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[2026] NSWSC 135
General information, not legal advice.
Supreme Court of NSW
2026-03-03
Hammerschlag CJ in Eq
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Fang v Yang [2026] NSWSC 135
Hearing dates: 2 and 3 March 2026
Date of orders: 3 March 2026
Decision date: 03 March 2026
Jurisdiction: Equity
Before: Hammerschlag CJ in Eq
Decision: (1) The proceedings against the First, Second, Third and Fourth Defendants are dismissed.
(2) The monies standing in Court, together with any interest, are to be paid out to the First Defendant.
(3) The Plaintiff is to pay the costs of the proceedings of the First, Second and Third Defendants.
(4) The Plaintiff is to pay the Fourth Defendant’s costs of the proceedings, such costs to be assessed on the indemnity basis from 14 February 2025.
Catchwords: EQUITY — Trusts and trustees — Resulting trusts — Purchase money trusts – Plaintiff was the joint purchaser of three real properties – the other joint purchaser was his 50/50 joint venturer – a deposit was paid which the Plaintiff said he paid – the purchases did not complete and were rescinded – one property was purchased by his joint venture partner and then on sold to two of the Defendants it being accepted by the Plaintiff that one of them was a bona fide purchaser for value without notice and therefore free of any liability (the Fourth Defendant) – the second was bought by another of the Defendants and the third by yet another – Plaintiff claims an equitable interest in half of the first and in the whole of the second and third based on his alleged contribution to the deposit – Plaintiff fails to establish that any of the Defendants were on notice of any equitable interest of the Plaintiff and in any event paid full value for their interest (including the benefit of any deposits paid on the original contracts) – HELD: if the Plaintiff has any claim it is against his erstwhile joint venture party who dealt with his interest – Plaintiff has not established any equity in any of the properties which prevails against any of the Defendants – Plaintiff’s claim dismissed
Cases Cited: Fang v Yang [2021] NSWSC 890
Category: Principal judgment
Parties: Leo Shi Ran Fang (Plaintiff)
Xia Yang (First Defendant)
Xianxiang Yin (Second Defendant) (self-represented)
Yincui Zhang (Third Defendant) (self-represented)
Chunhong Chang (Fourth Defendant)
Guoqing Xu (Fifth Defendant)
Representation: Counsel:
G McGrath (Plaintiff)
N Maddocks (First Defendant)
J Smith (Fourth Defendant)
Solicitors:
CFS Legal (Plaintiff)
Luminous Legal (First Defendant)
Avalon Legal Pty Ltd (Fourth Defendant)
File Number(s): 2021/00199156
Publication restriction: Nil
These ex-tempore reasons are brief in the interests of disposing of this matter, which turns out to be about sums of money well within the Local Court jurisdiction.
The Plaintiff, Mr Fang, is a retired property developer who by all accounts lives in Wollongong on the New South Wales South Coast.
Mr Fang and his then friend, Mr Shen, found three properties (collectively, the Properties) in Wollongong, being numbers 80, 82 and 84 Corrimal Street, on which there were constructed houses and which they saw as a development opportunity. On 29 November 2013 they entered into three contracts to purchase, the salient terms of each were:
purchase price – $650,000;
deposit – 5% (ie. $32,500) with $16,666.67 to be paid on exchange and the balance of the 5% by 16 December 2013;
settlement – six months after the contract date;
if the purchaser did not settle on time, interest at 10% per annum payable for the period of delay;
the contracts to be interdependent upon each other; and
the purchaser may nominate another entity as purchaser. (At some point), a company apparently incorporated by Messrs Fang and Shen, called Australian Imperial Investment Pty Ltd, was nominated as the purchaser, but nothing turns on this.
The following is the current market value of the Properties:
No**.** 80: $1,150,000, based on unchallenged valuation evidence by a registered valuer;
No**.** 82: $1,110,000, based on its sale to an arm’s length purchaser; and
No. 84: $1,125,000, based on unchallenged valuation evidence.
Mr Shen is not a party to these proceedings and was not called as a witness. Material before the Court indicates that the problems to which the dealings in this case gave rise were likely caused by him. He may be the absent villain, but he was in a business relationship with Mr Fang, not the Defendants.
Mr Fang agrees that his arrangement with Mr Shen was that their joint enterprise would be 50/50 both as to expenses and as to profit.
The evidence does not extend to revealing any realistic suggestion that any of the Defendants had any knowledge that Mr Fang had any proprietary interest in the Properties at the time that the Defendants acquired their interests in them. It was obvious on the face of the contracts that he was an original purchaser. In their dealings leading to their acquisition of the Properties, the Defendants dealt exclusively with Mr Shen.
This hearing was set down for two days and completed in a day and a half. Mr Fang gave evidence. His first language is Mandarin. He started giving evidence in English, but this turned out to be impractical and the Court had the benefit of an interpreter. When taken to documents Mr Fang said he could not read English, but notably his affidavits were in English and not stated to be a translation. I accept his evidence where it is supported by contemporaneous objective material.
Mr Fang and the First Defendant were represented by Counsel. The Second and Third Defendants were self-represented. The Second and Third Defendants do not speak English, and the Court also had the benefit of the translator. But there were obvious challenges.
The Fourth Defendant was represented by Counsel, but only in relation to costs which was the sole remaining issue between her and Mr Fang when the hearing started.
Mr Shen himself bought number 80 on 1 October 2014. In March 2019, he sold it to Ms Zhang, the Third Defendant, and Ms Chang, the Fourth Defendant. It is accepted that Ms Chang was a bona fide purchaser for value of her share and that Mr Fang has no redress against her. The proceedings against her will be dismissed. Any equitable interest in the hands of Mr Fang in number 80 is thus only in half of it.
Mr Shen apparently persuaded the vendors to attribute $65,000 (of the $97,500 that had been paid) as the deposit on his purchase (ie. for his own benefit). This would have been in breach of the arrangement between him and Mr Fang and also no doubt also a breach of the plain fiduciary duty Mr Shen owed Mr Fang on the arrangement as articulated by Mr Fang, but that is a matter which has nothing to do with the Defendants who knew nothing of the arrangements between Messrs Fang and Shen.
It was not put on behalf of Mr Fang that his interest in this property equated to the contribution of $65,000. It was maintained that his contribution was one-third of $97,500 (ie. $32,500). However, I have found that his maximum equitable contribution is half of $97,500. This would attribute a maximum of $16,250 to number 80. But that contribution only pertains to a 50% interest. His full contribution cannot give him the same proportion of interest in relation to half of the property. Only half of his share of the contribution can be attributed to half of the property, ie. the proportion that $8,125 bears to the original purchase price (ie. 1.25%) to the agreed value of half a share, which is $575,000, ie. $7,187.50. That would be the maximum claim Mr Fang could have had on his own thesis, for which he has embroiled Ms Zhang in litigation for years.
There is no suggestion, however, that Ms Zhang did not pay full value to Mr Shen for the entirety of a half share in the property. Mr Shen took it. If Mr Fang had a claim, it is against Mr Shen. The claim against the Third Defendant must be dismissed.
The First Defendant (Mrs Yang – Mr Xu’s wife) bought number 82 on 1 October 2014, relevantly, on the same terms as Messrs Fang and Shen had previously bought.
Given that $65,000 of the deposit paid (irrespective of who paid it) in respect of the earlier purchases had been attributed to number 80, only half of the balance ($32,500) remained to be attributed to the purchase of the other Properties, and a little over half of that – $17,500 – was attributed to this sale, of which Mrs Yang got the benefit. But she paid for that benefit by paying $12,020.55 in penalty interest, which was payable because of the delay in settling by Messrs Fang and Shen, and another $5,500 in cash to Mr Shen.
There would have been room for debate as to how payment of penalty interest should be accounted for had Mr Fang established an entitlement to follow an equitable interest into number 82. But as against Mrs Yang he has established no such entitlement. As I have earlier said, none of the Defendants knew of any arrangement between Messrs Fang and Shen and she paid in full for her interest in number 82. Equity does not require any interest that Mr Fang may have had which was dealt with by Mr Shen, and of which Mrs Yang was ignorant, to be recognised. The claim against the First Defendant must fail. Once again, any claim Mr Fang might have is against his erstwhile friend Mr Shen.
The Second Defendant (Mr Yin) and his wife (Ms Zhang) bought number 84 and settled on 1 October 2014, also paying $12,020.55 as penalty interest for the late settlement.
The settlement sheet for number 84 is in evidence. It does not reflect, nor was I taken to any material, that establishes that the Second Defendant got the benefit of the attribution to his purchase of anything paid by either Mr Fang or Mr Shen on the original sales. Indeed, what evidence there is indicates that well before 1 October 2014, Mr Yin paid monies to Mr Shen.
But in any event the maximum benefit Mr Fang could have got was the remaining $15,000 of the deposit, unattributed to the other 1 October 2014 sales (ie. $97,500 minus $65,000 minus $17,500).
Had Mr Fang established any equitable interest, I think the penalty interest should have been treated as a deduction – he is not entitled to get some benefit from Mr Yin bearing the full penalty and Mr Fang not having to make him good for it because he has a claim to a minor equity in the property. This means that the maximum contribution of Mr Fang is $2,979.45, which equates to 0.26% of the value of the property (rounded to two decimal places). Even if Mr Fang had succeeded in obtaining a verdict for this amount I would have ordered that it be set off against the costs which Mr Fang will inevitably pay.
On 6 April 2021, Mr Fang lodged a caveat over number 82 claiming an interest on the basis of his contribution to the purchase price and claiming an interest arising under a resulting, or alternatively a constructive, trust, said to have arisen pursuant to the 11 July 2014 Letter of Commitment referred to earlier. Henry J found that he had not established a serious issue to be tried that he had a caveatable interest in number 82: see Fang v Yang [2021] NSWSC 890. At [5], her Honour recorded that Mr Fang accepted that the caveat did not accurately describe the facts giving rise to his claimed interest, and that his evidence as to who paid the initial deposit for number 82 changed in the course of the proceedings. Her Honour refused to extend the caveat, and Mr Fang was ordered to pay the costs of the proceedings.
On 17 December 2021, Mr Fang lodged a further caveat over number 82 claiming a lien by him having paid the deposit. Whatever else may be said, his share of the deposit, on his own version of the case, did not exceed $32,500. On 3 July 2024, I ordered that the caveat be withdrawn on payment by Mrs Yang into Court of $50,000 which was done. The amount presumably with some interest is still in Court.
I turn to the Fourth Defendant. The case against the Fourth Defendant was patently without merit from the start. Mr Fang accepts that he has to pay her costs. There is an argument as to whether he should pay indemnity costs.
On 14 February 2025, the Fourth Defendant made an Offer of Compromise that the proceedings against her be dismissed, and each party pay their own costs. I am not persuaded that that Offer of Compromise represents a real commercial settlement, rather than a capitulation, and were Mr Fang to have succeeded, the Fourth Defendant was a necessary party because he was seeking equitable relief in relation to a property in which she has an interest and where at least, theoretically, the forced sale of that property to vindicate Mr Fang’s interest was a possibility.
The difficulty is that the Fourth Defendant, as has now been acknowledged, was a bona fide purchaser for value without notice and she had made this clear in correspondence, dating back as early as 24 October 2023, and Mr Fang made no attempt in the proceedings (nor could he) to sheet home any liability to her. By the time of the Offer of Compromise in 2025, at least, it was obvious that Mr Fang could not succeed against the Fourth Defendant. Maintenance of the proceedings from that point on was such as to merit an order for indemnity costs.
The Plaintiff is to pay the costs of the Fourth Defendant which, from 14 February 2025, are to be assessed on the indemnity basis.
The Court makes the following orders:
The proceedings against the First, Second, Third and Fourth Defendants are dismissed.
The monies standing in Court, together with any interest, are to be paid out to the First Defendant.
The Plaintiff is to pay the costs of the proceedings of the First, Second and Third Defendants.
The Plaintiff is to pay the Fourth Defendant’s costs of the proceedings, such costs to be assessed on the indemnity basis from 14 February 2025.
**********
Fang
Yang [2026] NSWSC 135
It will be observed that the total of the first component of the deposit for the Properties is $50,000.01. Plainly the intention was for the vendor to receive $50,000 across the Properties (I ignore the 1 cent discrepancy) as the first instalment of the 5% deposits.
It is not in dispute that both components of the deposits for the Properties were paid but there is controversy as to who paid them.
Mr Fang says that he did. The Defendants say that there is material which undermines that suggestion and supports the conclusion that Mr Shen did. In the end, it probably does not make any difference for reasons which will emerge below.
Mr Fang’s bank account statement with the Commonwealth Bank for the period 2 October 2013 to 1 January 2014 shows a debit of $50,000 on 29 November 2013. A Commonwealth Bank withdrawal voucher discloses an entry in its “compliance file” which establishes that the withdrawal was used to purchase a bank cheque for $50,000 drawn in favour of Elders Real Estate Wollongong (which I am prepared to infer from other documents was the real estate agent acting on the transactions). I find on the probabilities that Mr Fang paid the initial instalment of the deposits.
Mr Fang maintains that he paid the balance of the deposits as well (in cash), but he brought no evidence from the vendor as to the mode of payment, he produced no receipts, and there is material in evidence that Mr Shen asserted that he was the one who paid all of the deposits. Either way, the evidentiary material does not extend to enabling the Court to make any finding that the Plaintiff actually made any contribution beyond the payment of the initial instalment. However, it is established that the second instalment was paid, so that the total of $97,500 for the Properties was received by the vendor somehow.
On his own evidence, Mr Fang would be liable to account to Mr Shen for half of any interest he acquired by making the payment I have found he made. Correspondingly, if Mr Shen paid the balance, he would have to account to Mr Fang for half of any interest acquired by him as a result of making that payment. But that is a matter between them.
I find that, as between Mr Fang and Mr Shen, Mr Fang made an overall contribution to the acquisition of the Properties represented by one-half of $97,500, ie. $48,750. This of course does not mean that equity entitles Mr Fang to assert that interest against any of the Defendants, or requires them to recognise it. Whether equity has either result depends on what happened later, more particularly, when the Defendants acquired their interests.
Enter the Defendants.
On 11 July 2014, Messrs Fang, Shen, Yin and Xu signed a document entitled “Letter of Commitment” under which they agreed to enter into a joint development of the Properties and that decisions of a majority would prevail. This instrument ultimately plays no role in the resolution of this dispute, other than being consistent with the arrangements between Messrs Fang and Shen earlier referred to.
Messrs Fang and Shen were apparently unable to settle and the contracts they had entered into were rescinded. The commercial intromissions of the participants in the following transactions are opaque but there is no dispute that the following events occurred involving the sale of the Properties to various of the Defendants.
Mr Fang claims an equitable interest in the value of the Properties in the hands of the Defendants proportionate to his alleged contribution to the deposit. Any interest in number 82 is, however, only as to half its value because of the agreement that Ms Chang acquired one half as a bona fide purchaser for value, of which the Court was informed at the commencement of this hearing.