Haiqin Lu v Qindi Shen; Weiren Jin v Qindi Shen

The parties

1. Mr Paul Jin (who is not a party to either proceeding) and Mr Linfa Jin are brothers. The plaintiffs are Ms Haiqin Lu and Mr Weiren Jin. The defendants in each matter are Ms Qindi Shen, Ms Huiju Jin and Mr Linfa Jin.
2. In each case, I have stated the names in the order that is customary in this country: that is to say, with the given name first and the family name second. That is the way the parties are described in the court documents. For convenience, and without intending to be either disrespectful or patronising, I shall refer to each of those persons by their given name. I have been assured that I will cause no offence by doing so.
3. Weiren is Paul's son. Haiqin is Paul's daughter-in-law, being married to his other son Weimin Jin (Weimin). Qindi is Linfa's wife, and Huiju is their daughter.
4. For a number of years, Paul and Linfa conducted business together in Australia and in China. One of the vehicles through which they conducted their business was a company known as Australian Golden Way Pty Limited (AGW). AGW went into liquidation, and has now been deregistered. The loans in question were made by Haiqin and Weiren to AGW. AGW's obligations were guaranteed by the defendants. The transactions of loan and guarantee took place against the background that shares held by Paul and his family in AGW were to be sold to Linfa's family. The settlement of those sales was to be contemporaneous with the execution of the deeds.

Credibility

1. Paul, Haiqin, Weiren, Linfa, Qindi and Huiju gave evidence. All but Huiju gave their evidence through an interpreter. Although Huiju gave her evidence in English, it was apparent that English is not her first language.
2. This is a case where the observations of McLelland CJ in Eq in Watson v Foxman [1] are even more than usually apposite. The conversations on which, in particular, the defendants rely to make out their various defences occurred many years ago. Each of the witnesses has a very substantial stake (whether monetary or otherwise is irrelevant) in the outcome of the proceedings. Paul and the defendants displayed considerable emotion in the course of giving their evidence: hardly surprising, given the close family relationships involved.
3. The passage of time between the alleged conversations and the hearing is sufficient of itself to raise strong doubts as to the ability of the witnesses to recall at all, let alone with the precision and detail apparent in their affidavits, who said what to whom. There are no contemporaneous notes, and very few contemporaneous documents, that could have helped to refresh the recollection of any witness.
4. Further, in my view, the process of recollection has been affected severely and adversely by the corrosive action of self-interest and emotion. That comment applies particularly to Paul and the defendants.
5. In general, I am not disposed to accord any real probative weight to disputed testimonial evidence of conversations. I think that the purported recollections have been fashioned, whether subconsciously or otherwise, so as to tell the story that best suits the interests of each witness.
6. Unfortunately, this is not a case where there is a substantial body of contemporaneous documents to which recourse may be had as a reliable guide to what the parties actually said and did. Hence, my assessment of the evidence must be based substantially on the probabilities, regarded objectively, as they appear from the parties' relationships (both familial and commercial) and the nature of the various transactions involved.
7. I take into account, in my assessment of credibility, the fact that the principal witnesses, Paul and Linfa, were prepared in the course of cross-examination to give lengthy and elaborate details of matters that had not featured in any way in their affidavits. In my view, much of those aspects of their evidence reflects spur of the moment invention, designed to deflect the otherwise unacceptable consequences of a direct and truthful answer.
8. I have sought to make every allowance for cultural differences and what may very well be the strange situation in which each found himself, subjected to cross-examination. Nonetheless, the abundance and readiness of purported recall in the witness box, contrasted with the lack of recall (so far as the affidavits go) ten months or so earlier is in my view significant, and is detrimental to acceptance of either of them as a witness on whose evidence much reliance can be placed.
9. I was not overly impressed by Weiren and Weimin as witnesses. Each of them affirmed an affidavit in which he purported to display a reasonably clear recollection of events. However, in cross-examination, each of them retreated time and again to the response "I do not recall". That was done so often that its contrast with the apparent precision of the affidavits tells against accepting those affidavits as reliable. I add that there was a similar tendency in Haiqin's evidence, although it was not so marked as it was in the evidence of her husband and her brother-in-law.
10. Neither Qindi nor Huiju was overly prepared to answer questions directly. Each succumbed from time to time to emotional (and non-responsive) outbursts. I am not disposed to accept them as reliable witnesses.
11. Counsel referred to other matters in their submissions on credit. I do not propose at this point to refer to any of them bar one. That relates to a document, purporting to be a withdrawal of caveat signed by Weiren, dated in or around December 2011. The only evidence of date appears from the date of registration, 9 December 2011.
12. Weiren denied that the signature was his. The plaintiffs obtained the services of an expert document examiner, Ms Michelle Novotny. Ms Novotny concluded, for reasons that do not need to be set out, that she was unable to express an opinion as to whether the signature was Weiren's.
13. Weiren said (and his passport confirms) that he had been in China when the document was purportedly signed, and had been there for some time before and after that date. It is scarcely necessary to note that this does not mean that he could not have signed the document.
14. Linfa signed the document as the witness to Weiren's purported signature. Linfa accepted he had not been present when that signature was affixed to the document. He said that he had been given the signed document by Paul, who told him that he (Linfa) should witness the signature of Weiren and then procure registration. Paul denied that he had said this or so acted.
15. It is clear that the document was not signed in Linfa's presence, although Linfa, by signing it as he did, certified that he was "an eligible witness and that [Weiren] signed this dealing in my presence". Had Linfa understood what he was saying by signing the document, it would be something that could tell heavily against his credibility. However, he said, he did not know what the document said, and simply did what Paul had told him to do.
16. Linfa said that he showed the document to Huiju. Huiju said in her affidavit [2] : I recall seeing that document after my father had received it and translating it orally for him.
17. If that aspect of Huiju's affidavit evidence were to be accepted, and if by "translating it" she meant that she translated all the writing on it, then Linfa must have understood that he was certifying falsely. However, in cross-examination, Huiju sought to resile from her affidavit. First of all, she said [3] , she recalled translating the document orally to her father at a time when his signature was on it. However, when her attention was directed to the form of certification, she denied that she had translated those words to her father [4] . She said "for the headings I translated" [5] .
18. Huiju was taken to the paragraph of her affidavit from which I have quoted. She read it to herself. She then gave the following evidence [6] : Q. Firstly, you don't say anything there about translating this document after your father had signed it do you? You don't mention that. A. No, I didn't. I would received after my - that document was be done, I received from my dad. Q. You don't mention anything there about only translating part of the document do you? A. That's right. Q. Are you now telling his Honour that notwithstanding what you swore in this affidavit, that you in fact only translated part of the document to your father? A. Yes. Because my dad is give to me and I say that already. That's what I was said, my just - my dad is asking me, "Is the -is - is this the document for withdrawal caveat?" I said, "Yes, this is the withdrawal document." And I saw -saw other signature there, so. Q. Is this now your evidence that the full extent of your translation was to say, yes, this is a withdrawal of caveat form? A. Yes. Q. That's the full extent of your translation to your father? A. Yes. Q. You're just making this up aren't you? A. Because my dad doesn't know the English so she ask me. He ask me, "This document is a withdrawal caveat for this property." I read it and I said, "This is a withdrawal caveat and this is the - this address is right." Q. He asked you to translate the document for him didn't he? A. He - he asked. Q. You told him that if you sign this document you are certifying that the caveators signed the document in your presence. You told him that didn't you? A. I can't remember who did it. Q. You may have told him that? A. No, I didn't. Q. I just want to be quite clear on this, when you say you translated this document to your father the only translation you say you gave to him was to say that this is a withdrawal of caveat form? A. Because this document would all be done before he handed to me. And he just ask me. He wanted to confirm this is the withdrawal caveat. I told him‑‑
19. There was more cross-examination to the same effect.
20. Huiju also said that everything that now appears on the face of the document - printed or handwritten, and the signatures - was on the document when her father gave it to her. Apart from the usual printed details, the document contains handwriting that identifies the lodging party as: Linfa Jin 201 Midson Road Epping NSW 2121
21. It then gives, again in handwriting, a mobile phone number. Beneath Linfa's signature, the same address is written, in the same handwriting.
22. It is obvious, on the evidence that Linfa gave, that he did not write any of those handwritten words or figures. There is no explanation of who wrote them. That mystery remains unilluminated by the evidence.
23. I regard this aspect of Huiju's evidence as unacceptable. The natural meaning of her affidavit is that she translated the document either wholly or substantially in full to her father. The effect of her oral evidence is that she translated very little, if anything, of it. My impression, both at the time Huiju gave this passage of evidence and upon reconsidering the transcript, is that she realised the danger of adhering to her affidavit evidence, and sought to avert that danger by retreating from what she had said. That is not the conduct of an honest witness seeking to do her best to tell the whole truth.
24. Mr Ashhurst of Senior Counsel, who appeared with Mr Burchett of Counsel for the plaintiffs, pressed upon me that the circumstances in which Linfa signed the document told against his credit. That submission, however, presupposes that Linfa knew what he was signing and, in particular, what he was certifying. Although I have an uneasy feeling that Linfa knew more (on this topic) than he was prepared to admit in the witness box, I am not prepared to make the finding that Mr Ashhurst sought. I take into account the extremely unsatisfactory nature of the evidence, Linfa's evident unfamiliarity with the English language, and the serious character of the dishonesty implicit in that suggested finding.
25. There are other matters that are relevant to my assessment of credibility. I shall refer to some of them later in the course of these reasons.

The issues

1. The parties agreed on the real issues in dispute. I set out their statement of those issues: 1. a) If the 'Deeds of Loan Agreement' sued upon were executed as they purport to have been, whether they take effect as 'deeds'? b) Whether the 'Deeds of Loan Agreement' sued upon take effect as 'deeds'? 2. Whether the Deeds were procured by misleading and deceptive or unconscionable conduct within the meaning of ss.42 and 43 Fair Trading Act? 3. Is the enforcement of the Deeds unconscionable within the meaning of ss.20 and 21 Australian Consumer Law? 4. If question 2 or question 3 is answered in the affirmative, what is the consequence thereof? In particular, are the Plaintiffs' alternative remedies open on the pleadings and, if so, are they statute barred? 5. Are the Defendants entitled to a set-off of any amounts claimed? 6. Are the Plaintiffs entitled to the judicial sale of the security properties? 7. Whether the Defendants' liability was discharged or released (as a result of the matters set out in para.C5 of the Commercial List Responses)? 8. If the answer to issue 1 is in the negative are the Plaintiffs' claims extinguished pursuant to s 63 of the Limitation Act 1969 or do the claims against the properties owned by the Defendants continue by operation of ss.36(2), 42(1)(a), 43 and 11 of the Limitation Act?
2. The first issue is stated in effect in the alternative. One alternative represents the plaintiffs' preferred formulation. The other represents the defendants'. In the event, nothing turns on the difference in formulation.
3. I should note that there was a pleaded allegation that in each case, the deeds were shams. That allegation did not find its way into the agreed issues. As I understand things, it has been subsumed into the second and third issues.

Issue 1: do the agreements sued upon take effect as deeds?

1. Each written agreement is described as a "DEED of Loan Agreement". Each is said to have been "executed". On the face of the deeds, each defendant signed in the presence of a witness. Neither witness was a party to the deeds. Each defendant admits that he or she signed the deeds. There is no pleaded allegation that he or she did not sign in the presence of a witness.
2. AGW was also a party to each deed. Its common seal was affixed to them. That was said to have occurred with the authority of its board of directors, and to have been affixed by one director (Linfa) in the presence of another director, who was also a secretary (Huiju).
3. Section 38 of the Conveyancing Act 1919 (NSW) reads as follows: 38 Signature and attestation (1) Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation. (1A) For the purposes of subsection (1), but without prejudice to any other method of signing, a deed is sufficiently signed by a person if: (a) by the direction and in the presence of that person the deed is signed in the name of that person by another person, (b) the signature is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and (c) the person attesting the signature certifies in his or her attestation that he or she is a prescribed witness and that the signature was affixed by the direction and in the presence of the person whose signature it purports to be. (1B) For the purposes of subsection (1) but without prejudice to any other method of signing, a deed is sufficiently signed by a person if: (a) that person affixes his or her mark to the deed, (b) the affixing of the mark is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and (c) the person attesting the affixing of the mark certifies in his or her attestation: (i) that, before the mark was affixed, he or she explained the nature and effect of the deed to the person making the mark, and (ii) that he or she believed, at the time the mark was affixed, that the person making the mark understood the explanation. (2) Indenting shall not be necessary in any case. (3) Every instrument expressed to be an indenture or a deed, or to be sealed, which is signed and attested in accordance with this section, shall be deemed to be sealed. (4) Every deed, executed and attested in accordance with this section may be proved in the same manner as a deed not required by law to be attested might have been proved heretofore. (5) Nothing in this section contained shall affect: (a) the execution of deeds by corporations, or (b) the provisions of section 184F (4), or (c) any deed executed prior to the commencement of this Act.
4. On the face of the deeds, each of them complies with the formal requirements set out in s 38, so as to take effect as a deed.
5. Mr Condon of Senior Counsel, who appeared with Mr Sharp of Counsel for the defendants, sought to argue that at least some of the defendants had not signed in the presence of a witness. As I have said, that was not squarely flagged in the pleadings. Indeed, there was no pleaded denial that the deeds took effect as deeds; simply a non-admission. I took the view that it was not open to the defendants, on their pleading, to run that argument. That does not matter, because the evidence establishes that each defendant's signature was witnessed by a non-party.
6. Linfa signed in the presence of a witness who signed to attest his signature. That witness was a solicitor, Ms Elsie Chan. The signatures of Qindi and Huiju purport to have been witnessed by another solicitor, Mr Bob Chan. Qindi and Huiju denied that they had met Mr Chan and that he had witnessed their signatures. However, Mr Chan prepared and signed a "Solicitor's Certificate" relating to each of them. He stated in each certificate that he attended the relevant party in conference on 5 August 2005, and that he witnessed her execution of the documents.
7. The certificates stated, among other things, that Mr Chan had confirmed the identity of the signatory by examining documents produced by her. In Qindi's case, those documents were a Chinese passport and an Australian Medicare card. Qindi was not able to produce her passport, when served with a notice to produce it. She did however confirm that the number given for her Medicare card was correct. In Huiju's case, the identifying documents were her driver licence and Medicare card. She confirmed that the number stated for each was correct.
8. Neither Qindi nor Huiju was able to offer any credible suggestion as to how Mr Chan might have become aware of the identifying details, except by having met them and asking them to produce the relevant documents. Huiju sought to suggest that she had given her driver licence and Medicare card to her uncle Paul, and that he might have given the details to Mr Chan. I regard that as a spur of the moment invention. The allegation was not put to Paul (his cross-examination had been completed by then, but it was open to the defendants to ask for him to be recalled so that he could be tested on the point). I do not regard that evidence as honest, and I have taken it into account in my assessment of the weight to be accorded to Huiju's testimony.
9. Neither Ms Chan nor Mr Chan was called to give evidence. Each party sought to suggest that the other should have called them. It is unnecessary to decide that dispute. From the plaintiffs' perspective, there being no pleaded denial of signature (nor any pleaded absence of witnessing), there was no need to call them. From the defendants' perspective, and for the same reasons, there was no proper basis upon which they could have been called.
10. I note, if it matters, that efforts were made to contact each of Ms Chan and Mr Chan. Ms Chan is overseas. Mr Chan has disappeared, in circumstances that are somewhat mysterious. It may have been possible for one party or the other to call Ms Chan, had she been given sufficient notice of the hearing. I suspect that in reality Mr Chan was never going to make himself available as a witness.
11. Ultimately, Mr Condon accepted that there was little that he could put in submissions to overcome the weight of all the evidence. I conclude that each of the defendants did execute the deeds in the presence of a witness, and that in each case the witness signed so as to attest the defendant's signature.
12. It is convenient to add at this point that there was a factual dispute as to whether Mr Chan had acted for Linfa in another transaction dealing (relating to the withdrawal of a caveat). The evidence is on this point is exiguous, and I see no utility in attempting to resolve it.
13. To the extent that there is an additional requirement of delivery, I am satisfied that there is evidence of that. The effect of the evidence is that the defendants left the signed deeds with the solicitor who had witnessed their execution. Paul gave evidence (which was not controverted by any evidence from the defendants) that he collected the deeds from those solicitors. In my view, that is sufficient to demonstrate delivery, if delivery be required (and if it cannot be inferred from sealing). On any view, the defendants put it beyond their power to recall the deed once they had signed them. They left them with the relevant solicitor, obviously enough to be handed back to Paul or to someone else, on behalf of Weiren and Haiqin as lenders.
14. I am satisfied that each of the deeds took and has effect as a deed.

Issue 2: misleading or deceptive conduct

1. There was initially a dispute as to whether either the Fair Trading Act 1987 (NSW) or the Australian Consumer Law [7] applied. However, by the time of closing submissions, the plaintiffs accepted that, whatever might be the source, the well-known statutory proscriptions of misleading or deceptive conduct and unconscionable conduct applied at all relevant times: that is to say, both when the deeds were made and now, when enforcement of them is sought.
2. Analysis of the defence based on misleading or deceptive conduct is made a little difficult because the pleaded defence, that the deeds were a sham, has been abandoned. There is, however, some overlap between the abandoned defence and the defence based on misleading or deceptive conduct (and, for that matter, with the defence based on unconscionable conduct).

Outline of the case

1. As pleaded, the defendants' case is that their execution of the deeds was procured by misleading or deceptive conduct, and that the enforcement of the deeds would constitute unconscionable conduct. The particulars given of the defences are as follows: Particulars i. The Deed did not embody the terms of the Agreement. ii. The parties did not intend the Deed to embody the terms of the Agreement. iii. Before the Deed was executed, the defendants were not told that the Deed contained terms which had not been agreed upon, including provisions concerning compound interest, the extent of the caveatable interest (as the plaintiff contends) and the amount allegedly repayable. iv. The defendants did not obtain legal advice concerning the Deed.
2. The "Agreement" referred to in the particulars is said to be an antecedent agreement for sale, from Paul's family to Linfa's family, of the issued shares in AGW. The pleading of that "Agreement" forms part of the now seemingly abandoned "sham" defence.
3. The case that was opened for the defendants, and that was put in final submissions, differs somewhat from the pleaded case. However, Mr Ashhurst made no complaint about this. The case that was opened involved the following elements [8] : 1. the deeds did not incorporate the terms of an antecedent agreement made between Paul and Linfa (for the sale of shares in AGW); 2. the deeds differed from the antecedent agreement because [9] : 1. the total of the indebtedness recorded in the two deeds was substantially greater than the total of the amounts earlier agreed to be lent; 2. the deeds provided for interim payments whereas the agreement did not; and 3. the deeds specified a default rate that was not only higher (18% per annum as opposed to 16.5% per annum) than that specified in the agreement, but was said to compound; 1. the defendants were not given the opportunity to read the draft deeds before execution; 2. the defendants did not receive legal advice on the effect of the deeds, nor were the deeds otherwise explained to them; 3. Paul did not tell Linfa that the deeds differed from the antecedent agreement in the ways just identified; 4. on the contrary, Paul told Linfa that the deeds were "for the agreed AGW share transfer"; and 5. Paul "encouraged the defendants to execute the [deeds] quickly, in circumstances where he knew that the contracts had not been translated or explained to them".

Background to the deeds

1. Linfa and Qindi said that they could not speak, read or write English. The plaintiffs appear to accept that this was so. However, it became apparent in the course of Linfa's cross-examination that he is able to read numbers written in Arabic numerals. Many of the documents exchanged between Paul and Linfa that were written in Chinese characters included numbers written in Arabic numerals. Linfa agreed that he was able to read those numbers. The significance of this fact is however a matter of analysis.
2. Paul and Linfa had engaged in numerous commercial transactions, including by way of real estate development, in both China and Australia for some years prior to 2005. There had been a history of mutual debits and credits, and of contributions (monetary or otherwise) by one to projects of the other, over the years. Although many of these transactions involved members of Paul's and Linfa's families, Paul and Linfa were effectively the principal actors.
3. Immediately before July 2005, Paul, Weiren and Weimin held shares in AGW. AGW was then undertaking a development of real estate at Midson Road, Epping. That development involved, among other things, AGW's acquiring three lots of land, and subdividing those lots in conjunction with another lot owned by a company associated with Paul.
4. At the time the sale of the shares was negotiated, AGW owed money to Haiqin and Weiren. Paul appears to have agreed with Linfa that, as part of the transaction, Haiqin and Weiren would leave some part of those loans owing, to be repaid in a year's time. It was contemplated that AGW would obtain finance for the Midson Road project. Ultimately, a company known as Shakespeare Haney Securities Limited (SHSL) agreed to provide a loan. Paul and Linfa appear to have agreed that, from the funds to be advanced by SHSL to AGW, Haiqin and Weiren would be repaid part of their loan accounts, leaving the agreed amounts owing and to be repaid in a year's time.
5. By July 2005, Paul and Linfa had developed a practice of recording in writing (in Chinese) arrangements made between them, including agreements made to settle disputes as to money owed by one to the other (or by one family to the other). A number of such documents were created in the period leading up to execution of the deeds.
6. The parties focused their attention on documents exchanged on 23, 24 and 25 July 2005. One of those is a so-called "Letter of Promises" sent as a draft by Paul to Linfa on 23 July 2003. That document referred to various transactions, including payments made (presumably from funds advanced by SHSL) to Haiqin and Weiren on 27 July 2005. It may be that the apparent temporal disconformity is an error arising from misreading or wrongly translating the Chinese original.
7. From Linfa's perspective, the key parts of the Letter of Promises are statements that Weiren is to leave as a loan owing by AGW the sum of $229,829.20, and that Haiqin is to leave owing $450,000. Those figures (and others) are written in Arabic numerals in the document sent by Paul to Linfa that is otherwise in Chinese characters.
8. Another document, bearing fax transmission dates of 23 and 24 July 2005, is called a "Loan Letter of Guarantee". It appears to have been signed by Linfa, Qindi and Huiju. That letter records, among other things, that Haiqin has agreed to lend $450,000 to AGW for 12 months, and that "Weimin" has agreed to lend $229,829.27 to AGW for 12 months. (The document, at least in its English translation, does refer to Weimin, not to Weiren).
9. Each loan is said to be for a term of 12 months. The document specifies that "the monthly interest rate will be 1.25% and the interest will be calculated day by day". The document says further that if the loan is not repaid in a year's time, it may be extended for six months at an interest rate of 1.5% per month. Thereafter, if the loans are still not repaid, the document states that Weiren (the reference is correct this time) and Haiqin "will join in with the bank to put the assets of AGW… and the private assets and houses land [sic] of [Linfa, Qindi and Huiju] into auction", with the proceeds of sale being used first to repay SHSL and then to repay Weiren and Haiqin.
10. Another document, signed by Paul on 25 July 2005 but bearing a fax transmission date of 24 July 2005 (when, presumably, it was sent to Linfa) continued the process of negotiation. It states that the loan from Weiren is to be reduced, because of certain offsets, to $225,158.92, and that Haiqin would (as before) lend $450,000. Paul asked Linfa to "sign the Letter of Promises as soon as possible". Linfa did not do so.
11. If that is the correct chronological sequence (and there is some confusion in assigning precise dates to documents), the arrangements contemplated by the time that exchange of correspondence had finished was that: 1. Haiqin would lend $450,000 to AGW; 2. Weiren would lend (rounding up the cents) $225,159 to AGW; 3. the loans were to be repayable in 12 months' time; 4. the loans were to carry interest at 15% per annum, payable on discharge; 5. the loans could be "extended" for a further six months, with the interest rate increasing to 18% per annum; 6. Linfa, Qindi and Huiju would guarantee repayment of the loans; and 7. if the loans were not repaid, Haiqin and Weiren could have recourse to, among other things, "the private assets and houses/land" of Linfa, Qindi and Huiju.
12. In addition, the substantial details of the share sale agreement appear to have been negotiated.

Preparation and signature of the deeds

1. The precise sequence of events thereafter is a little difficult to follow. There is no doubt that a solicitor, Mr Peter Leng How Phan of Ma & Company, was instructed to prepare the loan agreements and the share sale agreement. Paul says that he attended with Linfa in Mr Phan's office, and gave instructions for the preparation of those documents. He said that Mr Phan advised that one or other of the families should receive independent legal advice on the documents, so that their signatures could be witnessed by a solicitor independent of the other family's solicitor.
2. Linfa affirmed an affidavit in reply, in which he referred to the relevant paragraph of Paul's affidavit [10] and said [11] : I do not recall going with Paul Jin to see […] lawyer Peter How Leng Phan of Ma & Company.
3. The ellipse indicates two words that were not read. The meaning of what I have quoted would not have been affected by those words, were they read.
4. Mr Ashhurst submitted that it was significant that Linfa had said that he did not recall attending Mr Phan in company with Paul. Mr Ashhurst referred to other paragraphs of Linfa's reply affidavit where, when it was apparent that he disagreed with something, he said so in express terms. Mr Ashhurst cross-examined Linfa on this feature of the affidavit. The conclusions I draw from that cross-examination are that Mr Ashhurst discharged his ethical duty to lay the foundation for the submission that he put, but that Linfa may not have comprehended precisely what was being put to him (even though, as I have said, he had the benefit of an interpreter). Thus, I do not regard Linfa's answers on this point as either supporting or denying the submission.
5. Nonetheless, I think, there is force in Mr Ashhurst's submission. The affidavit was drafted in the English language, by a solicitor fluent in both English and Mandarin (all the parties speak the Shanghainese dialect of Mandarin), who certified that he read it over in translation to Linfa before he affirmed it, and that Linfa "appeared to me to have understood its meaning".
6. In my view, the contrast between the occasions on which Linfa expressly denied that something had happened or been said, and the occasion where he said he did not recall attending Mr Phan in company with Paul, is telling. On a number of occasions, Linfa said that something was "not true", or "not correct", or that he "denied" that something had happened. There are other paragraphs of the affidavit where similar expressions of denial ("I did not have the alleged conversation" being one) are used.
7. On other occasions, Linfa referred back to paragraphs of his earlier affidavit that were inconsistent with the evidence to which he was replying. The obvious inference is that he intended thereby to deny the evidence to which he was replying, and to adhere to his earlier evidence.
8. By contrast, on two occasions, Linfa used the "I do not recall" formulation. One of those related to a letter of demand (he did not recall receiving it, nor when exactly he signed it). It is obvious that Linfa did receive the document, because he signed it (as he acknowledged, even though he could not recall doing so). The other relates to the attendance upon Mr Phan.
9. In my view, if Linfa's instructions to his solicitor had been that he did not attend Mr Phan's office in company with Paul (or that he denied Paul's account of the meeting with Mr Phan), the solicitor would have drafted the paragraph in question to reflect those instructions. To put it the other way, I have no reason to think that the paragraph in question does not reflect accurately the instructions that Linfa actually gave to the solicitor. Thus, I conclude, at the time Linfa affirmed the affidavit, his evidence was not that he denied attending the meeting with Mr Phan in company with Paul but, rather, that he simply had no recollection of having done so.
10. I do accept that if Linfa had prepared the affidavit himself, the distinction between denying something and not remembering it may not have been apparent to him. However, the distinction clearly was apparent to the solicitor who took instructions for and drafted the affidavit.
11. It seems to be reasonably clear that Mr Phan regarded Paul and his family as having been his clients. The tax invoice that Mr Phan prepared, dated 5 August 2005, was directed to them. The details given of the work done are of a formal nature, and offer no assistance on this particular point.
12. The plaintiffs' solicitors made inquiries of Mr Phan. Mr Phan was asked whether he could recall what happened in July 2005. He said, not surprisingly, that it had been a long time, and he did not think he could recall the events. He added that: I may be able to recall if I see the documents but I doubt so though.
13. That rider goes nowhere, because Mr Phan did not have the documents. Nor (upon inquiry being made) did Ma & Company.
14. I draw no adverse inference from the failure to call Mr Phan, although it is possible that (despite his professed lack of recollection) his evidence may have been of some assistance.
15. On balance, I conclude that this aspect of Paul's evidence should be accepted. I reach that conclusion because: 1. Paul adhered to it in cross-examination; 2. Linfa was not able to deny it when he affirmed his affidavit in reply; and 3. there is no reason to think that Linfa's memory was any better in the witness box in April 2018 than it had been when he gave instructions for his affidavit in reply 10 months ago, in June 2017.
16. No doubt, the reason for choosing Mr Phan to draft the documents was that he was capable in Mandarin. The fact that Paul gave instructions in Mandarin to Mr Phan (he must have done so, because I accept Paul's evidence that he cannot speak English) in the presence of Linfa may be significant. The extent of its significance would depend on the detail of the instructions given. Paul's evidence does not descend to that level of detail. Nonetheless, the instructions given to Mr Phan must have been sufficient to enable him to prepare the deeds containing, among other things, the loan amounts and interest rates (standard and default) specified in them, and the share sale agreement. There is no reason to think that Mr Phan made those matters up, or that he went on some frolic of his own when, having taken instructions, he proceeded to draft the documents.
17. Paul's evidence is that a day or so after giving instructions to Mr Phan, he was advised that the documents were ready. He said that he attended Mr Phan in company with Weiren and Haiqin, and they signed the documents. Paul was "unable to recall, whether Weimin… attended the office with us". However, he said, he had "a vague recollection of Linfa… coming to the office also and collecting copies of the documents" [12] .
18. Weiren gave evidence of the execution of the deed. He said that he attended upon Mr Phan and that "[t]he only other persons present when I signed were my brother, sister-in-law and father". [13] Weiren did not say that, then or later, Linfa appeared and collected copies of the documents.
19. Linfa did not reply specifically to the relevant paragraph of Paul's affidavit. Nor did his evidence in chief refer to an occasion when Linfa attended Mr Phan's office and collected the documents.
20. Paul's "vague recollection" that Linfa had been present and collected the documents is not consistent with Weiren's evidence that he recalls no one else being present. Nor is it consistent with Haiqin's evidence, who said explicitly that she "did not see [Linfa, Qindi and Huiju] at the solicitors' office" when she attended Mr Phan to sign the documents [14] .
21. I find that Linfa was not present, and that Paul's "vague recollection" is wrong. Thus, there is something of a mystery as to how the documents got from Mr Phan's office to Ms Chan's office, or to Mr Chan's office. The obvious inference, and the conclusion I reach, is that, one way or another, Paul did this, or arranged for it to be done.
22. The evidence did not include any copy of either deed signed by all the parties to it. So far as the evidence goes, it does not appear to be the case that the deed was signed by one side and then given to the other side for signature. It may be that various copies of the agreements were produced and distributed for signature, but this is really no more than speculation.
23. Linfa, Qindi and Huiju accept that they attended Ms Chan's office in relation to the deeds and the share sale agreement. The evidence of Linfa and Qindi is that Paul and Weimin collected them and drove them to Ms Chan's office. Linfa, Qindi and Huiju all said that Huiju, who had been at university, arrived separately and after them.
24. Paul denied that he had collected Linfa and Qindi and driven them to Ms Chan's office. He denied, further that he had gone into Ms Chan's office with them. Weimin likewise denied having done so.
25. It appears to be accepted on all sides that neither Linfa nor Qindi can drive a motor vehicle (or, at least, could do so in 2005). Thus, there must have been some means by which they were able to get from their residence or place of business (as the case may be) to Ms Chan's office. Huiju had a licence and, presumably, a car; but she was at university, and could not have done so (I accept her evidence in this respect).
26. It was not put to Linfa or Qindi that they went to Ms Chan's office by taxi or by some other form of public transport, or that someone other than Paul or Weimin drove them there. Paul wanted the transaction to be documented and completed. He could drive, and he did have the use of a car. In my view, the evidence given by Linfa and Qindi on this topic accords with the probabilities, viewed objectively. I accept it, and I do not accept Paul's and Weimin's denials of having driven to Linfa and Qindi to Ms Chan's office.
27. That leaves open the question of whether, as Linfa and Qindi said, Paul went into the solicitor's office with them. The evidence is a little equivocal. Qindi was unshaken in her evidence that Paul was present. Huiju said that Paul was present when she arrived. Linfa's evidence in cross-examination suggested that Paul waited outside. However, it was not put directly to Linfa that, contrary to his affidavit, Paul had not been present in the solicitor's office with Linfa and Qindi and in due course Huiju. Linfa's evidence in cross-examination was as follows [15] : Q. I want to suggest that your brother did not go with you when you saw the solicitor in Eastwood. A. INTERPRETER: He went there too. He and his younger son drove us - drove me and my wife there. Q. Do you say that the younger son went into the meeting with you and your wife and your brother? A. INTERPRETER: They just drove us there. Q. And then they left you and you walked into the building by yourselves? A. INTERPRETER: It's been 12 years, but my recollection was that we were drop off at the building, and when we finish the things and came out of the building they were there to pick us up and drove us home. Q. The "they" being your brother and your brother's son were there when you came out of the building, to pick you up and drive you home? A. INTERPRETER: Yes.
28. As I have said, I am satisfied that Paul and Weimin did drive Linfa and Qindi to Ms Chan's office. It may be that Paul at least took them up to the office. However, I am not prepared to find that Paul was present in the office when whatever took place between Ms Chan and Linfa and Qindi (and, when she arrived, Huiju) occurred. It seems to me to be inherently implausible that a solicitor, who must have understood that she was being asked to act for parties on one side of share sale and loan transactions and to witness their signatures to the documents effecting those transactions, would have done so in the presence of a person who, clearly enough, represented the interests of the other side. I think it is more plausible that, as Linfa indicated in cross-examination, Paul and Weimin dropped Linfa and Qindi off at the building, waited for them to "finish the things", and thereafter drove them home.
29. The evidence of Linfa, Qindi and Huiju is that Ms Chan gave them no explanation of the documents, and was in a hurry for them to be gone. She apparently told them that they were late and she had to collect her daughter from school. However, Ms Chan did witness Linfa's signature to the documents. It seems to me to be inherently implausible that a solicitor would do this without at least satisfying herself that the person knew what the document was, knew what its basic terms were, and was content to sign it so as to accept those terms.
30. I think that this aspect of the evidence given by Linfa, Qindi and Huiju is confected, in an attempt to explain away the inconvenient truth that Linfa did indeed sign the document in the presence of a solicitor, whose obvious function was to satisfy herself that Linfa understood and agreed to what he was signing. I think that Linfa, Qindi and Huiju were concerned to give the court the impression that they had no understanding whatsoever of the contents of the documents they signed. In the case of Qindi and Huiju, that impression is flatly at odd with Mr Chan's certification; and their evidence that they did not see him cannot be accepted given his otherwise inexplicable knowledge of the correct numbers of Huiju's driver licence and the Medicare cards of each (and, I infer, of Qindi's then current Chinese passport).
31. That conclusion leads to the next relevant events, which, I find, are that Qindi and Huiju did attend Mr Chan; Mr Chan did (as he certified) explain the documents to them; and Mr Chan did (as is apparent) attest their signatures to the documents. In my view, the evidence given by Qindi and Huiju on this point is confected, and their readiness to engage in confection tells very heavily against their credibility.
32. As I have noted, part of the defendants' case is that Paul in effect told them (or told Linfa, from whom Qindi and Huiju learned it) that the agreements prepared by Mr Phan gave effect to what had been agreed. I am prepared to accept that evidence. However, it begs the question: what was it that had been agreed? If the agreements, as Linfa in particular understood them, departed significantly from what had been agreed, one would have expected him to protest, given my conclusion that Ms Chan would have explained at least the significant details to him before he signed them.
33. There is another piece of evidence which bears on this point. On 28 July 2006, Weiren and Haiqin made demand on Linfa, Qindi and Huiju for repayment of their loans. The demand was written in Chinese characters, with the relevant amounts and other numbers (for example, references to years) in Arabic numerals. Paul delivered the demand, and Linfa signed it as having received it. The demand recorded that: 1. AGW had borrowed the sums of $232,000 and $500,600 from Weiren and Haiqin respectively, guaranteed by Linfa, Qindi and Huiju; 2. partial repayments had been due as set out in the loan agreements ($50,000 by 31 August 2005, $50,000 by 30 September 2005 and $50,000 by 21 November 2005); 3. the balance of the principal, together with interest, had been due on 27 July 2006; 4. nothing had been paid; 5. $273,760 was owed to Weiren, including the principal of $232,000 and interest of $41,760 "which was calculated at the annual default rate of 18%... as agreed…"; 6. the equivalent figures for Haiqin were $590,708 (in fact, the correct total is $590,780), $500,600 and $90,180; and 7. payment was required within 28 days.
34. The demand specifically stated: The Lenders specially remind the Borrower [AGW] and the Borrowing Guarantor [Linfa, Qindi and Huiju] that the interest is interest on interest and calculated according to the annual default rate of 18% the settlement amount… and based on the accumulated days.
35. The English translation of that document referred to "composite interest", not "interest on interest". However, the parties expressly agreed that the phrase I have used, "interest on interest", is an accurate translation from the Chinese original.
36. Linfa made no objection to the statements of the principal amounts, the requirement to pay instalments, the default interest rate, or the reference to compound interest (as, surely, "interest upon interest" must be) when he received and signed the demand. He made no complaint at any relevant time thereafter. Nor (if it matters) did Qindi or Huiju. (I say "if it matters" because I have the strong impression that they left it to Linfa to handle the negotiations and repayment between himself and Paul.)
37. The document (being the Chinese original with Linfa's signature in Chinese characters) was put to Linfa in cross-examination. He gave the following evidence [16] : Q. By 2006 the company Australian Golden Way had not repaid the loan to Haiquin [sic] Lu or Weiren Jin. Correct? A. INTERPRETER: That's just part of it. Q. Your brother came to you and demanded that you sign this document, didn't he? A. INTERPRETER: That's correct. Q. You have no trouble reading this document, do you? A. INTERPRETER: Yes. For the Chinese version. Q. I'm only asking you about the Chinese version, aren't I? A. INTERPRETER: Yes. Q. This document says that there is a loan owing to Weiren Jin, the principal of which was $232,000. That's what this document says, doesn't it? A. INTERPRETER: That's not true. The amount should be 210. Q. But the document says $232,000, doesn't it? A. INTERPRETER: That's what was written down. Q. And that's what was written down when you signed it? A. INTERPRETER: I didn't know how he came up with the figure. Q. But you signed it because you knew it was correct? A. INTERPRETER: That's not true. Q. Then why did you sign it? Why did you sign a document that you thought was incorrect? INTERPRETER: Your Honour, I would request Mr Jin to repeat his answer. HIS HONOUR: Yes. Of course. A. INTERPRETER: Sometimes he will bring false things for me to sign. HIS HONOUR: Sometimes he would what? INTERPRETER: He would bring false things. HIS HONOUR: False? INTERPRETER: Yes. Fake things. HIS HONOUR: Fake. Fake news, fake things. ASHHURST Q. You would read those fake things before you signed them, would you, Mr Jin? A. INTERPRETER: My understanding was that I owed him 250 and 450 and 210 and I would do my best to repay the loans and so no matter what document he bring to me that's not the only thing we rely on. We're brothers. So I will return his money for sure. Q. This document also says that there's a loan owing to Haiquin [sic] Lu with the principal of $500,600. Correct? A. INTERPRETER: Yes. Looking at the document now I realised it. Q. This document also says that the loans had a default interest rate of 18%. Correct? A. INTERPRETER: 18% for an extended 60 month long period. But the compound rate was never mentioned. The compound rate wasn't mentioned in any of the Chinese document. If it was used the money would be more than $5 million. Q. You had no difficulty reading the reference to the default interest rate of 18% when you signed this document? A. INTERPRETER: Yes. Q. And you had no difficulty reading that the principal of the loan to Haiquin [sic] Lu was $500,600 when you signed this document? A. INTERPRETER: I understood the figures. But I didn't know how they came up with the figures.
38. Linfa was then shown a copy of the same document with highlighting to the reference (in the Chinese original) to "interest upon interest". He was asked to look at this document. He then gave the following evidence [17] : WITNESS (INTERPRETER): That's not my understanding. That's never my understanding. He's good at playing word tricks. That's not right. To the public that's not true. I'm not an idiot. I can't use compound rate. He asked me to sign and he said, "Just sign it. We're brothers. I won't do you bad". But he did. ASHHURST Q. Those words I've highlighted say, "compound interest", don't they? A. INTERPRETER: You can ask a lawyer would that be reasonable 5.8 million loan. That's not realistic. Q. Mr Jin, the words I've highlighted say, "compound interest", don't they? A. INTERPRETER: I didn't notice the words. It was embedded in the long sentences and he told me, "Just sign..(not transcribable)..I won't push you". He..(not transcribable)..to here and he's been doing me a lot of bad things.
39. I do not accept those passages of Linfa's evidence. I think that he was scrabbling for anything that he could say to avert the obvious inference to be drawn from the content of the document and his signature of it; and, however he could, to cast the blame for his having signed it onto Paul.
40. Having said all that, there remains a gap in the evidence. How did the loan amounts change from the figures originally stipulated to those specified in the deeds? Paul's evidence on the point is of no use. He says simply that he had a conversation with Linfa in which he specified the amounts, and that Linfa agreed. That cannot be correct, having regard to the exchange of documents over 23, 24 and 25 July to which I have referred already.
41. The last pre-contractual document prepared by Paul stated, among other things, that "Linfa" (in truth, AGW) borrowed (or agreed to borrow) the following amounts: 1. $229,839.20 from Weiren, reduced by two deductions to the figure I have stated as $225,159; and 2. $450,000 from Haiqin.
42. In that letter, and as I have noted already, Paul asked Linfa to sign the Letter of Promises and return it, whereupon "[t]he lawyer will prepare the contract and the matter can be solved within this week". Linfa did not sign the Letter of Promises. Nonetheless, the brothers (as I have found) went to see Mr Phan, and Paul instructed him to prepare the documents.
43. There is simply no evidence to explain how the loan to be made by Haiqin increased by $50,600, nor how the loan to be made by Weiren increased by a little under $7,000. Nor is there any evidence as to how the three partial repayments were negotiated. Presumably, the very long delay between the occurrence of those events and the commencement of proceedings has meant that the parties' recollections have faded.
44. So far as the evidence goes, the deeds that were prepared and signed did not reflect the last documented state of negotiations. The amounts to be lent had increased. The partial repayments of principal had been inserted. The default interest rate had been specified to be 18% per annum "calculated daily on a compounding basis". Nonetheless, the fact that the deeds as drafted and signed departed in those respects from the last proved state of the negotiations does not mean that the parties - specifically, the defendants - are not bound by them. The inference from the facts as I have recounted them is that, however those matters came to be stated, the defendants were aware of them, and by their signatures agreed to them.

Conclusions on this issue

1. It is part of the defendants' case that they signed the deeds because Paul represented to Linfa that the deeds did no more than reflect what had been negotiated up until about 25 July 2007. I am not prepared to accept Linfa's evidence on that point. It is completely at odds with the absence of any protest once he received, no doubt read, and signed the letter of demand on 28 July 2006. It is also completely at odds with all the evidence as to the circumstances in which the deeds came to be signed. In particular, as to Qindi and Huiju, it is at odds with Mr Chan's certification of having explained the agreements to them.
2. As noted at [52] above, the case of unconscionability as it was run includes allegations that the defendants were not given the opportunity to read the draft deeds before signing them, and did not receive legal advice on, or an explanation of, those deeds. Those allegations really go nowhere. The defendants (save perhaps for Huiju) could not have read the draft deeds if they were given copies. And in Huiju's case, her proficiency in English as it appeared from her evidence in the witness box suggests that she might not have understood all of it. I do of course accept that she would have understood the various figures (the amount of the loan and so on).
3. However, as the deeds record [18] , the defendants were given the opportunity to seek legal advice. Further, I have concluded that it is likely that Ms Chan explained at least the substance of the deed to Linfa. Mr Chan certified, and I find, that he explained the deeds to Qindi and Huiju.
4. I do not think that these allegations add anything to the defence based on of misleading or deceptive conduct.
5. I conclude that the defendants' execution of the deeds of loan was not procured by misleading or deceptive conduct on the plaintiffs' part, nor on the part of Paul (whether to the extent that any such conduct of his might be otherwise be sheeted home to the plaintiffs or otherwise).

Issue 3: unconscionability

1. Save for one matter, the conclusions that I have reached on the second issue mean that the third issue should be resolved in favour of the plaintiffs. That one matter relates to the interest rate specified in the deeds. I asked Mr Ashhurst to put submissions as to how an interest rate of 18% per annum compounding on daily rests could be anything other than unconscionable. The effect of application of that rate would be to increase the amounts owed up to 30 April 2018 (calculating from 25 August 2006, being 28 days after the letter of demand, and also the date used in the plaintiffs' Summons) to: 1. $4,095,679 ($500,600 in principal and $3,595,079 in interest) in the case of Haiqin; and 2. $1,898,118 ($232,000 in principal and $1,666,118 in interest) in the case of Weiren.
2. Mr Ashhurst responded to that invitation by stating that his clients would not seek compound interest. Mr Condon accepted that this effectively resolved the issue of unconscionability to the extent that it involved the charging of compound interest. He did not submit that the default rate of 18% per annum was of itself unconscionable. Nor did the defendants plead that it constituted a penalty, as that concept was explained in cases such as Andrews v Australia and New Zealand Banking Group Ltd [19] and Paciocco v Australia and New Zealand Banking Group Ltd [20] .
3. I conclude that it is not unconscionable for the plaintiffs to enforce the deeds, on the basis that they do not seek compound interest.

Issue 4: consequences of misleading or deceptive or unconscionable conduct

1. This issue does not arise.

Issue 5: set-off

1. This issue can only arise to the extent that moneys were advanced by one or other of the defendants to one or other of the plaintiffs. It cannot arise in respect of amounts owing between the defendants or any of them and Paul, or the defendants or any of them and one of Paul's companies.
2. Mr Condon pointed to what he said was evidence of advances made from time to time. It is unnecessary to go to the detail. To the extent that the evidence (if accepted) would identify loans that in principle could be the subject of the set-off (because there was a debt owed, either directly or by assignment, by one or other plaintiff to one or other defendant), all were, as Mr Condon acknowledged, statute-barred.
3. Mr Condon accepted that there could be no set-off of an irrecoverable (because statute-barred) debt. I think that is correct. Section 63(1) of the Limitation Act 1969 (NSW) provides that upon the expiration of a relevant limitation period, "the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay…, extinguished".

Issue 6: judicial sale

1. Clause 11 of each deed provided as follows: 11. As security for the performance of the Guarantors' obligations in this Deed, the Guarantors agree to grant to the Lender a legal right to the Guarantors' properties, including but not limited to the properties as set out in item 7 of Schedule 1, and permits the Lender to place a caveat over any or all of such properties.
2. Item 7 of Schedule 1 to each deed specified, among other things, several parcels of land owned by Huiju, Linfa and Qindi. It is common ground that all but one of those properties have been sold.
3. Mr Ashhurst contended that cl 11 extended to all other lands, including after-acquired lands, from time to time owned by the defendants. Mr Condon contended that the clause applied only to lands owned by the defendants as at the date of the loan agreement.
4. It was common ground that the "grant" of "a legal right" which included allowing "the [grantee] to place a caveat over" the grantor's real estate amounted to an equitable charge of that real estate, and that in principle the charge could be enforced by an order for judicial sale. The question is, what are the properties (if any) in respect of which that equitable charge subsists, and that may be the subject of such an order?
5. The parties must be taken to have understood that at least some of the particular parcels of land described in item 7 of schedule 1 were required for the purposes of the development that Linfa was proposing to carry out through AGW. Thus, they must be taken to have understood that in due course, the defendants would no longer retain title to those parcels of land. To cover that, the rights granted by cl 11, although they extended to, were not limited to those parcels of land.
6. Mr Condon submitted that the drafter had not attempted to extend the security rights to after-acquired property. If I may say so with respect, that rather begs the fundamental question, which is: what is the proper construction of these words of the parties' bargain?
7. The parties intended the deeds to speak into the future, until they were finally discharged by payment or by some other mechanism. They understood that the defendants from time to time bought and sold land. The wording of cl 11 is prospective - "agree to grant". It seems to me to be consistent with both the language of the clause and the background known to both parties to construe the clause as extending to any real estate acquired by any of the defendants at any time until their obligations under the deeds were discharged.
8. Mr Condon submitted that the plaintiffs had no present right to an order for sale, because they had not taken steps of the kind identified by Campbell J in King Investment Solutions v Hussain [21] at [86] and following. Among the matters that his Honour identified, as pre-requisites to the making of such an order, were the need to give anyone who would be affected by an order for sale (such as a prior mortgagee) an opportunity to be heard.
9. Mr Condon's submission is correct. However, as I understand things, Mr Condon accepted that if the court were to hold that the plaintiffs are entitled in principle to an order for judicial sale, the parties should draft orders appropriate to give effect to that decision (including orders providing for the notification of others holding an interest in the relevant lands, and giving those others a proper opportunity to be heard).
10. The proper answer to issue 6 is that the plaintiffs have a right in principle to obtain an order for judicial sale of real estate owned by any defendant at the time orders are made, but that no order should be made at present having that effect. The parties are to consider what orders are appropriate to give effect to that conclusion.

Issue 7: discharge of the debt

1. The defendants' submissions identified a number of transactions whereby, it was said, "Paul… and/or his family members incurred various liabilities to or received credits from Linfa, Huiju and Qindi" [22] . Some five transactions were identified, of which four appear to be pressed: 1. a loan of $130,000 said to have been made by Linfa and Qindi, and a loan of $20,000 said to have been made by Huiju, in about mid 2004 in each case to Paul, Weiren and Weimin; 2. a loan of $60,000 made in early July 2005, whereby Linfa procured bank cheques to be drawn in favour of the wife of a Mr Stephen Gao, who at the time was a creditor of Paul's; 3. payments totalling $295,000 made in June 2010 to companies controlled by a Ms Qing Zhong, in respect of debts said to have been incurred by Paul, his sons and a company controlled by them to companies controlled by Ms Zhong; and 4. a transaction in 2013, whereby a company controlled by Linfa or his family agreed, it is said at Paul's request, to sell two three bedroom apartments in a development then being undertaken to Paul's grandsons Yuchen Jin and Dawei Jin, at prices that were undoubtedly at a significant discount from the asking prices, and were said to be at significantly less than full value.
2. The first two suggested payments can be dismissed. They were made before the deeds were signed. There is nothing in the deeds to suggest that the amounts of those antecedent loans should be set off against amounts owing under the deeds. There is no evidence to suggest that the relevant parties (and by this I mean Haiqin and Weiren as creditors and one or more of the defendants as debtors) agreed to appropriate those antecedent debts in part satisfaction of amounts owing under the deeds. The two loans (if they have not been repaid) are statute-barred.
3. The fourth matter too can be dismissed. It is entirely unclear how a benefit given by a stranger to the deeds to the grandsons of another stranger to the deeds could operate in any way to compromise liabilities owed by the defendants as debtors under the deeds to the plaintiffs as creditors, in the absence of any agreement by the plaintiffs.
4. Putting the matter that way exposes a significant difficulty for this defence. It is that the negotiations or conversations on which the defendants rely took place between Linfa and Paul. There is no evidence that Paul was authorised to negotiate on behalf of the plaintiffs to appropriate any offsets or benefits against amounts owing under the deeds, or to negotiate for the benefits in exchange for a discharge of the defendants' liabilities under the deeds.
5. Mr Condon relied on a number of concessions made by Paul in cross-examination which, Mr Condon said, showed "that Paul was authorised to speak for the plaintiffs in his dealings with Linfa" [23] . That may be accepted, at the level of generality that the submission was put. However, an authority to "speak for" the plaintiffs in relation to the debts is one thing. An authority to compromise the debts is quite another.
6. It was never put specifically to Paul, nor for that matter to Haiqin or Weiren, that the last two specifically authorised Paul: 1. to negotiate with Linfa for a discharge of or reduction in the amounts owing under the deeds; let alone 2. to bind them to some discharge or compromise of the defendants' liabilities under those deeds.
7. Mr Condon referred to evidence given by Weiren, in connection with cheques that Paul had signed on Weiren's Australian bank account whilst Weiren was in China on business. I accept that Paul was authorised to operate on that account (or was, at the relevant times). It does not follow that the authority so given extended to negotiating for the discharge or compromise of the defendants' liabilities under their deed with Weiren.
8. Again, I accept that Weiren gave Paul permission to look after Weiren's business interests, and to deal with those business interests, whilst Weiren was overseas. But it does not follow from that that Paul was authorised to bind Weiren to the suggested discharges or compromises.
9. Haiqin gave similar evidence to Weiren's. The same comments apply.
10. It might have been different if the suggested agreements for discharge or compromise had been put to Weiren and Haiqin, and they had conceded that Paul had been authorised by them to negotiate on their behalf and to bind them to the suggested agreements. But that was not done.
11. It should be noted that this aspect of the defences relies purely on contractual discharge or compromise. There is no plea of estoppel precluding enforcement, based on the matters alleged.
12. I return to the fourth matter: the discharge of the "Zhong" debts. Linfa said that when he discussed this with Paul, he (Linfa) specified that "I will not owe your family that money anymore in the future", and that Paul agreed [24] . Paul did not deny this in his affidavit in reply, although I think it is fair to say that when he was cross-examined on the point, he did not accept that there had been such a conversation.
13. The general problems to which I have referred affect this suggested discharge also. That is to say, there is no precise identity of the parties who are said to be entitled to the benefit and burden of the suggested agreement; and there is no evidence from Haiqin or Weiren to the effect that they had authorised Paul to negotiate it on their behalves.
14. Further, there is the difficulty that to find that there was such an agreement made (regardless of its legal effect) would require acceptance of Linfa's evidence. For the reasons I have given, I am not prepared to do so. In reaching that conclusion, I take into account that on numerous earlier occasions when Paul and Linfa had negotiated to compromise some dispute between them, they had reduced their agreement to the form of a document that set out (in lay language) its terms. There was no such document relating to the payment of the debts owed to Ms Zhong's companies. Nor, for that matter, was there any such document relating to the other suggested agreements relied upon for this defence.
15. Although it is unnecessary to point out, it should be noted that the "Zhong" agreement alleged by Linfa was one of pro tanto discharge - "I will not owe your family that money anymore in the future". If, contrary to my conclusions, some agreement had been negotiated and were binding upon Haiqin and Weiren, it would be one for reduction of the indebtedness (presumably, with effect from the time Linfa paid or caused to be paid the money to Ms Zhong's companies), not for its complete discharge.
16. The defendants have failed to prove any binding agreement for the discharge, compromise or reduction of their indebtedness under the deeds.

Issue 8: limitation

1. My conclusion on the first issue means that this issue does not arise.

Conclusion and orders

1. In each proceeding, the plaintiff is entitled to judgment for the amount of the loan, together with interest at 18% per annum (simple) up until the date of judgment. Each plaintiff is in principle entitled to orders providing for judicial sale of whatever lands the defendants presently own.
2. The parties are to submit draft orders to give effect to these reasons. I list the matter at 10am on 11 May 2018 for entry of judgment on the claim for debt and for the making of orders in relation to judicial sale. I reserve liberty to apply in the meantime on three days' notice.

Endnotes

1. (1995) 49 NSWLR 315.
2. Affidavit affirmed 28 June 2017, [5].
3. T221.27-.36.
4. T222.5-.6.
5. T222.11.
6. T222.23-223.16.
7. Schedule 2 to the Competition and Consumer Act 2010 (Cth).
8. Defendants' outline of opening submissions at [44], [45], referring back to [25].
9. [25] of the opening submissions.
10. Paul's affidavit affirmed 26 May 2017, [20].
11. Linfa's affidavit affirmed 28 June 2017, [50].
12. Affidavit affirmed 26 May 2017, [21].
13. Affidavit affirmed 5 May 2017, [21].
14. Affidavit affirmed 26 May 2017, [9].
15. T204.13-.29.
16. T193.50-195.23.
17. T196.6-.21.
18. Clause 12.
19. (2012) 247 CLR 205.
20. (2016) 258 CLR 525.
21. [2005] NSWSC 1076.
22. Written opening submissions, [26].
23. Written closing submissions, [38].
24. Affidavit affirmed 9 April 2017, [113]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 May 2018