Guo v Yufeng Investment Group

ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Guojin Huang v Jinghong Wei (No 2) [2022] NSWSC 473 GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113 GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315 Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6 Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 In the matter of Sunnya Pty Ltd [2024] NSWSC 403 Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd; Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Lane v L3 Enterprises Pty Ltd [2007] QSC 288 Ling v Pang [2023] NSWCA 112 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Norberg v Wynrib [1992] 2 SCR 226 Ogilive v Adams [1981] VR 1041 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 Sangha v Baxter [2009] NSWCA 78 Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268 The Insurance Commissioner v Joyce (1948) 77 CLR 39; [1948] HCA 17 Tozer Kemsley & Millbourn (Australasia) Pty Ltd v Collier's Interstate Transport Service Ltd (1956) 94 CLR 384; [1956] HCA 6 Watson v Foxman (1995) 49 NSWLR 315 Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51 Zibara v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18; [2021] FCAFC 4 Texts Cited: PD Finn, Fiduciary Obligations (Federation Press, 2016) Category: Principal judgment Parties: Wencheng Guo (Plaintiff) Yufeng Investment Group (Australia) Pty Ltd (First Defendant) Roseburg Investment Pty Ltd (Second Defendant) Changran Huang (Third Defendant) 152 Rowy Pty Ltd (Fourth Defendant) Representation: Counsel: MS Henry SC w DJ Delany (Plaintiff) J Kay Hoyle SC w FD Di Lizia (First and Fourth Defendants) G Ng SC w N Li (Third Defendant)

Solicitors: Arnold Bloch Leibler (Plaintiffs) Mitry Lawyers (First and Fourth Defendants) Unsworth Legal (Third Defendants) File Number(s): 2022/00329438 Publication restriction: Nil

Introduction

1. This proceeding arises out of a personal and business relationship between the Plaintiff, Mr Wencheng Guo, and the Third Defendant, Mr Changran Huang.
2. It is common ground that in May and October 2013, following conversations with Mr Huang, Mr Guo paid substantial sums into a bank account of Yufeng Investment Group (Australia) Pty Ltd. At the time, Mr Huang was a director and the Chairman of Yufeng.
3. Mr Guo claims that these moneys were paid pursuant to two oral agreements between Mr Guo and Mr Huang: 1. first, an agreement in May 2013 that Mr Guo would make a $20m investment in a joint commercial endeavour with Mr Huang involving the acquisition and development of a shopping centre in Eastwood, New South Wales (Eastwood Shopping Centre), in return for receiving a 60% share of income and profits; and 2. secondly, an agreement in October 2013 that Mr Guo would make a $16.8m loan to Mr Huang, which was guaranteed by Yufeng, with interest payable annually at a rate of 24% per annum.
4. It is common ground between Mr Guo and Mr Huang that Yufeng received the sum of $20m from Mr Guo in May 2013. Shortly prior to the receipt of those funds, Mr Huang, who was sole shareholder of Yufeng, transferred 30% of the shares in Yufeng to Mr Guo's wife. Mr Guo claims that Mr Huang agreed, at around this time, to hold another 30% of the shares in Yufeng on trust for Mr Guo. In May 2013, Mr Huang transferred his 70% shareholding in Yufeng to the Second Defendant, Roseburg Investment Pty Ltd, as trustee of Mr Huang's family trust.
5. The Eastwood Shopping Centre was not purchased by Yufeng, but by the Fourth Defendant, 152 Rowy Pty Ltd. Yufeng owned 95% of the shares in 152 Rowy, with the other 5% being held by a company associated with Mr Huang's accountant.
6. The purchase price for the properties comprising the Eastwood Shopping Centre project was $55.97m. In July 2021, 152 Rowy sold those properties for $155m. Mr Guo did not receive any share of the income from the operation of the Eastwood Shopping Centre, or any share of the profit from the sale of the Eastwood Shopping Centre.
7. Mr Guo claims that he and Mr Huang entered a joint venture in relation to the purchase and redevelopment of the Eastwood Shopping Centre; that Mr Huang owed fiduciary obligations to Mr Guo; that Mr Huang breached those fiduciary obligations by retaining Mr Guo's 60% share of the profits and income from the Eastwood Shopping Centre project, without Mr Guo's informed consent; that 152 Rowy knowingly participated in this breach, or alternatively is liable as Mr Huang's alter ego; and that Roseburg Investment holds 30% of the shares in Yufeng on trust for Mr Guo.

Witnesses

1. Mr Guo gave evidence in support of his claims and was cross-examined over the course of three days. In addition, he called evidence from two ex-wives, Ms Ying Deng and Ms Lin Zhang, who were also cross-examined, including regarding conversations with Mr Huang.
2. Mr Huang did not give any evidence in defence of Mr Guo's claims, and did not call any other witness. There was no explanation for the absence of Mr Huang, who had sworn a lengthy affidavit (parts of which were tendered as admissions by Mr Guo).
3. Yufeng and 152 Rowy did not call any evidence from their director, Mr Jiquan Huang, despite having served two affidavits affirmed by him. Mr Jiquan Huang is Mr Huang's son. There was no explanation as to why he was not called to give evidence. A redacted copy of one of his affidavits was tendered by Mr Guo, on the basis that it contained admissions. According to this document, Mr Jiquan Huang had, in 2023, an address in North Strathfield, New South Wales.
4. Yufeng and 152 Rowy called one witness, Ms Xueyi Fan. Ms Fan is not an employee or officer of either of those companies. Instead, she is employed as a tax accountant by a business which was engaged by Yufeng and 152 Rowy to review their books and records. Her evidence was essentially confined to statements about matters recorded in those documents. She was not cross-examined.
5. Roseburg Investment did not appear at the hearing.

Credit attack on Mr Guo

1. Mr Huang submitted that any part of Mr Guo's witness statement and oral evidence which was not corroborated by a document which the Court is satisfied records a genuine dealing must be treated as unreliable.
2. Mr Huang advanced three main criticisms of Mr Guo's evidence: first, that Mr Guo's evidence was "coloured by his sense of grievance and his regret at having made a bad bargain", referring to Mr Guo's intemperate language and casual attacks on Mr Huang's integrity in the course of cross-examination; secondly, that Mr Guo had "a propensity for reconstruction", referring, for example, to his changing evidence regarding how the $20m investment was effected; and thirdly, that Mr Guo had "an inability to distinguish truth from untruth", referring to his refusal to accept that some statements made by him in the past were inconsistent with his evidence in this proceeding, and that both could not be true.
3. I accept that there is some force in these criticisms.
4. As regards the first criticism, Mr Guo was frequently animated and voluble in his answers, raising his voice and expressing anger in response to questions. He frequently gave lengthy, non-responsive and self-serving answers.
5. It was plain that Mr Guo has a deep-seated grievance regarding what he sees as a betrayal by a former close friend. That is not surprising, given that (on the Defendants' own case) Mr Guo contributed $36.8m to Yufeng, which was used to purchase an investment that made a very substantial profit, and the Defendants assert that Mr Guo is entitled neither to receive any share of that profit nor to have any of his money repaid.
6. I do not, however, regard Mr Guo's temperament in cross-examination as a significant matter when assessing his evidence. The well-known limitations on making credit assessments based on a person's demeanour are amplified where (as here) cultural issues may impact the manner in which a person responds to questions, and where evidence is given through an interpreter: DVO16 v Minister for Immigration and Border Protection (2021) 273 CLR 177; [2021] HCA 12 at [54] per Edelman J; Guojin Huang v Jinghong Wei (No 2) [2022] NSWSC 473 at [18] (Kunc J).
7. As regards the second criticism, Mr Guo's evidence has, in some respects, changed over time as documents have come to light or issues have been raised in response to his evidence. For example, he initially claimed to recall having transferred $20m in cash to Yufeng's bank account, but later changed this evidence when it became apparent that only $10.1m had been transferred. In his second affidavit, he gave evidence of a set-off arrangement between himself and Mr Huang regarding the $9.9m balance of his investment, which had not been mentioned in (and was inconsistent with the evidence given in) his first affidavit.

Absence of Mr Huang

1. Mr Huang did not give any oral evidence in his defence of Mr Guo's claims, and his absence is unexplained.
2. In those circumstances, Mr Guo contended, and I accept, that the Court is entitled to draw an inference against Mr Huang that his evidence would not have assisted his case; and to draw, with greater confidence, inferences against him that are open on the evidence, where it appears that Mr Huang was in a position to cast light on whether the inference should be drawn: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63]-[64] per Heydon, Crennan and Bell JJ.
3. As Kitto J put it in Jones v Dunkel (1959) 101 CLR 298 at 308; [1959] HCA 8: "any inference favourable to the plaintiff 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 defendant and the evidence provides no sufficient explanation of his absence".
4. In Ling v Pang [2023] NSWCA 112 at [27], Kirk JA said (Leeming and Mitchelmore JJA agreeing) that: "What underlies the principle in Jones v Dunkel is that the failure to call the witness 'serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party': Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; at 320-1 at 320-321 per Windeyer J; see also Fabre v Arenales (1992) 27 NSWLR 437 at 449 per Mahoney JA."
5. This is particularly the case where the witness who is not called is a party. As Rich J observed in The Insurance Commissioner v Joyce (1948) 77 CLR 39 at 49; [1948] HCA 17, "when circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matter prefers the well of the court to the witness box a court is entitled to be bold". In Chong & Neale v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137 at [212], the Victorian Court of Appeal observed that: "In Dilosa v Latec Finance Pty Ltd [No 2], Street J recognised that where the absent witness is a party then considerable importance may well attach to the inference that nothing which the party could say would assist his or her case. As Gleeson CJ said in Azzopardi, the judgments in Weissensteiner recognise that the inference that may be drawn from the silence of a party to civil litigation may be significant. Santow J drew such an inference in ASIC v Adler because the parties who were available and not called had a personal involvement in the transactions in question. …"

Factual background

1. Mr Guo first met Mr Huang in 2006.
2. They are both members of the Chaoshan community in China, which is a community of people from an area of Guangdong province, centred on the cities around Jieyang, Shantou and Chaozhou. All of their conversations took place in the Chaozhou dialect, unless other people were present (in which case they spoke in Mandarin Chinese). Mr Guo does not speak or read English.
3. From the 1980s, Mr Guo established a business which was primarily involved in the trade of palm oil. In around 2010, he founded a group of companies in China called the NNF Group ("Nian Nian Feng"). From around that time, he invested in a number of property developments in China.
4. Mr Huang's business in China was called the Yuhu Group.
5. By 2012, Mr Guo and Mr Huang were good friends. They did not, prior to 2012, have any business dealings together in China.
6. It was common ground that, within the Chaoshan business community, there is a custom of loans being made between members of that community without any documentation. Mr Guo deposed that: 1. such loans are generally arranged by telephone calls and sometimes using WeChat; 2. the lender "usually" charges interest on this type of loan, which can be as high as 3 to 4% per month; and 3. if the lender requires funds to be repaid, usually at least 5 days' notice will be given to the borrower, and the borrower must pay back the deposited funds and the interest following the repayment demand.
7. Mr Guo gave the following evidence about this practice in cross-examination: "Q. … Within the Chaoshan community, there is a practise of business people lending money to acquaintances without the need for a written loan agreement, correct? A. INTERPRETER: Yes. … Q. The loans made in accordance with this practise can involve very large amounts of money, correct? A. INTERPRETER: What do you mean? Q. They can involve loans totalling millions of y[ua]n, correct? A. INTERPRETER: Yes. Q. They're generally arranged by telephone call or through messages on WeChat, correct? A. INTERPRETER: Yes. … Q. Often, the discussions that lead to such loans being made can take no more than a few minutes, correct? A. INTERPRETER: Yes. … Q. Before making such a loan, the lender doesn't perform a detailed review of the borrower's financial position, correct? A. INTERPRETER: Yes. Q. The lender doesn't seek to verify the value of the borrower's assets and liabilities, correct? A. INTERPRETER: Yes. Q. The lender doesn't seek to check the annual income or expenses of the borrower, correct? A. INTERPRETER: Yes. Q. And the lender doesn't require documents as evidence of any of those matters, correct? A. INTERPRETER: Yes."

First visit to Australia

1. In around June or July 2012, Mr Guo and his then wife, Ms Deng, had a meeting with Mr Huang at his office in Shenzhen. Mr Huang told Mr Guo that the Yuhu Group was undertaking business in Australia. He invited Mr Guo and Ms Deng to visit Australia, in order to see if they would like to invest with him in Sydney.
2. Mr Guo and Ms Deng agreed, and Mr Huang arranged the trip for them, including making applications for visas and arranging air tickets.
3. On 30 August 2012, Mr Guo and Ms Deng arrived in Sydney, staying for around two weeks. Mr Huang arranged accommodation and local transportation, and gave Mr Guo $10,000 spending money. One of the places to which Mr Guo was taken by Mr Huang was a shopping centre. Mr Huang explained that he had purchased this shopping centre for around $16m through a family trust.
4. Mr Guo gave unchallenged evidence that Mr Huang told Mr Guo, in the course of this visit, that Mr Huang would establish a company in Sydney and proposed that they do business together, stating: "I will look for investments and you could invest in projects with me together".
5. In September 2012, Mr Huang established Yufeng, which at that time was called Yuhu Group (Australia) Pty Ltd. At that time, Mr Huang was its director, secretary and sole shareholder.
6. Following his first visit to Sydney in 2012, Mr Guo loaned money to companies in China which were associated with Mr Huang.

February 2013 trip to Australia

1. Mr Guo took further trips to Sydney in January 2013 and February 2013 at Mr Huang's invitation.
2. In middle to late February 2013, Mr Huang took Mr Guo to see the Eastwood Shopping Centre. Mr Guo gave evidence that, during this visit, Mr Huang said to him words to the following effect: "(a) the shopping centre is a very good project and prospect for investment; (b) the market valuation for the property is around AUD $56 million but Mr Huang might be able to negotiate a lower price of around AUD $55 million or even $53 million; and (c) although it is a project that will involve a large investment, it is a very good investment because of the rental income from the shopping centre and because it might be possible to convert and redevelop some of the space to realise more commercial benefits."
3. Later that same day, Mr Huang took Mr Guo to dinner at the Golden Century restaurant in Sydney.
4. Mr Guo deposed that, in the course of this dinner, Mr Huang again told Mr Guo that he thought the Eastwood Shopping Centre was a good investment project, and said words to the following effect: "The shopping centre can be purchased with a price of AUD $55 million and, with the other costs including tax, the whole purchase price will be AUD $60 million" "I will fund approximately half of the $60 million using bank loans. For the other half of the purchase price, which is $30 million, I hope you can contribute $20 million. You will be holding 60% of the shares. I will be contributing $10 million. I will be holding 30% of the shares. I will be also be providing the management team to run this project. That means I will be holding another 10% of the shares as value in kind."
5. Mr Guo further deposed that Mr Huang said that, if they purchased the Eastwood Shopping Centre, Mr Huang would apply for approval to redevelop the shopping centre and would seek to increase the number of apartments within the shopping centre complex and to expand the capacity of the shopping centre; and said words to the following effect: "Currently the shopping centre is very old. The shops that are rented are not very organised. The leases for some of the shops have already expired, and the centre didn't enter into new agreements. The shops are just paying the rental fee according to the terms of the expired leases. So currently the shopping centre generates an income of about $2 million. But after the renovation, we are planning to sign new lease contracts with the shops. Then the shops will generate a rental income of $3 to $4 million, or even $4 to $5 million on an annual basis. We will divide the income according to our shareholdings in the project. It is a very good project."

Meeting in March 2013

1. In March 2013, Mr Guo was staying at a hotel room which Mr Huang had arranged and booked in Sydney.
2. At Mr Huang's request, Mr Guo attended a meeting at Mr Huang's house in Mosman.
3. Mr Guo deposed that, at this meeting, he and Mr Huang had a conversation to the following effect: "Mr Huang: What do you think about the Eastwood project that I mentioned to you last time? [Mr Guo]: This is a good project. I'm willing to invest in it."
4. Mr Guo also deposed that Mr Huang advised him that there were advantages in setting up a family trust, saying words to the effect that: "If you transfer your funds into the family trust, and something bad happens to you in China, this asset, because it belongs to the entire family, is safe". According to Mr Guo, a conversation took place to the following effect: "Mr Huang: Of your shares of 60%, I will hold 30% on your behalf and Deng Ying will hold the other 30%. It would be better not to register any shares under your name. It would be safer for you. You should expedite the process of setting up a family trust. As soon as the family trust is established, Deng Ying should transfer the shares she is holding on your behalf to the family trust. it will help me to attract investors if it can be shown on paper that I own 70% of the total shares. It will bring you no loss. It will be beneficial for my business activities in the future. Also, Deng Ying is very beautiful and young. To protect against what might happen if she Ieaves you, it would be better if I hold 30% of the shares on your behalf initially, and then also on behalf of your family trust when it is established. [Mr Guo]: Ok."
5. Mr Guo also deposed that, at this meeting, the following discussion took place: "Mr Huang: There will be three directors of the joint venture. One will be either you or Deng Ying. I will be another director and there will be one more. [Mr Guo]: I propose Deng Ying."

Transfer of shares to Ms Deng and appointment as director

1. Prior to April 2013, Mr Huang held all of the 100 shares issued in Yufeng.
2. On 11 April 2013, Mr Huang transferred 30 of the shares in Yufeng to Ms Deng, retaining 70 shares. On the same day, Ms Deng was appointed as a director of Yufeng.
3. Ms Deng did not remember the details of the papers relating to Yufeng which she was asked to sign, but could recall signing papers because Mr Guo asked her to do so. She never performed any function as a director of Yufeng.
4. Mr Huang stated, in a part of his affidavit which was tendered by Mr Guo, that he understood Ms Deng's role as a director to be similar to that of a director of one of his companies in China "in the sense that the appointment was in name only, but carried no power". He explained that he "had companies in China, the only directors of which were employees of mine who exercised no control or influence over the management of the company".

Transfer of $10.1m to Yufeng

1. Around the start of May 2013, Ms Deng opened, at Mr Guo's request, an account with the Bank of China in Hong Kong. Mr Guo transferred money into this account, which Ms Deng then transferred, at Mr Guo's request, to Yufeng.
2. In particular, Ms Deng transferred the following amounts from this account to Yufeng's account: 1. on 2 May 2013, an amount of $4.5m; and 2. on 3 May 2013, an amount of $5.6m.
3. In closing submissions, the Defendants accepted that these payments were made by Ms Deng on behalf of Mr Guo, using Mr Guo's money.
4. On the "Customer Advice" form for the $5.6m transfer to Yufeng, Ms Deng wrote a note in Mandarin which translates as follows: "Money to buy 30% shares in Eastwood Shopping Centre".
5. Ms Deng wrote this note shortly after the transaction, and before she put the document in a safe. In cross-examination, she gave the following evidence regarding the content of this note: "Q. Now, just in relation to the handwritten note there, Ms Deng, you're recording that the money you're transferring is for a 30% share in the Eastwood Shopping Centre. Is that correct? A. WITNESS: Yes. Q. And you understood, and when you say "money", you're referring both to the money that you transferred on 3 May as well as 2 May 2013. A. INTERPRETER: Yes. Q. And at the time you made this notation, you understood that those funds were being transferred in relation to obtaining a 30% share in the Eastwood Shopping Centre. Is that correct? A. INTERPRETER: Yes. Q. And you form that understanding on the basis of discussions you had with Mr Guo. A. INTERPRETER: Yes. He said to me - he asked me to transfer the investment money, the investment project in Australia. Q. And so you understood that Mr Guo would be getting a 30% share in the Eastwood Shopping Centre. Is that correct? A. INTERPRETER: Yes, that's what he told me."

Receipt of $20m

1. The two payments which Ms Deng made into Yufeng's account in early May 2023 totalled $10.1m (less fees).
2. Mr Guo gave evidence that, in late April 2013, he had a discussion with Mr Huang in which: 1. Mr Guo explained that he only had around $10m cash available; 2. Mr Guo referred to a debt of around 90 million yuan which Mr Huang owed to Mr Guo in China; and 3. Mr Guo proposed that, for the remaining balance of Mr Guo's $20m investment, Mr Huang would transfer the amount of $9.9m towards the acquisition of the Eastwood Shopping Centre and Mr Guo would deduct this from Mr Huang's debt to him in China.
3. In May 2013, Mr Guo met Mr Huang at his house in Mosman. Mr Huang told Mr Guo that he had received the two bank transfers totalling $10.1m, and that he had made a payment of $9.9m into Yufeng's bank account on behalf of Mr Guo.
4. At this meeting, Mr Huang signed a document on the letterhead of Yufeng, dated 19 May 2013, which he handed to Mr Guo. Mr Guo has retained the original of this document. It states as follows: "[Yufeng] acknowledges the receipt of twenty million Australian dollars (AUD 20,000,000.00) in investment funds from shareholder Ms Deng Ying."
5. Although there was an issue raised by the Defendants on the pleadings and in opening submissions as to whether Yufeng had in fact received $20m from Mr Guo (and, in particular, whether the $9.9m set-off transaction occurred), this issue fell away in the course of the hearing. In closing submissions, Senior Counsel for Mr Huang made the following concession: "HIS HONOUR: Just to clarify something that … flows from what you were saying about the 9.9 million offset. And a few times you've mentioned the [figure of] 20 million. You accept that there was 20 million paid as recorded in Mr Huang's receipt. [SENIOR COUNSEL FOR MR HUANG]: I don't think I can dispute that, given the receipt."
6. Accordingly, it was common ground between Mr Guo and Mr Huang that Yufeng received a total of $20m from Mr Guo.
7. However, there remains a dispute as to whether this was an investment or a loan (despite the receipt signed by Mr Huang referring to this sum as "investment funds").

Change of company name to "Yufeng"

1. Mr Guo gave unchallenged evidence that in March 2013, he asked Mr Huang to change the name of his company, in order to recognise Mr Guo's interest in the company; and that Mr Huang agreed to change it to "Yufeng", once he had received all of the investment funds from Mr Guo.
2. In September 2014, Mr Guo visited Mr Huang at his house in Mosman and asked him to keep his promise to change the company name.
3. On 23 October 2014, Yufeng's name was changed from Yuhu Group (Australia) Pty Ltd to Yufeng Investment Group (Australia) Pty Limited. Mr Huang informed Mr Guo about the name change in November or December 2014.
4. Mr Guo understood "Yufeng" was a portmanteau, combining "Yuhu" (the name of Mr Huang's group of companies) and "Nian Nian Feng" (the name of Mr Guo's group of companies). The Defendants did not advance any alternative explanation for the choice of name.

Mr Huang's shareholding in Yufeng is transferred to Roseburg Investment

1. On 15 May 2013, Roseburg Investment was registered, which was then named Haibin Investment Pty Ltd.
2. Roseburg Investment is the trustee of the Huang Family Trust. The directors and shareholders of Roseburg Investment are, and at all times have been, Mr Huang's wife and Mr Huang's son.
3. In a part of Mr Huang's affidavit which was tendered by Mr Guo, Mr Huang stated that he caused this trust to be established with Roseburg Investment as its trustee.
4. On the date that Roseburg Investment was registered, Mr Huang transferred his 70% shareholding in Yufeng to that company. Roseburg Investment continues to hold those shares.

Acquisition of Eastwood Shopping Centre by 152 Rowy

1. On 16 May 2013, Mr Huang established 152 Rowy, which was then named Yuhu Property (Australia) Pty Ltd.
2. Mr Huang was a director of 152 Rowy from 16 May 2013 to 12 November 2018. His son, Jiquan Huang, has been a director at all times since 12 November 2018.
3. The shares in 152 Rowy were held, as to 95%, by Yufeng and, as to 5%, by VG International Pty Ltd.
4. Mr Stephen Gao, who was at all material times Mr Huang's accountant, was a director and 90% shareholder of VG International.
5. Mr Guo gave unchallenged evidence that Mr Huang told him, some time in around 2014, that Mr Gao was another investor in the Eastwood Shopping Centre project, saying words to the effect that Mr Huang "had not been able to fulfil his share of the investment in the Eastwood project and that Mr Gao had invested".
6. On 30 May 2013, 152 Rowy exchanged contracts for the purchase of the two titles comprising the Eastwood Shopping Centre project, namely, 152-160 Rowe Street, Eastwood (being the shopping centre and office tower) and 168-190 Rowe Street, Eastwood (described in finance documents as the "Strip Shops and Development Land"). The total purchase price for those properties was $55m.
7. 152 Rowy paid a total deposit of $5.5m in respect of these two contracts. This deposit was funded by the transfers made by Ms Deng on 2 and 3 May 2013. On 9 May 2013, the amount of $10.1m which had been transferred by Ms Deng to Yufeng was moved into another account of Yufeng and, on 31 May 2013, an amount of $5.5m was withdrawn from this account.
8. A ledger entries report of 152 Rowy for the year ending 30 June 2013 records the amount of $5,500,500 as a loan from Yufeng; and a ledger entries report of Yufeng for the year ending 30 June 2013 records the two transfers from Ms Deng totalling $10.1m as "Loans from Guo Family Trust". The Guo Family Trust did not exist as at 30 June 2013. (As noted below, it was not established until September 2014.)
9. On 10 October 2013, National Australia Bank (NAB) issued a letter of offer to 152 Rowy for a total facility of $33m to assist with the purchase of the Eastwood Shopping Centre project. On 14 October 2013, this letter of offer was accepted by each of 152 Rowy and the two guarantors, Yufeng and VG International. Mr Huang signed as a director of each of 152 Rowy and Yufeng, and Mr Gao signed on behalf of VG International.

Ms Deng's shareholding in Yufeng transferred to Tongxin

1. In July 2013, Ms Deng bought a property in Mosman, which was paid for by Mr Guo. The property was 100 metres walk from Mr Huang's house. When Mr Guo was in Sydney, he would meet Mr Huang "every two days".
2. On 19 September 2014, a discretionary family trust called the Guo Family Trust was established. The settlor was Mr Gao. The trustee was Tongxin International Pty Ltd. The appointors were Ms Deng and Mr Guo's son. Mr Guo and Ms Deng were named in the trust deed as Income Beneficiaries and Corpus Beneficiaries.
3. On 21 October 2014, Ms Deng transferred, at Mr Guo's request, her 30% shareholding in Yufeng to Tongxin as trustee of the Guo Family Trust.
4. Mr Guo deposed that, in November 2014, he had a conversation with Mr Huang to the following effect: "[Mr Guo]: The Guo Family Trust has been established now. Can you return the shares that you have been holding on my behalf to the Guo Family Trust? Mr Huang: No. First, it would help me to come back up in the business community and it will also show that Yuhu is a reputable company if I hold these shares in my name. Secondly, Deng Ying has also transferred 30% of the shares that she holds on your behalf to your family trust. If I am to transfer the shares that I have been holding on your behalf to the family trust, the family trust would have too much assets. Since Deng Ying is in control of your family trust if you two get divorced you cannot control these assets. Deng Ying might take all these assets away. So you should not put too much assets under her control. It would be safer to put these assets with me. [Mr Guo]: Ok."

May 2015 - Letter of Undertaking

1. Some time prior to May 2015, Mr Zhuang Ruwu had loaned 40 million yuan to companies which Mr Guo controlled in China. In 2015, Mr Zhuang was chasing up payment of those moneys.
2. In May 2015, Mr Zhuang and Mr Guo had a telephone call. Mr Zhuang asked Mr Guo whether he had shares in Mr Huang's company which had bought the Eastwood Shopping Centre, and Mr Guo replied that he did. Mr Zhuang and Mr Guo arranged to meet at Mr Huang's house in Mosman.
3. This meeting occurred in May 2015. At this meeting, Mr Zhuang asked Mr Guo to sign a letter of undertaking.
4. There was in evidence a copy of a Letter of Undertaking which was signed by each of Mr Guo on 26 May 2015 and Mr Huang on 27 May 2015 (each of whom is referred to as a "Promisor"). This letter of undertaking referred to the loan made by Mr Zhuang's company, and recorded promises by Mr Guo that the monthly interest rate from June to September 2015 would be 2%; that the loan would be repaid in full along with interest on 30 September 2015; and that if the loan was not repaid in full by that date, Mr Guo would pay monthly interest at a rate of 2.5% from 1 October 2015. The Letter of Undertaking continued as follows: "Mr. GUO Wencheng now agrees to use the investment from his Yuhu Property (Australia) Pty Ltd in Eastwood NSW, Australia, as collateral for the loan."
5. The reference to Mr Guo's "investment" in Mr Huang's company and the agreement that this would be available as "collateral" for Mr Zhuang's loan likely explain why Mr Huang was asked to sign this document.

Other events from 2015 to 2018

1. In October 2015, Mr Guo moved to Australia. He has been a permanent resident since that time.
2. In around 2015, Mr Guo and Ms Deng divorced.
3. On 4 March 2016, Ms Deng resigned as a director of Yufeng and, on 17 March 2016, she resigned as a director of Tongxin.
4. On 13 April 2016, HD International Pty Ltd replaced Tongxin as trustee of the Guo Family Trust. On the same day, the trust deed was amended to exclude Ms Deng as a beneficiary.
5. On 14 April 2016, Tongxin transferred its 30% shareholding in Yufeng to HD International as trustee of the Guo Family Trust. At that time, the directors of HD International were Mr Huang and Mr Guo's son, and the shares in HD International were held, as to 70%, by Mr Huang and as to 30%, by Mr Guo's son.
6. On 12 November 2018, Mr Huang was replaced as a director of HD International by his son, and his shares in HD International were transferred to his son.
7. HD International remained trustee of the Guo Family Trust until 14 October 2024, when this Court made orders appointing Willow G Holding Pty Ltd as trustee.

2021: Sale of Eastwood Shopping Centre

1. On 12 November 2018, Mr Huang resigned as a director of Yufeng and 152 Rowy.
2. In February 2019, Mr Guo visited Mr Huang's home in Hong Kong. He gave evidence that, at this meeting, Mr Huang said words to the following effect: "the redevelopment requires quite a huge amount of funds. I'm not able to cope with it. I'm going to sell the project."
3. On 22 April 2021, 152 Rowy entered into a contract for the sale of the two properties comprising the Eastwood Shopping Centre project for a total amount of $155m. Around this time, Mr Guo was informed by Mr Gao that a contract of sale had been entered for the Eastwood Shopping Centre and a deposit had been received.
4. In cross-examination, Mr Guo agreed with the proposition put to him by Senior Counsel for Mr Huang that: "It was Mr Huang's decision to sell the shopping mall."
5. On 15 July 2021, the sale of the Eastwood Shopping Centre completed.
6. In August or September 2021, Mr Guo again spoke to Mr Gao, and was told that the Eastwood Shopping Centre had been sold.
7. According to an extract of Mr Jiquan Huang's affidavit which was tendered as an admission by Mr Guo, following receipt of the settlement funds, an amount of $100,538,122.79 was paid to NAB. This was applied to repay 152 Rowy's $33m facility with NAB (which had been used to purchase the Eastwood Shopping Centre), and also to repay loans which had been made by NAB to three related companies of 152 Rowy, which together totalled in excess of $67m. On the same day, 152 Rowy entered into intercompany loan agreements with each of those three related entities (in each case, for the amount of the entity's indebtedness to NAB which had been discharged by 152 Rowy's payment).
8. The balance of the net proceeds of sale, being $20,073,664.62, was paid into 152 Rowy's bank account. The bank statement for this account for July 2021 reveals that the whole of this amount was disbursed, to persons who are not identified, within four days of receipt.

March 2022: Distribution Proposal

1. In October 2021, Mr Guo visited Mr Huang at his house in Hong Kong. Mr Guo gave unchallenged evidence that he told Mr Huang that he had heard about the sale of the Eastwood Shopping Centre and asked when he would receive his share of the profit from the sale. Mr Huang responded as follows: "The contract has been entered into, and the deposit has been received, but the balance hasn't been received yet. I will receive the rest of the payment on around 28 February 2022."
2. In fact, as at October 2021, the whole of the settlement proceeds had been received and disbursed several months earlier.
3. On 28 February 2022, Mr Guo called Mr Huang. Mr Guo gave unchallenged evidence that they had a conversation to the following effect: "[Mr Guo]: You mentioned to me when we met in Hong Kong that you would receive the rest of the payments from the sale of the Eastwood shopping centre on or around 28 February. Mr Huang: There is something wrong with the loan of the buyer. They have already delayed the payment to around 18 March 2022."
4. On 18 March 2022, Mr Guo again called Mr Huang, and was told: "I now confirm the payment has been received."
5. On 25 March 2022, Mr Huang sent Mr Guo a WeChat message which contained a distribution proposal in relation to the sale proceeds from the Eastwood Shopping Centre project (the Distribution Proposal). The Distribution Proposal read as follows (emphasis in original): "Eastwood Project Distribution Proposal 1. Project sales gross profit The sale price of the Eastwood project is AUD 155 million dollars. After subtracting the purchase cost of AUD 59.18 million dollars, and the cumulative investment of approximately 5.77 million dollars, the profit pre-tax is 90.05 million dollars. Based on the income tax rate of 30% for the Australian company, the income tax payable amount is 27.02 million dollars. The final post-tax distributable profit is 63.03 million dollars. Index 1: Purchase cost Stamp duty 3,063,880.00 Purchase cost 55,585,000.00 Development cost 397,171.78 Other costs 82,895.00 Legal cost 54,335.00 Total purchase cost 59,183,281.78

2. Profit distribution The ownership of the Eastwood development project is held by Yuhu Properties Pty. Ltd., whose shareholders include VG International (5% shareholding) and Yufeng Investment Group Pty Ltd (95% shareholding). Yufeng Investment Group Pty Ltd is made up of 70% shares held by the Huang Family Trust, and the remaining 30% held by the Guo Family Trust. Based on the net profit of 63.03 million dollars after tax, VG International shall receive AUD 3.15 million, while Yufeng Investment Group (Australia) Pty Ltd shall receive AUD 59.88 million, of which the Huang Family Trust shall receive AUD 41.92 million and the Guo Family Trust shall receive AUD 17.96 million."
3. The pre-tax profit figure of "90.05 million dollars" in the Distribution Proposal appears to have been a typographical error. According to 152 Rowy's tax return for the financial year ending 30 June 2022 (in which the sale of the Eastwood Shopping Centre project occurred), 152 Rowy made a pre-tax profit of $90,005,523: that is, $90.005m rather than $90.05m. The amount of tax assessed to be payable by 152 Rowy was $27,001,656.90. This resulted in an after-tax profit of $63,003,866.10, rather than, as stated in the Distribution Proposal, $63.03m.

Mr Guo rejects Distribution Proposal

1. Mr Guo did not accept the Distribution Proposal. He deposed that his reason for not doing so was that he understood, based on his agreement with Mr Huang, that he "would own 60% of the Eastwood project and that Mr Huang would hold half of my shares on my behalf".
2. However, in a WeChat message which Mr Guo sent to Mr Huang on 3 April 2022, just over one week after receipt of the Distribution Proposal, Mr Guo did not assert that he was entitled to a 60% share of the profits from the Eastwood Shopping Centre project. Instead, he claimed that he was entitled to a 30% share, and that this share had been, in effect, reduced by reason that the project had not been purchased by Yufeng (in which Mr Guo had a 30% interest), but had instead been purchased by 152 Rowy (in which Mr Guo had, through Yufeng's 95% shareholding in that entity, a 28.5% interest).
3. Mr Guo's WeChat message was a carefully considered statement of his position. He gave evidence that he drafted it with the assistance of a friend on 2 April 2022, and he did not send it to Mr Huang until 7.05pm on the following day. Mr Guo's message identified six points, set out his position on each, and asked Mr Huang: "Please read the following six statements carefully and give me a clear response as soon as possible."
4. Mr Guo's message relevantly read as follows (emphasis added): "2… When I came to Sydney in early 2013, you again stressed the need to set up a family trust. You were interested in the Eastwood shopping centre project and asked me to transfer 117 million RMB from China to Australia, which was equivalent to 20 million Australian dollars based on the exchange rate at that time. At that time, we verbally agreed that the company would pay me interest, but to this day there is no explanation for this interest. 3. Regarding the investment in the Eastwood shopping centre project, we verbally agreed at the time that I would own 30% of the project and you would own 70%. Later, probably because of your funding or other reasons, although you asked Jinyu LI and other investors to invest you have only found Liqin GAO to invest. Liqin GAO holds 5%. You give me 30% of the remaining 95% and you take 70%, which means my share was reduced from 30% to 28.5%. This is inconsistent with the original agreement, and I hope you can follow the original agreement. 4. As a shareholder for so many years, I know very little about the Eastwood shopping centre project. In 2016, I wanted my eldest daughter (who graduated with a degree in accounting from the University of Melbourne) to join this project as an accountant, but you didn't agree after I asked you two or three times. To this day, from the time we purchased the project to the time we sold the project and received the full payment, you have not let me see the sales contract and all accounts. Next week, I plan to visit your son Jiquan with my son Huidong. Please ask your son to compile a complete set of the above information for me, a shareholder, to view."

August 2022: Different figures for net profit

1. On 10 August 2022, Ms Cynthia Duan, who was Chief Financial Officer (CFO) for the Yuhu Group, sent an email to Mr Stephen Gao attaching "the Financials and Tax recs for 152 Rowy Pty Ltd for FY22", and setting out a calculation of the dividend that would be payable to VG International from that profit. Ms Duan then provided a revised calculation on 12 August 2022.
2. This revised "VG Calculation" was as follows: Net income from Asset Disposal 95,489,706 Expensed Development Cost - 3,010,081 FY Management fee (Staff cost for DA and asset sales) - 198,000 Interest Cost - Mainly reps the shareholder loan interest paid - 18,106,759 Income tax for FY22 - subject to tax review - 21,821,733 Property Net Income after Tax and Interest 53,343,760 Carried forward tax loss from PY - 2,426,383 VG Franked Dividend 2,545,869

1. The figures in this calculation differ in a number of respects from those in the Distribution Proposal. The net income from the sale of the Eastwood Shopping Centre project is recorded as $95,489,706 (rather than $90.05m in the Distribution Proposal); and the net income after tax and interest is $53,343,760, which is further reduced by a carried forward tax loss from the prior year of around $2,426,383, resulting in an amount of $50,917,377 (compared to the figure of $63.03m recorded in the Distribution Proposal, which does not appear to have taken account of interest costs or the prior year loss).
2. VG International's "dividend" was calculated as being $2,545,869, which is exactly 5% of $50,917,377, reflecting VG International's shareholding in 152 Rowy.
3. According to 152 Rowy's bank statements, 152 Rowy paid an amount of $2m to Mr Gao on 30 September 2022 and a further amount of $545,869 to Mr Gao on 17 October 2022. The second of those payments has the narrative "VG dividend". The total of the two payments is the same as the amount of the dividend which Ms Yuan had calculated, in her email of 12 August 2022, to be owing to VG International.

November 2022: Discussion between Ms Zhang and Mr Huang

1. Following his divorce from Ms Deng, Mr Guo married Ms Zhang.
2. Mr Guo and Ms Zhang had a child together, and subsequently divorced.
3. Ms Zhang was called by Mr Guo as a witness.
4. Ms Zhang was aware that, up until March 2022, 152 Rowy had been making regular weekly payments to Mr Guo. These payments (which are addressed in paragraphs [286]-[301] below) had ceased around the time that the Eastwood Shopping Centre was sold.
5. At around this time, Mr Guo made a number of statements to Ms Zhang to the effect that he was going to receive "a huge amount of money". However, Mr Guo then stopped paying child support to Ms Zhang from around June 2022. In those circumstances, Ms Zhang did not trust Mr Guo's previous statements and was keen to know what the true position was.
6. On 7 November 2022, Ms Zhang sent a WeChat message to Mr Huang, which stated as follows: "Boss Guo has not paid child support for a few months now. He said some things have happened. I don't trust his word. Could you please give me an answer."
7. Ms Zhang gave evidence that on the same day, she received two telephone calls via WeChat from Mr Huang. Ms Zhang deposed that, in the course of their conversation, Mr Huang said words to the following effect: "Mr Guo has a law suit with me. It is about a project in Eastwood that we worked together before. Mr Guo is the main investor. The project is sold but we have not settled the money. The way Mr Guo calculates the money is different."
8. She was questioned in cross-examination regarding the extent of her recollection, and gave the following evidence: "I cannot remember each sentence what he said to me, yeah, but I remember the general idea because I asked him - because, you know, firstly, when I was with Mr Guo, I know we receive, like, a weekly payment from the project. So that's enough to cover our life spending. And - but that - that stopped because of the project sold. So we're supposed to receive what we paid before, right? And I'm ask him, 'So if you stopped pay weekly and you sold the project, and Mr Guo was the major investment people and he put more money, so he supposed to get most money and to cover my kid's spending,' and Mr Huang said yes he will, and he provide a certain amount to Mr Guo, but Mr Guo not accept, yeah."

Investment or Loan?

1. In closing submissions, it was common ground between Mr Guo and Mr Huang that Yufeng received $20m from Mr Guo, as stated in the receipt signed by Mr Huang in May 2013.
2. It was also common ground that the agreement, pursuant to which Mr Guo provided those funds to Yufeng, was undocumented and arose out of a conversation between Mr Guo and Mr Huang.
3. Mr Guo contended that the substance of his oral agreement with Mr Huang was that these funds represented his contribution to a joint commercial endeavour being undertaken by Mr Huang and Mr Guo involving the acquisition and development of the Eastwood Shopping Centre and that, in return for contributing these funds, Mr Guo would be entitled to a percentage (either 60% or alternatively 30%) of the profit and income from the Eastwood Shopping Centre project.
4. Mr Huang contended, in closing submissions, that the substance of the oral agreement between himself and Mr Guo was that Mr Guo would be issued 30% of the shares in Yufeng and would make shareholder loans to Yufeng for the purchase of the Eastwood Shopping Centre.
5. In summary, this is a case where there is no dispute that conversations took place between Mr Guo and Mr Huang in early 2013; that an oral agreement was reached as a result of those conversations; and that pursuant to this agreement Mr Guo received 30% of the shares in Yufeng and Yufeng received $20m from Mr Guo. Instead, the dispute concerns the character of the oral agreement pursuant to which those transactions occurred, namely, whether it was an agreement for an investment in the Eastwood Shopping Centre project, or an agreement to make a loan for the purposes of that project. This is an issue to be resolved by considering Mr Guo's evidence of the relevant conversations, and the inferences available from contemporaneous documents, the objective facts and the surrounding circumstances: Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268 at [49]-[50], [53].
6. Where the existence and terms of an oral contract are in issue, consideration of the surrounding circumstances, including the history of the relationship between the parties and their conduct prior to and at the time the contract was entered is permissible, as well as post-contractual conduct: Colyer Fehr Tallow Pty Ltd v KNZ Australia Pty Ltd [2011] NSWSC 457 at [47]-[50] (Ball J) and the cases there cited. Further, given Mr Huang's failure to give evidence of the relevant conversations, inferences which are available on the evidence regarding the terms of his oral agreement with Mr Guo may be more confidently drawn (see paragraphs [29]-[35] above).

Investment - 60% or 30%

1. In an Amended Commercial List Statement which was filed in Court on the first day of the hearing, Mr Guo added a plea in the alternative regarding the extent of his interest in the Eastwood Shopping Centre project. In particular, he pleaded that the arrangement between Mr Guo and Mr Huang was: "that of joint venturers with the common purpose of purchasing and owning the Eastwood Shopping Centre with a view to sharing the mutual profits from the centre in the following proportions: 60% to Mr Guo and 40% to Mr Huang, alternatively, 30% to Mr Guo and 70% to Mr Huang." [underlining in original, indicating amendment]
2. I am not satisfied that there was any agreement between Mr Guo and Mr Huang to the effect that Mr Guo would be entitled to a 60% share of the net income and profits of the Eastwood Shopping Centre project.
3. As a starting point, I acknowledge that Mr Guo gave evidence of conversations with Mr Huang, in which it was agreed that he would have a 60% interest, and in which Mr Huang promised that, in addition to the 30% of the shares in Yufeng which were held in Ms Deng's name, Mr Guo would be beneficially entitled to another 30% of the shares in Yufeng, which Mr Huang would hold on trust for Mr Guo.
4. These were matters regarding which Mr Huang could have given, but did not give, evidence. However, it does not follow that Mr Guo's evidence should be accepted. Given the passage of more than 11 years since the conversations in question and Mr Guo's strongly held views about this case, his evidence needs to be carefully assessed in the light of the contemporaneous records, the whole of the evidence and the inherent probabilities of events.
5. In particular, I have had regard to the following matters.
6. First, there is, prior to July 2022, not a single document that refers to Mr Guo having a 60% interest in the Eastwood Shopping Centre project or that refers to Mr Huang holding any shares in Yufeng on behalf of Mr Guo. The first statements to that effect were contained in a letter sent by Mr Guo's solicitors, shortly before this proceeding was commenced.
7. Secondly, Mr Huang transferred 30% of the shares in Yufeng to Ms Deng in April 2013. This is consistent with an arrangement that Mr Guo would have a 30% interest in the Eastwood Shopping Centre project.

Claims in relation to Investment in Eastwood Shopping Centre

1. In closing submissions, Mr Guo accepted that any contractual claim that Mr Huang breached the terms of the investment agreement with Mr Guo is statute-barred.
2. Instead, Mr Guo advanced claims that Mr Huang breached fiduciary duties which he owed to Mr Guo, and that 152 Rowy was liable as an accessory to Mr Huang's breach or alternatively as his alter ego.
3. As regards the other Defendants: 1. Mr Guo did not press any claim against Yufeng for breach of the investment agreement, accepting in closing submissions that such a claim was statute-barred; and 2. the factual foundation for Mr Guo's claim that Roseburg Investment holds 30% of the shares in Yufeng on trust for Mr Guo has not been established, as I have found that there was no agreement between Mr Guo and Mr Huang to the effect that Mr Guo would have a 60% interest in Yufeng (and it is therefore unnecessary to consider whether the alleged agreement was sufficient to establish any trust in respect of the shares held by Mr Huang, which were subsequently transferred to Roseburg Investment).

Did Mr Huang owe fiduciary duties to Mr Guo?

1. For reasons set out above, I am satisfied that the effect of the arrangement between Mr Guo and Mr Huang in May 2013 was that they would undertake a joint commercial endeavour, involving the acquisition and development of the Eastwood Shopping Centre; that Mr Guo would make a $20m investment in this joint endeavour and Mr Huang would manage the project; and that they would share the income and profits from the Eastwood Shopping Centre project, with Mr Guo being entitled to a 30% share and Mr Huang being entitled to a 70% share.
2. It is of little consequence whether or not this is described as a "joint venture". The term "joint venture" is not a technical one with a settled legal meaning: United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10; [1985] HCA 49 per Mason, Brennan and Deane JJ. Further, there is no presumption that a fiduciary relationship exists between parties to a joint venture: Younan v Herberton Enterprises Pty Ltd [2023] NSWSC 1566 at [87] (Peden J). Nor is there any "generally accepted checklist by reference to which it can be determined whether or not a joint venture involves a fiduciary relationship between the joint venturers": Assad v Eliana Construction & Developing Group Pty Ltd [2015] VSCA 53 at [54] (Redlich, Kyrou and McLeish JJA). Instead, "whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken": United Dominion at 11.
3. In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97; [1984] HCA 64, Mason J, after referring to the well recognised fiduciary relationships of trustee and beneficiary, agent and principal, solicitor and client, director and company, and partners, observed that the critical feature of those relationships was the undertaking or agreement by the fiduciary to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect, in a legal or practical sense, the interests of that other person. This statement has been subsequently endorsed on many occasions, including in the joint judgment in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd; Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [87] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

Did Mr Huang breach his fiduciary duties?

1. Mr Guo pleads that Mr Huang breached his fiduciary obligations by retaining for himself or his interests (a) Mr Guo's 60% share of the profit on sale of the Eastwood Shopping Centre by 152 Rowy, and (b) Mr Guo's 60% share of any profits made by the Eastwood Shopping Centre while under 152 Rowy's ownership.
2. For reasons given above, I have determined that Mr Guo and Mr Huang agreed that, in return for Mr Guo's $20m investment in the Eastwood Shopping Centre project, he would receive 30% (rather than 60%) of the profits from that project.
3. As regards the quantum of the net profit which was made on the sale of the Eastwood Shopping Centre project, the evidence establishes the following matters: 1. according to 152 Rowy's tax return for the financial year in which the sale of the Eastwood Shopping Centre project occurred (FY22), 152 Rowy made a pre-tax profit of $90,005,523, in respect of which it was liable to pay tax of $27,001,656.90, resulting in an after-tax profit of $63,003,866.10 (paragraph [126] above); 2. the figures in the FY22 tax return were broadly the same as those in the Distribution Proposal which Mr Huang sent to Mr Guo, indicating that a net profit of in excess of $63m was available for distribution (paragraph [126] above); 3. however, according to figures prepared by the Yuhu Group CFO in August 2022, the amount of net profit available for distribution by 152 Rowy, after allowing for interest expense and prior year's losses, was $50,917,377 (paragraph [136] above); 4. a distribution of $2.546m was subsequently made to Mr Huang's accountant, Mr Gao, based on the August 2022 calculation of profit, reflecting the 5% interest of Mr Gao's company, VG International, in 152 Rowy (paragraphs [137]-[138] above); 5. Mr Guo has not received any money from the sale of the Eastwood Shopping Centre project; and 6. instead, the settlement funds received by 152 Rowy appear to have been used to repay debts of related companies, and have otherwise been paid out to persons unknown (see paragraphs [119]-[120] above).
4. Mr Huang submitted that he was not a director of 152 Rowy at the time that 152 Rowy made decisions regarding the distribution of the settlement funds and net profit from the Eastwood Shopping Centre project. While this submission is factually correct as far as it goes, it ignores that Mr Huang remained in control of 152 Rowy and was able to, and did, give directions regarding the payment of moneys from 152 Rowy's bank accounts, well after he ceased to be a director (see, in particular, the payments referred to in paragraphs [286]-[301], [302]-[Error! Reference source not found.] and [307]-[311] below). Mr Huang was the person who determined that 152 Rowy should sell the Eastwood Shopping Centre. He was the person who sent the Distribution Proposal to Mr Guo, setting out how 152 Rowy would distribute the profits from the sale of the Eastwood Shopping Centre. Further, given these matters, he was likely the person who gave instructions for a payment to be made to VG International from the distribution proceeds, and who also gave instructions regarding the use of the balance of the settlement proceeds by 152 Rowy.

Is 152 Rowy liable as an accessory?

1. Mr Guo pleaded that 152 Rowy was liable either by reason of having knowingly participated in Mr Huang's breach of fiduciary obligations (under the second limb of Barnes v Addy) or, alternatively, as the "alter ego" of Mr Huang (relying on Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6 at [243]).
2. In order to establish liability under the second limb of Barnes v Addy, Mr Guo must establish that 152 Rowy assisted Mr Huang in a breach of his fiduciary obligations, in circumstances where 152 Rowy had knowledge of a dishonest and fraudulent design on Mr Huang's part: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [160] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
3. A dishonest and fraudulent design includes a dishonest and fraudulent breach of fiduciary duty: Farah Constructions v Say-Dee at [179]. Nothing falling short of dishonest conduct is sufficient to engage the second limb of Barnes v Addy: Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [9] per Gleeson JA and at [125] per Leeming JA. "Dishonesty" amounts to a transgression of the ordinary standards of honest behaviour; it is not necessary to show that the defendant thought about what those standards were: ibid at [124].
4. In the present case, I am satisfied that Mr Huang's conduct, in obtaining a $20m contribution from his friend, Mr Guo, to the Eastwood Shopping Centre project on the basis that Mr Guo would be entitled to 30% of the net profits from the project; in using that contribution to make a profit, after expenses, tax and interest, of in excess of $50m; in lying to Mr Guo about when the settlement proceeds were received; in failing to make any distribution to Mr Guo from the profit made on settlement; and in retaining the settlement proceeds and using them to repay debts of related companies (without the knowledge or consent of Mr Guo), was a transgression of the ordinary standards of honest behaviour.
5. Where an alleged accessory is a corporation, it is necessary to establish that the corporation had the requisite knowledge in order to establish liability under the second limb of Barnes v Addy. That can generally be done by showing that a specific person or persons associated with the corporation, and with sufficient seniority within the corporation, had knowledge that can be imputed to the corporation: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 582-583 per Brennan, Deane, Gaudron and McHugh JJ; [1995] HCA 68. In the context of a claim for knowing assistance, "what matters is the states of minds of the persons who directly controlled the conduct which is said to have involved the giving of assistance": Anderson v Canaccord Genuity Financial Ltd [2023] NSWCA 294 at [247]. Where the relevant third parties are companies under the control of the wrongdoing fiduciary, it will be a straightforward task to impute the fiduciary's knowledge of his or her misconduct to the company, and so satisfy the knowledge requirements for Barnes v Addy liability: Zibara v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18; [2021] FCAFC 4 at [148] per McKerracher and Anderson JJ.

Relief for breaches

1. In the Summons, Mr Guo sought, in respect of the breaches of fiduciary duty, an account of profits or alternatively equitable compensation.
2. Equitable compensation is a remedy available to the victim of a breach of fiduciary duty against both the fiduciary and any other person who knowingly participated in that breach and has thereby become subject to a personal liability as a "constructive trustee" by application of the principles derived from Barnes v Addy: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153 per McLelland AJA (Priestley and Meagher JJA agreeing).
3. The object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272 per Spigelman CJ (Priestley and Meagher JJA agreeing).
4. In order to obtain equitable compensation for breach of a fiduciary duty, it is necessary for the plaintiff to establish "a sufficient connection (or 'causation') between breach of duty and … the loss sustained": Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 at 468 per Brennan CJ, Gaudron, McHugh and Gummow JJ. When assessing causation for the purposes of equitable compensation, the "true inquiry is whether the loss would have happened had there been no breach, not whether the loss was caused by or flowed from the breach": O'Halloran at 276 per Spigelman CJ (with whom Priestley and Meagher JJA agreed).
5. In Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited (2018) 265 CLR 1; [2018] HCA 43 at [88], Gageler J observed as follows (footnotes omitted): "A causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain sufficient for the fiduciary or knowing participant 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, in the same way as 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. Because the concern of equity is to vindicate the equitable obligation that has been breached, the 'but for' connection will be sufficient even though other contributing causes might be in play. ..."

The $16.8m loan

1. It is common ground that Mr Guo transferred $16.8m to Yufeng, that he did so pursuant to an oral agreement with Mr Huang, and that this money was advanced as a loan. The issues in dispute were: 1. whether the loan was made to Mr Huang and was guaranteed by Yufeng (as Mr Guo contended) or was made to Yufeng (as Mr Huang and Yufeng contended); 2. whether interest was payable on the outstanding principal at a rate of 24% per annum (as Mr Guo contended) or whether the loan was interest-free (as Mr Huang and Yufeng contended); 3. whether payments have been made in respect of the loan and whether such moneys have been paid in reduction of principal or interest; and 4. whether the loan was repayable on demand, and whether any claim for recovery is statute-barred.

October 2013: Conversation and payments

1. The only evidence of the terms of the conversation which led to the loan being made was the evidence of Mr Guo. He deposed that, on 5 October 2013, he had a conversation with Mr Huang to the following effect: "Mr Huang: I would like to borrow $20 million from you as soon as possible as my company is having financial hardships. Without a loan, it will be very difficult for me. This is a personal loan for me, and Yuhu guarantees this loan. Transfer the money to Yuhu's bank account. Yuhu is the company that you transferred the previous funds to. [Mr Guo]: I will loan you what money I have available, but I will charge 2% as monthly interest as the cost price. Mr Huang: It will be difficult for me to repay the interest on a monthly basis. Instead, I will repay 24% interest every year. I will repay the loan in full and also interest when I have sufficient funds. At the latest, I will repay the full principal and interest when the Eastwood project is sold. [Mr Guo]: Ok. Mr Huang: Please transfer the loan to the same bank account that you transferred the $20 million for the investment."
2. Mr Guo deposed that he agreed to provide the loan because "I thought that I was transferring the money to the company that would own the Eastwood shopping centre, which could be used to repay the loan once the project was sold".
3. On 16 October 2013, Mr Guo transferred $13.5m to Yufeng. On 17 October 2013, Mr Guo transferred a further $3.3m to Yufeng. These payments were made from Mr Guo's personal bank account with the Bank of China in Hong Kong.
4. On the "Customer Advice" form for the second of these transfers, there is a handwritten note in Mandarin, which is translated as follows: "I have two payments (on 15 October and 17 October) of 4,889,160 Australian dollars in total for the Paramata [sic] land". (The word "Paramata" is written in English in the note.)
5. Mr Guo accepted that he provided the information recorded in this note, which was written by the bank manager. However, he claimed that the information was incorrect, in that the payments which he made in October 2013 were not related to the Parramatta investment. Mr Guo gave evidence that his contribution for the Parramatta investment (which did not proceed) was effected by means of a separate payment $5.646m which he made to Yufeng on 23 July 2013. There was evidence of this $5.646m transfer, and also evidence that, within a few days after this sum was received into Yufeng's bank account, an amount of $4,851,833.56 was transferred out of its account. (This sum is close to, but not the same as, the amount referred to in the handwritten note.)

Use of funds

1. It is likely that Mr Huang requested the sum of $16.8m be paid by Mr Guo because he needed the funds for the settlement of the purchase by 152 Rowy of the Eastwood Shopping Centre project, which occurred on 25 October 2013.
2. According to bank statements of Yufeng and 152 Rowy: 1. the two payments made by Mr Guo totalling $16.8m were received into Yufeng's bank account on 17 and 18 October 2013 respectively; 2. the amount of each payment was immediately transferred into another account of Yufeng on the day of receipt; 3. from this second account of Yufeng, a sum of $22m was transferred into 152 Rowy's bank account on 21 October 2013; and 4. the payments for the settlement of the purchase of the Eastwood Shopping Centre project were made from this account of 152 Rowy on 25 October 2013.

Financial records of Yufeng

1. A ledger general entries report of Yufeng for the year ending 30 June 2014, shows an opening balance (as at the end of 30 June 2013) for "Loans from Guo Family Trust" in the amount of $10.1m; and an increase in the amount of this loan by $13.9m in the course of FY14, resulting in a closing balance of $24m as at 30 June 2014.
2. As I have noted above, the Guo Family Trust did not exist in the financial year ending 30 June 2014. Further, the amount by which the loan from the "Guo Family Trust" increased in the course of FY14 (namely, $13.9m) did not correspond with any single payment, or any combination of payments, made by Mr Guo to Yufeng in FY14.
3. Accordingly, it is not possible to conclude that the $16.8m which was paid by Mr Guo in October 2013 corresponds with the information concerning a loan from "Guo Family Trust" that appears in Yufeng's financial records for FY14. Further, as I have explained at paragraphs [173]-[180] above, no weight can be placed on the entries relating to this loan in Yufeng's financial reports.

Amounts claimed to be repayments of interest

1. Mr Huang and companies associated with Mr Huang made a number of payments to Mr Guo from 2016 onwards. Mr Guo claimed that these represented payments in respect of the interest due under his $16.8m loan, and that he appropriated them as interest payments at the time of receipt.
2. The relevant payments are set out in a Schedule to Mr Guo's Amended Commercial List Statement, and total A$13,472,869.50, plus 4 million yuan. I set out below the evidence relating to each of these payments, dealing first with whether those payments were made in relation to the $16.8m loan, before considering whether they were payments in respect of interest or principal.

March 2016: $500,000

1. Mr Guo deposed that in March 2016 he telephoned Mr Huang and they had a conversation to the following effect: "[Mr Guo]: I need you to repay the interest you have not paid me for 2014 and 2015 because I need to make interest payments in China. Can you pay me $500,000. I want to purchase a property. Mr Huang: Ok."
2. On 21 March 2016, Mr Huang completed a transfer request form for the transfer of $500,000 from Yufeng's bank account to Mr Guo. A completed "Payment Application Form" on the letterhead of Yufeng records the following explanation for this payment to Mr Guo: "Relate to Loan".
3. On 21 March 2016, Yufeng's bank statements record a debit of $500,055 (with the difference between that sum and the sum approved for transfer likely being due to a bank fee).
4. In a part of Mr Huang's affidavit which was tendered by Mr Guo, Mr Huang referred to these documents and stated that he "made" the payment in question. Having regard to this evidence, I am satisfied that Mr Huang caused this payment to be made by Yufeng, and that it was a payment in respect of the $16.8m loan.
5. This money was transferred into a joint account in the name of Mr Guo and Ms Zhang, and was used to buy a property in Brisbane.

2016: Payment of $2.5m to Ms Deng

1. In early 2016, Mr Guo's ex-wife, Ms Deng, remained as a director of Tongxin, which was trustee of the Guo Family Trust, and also remained as a director of Yufeng. Mr Guo had no contact with Ms Deng at this time.
2. Mr Huang met with Mr Guo around this time and expressed concern that Ms Deng's continued involvement might affect the business prospects of the Eastwood Shopping Centre project. Mr Huang proposed that he would talk to Ms Deng, and would have her removed from her positions as director and would replace Tongxin as trustee.
3. Mr Guo deposed that he said to Mr Huang "why don't you repay the interest payments on your loan by paying [Ms Deng]?" and that Mr Huang agreed to this.
4. Mr Guo further deposed that, later in 2016, he had a conversation with Mr Huang to the following effect: "[Mr Guo]: How much does Deng Ying ask for so that she would agree to the replacement of the trustee of the Guo Family Trust. Mr Huang: $2.5 million. [Mr Guo]: Ok, make it. But show me the bank transfer receipt."
5. Mr Guo was subsequently told by Mr Huang that Ms Deng had required $2.5m be paid "as a precondition" of resigning as director of Tongxin and as a beneficiary of the Guo Family Trust (which occurred in, respectively, March and April 2016). Mr Guo deposed that he understood that the amount of $2.5m was paid by Mr Huang to Ms Deng, and that this was to be treated as a repayment of interest.
6. The Defendants did not lead any evidence disputing that the amount of $2.5m was paid to Ms Deng in 2016. They did not, in cross-examination of Mr Guo or Ms Deng, challenge the claim that a payment in this amount was made to her, or that Mr Huang was responsible for the making of this payment. They did not lead any evidence regarding the purpose of the payment, or the basis on which it was made. Having regard to those matters, I am satisfied that Mr Huang caused this payment to be made, and that it was made in respect of the $16.8m loan.

August and November 2017: Payments totalling $432,869.50

1. Mr Guo gave evidence that in 2017 he continued to chase Mr Huang for payment of interest in respect of his loan, and that Mr Huang made a payment to Mr Guo in the amount of $200,000.00 on 10 August 2017, and a further payment in the amount of $232,869.50 on 2 November 2017.
2. In parts of his affidavit which were tendered by Mr Guo, Mr Huang acknowledged that he "made" each of these payments to Mr Guo. Mr Huang did not, in the parts of his affidavit which were tendered, make any statement about the purpose of those payments or the basis on which they were made. Nor did the Defendants lead any other evidence regarding those matters. Accordingly, I am satisfied that Mr Huang caused each of these payments to be made, and that they were made in respect of the $16.8m loan.

December 2017 to March 2022: Weekly payments totalling $6.19m

1. Mr Guo gave evidence that, on 13 December 2017, he met Mr Huang at his office in North Sydney, asked Mr Huang to repay his loan, and explained that he needed to be paid interest on the loan to support his living costs. According to Mr Guo: 1. Mr Huang agreed, after around an hour's worth of discussion, to pay interest at a rate of $30,000 per week; 2. Mr Huang told Mr Guo that Mr Huang would need to borrow money to make these payments; and 3. Mr Huang asked, as a condition of making these payments, that Mr Guo sign "an IOU note".
2. This note was in evidence. It read as follows (noting that the English translation appears in the signed note, and is incomplete in the version that is in evidence, by reason of the document being cropped): "I, WENCHENG Guo, have borrowed $2,630,000 from Changran Huang since today, the period for the loan is 2 [missing text] since 13th Dec 2017, and the interest for the loan is 6.5 [missing text] year."
3. Mr Huang did not bring a cross-claim asserting the existence of any such loan.
4. Mr Guo gave evidence that he understood when signing this document that he was agreeing that he had borrowed $2.63m, even though he did not believe this to be the case. He explained that he signed the document only because Mr Huang required him to do so as a condition of receiving the agreed weekly payments, and he was desperate to be receive those payments in order to meet his living costs.
5. Two other documents were signed around the same time which contain contradictory information about the weekly payments that were to be made to Mr Guo.
6. First, there is a letter dated 20 December 2017, which is on the letterhead of 152 Rowy and addressed "To whom it may concern", which relevantly states as follows: "To whom it may concern, Statement of dividend This is to certify that following person is our company project partner. Every week, company issues $30,000 dividend to personal account. It starts from 19th December 2017 to end of year 2025. Name: Wencheng Guo … Company Name: [152 Rowy] … Should you have any concerns, please contact me on (02)…"
7. It is apparent from the terms of this document that it was created in order to provide evidence to third parties that payments were being regularly made to Mr Guo, and to provide evidence of the amount of those payments and the period for which they would be made. (Significantly, the document refers to Mr Guo as a "company project partner", which is consistent with his being an investor in, rather than a lender to, the Eastwood Shopping Centre project.)

September 2021: Payment of $1.35m to Ms Zhang's account

1. On 7 September 2021, Mr Guo sent a message to Mr Huang, requesting that Mr Huang "ask the financial department of the company in Australia to pay 1.35 million" to a specified bank account with Australia and New Zealand Banking Group in the name of Ms Zhang. On 8 September 2021, Mr Huang replied: "Okay".
2. On 11 September 2021, Mr Huang provided a screenshot of an exchange of messages with his son in relation to this transfer. The message from Mr Huang's son read as follows: "Dad, Guo's account is still being processed. Because it is the weekend, it will be slower to raise funds across banks. It's likely to be completed on Monday."
3. On Monday, 13 September 2021, Mr Guo sent a message to Mr Huang stating that: "I have received the money, thank you". There was in evidence a transaction record for this payment, showing that it was made from 152 Rowy's account into Ms Zhang's nominated account, and was authorised by Mr Huang's son.
4. It is apparent from the messages set out above that Mr Huang caused an amount of $1.35m to be paid into Ms Zhang's account, in accordance with Mr Guo's direction, and this was described in messages with his son as a payment in respect of "Guo's account". The Defendants did not lead any evidence in relation to the purpose of this payment, or the basis on which it was made. In particular, there was no evidence to suggest that this payment discharged any obligation which 152 Rowy had to Ms Zhang. Having regard to the evidence set out above, I am satisfied that Mr Huang caused this payment to be made in respect of the $16.8m loan.
5. Further, this material indicates that, several years after Mr Huang ceased to be a director of 152 Rowy, he remained able to give directions via his son (who was 152 Rowy's director) for payments to be made from 152 Rowy's account, in large amounts and for purposes unrelated to any business of 152 Rowy.

December 2021 and March 2022: Payments totalling $2.5m

1. Mr Guo gave evidence that he received the following further payments which Mr Huang caused to be made: 1. on 6 December 2021, a payment of $100,000; 2. on 17 December 2021, a payment of $400,000; and 3. on 25 March 2022, two payments in the amounts of $1,200,000 and $800,000 respectively.
2. In relation to the last two payments, there were in evidence WeChat messages exchanged between Mr Huang and Mr Guo dated 25 March 2022, in which Mr Huang sent Mr Guo two pdf documents: "$1.2 million transfer to GUO Wencheng - Proof of transfer"; and "$800,000 transfer to GUO Wencheng - Proof of Transfer". In response, Mr Guo replied on the same day: "Received. Thank you."
3. A transaction record for the $1.2m payment was in evidence, which established that it was made from 152 Rowy's account to Mr Guo's account, and was authorised by Mr Huang's son.
4. A "payment receipt" for the $800,000 payment was also in evidence, showing that it was paid to an account of Mr Guo on 25 March 2022. The description given for the payment was "Huang". Ms Fan, who was called by 152 Rowy, deposed that this payment of $800,000 was made from a bank account in the name of a company called JQ3 Pty Ltd, and that 152 Rowy transferred the amount of $800,000 to JQ3's account shortly afterwards. Accordingly, it appears that this, too, was a payment funded by 152 Rowy.
5. Mr Guo deposed that these payments were made by Mr Huang in respect of the $16.8m loan. The Defendants did not lead any evidence in relation to those payments, other than the evidence of Ms Fan to which I have referred above. In particular, they did not lead any evidence to suggest that the payments made to Mr Guo on 25 March 20222, which were funded by 152 Rowy, discharged any obligation which 152 Rowy had to Mr Guo. Having regard to the evidence set out above, I am satisfied that Mr Huang caused each of these payments to be made, and that they were made in respect of the $16.8m loan.
6. This material provides further evidence that, well after Mr Huang had ceased to be an officer of 152 Rowy, he was able to direct that payments be made from the company's account in very substantial sums which were not, on the evidence, made for any purpose related to 152 Rowy's business.

July 2021 to March 2022: Payments totalling 4 million yuan

1. Mr Guo deposed that Mr Huang made a series of payments in yuan to accounts which Mr Guo nominated in China, as follows: 1. on 21 July 2021, an amount of 200,000 yuan; 2. on 29 July 2021, an amount of 800,000 yuan; 3. on 28 October 2021, an amount of 1 million yuan; 4. on 22 November 2021, a further amount of 1 million yuan; and 5. on 2 March 2022, a further amount of 1 million yuan.
2. Mr Guo deposed that he understood these payments were made by Mr Huang in respect of the $16.8m loan.
3. The Defendants did not lead any evidence in relation to those payments. Mr Huang was plainly in a position to give evidence as to whether or not he made the payments and (if so) the basis on which they were made, but chose not to do so. In those circumstances, I am satisfied that Mr Huang made each of the payments in yuan set out above, and made those payments in respect of the $16.8m loan.

Mr Guo's tax returns

1. Mr Guo claimed that he understood, at the time of receipt of each of the payments set out above, that each represented a payment in respect of interest due on the $16.8m loan and that he so appropriated them at that time.
2. Mr Guo was cross-examined regarding his personal tax returns for each of FY16, FY17, FY18, FY19, FY20 and FY21. In each of those years, Mr Guo claims to have received substantial payments from Mr Huang or his companies in respect of the interest due under the $16.8m loan (being the payments set out in the Schedule to Mr Guo's Amended Commercial List Statement and referred to in paragraphs [271]-[315] above).
3. None of those tax returns records any significant sum being received by way of interest income in any of those financial years.
4. Having been taken through those tax returns in cross-examination, Mr Guo acknowledged that he took his requirements in relation to the preparation of tax returns very seriously, and agreed with the proposition that "none of the payments identified in schedule A to your lawyers Commercial List Statement [being the payments referred to at paragraphs [273]-[315] above] "are payments of interest".
5. In agreeing to this proposition, Mr Guo asked "Can I explain?" He was afforded this opportunity in re-examination, and gave the following evidence: "Q. Mr Guo, you were taken to a schedule A of the amended commercial list statement. Is that still in front of you? A. INTERPRETER: Yes. Q. And it was put to you that none of the payments referred to in that schedule are interest. Do you recall? A. INTERPRETER: Yes. Q. And you accepted that. But you said, 'May I explain?' A. INTERPRETER: Yes. Q. What is the explanation that you wanted to give? A. INTERPRETER: That because in total, my investment in Yufeng including 24 million. Of those, 20 million for Eastwood Shopping Centre, 4 million for Parramatta. And - and there is also 16.8 million loan, so in total, there's roughly $40 million investment. At the time when I was - at the time, my consideration, I wasn't think - I didn't know how long it's going to take - Mr Huang's going to take, and that that's the first reason. Secondly, in 2020-2021, because of COVID, I went back to Hong Kong, and I lived there for a year. After I returned to Australia, I started to deal with the disputes with Mr Huang. If the Court think that I need to - there's anything wrong with the tax return, and I need to pay back any money, I would - I would abide by a Court decision, and to pay back every penny of what I need to pay back. And number 4, mostly important thing, I was thinking if I bring up the topic of paying the interest, Mr Huang is going to - talking back and forth with me. This is my promise, every penny of income I make in Australia, I will pay the tax. And if there's any interest, I'll pay back the interest for my whole life in Australia. I will follow the rules and be a law-abiding citizen."

Who was the borrower?

1. Mr Guo pleaded that he had agreed to loan the sum of $16.8m to Mr Huang, with Yufeng as guarantor.
2. Mr Huang and Yufeng both contended that Mr Guo agreed to loan the sum of $16.8m to Yufeng (which in turn loaned this sum to 152 Rowy to fund the purchase of the Eastwood Shopping Centre).
3. It follows that, whether Yufeng's obligation is characterised as that of guarantor or as borrower, it is common ground between Mr Guo and Yufeng that Yufeng was liable to Mr Guo for the repayment of the loan (subject only to the issue whether recovery was statute-barred).
4. The critical question therefore is whether Mr Huang was personally liable to repay the sum advanced.
5. The starting point is the evidence given by Mr Guo of the conversation which gave rise to the oral agreement. Mr Guo deposed that Mr Huang said: "I would like to borrow $20 million from you as soon as possible as my company is having financial hardships. Without a loan, it will be very difficult for me. This is a personal loan for me".
6. Mr Huang is the only other person who knows what was said in this conversation. He could have given evidence as to what was said. He chose not to do so.
7. I accept Mr Guo's evidence. It is supported by the following matters.
8. First, Mr Guo and Mr Huang were friends and were members of the Chaoshan community. There is a practice of undocumented loans, sometimes in large sums, being made between acquaintances within that community. The personal relationship between the borrower and lender is an important element in the making of such loans, which are able to be obtained by way of a short phone call or a WeChat message, without any investigation of financial circumstances.
9. There was evidence that Mr Huang advanced loans for which Mr Guo was personally liable. In particular, there was: 1. a document signed by Mr Guo on 25 July 2018, for tax audit purposes, in which he acknowledged that, in around 2013, Mr Huang had made a "personal loan" to him (see paragraph [344] below); and 2. an acknowledgement signed by Mr Guo in December 2017, which read: "I, WENCHENG Guo, have borrowed $2,630,000 from Changran Huang since today" (see paragraph [287] above).
10. In circumstances where Mr Guo and Mr Huang were members of the Chaoshan business community, and it is common ground that the loans which they made to each other occurred in that context, it would seem implausible that loans made by Mr Huang were loans for which Mr Guo was personally liable, but a loan made by Mr Guo was a loan for which Mr Huang had no personal liability at all.

Was interest payable and were payments made in respect of interest?

1. Mr Guo pleaded that it was a term of the $16.8m loan that interest was payable annually at a rate of 24% per annum.
2. Mr Huang and Yufeng contended that the $16.8m loan was interest free.
3. The starting point, once again, is Mr Guo's evidence of his conversation with Mr Huang. According to Mr Guo, he told Mr Huang that he would require interest be paid at a rate of 2% per month; Mr Huang replied that it would be difficult for him to repay interest monthly, and instead proposed paying 24% interest every year; and Mr Guo agreed to this proposal.
4. Further, Mr Guo gave evidence of a number of other conversations with Mr Huang in the years subsequent to 2013, in which Mr Guo sought the payment of interest in respect of the loan. (However, Mr Guo did not state that, in any of those subsequent conversations, there was any reference to the rate of interest or any discussion of the amount outstanding in respect of interest.)
5. Mr Guo's evidence as to those matters was not contradicted by any evidence from Mr Huang, who plainly was in a position to give evidence of each of the relevant conversations.
6. However, I accept Mr Huang's submission that Mr Guo's version of events is, in a number of respects, not consistent with the contemporaneous documents or with the inherent probabilities of the events as revealed by the evidence as a whole. In reaching this conclusion, I have had regard to the following matters.
7. First, Mr Guo's evidence regarding the commercial practices of the Chaoshan community in relation to oral loan agreements was that the lender "usually" charges interest on this type of loan, which can be as high as 3 to 4% per month. His evidence that interest is "usually" charged implicitly recognises that, sometimes, it is not. Whether it is charged (and at what rate) presumably depends on the nature of the relationship and the circumstances. It is therefore not possible to conclude, from the fact that the loan was entered within this particular cultural context, that interest was likely charged by Mr Guo to Mr Huang.
8. Mr Guo relied on the Letter of Undertaking which he signed in May 2015, which referred to interest being payable on Mr Zhuang's loan at 2% per month (see paragraph [104] above). However, little can be gleaned from one arrangement with another lender, arising from a different personal relationship. Further, the Letter of Undertaking appears to indicate that the interest rate of 2% per month was only charged from June 2015, after a dispute had arisen about repayment and after the Letter of Undertaking was signed. The letter relevantly states as follows (emphasis added): "Mr. GUO Wencheng now promises that from 1 June 2015 to 30 September 2015, the monthly interest rate of the loan will be 2% and promises to repay the loan in full along with interest thereon before 30 September 2015". This letter does not therefore provide any indication as to the interest rate at the time when the loan was entered.

What amount was repaid in respect of principal?

1. I am satisfied, having regard to the evidence summarised at paragraphs [271]-[315] above, that each of the payments set out in the Schedule to Mr Guo's Amended Commercial List Statement represented a repayment in respect of the $16.8m loan. Mr Guo accepted, in closing address, that if the payments were not made in respect of interest, then they must have been made in respect of the principal: "It seems to us they're either interest or they're principal, no one suggests there's a gift being made".
2. It follows that those payments reduced the outstanding balance of the loan by a total amount of A$13,472,869.50 plus 4,000,000 Chinese yuan.
3. Mr Huang contended that there was a further amount of $4m received by Mr Guo in respect of the loan.
4. In July 2015, Mr Guo signed a document confirming "repayment of my investment of 4 million Australian dollars ($4,000,000.00) in Yufeng". It was common ground that this represented a repayment of the amount which Mr Guo had invested in the Parramatta project. This investment was described in the WeChat message which Mr Guo sent to Mr Huang in early April 2022 in the following terms: "In 2013, you were interested in another project in Parramatta. At that time, you said that you would sign the contract and give me 30% of the shares according to the shareholding ratio. I had to pay a deposit of 23.4 million RMB, which was 4 million Australian dollars according to the exchange rate at that time. But later, the project was cancelled".
5. Mr Huang submitted as follows: 1. the $16.8m loan was advanced by way of two payments by Mr Guo to Yufeng on 16 and 17 October 2013; 2. on the Customer Advice form relating to the second of those payments, the bank manager wrote, based on information supplied by Mr Guo, "I have two payments (on 15 October and 17 October) of 4,889,160 Australian dollars in total for the Paramata [sic] land" (see paragraph [261] above); 3. it followed that: 1. around $4.889m of $16.8m which was transferred by Mr Guo to Yufeng in October 2013 had been transferred for the Parramatta project, and 2. the repayment in July 2015 of $4m in respect of the Parramatta project must have been a repayment in respect of the $16.8m loan.
6. Mr Guo did not offer any satisfactory explanation for why he provided the information in the note on the Customer Advice form to the bank manager if it was inaccurate (see paragraph [263] above). However, it does not follow that the note should be accepted as accurate, having regard to the following matters.

Is any claim for the balance of the loan statute-barred?

1. Mr Huang and Yufeng contended that any claim for repayment of the $16.8m loan was statute-barred. In particular, they submitted that: 1. the $16.8m loan was repayable on demand; 2. the limitation period on a cause of action in debt for recovery of a loan which is repayable on demand commences to run from the date on which the loan is made; and 3. accordingly, any action to recover the $16.8m loan became statute-barred, and the debt was thereby extinguished, on 18 October 2019: Limitation Act 1969 (NSW), ss 14, 63.
2. In Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566; [1956] HCA 51, the High Court (Dixon CJ, McTiernan and Taylor JJ) held that: "A loan of money payable on request creates an immediate debt." Accordingly, where a loan is repayable on demand, the lender's cause of action arises immediately on the receipt of the money by the borrower, so that the lender's cause of action becomes statute barred at the expiry of six years after the receipt of the money: Ogilive v Adams [1981] VR 1041 at 1043 (Fullagar J).
3. Mr Guo disputed that the $16.8m loan was repayable on demand. He contended that, in the conversation which gave rise to the loan agreement, Mr Huang promised to repay the loan when he was able to do so, and at the latest when the Eastwood Shopping Centre was sold.
4. I accept Mr Guo's evidence that there was a conversation to this effect. Mr Guo's conduct in not demanding repayment of the principal in full at any time prior to the sale of the Eastwood Shopping Centre, despite his financial difficulties in the intervening period, was consistent with such a conversation having occurred.
5. Mr Huang and Yufeng contended that, even if such a conversation had taken place, the loan was nonetheless repayable on demand. First, they referred to GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315, where the Victorian Court of Appeal (Santamaria JA, Kyrou JA and Elliott AJA) held that an obligation on a debtor to repay a loan when able to do so was "illusory and void for uncertainty", and that such a loan was "repayable on demand" (at [51]-[55]). Secondly, they referred to the decision of Chesterman J in Lane v L3 Enterprises Pty Ltd [2007] QSC 288. In that case, the "only agreement reached with respect to the date for repayment of capital was that the loan was to be repaid when the second defendants sold the newsagency business, or, if there was no sale, 'eventually'" (at [13]). Chesterman J held as follows (at [72]): "There may have been some uncertainty about the term of the loan. The plaintiff's evidence was that the money was to be repaid on the sale of the newsagency or if there were no sale, 'eventually'. A term that the loan be repaid upon a contingency that might not occur or otherwise 'eventually' may well be void for uncertainty. In that case the loan would be one with no date fixed for repayment, in which case it is repayable on demand; see Seldon v Davidson [1968] 1 WLR 1083 at 1088 or, perhaps, within a reasonable time after request for repayment has been made; see Seldon at 1090. In any event the contingency has occurred and demand has been made."

Relief

1. For the reasons given above, I have found that Mr Guo loaned the sum of $16.8m to Mr Huang in October 2013; that the loan was guaranteed by Yufeng; that it has not been established that the loan was made at an interest rate of 24% per annum (or at any other interest rate); and that repayments totalling A$13,472,869.50 plus 4 million Chinese yuan were made by or on behalf of Mr Huang in reduction of the principal.
2. These repayments will need to be taken into account in determining the outstanding balance of the principal. Such a calculation will need to take account of the prevailing exchange rate at the time that each of the payments of Chinese yuan was made.
3. As noted above, Mr Huang and Yufeng contended that the $16.8m loan was repayable on demand. Mr Guo contended that Mr Huang promised to repay the loan at the latest on the sale of the Eastwood Shopping Centre, but submitted that there was an implied term that "liability to repay would not arise until some notice was given".
4. It is not necessary to resolve this issue. Whether the loan was repayable on demand, or whether the obligation to repay only arose on the giving of notice, Mr Guo did not demand repayment, or provide notice to Mr Huang requiring repayment, until 26 July 2022. It follows that, in either case, the obligation to repay the outstanding balance did not arise until that date. Accordingly, Mr Guo is entitled to interest on the outstanding balance of the loan, at Court rates, from 26 July 2022 until the date of judgment.

Orders

1. Mr Guo has had substantial success in relation to each of his claims, regarding his $20m investment in the Eastwood Shopping Centre project and his $16.8m loan to Mr Huang.
2. In respect of his claim concerning the $20m investment, Mr Guo is entitled to further discovery, so as to allow him to make an informed decision whether to elect for equitable compensation or an account of profits, and whether to make a split election as against Mr Huang and 152 Rowy.
3. I will direct the parties to confer regarding short minutes of order to give effect to these reasons. Such orders should include orders disposing of the loan claim, and orders dealing with any timetable for further discovery concerning the investment claim.
4. It is my preliminary view that costs should follow the event, such that Mr Guo is entitled to his costs of the proceeding against Yufeng, Mr Huang and 152 Rowy, on the ordinary basis. I will, however, give the parties an opportunity to be heard on whether any different costs order should be made, and whether any costs order should only be made at the time when final orders are made in this proceeding.
5. If the parties are unable to agree on the form of orders, the parties will have an opportunity to make submissions on the areas of dispute.
6. Accordingly, I make the following orders. The Court: 1. Directs the parties to bring in short minutes of order, by 5pm on 20 December 2024, to give effect to these reasons for judgment. 2. Directs that, in the event that the parties are unable to agree orders to give effect to the reasons for judgment, the parties exchange, by 5pm on 20 December 2024, and provide to the Associate to Nixon J, the orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the issues in dispute.

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