31 In January 2003 at Mr Fan's request, Mr Tang opened an ETrade account with the Australia and New Zealand Banking Group Ltd. This ETrade account was opened in the names of Mr Fan and his wife, Mrs Jan Fan. Mrs Fan is not a party to these proceedings. She has however sworn an affidavit disclaiming any interest in the proceeds of this ETrade account. She says that both her husband and herself regarded the moneys in that account as belonging to Mr Fan. At no stage did Mrs Fan communicate with Mr Tang about the ETrade account or the Box Hill property. The evidence supports Mr Fan's claim in these proceedings that he is solely entitled to recover the proceeds of this ETrade account.
Purchase of the Box Hill Property
32 When the ETrade account was opened Mr Fan deposited into it the proceeds of sale of nine houses on the Gold Coast that had belonged to Mr Fan's father. Once the account was set up and placed in funds Mr Fan gave Mr Tang authority to operate the ETrade account for the purpose of investing in Australian listed shares. Mr Tang undertook share investments using this account. The account records show that Mr Tang traded in the shares of a number of well known Australian listed companies. Mr Tang operated the account under Mr Fan's authority for share investment up until early 2003. It was then that a new venture was discussed between them.
33 Mr Tang made contact with Mr Fan in about April or May 2003 to explain to him that Mr Tang had identified an opportunity to purchase an option on real estate in Australia. Mr Tang explained to Mr Fan the features of options over real estate and how such options worked. Mr Tang suggested one particular property, the Box Hill property, as an appropriate subject for investment using options. He explained to Mr Fan that he, Mr Tang, thought this property had great potential for development and subdivision. Mr Fan's evidence is that in this conversation, Mr Tang indicated that the cost of Mr Fan's investment in the option would be in the order of $70,000. I accept Mr Fan's evidence that this was the amount discussed. However, the evidence shows that the amount that Mr Tang actually withdrew from the ETrade account on 8 May 2003 shortly after this conversation, was the much greater sum of $270,000.
34 Mr Fan's recollection is that Mr Tang said to him words to the effect "the cost of your investment in the option will be around $70,000". Although Mr Fan does not specifically recall giving Mr Tang the authority to withdraw this amount to pay the option fee. Mr Fan does recall signing some ETrade paperwork at about that time. Mr Fan's recollection though is that this paperwork only authorised a withdrawal to pay for the option fee in the order of $70,000.
35 On 21 May 2003 the then registered proprietors of the Box Hill property entered a put and call option with Ms Yang, JV Capital and the Cappellos by deed. The option deed required the purchasers to pay an option fee to the vendors of a sum equal to the deposit specified in the contract for the sale of the Box Hill property which contract was annexed to the option deed. This option fee was an amount of $270,000. The option deed relevantly provided for Ms Yang, JV Capital and the Cappellos the right to exercise a call option by 3 March 2004.
36 Mr Fan alleges that the $270,000 that Mr Tang withdrew from the ETrade account was used to pay the whole of the option fee due upon the execution of the option deed. Mr Tang and JV Capital admitted to this allegation in their verified defences. Although Ms Yang has not as yet filed any defence to any of the amended pleadings, the verification of this admission by JV Capital and Mr Tang provides some evidence that the $270,000 was used in this way. Indeed the simultaneous withdrawal of this sum from the ETrade account and the execution of the option deed requiring the payment of this sum is the basis to infer that the funds withdrawn were applied for this purpose.
Exercising the Option
37 In March or April 2004 Mr Tang and Mr Fan had a discussion about exercising the option to acquire the Box Hill property. Initially Mr Fan pressed on Mr Tang the opinion, "why can't I just sell my option to someone else?". Mr Tang was keen for the option to be exercised. He said "we can make a significant profit by purchasing the property under the terms of the option, and subdividing it for sale". Mr Tang eventually persuaded Mr Fan that this was the course that should be taken.
38 However, in the course of persuading Mr Fan to this course Mr Tang misrepresented the ownership structure of the Box Hill property even further. At the time of this conversation Mr Fan was under the misapprehension already induced by Mr Tang, that he had an entitlement to exercise the option in his own name. Mr Tang contributed to a further misunderstanding on Mr Fan's part by saying to him "I suggest we contribute almost equally to the balance of the purchase price of the property. The other investor in the property aside from you and me, may be my wife. You do not have any objections if my sister in law also provides a small percentage of investment funding for the property?". Mr Fan indicated to Mr Tang he had no objections to Mr Tang's sister in law providing funding for the property. Mr Fan understood that she would thereby obtain an interest of only a few percent in the property. Aside from this possible interest of Mr Tang's sister in law, Mr Fan understood that he would share with Mr Tang an interest in the Box Hill property after exercise of the option of about 50%. His understanding flows directly from Mr Tang's representations.
39 Mr Fan says that Mr Tang made no reference to the other investors in the property, William, John and Emanuele Cappello. I accept Mr Fan's evidence that Mr Tang omitted to refer to the Cappellos.
40 The reality was quite different from what Mr Tang had represented. Contrary to the impression he gave about Box Hill property, the Cappellos had a 60% interest, JV Capital had a 32% interest and Ms Yang had an 8% interest. None of these interests coincided with what Mr Tang had told Mr Fan.
41 Mr Fan was persuaded to contribute $800,000 to the purchase of the Box Hill property for the exercise of the option. Mr Fan authorised the electronic transfer of $800,000 from the ETrade account to another account with the ANZ Bank, the ANZ Select Account. Mr Fan authorised Mr Tang to be made a signatory on the ANZ Select Account.
42 On 16 April 2004 $800,000 was deposited into the ANZ Select Account and then withdrawn by Mr Tang from that account. In their defences Mr Tang and JV Capital admit that this sum of $800,000 was applied to the purchase of the Box Hill property. The purchase was completed on 19 April 2004 resulting in the acquisition of the Cappello's, JV Capital's and Ms Yang's respective interests.
Mr Fan's Claims about the Purchase of the Box Hill Property
43 There is a close alignment between Mr Fan's percentage contribution to the total purchase price of the Box Hill property and the percentage ownership acquired by JV Capital and Ms Yang in the property and recorded on the title. The Box Hill property was acquired for $2.7 million. Mr Fan's contribution was $1,070,000 ($800,000 + $270,000). Mr Fan therefore contributed 39.63% of the purchase price. JV Capital and Ms Yang acquired on title a 40% share of the property.
44 Mr Fan's money contribution through Ms Yang and JV Capital can be roughly reconciled to 40% of the purchase price by factoring in the timing of Mr Fan's payments. Mr Fan paid consideration of $270,000 in the form of the whole option fee a year in advance of the date of acquisition. The other parties to the option deed were thereby relieved of the burden of advancing their proper share of the option fee, in April 2003. The difference between Mr Fan's actual contribution of 39.63% of the $2.7 million purchase price and his percentage entitlement to the property of 40% is 0.37%, or 0.0037. The dollar value of this percentage of $2.7 million is $9,990.
45 If one allows interest on the $270,000 Mr Fan advanced for a period of one year (April 2003 to April 2004) at say 8%, one reaches a figure of $21,600. The proportion of this $21,600 in interest which Mr Fan would need to bear himself fully to contribute his 40% of the purchase price is $8640 (being 40% of $21,600). This is in fact quite close to the gap of $9,900 (0.37% of $2.7 million) required to reconcile Mr Fan's actual contribution to the 40% interest Ms Yang and JV Capital now hold on the title to the Box Hill property. Thus the 40% interest in the Box Hill property credits Mr Fan (through Ms Yang and JV Capital) with a slightly additional percentage interest in the property, apparently as reimbursement for interest on the advance of the option fee to the Cappellos. The figures are not exact but they work out sufficiently well for it to be inferred that some such arrangement was probably made.
46 Thus it can be concluded that Mr Fan's actual money contribution to the acquisition of the Box Hill property, as against other purchasers was about 40% of the total consideration of the property. This finding is a basis to infer that JV Capital and Ms Yang hold their respective 32% and 8% interests in the Box Hill property on resulting trust for Mr Fan: see Calverley v Green (1984) 155 CLR 242 at 246 per Gibbs CJ, at 255-256 per Mason and Brennan JJ, and at 266-267 per Deane J.
47 This conclusion in relation to JV Capital is further supported by an admission in JV Capital's amended defence, verified by Mr Tang as director of the company, that the 32% share held by JV Capital in the Box Hill property has at all relevant times been held on trust for Mr Fan.
48 Mr Fan does not have the benefit of an admission on the pleadings from Ms Yang. Ms Yang did not file a defence to the further amended statement of claim. Nor did she file any subsequent pleadings. Nevertheless I infer that Mr Fan's money was used to acquire her 8% interest in the Box Hill property for the following three reasons. First, no document in evidence shows that Ms Yang herself made any financial contribution from her own resources towards acquiring her interest in the Box Hill property. Second, the funds Mr Tang dealt with through the ETrade account and the ANZ Select Account were sufficient to acquire Ms Yang's 8% interest in the Box Hill property. Third, the time at which Mr Tang dealt with Mr Fan's funds was the very time the funds would be needed by Ms Yang to permit her to use them to acquire her interest in the Box Hill property. I find therefore that the respective interests of JV Capital (32%) and Ms Yang (8%) in the Box Hill property were acquired by them using Mr Fan's funds.
49 Where a person purchases a property in the name of another and where that other has not provided any of the purchase money, unless there is presumption of advancement or evidence of an intention to vest a beneficial interest in the property in the nominal purchaser, the law presumes that the purchaser did not intend the other person to take beneficially: Calverley v Green at 246 per Gibbs CJ. There is no evidence that Mr Fan had any intention to vest any part of the Box Hill property in JV Capital or Ms Yang. The relationship between these parties is not one to which the presumption of advancement applies. I therefore conclude that JV Capital and Ms Yang held their respective 32% and 8% interests in the Box Hill property on resulting trust for Mr Fan. I grant Mr Fan the declaratory relief he seeks in relation to the acquisition of the Box Hill property.
Foreign Investment Review Board Approval
50 Mr Fan's status as non-resident of Australia creates a potential impediment to a grant of declaratory relief. Before the Court can declare his interest in the Box Hill property Mr Fan must satisfy the applicable provisions of the Foreign Acquisitions and Takeovers Act 1975 (Cth). For the reasons set out here I am satisfied that he does.
51 Mr Fan is "a natural person not ordinarily resident in Australia" within the meaning of the Foreign Acquisitions and Takeovers Act. Mr Fan's claimed interest in the Box Hill property is an "interest in Australian urban land" within s 12 Foreign Acquisitions and Takeovers Act. Under the Foreign Acquisitions and Takeovers Act if a natural person, not ordinarily resident in Australia, acquires an interest in Australian urban land without giving notice to the Treasurer of the Commonwealth, the person is liable to conviction for an offence under s 26A of that Act.