume that CPF Group Pty Ltd expects the sale of [the Vaucluse property] to be actively promoted in conformity with the agreement that was signed.

Active promotion of the sale would require an up-to-date Contract to be prepared and provided to a listing agent.

The Contract previously prepared might be acceptable for marketing purposes but because the prescribed mandatory annexures to it are now somewhat dated and in fact the Planning Certificate needs to be updated to reflect changes under the Environmental Planning and Assessment Act and regulations thereunder. Accordingly, a new contract is needed if a buyer is identified prepared to pay a price you will accept.

In respect of work as to a proposed sale of the Property since instructed in August 2022 and some collateral matters as to engagement with lenders, I now provide an account to the end of August and thank you in anticipation of payment of same. It is otherwise the case that I await instructions to confirm that I should apply for updated prescribed documents and prepare an updated Contract for Sale for the sale of [the Vaucluse property].

I have no information that enables me to assess the probability of Richie’s instructions that the proposed $1,000,000.00 paydown of the debt owed to CPF Group Pty Ltd is certain and for reasons you would certainly appreciate CPF Group Pty Ltd will assume payment may be possible but not certain. Accordingly, I suggest that it may be in your own interests and limit risk of liability for default interest and CPF Group Pty Ltd adopting the same course of starting Supreme Court Proceedings to take possession of the Property that ALS428 Pty Ltd did if you update the contract and have your agent in the market looking for buyer who may pay a price that relieves you of all your present issues.

Finally I note that I will early in coming week follow up this and my letters regarding the 2022 refinancing of [the Lindfield properties] with the reports as requested by Richie as to Churchill St properties and loans made secured by such and then the major loan by CPF Group Pty Ltd all as part of working up the quantification of losses attributable conduct of Richie’s ex-partner which delayed the refinance of ALS428 Pty Ltd loan.”

140. On 15 September 2023, Mr Green wrote to Mr Wang and Ms Zhuang informing them of CPF’s concern, based on its independent inquiry, as to the lack of ongoing efforts to sell the Vaucluse property.

141. On the basis of that correspondence and subsequent correspondence which was in evidence and Richie’s practice of informing his parents in Mandarin of the substance of correspondence addressed to them, I accept that in the months after the CPF loan was settled, Ms Zhuang and Mr Wang were told many times that they were obliged to sell the Vaucluse property and that Ms Zhuang and Mr Wang knew that they were obliged to do so.

142. In October 2023, Richie was making enquiries with another lender with the intention of refinancing the CPF loan and mortgage.

143. On 13 October 2023, Richie sent an email to Mr Green as follows:

“Dear Mark,

I hope this message finds you well.

I wanted to express my heartfelt gratitude for the invaluable assistance you’ve provided to my family regarding my parents’ property loan at [the Vaucluse property]. Your guidance and support have been instrumental throughout this journey, and I truly appreciate your expertise and dedication. I’m writing to discuss a matter that has recently come to our attention and has prompted us to consider a potential adjustment to the terms of the loan. Over the past two months, we have closely observed the real estate market in the Vaucluse area. To our surprise, we discovered that three properties in our neighbourhood have sold at exceptionally favourable prices within a relatively short time frame.

1. [one house in Vaucluse] sold for $36.2m

2. [another house in Vaucluse] sold for just under $24m

3. [yet another house in Vaucluse] sold for 32.5m (569sqm)

Based on the information gathered, the current market value of our properties appears to be in the range of 22 million to 25 million.

To gain a more comprehensive understanding of our property’s value, I engaged the Valuation (Civic). Their professional assessment also indicated that the appraised value of our properties exceeds 22 million. This revelation naturally led us to consider the terms of our existing loan.

During this time, I shared this information with my friend Baxter, who subsequently approached me with a preliminary offer for refinancing the loan (in the below email). It is important to me that you understand my intentions are not to cause any inconvenience or losses to your business. Baxter’s offer prompted me to contemplate whether it would be possible to discuss the interest rate on our current loan, given the remarkable increase in our property’s value.

My intention in bringing this up is to secure the best financial outcome for my parents, and I do not want Baxter to face any adverse consequences due to this loan incident. I have the utmost respect for his dedication and assistance, just as I do for your unwavering support.

I kindly request your consideration of the possibility of reducing the interest cost on our current loan to better align with the increased value of our property. We value your expertise and trust your judgment, and we would appreciate the opportunity to explore this option in collaboration with you.

Please understand that my foremost intention is to maintain a positive and mutually beneficial relationship, acknowledging your instrumental role in assisting us throughout this loan process. I understand that any adjustments will need to be evaluated within the context of your business operations, and we are open to a constructive dialogue to achieve an arrangement that benefits all parties involved.

Once again, thank you, Mark, for your unwavering support. We look forward to your guidance on how best to proceed in light of these developments.”

144. The reference to “not to cause any inconvenience or losses to your business” indicates that Richie was aware that the CPF loan and mortgage were arranged as part of Mr Green’s business and is consistent with Richie and his parents being aware of VAPL’s role in bringing together the persons who funded the CPF loan and mortgage in a similar way to the way in which VAPL had done in December 2022, to assist Harvestone, Richie and his parents with refinancing.

145. On the same day, Mr Green responded noting he would pass Richie’s and his parents’ position on to CPF and that he thought CPF’s preference would be to be paid out.

146. On 22 November 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang regarding the refinancing on the CPF loan, providing some background to the ALS loan and mortgage and the CPF loan and mortgage before relevantly advising:

“…

As you know the temporary facility that was arranged so as to prevent ALS 428 Pty Ltd obtaining orders in the NSW Supreme Court giving ALS428 Pty Ltd possession and the right to sell [the Vaucluse property], was arranged in reliance upon an undertaking to actively market and sell the property with special conditions limiting the interest rate applicable, if a contract of sale was entered into by 1 October. That did not occur.

Richie has advised that [the Vaucluse property] is not being sold and that the risk created of the current mortgagee wanting to obtain possession of the property and sell it, you will avoid on the basis that you have arranged with Baxter Gamble to refinance the existing facility with completion of the refinancing, as I understood, originally estimated by Richie Wang, to take place by the end of November.

Referable to completion of the refinancing, it is my understanding that the valuation required by Baxter Gamble as a pre-condition to the refinancing has been obtained. It would be appreciated if you could provide me with a copy of that valuation and if you could tell me what the present timing is for the new loan. I need this information so as to inform the existing mortgagee who is now seeking independent legal advice on enforcement of its security because of what is considered a material change of position. I very much hope that with a copy of the new valuation and some update detail on refinance, that I can persuade the present mortgagee that all is moving forward and that it should expect repayment by end of November as proposed and that enforcement proceedings on its part can be avoided from your perspective, and particularly so given it could result in a significant increase in costs.”

147. On 20 December 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang summarising a history of the CPF loan and mortgage to that date and offering insight into the concerns of CPF:

“6. As of 1 October 2023, a contract for sale of [the Vaucluse property] had not been entered into. In fact, it was apparent from independent enquiries by directors of CPF that you had not commenced any active marketing of the sale of the property but had formed an intention to adopt an alternative course to the sale of such property. That decision put you in default of compliance with the terms of the Deed of Loan as set out in the Supplemental Deed of Variation of Loan. (Richie in the course of discussions I had with you in September and October you indicated that as a result of some alternative business venture you might be in a position to have made some payment on account of unpaid interest, establishment fees etc. My recollection is that you mentioned a possible amount over $1,000,000.00 might be paid to reduce the debt. Such representations were passed on to CPF but no further steps consistent with those representations were taken.

In the events that have occurred the money secured by the Deed of Loan, as varied by the Supplemental Deed of Variation of Loan, became repayable as provided for in the Deed of Loan on 26 November 2023 in the context that there was no sale of [the Vaucluse property]. In this respect it was an election on your part to not market the property for sale that has meant the possibility of an extension of the Final Repayment Date under the Supplemental Deed of Variation of Loan does not apply. It is open to CPF to commence the same Court proceedings that ALS428 Pty Ltd did earlier in the year, albeit I have advised against this because I understand that a reason Baxter Gamble couldn’t assist on a refinance was because of those Court Proceedings which I settled with benefit of the loan that is the subject of this letter.

All the above noted, I enclose herewith as provided by CPF, a Schedule which sets out a prospective balance due on the assumption that there will be a settlement on 19 January. The enclosed Schedule is prepared in reliance upon the conditions of the original Deed of Loan and the Supplemental Deed of Variation of Loan, and your election not to sell [the Vaucluse property]. A real concern for CPF is that in all this matter to date no money has been paid in respect of the debt, the Vaucluse property has been withdrawn from sale and you are seeking but do not appear to have the finance to repay the now debt claimed by CPF.”

(emphasis in original)

148. On 14 January 2024, the last potential Final Payment Date for the CPF loan and mortgage passed without the loan being repaid.

149. On 17 January 2024, Mr Green wrote to Everest, Ms Zhuang, Mr Wang and Richie concerning default by failing to repay the amount owed under the CPF loan and mortgage and by failing to sell the Vaucluse property.

150. On 19 January 2024, Addaces Investments Pty Ltd (Addaces), another company of which Ms Zhuang and Mr Wang were directors, entered into a loan and mortgage transaction under which Addaces borrowed $555,000 from Pronto Funds Pty Ltd (Pronto) with Ms Zhuang, Mr Wang and Richie as guarantors secured by a second registered mortgage over the Vaucluse property. The mortgage documentation was signed on 23 January 2024 and the mortgage was registered on 15 February 2024. The term of the loan was three months from the date of draw down and the interest rates specified were a standard rate of 4.99% per month and a discount rate of 2% per month. It can be noted that the address given for each of Addaces, Ms Zhuang, Mr Wang and Richie in the loan documentation was an address in Strathfield. On this occasion, Ms Zhuang, Mr Wang and Richie apparently retained a solicitor in Campsie to act for them and not Mr Green.

151. On 19 February 2024, CPF received a payment of $260,000 in respect of the CPF loan and mortgage. No further repayment has been made. Nor has the Vaucluse property been sold.

152. On 1 March 2024, CPF issued a letter of demand to Everest Index International Pty Ltd, Richie Lin Ze Wang, Li Qing Zhuang and Ding Sen Wang.

153. On 6 March 2024, CPF issued a Notice of Default to Li Qing Zhuang and Ding Sen Wang. The relevant clauses of the notice are extracted as follows, and reiterate those in the letter of demand:

“3. The following events occurred:

a. The Borrower failed to pay the Secured Money to the Financier on the Final Repayment Date which constituted a breach of the Borrower’s obligations pursuant to clause 4.3 of the Loan Deed and clause 7.3 of the Variation Deed; and

b. Li Qing Zhuang and Ding Sen Wang failed to properly, diligently and with all expedition take all necessary steps to effect the sale of the Property, which constituted a breach of clause 5(a)(ii) of the Variation Deed.

4. By reason of those breaches, an Event of Default occurred pursuant to clause 1.1 of the Loan Deed.

5. By Notice of Demand dated 1 March 2024 issued by the Financier to the Borrower and Guarantors (Demand), the Financier demanded that the Borrower and Guarantor pay the Total Amount Owing (as that term was defined in the Demand) by 4.00pm AEDT, Monday 4 March 2024.

6. The Borrower and Guarantor failed to comply with the Demand.

7. As a consequence of the above:

a. the Guarantors have committed a further breach of clause 8.3 and 8.5 of the Loan Deed, clause 11.3 and 11.5 of the Variation Deed and a further Event of Default has occurred pursuant to clause 1.1 of the Loan Deed;

b. an Event of Default has also occurred under the Mortgage and the Mortgage is now enforceable; and

c. the Secured Money remains immediately due and payable pursuant to clause 7(a) of the Loan Deed, clause 10(a) of the Variation Deed and clause 5 of the Memorandum (as defined in Schedule 1).

8. Accordingly, the Financier hereby demands and requires payment of the Secured Money in full, which totals $15,590,001.89 (Total Amount Outstanding) as at the date of this notice and on which amount interest, costs, legal costs, fees and charges continue to accrue in accordance with the Facility Agreement.”

154. There was no dispute that the requisite demands and notices relating to default under the CPF loan had been served on Everest, Ms Zhuang, Mr Wang and Richie.

155. On 28 February 2025, Pronto obtained judgment for possession of the Vaucluse property and, on 28 March 2025, a writ of possession was issued. Subsequently, a notice to vacate the Vaucluse property was issued by the New South Wales Sheriff’s Office.

156. On 13 May 2025, Ms Zhuang and Mr Wang entered into a Sales Inspection Report and Auction Agency Agreement with a real estate agent relating to the sale of the Vaucluse property which included a then current estimated selling price of $21-23 million. Later in May, two offers well below the estimated selling price were submitted.

157. On 27 May 2025, Ms Zhuang and Mr Wang filed a notice of motion in the proceedings brought by Pronto seeking a stay of the writ of possession “issued on 11 April 2025” (although it appears that the writ was issued on 28 March 2025).

158. On 18 June 2025, an offer of $19 million was received for the Vaucluse property.

159. On 19 June 2025, Lonergan J refused Ms Zhuang’s and Mr Wang’s application for a stay of the writ of possession: Pronto Funds Pty Ltd ACN 669796847 v Zhuang [2025] NSWSC 641.

160. Nothing in the CPF loan and mortgage and nothing in relation to that transaction prevented Ms Zhuang and Mr Wang from selling the Vaucluse property and after July 2023 they, as the registered proprietors, were responsible for deciding whether or not to sell the property. I do not accept Mr Wang’s evidence in that regard which was as follows: [18]

“Q. The decision not to sell the property at Vaucluse Road in the second half of 2023, that was your decision and your wife’s decision?

A. INTERPRETER: Incorrect.

Q. Whose decision was it not to sell the property in the second half of 2023?

A. INTERPRETER: Because the market at that time wasn’t good?

Q. But you made the decision not to sell together with your wife, correct?

A. INTERPRETER: No.

Q. Who made the decision?

A. INTERPRETER: The agent.

Q. Which agent?

A. INTERPRETER: I couldn’t remember.”

161. Based on that evidence and in light of the evidence as a whole, I am satisfied on the balance of probabilities that Mr Wang and Ms Zhuang chose not to sell because they thought that the market was not good at that time, possibly as a result of advice from an estate agent, and they hoped that it would improve and thus allow them to sell for more in the future.

162. There was no dispute that as at 31 March 2026, which is the most recent Interest Payment Date, being the last day of each consecutive month for which secured money is owed by Everest to CPF, the amount owing under the CPF loan and mortgage was $21,621,915.54.

CPF’s claims against Ms Zhuang, Mr Wang, Richie and Everest and the first cross claim

163. There was in effect no dispute that CPF will be entitled to the relief it claims against Everest, Ms Zhuang, Mr Wang and Richie unless Ms Zhuang, Mr Wang and Richie are successful:

164. in their claim that the CPF loan and mortgage contracts were unconscionable under s 12CB of the ASIC Act or the corresponding provision of the ACL, s 21; [19] or

165. in their claim that the CPF loan and mortgage contracts were “unjust” for the purposes of the CRA and ought to be set aside.

166. The claims for declarations that the contracts constituting the CPF loan and mortgage have been rescinded by Ms Zhuang and Mr Wang did not appear to be based on any circumstances other than those relied on to support the unconscionable conduct and CRA claims. The rescission claims were not addressed separately from the unconscionability and CRA claims in oral or written submissions. As I understood it, they amounted to claims that simply rephrased the nature of the relief sought even though the statutory regimes relied upon did not permit in terms a remedy by way of rescission.

167. Ms Zhuang’s and Mr Wang’s claim rested primarily upon s 12CB(1) of the ASIC Act which prohibits engagement in conduct which is unconscionable in all the circumstances in the supply (and possible supply) to, or acquisition (or possible acquisition) of, financial services. Counsel for Ms Zhuang and Mr Wang in his written submissions submitted that provision of the CPF loan and mortgage constituted both a “credit facility” and a “security” and were therefore a “financial service” for the purposes of the ASIC Act. Alternatively, s 21 of the ACL was relied on if the conduct did not relevantly relate to financial services. In addition, reliance was placed on ss 7 and 9 of the CRA on the basis that the CPF loan and mortgage were unjust when made. Counsel drew attention to the remedial provisions including s 12GM of the ASIC Act and s 7 of the CRA.

168. Counsel submitted that the CPF loan and mortgage were unconscionable and unjust because CPF obtained the benefit of security of the home of elderly retired persons who had no capacity to repay the loan, and who would have been better off if ALS had simply exercised its security in circumstances where they were not getting independent advice from Mr Green, and CPF should be taken to have had knowledge of those matters.

169. It was also submitted that if Ms Zhuang and Mr Wang had obtained independent advice, the Vaucluse property would have been sold and they would have preserved some equity with which to purchase another domicile.

170. It was contended that the knowledge of Mr Green should be attributed to CPF for the purposes of considering unconscionability and unjustness on the basis of general principles of agency and the provisions of s 12GH of the ASIC Act (or the corresponding provision in respect of the ACL).

Were the CPF loan and mortgage contracts unconscionable or unjust?

172. Section 12CB of the ASIC Act applies in relation to the supply of financial services. Section 21 of the ACL applies generally to conduct in trade or commerce and in connection with goods and services but does not apply in relation to financial services, by virtue of s 131A of the Competition and Consumer Act 2010 (Cth) (CCA). Otherwise, the two provisions are essentially the same.

173. The definitions of “financial product” and “financial service” in ss 12BAA and 12BAB respectively, are not without their difficulties. Nonetheless, s 12BAB(1AA) provides that, for presently relevant purposes, “a financial product is a financial service”. By virtue of s 12BAA(7)(k) of the ASIC Act and reg 2B of the Australian Securities and Investments Commission Regulation 2001 (Cth), the provision of credit for any period is a “credit facility” and therefore a “financial product”. Since the CPF loan and mortgage transaction involved the provision of credit for a period, it was a financial product and thus a financial service for the purposes of s 12CB of the ASIC Act. Accordingly, Ms Zhuang’s and Mr Wang’s unconscionability claim fell to be dealt with under s 12CB of the ASIC Act. In any event, given the similarity of the relevant provisions in the ASIC Act and the ACL, it was not in dispute that the type of conduct involved in the present case would fall within either the ASIC Act or the ACL depending on whether or not the conduct involved providing financial services. Nothing turns on whether the ASIC Act or the ACL applies.

174. Section 12CB relevantly provides:

“12CB Unconscionable conduct in connection with financial services

(1) A person must not, in trade or commerce, in connection with:

(a) the supply or possible supply of financial services to a person; or

(b) the acquisition or possible acquisition of financial services from a person;

engage in conduct that is, in all the circumstances, unconscionable.

….

(3) For the purpose of determining whether a person has contravened subsection (1):

(a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4) It is the intention of the Parliament that:

(a) this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and

(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c) in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:

(i) the terms of the contract; and

(ii) the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.”

175. Section 12CC of the ASIC Act contains lists of potentially relevant factors in determining whether conduct is unconscionable for the purposes of s 12CB. Section 12CC relevantly provides:

“12CC Matters the court may have regard to for the purposes of section 12CB

(1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier ) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient ), the court may have regard to:

(a) the relative strengths of the bargaining positions of the supplier and the service recipient; and

(b) whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and

(c) whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and

(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and

(e) the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and

(f) the extent to which the supplier’s conduct towards the service recipient was consistent with the supplier’s conduct in similar transactions between the supplier and other like service recipients; and

(g) if the supplier is a corporation--the requirements of any applicable industry code (see subsection (3)); and

(h) the requirements of any other industry code (see subsection (3)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and

(i) the extent to which the supplier unreasonably failed to disclose to the service recipient:

(i) any intended conduct of the supplier that might affect the interests of the service recipient; and

(ii) any risks to the service recipient arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and

(j) if there is a contract between the supplier and the service recipient for the supply of the financial services:

(i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and

(ii) the terms and conditions of the contract; and

(iii) the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and

(iv) any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and

(l) the extent to which the supplier and the service recipient acted in good faith.

…”

176. The principles relating to the application of the unconscionability provision in s 12CB of the ASIC Act (and s 21 of the ACL) were not generally in dispute. They can be briefly but adequately summarised as follows.

177. In the context of a commercial dealing, the unconscionability of conduct for the purposes of s 12CB turns on whether the alleged unconscionable conduct is “so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience”: Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 (Kobelt) at [92] (Gageler J).

178. In Productivity Partners Pty Ltd v Australian Competition and Consumer Commission (2024) 281 CLR 338; [2024] HCA 27, Gageler CJ and Jagot J explained, at [60]:

“… The normative standard set by s 21(1) is tethered to the statutory language of “unconscionability”. While that term is not defined in the legislation and, in its statutory conception, is “more broad-ranging than the equitable principles”, it expresses “a normative standard of conscience which is permeated with accepted and acceptable community standards”, and conduct is not to be denounced by a court as unconscionable unless it is “outside societal norms of acceptable commercial behaviour [so] as to warrant condemnation as conduct that is offensive to conscience”. The items listed in s 22(1)(a)‑(l) are matters that the legislation requires to be considered, in the overall evaluation of the totality of the circumstances to be undertaken for the purpose of s 21(1), if and to the extent those matters are applicable. …” (footnotes omitted).

179. Further, the values that inform the standard of conscience include those identified by Allsop CJ in Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 at [296], as referred to by Kiefel CJ and Bell J in Kobelt at [14] are as follows:

“The term “unconscionable” is not defined in the ASIC Act and is to be understood as bearing its ordinary meaning. The proscription in s 12CB(1) is of conduct in connection with the supply of financial services that objectively answers the description of being against conscience. The values that inform the standard of conscience fixed by s 12CB(1) include those identified by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd: certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and:

‘the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage’.” (footnote omitted)

180. In addition, since Ms Zhuang’s and Mr Wang’s case depended on the attribution of knowledge of Mr Green to CPF, they relied on s 12GH of the ASIC Act which deals with the attribution of knowledge of an agent of a body corporate to that body corporate. Section 12GH of the ASIC Act relevantly provides:

“(1) If, in a proceeding under this Subdivision in respect of conduct engaged in by a body corporate, being conduct in relation to which the Division applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a[n] …. agent of the body corporate, being a[n] … agent by whom the conduct was engaged in within the scope of the person’s actual or apparent authority, had that state of mind.

(2) Any conduct engaged in on behalf of a body corporate:

(a) by a[n] …agent of the body corporate within the scope of the person’s actual or apparent authority; or

…

is taken, for the purposes of this Division, to have been engaged in also by the body corporate.

…

(5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person’s reasons for the person’s intention, opinion, belief or purpose.

…”.

181. The claim based on the CRA raised the issue of whether the CPF loan deed, the security deed, the mortgage and the supplemental deed of variation with Everest, Ms Zhuang, Mr Wang and Richie were “unjust” in the circumstances at the time they were made. Section 7 of the CRA provides:

“7 Principal relief

(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following—

(a) it may decide to refuse to enforce any or all of the provisions of the contract,

(b) it may make an order declaring the contract void, in whole or in part,

(c) it may make an order varying, in whole or in part, any provision of the contract,

(d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that—

(i) varies, or has the effect of varying, the provisions of the land instrument, or

(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.

(2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

(3) The operation of this section is subject to the provisions of section 19.”

182. The word “unjust” in s 7 is defined in s 4(1) of the CRA as including “unconscionable, harsh or oppressive”. As a result, there is considerable overlap between the considerations which might lead to a contract being unjust for the purposes of the CRA and unconscionable for the purposes of s 12CB of the ASIC Act. Furthermore, s 9, like s 12CC, establishes a list of matters relevant to determining whether a contract is relevantly “unjust”, although in the case of s 9 these matters must be taken into account. Section 9 is in the following terms:

“9 Matters to be considered by Court

(1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of—

(a) compliance with any or all of the provisions of the contract, or

(b) non-compliance with, or contravention of, any or all of the provisions of the contract.

(2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following—

(a) whether or not there was any material inequality in bargaining power between the parties to the contract,

(b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation,

(c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract,

(d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,

(e) whether or not—

(i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or

(ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented,

because of his or her age or the state of his or her physical or mental capacity,

(f) the relative economic circumstances, educational background and literacy of—

(i) the parties to the contract (other than a corporation), and

(ii) any person who represented any of the parties to the contract,

(g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,

(h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,

(i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect,

(j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act—

(i) by any other party to the contract,

(ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or

(iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,

(k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and

(l) the commercial or other setting, purpose and effect of the contract.

(3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made.

(4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made.

(5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.”

183. The application of s 7 of the CRA involves a three step process: Huynh v Ledinh Sovereign Super Pty Ltd [2024] NSWCA 78 (Huynh) at [69] (Bell CJ with Payne and Kirk JJA agreeing), citing Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [97] and Perpetual Trustee Co**mpany Limited v Albert and Rose Khosaba [2006] NSWCA 41; (2006) 14 BPR 26,639 at [106] (Basten JA). The first step is making findings of primary fact. The second step involves evaluating, in light of those findings, whether or not the contract is unjust. The third step is the exercise of the power to grant relief under the CRA which, may, but need not, follow from a conclusion that a contract is unjust.

184. Section 9 lists non-exhaustive sets of matters which the Court is to consider when determining at the second stage whether a contract is unjust pursuant to s 7. That determination involves a broadly based value judgment to be made having regard to the relevant circumstances.

185. Bearing in mind those provisions and principles, I turn to consider Ms Zhuang and Mr Wang’s unconscionability and unjust contract claims.

186. Based on my findings set out above and the parties’ cases as pleaded and relied on at the hearing, I accept that Mr Green, as a partner of the firm Pikes & Verekers, agreed to act as the solicitor for Ms Zhuang, Mr Wang and Richie and their companies in about April or May 2023 in relation to the refinancing of the ALS loan and mortgage. The retainer was informal and specifically involved Mr Green acting in relation to the negotiation and execution of the CPF loan and mortgage documentation, and advising generally in relation to the transaction.

187. This retainer was in effect a continuation of Mr Green’s previous assistance to Ms Zhuang, Mr Wang and Richie in relation to refinancing their extensive borrowings. By April or May 2023, Ms Zhuang, Mr Wang and Richie were familiar with Mr Green acting for them as a solicitor in relation to loan transactions as well as being familiar with him assisting to arrange loans through VAPL as he had done previously for them and their companies. Instances of this included when Mr Green acted for Ms Zhuang, Mr Wang and Richie when they entered into the ALS loan and mortgage in late 2021 and early 2022 to refinance existing borrowings and when they obtained the extension of the ALS loan and mortgage in January 2023. An instance of Mr Green arranging funds and also acting for them in relation to their entry into a loan and mortgage transaction was when Ms Zhuang, Mr Wang and Richie contracted with VAPL in order to obtain urgently needed funds for Harvestone in December 2022 to repay an existing loan from PCL Money Pty Ltd. In relation to that Harvestone transaction, Ms Zhuang, Mr Wang and Richie knew that Mr Green organised making available the funds for the refinancing through VAPL, a company associated with his firm, Pikes & Verekers. To the extent that VAPL had the services of a solicitor in relation to that transaction, it appears that Mr Green performed that role. Mr Green’s involvement in the Harvestone refinancing on behalf not only of Ms Zhuang, Mr Wang and Richie and their companies but also on behalf of the lender, VAPL, was not a matter which caused Ms Zhuang, Mr Wang and Richie any concern at that time or afterwards.

“[Ms Zhuang and Mr Wang] do submit, however, that the conduct of CPF, with the knowledge of Mr Green attributed to them, in securing them to the CPF Loan is unconscionable within the meaning of s 12CB of the ASIC or s 21 of the ACL, as well as being unjust within the meaning of s 9 of the CRA. ...

22. They submit that the CPF Loan was unconscionable and unjust because CPF, having the knowledge and conduct being its conduct, was obtaining the benefit of a security of the home of elderly retired persons who had no capacity to repay the loan, and who would have been better of[f] if ALS428 had simply exercised its security, in circumstances where they were not getting independent advice from Mr Green. For the reasons set out below, Ms Zhuang and Mr Wang submit that if they had got independent advice, the property would have been sold and they would have preserved some equity with which to purchase another domicile. As it stands, as they stated in their plea to Lonergan J (CB 1825), they presently stand on the precipice of homelessness.”

195. Elsewhere it was submitted that Richie had led his parents into a situation where they were at grave risk of losing their house and that it was his “irrational optimism” in effect that led them to seek to put off the fateful day. I do not accept this submission. The evidence as to the nature of, and reasons for, the original borrowings which were refinanced by ALS was exiguous and was not such as to allow me to be satisfied on the balance of probabilities that those original borrowings were only or principally for the benefit of Richie or his companies, rather than for the benefit of his parents and companies that they owned or controlled. Nor was I satisfied on the balance of probabilities that Richie “led” his parents into any relevant transactions. Richie’s parents did rely on him to translate and explain information provided in English to them in Mandarin, but it does not follow from this that they were ignorant as to what was going on or were under Richie’s influence, so as to enter into transactions without independent understanding or consideration. I do accept, however, the parents’ submission to the effect that Mr Green’s communications were often expressed in terms which even native English speakers would require experience and commercial knowledge to understand fully.

196. In that latter regard, I was satisfied on the evidence that Ms Zhuang and Mr Wang had, despite their lack of proficiency in English, substantial commercial knowledge and understanding. They were both the directors of Everest and Harvestone as well as other companies. The evidence also established that neither Ms Zhuang nor Mr Wang were, because of their age or retired status or otherwise, under the influence of Richie. Rather, they relevantly instructed Richie what to do; as Ms Zhuang phrased it, “[s]o basically I tell Richie what my instructions are and he would follow”. [23] They were both well aware of their borrowings and the effect of interest rates on their financial position and they had an appreciation of the value of the Vaucluse property relative to the amount they owed, their obligations to repay loans made to them and the consequences which might follow if they defaulted in repayment of their loans or related obligations. They both had considerable time and, I infer, experience as directors of companies. Further, although Mr Green’s letters were in some cases quite long and complex, I was satisfied that Richie kept Ms Zhuang and Mr Wang sufficiently informed of their contents that they were not misled as to, inter alia, the nature or effect of the relevant transactions, their obligations and the consequences of non-compliance with their obligations. This was confirmed by the fact that Mr Green’s letters often, if not invariably, invited Ms Zhuang and Mr Wang to raise with him any queries or issues they may have and it does not appear that they ever did so.

197. In these circumstances and based on the written submissions quoted above, for the purposes of considering the unconscionability or unjustness of the CPF loan and mortgage, Mr Green’s relevant knowledge said to be attributed to CPF was that Ms Zhuang and Mr Wang were elderly, retired persons with no capacity to repay the CPF loan, who had not received independent advice (including advice independently from Richie) and who would be better off if they allowed ALS to take possession of the Vaucluse property and sell it to repay the ALS loan and mortgage.

“(a) The Facility provided pursuant to the Deed of Loan, the repayment of which is secured by this Mortgage, is a Facility provided by the Mortgagee to the Borrower for the purpose of the Borrower repaying a debt owed to ALS428 Pty Ltd pursuant to an agreement by which ALS428 Pty Ltd lent money to the Borrower, the repayment of which money was guaranteed by the Guarantors and the property mortgaged in favour of ALS428 Pty Ltd as security for such repayment to ALS428 Pty Ltd;

(b) Each of the Borrower and the Mortgagor have received from ALS428 Pty Ltd notice of default in response to their failure to comply with a loan agreement entered into with ALS428 Pty Ltd and neither the Borrower nor the Mortgagor have any present financial capacity to repay ALS 428 Pty Ltd other than from funds raise pursuant to the Mortgagor having agreed to sell the property charged by this Mortgage; and

(c) Each of the Borrower and the Mortgagor have entered into the Deed of Loan with the Mortgagee and the Mortgagor has charged the Property by this Mortgage as security for repayment of the Secured Money on the basis that the Deed of Loan provides the Borrower and the Mortgagor with an interim facility to enable the Mortgagor to procure the sale of the Property without incurring the Forbearance Fee demanded by ALS428 Pty Ltd as a precondition to refrain from exercising powers in default under the existing Loan Agreement between the Borrower and ALS428 Pty Ltd at a rate of 16.02%, as demanded by ALS428 Ltd as at date of the Deed of Loan.”

201. These circumstances and CPF’s knowledge of them means that the fact that Ms Zhuang and Mr Wang were elderly and retired did not support to any significant extent the conclusion that CPF’s conduct in relation to Ms Zhuang’s and Mr Wang’s entry into the CPF loan and mortgage was in any way unconscionable or unjust in any relevant sense. It was never intended that Ms Zhuang and Mr Wang, or Everest or Richie, should repay the CPF loan otherwise than through the sale of the Vaucluse property. Ms Zhuang’s and Mr Wang’s lack of earning capacity because of age and retired status was irrelevant to that matter. Similarly, it is not correct to say that they lacked the capacity to repay the loan when the sale of the Vaucluse property was the accepted means of repayment. Indeed, the purpose of the CPF loan and mortgage was to allow Ms Zhuang and Mr Wang the breathing space to manage that sale themselves rather than have the property sold by a mortgagee in possession. In addition, if the CPF loan and mortgage were not entered into, Ms Zhuang and Mr Wang had only two realistic alternatives as guarantors and mortgagors under the ALS loan and mortgage, namely, either entering into the proposed forbearance agreement with ALS or allowing ALS to take control of the sale of the Vaucluse property as a result of ALS obtaining judgment for possession and costs. There is nothing in all these circumstances which would take CPF’s entry into the CPF loan and mortgage so far outside societal norms of acceptable commercial behaviour as to warrant condemnation of CPF’s conduct in entering into that transaction as offensive to conscience.

202. Secondly, at the time the CPF loan and mortgage were entered into, it was not the case that Ms Zhuang and Mr Wang would have been better off if they entered into the proposed ALS forbearance agreement or allowed ALS to take possession of the Vaucluse property and sell it to repay the ALS loan and mortgage. Some of the advantages for Ms Zhuang and Mr Wang in entering into the CPF loan and mortgage in order to refinance the ALS loan and mortgage are evident from the terms of the CPF loan deed, the security deed, the mortgage and the supplemental deed of variation compared to the ALS loan and mortgage and the forbearance agreement proposed by ALS. Those advantages included that:

203. entering into the CPF loan and mortgage allowed Ms Zhuang and Mr Wang to avoid:

(a) a judgment for possession of the Vaucluse property in favour of ALS and a mortgagee sale of that property, which they did not want; or, alternatively, (b) entering into the forbearance agreement proposed by ALS.

2. the establishment and management fee payable in respect of the CPF loan and mortgage were significantly lower than the Forbearance Fee of nearly $300,000 that ALS demanded as part of the proposed forbearance agreement;

3. even the higher interest rate under the CPF loan and mortgage was less than the rate of 16.02% demanded by ALS as part of the proposed forbearance agreement;

4. under the CPF loan and mortgage they would have the benefit of the specified lower rate of interest which would be allowed to be capitalised for the term of the loan provided that they entered into a contract to sell the Vaucluse property within about three months; and

5. if they entered into the CPF loan and mortgage, they would obtain for the term of the loan control of the marketing and sale of the Vaucluse property rather than that being the responsibility of ALS as mortgagee in possession.

6. Consequently, the CPF loan and mortgage was not so disadvantageous to Ms Zhuang and Mr Wang that this bespoke unconscionability or unjustness in the relevant senses. The evidence indicated that although Richie, on behalf of Ms Zhuang and Mr Wang, had tried to find another lender to refinance the ALS loan and mortgage, they were unsuccessful and they could not obtain equivalent financial services from a financier other than CPF. Nor did the evidence suggest that any unfair tactics were used against them in order to have them sign the documentation for the CPF loan and mortgage.

7. Thirdly, the evidence viewed as a whole did not establish to the requisite standard that Ms Zhuang’s and Mr Wang’s age and retired status, lack of capacity to repay from their own labour or any other circumstance affecting them meant that they had limited commercial knowledge or understanding and little involvement in Everest’s business affairs or those of Harvestone. As noted above, the evidence concerning Ms Zhuang’s and Mr Wang’s previous commercial dealings and the genesis of the borrowings which were refinanced by ALS and ultimately by CPF was exiguous and, such as it was, suggested that Ms Zhuang and Mr Wang were directors of a number of companies at relevant times and not lacking in commercial understanding or experience. In addition, I have found that Richie did translate the relevant letters and documents for his parents or provide them with the substance of those letters and documents to them in Mandarin. Thus, there was no basis for concluding that they were not able to understand the documentation for the CPF loan and mortgage or the advice given in relation to it. Nor, for the reasons given above, was there a proper basis for concluding that any undue influence or pressure was exerted on them by Richie or CPF or Mr Green. Rather Richie relevantly acted on their instructions.

8. While it was in effect contended that Richie’s interests did not align or were contrary to those of his parents, there was no explanation proffered as to the particular circumstances which might support this submission. Nor was it a matter about which Ms Zhuang or Mr Wang gave evidence. I was not satisfied on the evidence as a whole that there was a material misalignment between Richie’s interests and those of his parents.

“(i) actively market for sale [the Vaucluse property]; and

(ii) cause the listing estate agent retained by the Mortgagor to sell [the Vaucluse property] to provide a monthly report to the Financier detailing particulars of inspections of the property and any offers made to purchase the property.”

210. This conclusion as to the advantageous and beneficial nature of the CPF loan and mortgage from the perspective of Ms Zhuang and Mr Wang was reinforced by cl 8(b) of the supplemental deed of variation which was:

“The Borrower and the Guarantors for the benefit of the Financier acknowledge that the Facility provided to enable the Supreme Court Proceedings to be terminated and the debt to ALS428 Pty Ltd repaid and so provided on terms which allow interest to be capitalised for a period which enables the marketing for sale of [the Vaucluse property] provides a material financial benefit to the Borrower and the Guarantors.”

211. These terms and conditions to which Ms Zhuang and Mr Wang agreed to be bound as well as the other specific provisions relating to repayment, interest and security, especially given the short term and purpose of the loan were reasonably necessary for the protection of the reasonable interests of CPF and, in any event, were not harsh or oppressive as against Ms Zhuang and Mr Wang in all the circumstances.

212. Fifthly, to the extent that Ms Zhuang and Mr Wang rely on the contentions that the CPF loan and mortgage are unconscionable or unjust because, if they had received independent advice, they would not have entered into the CPF loan and mortgage and the Vaucluse property would have been sold by ALS and they would have preserved some equity with which to purchase another domicile, I do not accept those contentions.

213. I am satisfied that, if Ms Zhuang and Mr Wang had been informed of Mr Green’s breach of fiduciary duty as a result of his conflict of duties and, as a result, sought and obtained independent legal, or even financial, advice, they would not have received advice materially different from that provided by Mr Green in relation to the CPF loan and mortgage, which has been set out above in some detail. This was because, if they wished to control the sale of the Vaucluse property themselves rather than there being a mortgagee in possession sale, as was the case, the CPF loan and mortgage was the more advantageous, practically available means of doing do so. To the contrary, however, Mr Kabilafkas submitted in effect that Ms Zhuang and Mr Wang should and would have been advised, by an independent legal or financial adviser, in effect: [25]

“‘Stop.’ Every month that passes, you are accumulating substantial amounts of interest, and these refinances are costing you additional fees. You haven’t given me any evidence that you have an ability to repay these loans. What you need to do is to simply have this property sold and preserve your equity. …”

214. It was accepted in submissions that this amounted to being advised that they should give up and not oppose ALS obtaining an order for possession in the proceedings brought in this Court by ALS.

215. I do not accept that, if Ms Zhuang and Mr Wang had sought and obtained independent legal or financial advice, they would have been advised as Mr Kabilafkas submitted. His contention was not supported by any expert evidence from a solicitor or financial adviser that such advice would actually have been given in all the circumstances. As a consequence, that contention could not be tested in cross examination of such a witness.

216. In addition, such advice would not make commercial or legal sense in the particular circumstances of the present case:

217. given Ms Zhuang’s and Mr Wang’s motivation for entering into the CPF loan and mortgage, which was reflected in the obligation in cl 9.1(c)(i) of the supplemental deed of variation to “actively market for sale [the Vaucluse property]” and which was to obtain some short term breathing space to allow them to sell the Vaucluse property with a view to obtaining a better price than if the property was offered for sale by way of a mortgagee sale; and

218. given that the only other option to avoid a mortgagee sale as a result of ALS obtaining possession of the Vaucluse property, apart from the CPF loan and mortgage, was the proposed forbearance agreement offered by ALS which would involve higher fees and a higher interest rate than the CPF loan and mortgage.

219. The submissions on behalf of Ms Zhuang and Mr Wang did not identify anything in the particular drafting of the documentation for the CPF loan and mortgage or any of the specific terms which were said to be harsh or oppressive in the circumstances or which would have led an independent legal or financial adviser to have advised Ms Zhuang and Mr Wang not to enter into the CPF loan and mortgage, if they wished to have the opportunity to manage the sale of the Vaucluse property themselves, as they proposed. The provisions of the CPF loan and mortgage were not, given Ms Zhuang and Mr Wang’s motivation to seek breathing space to allow them to sell the Vaucluse property themselves, unreasonably difficult for them to comply with.

220. In all the circumstances and given their motivation, I was not prepared to infer that advice to “stop” and allow ALS to sell as mortgagee in possession would have been given to Ms Zhuang and Mr Wang, if they had sought independent advice as a result of being informed of Mr Green’s breach of fiduciary duty by his acting for both sides in the CPF transaction without informed consent and by his involvement with VAPL in assisting to administer the funds. Furthermore, even if such “stop” advice had been given, I do not accept that the evidence established that Ms Zhuang and Mr Wang would have acted on it. Their previous conduct referred to in Mr Green’s letter of 17 November 2022, quoted above at [62], and their conduct in entering into the Harvestone transaction and their entering into the Pronto loan and mortgage, were all consistent with a willingness on Ms Zhuang’s and Mr Wang’s part to take on onerous terms and conditions in order to obtain urgently needed funds. It was not suggested that in any of those transactions, Ms Zhuang and Mr Wang did not appreciate what they were doing or why.

“applying the same principle stated in In re Hampshire Land Company [[1896] 2 Ch 743 at 749] to a solicitor, the state of mind of the solicitor, including his or her knowledge, will only be attributed to a client if the knowledge were obtained in the course of acting for that client and within the scope of his or her authority from that client, and where there was a duty to communicate the knowledge to the client.”

223. It did not appear to me that Mr Green’s informal retainer by CPF involved a duty on his part to communicate relevant knowledge he obtained concerning Ms Zhuang and Mr Wang and any other circumstances relevant to their unconscionability and unjust contract claims to CPF. Thus, Mr Green’s knowledge, as relied on by Ms Zhuang and Mr Wang, would not be attributed to CPF. In addition, attribution of knowledge under s 12GH(1) was relied on.

224. Section 12GH(1) of the ASIC Act applies “[i]f, in a proceeding … in respect of conduct engaged in by a body corporate, being conduct in relation to which the Division applies, it is necessary to establish the state of mind of the body corporate”. In that situation, the state of mind, and thus knowledge, [26] to be attributed to the body corporate is the state of mind of the “director, employee or agent by whom the conduct was engaged in within the scope of the person’s actual or apparent authority” In this case, the relevant conduct that was the subject of the proceeding is CPF’s entry into the CPF loan and mortgage. The director, employee or agent who engaged in that conduct was, at least, the person who executed the CPF loan and mortgage documentation on behalf of the company and would probably include the persons who decided to have CPF advance the funds, be the nominated mortgagee and enter into the CPF loan and mortgage. On the evidence the relevant decision makers were Mr Reed and his father. Mr Green was not the director, employee or agent of CPF who actually engaged in the relevant conduct of entering into, or deciding to enter into, the CPF loan and mortgage. Nor would that have been within the scope of Mr Green’s actual or apparent authority under his retainer with CPF. In these circumstances, s 12GH(1) does not operate to attribute Mr Green’s knowledge to CPF.

225. As noted above, it was not in dispute that if Mr Green’s knowledge was not to be attributed to CPF, the unconscionability and unjust contracts claims would fail.

226. For all these reasons, I would dismiss Ms Zhuang’s and Mr Wang’s cross claim against CPF. It then follows that Ms Zhuang and Mr Wang have no defence to CPF’s claims in its statement of claim. Furthermore, Everest has not filed a defence to CPF’s claims and Richie relied on Ms Zhuang’s and Mr Wang’s cross claim as the only basis for his defence to CPF’s claims.

227. In those circumstances and in light of my findings and reasons set out above, CPF is entitled to judgment against Everest, Ms Zhuang, Mr Wang and Richie, in their various capacities under the CPF loan and mortgage in the sum of $21,621,915.54, which includes interest at the applicable rate in accordance with the CPF loan and mortgage to 31 March 2026, which is the latest monthly interest accrual date. No post-judgment interest under s 101 of the Civil Procedure Act was sought by CPF.

228. As to costs, there was no reason or factor which in my view would militate against costs following the event and an award of costs being made in CPF’s favour as sought. In addition, CPF’s contractual rights to recover costs and expenses incurred in enforcement of its rights under the CPF loan and mortgage provide sufficient support in the present case for the claims for indemnity costs awards against Ms Zhuang, Mr Wang and Richie, as sought in the statement of claim. CPF also seeks as against the mortgagors, Ms Zhuang and Mr Wang, interest on any costs incurred in enforcement of the CPF loan and mortgage recoverable in these proceedings from the date on which those costs were paid. Given the terms concerning the amount secured by the mortgage which includes costs of enforcement and the compounding of interest on that amount daily, it is appropriate to order interest on costs against the mortgagors compounding daily at the rate of 16%, which is consistent with the relevant provisions of the CPF loan and mortgage.

(a) judgment in the sum of $21,621,915.54, as at 31 March 2026 with interest at the rate applicable under s 101 of the Civil Procedure Act 2005 (NSW) thereafter; and (b) costs on the ordinary basis,

2. against Richie, Ms Zhuang and Mr Wang:

(a) judgment in the sum of $21,621,915.54, as at 31 March 2026 with interest at the rate applicable under s 101 of the Civil Procedure Act 2005 (NSW) thereafter; and (b) costs on an indemnity basis,

3. in addition, against Ms Zhuang and Mr Wang:

(a) an order for possession of the Vaucluse property and for leave to issue a writ of possession; and (b) interest on costs incurred from the date of payment of those costs compounding daily at 16% per annum.

Ms Zhuang and Mr Wang cross claim against Mr Green

Submissions

230. In the event that the Court did not make an order in favour of Ms Zhuang and Mr Wang against CPF setting aside the CPF loan and mortgage, they submitted that Mr Green’s breach of fiduciary duty entitled them to claim equitable compensation for the loss suffered by them as a result of entering into the CPF loan and mortgage. In this regard, it was contended that in the ordinary course Ms Zhuang and Mr Wang would be required to establish that Mr Green’s breach of duty “materially contributed to the fact that their equity in the Vaucluse Road Property has eroded substantially since the ALS428 Loan fell into default such that they may realise nothing from the sale of that property”. [27]

231. Nonetheless, Ms Zhuang and Mr Wang’s ultimate submissions were that:

232. Ms Zhuang and Mr Wang’s evidence that they would not have entered into the CPF had they known of Mr Green’s conflict ought to be accepted; and

233. based on the Privy Council’s decision in Brickenden v London Loan & Savings Co [1934] 3 DLR 465; [1934] UKPC 25 (Brickenden*)*, Mr Green could not contend that that Ms Zhuang and Mr Wang would have proceeded with the CPF loan and mortgage even if he had obtained from them their fully informed consent to act on behalf of CPF.

234. Mr Green submitted that the application of Brickenden for which Ms Zhuang and Mr Wang contended was misconceived when the factual basis for that decision was understood and in light of more recent authorities. In summary, it was submitted that Brickenden does not stand for the proposition for which Ms Zhuang and Mr Wang contend in this case, namely, that wherever a fiduciary does not obtain “fully informed consent”, the fiduciary is “prohibited from contesting causation”. It was also submitted in effect that Ms Zhuang and Mr Wang had not established that they would not have entered into the CPF loan and mortgage if they had known of Mr Green’s conflict.

Consideration

233. As noted above, Mr Green admitted that he breached his fiduciary duty to, inter alios, Ms Zhuang and Mr Wang by failing adequately to disclose to them that he was acting on behalf of CPF and also that he was an officer of VAPL which assisted CPF in the management of the funds to be made available under the CPF loan and mortgage. Ms Zhuang and Mr Wang claimed equitable compensation in respect of the loss caused by Mr Green’s breach and in respect of disgorgement of profits.

234. Equitable compensation seeks to restore a claimant, as close as possible, to the position it would have been in, had no equitable breach occurred: Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [40]-[41] (Gleeson J, Griffiths AJA and Mitchelmore JA agreeing). A causal connection sufficient for the fiduciary to be liable to the equitable remedy of compensation will exist if a loss to the person to whom the fiduciary obligation is owed would not have been sustained but for the breach: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 (Ancient Order) at [88] (Gageler J). Similarly, a causal connection between a fiduciary’s breach of fiduciary obligation and a benefit or gain sufficient for the fiduciary to be liable to the equitable remedy of account will exist if the benefit or gain to the fiduciary or knowing participant would not have been obtained “but for” the breach: Ancient Order at [88].

235. Ms Zhuang and Mr Wang relied on the principle in Brickenden to contend that their claim for equitable compensation should be upheld and Mr Green should not be entitled to rely on a counterfactual position that they would have entered into the CPF loan and mortgage even if there had been no breach of fiduciary duty. In Brickenden, Lord Thankerton, delivering the advice of the Privy Council, stated: [28]

“When a party, holding a fiduciary relationship, commits a breach of his duty by non-disclosure of material facts, which his constituent is entitled to know in connection with the transaction, he cannot be heard to maintain that disclosure would not have altered the decision to proceed with the transaction, because the constituent’s action would be solely determined by some other factor, such as the valuation by another party of the property proposed to be mortgaged. Once the Court has determined that the non-disclosed facts were material, speculation as to what course the constituent, on disclosure, would have taken is not relevant.”

236. The operation of the principle depended upon a threshold finding that the non-disclosed information was material, in that the information which the solicitor was obliged to disclose was the very information upon which the third party had to act. The facts of Brickenden have been noted by the Court of Appeal in Beach Petroleum NL v Kennedy (1998) 48 NSWLR 1; [1999] NSWCA 408 (Beach Petroleum) at [436] and [442]-[444]. In brief summary, Brickenden concerned a solicitor acting for both mortgagor and mortgagee while having undisclosed personal interests in prior mortgages over the same property which were to be discharged as a result of the transaction. Those interests were found to be material, and the fiduciary was not permitted to contend that disclosure would have made no difference to the lender’s decision. As White J explained in Short v Crawley (No 30) [2007] NSWSC 1322 (Short) at [410]:

“In Brickenden, the relevant breach ought to have been categorised as the solicitor acting on the transaction where there was a conflict, or possible conflict, between his duty to the lender and his personal interest in being paid out of the proceeds of the loan. The materiality of the disclosure of those facts was that had the lender known of them, then it may have given its informed consent to the solicitor so acting so as to negate what was otherwise a breach of fiduciary duty (Maguire v Makaronis at 466-467). The effect of the decision was to preclude the solicitor from contending and endeavouring to prove that there was no causal relationship between the breach of fiduciary duty and the making of the loan.”

237. It is important to note that Brickenden is not authority for the general proposition that in no case involving breach of fiduciary duty may the Court consider what would have happened if the duty had been performed: Beach Petroleum at [444]. In this regard, there is no equitable by-pass of the need to establish causation: Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [44] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).

238. In Mao v Bao (2023) 113 NSWLR 26; [2023] NSWCA 278 (Mao) Ward ACJ (with whom White and Mitchelmore JJA agreed) said at [175]:

“That Brickenden stands for a relatively narrow principle is important. I consider that it is not authority for a general principle that a defaulting trustee may not point to counterfactuals as a defence to causation, rather, confined to its facts, Brickenden is authority for the much narrower principle that a defaulting fiduciary, in circumstances where proper disclosure has not been made, is prohibited from contesting causation on the basis that the principal would have gone ahead with the transaction even if disclosure had been made (see White v Illawarra at [144]-[145] per Hodgson JA).” (emphasis added)

239. The facts in the present case are materially different from those in Brickenden in that Mr Green did not have any interest in the ALS loan or mortgage which were to be discharged through the refinancing by way of the CPF loan and mortgage. In addition, Ward ACJ continued in Mao at [176]-[177]:

“176. Thus, assuming for the purpose of the present argument that the Brickenden principle remains presently applicable at all, the context in which it is applied should in my opinion be confined to cases where a defaulting trustee is required to account for breach of fiduciary duty such as that comprised by the unauthorised disbursement of trust assets (so as to permit the conclusion that the loss was sustained when the unauthorised disbursement occurs without reference to subsequent events). However, the present question relates not to whether there was a loss when Mr Mao failed to account for the proceeds of sale of the Vaucluse Property (a matter that seems to be accepted insofar as there is no challenge to the liability to account) but, rather, as to whether the claim for that loss has a sufficient connection with the countervailing claim for repayment of the distinct transaction by which the ¥11 million loan was made.

177. I do not consider that the Brickenden principle, if applicable, precludes Mr Mao from arguing (in support of his contention that the failure to account did not cause or contribute to the loan claim and was not relevantly interdependent with that claim) that there was no evidence to establish the counterfactual posited by Mr Bao (namely that, had Mr Mao accounted for the sale proceeds in 2014, a set-off arrangement would have been agreed at that time and therefore interest would not have continued to accrue under the loan agreement). In other words, I consider that there is force to the argument that the Brickenden principle would apply only to the question of causation of loss for breach of fiduciary duty if that question arises consistently with the reasoning in Youyang and that it is not applicable by analogy to the question whether there is a sufficient connection between the respective claims for the purpose of the doctrine of equitable set-off.”

240. In Short, White J also observed at [413] and [428]:

“413. It is one thing to say, on a claim against a fiduciary to account for profits derived on a transaction entered into in breach of fiduciary duty or to rescind such a transaction, the fiduciary cannot be heard to maintain that the transaction would have proceeded even if the facts giving rise to the breach had been disclosed. It is quite another to say that the fiduciary is liable to compensate the principal for the loss suffered from the transaction even if the loss would have been suffered had no breach of duty occurred.

…

428. Authority which binds me establishes that the plaintiffs must establish that, but for the breach of fiduciary duty, the losses would not have been incurred.”

241. Recently, Faulkner J considered the application of the principle in Brickenden in a somewhat similar situation to the present in Tekin v Stratford [2025] NSWSC 541. In that case at [273], his Honour said:

“In his closing submissions Mr Tekin refered to Brickenden v London Loan & Savings Co [1934] 3 DLR 465 as authority for the proposition that it is not open to the Firm to assert that Mr Tekin would have gone ahead with the refinance from Balmain NB in any event. In a case such as this where equitable compensation is sought for loss said to have been caused by a breach of fiduciary duty constituted by advice given (or not given) about selling the Land, Brickenden does not require a departure from the principles stated by the High Court in Youyang v MinterEllison; Mao v Bao [2023] NSWCA 298 at [175]-[177] (Ward ACJ, with whom White and Mitchelmore JJA agreed). It is still necessary for Mr Tekin to prove an adequate or sufficient connection between the advice given (or not given) by the Firm and the claimed equitable compensation. Mr Tekin pleads the counterfactual that he ‘could and would have sold the Property to a third party’. He must make good that allegation. For the reasons given above he has not done so.”

242. The Court of Appeal dismissed an appeal from this decision: Tekin v Stratford [2026] NSWCA 54 holding at [87]-[89]:

“87. In the present case, there was no credible evidence that Mr Tekin was prepared to “meet the market” by selling the land for less than $10 million. To the contrary, the evidence established, as the primary judge found, that Mr Tekin was intent on retaining the land in order to capitalise on the potential re-zoning, as evident from the interim finance he obtained to permit him to do so. Further, as the experts’ opinions of the value of the land indicated, the market value of the land increased considerably between February 2015 to September 2016. Mr Tekin was not one to abandon an opportunity for a greater gain, which may explain why he retained the land for as long as he did and, indeed, forewent the opportunity of selling it himself as his default entitled Balmain NB to sell it as secured creditor. The causal potency of the firm’s breaches was, in these circumstances, zero, since even had the firm expressly told him that he was free to sell, Mr Tekin would not have sold, and did not lose a valuable opportunity to sell, the land until after 5 July 2016 in any event. The proposition advanced by Ms Bampton – that Mr Tekin would have “met the market” – is redolent with hindsight reasoning and has not been made out.

88. Nor does a different result ensue if the matter is analysed by reference to equitable principles of breach of fiduciary duty rather than negligence. In a case such as the present, where the principal allegation is a failure to advise, Mr Tekin still bore the onus of proving that his losses were, on a common sense view of causation, caused by the breach: see the discussion of the authorities in Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232 at [135]-[145] (Stern JA). As was said in Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [44] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ), quoting Mummery LJ, “[t]here is no equitable by-pass of the need to establish causation”.

89. The position is no different with respect to the firm’s alleged failure to advise Mr Tekin to seek independent advice. Ms Bampton’s submission that, had Mr Tekin sought independent advice, he would have been told that he was at liberty to sell the land does not result in an entitlement to damages. For the reasons given by the primary judge, Mr Tekin would not have sold, and did not lose a valuable opportunity to sell, the land during the relevant period because he was not prepared to sell it for less than $10 million as his expectations as to potential gain exceeded the land’s market value as established by the evidence.”

243. Thus, in my view in order for Ms Zhuang and Mr Wang to be successful in claiming equitable compensation in the present case, it was necessary for them to establish on the evidence that loss has actually been suffered by them as a result of the breach of fiduciary duty. [29]

244. As to the factual question of causation of loss to Ms Zhuang and Mr Wang or benefit to Mr Green, the present case depended on whether Ms Zhuang and Mr Wang would not have entered into the CPF loan and mortgage had they known of Mr Green’s conflict. In the present case, Ms Zhuang and Mr Wang expressly pleaded that:

“If [they] had been aware of the Undisclosed Conflict pleaded in paragraph 8 hereof, [they] would never have executed the [CPF loan deed, security deed, mortgage or supplemental deed of variation]”.

245. In this regard, it can be noted that their evidence was not precisely to that effect.

246. Ms Zhuang’s evidence was:

“23. Had I known that Mark was also acting for the lender, I would not have relied on his advice. I would have sought independent legal advice from a different lawyer who could properly advise me and protect my interests. I would not have signed the finance documents and contracts that he showed me.

24. Further, had I understood the nature of Mark’s dual role or any potential conflict of interest, I would have made alternative inquiries about refinancing options to ensure that I was entering into a fair and reasonable financial arrangement. I would not have made a deal with this lender but with another lender who I had been introduced to by independent advice.”

2. Mr Wang’s evidence was:

“25. If I had known Mark was also acting for the lender, I would not have signed the documents he showed me and I would not have agreed to enter into the agreement with CPF. I would have sought independent legal advice from another lawyer.”

246. Both Ms Zhuang’s and Mr Wang’s evidence was effectively confined to what they would have done initially if they had been told of Mr Green’s conflict of interest. In that situation, they both said in effect that they would have sought independent legal advice and at least would not have signed the documentation until that had been obtained. It does not follow from this that they would not have entered into the CPF loan and mortgage after they received such independent legal advice. Given the circumstances outlined in detail above, the relatively advantageous terms of the CPF loan and mortgage documentation compared to the proposed ALS forbearance agreement and their motivation to gain some breathing space to allow them to control the sale of the Vaucluse property themselves rather than having a mortgagee sale, I am comfortably satisfied that, if they had received independent legal advice, it would not have been materially different from that provided by Mr Green and, after receiving that advice, Ms Zhuang and Mr Wang would then have signed the CPF loan and mortgage documentation in order to refinance the ALS loan and mortgage and obtain the breathing space they wanted. Thus, their claim fails at the factual level.

247. This conclusion is confirmed by a consideration of the fact that Ms Zhuang and Mr Wang entered into the Harvestone refinancing transaction when they were aware that the lender was VAPL, a company associated with Mr Green and his firm, when Mr Green was acting on both sides of the transaction and did not seek, or did not consider it appropriate to obtain, independent legal advice in that case. On this basis and given all the relevant circumstances, I inferred that even if Ms Zhuang and Mr Wang had been properly informed of Mr Green’s involvement with VAPL and his acting for CPF as well as themselves in relation to the CPF loan and mortgage, they would still have been prepared to sign the documentation as they did for the Harvestone transaction, without seeking independent legal advice, in light of the more advantageous terms and the breathing space to sell the Vaucluse property themselves, both of which I am satisfied they clearly understood and wanted to obtain.

248. In addition, such evidence as to what parties believe they would have done if they had been informed of certain matters is often found to be unreliable because of the natural human tendency to believe that one would not have taken certain action if an undesired outcome which came to pass could have been avoided thereby when that action would actually have been taken at the relevant time.

249. Moreover, the evidence established that there was no other viable refinancing option available to Ms Zhuang, Mr Wang or Richie at the relevant times and that was the reason why Richie reached out to Mr Green to seek his support. The principal support sought was not that Mr Green should act as their solicitor but that he should find a funder to refinance the ALS loan and mortgage for them. Mr Green’s acting for them on that refinancing transaction was likely to have been considered a matter of convenience for them and I am satisfied on the balance of probabilities that they were not concerned whether Mr Green also acted for the lender, as similarly they had not been concerned that Mr Green acted for both them and the lender in relation to the Harvestone transaction.

“The objects of this Act are as follows:

(a) to enable the creation of schemes to limit the civil liability of professionals and others,

(b) to facilitate the improvement of occupational standards of professionals and others,

(c) to protect the consumers of the services provided by professionals and others,

(d) to constitute the Professional Standards Council to supervise the preparation and application of schemes and to assist in the improvement of occupational standards and protection of consumers.”

262. Section 21 of the Professional Standards Act provides:

“21 Limitation of liability by insurance arrangements

A scheme may provide that if a person to whom the scheme applies and against whom a proceeding relating to occupational liability is brought is able to satisfy the court that:

(a) the person has the benefit of an insurance policy insuring the person against the occupational liability to which the cause of action relates, and

(b) the amount payable under the policy in respect of that occupational liability is not less than the amount of the monetary ceiling specified in the scheme in relation to the class of person and the kind of work to which the cause of action relates,

the person is not liable in damages in relation to that cause of action above the amount of that monetary ceiling.”

263. Section 26 relevantly provides:

“26 Liability that cannot be limited by a scheme

(1) A scheme can only affect the liability for damages arising from a single cause of action to the extent to which the liability results in damages exceeding such amount (but not less than $500,000) as is determined for the purposes of the scheme by the Council and specified in the scheme.

…”.

264. Section 28 of the Act is in the following terms:

“28 Limit of occupational liability by schemes

(1) To the extent provided by this Act and the provisions of the scheme, a scheme limits the occupational liability, in respect of a cause of action founded on an act or omission occurring during the period when the scheme is in force, of any person to whom the scheme applied at the time when the act or omission occurred.

(2) The applicable limitation of liability is the limitation specified by the scheme as in force at the time at which the act or omission giving rise to the cause of action concerned occurred.

(3) A limitation of liability that, in accordance with this section, applies in respect of an act or omission continues to apply to every cause of action founded on it, irrespective of when the cause arises or proceedings are instituted in respect of it, and even if the scheme has been amended or has, in accordance with section 32, ceased to be in force.

(4) A person to whom a scheme applies cannot choose not to be subject to the scheme, except in accordance with provisions included in the scheme under section 17 (2).”

265. Section 29 provides:

“29 Limitation of amount of damages

(1) Limitation imposed on single claims A limitation imposed by a scheme in force under this Act of an amount of damages is a limitation of the amount of damages that may be awarded for a single claim and is not a limitation of the amount of damages that may be awarded for all claims arising out of a single event.

(2) No splitting of plaintiffs Claims by a number of persons who have a joint interest in a cause of action are to be treated as a single claim for the purposes of this Act despite the fact that they may also have several interests.

(3) No splitting of defendants Two or more claims by the same person arising out of a single event against persons to whom a scheme in force under this Act applies and who are associated are to be treated as a single claim for the purposes of this Act.

(4) Associated defendants Persons are associated if they are:

(a) partners, employees of the same employer or in the relationship of employer and employee, or

(a1) officers of the same body corporate or in the relationship of body corporate and officer of the body corporate (with officer having the same meaning as in section 18), or

(b) persons who are prescribed by the regulations for the purposes of this subsection.”

266. The operation of the scheme has recently been summarised by Peden J in GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd [2025] NSWSC 975 as follows, at [483]:

“The Scheme limits the civil liability (arising in tort, contract or otherwise) of a participating member for damages arising from a single cause of action founded on an act or omission in relation to the provision of legal services to the extent that those damages exceed a monetary ceiling specified in clause 4.4: see clause 4.1 of the Scheme; s 28 PSA. By dint of s 5(1) PSA, the Scheme does not operate to limit liability for damages arising from “a breach of trust” or “fraud or dishonesty”. If a member of the scheme is able to satisfy the Court that they have the benefit of an insurance policy insuring them against the liability to which the cause of action relates, and the amount payable under that policy is not less than the amount of the monetary ceiling, then the member is “not liable for damages in relation to that cause of action above the amount of that monetary ceiling”: clause 4.2. Damages are defined in s 4(1) to include costs and interests on damages or costs.”

267. The only substantive issue between the parties in relation to the scheme was whether it applied to Mr Green and his partners in the present case. This turned on whether Ms Zhuang and Mr Wang were claiming “damages” as a result of Mr Green having engaged in a “breach of trust”. If so, by virtue of s 5(1)(c) of the Professional Standards Act, that Act and therefore the scheme would not apply. Section 5(1) provides as follows:

“5 Occupational liability to which Act does not apply

(1) This Act does not apply to liability for damages arising from any of the following:

(a) the death of or personal injury to a person,

(b) (Repealed)

(c) a breach of trust,

(d) fraud or dishonesty.”

268. In s 4(1) of the Professional Standards Act, “damages” is defined as meaning:

“(a) damages awarded in respect of a claim or counter-claim or claim by way of set-off, and

(b) costs in or in relation to the proceedings ordered to be paid in connection with such an award (other than costs incurred in enforcing a judgment or incurred on an appeal made by a defendant), and

(c) any interest payable on the amount of those damages or costs.”

269. Recently, Jackman J considered the issue of whether “damages” in the Professional Standards Act should be construed broadly to include equitable compensation in DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16 (DC Rd). At [442], his Honour held:

“Damages are not defined by the PS Act or the Scheme. The object of the PS Act is, among other things, to enable the creation of schemes “to limit the civil liability of professionals”: s 3(a) of the PS Act. The term “occupational liability” means “civil liability arising (in tort, contract or otherwise) directly or vicariously from anything done or omitted by a member of an occupational association acting in the performance of his or her occupation”: s 4(1) of the PS Act. The term “scheme” means “a scheme for limiting the occupational liability of members of an occupational association”: s 4(1) of the PS Act. Section 5(1)(c) of the PS Act provides relevantly that the Act does not apply to “liability for damages arising from … a breach of trust”. As the Bob Parties submit, s 5(1)(c) provides a strong indication that the word “damages” was intended to extend beyond common law damages. As Brownie J said in Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 at 215–6, while it is not correct to speak of awarding “damages” for breach of trust, it is a convenient shorthand expression and a succession of statutes have spoken of damages for breach of trust in the past; thus using the word “damages” is apt to extend to equitable relief. In my view, the term “damages” for the purposes of the PS Act and the PSA Scheme means broadly monetary compensation for loss, whether that be common law damages, equitable compensation, other pecuniary relief of a compensatory nature (whether in equity or at common law), or statutory compensation. ...”

270. I understand his Honour’s first sentence in [442] to refer to the fact that the definition of “damages” in s 4(1) of the Professional Standards Act does not provide a definition which delimits the denotation of that term but in par (a) of the definition effective leaves “damages” undefined except that they are limited to “damages” that are “awarded in respect of a claim or counter-claim or claim by way of set-off” and by virtue of pars (b) and (c) damages includes costs and interest, which would not normally fall within the description “damages”.

271. After the hearing, it was brought to my attention, with the consent of the parties, that Peden J had also briefly dealt with the issue of “damages” in s 5(1) in Council of the City of Broken Hill v Redenbach Group Pty Ltd trading as Redenbach Legal [2026] NSWSC 262 at [311]-[317] relevantly as follows:

“311. Redenbach Group submitted that it was entitled to an indemnity in relation to the restitution claim and the misleading and deceptive conduct claim either because:

…

2. The Professional Standards Act 1994 (NSW) (Professional Standards Act).

312. I reject those arguments for the following reasons.

…

314. Secondly, the Professional Standards Scheme only applies to certain “occupational liability” claims for “damages”. It does not include claims arising from a breach of trust (see Professional Standards Act, ss 4 and 5).

315. Council’s claims in relation to the uplift fees paid seek to enforce Redenbach Group’s obligations as trustee (and those of Mr Redenbach and Broken Hill Legal as constructive trustees) or arise from breach of trust and fiduciary duty. They are also claims for recovery of the statutory debt created by the LPUL. They are not claims for “damages” within the meaning of the Professional Standards Act.

316. Council’s claims in respect of the overcharging are based on restitution and equity. They are not “damages” claims. Council’s only claim potentially the subject of the Professional Standards Scheme is that in respect of misleading or deceptive conduct, but it is unaffected as it for less than $1.5 million.

317. Therefore, there is no defence based on an indemnity that reduces Redenbach Group’s liability to Council as I have found it.”

272. It does not appear that Jackman J’s decision delivered about a month earlier was brought to her Honour’s attention. Without the benefit of Peden J’s detailed consideration of the matters raised by Jackman J, I respectfully agree with the reasoning of, and the conclusion reached, by his Honour.

273. In my view, there is much to recommend Jackman J’s conclusion that “damages” for the purposes of the Professional Standards Act should be construed broadly as referring to monetary compensation for loss, including common law damages, equitable compensation or other pecuniary relief of a compensatory nature. This construction appears to me to be one which promotes the objects of the Act, especially those in pars (a), (b) and (c) of s 3. The use of “damages” in the chapeau to s 5(1) indicates that the Parliament intended “damages” to include a remedy involving monetary compensation for, inter alia, a breach of trust. The construction is also consistent with the way in which “damages” is used, and the purpose for which it is used, in provisions such as ss 21, 22, 23, 26 and 29 of the Act. Accordingly, I accept that “damages” for the purposes of the Professional Standards Act means monetary compensation for loss, whether that be common law damages, equitable compensation or other pecuniary relief of a compensatory nature, notwithstanding the use of “cause of action” in some relevant provisions.

274. The expression “breach of trust” in s 5(1)(c) is not defined in the Professional Standards Act. As the issue has been raised in the present case, the question can be framed as whether a “breach of trust” in this context includes any breach of fiduciary duty.

275. It is often appropriate to draw a distinction between a breach of trust and a breach of fiduciary duty, especially in the context of claims arising out of the professional relationship between a solicitor and client. [30] In Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23, Brennan CJ, Gaudron, McHugh and Gummow JJ observed at [31]:

“The claims which, from the relationship of solicitor and client, may arise in favour of the client include claims founded in contract, tort, and for breach of fiduciary duty. In so far as the solicitor has held moneys or other property on trust for the client there may be an allegation of breach of trust….”.

276. Their Honours also noted at [63] and [66]:

“Several matters appropriately will be taken into account when there falls for consideration, in an action against a fiduciary arising other than out of breach of trust, the criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty. First, breach of trust cases present particular characteristics. Whilst the trustee is the archetype of the fiduciary, the trust has distinct characteristics. In particular, where a trust is created by will or settlement in traditional form, the trustee holds title to property on behalf of beneficiaries or for charitable purposes. If the trust be still subsisting, the objective of an action to recover loss upon breach of trust is the restoration of the trust fund. The right of the beneficiaries is to have the trust fund reconstituted and duly administered, rather than to recover a specific sum for the sole use and benefit of any beneficiary. Indeed, no one particular beneficiary may have sustained a present and individual loss. This may be so if the trust is a discretionary trust or no interest vests, either in interest or possession, before the termination of a prior interest.

…

Yet the policy of the law to hold the trustee up to the obligation to perform the trust is strongly manifested in cases where loss is occasioned upon breach arising from conflict between duty and interest. …”. [31] (footnotes omitted)

277. The context in which the expression “breach of trust” occurs in s 5(1) and, in particular, that it is being used as a criterion for excluding a particular type of claim from the operation of the scheme, indicates that the expression should not be given a broad construction so as to include breaches of fiduciary duty not involving a trust relationship. In the case of solicitors, a monetary claim may be based on a breach of contract, negligence and a breach of fiduciary duty arising out of the same factual circumstance not involving a trust relationship. It would be unlikely that the Parliament intended to exclude the claim based on breach of a non-trust based fiduciary duty but not the contractual and tortious claims in such a case.

278. This approach to the construction of “breach of trust” is confirmed by consideration of the Second Reading Speech which contained the following concerning s 5(1): [32]

“As I earlier noted, limitation of liability will not apply in relation to claims for death or personal injury. These claims raise issues of more general application. The scope of limited liability is therefore restricted to liability for financial loss. Liability will also not be limited in relation to a breach of trust or arising from conduct involving fraud or dishonesty. The duty of care arising from a trust relationship imposes greater obligations, and it is not appropriate to limit liability for breach of those obligations. It would not be proper for a person who is personally guilty of fraud or dishonesty to be entitled to any limitation of liability”. (underlining added)

279. Although not expressed with the precision which might be found in a judgment or equity text book, it appears clear that the Parliamentary intention was to limit the exclusion from the operation of a scheme under the Act established by s 5(1)(c) to liability arising out of a breach of an obligation arising from “a trust relationship”, that is a formal relationship in which there is trust property, a trustee and a cestui qui trust and which imposes “greater obligations”. The Second Reading Speech does not support the approach that “breach of trust” should be construed as including any breach of fiduciary duty whether arising out of a trust relationship or otherwise.

280. It was also submitted by Ms Zhuang and Mr Wang that because a “breach of trust” in the context of debts that are not provable in bankruptcy in s 82(2) of the Bankruptcy Act 1966 (Cth) has been held to include a breach of fiduciary duty, a similar construction should be adopted in relation to that same wording in s 5(1)(c) of the Professional Standards Act.

281. Section 82(2) of the Bankruptcy Act provides:

“(2) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.”

282. In Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236; 29 ACLC 11-018, Perram J considered the expression “breach of trust” in s 82(2) and noted the different views in that regard at [116]-[118] as follows:

“116 There is a debate as to the breadth of the expression “breach of trust” in s 82(2). In Re Sharp; Ex parte Tietyans Investments Pty Ltd [1998] FCA 1367 Weinberg J considered whether a claim against a firm of solicitors for, in effect, a breach of fiduciary duty was a claim for a breach of trust within s 82(2). In what Bryson AJ subsequently considered to be an obiter dictum, Weinberg J suggested if the claims made involved “allegations of moral turpitude and breach of fiduciary obligation” then this would suffice to constitute a “breach of trust” within the meaning of s 82(2).

117 In the Supreme Court of New South Wales a different view holds sway. In Auto Group Ltd v England (2008) 6 ABC(NS) 72 Bryson AJ at 76 [11] thought Weinberg J’s conclusion unsupported by the authorities and to “involve a striking departure from the ordinary and natural meaning of ‘breach of trust’”.

118 On the views of Weinberg J the applicants’ claims are provable debts and hence barred by s 229(1); on Bryson AJ’s they are not.”

283. Accordingly, there does not appear to be any definitive determination of the construction of the expression “breach of trust” in the Bankruptcy Act, although if I were required to decide the matter I would adopt the conclusion and reasoning of Bryson AJ in Auto Group Ltd v England [2008] NSWSC 402; 6 ABC(NS) 72 at [8]-[22] and in particular the following:

“22. Many breaches of trust are breaches of fiduciary duty but a breach of fiduciary duty is not necessarily a breach of trust; there is no contextual or other reason for giving “breach of trust” in s 82(2) a meaning other than its ordinary meaning, applicable only where there is an identifiable trust, trustee, equitable owner and trust property. These have no application on the present facts. This brings the excursus to an end: there is no breach of trust, …”.

284. This conclusion provides some, albeit limited, support for the construction of s 5(1)(c) I have put forward above.

285. Having regard to all of these considerations, in my view, “breach of trust” in s 5(1)(c) of the Professional Standards Act should not be construed as including a breach of fiduciary duty arising otherwise than out of a trust relationship involving trust property, a trustee and a cestui qui trust.

286. Consequently, if Mr Green and his partners were liable to pay equitable compensation to Ms Zhuang and Mr Wang in the present case, contrary to my conclusion above, Mr Green and his partners would be entitled to rely on the limitation of liability to $1.5 million provided for by the Law Society of New South Wales Professional Standards Scheme.

CPF’s cross against Mr Green and his partners

287. CPF’s claim against Mr Green and his partners in the second cross claim in these proceedings was contingent on CPF not being entitled to recover the monies owing under the CPF loan and mortgage in full. Since I have concluded that CPF is entitled to recover those monies in full, CPF’s claim against Mr Green and his partners falls away and it is not necessary to determine it.

Conclusion and orders

288. When the orders of the Court were initially announced on 24 April 2026, the parties noted that the judgment sum was mistaken and, by consent, the orders and reasons for judgment were amended to reflect the correct position. In addition, submissions were made in relation to certain aspects of the costs orders and amended costs orders were made, to which the parties had no objection.

289. For all of these reasons and in the circumstances, the orders of the Court were:

290. Judgment for the plaintiff against the first, second, third and fourth defendants in the sum of $21,621,915.54, as at 31 March 2026 with interest at the rate applicable under s 101 of the Civil Procedure Act 2005 (NSW) thereafter.

291. Judgment for the plaintiff against the third and fourth defendants for possession of land contained in certificate of title folio identifier A/403100 known as 7 Vaucluse Road, Vaucluse, New South Wales.

292. The plaintiff has leave to issue a writ of possession in respect of the land referred to in order (2) above.

293. The first defendant is to pay the plaintiff’s costs on the ordinary basis.

294. The second, third and fourth defendants are to pay the plaintiff’s costs, including costs of the First Cross-claim, on an indemnity basis.

295. The third and fourth defendants are to pay interest on the costs incurred by the plaintiff in relation to enforcement of the mortgage dated 25 May 2023 as varied by the supplemental deed of variation dated 14 July 2023 on from the date of payment of those costs, compounding daily at 16% per annum.

296. The First and Second Cross-claimants on the First Cross-claim are to pay to the Second Cross-defendant to the First Cross-claim’s costs of that cross-claim on the ordinary basis.

297. There is no order as to costs in respect of the Second Cross-claim.

298. Otherwise, all claims and cross-claims are dismissed.

**********

Endnotes

Tcpt, 17 March 2026, pp 177(41)-178(17).

Tcpt, 17 March 2026, pp 174(31)-175(25).

Tcpt, 17 March 2026, pp 182(34)-183(18).

Tcpt, 17 March 2026, pp 181(49)-182(9).

See for example Tcpt, 18 March 2026, pp 207(18)-208(23).

Including in particular, Tcpt, 18 March 2026, p 217(31)-(34).

See for example, Tcpt, 17 March 2026, p 185(33)-(35), Tcpt, 19 March 2026, pp 264(26)-265(37) and p 266(17)-(20).

Tcpt, 18 March 2026, pp 200(43)-201(11).

See for example Tcpt, 19 March 2026, pp 273(20)-275(11).

Tcpt, 19 March 2026, p 264(18)-(28).

Tcpt, 19 March 2026, pp 266(17)-267(27).

Tcpt, 19 March 2026, p 282(21)-(46).

Tcpt, 19 March 2026, p 269(31)–(49).

Clause 7 also potentially applied to the payment of interest but was not relevant in the present case since no interest was paid in accordance with cl 7.1.

Tcpt, 18 March 2026, pp 218(35)-219(16).

Tcpt, 18 March 2026, p 219(34)-219(40).

Tcpt, 18 March 2026, pp 219(46)-220(30).

Tcpt, 18 March 2026, p 233(8)-(34).

Third and Fourth Defendant’s written closing submissions, dated 20 March 2026, par 20. During oral submissions, counsel for Ms Zhuang and Mr Wang confirmed that they no longer relied on s 12CA of the ASIC Act or s 20 of the ACL: Tcpt, 20 March 2026, p 372(5)-(27).

Tcpt, 20 March 2026, pp 371(50)-372(1).

Tcpt, 17 March 2026, p 114(38)-(40).

Third and fourth defendant’s closing submissions, dated 20 March 2026, pars 21 and 22.

Tcpt, 19 March 2026, p 264(18)-(19).

Tcpt, 20 March 2026, pp 371(50)-372(1).

Tcpt, 20 March 2026, pp 376(49)-377(26).

By virtue of s 12GH(5) of the ASIC Act.

Third and Fourth Defendant’s written opening submissions, dated 10 March 2026, par 83.

Brickenden v London Loan & Savings Co (1934) 3 DLR 465 at 469.

This view is also consistent with the opinion of the learned authors of Meagher, Gummow and Lehane Equity Doctrines and Remedies (Fifth Ed, 2015, Sydney) at 23-495.

That is not to say that the expression “breach of trust” could never include any breach of fiduciary duty, see Pittmore Pty ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [157] (Leeming JA, with Bell P and Brereton JA agreeing).

The High Court was not considering in that case a conflict between duty and duty.

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 21 September 1994 at 2934.