Lin v Zheng

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The respondents, Mr Zheng, Ms Luo, Dr Wang and Ms Qian and MSD, and the third plaintiff below, Mr Shen, (together, the Lenders), advanced funds on an unsecured basis to Quantum Investments (Aust) Pty Ltd (Quantum), the director of which was the appellant, Mr Lin, for the purchase and development of land at Turramurra as a residential apartment building. Quantum agreed to pay the Lenders interest at a rate of 20% per annum. Quantum on-lent the funds on an unsecured basis to another company to conduct the development. That company did not repay Quantum in full, and Quantum did not repay the Lenders in full. The Lenders sued Mr Lin to recover their shortfall, alleging that they were induced to make their loans to Quantum by misleading or deceptive conduct engaged in by Mr Lin, which they relied on to their detriment. Relevantly, they alleged six misleading or deceptive representations: that Mr Lin personally guaranteed the repayment of the Lenders' monies (the Guarantee Representation); that the Lenders' monies would be repaid (the Guaranteed Repayment Representation) regardless of the outcome of the Turramurra development (the Second Guaranteed Repayment Representation); that monies loaned to Quantum would be secured against the Turramurra land (the Security Representation); that there was no risk in providing the loans (the No Risk Representation); and that there was a low risk in providing the loans (the Low Risk Representation). Black J found that the Guarantee Representation was established in relation to Dr Wang and Ms Qian and MSD, and that the two Guaranteed Repayment Representations were established in relation to all of the Lenders, except Mr Shen. His Honour found that the misleading or deceptive representations were a cause of the respondents' loss. His Honour made orders against Mr Lin compensating the respondents for their loss. Mr Lin sought leave to appeal from the orders of Black J.

The Court (per Payne JA, Bell CJ and White JA agreeing) held, granting leave to appeal and dismissing the appeal: 1 For the purposes of s 4 of the Australian Consumer Law, a statement of what the representor believes a future position will be may be a representation with respect to a future matter even if it implies a representation as to the representor's state of mind, depending on the words used and the context. There will not be reasonable grounds for making a representation if, at the time of making it, the representor did not have facts sufficient to induce in the mind of a reasonable person, a basis for making the representation: [31]-[36]. The primary judge correctly concluded that the Guaranteed Repayment Representations conveyed an assurance of repayment in the event of the Turramurra development's failure. As such, they were representations as to a future matter which were misleading or deceptive [37]-[44]; [61]-[67]. Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58; (2004) 62 IPR 184; Australian Competition and Consumer Commission v Woolworths Group Ltd (2020) 281 FCR 108; [2020] FCAFC 162; Sykes v Reserve Bank of Australia (1998) 88 FCR 511; [1998] FCA 1405; Australian Competition and Consumer Commission v Dateline Imports Pty Ltd (2015) 161 FCR 513; [2015] FCAFC 114 applied. 2 If a material representation is made which is calculated to induce a representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he or she was induced to do so by that representation. To establish reliance on a misleading or deceptive representation, what must be established is a causal connection between the alleged representations and the loss for which they seek compensation: [49]-[53]. The primary judge correctly found that the nature of the Guaranteed Repayment Representations did not preclude a finding of actual reliance: [54]-[57]; [68]-[69]; [82]-[83]; [91]-[92]. Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55; Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 applied. 3 It is necessary to look at the actual conduct of proceedings to see whether a point was or was not taken at trial: [63]. Although Ms Luo did not specifically plead reliance on the Guaranteed Repayment Representations, it was clear from the submissions made by the parties that there was a contest fought before the primary judge on the basis that he should at least entertain Ms Luo's case on the Second Guaranteed Repayment Representation: [64]. Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 applied. 4 In the context of appellate review of the adequacy of reasons, the function of an appellate court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard: [72]-[73]. The primary judge did not fail to give adequate reasons for factual findings that certain representations were made or relied on: [74]-[81]; [86]-[90]. New South Wales Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 applied.

Judgment

1. BELL CJ: I agree with the reasons of Payne JA and the orders his Honour proposes.
2. PAYNE JA: The appellant, Mr Lin, seeks leave to appeal from the orders made by Black J in Quantum Investments (Aust) Pty Ltd & Ors v Zhi Wei Lin trading as Jack Lin (No 2) [2022] NSWSC 1558 ("the No 2 judgment"), which quantified the amount the successful plaintiffs were entitled to recover for the reasons given in Quantum Investments (Aust) Pty Ltd & Ors v Zhi Wei Lin trading as Jack Lin [2022] NSWSC 1387 ("the principal judgment"). The application for leave to appeal was heard concurrently with the appeal.
3. The proceedings arose from four loans made in connection with a residential development at Turramurra ("the Turramurra Project"). The first (Mr Zheng), second (Ms Luo), third (Dr Wang), fourth (Ms Qian) and fifth (Moral Success Developments Ltd ("MSD")) respondents and the third plaintiff below (Mr Shen) (together, "the Lenders") advanced funds as a loan on an unsecured basis to Mr Lin's company, Quantum Investments (Aust) Pty Ltd ("Quantum"), for the purchase and development of land at Turramurra as a residential apartment building. Quantum agreed to pay the respondents interest at the rate of 20% per annum. Quantum on-lent the funds on an unsecured basis to a developer, MV Golden Destiny Development (Turramurra) Pty Ltd ("the Developer"), to conduct the Turramurra Project. The Developer agreed to pay Quantum interest at a rate of 30% per annum. Quantum was not repaid in full by the Developer and Quantum did not repay the Lenders in full.
4. The Lenders sued Mr Lin to recover their shortfall, alleging that they had been induced to make their loans to Quantum by misleading or deceptive conduct engaged in by Mr Lin, which was relied upon by the Lenders to their detriment. The Lenders claimed damages or compensation and consequential orders against Mr Lin.

The principal judgment

1. On 14 October 2022, the primary judge delivered the principal judgment, finding that all of the Lenders were successful, except for the third plaintiff, Mr Shen. Mr Shen failed as the statement made by Mr Lin upon which he relied was not made until after Mr Shen had made his payment to Quantum. Mr Shen did not identify any basis on which a statement made after the event caused relevant loss to him. No appeal was brought by Mr Shen.
2. The proceedings had been dismissed at the commencement of the hearing in respect of the first, seventh, eighth and tenth plaintiffs, who failed to appear. As the successful plaintiffs had not properly quantified their loss, his Honour granted the parties leave to file further evidence and make submissions about that issue. On 15 November 2022, the primary judge made the following orders in the No 2 judgment: (1) Judgment for the Second Plaintiff against the Defendant in the sum of $285,300.30. (2) Judgment for the Fourth Plaintiff against the Defendant in the sum of $1,316,233.70. (3) Judgment for the Fifth and Sixth Plaintiffs against the Defendant in the sum of $657,377.82. (4) Judgment for the Ninth Plaintiff against the Defendant in the sum of $657,395.63. (5) The Defendant pay the Second, Fourth, Fifth, Sixth and Ninth Plaintiffs' costs of and incidental to their claims in the proceedings, as agreed or as assessed. (6) The Third Plaintiff's claim be dismissed. (7) The Third Plaintiff pay the Defendant's costs of and incidental to his claim in the proceedings, as agreed or as assessed.

The pleaded misleading or deceptive conduct

1. A deal of unnecessary complexity was introduced to this case by the large number of separate meanings attributed by the pleadings to reasonably clear words spoken on only a few occasions by Mr Lin. Despite in each case a reasonably short conversation being the substance of the alleged misleading or deceptive conduct, separate meanings were pleaded as follows: 1. The Guarantee Representation: Mr Lin personally guaranteed the repayment to the Lenders of monies loaned to Quantum for the purposes of the Turramurra Project and was guarantor to those Lenders of monies they may loan to Quantum; 2. The Guaranteed Repayment Representation: the principal loaned by the Lenders and any interest thereon was guaranteed to be repaid to the Lenders; 3. The Second Guaranteed Repayment Representation: the principal and interest loaned by the Lenders was guaranteed to be repaid to them regardless of the outcome of the Turramurra Project; 4. The Security Representation: monies loaned to Quantum would be secured against the Turramurra land; 5. The No Risk Representation: providing loans to Mr Lin or his related entities in order to fund the Turramurra Project had no risk; and 6. The Low Risk Representation: providing loans to Mr Lin or his related entities in order to fund the Turramurra Project had minimal or low risk.
2. The focus of this appeal was the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation which the primary judge found were established on the evidence in relation to all of the Lenders. The primary judge found at [116] of the principal judgment that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation referred to a "guarantee" in the sense of an assurance of repayment. His Honour found that the representation was of a more general character than the Guarantee Representation, which was to the effect that Mr Lin personally guaranteed Quantum's liability under loans made by the Lenders to it. The primary judge found that on the correct construction of Mr Lin's conduct, the Guarantee Representation was established in relation to Dr Wang and Ms Qian and MSD, but not Mr Zheng or Ms Luo. The Lenders' case in relation to the Security Representation, the No Risk Representation and the Low Risk Representation failed and no cross-appeal was brought by the Lenders.

Guaranteed Repayment Representation and Second Guaranteed Repayment Representation

1. The primary judge found, at [121], that both the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation were established by Mr Zheng, Ms Luo, Dr Wang and Ms Qian and MSD. The primary judge held that these representations were misleading or deceptive as there was no proper basis for Mr Lin to provide any assurance that the Lenders would be repaid.
2. In relation to Mr Zheng, the primary judge found that Mr Lin had made the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation by saying to Mr Zheng words to the effect of "[w]e guarantee 20% interest per year" and "guarantee to return your money" after the two year and six month period for which it was required. His Honour determined that the additional evidence on which Mr Zheng also relied, namely representations that "my money will be secure because of the value of the land" and his belief that "I would really make a lot of money", did not support the alleged representations.
3. In relation to Ms Luo, her case was built on Mr He's evidence of things said to him by Mr Zheng which were conveyed to Ms Luo with Mr Lin's authority. The primary judge accepted that Mr He was told by Mr Zheng that Mr Lin would pay back the funds advanced, which the primary judge accepted established the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation, where Mr Zheng's statement was "consistent with the representation made by Mr Lin to Mr Zheng with the apparent intent that he convey it to other Lenders". His Honour was not convinced that Mr He's evidence of a guarantee of the "return" (or interest) rather than the principal, relayed by Mr Zheng, supported Ms Luo's Guarantee Representation claim.
4. Dr Wang and Ms Qian relied on Dr Wang's evidence, which the primary judge accepted, that Mr Lin referred in July 2014 to a guarantee that Dr Wang and Ms Qian would get their money back, referring to other properties that he owned to support that guarantee. This statement established that the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation were made.
5. The primary judge also accepted, albeit hesitantly, that a statement was made by Mr Lin through Mr Xu to MSD to the following effect: I personally have two properties, one in Earlwood and one in North Ryde so there is no risk for you to get repaid. I will be responsible for all risks in the Turramurra [P]roject. If there is a risk I promise to sell my properties and ensure safety for your loan.

Security Representation

1. The primary judge concluded that none of the Lenders established that the Security Representation was made. No party to the appeal sought to agitate any issue relevant to these findings.

No Risk Representation and Low Risk Representation

1. The primary judge found that the No Risk Representation and the Low Risk Representation were made but was not satisfied that causation had been established. As this matter was close to the heart of the appellant's submissions in this Court, I will set out the primary judge's reasons in a little detail.
2. His Honour found that Quantum's (or Mr Lin's) capacity to repay the loans would likely be affected by the failure of the Turramurra Project and noted the discussion on this subject in Dawson v LNG Holdings [2008] NSWSC 137 which concerned an investment promising "marginally higher returns" than the interest rate of 20% per annum which Quantum agreed to pay the respondents. His Honour concluded that: No-one investing money at 25 percent per annum interest in a property development which required the obtaining of a construction certificate, the building of townhouses or apartments, and the sale of the townhouses or apartments, could reasonably expect that there were no risks attached and that return of their money was assured.
3. His Honour outlined a number of factors at [126] which caused him to reject the submission that the Lenders could have understood that the loan was without risk or had minimal risk: While I accept that the Lenders may have been over-optimistic as to the benefits of investment in Australian property and likely also placed weight on the prospect of high returns, I am unable to accept that they could reasonably have understood that a loan to a proprietary company (or to Mr Lin as an individual), generally made before a loan agreement was executed, which was then to be lent to another proprietary company which was one of several participants in a property development in respect of land which had not yet been acquired and as to which security had not yet been given, which was to pay a return of 20% per annum (and more in the case of MSD, which was offered an additional fee, and Mr Zheng, who sought an additional payment) was either without risk or had minimal risk, so as to establish causation in respect of these representations.

Guarantee Representation

1. The primary judge accepted the evidence of Dr Wang that Mr Lin said to Dr Wang and Ms Qian words to the following effect: I have some properties in my own name and will be receiving one unit from the Lane Cove Project once it is completed. In the worst case I have these properties to secure your loan. I guarantee you to get your money back.
2. His Honour also accepted Dr Wang's evidence that after reading a loan agreement document he and Ms Qian received from Mr Lin, he and Mr Lin had a conversation to the following effect: I said: "The Lane Cove loan agreement had Victor as guarantor, why does this one have no guarantor in it? Jack said: "Don't worry I am guaranteeing this. I have 2 properties and this company is my company so don't worry. I can pay you out."
3. MSD relied on Mr Xu's evidence that Mr Lin relevantly told him "I will bear all of the economic and legal risks involved in the project" and "… there is no risk for you to get repaid. I will be responsible for all risks in the Turramurra [P]roject". The primary judge accepted that a representation of this general character was made to MSD through Mr Xu, which at least amounted to Mr Lin accepting that he was responsible for the repayment of a loan made by MSD to Quantum.
4. On these bases, the primary judge found that the Guarantee Representation had been made by Mr Lin to Dr Wang and Ms Qian and MSD (through Mr Xu), but not to the other Lenders. The Guarantee Representation was a continuing representation which was made about a future matter without a reasonable basis.

Causation: Guarantee Representation, Guaranteed Repayment Representation and Second Guaranteed Repayment Representation

1. The primary judge found that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation were a cause of the Lenders advancing money to Quantum for the Turramurra Project. The representations made by Mr Lin were calculated to induce investment in the Turramurra Project and likely would have done so. The primary judge also found that the Lenders to whom the Guarantee Representation was made, Dr Wang and Ms Qian and MSD, could reasonably rely on those representations.

Quantification of loss

1. Mr Zheng, Ms Luo, Dr Wang and Ms Qian and MSD succeeded in establishing their claims on a "no transaction" basis. Mr Zheng admitted he received $131,257.83 from Quantum, Ms Luo admitted she received $109,381.52 from Quantum, Dr Wang and Ms Qian admitted they received $54,690.76 from Quantum, and MSD admitted that it received $54,690.76 from Quantum. His Honour explained that those amounts established the minimum amounts by which judgment in favour of Mr Zheng, Ms Luo, Dr Wang and Ms Qian and MSD should be reduced, but did not allow the amount of the judgment in their favour to be determined. His Honour gave Mr Zheng, Ms Luo, Dr Wang and Ms Qian and MSD an opportunity to establish that those were also the maximum amounts they received, and hence the maximum amounts to be deducted from their judgments.
2. The primary judge addressed quantification in the No 2 judgment and made the orders set out at [6] above.

Grounds 1 and 2 of the appeal

1. By grounds 1 and 2, which concerned the judgment in favour of Mr Zheng, the appellant contends: 1 The learned trial judge erred in finding that the appellant made the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation to the first respondent. 2 The learned trial judge erred in finding that the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation were a cause of the first respondent's loss.

Ground 1

1. The appellant submitted that the primary judge erred in treating the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation as conveying that Mr Lin was personally assuming the risk that the outcome of the Turramurra Project would not be achieved. It was submitted that the evidence on which the primary judge based his finding at [111] that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation had been made by Mr Lin to Mr Zheng was the evidence of the conversation at [11] of Mr Zheng's affidavit dated 28 May 2021. That evidence, the acceptance of which is not challenged by the appellant, was: Jack and I had a conversation in Mandarin to the following effect regarding the project in Turramurra: Jack said: "There are 3 shareholders in the land. We are going to buy lands in Turramurra and then build 104 units" "I will be running the whole project" I said: "How much money can be made from this project?" Jack said: "We guarantee you 20% interest per year for any money that you invest. We only need the money for 2 years and 6 months and guarantee to return your money after that time". Jack then handed to me a few pages which were written in the Chinese language which had introductory information in relation to a project at Turramurra (Turramurra Introduction). Annexed hereto and marked "B" is a copy of the document handed to me and its translation. After looking at the document he handed to me, we then continued our conversation in words to the following effect: I said: "How much money do I need to pay? I only have $300,000.00" Jack said: "That is not enough, I need to gather total $3 million on my end, so you can ask your friends if they want to invest. It will be on the same terms as I have told you". "My home is in Earlwood, speak to your friends and you can come to see me" I said: "Is there any risk in losing my money?" Jack said: "No, once we buy the land there is no risk because it doesn't matter if we develop or not, the land is worth money. If we want to build, we still need to borrow from the bank."
2. It was submitted by the appellant that the evidence that Mr Lin said "[w]e guarantee you 20% interest per year" and "guarantee to return your money" after the 2 year 6 month period (which his Honour referred to at [111]) must be considered in its context. That answer was a response to Mr Lin's question, "How much money can be made from this project?". In that context, Mr Lin submitted that the answer did not convey that he was assuming any personal responsibility to meet the obligations of Quantum, since neither the question nor the answer was concerned with that topic at all. Although the word "guarantee" was used by Mr Lin, he submitted that in the context it did not convey anything more than a "promise", in the same way that any borrower promises to repay.

Relevant legal principles

1. Conduct is misleading or deceptive or likely to mislead or deceive if it has a tendency to lead a person into error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [39] (French CJ, Crennan, Bell and Keane JJ). It is not necessary for a plaintiff to establish that a person engaging in misleading or deceptive conduct intended to mislead or deceive. The relevant question is whether, viewed objectively, the relevant conduct was misleading or deceptive or likely to mislead or deceive: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44 at 197 per Gibbs CJ, 216 per Brennan J.
2. Conduct is likely to mislead or deceive if there is a real and not remote chance or possibility that a person is likely to be misled or deceived, and this is so even though the possibility of that occurring is less than 50 per cent: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [112] per McHugh J.
3. In Butcher at [109] (followed by a majority of the High Court in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [102]) McHugh J said: [109] The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 [of the then Trade Practices Act] has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. [citations omitted]

Consideration of Ground 1

1. There was no challenge to the primary judge's finding that the following statement was made by Mr Lin to Mr Zheng: We guarantee you 20% interest per year for any money that you invest. We only need the money for 2 years and 6 months and guarantee to return your money after that time.
2. The pleading as it related to the words spoken by Mr Lin was unnecessarily complex. The characterisation question raised by the appellant in ground 1 took advantage of confusion introduced by an overly elaborate Second Further Amended Commercial List Statement which identified multiple "representations" said to have been made in the same short conversation. Mr Zheng failed in his claim that the Guarantee Representation was made in that short conversation. That is, the primary judge did not accept that Mr Lin had personally guaranteed to repay Quantum's liability, in the sense of providing a surety for the loan, under loans made by Mr Zheng to Quantum.
3. It may be accepted that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation did not contain a promise by Mr Lin personally to guarantee to repay Quantum's liability under loans made by Mr Zheng to it. That, however, is not the relevant question. As the primary judge correctly found, Mr Lin provided Mr Zheng with a guarantee, in the sense of an assurance, that he would be repaid by Quantum. That was a statement about a future matter. Mr Lin did not seek to demonstrate that he had reasonable grounds for making that statement. Mr Lin's case before the primary judge was that the statements attributed to him by Mr Zheng were not made by him.
4. The fact that Mr Lin gave this assurance to Mr Zheng meant that, if causation could be established, Mr Lin was liable to pay damages to Mr Zheng for loss and damage suffered "by" Mr Lin's conduct. The fact that Mr Zheng failed to prove that Mr Lin personally agreed to provide a surety for the loan is of no consequence. A person may be liable to pay damages to another if the first person engages in misleading or deceptive conduct about a loan to a third party and the second person relies on that conduct to his or her detriment by making that loan. It is not a necessary element of liability that the person engaging in the misleading or deceptive conduct personally provided a guarantee of repayment by the third party, in the sense of providing a surety. The absence of a promise by Mr Lin to provide a surety here does not affect the primary judge's conclusion about the correct characterisation of the representation made by Mr Lin to Mr Zheng.

Ground 2

1. Ground 2 concerns the finding of causation made by the primary judge at [127]: Obviously enough, a promoter of a transaction (here, the loans to Quantum to be on-lent to MGVDD for the development) can represent its result although there is a risk that result will not be achieved. That does not depend on any proposition that the transaction has no risk or minimal risk, since it amounts to the promoter assuming the risk that the outcome would otherwise not be achieved.
2. The appellant submitted that the primary judge erred in concluding that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation were a cause of Mr Zheng making a loan to Quantum. It was submitted that the No Risk Representation and the Low Risk Representation were materially the same as the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation. It was submitted that those representations all concerned the probability that the Lenders would get their money back. It was submitted that it was glaringly improbable that the respondents had relied on the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation when they were found by the primary judge not to have relied on the No Risk Representation and the Low Risk Representation, which were substantially the same.
3. The appellant further submitted that his Honour's finding of causation in relation to Mr Zheng at [127] was not based on Mr Zheng's evidence, but was instead based solely on inferences drawn from the nature of the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation. It was said to be significant that Mr Zheng did not give evidence that he entered that loan because of a belief that Mr Lin was assuming some form of personal responsibility in respect of it. He did however give evidence that he was aware he was paying money to Quantum.
4. The respondents submitted that there was nothing glaringly improbable in the finding of reliance in relation to the Guaranteed Repayment Representations but not in relation to the No or Low Risk Representations. The flaw in the appellant's argument in relation to ground 2, the respondents said, is its premise that the different representations were substantially the same. The Guaranteed Repayment Representations conveyed an assurance of repayment in the event of the project's failure, whereas the No or Low Risk Representations conveyed that the project had no or a low risk of failure.

Consideration of Ground 2

1. The primary judge acted upon the well-known principles regarding reliance explained in Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 at 236: 1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case. 2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. 3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. 4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.
2. What must be established is a causal connection between the alleged representations and the loss for which they seek compensation: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55 at 525-526; Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at 469-470 [17] (Gleeson CJ), 480 [61] (Gaudron J), 488-489 [94] (McHugh J with whom Gummow J agreed) and 508-509 [159]-[160] (Hayne J with whom Gummow J agreed). In a claim for misleading or deceptive conduct constituted by representations, acts done by the person to whom the representation was made in reliance upon the misrepresentation will "constitute a sufficient connexion to satisfy the concept of causation": Wardley at 525.
3. A material representation, in the sense of a representation that is "objectively likely" to act as an inducement to act in a particular way, will be a cause of the relevant loss or damage if it contributed to the loss or damage in some way, even if "other factors or conditions … played an even more significant role in producing the loss or damage": Henville at 493 [106] (McHugh J, with whom Gummow J agreed), 509 [163] (Hayne J, with whom Gummow J also agreed).
4. In an appropriate case, reliance may be inferred: Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545 at [11] per Wilcox J, and at [45] per Kiefel J.

Grounds 3, 4 and 5 of the appeal

1. Grounds 3, 4 and 5 relate to Ms Luo. The appellant contends: 3 The learned trial judge erred by entertaining and upholding a case for the second respondent based on the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation when no such case was pleaded. 4 The appellant also relies on Appeal Ground 1 (above) against the second respondent. 5 The learned trial judge erred in finding that the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation were a cause of the second respondent's loss.

Ground 3

1. By ground 3, the appellant argues that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation were not pleaded in relation to Ms Luo. Neither the Further Amended Commercial List Statement nor the Second Further Amended Commercial List Statement alleged that those Representations were made to Ms Luo.
2. Ms Luo submitted that in the Lenders' Closing Schedule, which was provided on the last day of the trial after the close of evidence and was to be restricted to the pleaded representations, the Second Guaranteed Repayment Representation was included in the representations relied upon by Ms Luo. In her closing submissions before the primary judge, Ms Luo also submitted that she entered into the agreement with Quantum and advanced funds pursuant to it in reliance on the Second Guaranteed Repayment Representation.
3. The appellant submitted that because this was not a case where the proceedings, with the acquiescence of the parties, travelled beyond the pleaded issues, the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation should not have been included as a representation forming part of Ms Luo's case and his Honour should not have entertained that case.

Consideration of Ground 3

1. Although the conversation relied upon by Ms Luo was pleaded, it is correct, no doubt by error in cross-referencing the overly complicated "representations" said to have arisen from that conversation, that the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation were not alleged by Ms Luo. It is clear, however, that both parties approached the case at trial on the basis that, at least, the Second Guaranteed Repayment Representation had been made to Ms Luo.
2. In a case such as the present, it is necessary to look at the actual conduct of the proceedings to see whether a point was or was not taken at trial: Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 at 497. As I have said, the pleading refers to the evidence of Ms Luo, built on Mr He's evidence of things said to him by Mr Zheng which were conveyed to Ms Luo with Mr Lin's authority. The primary judge accepted that Mr He was told by Mr Zheng that Mr Lin would pay him back, which the primary judge accepted established the Guaranteed Repayment Representations. Mr Zheng's statement to Mr He was "consistent with the representation made by Mr Lin to Mr Zheng with the apparent intent that he convey it to other Lenders".
3. I have concluded that the parties fought the case before the primary judge on the basis that his Honour should entertain, at least, Ms Luo's Second Guaranteed Repayment Representation case. That case was addressed in the Lenders' Closing Schedule and in Ms Luo's closing submissions. No objection to Ms Luo advancing the Second Guaranteed Repayment Representation case was taken at the hearing. On appeal, no prejudice in the primary judge considering Ms Luo's Second Guaranteed Repayment Representation case was identified. The absence of prejudice is unsurprising in light of the appellant's submission to this Court that the various representations on which the Lenders relied were substantially the same. Ms Luo's claim was in a sense derivative of the claim made by Mr Zheng as it was his statements to Mr He, made with Mr Lin's authority, which formed the basis of Ms Luo's claim. On the actual conduct of the case before the primary judge the parties addressed Ms Luo's Second Guaranteed Repayment Representation case. There was no error in the primary judge addressing an issue the parties asked to him to decide.
4. I would reject ground 3.

Ground 4

1. The judgment in favour of Ms Luo depends upon the finding that Mr Lin's statement at [11] of Mr Zheng's affidavit dated 28 May 2021 conveyed the Second Guaranteed Repayment Representation. That is the subject of ground 1, which, by ground 4, the appellant also relies on against Ms Luo.

Consideration of Ground 4

1. For the same reasons I have rejected ground 1, I would reject ground 4.

Ground 5

1. In relation to ground 5, the appellant relied on the same arguments made in support of ground 2. That is because the primary judge's reasoning supporting the conclusion that the Second Guaranteed Repayment Representation was a cause of Ms Luo's loss is the same reasoning by which his Honour concluded that the Second Guaranteed Repayment Representation had caused Mr Zheng loss. The appellant submitted that the primary judge made the same error as it identified in ground 2.

Consideration of Ground 5

1. For the same reasons I have rejected ground 2, I would reject ground 5.

Grounds 6 and 7 of the appeal

1. Grounds 6 and 7 of the appeal concern Dr Wang and Ms Qian. By grounds 6 and 7, the appellant contends: 6 The learned trial judge erred by failing to give adequate reasons in respect of his findings: a. that the appellant made the Guarantee Representation to the third respondent; b. that the appellant made the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation to the third respondent; c. that the Guarantee Representation was a cause of the third and fourth respondents' loss, because his Honour failed to refer to and consider the evidence that the third and fourth respondents had read and understood the loan agreement and the draft loan agreement. 7 The learned trial judge erred in finding that the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation were a cause of the third and fourth respondents' loss.

Ground 6

1. The appellant submitted that the primary judge erred by not addressing the evidence of Dr Wang and Ms Qian, who were both proficient in English, that they had read and understood that the loan agreement and draft loan agreement did not contain a guarantee. The appellant made a derivative argument that those matters supported the conclusion that the Guarantee Representation had not been made or that they had not relied on that representation. It was submitted that the primary judge did not address the argument that it was implausible in the circumstances that Dr Wang would have signed the loan agreement, which omitted to mention the alleged guarantee, and would have kept no documentary record of an oral guarantee. The primary judge also did not refer to the evidence that the only change to the draft loan document that Dr Wang requested (after discussing the matter with Ms Qian) was to change their address. That evidence was one of the main reasons advanced by the appellant for why the evidence of the conversation recorded at [50] of the primary judgment should not be accepted and was important or critical to the determination of an issue in dispute. Accordingly, he submitted that his Honour's failure to deal with it constituted a failure to give adequate reasons.

Consideration of Ground 6

1. Ground 6 is an attack framed as being about inadequate reasons. In truth, it is a collateral attack on the primary judge's factual findings that Mr Lin made the Guarantee Representation and the Guaranteed Repayment Representations and that Dr Wang and Ms Qian relied upon those representations. The attack against those factual findings is not made directly, no doubt because the obstacles identified in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 could not be overcome. The complaint is framed as being that the primary judge did not give specific reasons rejecting the appellant's submissions about the importance of the fact that the draft loan agreement nor the final version contained a guarantee.
2. The quality and detail of reasons necessary to be regarded as adequate was summarised by Bell P in New South Wales Land and Housing Corporation v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 at [65]-[68]: [65] One may begin with the observation that the quality of a court or tribunal's reasons can vary immensely, of course, depending upon a range of considerations including the experience and skill of a judicial officer or tribunal member, the complexity of the subject matter, the quality of the submissions made before the court or tribunal, the availability of transcript, the urgency of the matter and the time the judicial officer or tribunal member has to compose his or her reasons. Further, good judgment writing is an art not a science (see TF Bathurst, "Writing Better Judgments", speech delivered to the COAT NSW Annual Conference "Efficient, Informal and Fair: Tribunals Delivering Under Pressure"). [66] In the context of appellate review of the adequacy of reasons, the function of an appellate court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard: Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48]. The standard is not one of perfection: Bisley Investment Corporation v Australian Broadcasting Tribunal (1982) 40 ALR 233 at 255. [67] Whilst all decision makers, be they judges or tribunal members, should aspire to high quality decision-making, an integral part of which is the formulation of clear reasons for decision (as Gleeson CJ explained extra-judicially in "Judicial Accountability" (1995) The Judicial Review 117 at 122), as Basten JA said in Resource Pacific at [48], "[t]ransparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality." His Honour's identification of separate parameters of quantity and quality is, with respect, a useful one. [68] In terms of the former parameter, the quantity (or detail) of reasons, necessary for those reasons to be adequate may vary both with the nature of the decision maker, that is, whether or not it is a court or tribunal, and, if the latter, possibly the type of tribunal, and the nature of the question being decided: Wainohu v New South Wales (2011) 243 CLR 181; [2011] HCA 24 at [56] per French CJ and Kiefel J. Thus even superior courts are not required to give reasons for every interlocutory decision (Wainohu at [56], [98], Hogan v Hinch (2011) 243 CLR 506; [2011] HCA 4 at [42]; Lodhi v Attorney General (NSW) [2013] NSWCA 433; 241 A Crim R 477 at [29]; R v Kay; Ex parte Attorney-General (Qld) [2017] 2 Qd R 522; [2016] QCA 269 at [27]) and other aspects of decision making such as findings on pure credibility or matters that necessarily call for estimation or impression may require less or only allow for limited reasoning to be exposed: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280 but cf Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 at [34], Pollard at [65] and see the discussion in Resource Pacific at [48]−[58]. (emphasis in original)

Ground 7

1. In relation to ground 7, the appellant relies on the arguments made in support of ground 2. He submitted that, having concluded that the No Risk Representation and the Low Risk Representation were not causative of loss, his Honour should have reached the same conclusion in respect of the Guaranteed Repayment Representations, which were substantially the same.

Consideration of Ground 7

1. As I have rejected ground 2, I reject ground 7 for essentially the same reasons.

Grounds 8 and 9 of the appeal

1. Grounds 8 and 9 concern the judgment in favour of the fifth respondent, MSD. By those grounds, the appellant contends: 8 The learned trial judge erred by failing to give adequate reasons in respect of his findings: a. that the appellant made the Guarantee Representation to the fifth respondent; b. that the appellant made the Guaranteed Repayment Representation and the Second Guaranteed Repayment Representation to the fifth respondent; c. that the Guarantee Representation was a cause of the fifth respondent's loss, because his Honour failed to refer to and consider, in the context of making those findings, the evidence that the fifth respondent had either read the draft loan agreement in translation or had the draft loan agreement translated to him. 9 The learned trial judge erred in finding that the Guaranteed Repayment Representation and Second Guaranteed Repayment Representation were a cause of the fifth respondent's loss.

Ground 8

1. The appellant submits that there was evidence that Mr Xu had read a translated version of the loan agreement or a draft of it, or that the loan agreement or draft loan agreement had been translated to him. It would have been apparent from a translation of the loan agreement or the draft loan agreement that it contained no guarantee. Those matters, the appellant submits, suggested that Mr Lin did not make the statements that he would "bear all of the economic and legal risks involved in the project" and that "there is no risk for you to get repaid. I will be responsible for all risks in the Turramurra [P]roject" (which were found to convey the Guarantee Representation and the Guaranteed Repayment Representations). Otherwise, he submits, if those statements were made, then those matters suggested that the representations did not cause Mr Xu to believe that MSD's loan would be secured by a personal guarantee given by Mr Lin. That argument was made below, although admittedly in more general terms than how the argument was put in relation to Dr Wang and Ms Qian. The failure to address those matters allegedly constituted a failure to give adequate reasons.

Consideration of Ground 8

1. Ground 8 is another collateral attack on factual findings, namely, that Mr Lin made the pleaded representations to Mr Xu and that Mr Xu, on behalf of MSD, relied upon those representations. As with ground 6, the attack is not made directly against the factual finding. No doubt this is because of the constraints imposed by the principles in Fox v Percy.
2. The complaint is framed as being that the primary judge did not give adequate reasons because his Honour did not squarely address the submissions about evidence which "tended to suggest" a different factual scenario than that found by the primary judge.
3. As Mr Lawrance SC accepted in his written submissions on appeal, no specific submissions were put below, either orally or in writing, in relation to this evidence concerning Mr Xu. The appellant submitted that the relevant argument "was put in more general terms in relation to all of the respondents". He pointed to the following submissions put at the hearing below by counsel then appearing for Mr Lin: 1. At Black 209C-E: It may not, but if it does assist, essentially, my client says that the best evidence of the representations made to each of these plaintiffs are in the written documentation that is contained in the cross-examination bundle. That is, the information memorandum or introduction document dated 11 July 2014, the deed of loan provided on 11 July 2014. 1. At Black 209S-T: I am going back to my broader submissions. Those three documents are the best evidence of the representations made by my client to each of the plaintiffs. 1. At Black 211D-H: One of the numerous issues, in my submission, for the plaintiff in the present case, is that there's simply been no engagement in any of the plaintiff's evidence-in-chief as to the documentary context within which these oral representations are said to have been made. It's plain that these emails were sent to each of these plaintiffs. It's plain that they read and considered them, and in some cases asked some questions of my client, but in large measure did not. That is part of the context within which the statements need to be considered.
4. None of these submissions raise for consideration evidence which "tended to suggest" a different factual scenario than that found by the primary judge. The complaint that the primary judge did not give adequate reasons for rejecting evidence which "tended to suggest" a different factual scenario is without substance. There was no error in the primary judge failing to give reasons for rejecting evidence which "tended to suggest" a scenario not put in cross-examination nor the subject of any submission made by Mr Lin.

Ground 9

1. In relation to ground 9, the appellant relies on the arguments made in support of ground 2.

Consideration of ground 9

1. I would reject ground 9 for the same reasons given in rejecting ground 2.

Application to amend the notice of appeal

1. During the hearing of the appeal, in response to issues raised by the Court, leave to amend the notice of appeal was sought to amend ground 6 to read as follows (proposed amendments underlined): 6 The learned trial judge erred by failing to give adequate reasons in respect of his findings: … because: d. his Honour failed to refer to and consider the evidence that the third and fourth respondents had read and understood the loan agreement and the draft loan agreement; and e. his Honour failed to refer to and consider the evidence relied on at Black 297 [80] to the effect that Dr Wang's evidence at Blue 58-59 [22], [26] and [29] was that the conversations on which he relied occurred after the first payment by Dr Wang and Ms Qian on 4 July 2014.
2. Leave to amend should be refused. There is an inconsistency in the evidence read by Dr Wang. That inconsistency was not explored in the evidence below. There are passages in Dr Wang's evidence which appear to suggest that a decision was made to invest at least part of the money advanced before the critical conversation with Mr Lin took place. Dr Wang was not, however, cross-examined about his evidence at Blue 59 [28] that following the critical conversation with Mr Lin, "My wife and I then decided to loan $500,000 towards the Turramurra Project" (emphasis added). Mr Lin, having elected not to explore the inconsistency in the evidence at trial, cannot fairly raise the matter on appeal.
3. If the matter had been raised at trial, and Dr Wang confronted about the apparent inconsistency in his evidence, it is likely to have been clarified, one way or the other. Dr Wang lost the opportunity to do that by reason of the forensic decision not to draw attention to this issue at the trial. The point sought to be raised by the proposed amended notice of appeal may have been a good point at the trial, had it been pursued. It was not. Leave to amend the notice of appeal should be refused.

Conclusion and proposed orders

1. For the foregoing reasons I propose the following orders: 1. Leave to amend the notice of appeal refused. 2. Leave to appeal granted. 3. Appeal dismissed. 4. Appellant to pay the respondents' costs of the appeal.
2. WHITE JA: I agree with Payne JA.

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