First Plaintiff Second Plaintiff v Defendant

2 It was not in dispute that the plaintiffs have proven a default under cl 1.8 of the Deed by reason that the defendant has failed to pay the sum of $1 million, by 3 May 2018, or at all.[1]

3 However, the defendant claims that he is released from this obligation pursuant to the provisions of cl 1.11 of the Deed. More particularly, he claims that the plaintiffs breached their obligation to submit a request to all relevant Chinese authorities to withdraw a complaint against him. Further, that the breach continued for 7 days after he gave requisite notice(s) of breach under the Deed.

4 In the result, the parties co-operated to agree that there are only 3 issues for determination (with no other issues, for example as to the enforceability of the Deed)[2] as follows:

1. Did the Plaintiffs breach their obligation to submit a request to the Chinese authorities in accordance with clause 1.10 of the Settlement Deed?

2. If yes to [1], was the Defendant's notice dated 16 May 2017, further or alternatively the Defendant's notice dated 20 July 2018, an effective written notice of the breach for the purposes of clause 1.11 of the Settlement Deed?

3. If yes to [1] and to [2], did any breach of which written notice was given continue for a period of 7 days following written notice of the breach?

If the Defendant establishes that the answer to each of [1], [2] and [3] is "yes", the Defendant is released from his obligation to pay the "Balance" under clause 1.8 of the Settlement Deed.

If the Defendant does not establish that the answer to each of [1], [2] and [3] is "yes", the Defendant is liable to pay the Plaintiffs the Balance plus interest and costs, and the Plaintiffs are entitled to judgment accordingly under clause 3.1 of the Settlement Deed.[3]

5 Following agreement by the parties to these issues I made orders on 4 September 2018, listing the plaintiffs' application (with some limited discovery and exchange of affidavit material) within the existing proceeding. I was satisfied that it was in the interests of justice to proceed this way which approach was also accepted by the parties.[4]

6 However, notwithstanding the containment of the dispute, it is necessary to set out the evidence in some detail given the substantive challenge to whether there was proper submission of the relevant request(s).

7 Mr Weimin Yan is the director and legal representative of Shanghai Yingyue Industrial Co Pty Ltd, the second plaintiff (which is now known as Shanghai Yingyue Investment Group Co Pty Ltd) (Yingyue).

8 Mr Heng Zhang is the director of the companies, Ausen International Pty Ltd (Ausen) and Shanghai Jie'En Furniture Co Ltd.

9 By a document, the translation of which is titled 'Criminal Reporting Materials of the Joint Contract Defraud Case of Shanghai Jie'En Furnishings Co, Heng Zhang, Maoqiang Yang' a complaint was lodged against 3 'suspects': Shanghai Jie'En Furnishings Co, Mr Zhang and Maoqiang Yang (a lawyer) by Yingyue as informant (Complaint). Mr Yan is described on the Complaint as the 'Legal Representative'.

10 The Complaint is dated 17 September 2013 and was said to be addressed to the 'Economic Crime Detachment of Shanghai Security Office Chang Ning District Branch' (Complaint Addressee).

11 However, Mr Yan provided evidence (in an affidavit of 14 July 2015) of a 'Case Filing Notification' which was entitled 'Shanghai Public Security Office Pudong Branch Case Filing Notification.' This showed that the Complaint was actually accepted for filing on 2 January 2014 by the Shanghai Public Security Office Pudong Branch. It also showed that the relevant 'operator unit' was the 'Second vice squad of the First Interpol Detachment, Economic Crime Investigation, Shanghai Public Security Office Pudong Branch.'

12 In the result, Counsel for the defendant accepted that the Complaint was not sent to the Complaint Addressee but rather it was sent to the 'Shanghai Public Security Office Pudong Branch'[5] (Complaint Recipient). In fact, Changning and Pudong are different districts.[6]

13 It was also common ground that the Complaint was the only criminal complaint in existence.[7]

14 In July 2015 this proceeding was issued wherein it was alleged that Mr Zhang was personally liable to pay approximately Chinese RMB25 million to Mr Yan and Yingyue pursuant to two personal guarantees executed in October 2012 and May 2013 respectively, and a number of oral loan agreements made between December 2012 and March 2013. The proceeding raised a number of contested issues as to what was the applicable Chinese law.

15 Mr Yan and Yingyue also applied for, and obtained, freezing orders in the course of the proceeding against the assets of Mr Zhang, Ausen and Mr Zhang's wife, Ms Xiao Qun Huang.

16 On 3 May 2017, the plaintiffs and defendant (as well as Ausen and Ms Huang) entered into the Deed.

(a) Mr Zhang and Ausen were to immediately pay the single sum of AU$500,000 (out of funds held in the trust account of their solicitors pursuant to freezing orders) unconditionally to the plaintiffs (cl 1.2);

(b) Mr Zhang also agreed to sell a property known as 205/370 St Kilda Road, Melbourne, Victoria and provide the net proceeds to the plaintiffs (cl 1.3); and

(c) Mr Zhang agreed to pay the plaintiffs the single sum of AU$1 million (Balance) in cleared funds transferred to the trust account of the plaintiffs' solicitors by 3 May 2018 (cl 1.8).

18 Upon receipt of the payment of AU$500,000, the plaintiffs were to release and forever discharge Mr Zhang, Ausen and Ms Huang from all actions and claims other than the obligations under the Deed (cl 2.1).[8]

19 In the event Mr Zhang defaulted in paying the Balance the plaintiffs would be entitled to immediately reinstate the proceeding and enter judgment against Mr Zhang for the whole of the Balance, plus interest and costs of entering judgment on an indemnity basis, less any amount already paid by Mr Zhang in respect of the Balance (cl 3.1).

20 Clauses 1.10 to 1.12 also set out obligations in relation to the Complaint as follows:

1.10 Within seven days of receipt of the AU$500,000 under clause 1.2, Yan and Yingyue shall submit a request to all relevant Chinese authorities seeking to withdraw any and all criminal complaints against Zhang and Yang Maoqiang (of Shanghai Xie Law Firm) instigated by Yan or Yingyue in China. Yan and Yingyue shall provide a copy of the request to Zhang's solicitors within seven business days of submitting the request.

1.11 If Yan and Yingyue breach their obligation to submit a request to the Chinese authorities in accordance with clause 1.10 of this deed, and the breach continues for a period of seven days following written notice of the breach by Zhang, then Zhang shall be released from his obligation under clause 1.8 to pay the Balance.

1.12 In addition to the obligation set out in clause 1.10, Yan and Yingyue will take any further reasonable steps within their power to support the termination of criminal proceedings arising as a result of the criminal complaints referred to in clause 1.10 against Zhang and Yan [sic] Maoqiang.

22 First, the Deed is governed by the laws of Victoria (not China) (cl 12.1).

23 Second, there is provision for the giving of notices or other communications to or by a party through their Victorian solicitors in cl 13. However, both Counsel agreed that this clause had no application to the submission of a request to a Chinese authority under cl 1.10.[9] (This appears appropriate given cl 1.10 would be rendered unworkable given it could not be complied with if the deeming provision in cl 13.1(c)(ii) applied.)

24 Pursuant to minutes of consent orders provided under cl 1.9 of the Deed, on 4 May 2017 the Court ordered that the proceeding be dismissed without any adjudication on the merits and with a right of reinstatement reserved by the plaintiffs with no order as to costs.

25 On 5 May 2017 the defendant paid $500,000 to the plaintiffs.

26 On the same day, the defendant's solicitors asked the plaintiffs' solicitors to provide a copy of the written request required by cl 1.10 of the Deed by no later than 12 May 2017.

27 On 9 May 2017, the plaintiffs' solicitors confirmed receipt of the AU$500,000 payment by email and attached their client's request to withdraw the criminal complaints, which they said was 'as submitted in China and in accordance with clause 1.10 of the settlement deed' (First Withdrawal Request). An English translation of the First Withdrawal Request shows it is dated 5 May 2017 and reads as follows:

To The Economic Crime Investigation Department of Shanghai Public Security Bureau [(Authority 1)]

The Second Brigade of the First Detachment of the Economic Crime Investigation Department of Pudong New District Branch of Shanghai Public Security Bureau [(Authority 2)]

Shanghai Pudong New District People's Court [(Authority 3)]

Shanghai Pudong New District People's Procuratorate [(Authority 4)]

On 28 October 2013 Shanghai Yingyue Industrial Co. Ltd., (now renamed as Shanghai Yingyue Investment Group Co. Ltd., hereinafter referred to as Yingyue Company or our Company) submitted to the Economic Crime Investigation Department of Shanghai Public Security Bureau "Criminal Report Materials on Shanghai Jie En Furniture Co. Ltd., Zhang Heng and Maoqiang Yang Jointly Suspected of Contract Fraud" (originally intended to submit to Changning Branch of Shanghai Public Security Bureau but later submitted to the Economic Crime Investigation Department of Shanghai Public Security Bureau due to jurisdiction).

On 2 January 2014 the Executive Deputy General Manager of our Company, Ms Yinghua CUI, received the "Notice of Filing a Case" from the Second Brigade of the First Detachment of the Economic Crime Investigation Department of Pudong New District Branch of Shanghai Public Security Bureau.

An agreement was reached to settle the other debt disputes filed by our Company and our Chairman of the Board, Mr. Weimin YAN, against Zhang Heng during the trial in Melbourne, Australia. In accordance with the provisions of the settlement agreement, our Company is now applying for the withdrawal of the criminal report on Shanghai Jie En Furniture Co. Ltd., Zhang Heng and Maoqiang Yang jointly suspected of contract fraud.

Shanghai Yingyue Investment Group Co. Ltd., (Stamp)

28 Authority 2 above appeared to be substantially identical to the name of the Complaint Recipient. The defendant also generally accepted that the 4 Authorities named above were 'relevant Chinese authorities' (although, as will be seen below, the defendant sought to add an additional relevant Chinese authority, being the Complaint Addressee).

29 On 11 May 2017, the defendant's solicitors requested evidence that Mr Yan had 'submitted the request to all relevant Chinese authorities' and said that 'unless we see evidence of the fact of the submission, and not just the document itself, we will have no option but to assume that it has not submitted [sic] and serve a notice of breach.'

30 Later that day, the defendant's solicitor received an email from the plaintiffs' solicitors attaching copies of 4 'EMS' Worldwide Express Mail Service documents (EMS Despatch Documents) (written in Mandarin) numbered 1053173017524, 1053173020724, 1053173018424 and 1053173019824 respectively.

31 There was evidence from a lawyer with some 9 years' experience that EMS was one of the largest and most reliable mail service providers in China. Further that it was recognised by Chinese Courts as a method of serving documents unless there was contrary evidence provided.[10]

32 English Translations of 2 of these EMS Despatch Documents provide that they relate to documents sent by domestic standard express post on 6 May 2017 (as will be seen below 2 others were not translated as they were not delivered). The respective 'Receiver details' are recorded as follows:

(a) Economic Crime Investigation Corps, Shanghai Municipal Bureau of Public Security (for EMS Despatch Document numbered 1053173017524); and

(b) Team 2, Economic Crime Investigation Division No. 1, Pudong New District Branch, Shanghai Municipal Bureau of Public Security (for EMS Despatch Document numbered 1053173020724).

33 On 12 May 2017, solicitor for the defendant, Mr McKenzie-McHarg, telephoned Ms Petronijevic, solicitor for the plaintiffs, and informed her that the delivery receipts provided on 11 May 2017 indicated that mail was returned to sender.

34 On 12 May 2017, the plaintiffs' solicitors emailed the defendant's solicitors explaining that the requests to the Shanghai Pudong People's Procuratorate and Shanghai Pudong People's Court posted on 6 May 2017 were not successfully delivered. Further that their client had arranged for delivery of those requests again and that they had been successfully delivered and that the email also attached 'the delivery receipts and evidence of receipt'.

(a) 2 EMS Despatch Documents numbered 1083012982017 and 1083012981617 respectively;[11] and

(b) 4 documents that appear to be print outs from the EMS website titled: 'Tracking Number: 1053173020724', 'Tracking Number: 1083012981617', 'Tracking Number: 1083012982017, and 'Tracking Number: 1053173017524' respectively (Online Tracking Print Outs).

36 English Translations of these further 2 EMS Despatch Documents provide that they relate to express mail with 'Details of receiver' recorded as follows:

(a) Chief Procurator of the procuratorate at the Pudong New District People's Procuratorate (for the EMS Despatch Document numbered 1083012982017); and

(b) President of People's Court at the Pudong New District People's Court, Shanghai (for the EMS Despatch Document numbered 1083012981617).

37 English Translations of the 4 Online Tracking Print Outs each recite that 'Your item was delivered' at a particular time and date. Further, that this was 'Signed for by' (with relevant details inserted). Specifically, the 4 translated Online Tracking Print Outs shows items delivered as follows:

(a) an item with the tracking number 1053173017524 was posted on 6 May 2017 and 'delivered' on 7 May 2017 at 9:55:07. It was also signed for by: **'**Collected by others; collected by colleagues' at 9:55:07;

(b) an item with the tracking number 1053173020724 was posted on 6 May 2017 and 'delivered' on 7 May 2017 at 11:06:33. It was also signed for by: 'Stamped with organisation seal' at 11:06:33;

(c) an item with the tracking number 1083012982017 was posted on 10 May 2017 and 'delivered' on 11 May 2017 at 9:44:54. It was also signed for by: 'Stamped with organisation seal' at 9:44:54; and

(d) an item with the tracking number 1083012981617 was posted on 10 May 2017 and 'delivered' on 11 May 2017 at 8:21:25. It was also 'Signed for by: Stamped with organisation seal' at 8:21:25.

38 On 15 May 2017, the defendant's solicitors emailed the plaintiffs' solicitors asking whether they had any evidence that the request was 'in fact received' by each of the 4 Authorities.

39 On 16 May 2017, the defendant's solicitor wrote as follows:

I refer to my below email [of 15 May 2017] and note that my client is anxious to receive evidence of receipt of the request as stated below.

Please treat this email as a notice of default regarding this matter pursuant to the terms of the deed of settlement.

40 The defendant alleges that this constituted a breach notice pursuant to cl 1.11 of the Deed (First Alleged Breach Notice).

41 By further email correspondence on 16 May 2017, the plaintiffs' solicitor maintained that the documents provided to the defendant's solicitor were evidence of both successful delivery and receipt. In any event, that the obligation in cl 1.10 was to submit a request to the authorities (which had been done) and to provide a copy of the request (which had also been done). They then asked the defendant's solicitor '[w]hat is the alleged default?'.

42 By email on the same day the defendant's solicitor stated that they were instructed that the documents did not evidence receipt by the authorities at all. They further suggested that the issue could be resolved by provision of an acknowledgment of receipt from each of the authorities.

43 Further correspondence then ensued with the plaintiffs maintaining that there was no default under the Deed.

44 In the result, no payment of AU$1 million was made by 3 May 2018, nor at any time since.

45 On 6 June 2018, the plaintiffs filed this summons seeking enforcement of the Deed.

46 On 20 July 2018, the defendant's solicitors issued a second alleged breach notice (Second Alleged Breach Notice) which relevantly reads as follows:

Without prejudice to our client's position that the First Breach Notice was valid, we again provide you with notice under clause 1.11 of the Deed that you breached your obligation to submit a request to the Chinese authorities in accordance with clause 1.10 of the Deed in that you failed, within seven days of receipt of the AU$500,000 sum under clause 1.2, to submit a request to all relevant Chinese authorities seeking to withdraw any and all criminal complaints against Zhang and Yang Maoqiang (of Shanghai Zie Law Firm) instigated by Yan or Yingyue in China.

TAKE NOTICE that our client hereby provides you with written notice of the Breach pursuant to clause 1.11 of the Deed.

By clause 1.11 of the Deed, if your breach of clause 1.10 continues for a period of seven days following this written notice, our client is released from any obligation under clause 1.8 to pay the Balance (the existence of any such obligation being denied by reason of the continuation of the breach for seven days after the First Breach Notice).

47 On 23 July 2018, the plaintiffs' solicitors wrote to the defendant's solicitors stating that the Second Alleged Breach Notice did not do more than assert a breach of cl 1.10. In particular, that it did not:

(a) identify any relevant Chinese authority which has not had a request submitted to it in accordance with clause 1.10 of the Deed; or

(b) identify any alleged defect in the request dated 5 May 2017; or

(c) otherwise specify how our clients are alleged to have breached clause 1.10 of the Deed.

In the circumstances our clients do not know what the alleged default is, and so what your client alleges needs to be done to remedy that alleged default; it follows that the Notice is not a valid notice under clause 1.11 of the Deed.

49 There appeared to be no response to the plaintiffs' inquiry of 23 July 2018. Rather, on 1 August 2018, the plaintiffs' solicitors advised (without prejudice to their other arguments that they had complied with cl 1.10 and that there was no valid notice of breach) that the plaintiffs had submitted a further request to all relevant Chinese authorities (Second Withdrawal Request). An English translation of this request shows it was dated 25 July 2018 and reads as follows:

Regarding Application for Withdrawal of Criminal Reports

On 28 October 2013 Shanghai Yingyue Industrial Co. Ltd., (now renamed Shanghai Yingyue Investment Group Co. Ltd., hereinafter referred to as Yingyue Company or our Company) submitted to the Economic Crime Investigation Department of Shanghai Public Security Bureau "Criminal Report Materials on Shanghai Jie En Furniture Co. Ltd., Zhang Heng, and Maoqiang Yang Jointly Suspected Contract Fraud" (originally intended to submit to Changning Branch of Shanghai Public Security Bureau but later submitted to the Economic Crime Investigation Department of Shanghai Public Security Bureau due to jurisdiction).

On 2 January 2014 the Executive Deputy General Manager of our Company, Yinghua CUI, received the "Notice of Filing a Case" from the Second Brigade of the First Detachment of the Economic Crime Investigation Department of Pudong New District Branch of Shanghai Public Security Bureau.

Weimin YAN and Yingyue Company are now applying to relevant Chinese authorities for the withdrawal of all criminal reports submitted by Weimin YAN or Yingyue Company against Zhang Heng and Maoqiang YANG (Shanghai Xingye Law Firm) in China.

Shanghai Yingyue Investment Group Co. Ltd., (Stamp)

Further evidence as to service of First and Second Withdrawal Requests

50 At the hearing on 13 November 2018, after a 'no case' submission by the plaintiffs (on which the Court refused to rule absent an election),[12] the plaintiffs tendered some further evidence (being three affidavits)[13] as to the service of the First Withdrawal Request and Second Withdrawal Request as described below (Further Evidence). In particular, that evidence was sought to address a complaint made that there was no evidence that the relevant withdrawal requests had actually been inserted into each of the envelopes the subject of the EMS Despatch Documents evidence.

51 Firstly, then, there was an affidavit of Mr Wang Jutao, a human resource manager at Yingyue dated 13 November 2018. Mr Jutao says that on 6 May 2017 he attended a post office in Shanghai. He says he inserted a copy of a document entitled 'Application for Withdrawal of Criminal Complaints' dated 5 May 2017 into 4 envelopes and he addressed the envelopes to each of the 4 Authorities at their specified addresses. Further, that he sealed the envelopes, handed them over to a post office employee to send and paid the postage fees. For each envelope, Mr Jutao completed an EMS Despatch Document, with the relevant document number. Further, that two of the envelopes addressed to Authority 1 and Authority 2 respectively were not returned to sender.

52 Secondly, an affidavit of Mr Junzheng Zhao, an administration manager at Yingyue, dated 13 November 2018. Mr Zhao says on 10 May 2017 he attended a post office in the Pudong New District in Shanghai. He inserted a copy of a document entitled 'Application for Withdrawal of Criminal Complaints' dated 5 May 2017 into 2 envelopes and he addressed the envelopes to Authority 3 and Authority 4 respectively at their relevant addresses. Further, that he sealed the envelopes and handed them to the post office employee to send and paid the postage fees. For each envelope, Mr Zhao also completed an EMS Despatch Document, with the relevant document number. Further, that the two envelopes he posted on 10 May 2017 were not returned to sender.

53 Lastly, an affidavit of Ms Fenfang (Jolene) Zhou, a lawyer at Shanghai ForTran Law Firm (ForTran), dated 13 November 2018. Ms Zhou says that during the period 26 to 27 July 2018 she personally hand delivered a document entitled 'Regarding Application for Withdrawal of Criminal Reports' dated 25 July 2018 and a covering letter addressed to each of Authorities 1, 2, 3 and 4 by personally delivering these documents in an envelope addressed to the 4 relevant authorities .[14]

54 The defendant did not seek to challenge the Further Evidence,[15] save for a minor suggestion that the title of the documents said to be sent by both Mr Jutao and Mr Zhao ('Application for Withdrawal of Criminal Complaints') was not completely identical to the title of the English translation of the First Withdrawal Request ('Application for Withdrawal of Criminal Reports'). Absent any suggestion that this was a matter of significance I do not consider this to be a point of substance.

55 Given the case raised issues of construction of a Deed, it is necessary to have regard to the relevant contractual principles.

56 First, in determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean.[16]

57 Second, the rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.[17]

58 Third, insofar as recourse to matters external to the contract are necessary (for example to identify purpose or where there is constructional choice)[18] what may be referred to are objective matters i.e. 'mutually known facts' or matters which assist in identifying the purpose or object of the transaction. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.[19]

59 Fourth, absent a contrary intention, the Court approaches the task on the assumption that the parties intended to produce a commercial result and, accordingly, a commercial contract is to be construed so as to avoid 'making commercial nonsense or working commercial inconvenience.'[20]

Issue 1: Whether the plaintiffs breached their obligation to submit a request to all relevant Chinese authorities

60 The plaintiffs relied on the First Withdrawal Request as meeting its obligations under cl 1.10 (which they claim was submitted within 7 days of receipt of the $500,000 on 5 May 2017).[21]

61 They also emphasized that, consistent with the way the Agreed List of Issues was framed, that the defendant bore the onus of establishing breach.[22]

62 In oral submissions, Counsel for the defendant clarified that the breach was particularised in 4 ways:

(a) that the First Withdrawal Request was not made by both plaintiffs (when it should have been);

(b) that the First Withdrawal Request was not (or was not, on the evidence, shown to be) sent to, or received by, all relevant authorities;

(c) that the First Withdrawal Request was not sent to the Complaint Addressee (although the original Complaint was addressed to this entity which is therefore a relevant Chinese authority pursuant to cl 1.10); and

(d) that the First Withdrawal Request was not addressed to relevant (individualised) officials within each of the relevant authorities.[23]

63 In relation to onus the defendant cited a principle from Hawksford & Anor v Hawksford & Others[24] as follows:

Where party A has the legal onus of proving a negative proposition, and relevant facts are peculiarly in the knowledge of party B or where party B has the greater means to produce evidence relating to those facts, then provided party A establishes sufficient evidence from which the negative proposition may be inferred, party B then comes under an evidential burden, or an onus of adducing evidence. (citations omitted)

64 In particular it was submitted that this principle applied such that the Court should find that there was no further request to the initial addressee of the Complaint and, further, that Mr Yan had not made a further request. However, regard to the above principles was unnecessary in both instances since the plaintiffs did not suggest that there was a further request to the Complaint Addressee, nor did they rely on any request (for issue 1) beyond the First Withdrawal Request.

(a) That the First Withdrawal Request was not made by both plaintiffs

65 The defendant submitted that cl 1.10 provides that both Yan and Yingyue shall submit a request to all relevant Chinese authorities and that this did not occur.

66 Counsel highlighted that the First Withdrawal Request breached this obligation since it included the statement that 'our Company' is now applying for the withdrawal of the criminal report. This was said to be in breach of the conjunctive obligation under the Deed.

67 Firstly, I accept the submission of the plaintiffs that there is no obligation on Mr Yan to submit a request in circumstances where he is not an informant to the relevant Complaint. Thus the only obligation under cl 1.10 is to submit a request seeking to withdraw 'any and all' complaints instigated by 'Yan or Yingyue' in China. Thus the obligation only attaches to any complaint actually instigated by Mr Yan. There is no obligation in circumstances where Mr Yan has not, in fact, instigated the Complaint or any other complaint.

68 In any event, to the extent that there is any obligation on Mr Yan, it is more than met by the fact that the First Withdrawal Request was executed by both the Company and Mr Yan. The reference to 'our Company' is also entirely explicable by reason that it was only the Company who was the informant to the Complaint.

69 The first particular of breach is not established.

(b) That the First Withdrawal Request was not sent to or received by all relevant authorities

70 The defendant submitted that the concept of 'submit' encompassed 'all actions necessary to present the request to the relevant authority for consideration.' Further, that receipt was necessary because the process of consideration could not commence without receipt.

71 In oral submissions, it was highlighted, first, that there was no evidence of receipt of the actual First Withdrawal Request at each of the named addresses (that is, that the letter was put in the envelope).

72 Second, it was submitted that, in two instances, there was a lack of correlation between the names identified in the First Withdrawal Request and the identity of the addressee in the EMS Despatch Documents. Thus:

(a) 'Economic Crime Investigation Corps, Shanghai Municipal Bureau of Public Security' (address on EMS Despatch Document numbered 1053173017524) was not the same as 'Economic Crime Investigation Department of Shanghai Public Security Bureau' (Authority 1 in the First Withdrawal Request); and

(b) 'Team 2, Economic Crime Investigation Division No. 1, Pudong New District Branch, Shanghai Municipal Bureau of Public Security' (address on EMS Despatch Document numbered 1053173020724) was not the same as 'Second Brigade of the First Detachment of the Economic Crime Investigation Department of Pudong New District Branch of Shanghai Public Security Bureau' (Authority 2 in the First Withdrawal Request).

73 Insofar as the complaint was made that there was no evidence that the actual First Withdrawal Request was placed in the envelope, this is now met by the Further Evidence.

74 Insofar as the alleged lack of correlation was concerned, it is important to have regard to the terms of the Further Evidence. As indicated above, the deponents in each case specifically say that the envelope was addressed to the relevant authority as named in the First Withdrawal Request. Thus the divergence identified was only found in the EMS Despatch Documents. However, the address on the envelope would be of primary importance given this was where the letter was directed to be sent.

75 In any event, the names on the EMS Despatch Documents are sufficiently close in the absence of any suggestion that the slight differences were meaningful. It must also be borne in mind that the documentation had been subject to translation where some minor differences are readily explicable.

76 It was somewhat unclear whether the defendant was maintaining that actual receipt needed to be demonstrated. Thus, in oral submissions it appeared to be accepted that there were only two complaints[25] which I have now dealt with.

77 Nevertheless, given the matter was dealt with by the plaintiffs' Counsel (and the defendant's written submissions) I will deal with the suggestion that actual receipt by all relevant Chinese authorities was necessary but not effected.

78 I do not consider that a reasonable business person would understand the word 'submit' in cl 1.10 to mean receipt. As highlighted by the defendant, the dictionary definitions of 'submit' relevantly include:

(a) to 'hand over' for assessment, valuation;[26]

(b) to 'present' to a person or body for consideration or judgment.[27]

79 The Latin origin of the word relevantly also includes 'to send'.[28]

80 Hence, the ordinary meaning of the word 'submit' does not necessarily connote receipt. Rather it focuses attention on the actions of the person at the point of origin.

81 This also tends to be confirmed by the context in which the term appears. Not only is there no explicit reference to 'receipt', the only further obligation imposed in cl 1.10 is an obligation to provide a copy of the request itself within 7 business days. There is no suggestion that the plaintiffs were to demonstrate or provide any additional evidence of actual 'receipt.'

82 Moreover, to the extent that there is any issue with the further termination of criminal proceedings this is expressly dealt with by cl 1.12 which requires the plaintiffs to take any 'further' reasonable steps within their power to support termination of any criminal proceedings 'in addition to' the obligation set out in clause 1.10. It was not suggested that there was any breach of this clause. However, the reference to the word 'further' confirms that the plaintiffs were only to take reasonable steps within their power pursuant to clause 1.10.

83 In such circumstances, a reasonable business person would understand that cl 1.10 merely imposes an obligation on the plaintiffs to take all reasonable steps within their power to 'present' or 'send' the relevant request with no obligation to provide any acknowledgment of receipt.

84 I am satisfied that the plaintiffs established that they took all reasonable steps within their power to ensure the First Withdrawal Request was sent in accordance with cl 1.10. This is established by reason of the EMS Despatch Documents and Online Tracking Print Outs summarised above, as well as the Further Evidence.

85 Indeed Counsel for the defendant fairly accepted that one might infer from the Online Tracking Print Outs that there was in fact delivery of something to all four identified addresses.[29] The Further Evidence establishes that that 'something' was the First Withdrawal Request.

86 However, even if receipt is required, I am satisfied that I ought to infer both delivery and receipt in this case.

87 I should first say that, in terms of onus, I do not accept there is any further onus on the plaintiffs to demonstrate actual receipt (as appears to be suggested in correspondence from the defendant). Thus, although the plaintiffs might have greater knowledge/means as to whether they sent the request, there was nothing to suggest they were in a superior position as regards receipt.

88 In any event, even if wrong on that, I am satisfied that their onus has been discharged by reason of three factors, below.

89 Thus, first, there is the evidence of delivery summarised above. In particular, the Online Tracking Print Outs show that delivery (of the First Withdrawal Request) was 'Signed for by' a relevant recipient at the time of delivery. I am hence able to infer that the request was received at the point of destination.

90 Second, the evidence establishes that the relevant 4 envelopes were not returned to sender. This is despite the fact that the EMS Despatch Documents included details of the sender's address.

91 In this respect Counsel for the plaintiffs pointed to the statements of Holroyd J in Cushing v The Lady Barkly Gold Mining Company[30] as follows:

The presumption that a letter properly addressed, stamped and posted, and which is not returned to the writer, arrived at its destination, is conclusive if not denied, and so strong that mere non-recollection would be insufficient to outweigh it.[31]

92 This presumption has been approved in other cases including in Victoria,[32] although in Wallville Pty Ltd v Liristis Holdings Pty Ltd,[33] Bryson J suggested that the statement ought be modified from a statement of presumption to a statement of reasoning about factual probabilities.[34]

93 Even if not a presumption, however, the non-return of the correspondence in this case further supports an inference that there was receipt.

94 Finally, there is also the evidence that EMS was one of the largest and most reliable mail service providers in China.

95 Overall, then, even if the onus was on the plaintiffs to demonstrate receipt, I am satisfied that any such onus has been discharged.

96 The allegation that the First Withdrawal Request was not sent to, or received by, the relevant authorities is not sustained.

(c) That the First Withdrawal Request was not sent to the Complaint Addressee

97 The defendant submitted that 'all relevant Chinese authorities' included the Complaint Addressee, being the authority who, on the face of it, was to be the intended recipient of the Complaint (a fact known to both parties at the time of the Deed).

98 Further, that it did not matter that the plaintiffs never sent it to that Complaint Addressee given this serious document rested in the Chinese legal system with a stated and manifest intention of being directed to that entity.

99 As properly conceded by the defendant, it was known to both parties that the Complaint never went to the Complaint Addressee, given both knew the terms of the Case Filing Notification (which was annexed to the affidavit of Mr Yan of 14 July 2015 and filed in the proceeding).[35]

100 In such circumstances, there is nothing to suggest that the Complaint had ever come to the attention of the Complaint Addressee. Nor was there any evidence to suggest that it was otherwise a relevant Chinese authority (in fact, the First Withdrawal Request suggests it had no jurisdiction over the matter).

101 The defendant has therefore failed to establish that the Complaint Addressee was a relevant Chinese authority pursuant to cl 1.10 and no breach is established.

(d) That the First Withdrawal Request was not addressed to officials within each of the relevant authorities

102 The defendant submitted that it was necessary to determine who the relevant decision-maker was so as to address the relevant request to that particular person. This was because cl 1.10 could not be performed unless there was receipt by the relevant decision-maker.

103 I accept the plaintiffs' submission that there is no express or implied obligation in the Deed to name a particular person at each organisation as a recipient.

104 Rather, cl 1.10 merely requires that a request be submitted to all relevant Chinese 'authorities'.

105 I am fortified in this view by the fact that the Complaint was sent to an authority rather than to any particular individual.

107 The defendant has not established that the plaintiffs breached their obligation to submit a request to all relevant Chinese authorities in accordance with cl 1.10 of the Deed.

108 It follows that the answer to the question raised in issue 1 is 'No'.

109 It also follows that the defendant is liable to pay the plaintiffs the Balance plus interest and costs, under cl 3.1.

110 In such circumstances it is unnecessary to consider the other 2 issues. However, for the sake of completeness, I will briefly summarise my views.

Issue 2: Whether effective written notices of breach

111 First, as stated by Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd,[36] the construction of a notice must be approached objectively.[37] The issue is how a reasonable recipient would have understood the relevant notice, i.e. the issue is what reasonable persons in the same circumstance as the actual parties were, would have had in mind.[38]

112 Second, it is important that the notice identify the applicable clause of the contract allegedly breached,[39] i.e. that the contents of the notice are 'matched' against the relevant requirements in the clause.[40]

113 Third, it may be enough to direct attention to the provision in the contract in respect of which default is made. However particulars may also be necessary with each case depending on its own circumstances.[41]

114 Finally, it may be relevant to consider any information provided by the drafter of a notice in response to an inquiry by the addressee.[42]

115 The defendant submitted that cl 1.11 does not demand a high degree of particularity, nor were there any formal requirements, beyond that the notice be in writing.

116 It was therefore sufficient that the notice allowed the plaintiffs to understand that the defendant asserted that requests had not been submitted to all relevant Chinese authorities.

117 In oral submissions it was submitted that cl 1.11 only required 'written notice of the breach.' This did not carry an obligation of specificity or particularity.

118 It was therefore submitted that the First Alleged Breach Notice constituted such notice of the breach given it requested that the plaintiffs 'treat this email as notice of default.' That is, a reasonable person with relevant background would reasonably have understood that this was a notification of a default in relation to the withdrawal of criminal complaints.

119 The First Alleged Breach Notice requests 'evidence of receipt' and then immediately asserts a default.

120 For reasons given already, I do not consider that cl 1.10 requires the plaintiffs to provide evidence of receipt. As highlighted already, the only obligation in this respect is to submit a request, and, further to provide a copy of that request.

121 In such circumstances, a reasonable recipient is unable to understand the alleged breach of the Deed since the notice does not 'match' the contractual requirement. This view is also fortified by subsequent correspondence wherein the defendant (in response to an inquiry from the plaintiffs) again maintains that he should be provided with 'acknowledgement of receipt' (in correspondence dated 16 May 2017).

122 It follows that the defendant has not established that the First Alleged Breach Notice is an effective written notice of breach.

123 The defendant submitted that the Second Alleged Breach Notice (given on 20 July 2018) explicitly asserted non-compliance with cl 1.10 and was clear enough for a recipient to understand the breach being asserted. Further, that it was not necessary to provide further particularisation.

124 The first answer to this complaint is that the Second Alleged Breach Notice was given too late.

125 Thus, the obligation to pay the Balance accrued on 3 May 2018 under cl 1.8.

126 Further, although the words of cl 1.11 may appear to be without temporal limitation as the defendant submitted, the release is futuristic in providing that Mr Zhang 'shall be released' from his 'obligation [under clause 1.8] to pay' the Balance. Thus, there is no suggestion that Mr Zhang could be released from an obligation 'to have paid' the Balance (the failure of which may have already given rise to an entitlement to judgment).

127 Such a construction is consistent with what reasonable business people would understand the Deed to do. In the context of a settlement deed, it can hardly have been intended that payment to the plaintiffs on 3 May 2018 could be put in jeopardy for an uncertain future time. Indeed the whole context of cls 1.10 to 1.12 is that the request to withdraw the complaint was to take place swiftly - within 7 days of receipt of the AU$500,000 (which was to be paid 'immediately' under cl 1.2). Further, that a sum certain should be paid by 3 May 2018 to finalise the position of the parties.

128 Given this construction, I do not consider that any written notice of the breach could be given after 3 May 2018.

129 Even if I am wrong on this, the second issue is whether the Second Alleged Breach Notice was otherwise effective. In particular, although the Second Alleged Breach Notice does appear to identify the correct clause and 'match' the contractual requirement in cl 1.10, the question which arises is whether proper particulars ought to have been given (as was ultimately done at the hearing of this matter, as outlined above).

130 It is true that cl 1.11 merely requires 'written notice of the breach.' However, there are two other matters of significance which suggest that particulars ought to have been provided in this case.

131 First, there is the unanswered inquiry from the plaintiffs described above on 23 July 2018. As highlighted already, the Court is entitled to take into account any inquiry made by a recipient of a notice. This inquiry was also made in a context of a considerable time delay where the current summons had been issued for enforcement of the Deed. In such circumstances I consider that the defendant ought to have provided particulars so that the plaintiffs might address any defect. This may even have avoided the hearing in this case since it was really only at the hearing that particulars were properly specified (with further evidence then provided).

132 The second matter which fortifies this finding is that cl 1.11 only provides for a release where any breach 'continues' for 7 days after the relevant written notice. The obvious purpose of this period is to provide an opportunity to the plaintiffs to take action to cure any defect. This purpose is rendered nugatory unless the plaintiffs are given particulars of the alleged breach (where they are clearly asking for them).

133 Given the Second Alleged Breach Notice was out of time and, further, ineffective absent particularisation, I am therefore not satisfied that it was an effective written notice of breach.

134 The answers to the questions raised in issue 2 are 'No' and 'No.'

Issue 3: Whether breach continued 7 days after notice

135 If, contrary to the above, the plaintiffs breached cl 1.10, and, further, the defendant's Second Breach Alleged Notice was effective, the plaintiffs rely on the Second Withdrawal Request as curing any alleged defect.

136 Counsel for the defendant submitted that the request was not submitted to the Complaint Addressee. Further, that there was no evidence that the request itself was enclosed in whatever was sent.[43]

138 Thus, the Further Evidence shows that that the Second Withdrawal Request was enclosed in the envelopes. To the extent necessary, the evidence of receipt is also stronger given the Request was hand delivered.

139 Second, for reasons given above, I do not consider that the Complaint Addressee was a relevant Chinese authority in circumstances where the Complaint was never delivered to it.

140 Given the Second Withdrawal Request was submitted to the relevant authorities on 26 and 27 July 2018 this means it was delivered within 7 days after the date of the Second Breach Notice of 20 July 2018. In such circumstances any breach did not continue for a period of 7 days following written notice of the breach.

141 It follows that the answer to the question raised by issue 3 would also be 'No', but only insofar as far as the Second Alleged Breach Notice is concerned.

142 There will be orders for the plaintiffs as follows: [44]

(a) There be judgment for the plaintiffs against the defendant for the amount of $1,000,000 plus interest.

(b) The defendant pay the plaintiffs' costs of the application on an indemnity basis.

[1] Affidavit of Andrew John Green sworn 6 June 2018 [5].

[2] Transcript of Proceeding (13 November 2018) 1-2.

[3] See 'Agreed List of Issues for Determination at the Hearing on 4 October 2018' (Agreed List of Issues).

[4] See Seachange Management Pty Ltd v Pital Business Pty Ltd [2009] VSCA 139; (2009) 23 VR 396, 408 [40] and Transcript of Proceeding (13 November 2018) 1-2.

[5] Transcript of Proceeding (13 November 2018) 81-82.

[8] It was accepted that Ausen and Ms Huang are consequently now released under this provision, see Transcript of Proceeding (13 November 2018) 2-3.

[10] Affidavit of Fenfang (Jolene) Zhou dated 13 November 2018 [2].

[11] There was a third EMS Despatch Document numbered 1053173017524 attached to the plaintiffs' solicitors' email dated 12 May 2017, which appears to be a duplicate of the EMS Despatch Document with the same number attached to the plaintiffs' solicitors' email dated 11 May 2017.

[12] Yan & Anor v Zhang (Ruling No 1) (revised 22 November 2018, unpublished).

[13] The affidavits were unsworn as at the date of the hearing and were marked for identification with an undertaking given by plaintiffs' Counsel that sworn versions would be filed (see Transcript of Proceeding (13 November 2018) 80. Sworn versions of the three affidavits were subsequently filed on 14 November 2018.

[14] The documents were personally handed to the guard room of the Economic Crime Investigation Department of Shanghai Public Security Bureau; the #8 reception window of the Economic Crime Investigation Department of Pudong New District Branch of Shanghai Public Security Bureau; the guard room of the People's Procuratorate of Pudong New District, Shanghai; and the #1 reception window of People's Court of Pudong New District, Shanghai.

[15] Transcript of Proceeding (13 November 2018) 122-123.

[16] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116 [47] per French CJ, Nettle and Gordon JJ; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 343 ALR 58, 70 [45], 77 [73]; Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656 [35].

[17] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116 [46] per French CJ, Nettle and Gordon JJ.

[21] They did not rely on the Second Withdrawal Request in its own right, only as a 'fall back' if the Second Alleged Breach Notice was effective in respect of issue 3: see Transcript of Proceeding (13 November 2018) 106.

[22] Citing Strong v Woolworths Ltd t/as Big W [2012] HCA 5; (2012) 246 CLR 182.

[23] Transcript of Proceeding (13 November 2018) 7-9.

[24] [2005] NSWSC 463; (2005) 191 FLR 173, 190 [54].

[25] Transcript of Proceeding (13 November 2018) 35.

[26] Macquarie Dictionary (online) 'submit', accessed 16 November 2018.

[27] Oxford Dictionaries (online) 'submit', accessed 16 November 2018.

[28] Collins English Dictionary (online) 'submit', accessed 16 November 2018.

[29] Transcript of Proceeding (13 November 2018) 34.

[30] [1883] VicLawRp 21; (1883) 9 VLR (E) 108.

[32] Durney v Deakin University [2014] VSC 577 [47].

[33] [2001] NSWSC 894.

[35] Transcript of Proceeding (13 November 2018) 19, 48, 118.

[36] [1997] UKHL 19; [1997] AC 749.

[38] Ibid 767-768. This approach has been endorsed in MLW Technology Pty Ltd v May [2005] VSCA 29 [78]-[82], by Gillard AJA (with Winneke P and Buchanan JA agreeing) and, more recently in Salta Constructions Pty Ltd v St George Bank, a Division of Westpac Banking Corporation Limited [2014] VSCA 289; (2014) 45 VR 245, 253-254 [28].

[39] R Developments Pty Ltd v Forth [2017] ACTCA 38 [50].

[40] Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99 [388].

[41] Re Stewardson Stubbs and Collett Pty Ltd v Bankstown Municipal Council (1965) NSWR 1671, 1675 per Moffitt J cited in FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 [147].

[42] Bunbury Foods Pty Ltd & Anor v National Bank of Australasia Ltd & Anor [1984] HCA 10; (1984) 153 CLR 491, 504; Hounslow London Borough Council v Twickenham Garden Developments Ltd [1970] 1 Ch 233, 265.

[43] Transcript of Proceeding (13 November 2018) 52. See also Transcript of Proceeding (13 November 2018) 53, where Counsel said other arguments regarding joint plaintiffs and lack of correlation could not be made here.

[44] The defendant agreed to this form of order, see Transcript of Proceeding (13 November 2018) 126.