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[2026] NSWSC 1035
Supreme Court of NSW
2026-08-28
Nixon J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Guo v Yufeng Investment Group (Australia) Pty Ltd (No 2) [2026] NSWSC 1035
Hearing dates: 29 and 30 July 2026
Date of orders: 28 August 2026
Decision date: 28 August 2026
Jurisdiction: Equity - Commercial List
Before: Nixon J
Decision: 1. By 4.00pm on 4 September 2026, the parties confer and provide to the Associate to Nixon J a proposed form of orders to give effect to these reasons for judgment.
Catchwords: REMEDIES – account of profits – determination of the extent of the benefits obtained by Third and Fourth Defendants as a result of the Third Defendant’s breach of his fiduciary obligations in which the Fourth Defendant knowingly participated – whether amounts payable by way of interest on a bank facility should be treated as a project expense in determining the extent of the benefits received – whether the amount of the award should be grossed-up for tax – whether interest on the benefits received in individual financial years should run from the end of the relevant financial year or from the end of the project
Cases Cited: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43
Daniels v Anderson (1995) 37 NSWLR 438
Guo v Yufeng Investment Group (Australia) Pty Ltd [2024] NSWSC 1599
Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143
New Cap Reinsurance Corporation Ltd v AE Grant & Ors, Lloyd’s Syndicate No. 991 [2009] NSWSC 950
Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274
Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
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:
T D Castle SC w D Levi (Plaintiff)
V Bedrossian SC w F Di Lizia (First and Fourth Defendants)
G Ng SC w N Li (Third Defendant)
Solicitors:
Legal Point Lawyers (Plaintiffs)
Mitry Emerson Lewis (First and Fourth Defendants)
Unsworth Legal (Third Defendants)
File Number(s): 2022/00329438
Publication restriction: Nil
On 13 December 2024, I delivered reasons for judgment in this matter: Guo v Yufeng Investment Group (Australia) Pty Ltd [2024] NSWSC 1599 (Primary Judgment).
In the Primary Judgment, I determined that the Plaintiff (Mr Guo) invested $20m in a project to acquire, operate and develop the Eastwood Shopping Centre (the Project), pursuant to an agreement between himself and the Third Defendant (Mr Huang) that, in return for this investment, Mr Guo (or his interests) would receive 30% of the profits from the operation and sale of the Eastwood Shopping Centre.
I also determined that:
Mr Huang owed fiduciary obligations to Mr Guo in relation to the Project;
Mr Huang breached those obligations by failing to distribute any part of the profit on the sale of the Eastwood Shopping Centre to Mr Guo or his interests, and retaining the proceeds of sale for the benefit of himself, the Fourth Defendant (152 Rowy Pty Ltd) and other related corporations; and
152 Rowy knowingly assisted in Mr Huang’s dishonest breach of his fiduciary obligations.
In the Primary Judgment, I found that a profit of $50,917,377 was made on the sale of the Eastwood Shopping Centre. I did not, however, make any orders for relief in respect of this claim. That was because there had been late disclosure of documents by the Defendants and, in those circumstances, Mr Guo:
had not had an opportunity to put on evidence regarding any profits made from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy; and
did not have sufficient information to make an election between equitable compensation and an account of profits.
Following the delivery of the Primary Judgment, orders were made for further discovery by the Defendants, and the parties prepared expert evidence addressing these outstanding issues. In the course of preparing this evidence, it was identified that there was an error in the Primary Judgment concerning the profit made on the sale of the Eastwood Shopping Centre. This arose, in short, because the document on which this finding was based itself contained an obvious arithmetic error (which was not identified by any of the parties or the Court in the course of the November 2024 hearing) and, in addition, assumed a figure for tax which was incorrect.
In those circumstances, the parties agreed – consistently with the principles stated in New Cap Reinsurance Corporation Ltd v AE Grant & Ors, Lloyd’s Syndicate No. 991 [2009] NSWSC 950 at [20] (Barrett J) – that the Court should re-open this finding and should determine the profit made on the sale of the Eastwood Shopping Centre in accordance with the evidence given by the parties’ respective accounting experts. I will proceed on this basis.
The parties also agreed (subject to the “NAB Interest Issue” which is addressed below) on the amount of profit made from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy, and on the amount of the profit made on its sale.
Mr Guo seeks an account of profits from Mr Huang and 152 Rowy. Neither of those defendants – who were separately represented – advanced any submission to the effect that the profits in question were obtained and retained by the other defendant, rather than by itself. Instead, each accepted that they should be jointly and severally liable to account for whatever sum is determined by the Court as being payable to Mr Guo.
There are four main issues which remain for determination, which were the subject of evidence and argument at the hearing on 29 and 30 July 2026:
first, whether Mr Guo is entitled to recover not only 30% of the profits from the operation and sale of the Eastwood Shopping Centre, but also the full amount of his initial $20m investment;
secondly, whether, in determining the amount of profit made from the operation of the Eastwood Shopping Centre, the Court should take into account payments made to National Australia Bank (NAB) by way of interest on a loan to 152 Rowy;
thirdly, whether the amount awarded in respect of Mr Guo’s share of the profits from the operation and sale of the Eastwood Shopping Centre should be grossed up for tax; and
fourthly, whether, so far as concerns the profits made from the operation of the Eastwood Shopping Centre, pre-judgment interest should run from the conclusion of each relevant financial year in which such profits were made, or from the time of the sale of the Eastwood Shopping Centre.
At the hearing in November 2024, Mr Guo did not advance a case either:
that he and Mr Huang agreed that, when the Eastwood Shopping Centre was sold, Mr Guo’s initial $20m investment in the Project would be returned to him; or
that Mr Huang breached his fiduciary obligations to Mr Guo by failing to take steps, at the conclusion of the Project, to return Mr Guo’s initial investment to him, or by taking the benefit of that $20m investment, after the conclusion of the Project, either for himself or for an entity or entities which he controlled.
Instead, Mr Guo advanced a case (which was established) that it was a term of his agreement with Mr Huang that he would receive, by reason of his investment, 30% of the profit from the operation of the Eastwood Shopping Centre and 30% of the profit on its sale.
Further, in advancing this claim, Mr Guo successfully disputed Mr Huang’s contention that his $20m payment was a loan (Primary Judgment at [161]-[183]).
There was no submission advanced by any of the parties at the November 2024 hearing, and therefore no finding made in the Primary Judgment, as to the parties’ respective rights (if any) in relation to Mr Guo’s initial $20m investment in the event that the Court (as occurred) found that Mr Guo and Mr Huang agreed to share the profits from the Project.
Mr Huang submitted that, given the Court’s finding that Mr Guo, in return for his $20m investment, obtained the right to receive 30% of the profits from the operation and sale of the Eastwood Shopping Centre, it followed that his $20m investment represented the price paid in order to obtain this return.
Mr Huang contended that two consequences flowed from this:
first, “if (as the Court appears to have found) what Mr Guo acquired for his investment was a right to receive 30% of the profits from the Eastwood Shopping Centre project, as distinct from a right to receive that 30% plus $20 million, then he is not entitled, as part of the relief granted in this litigation, to the return of his $20m investment”; and
secondly, Mr Guo should be required, as a condition of the grant of relief, to cause the trustee of the Guo Family Trust (namely, HD International Pty Ltd), which holds 30% of the shares in the First Defendant (Yufeng Investment Group (Australia) Pty Ltd) to transfer those shares to Mr Huang or his nominee.
The proposed condition regarding the transfer of those shares was said to be necessary in order to address the prospect of double recovery by Mr Guo. This prospect was said to arise because Mr Guo is a beneficiary of the Guo Family Trust and, if HD International as trustee of that trust continued to hold shares in Yufeng, it would be entitled to receive any dividends paid by Yufeng (which would, in turn, as a 95% shareholder of 152 Rowy, be entitled to receive any dividends paid by that entity).
Mr Guo did not oppose an order conditioning his entitlement to relief on such a transfer occurring, provided that he obtained the relief which he sought.
Accordingly, both Mr Guo and Mr Huang sought, at the July 2026 hearing, that the Court make findings regarding whether Mr Guo’s entitlements in respect of the Project were limited to the right to receive a fixed share of the profits from the operation of the Eastwood Shopping Centre and a fixed share of the profit from its sale, or whether he had any entitlement to share in any other benefits received from the acquisition, ownership and sale of the Eastwood Shopping Centre (such as an entitlement to some part of the balance of the sale proceeds). Further, both Mr Guo and Mr Huang sought that the Court should fashion relief in a form which ensured that the Court addressed the issue of the shares in Yufeng held by HD International.
It is understandable why the parties adopted this position. If, at the end of this proceeding, it remained the case that HD International (which is not a party) held a 30% share in Yufeng, and if the question as to whether HD International had, by reason of its shareholding, any claim in respect of the proceeds of the sale of the Eastwood Shopping Centre was left open, then there would be the potential for ongoing litigation. For example, HD International might seek leave to bring a derivative action in the name of Yufeng alleging that the affairs of 152 Rowy had been conducted in a manner that was oppressive to Yufeng, or contrary to the interests of the members as a whole, by reason of failing to make some distribution to Yufeng from the proceeds of the sale of the Eastwood Shopping Centre.
In circumstances where both Mr Guo and Mr Huang seek findings about the matters set out in paragraph [18] above and in circumstances where no orders for relief have yet been made in these proceedings, I am satisfied that – even though those matters could have been, but were not, raised at the November 2024 hearing – it is desirable, in the interests of achieving finality between the parties regarding their dispute concerning the Eastwood Shopping Centre, for the Court to determine these outstanding matters when determining the outstanding issues of relief.
At the July 2026 hearing, Mr Guo advanced his claim for the return of the $20m investment on the following basis:
as a fiduciary, Mr Huang was not entitled to retain any benefit from his position, without Mr Guo’s informed consent;
the commercial venture in which Mr Guo invested came to an end with the sale of the Eastwood Shopping Centre;
the failure to return, at the conclusion of this venture, Mr Guo’s initial $20m investment resulted in a detriment to Mr Guo, and a benefit to Mr Huang, 152 Rowy or their related entities;
Mr Huang caused 152 Rowy to pay all of the proceeds from the sale of the Eastwood Shopping Centre (and not just the profits from that sale) to related entities, and thereby obtained for himself and 152 Rowy (or their related entities) a benefit, being the retention of Mr Guo’s initial $20m investment, without his informed consent; and
Mr Huang and 152 Rowy should account to Mr Guo for this benefit.
Mr Huang and 152 Rowy objected that such contentions were outside Mr Guo’s pleaded case, and that there were no findings in the Primary Judgment which supported Mr Guo’s contentions.
“An order that [Mr Huang] and/or [152 Rowy] account to [Mr Guo] for:
(a) the profits he or it has received from the sale in or about July 2021 of the [Eastwood Shopping Centre]; and
(b) the profits he or it has received from the ownership and/or operation of the Eastwood Shopping Centre during the period in which [152 Rowy] was the owner of the Eastwood Shopping Centre.”
This prayer for relief seeks that Mr Huang and 152 Rowy account to Mr Guo not only for the profits received from the “operation” and the “sale” of the Eastwood Shopping Centre, but also for the profits received from “the ownership” of the Eastwood Shopping Centre.
The liability to account for profits is not confined to a liability to account for “accrued profit in narrow accounting terms”, but extends more broadly to a liability to account for “benefits” received by the wrongdoer: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 at [24] per Kiefel CJ, Keane and Edelman JJ; and see also at [75] per Gageler J (as his Honour then was).
It follows that this prayer for relief was sufficiently broad to extend to a liability on the part of Mr Huang and 152 Rowy to account not only for the accounting profit which they have retained from the operation and sale of the Eastwood Shopping Centre, but also any other “benefits” which they have retained from the ownership or sale of the Eastwood Shopping Centre at the conclusion of the Project (including, in particular, the retention of the balance of the sale proceeds).
Senior Counsel for Mr Guo acknowledged that the Amended Commercial List Statement (A****CLS) did not, in terms, contain any plea that Mr Huang breached his fiduciary duties by retaining (or by causing 152 Rowy to pay to related entities) the amount of Mr Guo’s $20m contribution following the sale of the Eastwood Shopping Centre.
However, he submitted that the following parts of the ACLS were sufficiently broad to capture the issue:
(ACLS at [16]-[17]): the “Investment Proposal” which Mr Huang made to Mr Guo, prior to his investment in the Eastwood Shopping Centre, and which Mr Guo accepted, included that “by reason of his contribution” of $20m, Mr Guo would:
(a) “own 60% of the investment in the Eastwood Shopping Centre”; and (b) “be entitled to receive, on an ongoing basis, 60% of the net income from the operation of the Eastwood Shopping Centre”;
“(a) any share of the profit from the sale of the Eastwood Shopping Centre;
(b) any portion of the proceeds of sale of the Eastwood Shopping Centre; or
(c) any share of any profits received by, or on behalf of, 152 Rowy during the period during which the company owned the Eastwood Shopping Centre.”
(ACLS at [56]-[57]): in breach of his fiduciary obligations, Mr Huang, through 152 Rowy, obtained and retained for himself, or his interests, “Mr Guo’s 60% share of the profit on the sale of the Eastwood Shopping Centre” and “Mr Guo’s 60% share of any profits made by the Eastwood Shopping Centre whilst 152 Rowy owned the centre”, and Mr Huang “is liable to Mr Guo to account for” Mr Guo’s share of those profits; and
(ACLS at [58]-[59]): Mr Guo claims from each of Mr Huang and 152 Rowy, relevantly, “an account of the profits on the sale of the Eastwood Shopping Centre” and “an account of the profits made by the Eastwood Shopping Centre whilst 152 Rowy owned the centre”.
I do not consider that these paragraphs raise any issue that Mr Guo had an entitlement to the return of his initial $20m investment, or that Mr Huang breached his fiduciary obligations to Mr Guo by retaining (or causing 152 Rowy to retain or use for the benefit of related companies) the amount of Mr Guo’s $20m investment.
However, I am satisfied that these paragraphs of the ACLS did plead the following matters.
First, Mr Guo made his investment of $20m on the basis that he would “own 60% of the investment in the Eastwood Shopping Centre” and, as such, would be entitled to received 60% of the profits from the ownership, operation and sale of the Eastwood Shopping Centre (ACLS at [16]-[17]). (As outlined below, I determined in the Primary Judgment that Mr Guo and Mr Huang agreed that Mr Guo would receive, in return for his investment, a 30%, rather than 60%, interest in the Project.)
Secondly, Mr Guo and Mr Huang entered into the Project “with a view to sharing the mutual profits from the [Eastwood Shopping Centre]” in the agreed proportions (ACLS at [24(b)]).
Thirdly, Mr Huang was under an obligation not to obtain and retain for himself or his interests “any advantage from the purchase and ownership of the Eastwood Shopping Centre” without Mr Guo’s informed consent (ACLS at [25]).
Fourthly, Mr Huang did not pay to Mr Guo “any share of any profits received … during the period … [152 Rowy] owned the Eastwood Shopping Centre”, “any share of the profit from the sale of the Eastwood Shopping Centre”, or “any portion of the proceeds of sale of the Eastwood Shopping Centre” (ACLS at [54]; emphasis added).
Fifthly, Mr Guo claims from Mr Huang and 152 Rowy an “account of the profits made by 152 Rowy during the period in which it owned the Eastwood Shopping Centre” and “an account of the profits on the sale of the Eastwood Shopping Centre” (ACLS at [58]-[59]).
Consistently with the statement of principle in Ancient Order of Foresters set out at paragraph [25] above, the liability to account for “the profits on the sale of the Eastwood Shopping Centre” (ACLS at [58]-[59]) is not confined to a liability to account for the accounting profit made on the sale, but extends to a liability to account for any “benefit” received by Mr Huang and 152 Rowy “on the sale of the Eastwood Shopping Centre”, in breach of Mr Huang’s fiduciary obligations.
This interpretation of the pleaded claim for “an account of the profits on the sale of the Eastwood Shopping Centre” is consistent with the manner in which the fiduciary obligation which was breached by Mr Huang is pleaded in the ACLS at [25], namely, an obligation “to refrain from pursuing, obtaining or retaining for himself, or his interests, any advantage from the purchase and ownership of the Eastwood Shopping Centre without the knowledge and informed assent of [Mr Guo]” (emphasis added). The “advantages” which Mr Huang is pleaded to have obtained and retained for himself or his interests on the sale of the Eastwood Shopping Centre include not only the accounting profit made on the sale, but the whole of “the proceeds of sale” (ACLS at [54]).
Having regard to those matters, I consider that the pleading is sufficiently broad to capture a claim that:
Mr Guo and Mr Huang agreed that, in return for Mr Guo’s $20m investment, he or his interests would be entitled to a 30% share of the “profits” (in the sense of benefits or gains) flowing from the ownership, operation and sale of the Eastwood Shopping Centre;
Mr Huang breached his fiduciary obligations to Mr Guo by pursuing, obtaining and retaining for himself or his interests, without Mr Guo’s informed consent:
(a) the whole of the profits from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy; and (b) the whole of the net proceeds from the sale of the Eastwood Shopping Centre;
152 Rowy knowingly assisted in this breach of Mr Huang’s fiduciary obligations; and
Mr Huang and 152 Rowy are liable to account to Mr Guo for his 30% share of the amounts referred to in paragraph (2) above, this being a “profit” or “advantage” obtained and retained by them as a result of Mr Huang’s breach of his fiduciary obligations, in which 152 Rowy knowingly assisted (ACLS at [25], [58]-[59]; Summons at [5]).
As I have already observed, no submission in those terms (and, in particular, so far as concerns retaining Mr Guo’s 30% share of the net proceeds of the sale) was advanced at the November 2024 hearing.
However, for reasons explained above, that hearing did not deal with the question of an account of profits. The question that now arises for determination is the extent of Mr Huang’s and 152 Rowy’s liability to account, which in turn depends on the quantification of the benefits they have received as a result of Mr Huang’s breach of his fiduciary obligations as found in the Primary Judgment.
In the Primary Judgment, I made findings that the effect of the agreement between Mr Guo and Mr Huang in relation to the Project was that:
Mr Huang and Mr Guo would undertake a joint commercial endeavour, involving the acquisition and development of the Eastwood Shopping Centre;
Mr Guo would contribute the sum of $20m as an equity investment in the Project;
Mr Huang would manage the Project; and
Mr Guo and Mr Huang would share the income and profits from the Project, with Mr Guo being entitled to a 30% share and Mr Huang being entitled to a 70% share.
(see, in particular, Primary Judgment at [158]-[160], [183], [203], [207]).
There are a number of points to note about the terms in which these findings were framed, which reflect the manner in which the case proceeded at trial.
First, the references to “income” from the operation of the Eastwood Shopping Centre are, consistently with the pleading, short-hand references to income net of expenses (and the parties’ respective accounting experts prepared their reports on this basis).
Secondly, the references to “profits” reflect the terms of the pleading and the submissions advanced by the parties at the November 2024 hearing. However, those findings should not be read as entailing a proposition that the parties agreed that Mr Guo would have no entitlement to share in any of the proceeds from the sale of the Eastwood Shopping Centre, beyond a 30% share of the “profits” in a narrow accounting sense. In circumstances where Mr Huang proposed that Mr Guo contribute the sum of $20m as an equity investment in the Project, it is likely that the parties, in agreeing that the “profits” would be shared, were agreeing that any financial benefit or advantage flowing from the Project would be shared with Mr Guo and his interests in the agreed proportions.
No submissions were advanced at trial to the effect that the term “profits” (in an English translation of an account of a conversation in Mandarin) meant that Mr Guo’s entitlements were limited to a share of profit in an accounting sense. I acknowledge that Mr Guo made submissions at the November 2024 hearing regarding the quantum of his 30% share of the “profit” made from the sale of the Eastwood Shopping Centre, which focussed on the profit in an accounting sense, and which led to the findings at paragraphs [248]-[250] of the Primary Judgment. However, it is common ground between the parties that those findings should be re-opened.
Further, there was no finding in the Primary Judgment regarding the extent of the liability of Mr Huang and 152 Rowy to account for any benefits which were obtained and retained by them as a result of Mr Huang’s breach of his fiduciary obligations. That was an issue left to this hearing, in circumstances where the Defendants had been in default of their discovery obligations.
In those circumstances, I do not consider that any of the findings in the Primary Judgment preclude Mr Guo from advancing a submission that, pursuant to his agreement with Mr Huang, Mr Huang was obliged to take steps to share with Mr Guo or his interests, in the agreed proportions, any profits (in the sense of benefits) that were obtained from the Project, which would extend not only to the retention of the whole of the profits from the operation of the Eastwood Shopping Centre, but also the retention of the whole of the net proceeds from its sale. Instead, any such submission is consistent with, and supported by, the findings set out at paragraph [42] above.
Thirdly, although the findings set out at paragraph [42] above refer to an agreement that income and profits would be “shared” between Mr Guo and Mr Huang, this did not mean that Mr Huang could only discharge this obligation by making a payment to Mr Guo personally. As Senior Counsel for Mr Huang acknowledged in oral address at the July 2026 hearing, there was a tendency at the hearing for all parties to use references to “Mr Guo” to refer not only to Mr Guo himself, but also to the entities and interests associated with him.
That is consistent with the findings in the Primary Judgment (at [217]-[218]) regarding how Mr Guo and Mr Huang dealt with each other, namely, that Mr Guo trusted Mr Huang to determine the corporate entity or entities through which the Project would be performed and any net income or profits would be distributed in the agreed proportions. In short, what mattered to Mr Guo was that Mr Huang took steps to ensure that Mr Guo or his interests received the agreed proportion of the net proceeds of the Project, rather than that this distribution be achieved in any particular way.
One possibility was that the distribution occur by means of a dividend being paid by 152 Rowy to Yufeng as its 95% shareholder, with a dividend then being paid by Yufeng to HD International as its 30% shareholder. This was the course contemplated by the Distribution Proposal that Mr Huang sent to Mr Guo at around the time of the sale of the Eastwood Shopping Centre (see Primary Judgment at [125]). However, as Senior Counsel for Mr Huang stated at the July 2026 hearing, this was not the only means by which profits may have been shared. For example, Mr Huang or one of his entities could also have made a payment to Mr Guo or one of his entities, or could have forgiven some debt owing by Mr Guo or one of his entities (by analogy with what happened at the time that Mr Guo made his initial investment, which appears to have be effected partly by forgiving debts owed by Mr Huang or his interests: Primary Judgment at [70]-[75]). Alternatively, Mr Huang could have offered Mr Guo or his interests an equity share of equivalent or greater value in another investment opportunity (which would be consistent with Mr Guo’s evidence that Mr Huang proposed that they would do business together in Australia, with Mr Huang stating that he would “look for investments” in which the two could invest: Primary Judgment at [46]).
In the Primary Judgment, I made findings that:
Mr Guo placed significant trust and confidence in Mr Huang to act on his behalf in relation to the Project, and Mr Huang undertook to act in the interests of Mr Guo in relation to the Project (at [214(1)-(3)]);
Mr Huang had the scope to exercise powers or discretions in a manner which might affect Mr Guo’s interests in respect of the Project and, in particular, had sole effective control over decisions whether to make any distribution of the rental income from the Eastwood Shopping Centre, and over “decisions regarding the distribution of the sale proceeds from the Eastwood Shopping Centre” (at [214(4)]);
Mr Guo was entitled to expect that Mr Huang would act in Mr Guo’s interests in exercising such decisions and was vulnerable in the event that Mr Huang failed to do so (at [214(5)]);
Mr Guo invested in the Project on the basis of his close personal relationship with Mr Huang, left it to Mr Huang to have control of the Project, and trusted Mr Huang to act in Mr Guo’s interests, including to take steps to generate and share profits from the Project, and Mr Huang undertook to act on Mr Guo’s behalf in respect of the Project and knew that Mr Guo was relying on him to do so (at [218]);
having regard to those matters, Mr Huang was in a fiduciary relationship with Mr Guo (at [219]);
on 15 July 2021, the sale of the Eastwood Shopping Centre completed (at [115]);
at the time of the sale, Mr Huang was in control of 152 Rowy and was able to, and did, give directions regarding the payment of moneys from its bank accounts and, in particular, regarding payments made from the settlement proceeds (at [225]);
from the settlement proceeds, an amount of $33m was applied to repay the NAB facility which had been used to fund, in part, the purchase of the Eastwood Shopping Centre (at [119]);
a further amount of $67m from the settlement proceeds was used to repay loans which had been made by NAB to three related companies of 152 Rowy, and a further $20.07m was paid into 152 Rowy’s bank account and disbursed, within four days of receipt, to persons who are not identified (at [119]-[120], [224(6)]). Mr Huang did not obtain Mr Guo’s informed consent in respect of these payments (at [229]);
Mr Guo did not receive any money from the sale of the Eastwood Shopping Centre (at [224(5)]);
“Mr Huang breached his fiduciary obligations to Mr Guo by failing to provide the agreed 30% share of the net profits from the Eastwood Shopping Centre project to Mr Guo, and instead retaining or using those proceeds for the benefit of his companies or other persons” (at [230]);
Mr Huang’s conduct in, among other things, “retaining the settlement proceeds and using them to repay debts of related companies (without the knowledge of consent of Mr Guo)” was a transgression of the ordinary standards of honest behaviour, such as to establish a dishonest breach of fiduciary duty (at [236]-[237]); and
152 Rowy knowingly assisted in Mr Huang’s dishonest breach of his fiduciary obligations (at [234]-[242]).
In the Primary Judgment, I noted that Mr Guo had not yet made an election between equitable compensation and an account of profits; and that, in circumstances where relevant documents had not been discovered by 152 Rowy, he did not have sufficient information to make such an election (Primary Judgment at [252]). Accordingly, I determined that Mr Guo was 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 (Primary Judgment at [391]).
Mr Guo has now obtained further discovery, and seeks an account of profits against Mr Huang and 152 Rowy.
In Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557-558; [1995] HCA 18, the Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) observed as follows:
“A fiduciary must account for a profit or benefit if it was obtained either (1) when there was a conflict or possible conflict between his fiduciary duty and his personal interest, or (2) by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position.”
“The assessment of the profit will often be extremely difficult in practice; accordingly it has been said that ‘[w]hat will be required on the inquiry … will not be mathematical exactness but only a reasonable approximation’. What is necessary however is to determine as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his duty.”
As these passages make clear, the fiduciary’s liability to account for “profits” extends to any unauthorised “benefit” obtained “by reason of his fiduciary position”, and the Court’s task is to determine as accurately as possible the “true measure” of the benefit obtained by the fiduciary. Having ascertained the extent of the benefit acquired by the wrongdoer, “the cardinal principal of equity” to be applied is that “the remedy must be fashioned to fit the nature of the case and the particular facts”: Warman at 559.
The findings from the Primary Judgment set out above are to the effect that Mr Huang was, as a fiduciary, in a position to direct how the settlement proceeds were paid; that he used his position as a fiduciary to direct that the settlement proceeds from the sale of the Eastwood Shopping Centre be paid away for the benefit of related companies or other persons; that he did not obtain Mr Guo’s informed consent to those payments; and that this amounted to a dishonest breach of Mr Huang’s fiduciary duty.
The benefits which Mr Huang and 152 Rowy obtained as a result of Mr Huang’s breach of his fiduciary obligations, in which 152 Rowy knowingly assisted, comprise:
the retention of Mr Guo’s 30% of the profits from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy; and
the retention of Mr Guo’s 30% share of the net proceeds of the sale of the Eastwood Shopping Centre.
Mr Huang and 152 Rowy must account to Mr Guo for those benefits.
Such relief is both within the pleading and consistent with, and supported by, the findings in the Primary Judgment.
As noted above, Mr Huang and 152 Rowy did not advance any submission that there was any difference between the profits obtained by each of them, or that there should therefore be any difference in the liability of each to account for such profits. Instead, they accepted that there should be joint and several liability to account for the amount determined by the Court.
It will be a condition of the relief that Mr Guo must cause HD International to transfer its shares in Yufeng to Mr Huang or his nominee. Although HD International is not a party, it was common ground between Mr Huang and Mr Guo that equity could impose such a condition on Mr Guo’s entitlement to receive an account of profits. It will be a matter for Mr Guo whether he is able to satisfy this condition.
The imposition of this condition reflects that:
the 30% shareholding in Yufeng, which is presently held by HD International as the trustee of the Guo Family Trust, was transferred to Mr Guo’s former wife (Ms Deng) by Mr Huang pursuant to the agreement between Mr Huang and Mr Guo in relation to the Project (Ms Deng subsequently transferred this shareholding, at Mr Guo’s direction, to the predecessor trustee of the Guo Family Trust) (Primary Judgment, [60]-[61], [98]-[99]);
the Project came to an end with the sale of the Eastwood Shopping Centre; and
I have determined that Mr Huang and 152 Rowy should account to Mr Guo for his 30% share of the profits from the operation of the Eastwood Shopping Centre, and his 30% share of the net proceeds from its sale, these being amounts which were obtained and retained for the benefit of Mr Huang, 152 Rowy or their interests, without Mr Guo’s informed consent.
The transfer of the shares held by HD International to Mr Huang or his nominee will avoid any prospect of double recovery by Mr Guo and his interests, and will finally resolve all issues between, on the one hand, Mr Huang and his interests and, on the other, Mr Guo and his interests, in relation to the Project.
To quantify the extent of the benefit for which Mr Huang and 152 Rowy must account, it is necessary to resolve the remaining issues in dispute, which are addressed below.
In order to purchase the Eastwood Shopping Centre, 152 Rowy obtained a $33m facility from NAB, and drew down the full amount of that facility (Primary Judgment at [92]-[95]) (NAB F****acility).
As discussed below, 152 Rowy paid interest on the NAB Facility during the period that it owned and operated the Eastwood Shopping Centre.
On the completion of the sale of the Eastwood Shopping Centre, the NAB Facility was repaid in full (Primary Judgment at [119]).
Mr Huang and 152 Rowy submitted that, having regard to those matters, the interest on the NAB Facility was a business expense of 152 Rowy, which must be deducted in order to determine the net income from the operation of the Eastwood Shopping Centre. (If this is correct, then it would also follow – as acknowledged by Senior Counsel for Mr Guo in his closing submissions in reply – that the repayment of the NAB Facility should be deducted when determining the net proceeds from the sale of the Eastwood Shopping Centre.)
Mr Guo submitted that the NAB Facility ought not be considered part of the joint venture, but instead “represented Mr Huang’s contribution to the joint venture”. The submission was put as follows in oral address:
“The NAB loan was actually how Mr Huang financed his contribution. So it wasn’t actually a project expense. It’s a Huang expense. If that’s the case, then the interest paid on that loan is excluded from the profit calculation. It’s Mr Huang’s responsibility. Even though it might’ve been paid by the company, and even though the way it was structured was that NAB provided a loan directly to the property‑owning company, 152 Rowy, it was still Huang’s contribution.”
“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 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.”
By stating that “I will fund approximately half of the $60 million using bank loans”, Mr Huang was not representing that he would personally borrow an amount of $30m from the bank, which he would provide as an equity injection into the proposed investment. That is plain from the fact that Mr Huang also said “I will be contributing $10m”. On Mr Guo’s account of the conversation, the fact that Mr Huang would personally contribute an amount of only $10m explained why Mr Huang would have a 30% share in the investment (for his $10m), compared to Mr Guo’s 60% (for his $20m), with Mr Huang receiving the remaining 10% for “management” services.
Instead, in this conversation, Mr Huang was proposing to Mr Guo that they would, between them, invest $30m, and that the remaining $30m required to purchase the Eastwood Shopping Centre would be provided by way of a bank loan which would be taken out for the purposes of the Project.
This is consistent with the manner in which the ACLS (at [16]-[17]) described the Investment Proposal which Mr Huang put to Mr Guo, and which Mr Guo accepted. In particular, the ACLS pleaded (at [16(a)]-[16(b)]) that the terms of the Investment Proposal included that:
“(a) Mr Huang proposed to fund approximately half of the purchase price (50% of $60 million) for the Eastwood Shopping Centre using bank loans which he would arrange;
(b) for the other half of the purchase price:
(i) Mr Guo should invest $20 million;
(ii) Mr Huang would invest $10 million”.
Further, Mr Guo’s submission that Mr Huang financed his contribution to the Project through the NAB Facility ignores that, according to the Investment Proposal outlined above, Mr Huang was to contribute $10m, and Mr Huang did in fact contribute $16.8m to the acquisition of the Eastwood Shopping Centre (this being the amount which Mr Huang borrowed from Mr Guo and which was paid to 152 Rowy via Yufeng): see Primary Judgment at [96], [266]-[267], [335].
Finally, Mr Guo never pleaded a case that Mr Huang breached his fiduciary obligations to Mr Guo by causing 152 Rowy to enter into the NAB Facility in order to fund Mr Huang’s contribution to the Project (which is unsurprising given the matters set out above).
For those reasons, I am satisfied that the NAB Facility, which was taken out by 152 Rowy in order to fund the acquisition of the Eastwood Shopping Centre (Primary Judgment at [92]-[95]), was an expense of the Project.
It follows that:
in respect of the period during which the Eastwood Shopping Centre was owned by 152 Rowy, it is necessary to bring to account interest payments in respect of the NAB Facility as an expense in order to determine the profits from the operation of the Centre; and
in respect of the sale of the Eastwood Shopping Centre, it is necessary to bring to account the repayment of the NAB Facility in order to determine the net proceeds of sale.
Mr Guo contended that, because the profits from the operation and sale of the Eastwood Shopping Centre have been calculated on an “after-tax” basis, the amount awarded to Mr Guo should be grossed up to restore him to an equivalent “pre-tax” award (with Mr Guo then being liable to taxation on this grossed-up amount at his ordinary tax rate).
Senior Counsel for Mr Guo submitted that, unless the gross-up occurs, tax will be collected twice in respect of Mr Guo’s share of the underlying profits generated by the Eastwood Shopping Centre.
In advancing this position, Mr Guo relied on the decision in Daniels v Anderson (1995) 37 NSWLR 438 at 584, where Clarke and Sheller JJA observed that:
“If … it is unjust not to take account of identifiable and quantifiable taxation impacts both on the lost receipts and the compensatory damages then these may be taken into account in assessing damages.”
“The primary judge dealt with this issue in the Tax Judgment [Macquarie International Health Clinic Pty Ltd v Sydney Local Health District (No 11) [2017] NSWSC 1249]. The primary judge relevantly held that Macquarie’s damages in relation to the Hospital Site should be ‘grossed up’ for taxation. This was because:
(1) damages are compensatory (Tax Judgment at [90]);
(2) where damages are, or are arguably, going to be taxed, the question is ‘whether justice requires that taxation be taken into account in the amount of the award’ (Tax Judgment at [90])
(3) the mesne profits awarded in relation to the Hospital Site were compensatory, despite the process of assessment being governed by the user principle; and
(4) justice in the present case required that taxation be taken into account in the amount of the award (Tax Judgment at [129]).”
The Court of Appeal held that the primary judged erred in his approach to valuing the respondent’s lost commercial opportunity. However, the Court held that, on the assumption that the primary judge’s approach to valuation had been appropriate, his Honour was correct to “gross up” the damages award for taxation (at [481]). This was because the “cash flows used by the damages model for the Hospital Site were … post tax cash flows” and, consistently with the principle from Daniels which is set out above, it “would have been unjust not to take into account identifiable and quantifiable taxation impacts on the damages, which were in truth compensation for a lost commercial opportunity, albeit that the commercial opportunity was not correctly identified or valued” (at [482]-[483]).
These statements of principle are, in broad terms, to the effect that where the Court is assessing compensatory damages, and where it would be unjust not to take into account identifiable and quantifiable taxation impacts on the damages award, then the Court may take those impacts into account in assessing the damages award.
Mr Guo also relied on the fact that the accounting experts agreed in their joint report that, where an award of damages quantified on a post-tax basis will be taxable in the hands of a party, it “may” be appropriate to gross up the benefits to be paid. However, this is little more than a recognition of the statements of principle outlined above.
I do not consider that those statements of principle are applicable in the circumstances of the present case.
Mr Guo seeks, by way of remedy, an account of profits from Mr Huang and 152 Rowy.
In general terms, whereas the award of compensation looks to the loss suffered by the plaintiff, the remedy of an account of profits looks to the gain made by the party in breach (or by the knowing recipient or knowing assistant): Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [40] per Gleeson JA (with whom Mitchelmore JA and Griffiths AJA agreed). While the aim of equitable compensation is to restore the plaintiff, as nearly as possible, to the position the plaintiff would be in had no breach occurred, the aim of an account of profits is to strip from the party in breach the gains made by reason of the breach (or by reason of their knowing receipt or knowing assistance): Xiao at [41].
The liability to account rests on “the stringent rule that the fiduciary cannot profit from his trust”: Xiao at [45], quoting Warman at 557. In determining the proper basis for an account of profits, it is “of first importance … to ascertain precisely what it was that was acquired in consequence of the fiduciary’s breach of duty”: Warman at 559.
In the present case, the gains made by reason of the breach of Mr Huang’s fiduciary duty included, relevantly, the retention of Mr Guo’s share of the after-tax profits from the operation and sale of the Eastwood Shopping Centre.
If the Court grossed up this amount, the effect would be that Mr Huang and 152 Rowy would be required to account to Mr Guo for an amount substantially in excess of the gains which they made as a result of Mr Huang’s breach.
On the first day of the July 2026 hearing, I asked Senior Counsel for Mr Guo whether he was able to identify any case where a gross-up for tax had been applied in respect of an account of profits, such that an errant fiduciary who received, as a result of their breach, an after-tax profit, was required to account to the principal for a greater (grossed-up) amount. On the following day, the only authority that was identified was the Macquarie International Health decision which, as noted above, concerns the assessment of compensatory damages.
Mr Guo’s written submissions raised the possibility of there being “tax credits” for any dividends paid by 152 Rowy. In response, Mr Huang submitted that franking credits are not property, such that there could not be any obligation to account for any benefit in having received franking credits. It is unnecessary to consider those submissions in any detail, given that Mr Guo expressly stated, in reply, that it was not part of his claim “to be compensated for any non-receipt of franking credits”.
Further, and in any event, the factual basis for the gross-up, which was advanced by Mr Guo’s expert, Mr David Mullins, has not been established. Mr Mullins expressed the view that a gross-up was appropriate because any profit from the Project “would have been distributed [to Mr Guo] by way of payment of a dividend”.
However, Mr Guo was not a shareholder of 152 Rowy (or, for that matter, of Yufeng). Although profits from the Project could have been distributed by way of a dividend from 152 Rowy to Yufeng as a 95% shareholder, and then by way of a dividend from Yufeng to HD International as a 30% shareholder, and then by way of a distribution by HD International to Mr Guo as a discretionary beneficiary of the Guo Family Trust, this was not the only way in which Mr Huang might have satisfied his obligation to ensure that 30% of the profits were shared with Mr Guo or his interests (see paragraph [51] above). Each of the various options available for providing Mr Guo with a share of the profits from the Project may have given rise to different taxation consequences.
As the Defendants submitted, it was Mr Guo’s choice to arrange his affairs so that he did not have any direct shareholding in Yufeng or 152 Rowy. He did not take steps to make an investment in a tax efficient structure. Rather, he relied on Mr Huang to determine the structure through which the Project was pursued. Mr Guo did not advance any allegation that the corporate structure adopted by Mr Huang was a sham. As Mr Huang submitted, by adopting a corporate structure, the investors obtained the benefit of limited liability but also became subject to corporate tax. There was no allegation that Mr Huang made any promise to Mr Guo that he would receive 30% of the pre-tax profits from the Project. Nor was there any allegation that Mr Huang breached any obligation to Mr Guo by failing to ensure that Mr Guo received his share of the profits in a tax-efficient way.
For those reasons, I reject Mr Guo’s submission that his 30% share of the after-tax profits from the Eastwood Shopping Centre, for which Mr Huang and 152 Rowy are liable to account, should be grossed up for taxation.
Following discovery and the preparation of expert reports, it was agreed by the parties’ accounting experts that (even after allowing for the payment of interest on the NAB Facility), there were substantial profits made from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy.
Mr Huang and 152 Rowy did not distribute any part of those profits to Mr Guo or his interests.
I have determined that Mr Huang and 152 Rowy are liable to account to Mr Guo for 30% of those profits from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy. For the purpose of calculating pre-judgment interest, it is necessary to determine the date from which such interest runs.
The calculation advanced by Mr Guo proceeded on the basis that, where a profit was made from the operation of the Eastwood Shopping Centre in a particular financial year, pre-judgment interest on Mr Guo’s 30% share of that profit ran from 1 July of the following financial year.
Mr Huang submitted that it was implicit in this calculation that Mr Huang had a fiduciary duty to distribute 30% of the profit from the operation of the Eastwood Shopping Centre at the end of each financial year. Mr Huang submitted that Mr Guo did not plead that this was the case, and the Court made no such finding. Mr Huang contended that the Court should not assess interest on the hypothetical basis that Mr Huang breached his fiduciary duty to Mr Guo on 1 July each year, but instead the Court should proceed on the basis that any profits earned from the operation of the Eastwood Shopping Centre were to be retained by 152 Rowy (for use, if required, in relation to the development of the Eastwood Shopping Centre). It followed that pre-judgment interest on the total amount of those profits should run only from the end of the Project, that is, from the time of the sale of the Eastwood Shopping Centre.
I do not accept Mr Huang’s submissions on this issue, for the following reasons.
First, adopting the calculation advanced by Mr Huang would involve making an assumption on a doubtful issue – namely, whether profits were to be retained by 152 Rowy or were to be distributed – which was in favour of the wrongdoer. This is at odds with the approach that the Court will generally adopt: Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143 at [139] per Mitchelmore JA, with Gleeson JA and Basten AJA agreeing.
Secondly, this assumption is also at odds with the representations which Mr Huang made to Mr Guo prior to Mr Guo’s investment in the Project. In particular, Mr Huang said to Mr Guo that “the shops will generate a rental income of $3 to $4 million, or even $4 to $5 million on an annual basis” and that they “[w]e will divide the income according to our shareholdings in the project” (Primary Judgment at [53]). That statement suggested that a benefit from Mr Guo’s investment in the Project would be a share in the substantial annual income generated by the Eastwood Shopping Centre.
Thirdly, Mr Guo expressly pleaded that it was a term of the Investment Proposal, which he accepted, that by reason of his contribution, he would “be entitled to receive, on an ongoing basis, 60% of the net income from the operation of the Eastwood Shopping Centre” (ACLS at [16(f)]; emphasis added). This pleading plainly conveyed a proposition – consistent with the terms of Mr Huang’s statement quoted above – that the profits from the operation of the Eastwood Shopping Centre would be shared as and when they were received. It is true that I did not make any finding to the effect that any such obligation was breached, but that was in circumstances where, because of the Defendants’ incomplete discovery, there was no evidence at the November 2024 hearing as to whether any profits had been made from the operation of the Eastwood Shopping Centre at any time during the period that it was owned by 152 Rowy (Primary Judgment at [231]).
Fourthly, equity requires the errant fiduciary to disgorge “the full value of an advantage obtained in a situation of conflict of duty” (subject to the errant fiduciary establishing some basis for ordering otherwise): Ancient Order of Foresters at [13] per Kiefel CJ, Keane and Edelman JJ. In the present case, Mr Huang and 152 Rowy obtained a benefit by retaining the whole of the profit from the operation of the Eastwood Shopping Centre for each financial year that it was owned by 152 Rowy, without distributing any part to Mr Guo or his interests. In order for Mr Huang and 152 Rowy to disgorge the full value of the advantage obtained by them by failing to distribute a 30% share of the profits from the operation of the Eastwood Shopping Centre for each financial year to Mr Guo or his interests, they should be required to pay pre-judgment interest on the amount of the profit for each financial year, calculated from the first day of the following financial year. This was the approach adopted by the accounting experts for both parties.
It follows that pre-judgment interest on Mr Guo’s share of the profit from the operation of the Eastwood Shopping Centre should be calculated in the manner for which Mr Guo contended.
The accounting experts, after allowing for the payment of interest on the NAB Facility, agreed that the total amount of the profits made from the operation of the Eastwood Shopping Centre during the period that it was owned by 152 Rowy was $2,514,600.
Mr Guo is entitled to 30% of this amount, together with pre-judgment interest calculated in the manner outlined above (which is consistent with the approach adopted by the parties’ respective accounting experts).
In addition, I have determined that Mr Huang and 152 Rowy are required to account to Mr Guo for 30% share of the net proceeds received from the sale of the Eastwood Shopping Centre.
I have determined that the NAB Facility represented a loan taken out for the purposes of the Project, which should be treated as an expense of the Project. It follows that the amount for which Mr Huang and 152 Rowy are liable to account in respect of Mr Guo’s 30% share of the net proceeds received from the sale of the Eastwood Shopping Centre is calculated as follows:
sale price of $155,000,000 (Primary Judgment, [115], [117]);
less the capital gains tax of $27,001,657 payable in FY2022 on the sale of the Eastwood Shopping Centre (Primary Judgment, [126]);
less the amount of $33,000,000 in repayment of the NAB facility upon settlement (Primary Judgment, [119]);
resulting in a subtotal of $94,998,343, with 30% of this amount being $28,499,503.
Mr Guo is entitled to pre-judgment interest on that amount, from the date of the settlement of the sale of the Eastwood Shopping Centre (namely, 15 July 2021).
Mr Guo sought his costs of the proceedings from Mr Huang, Yufeng and 152 Rowy, on the basis that he had achieved substantial success in respect of his claims, and costs should follow the event. This reflected the preliminary view which I expressed in the Primary Judgment (at [393]).
None of the Defendants sought any different or other form of costs order. In particular, none of the Defendants advanced any submission to the effect that the costs award in favour of Mr Guo should be reduced by reason that he failed on some clearly dominant or separable issue.
I am satisfied that it is appropriate for an order for the costs of the proceedings to be made in Mr Guo’s favour.
It will be necessary for the parties to confer on the calculation of pre-judgment interest up to the date of the orders, having regard to my findings regarding the amounts for which Mr Huang and 152 Rowy must account to Mr Guo.
Accordingly, I make the following order:
By 4.00pm on 4 September 2026, the parties confer and provide to the Associate to Nixon J a proposed form of orders to give effect to these reasons for judgment.
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Amendment to name of Plaintiff's representation
Guo
Yufeng Investment Group (Australia) Pty Ltd (No 2)
(2018) 265 CLR 1
(1995) 37 NSWLR 438
(1995) 182 CLR 544
(2023) 111 NSWLR 132