Linjing Fang v Xiaodan Sun & Ors

Supreme Court of NSW|2014-02-06|Before: Slattery J

Judgment 1In late 2009 Ms Xiaodan Sun attempted to play a role as a business intermediary between her aunt in Beijing, Ms Linjing Fang, and her mother-in-law, in Sydney, Mrs Mal Soon Park. Ms Sun's efforts in this role failed mainly because of Mrs Park's conduct. Ms Fang has a judgment against Mrs Park. She now pursues action against Ms Sun for alleged misleading and deceptive conduct under the Fair Trading Act (1987) ("FTA") s42 and breach of fiduciary duty. 2In June 2009 Ms Fang was applying for permanent residence in Australia on a business investment visa. To satisfy the applicable visa conditions Ms Fang needed to find a suitable business investment in Australia. Ms Fang turned to Ms Sun, a close family friend who had grown up in Australia. Ms Sun told Ms Fang of an opportunity that may have met her visa requirements: a Korean restaurant business in the World Square building in Sydney. 3Ms Sun is married to Mr Chong Hung Park. The restaurant known as the "Zozo Korean Restaurant" was to be purchased and operated by Mr Park's mother, Mrs Mal Soon Park. Mrs Park and Ms Fang did not know one another. The only common point of contact between Ms Sun's aunt (Ms Fang) and her mother-in-law (Mrs Park) was Ms Sun herself. So Ms Sun conveyed information about the possible investment from Mrs Park in Sydney to Ms Fang in Beijing. Ms Fang invested on the basis that she and Mrs Park were buying the restaurant together and were jointly funding its purchase. Between October 2009 and May 2012 Ms Fang advanced a total of $704,850, on account of the acquisition of the restaurant and for the restaurant's early operating expenses. 4The parties are at issue: about what Ms Sun said to Ms Fang about the restaurant investment; whether what Ms Sun said was accurate; and whether Ms Fang relied upon what Ms Sun said. The principal misleading conduct alleged is as to the purchase price of the restaurant and whether Mrs Park was putting any money into the acquisition. Ms Fang says Ms Sun told her: that she (Ms Fang) and Mrs Park could purchase the restaurant for $750,000; and, that (2) if she (Ms Fang) invested $450,000 then Mrs Park would put in the other $300,000. It is common ground that Ms Fang did advance $450,000 for what she thought was her share of the purchase money. And it is common ground that Ms Sun said to Ms Fang that the restaurant was being purchased for $750,000. But Ms Fang says that after her arrival in Australia she discovered that Mrs Park had actually purchased the restaurant for a total consideration of only $450,000, which it turned out Ms Fang had wholly funded, as Mrs Park had not put any of her own money into the acquisition. Ms Fang says had she known the truth, that she was funding the whole purchase price, she would not have invested in this business at all. 5Ms Sun did not concede that the purchase price of the restaurant was only $450,000, although the vendor gave evidence to substantiate the correctness of that figure. Ms Sun concedes that she told Ms Fang that the purchase price for Ms Fang and Ms Sun to buy jointly was $750,000, but says she did not mislead her. 6The focus of the misleading conduct case shifted a little in the course of the hearing. Ms Fang's case was initially put on two alternative bases. First, Ms Fang contended that Ms Sun had herself vouched for the accuracy of what she was passing on from Mrs Park, whether or not she (Ms Sun) actually knew the information she was passing on was true or not. Secondly, Ms Fang contended that Ms Sun actually knew that the information she was passing on was false. 7But Ms Fang's case narrowed as a result of her cross-examination, in which she conceded that she was aware that Ms Sun was only talking on behalf of Mrs Park and was merely passing on information. So any liability is that of the principal: Lawson Hill Estate Pty Limited v Tovegold Pty Limited [2005] FCAFC 169. As a result Ms Fang only advanced her alternative case. She conceded her success on this alternative case would depend on whether Ms Sun knew the true restaurant purchase figure. 8The parties strongly contested what Ms Sun knew as to the purchase price of the restaurant. But the Court finds in these reasons that during her conversations with Ms Fang, Ms Sun knew that the purchase price was $450,000, not $750,000 and knew that Mrs Park was not contributing to the funding of the purchase price. Ms Fang also succeeds on her breach of fiduciary duty case, based on the Court's findings on her misleading and deceptive conduct case. 9These proceedings were originally more procedurally complex. The plaintiff, Ms Fang sued a number of defendants for the return of her $704,850 and sought other relief against some of them. But there was ultimately no contest with these other defendants. 10Ms Fang sued Mrs Park as second defendant. But Mrs Park did not appear by any legal representative to contest the relief sought against her. Before the proceedings commenced default judgment had already been entered against Mrs Park. 11Ms Fang also sued Zozoen Pty Limited ("Zozoen"), as the fourth defendant, the company that operated the subject Korean restaurant. The restaurant had failed before the proceedings commenced. Ms Fang contends that Zozoen now has no commercial value. The company was not legally represented. 12Ms Fang sued Mr Park for declaratory relied that he held his shares in Zozoen on trust for Mrs Park or Ms Fang. But as the restaurant had ceased trading, Ms Fang agreed with Mr Park on the first day of the hearing to dismiss the proceedings against him by consent with no order as to costs. These proceedings now continue as a contest between Ms Fang and Ms Sun. 13All the legal representatives efficiently conducted these proceedings in a little over two days. Mr Pesman SC and Mr Alexander of counsel represented Ms Fang. Mr G. McGrath SC represented Ms Sun and Mr Park.

Some Credibility and Onus of Proof Observations 14The Court was required to assess the credibility of four witnesses in this case: Ms Fang, Ms Sun, Mr Park, and the vendor of the restaurant, Mr Sung Jae Kim. 15Ms Fang is an accomplished businesswoman. She owns furniture and lamp retail outlets in Beijing. She gave evidence in Mandarin, through an interpreter. Her character well penetrated all language and cultural barriers. She came across as a careful businesswoman, trustful of family, intuitive in her relationships, and a reliable witness. Although thoroughly cross-examined by Mr McGrath SC, her credibility was not ultimately damaged. I accept her evidence. 16Ms Sun was a less reliable witness. Some of her story came across as improbable and was inconsistent with the testimony of other witnesses whose evidence I prefer. Her husband Mr Park had poor recollection of important events and his evidence failed to secure the Court's confidence. 17The other witness Mr Sung Jae Kim, was the vendor of the Zozo Korean Restaurant. Mr Kim was an astute investor and the founder of a chain of 19 Asian food restaurants, the Hokka Hokka franchise group. He had an impressive and reliable recollection of his conversations with Ms Sun and Mrs Park in relation to the sale of the restaurant. I accept his evidence of these conversations. It has assisted the Court to resolve important disputed questions. 18The way that Ms Fang ultimately put her case meant that she was in substance alleging that Ms Sun had dishonestly deceived her. The nature of such a serious allegation "requires as a matter of common sense and worldly wisdom the careful weighing of testimony, a close examination of facts proved as a basis of inference and a comfortable satisfaction that the tribunal has reached both a correct and just conclusion": Briginshaw v Briginshaw (1938) 60 CLR 336 and 350, per Rich J. Ms Fang's case against Ms Sun met this standard.

Linjin Fang Buys a Business in Australia - 2009 to 2012 19This section of the Court's reasons contains a narrative of the Court's findings in relation to the dealings among these parties. This narrative represents the Court's findings as to what happened, recording uncontested facts and deciding contested matters. It does not refer in any depth to all evidence that was considered and rejected, such as much of Ms Sun's account of these events.

Ms Fang Seeks to Emigrate 20Ms Fang lived and worked in Beijing until 2012. By mid 2009 she had decided she wished to emigrate from the Peoples Republic of China to Australia, which she did in June 2012. Ms Fang first visited Sydney in June 2009 to advance her objective and to find out more about the requirements of Australia's business investment visa scheme. 21During that visit she discussed with Ms Sun and her husband Mr Park, her intentions to obtain permanent residence in this country. She examined a number of migration options with Ms Sun and Mr Park before she returned to China. 22Ms Sun was a logical choice for Ms Fang to seek migration assistance. Ms Fang is a long-term friend of Ms Sun's parents. Ms Fang and her husband, who is not a party to these proceedings, have known Ms Sun since Ms Sun was a young child. Ms Fang has a status in Ms Sun's life akin to that of an aunt and refers to her naturally in conversation as "Aunty Fang". So when Ms Fang visited Australia from Beijing on a migration agent's tour, she made contact with Ms Sun and Mr Park. 23At their June 2009 meeting in Sydney Ms Fang and Ms Sun arranged to continue discussions on the telephone about Ms Fang's future migration. These June 2009 conversations were merely exploratory and did not broach the subject of the Zozo Korean Restaurant. 24In September 2009 at least two restaurant-related telephone conversations took place between Ms Fang and Ms Sun. In these conversations Ms Sun outlined to Ms Fang that her mother in law, Mrs Park, was about to buy a Korean restaurant. Ms Sun explained to Ms Fang that Mrs Park was interested in taking a partner into her restaurant. The parties do not dispute these two discussions took place. But they dispute what was said in each conversation.

The First September Conversation 25The first Fang-Sun telephone conversation seems to have taken place close to Mrs Park and Ms Sun discovering the Zozo Korean Restaurant was for sale. 26Ms Fang says, and I accept, that Ms Sun said to her in the first of the conversations in summary, the following: Ms Sun's mother in law, Mrs Park, was interested in engaging in a business venture with Ms Fang; Mrs Park had authorised Ms Sun to speak to Ms Fang on Mrs Park's behalf; Mrs Park had previously worked in Korean restaurant businesses and was very experienced in running Korean restaurants; Mrs Park knew of a Korean restaurant business that was available for purchase for $750,000 (AUD) which represented "good value", because the restaurant was worth more than this amount; if Ms Fang provided $450,000 to invest in the purchase of the restaurant, then Mrs Park would provide the other $300,000 and they would both be partners in the purchase the Korean restaurant; Mrs Park was willing and able to run the Korean restaurant prior to Ms Fang arriving in Sydney from China; Mrs Park was family and therefore Ms Fang could trust her and Ms Fang would therefore have nothing to worry about; and Ms Sun would be able to act as Ms Fang's representative in managing the affairs of the Korean restaurant. 27Ms Sun's version of these conversations is rather different. She says that she merely passed on the information her mother-in-law gave to her and made no relevant representations of her own. Ms Sun's case is that she was merely an intermediary and was passing on what her mother in law said. I prefer the substance of Ms Fang's version.

The Second September Conversation 28Ms Fang claims that Ms Sun told her in a subsequent conversation that Ms Sun and Mrs Park had done some follow up investigations of the restaurant since their first conversation. Ms Fang says, and I accept, that Ms Sun told her in the second conversation Ms Sun and Mrs Park had attended daily on the Korean restaurant and observed its customer demand and that it was good; and that, based on her investigations Mrs Park was confident that the Korean restaurant would be profitable from the first month after purchase. 29At the end of the second conversation, which I find took place in early to mid September 2009, Ms Sun put a business proposal on behalf of Mrs Park to Ms Fang. In summary the business proposal that I accept Ms Sun put was that: (a) Mrs Park and Ms Sun would purchase the Korean restaurant for $750,000, with Mrs Park providing $300,000, and Ms Fang providing $450,000, of the total purchase price; (b) Mrs Park estimated the total monthly profits from the restaurant would be $10,000 but the plaintiff's share would definitely be at least $3,000 per month; (c) Mrs Park was prepared to manage the Korean restaurant herself and would report to the plaintiff at monthly intervals through Ms Sun; and (d) Upon Ms Fang later taking up permanent residency in Australia, if she did not wish to carry on the Korean restaurant business herself, then Mrs Park would be prepared to buy out her share at that time. 30This arrangement was oral. Ms Fang still had no direct contact with Mrs Park. No documents of any formal kind had passed between any of the three parties. Yet Ms Fang accepted the proposal and agreed on the basis of what Ms Sun had told her to invest $450,000 in the purchase of the Korean restaurant. Other statements made in the course of these conversations are referred to later in these reasons.

Ms Sun Reports Back - 15 September 2009 31On 15 September 2009 Ms Sun telephoned Ms Fang for a third time. Ms Sun reported that Mrs Park had indeed finalised the agreement to purchase the restaurant for $750,000. She explained that the purchase price was payable in two instalments: $200,000 to be paid by the end of October 2009, and the balance of $550,000 by the end of December 2009. Ms Sun further reported to her aunt Fang that Mrs Park had to go to Korea to arrange the transfer of her portion of the purchase price. Ms Sun passed on Mrs Park's requests about the expected timing of Ms Fang's payments: that Ms Fang should pay the $200,000 by the end of October to meet the vendor's payment timetable; and, that the balance of $250,000 now due from Ms Fang should be paid by the end of December along with Mrs Park's $300,000. 32Ms Fang accepted this payment schedule. Although as will be seen in practice it was slightly extended (as between Ms Fang and Ms Sun) for Ms Fang's benefit, as she would have breached PCR restrictions on overseas capital transfers. 33The parties also agreed through Ms Sun upon their respective shares in the new business. This part of the agreement was finalised either when the payment timetable was agreed or in the telephone conversation immediately before. 34Their agreement as to their respective ownership shares in the business was marginally different from their agreed financial contributions. Their financial arrangements implied Ms Fang had a share of 60 per cent ($450,000 divided by $750,000, multiplied by 100) and Mrs Park had a share of 40 percent ($300,000 divided by $750,000, multiplied by 100). But Ms Fang was prepared to allow Mrs Park to have what she described as "more than 40 per cent of the business", provided that Ms Fang had at least 51 per cent. Despite the fact that Ms Fang would have more than a 50 per cent share of the business, she was prepared to split the profits equally with Mrs Park. 35This aspect of the terms of the Fang-Park agreement says much about Ms Fang and about the nature of their transaction. She did not drive a hard bargain with Mrs Park. She was keen to secure an Australian business investment. She was generous with people she regarded as family. This explains some of her later conduct, and gives context to how she understood what Ms Sun was telling her.

The Purchase Price of the Restaurant 36The parties disputed the purchase price of the restaurant. Ms Fang adduced evidence from Mr Kim, the vendor that he negotiated the sale with Mrs Park, Mr Park and Ms Sun for no less than $450,000 at their first meeting in September 2009. I accept Mr Kim's evidence that that was the price negotiated. I accept that Mrs Park, Mr Park and Ms Sun were present at negotiations with Mr Kim for the sale of the restaurant in September 2009. He remembers, and I accept, that the agreed purchase price of $450,000 did not include stock. But there was not much stock in the restaurant anyway. 37Mr McGrath SC had very little objective evidence to put to Mr Kim on behalf of Ms Sun to suggest that the purchase price was actually $750,000, and not $450,000. There was a receipt for $750,000, discussed below, dated 5 November 2009. But this had obviously been altered. Exercising forensic sound judgment, Mr McGrath SC did not use this flawed document to suggest to Mr Kim that the purchase price was $750,000. 38So the real contest between the parties moved to the next level: whether Ms Sun knew that the purchase price was $450,000, and not $750,000. Mr Kim's evidence resolves this issue. 39Mr Kim had no interest in the outcome of this litigation. He has never met Ms Fang; did not recognise her in the courtroom and at one point in his evidence had to look at the front page of his affidavit even to remember her name. He was an impressive witness who spontaneously added consistent detail to his account of his negotiations with Mrs Park, Mr Park and Ms Sun. 40But there were language difficulties at this meeting. Mr Kim speaks fluent Mandarin, English and Korean. He was conscious that Mrs Park only speaks Korean and very little English, whereas Mr Park speaks English and very little Korean and Ms Sun speaks Mandarin, and some English, but no Korean. This mixture of linguistic capacities meant that the meeting was conducted in three languages. I accept Mr Kim's evidence that he wanted to make sure that everyone understood what he was saying. He was sufficiently experienced in business that he recognised that this combination of languages was likely to produce a misunderstanding unless he made himself very clear in every language. He frankly confessed that he was not always sure who said what to him in the meeting. But one part of the negotiation became very important: the funding of the purchase price. 41Mr Kim says, and I accept, that he specifically discussed the purchase price of $450,000 with Ms Sun in Mandarin, because she told him she represented the source of the money. I accept this is what happened partly because of my acceptance of Mr Kim as a witness of truth, but partly also because it is inherently probable. I accept that he understood that "the money is coming from China". He remembers that that is one of the first things that Ms Sun said to him at the September meeting. Although it was not mentioned in his affidavit, he spontaneously and genuinely recollected this important detail. 42Ms Sun's account is that Mrs Park told her outside this meeting that the purchase price was $750,000 and Ms Sun infers that she had no other independent source of information about the actual purchase price of $450,000. Mr Kim's evidence makes clear that the meeting negotiations were directed from his perspective at protecting a minimum-selling price of $450,000; a financial target Ms Sun was unlikely to have misunderstood. I accept his recollection as accurate that the range of figures negotiated between the parties on this occasion was $420,000-$500,000, nowhere near $750,000. 43Ms Sun's account I accept is partly right. Mrs Park may have said to her outside this meeting that the purchase price was $750,000 and the purchasers would share the business Fang (55%), Park (45%). But after attending this meeting Ms Sun knew the truth. This then explains how Ms Sun came to mislead Ms Fang. Regrettably she herself was first misled by Mrs Park and passed on the higher figure to Ms Fang. But she nevertheless found out the truth before Mrs Fang sent any money. Her mother-in-law had ill used Ms Sun, who was then trapped in her mother-in-law's scheme. For this reason she does not deserve as harsh a judgment on these events as Mrs Park. But she still did not correct the wrong impression she knew she had conveyed to Ms Fang. 44Mr Kim was particularly focussed upon Ms Sun at the meeting. He knew that Ms Sun "was the person who comes with the money, not [Mrs Park]". So he concluded that Ms Sun "has to understand clearly what is going to happen". That Ms Sun was likely to be bringing the money to this negotiating table did not come as any surprise to Mr Kim. He was very familiar with the Korean community in Sydney. Before the meeting he had formed an impression from this general background that Mrs Park probably did not have the money herself. 45Mr Kim did not recall being told at this meeting that anyone from China would be taking an interest in the business. Mr Kim was not interested in how the purchase would be structured. But the Court's acceptance of Mr Kim's recollection of the discussion that "the money is coming from China", and his conduct of the discussion on the basis that Mrs Park was not the source of the money, founds another important inference the Court draws against Ms Sun: she also knew that Mrs Park would not herself be putting any money into the acquisition. 46If accepted, Mr Kim's evidence is fatal for Ms Sun's case that she did not know that Ms Fang was the sole funder of a restaurant acquisition at a price of $450,000. She sought to distance herself from the discussion on this occasion. She said she left the meeting early. But her account of leaving early is implausible. She cannot recall why she left the meeting early other than "I needed to be work at 9.30". Quite inconsistently with Ms Sun's account, Mr Kim recalls, and accurately in my view, that this meeting took place in a coffee shop next to the Zozo Korean Restaurant at about 3.40pm. I accept it was an afternoon meeting. Ms Sun cannot recall whether she left the meeting with her husband, Mr Park, or not. And if she did leave early without him, she cannot recall taking the natural step of later asking her husband what happened at the meeting after she left. 47Ms Sun's account of this first September meeting was that there was no talk about the purchase of the business that day in her presence. She says, "I only greeting [sic] to him and I left the meeting". But Mrs Park did bring her to the meeting to introduce her to Mr Kim. And this was for a reason. Even by then it was clear to all concerned that Ms Fang would be the source of the money and Mrs Park expected that Mr Kim would therefore want to meet Ms Sun. Once it is understood that the purchase price of the Zozo Korean Restaurant was $450,000 and that Ms Fang was supplying the whole of that $450,000, Ms Sun's presence at this meeting, as the representative of the sole funder of the acquisition, becomes critical to the rationale of the meeting. 48And that was Mr Kim's focus. He wanted to know that the representative of the person bringing the money to the table, Ms Sun, fully understood the the transaction and in particular the purchase price. Ms Sun's only explanation for being at the meeting was that she was just "being polite" as is expected in Korean culture. Ms Sun is partly right, when she says this. But why did they have to be "polite" to her at all in this context? The answer is simple: she represented the money.

Ms Fang Advances Funds - October 2009 to January 2010 49Ms Fang advanced funds more or less in accordance with the Fang-Park agreement. Between 23 and 28 October 2009 she advanced $200,000 into Ms Sun's account and into a joint account that Ms Sun held with Mr Park. Both accounts were with the Commonwealth Bank of Australia and are respectively described in these reasons as, Ms Sun's account and the joint account, without reference to account numbers. 50Between October and December 2009 Ms Fang advanced the balance of her agreed $450,000 contribution to the restaurant acquisition partnership. But this was done with a small variation from what had been agreed. Shortly after the $200,000 had been paid in late October, Ms Fang and Ms Sun agreed to vary the time of Ms Fang's provision of the balance of $250,000, so that only $100,000 (not $250,000) would be transferred by the end of December 2009, and the remaining $150,000 would be transferred in early 2010. Ms Fang transferred the $100,000 into the joint account on 18 December 2009 and the further $150,000 (actually $150,500) into the joint account on 28 January 2010. But Ms Sun and Mrs Park still had to meet the arrangements with Mr Kim for full payment by the end of December. So she volunteered to use her own money for a month to tide Ms Fang over. 51The amount of $500 in the last payment of $150,500 was for personal expenses and is not any part of Ms Fang's claim in these proceedings.

A Second Meeting with Mr Kim - 5 November 2009 52Mrs Park and Ms Sun gave the money they had received from Ms Fang in China to Mr Kim in exchange for shares in Zozoen. They all met again on 5 November 2009 for this exchange to occur. I accept Mr Kim's evidence that he and Mrs Park and Ms Sun were present at this November meeting. It is unclear whether Mr Park was present. 53This meeting can be dated accurately because Mr Kim wrote out a receipt (Exhibit B) for the money he received that day and gave it to Mrs Park. The original receipt reads as follows: "Receipt This is to confirm that $750,000.00 is received on 5/11/09 Sung Jae Kim" 54Mr Kim says, and I accept, that this is not the form in which he last saw the receipt. When he wrote the receipt out on 5 November 2009 the figure within the receipt was "$150,000" not "$750,000". It does not require very sophisticated observation of Exhibit B to see that someone has added two strokes to make the "1" in "$150,000" to read as though it were a "7". A slightly thinner pen is used for the strokes converting the "1" into a "7" than the other writing in the receipt and a slightly less flowing script is used for these additional strokes. But amateur handwriting analysis is not required. The Court accepts Mr Kim's evidence that he only wrote out a single receipt for $150,000 on 5 November, 2009. 55Mr Kim says he received a single cheque for $150,000 on this occasion. He is mistaken about this. He was given two cheques making up $150,000. But I accept his evidence that this meeting was arranged so that he could receive the money and that he brought along some Hokka Hokka stationary for the purposes of writing out a receipt, which he did. 56As to the number of cheques, I accept Ms Sun's evidence. She gave two cheques to Mr Kim on 5 November, not one. The objective evidence supports that conclusion. Mr Kim's mistake on this matter is only a minor part of his evidence and does not impair his overall credibility. 57Funds were received from Ms Fang in late October. Cheques drawn for Mr Kim in early November. Ms Fang paid into Ms Sun's account $42,492.50 on 27 October 2009, $57,492.50 on 28 October 2009 and $57,492.50 on 29 October 2009. These payments totalled $157,477.50. Then on 30 October 2009 Ms Fang paid into the joint account a further $42,492.50. The total funds transferred into both accounts in the last week of October were $199,700. 58I accept Ms Sun's evidence that Mrs Park gave Ms Sun instructions about the drawing of three bank cheques out of these funds. Mr Kim had asked for his bank cheques to be drawn payable to Kimbel, a company he controlled. Ms Sun drew cheques with the following dates, payees and amounts: 2 November 2009 - Kimbel - $107,500; 2 November 2009 - John Won Lim - $50,000; 5 November 2009 - Kimbel - $42,500; and, 9 November 2009 - S.J.Kim - $5,000. These amounts total $205,000. 59The two cheques to Kimbel of $107,500 and $42,500 were given to Mr Kim on 5 November 2009, making up the total payment of $150,000 that day. The cheque to Mr Lim was to repay a loan of $50,000 from Mr Lim for the deposit on the deal. And the cheque to Mr Kim of $5,000 was paid after he issued the 5 November receipt. 60Thus by the end of November a total of $205,000 (deposit $50,000, 5 November $150,000 and 9 November $5,000) had been paid to Mr Kim. Further money was paid to Mr Kim in December 2009. A further $250,000 to complete the purchase was paid in December $205,000 on 16 December and $45,000 on 30 December 2009 making a total of $250,000 in December. Mr Kim issued another receipt on 16 December 2009, as follows:- "Receipt Received $250,000.00 Balance Payment for Zozo Korean Restaurant. Sung Jae Kim (signature) 16/12/09" 61The amount of the second receipt of $250,000 assists the inference that the first receipt has been altered, and that Mr Kim should be accepted that it was issued in the sum of $150,000. The altered receipt infers a transaction for a total consideration of $1,000,000, which is consistent with neither case.

Mrs Park Completes the Purchase - February 2010 62On or about 12 February 2010 Ms Sun communicated from Sydney with Ms Fang who was still in Beijing: that the business purchase had gone through according to plan; that Ms Sun and Mrs Park were now running the Korean restaurant; and, that Ms Sun and/or Mrs Park would soon be in a position to pay Ms Fang her monthly dividend. 63A company, Zozoen, was set up ostensibly to conduct the business of the restaurant. Ms Fang says, and I accept, that at this time she was entirely unaware of Zozoen's incorporation or that it had any role in relation to the Zozo Korean Restaurant. The company was actually used in part as a vehicle to provide funds for Mrs Park's personal use. 64Zozoen had been incorporated on 21 September 2009 by Mr Kim, who became its first sole director and secretary and sole shareholder holding ten shares. On 19 November 2009 Mr Kim issued a further 90 shares in Zozoen, 45 of which were issued to him and 45 to Mrs Park. The same day Mrs Park was appointed a director of Zozoen. 65On 14 January 2010 Mr Kim transferred the shares in Zozoen to Ms Fang, when there was only $150,000 outstanding from the purchasers. But I accept that this too was done without Ms Fang's knowledge. Mr Park, Mrs Sun's husband, was also appointed a director of Zozoen on 14 January 2010. 66Zozoen conducted a bank account with the National Australia Bank (referred to in these reasons as "the company account"). Mrs Park had use of the company account throughout 2010. Some of the post acquisition funds that Ms Fang transferred from China found their way into Zozoen's company account. Between May and August 2010, and to a lesser extent thereafter, Mrs Park made a large number of cash withdrawals from this account at hotels and at Star City Casino, many of them on the same day, many of them on Friday and Saturday nights, and most of them in amounts varying between $100 to $500. Mrs Park has not given evidence in the proceedings and not given any explanation of this pattern of withdrawals. But the pattern of withdrawals is consistent with these monies being consumed in gambling activity. 67Mrs Park had abandoned her shareholding in Zozoen by the end of 2010. On or about 10 December 2010 Mrs Park transferred her 45 shares in Zozoen. She transferred one share to Ms Fang, 22 shares to Ms Sun and 22 shares to Mr Park. The reasons for these share transfers was not explored in evidence but they generally coincide with the time of Mrs Park's retirement from the Zozo Korean Restaurant. Again, I accept that Ms Fang was not aware of the transfer of this share to her.

Ms Fang Advances More Money in 2010 68After the purchase of the restaurant and before she came to Australia, Ms Sun requested Ms Fang to pay further monies for the restaurant's operations, in addition to the purchase price. Between April 2010 and May 2012 Ms Sun transmitted a series of requests for further advances to Ms Fang. 69Ms Sun made the following further funds requests to Ms Fang, who effected funds transfers generally corresponding to the requests: (a) $70,000 as a deposit in respect of a bank guarantee for the lease in April/May 2010; (b) $30,000 to pay a supplier in October 2010; (c) $46,850 for restaurant renovations in March/May 2012; and (d) $87,650 for non-restaurant personal expenses of Ms Fang. 70The first two of these payments, which were made in 2010, are dealt with in this section of these reasons. The remaining two are dealt with later in these reasons. The requests for these payments began to demonstrate that Mrs Park either was not a very organised businesswoman, or that something unusual was going on in this restaurant business. 71(a) $70,000 in April/May 2010. In April 2010 I accept that Ms Sun telephoned Ms Fang and explained to her that "an issue has come up that we have not thought of before". Ms Sun said that the vendor of the restaurant, Mr Kim, had paid the deposit for the bank guarantee for the lease but "now he wants it back", so the new owners would have to pay the same amount to the bank. This is the kind of issue that might be expected to have been dealt with in a formal legal agreement for the sale of the business. But no such agreement had been made. Ms Sun continued her explanation to Ms Fang, "we do not have the money now, we have spent a lot of money buying and running the business" and for "maintenance and repairs". She concluded with a statement "we are hoping you could pay the $70,000. If you don't pay, then the building will ask us to close up and leave". I accept that Ms Fang, as she said, felt that she "had no choice" but to pay. She paid the $70,000 on 4 May 2010. 72Although Ms Sun had promised a monthly dividend to Ms Fang, the dividend did not come through on a regular basis. Only one dividend had been paid. Ms Fang does not seem to have queried early why regular divided money was not coming through. Now Ms Fang was receiving requests for money. 73(b) $30,000 in October 2010. Ms Fang says, and I accept, that Ms Sun telephoned her in October 2010 and explained that "my mother in law has not run the business properly and we are owing a lot of money to our suppliers". She went on to say that one of those suppliers, "Hong Australia, who we owe $30,000 to, is about to sue us in Court". Ms Sun concluded with the request "you have to give me $30,000, otherwise the business will be sued in Court and we will lose the restaurant". 74Because Ms Fang had by then already invested $520,000 in the restaurant ($450,000 for the purchase investment plus the $70,000 for the bank guarantee) I accept that she felt she could not walk away from the business and allow it to be wound up by a supplier for $30,000. So she gathered together some funds and transferred the $30,000 to Ms Sun the same month. 75But Ms Fang was starting to become puzzled. She had been paid a dividend. And at the same time money was being demanded for the business. I accept her evidence that she said to Ms Sun at some stage in 2010 "if the company needs money so badly, why did you pay [a] dividend to me?" To which Ms Sun responded, "my mother in law said that she wanted to keep her agreement with you". This seemed to satisfy Ms Fang in the medium term. 76Ms Fang recalls that another tranche of Australian currency equivalent to US$50,000 was transferred in about November 2010. But Ms Fang was unable to provide any documentary evidence to support this payment. It is unclear from the course of final submissions whether this amount is admitted or not. I will reserve for further consideration the issue of the proof of this advance.

Ms Sun and Mr Park Take Over the Business - late 2010 77By the end of 2010 disagreements had arisen between Ms Sun and Mrs Park about the restaurant. Ms Sun reported to Ms Fang in November 2010 that she and her husband, Mr Park, "have now taken over the restaurant...my mother in law has left the business and has given her share to [Mr Park] and me". 78Upon Ms Fang enquiring why this had happened Ms Sun explained that Mrs Park was not closely attending to the management of the restaurant and then candidly admitted to her aunt "sometimes she does gambling". Ms Sun professed to Ms Fang a sense of responsibility for the restaurant, saying "I feel that I have to be responsible for your investment, so I decided to take over with [Mr Park]". Ms Sun then said to Ms Fang, "Mrs Park also feels she has done the wrong thing so she has given up her $300,000 investment". Ms Sun assured Ms Fang that the restaurant would operate "as usual without Mrs Park".

Ms Fang Visits Sydney - April 2011 79Ms Fang and her family were granted a 163 visa in February 2011. In April that year she visited Sydney. But during that visit Ms Fang did not take the opportunity to look at the books of the business. This is odd. Ms Fang had received rolling bad news from Ms Sun about the business: dividends were not arriving as promised, further capital was required, and Mrs Park had already proved herself to be a management problem. In a non-family business environment Ms Fang might have been expected to ask during this April 2011 visit for the business' books of account. 80But Ms Fang did not do so. I infer that Ms Fang wanted to give Ms Sun some space to see if the restaurant could be turned around. Ms Fang is an astute businesswoman. She did not wish to appear to be interfering with Ms Sun's management of her Australian investment. I infer she hoped Ms Sun could turn the business around, so there would not be any future problems. And at a deeper level she probably did not want to find any more problems with the business until she was securely in Australia with her permanent residency. 81Nor did Ms Sun want Ms Fang to look at the business too closely on this trip. The question arises why Ms Sun and Mr Park were running the business at all at this time. Mr Pesman SC submitted with some force that Ms Sun's decision to take over the restaurant operations, including borrowing more than $100,000 from her parents to assist doing so, was to prevent the restaurant failing, with the inevitable consequence that Ms Fang would investigate how it had been funded in the first place. With one variation, I accept this theory. Ms Sun's motivation was not entirely negative: she did want to make the restaurant a success and deliver to Ms Fang what she had been promised - a successful Australian restaurant business. A side benefit of success in this direction was that Ms Fang might never find out that she had wholly funded the purchase of this business for $450,000. 82From then on Ms Sun reported to Ms Fang about her conduct of the business. Indeed Mrs Park never seems to have reported directly herself to Ms Fang, even when she was in charge: all Mrs Park's reports were through Ms Sun. But by the end of 2011 Ms Sun was asking Ms Fang for more money. She said that further funds were needed for renovations to the building. Ms Sun explained to Ms Fang that the restaurant lease required the lessee to undertake renovations which the business had expected to fund out of the profits of the business. But as the business was not profitable and the renovations were still required, Ms Sun said further funds were now needed from Ms Fang.

Ms Fang Makes Further Payments - January to May 2012 83Ms Fang made two further payments before coming to Australia. In March 2012 when Ms Fang was buying a property in Sydney she transferred additional funds to Ms Sun for the restaurant renovations and to pay in advance for Ms Fang's living expenses when she arrived in Sydney. 84(c) $46,850 in March/May 2012. Ms Fang visited Sydney in March 2012. Ms Sun explained to her then that "the restaurant's renovation needs $150,000". But Ms Fang's retail business in Beijing was not doing well at that time. So Ms Fang said to Ms Sun, "can you please see if your mother-in-law [Mrs Park] can pay for her portion of the renovations". Ms Sun replied "my mother in law does not have any money" and she suggested that Ms Sun's mother (Ms Fang's friend) might perhaps be able to lend the money to Mr Park. But Ms Sun still asked for the $50,000, which Ms Fang volunteered to "try and get". As it turned out she was able to transfer almost $50,000, the sum of $46,850, to Australia in early May 2012. 85And other small amounts of the plaintiff's funds (of $20,000 and $10,000) were applied on account of the debts of this venture in June and September 2012. The Statement of Claim sets out the running balance as follows, which the Court finds as established but for the November 2010 amount of $50,000, on which the Court invites further submissions. Date Amount Running Balance Transferee Account 23 October 2009 $57,500 $57,500 Ms Sun's Account 23 October 2009 $42,500 $100,000 Ms Sun's Account 27 October 2009 $57,500 $157,500 Ms Sun's Account 28 October 2009 $42,000 $200,000 The Joint Account 18 December 2009 $53,500 $253,500 The Joint Account 18 December 2009 $46,500 $300,000 The Joint Account 28 January 2010 $50,000 $250,000 The Joint Account 28 January 2010 $100,500 $450,000 The Joint Account 4 May 2010 $5,923.29 $455,923 The Joint Account 4 May 2010 $11,076.71 $467,000 The Joint Account 4 May 2010 $53,000 $520,000 The Joint Account 28 October 2010 $19,700 $539,700 The Joint Account 1 November 2010 $10,300 $550,000 The Joint Account Circa November 2010 Approx. $50,000 $600,000 The Joint Account Early May 2012 $46,850 $646,860 The Joint Account Applied in May 2012 Approx. $28,000 $674,850 Ms Sun's Account June 2012 $20,000 $694.850 Cash payment to Ms Sun's Account September 2012 $10,000 $704,850 Credit card payment to the Company Account Total $704,850 - -

Ms Fang Migrates to Australia - June 2012 86Ms Fang finally moved to Sydney in June 2012. On her arrival she became suspicious about the true purchase price of the restaurant. She asked Mrs Park for a copy of the restaurant purchase contract but Mrs Park did not have one. Ms Fang needed evidence of her Australian business investment to progress her visa application. Ms Fang began to ask Mrs Park about the purchase price and Mrs Park kept asserting that it was $750,000. But this did not satisfy Ms Fang. Ms Sun gives an account, which I accept, of Ms Fang having "strong doubts about the selling price" and that because Mrs Park "couldn't answer my aunty's questions", the "relationship like cut down a little bit, went down". By August 2012 there was clearly tension between Ms Fang and Mrs Park about whether Ms Fang had been told the truth. 87Ms Sun says that as a result of Ms Fang's questions, she too began to doubt that her mother-in-law Mrs Park had purchased the restaurant for $750,000. Ms Sun says that she also started asking her mother in law questions and asking her "to tell me the truth" about the price at which she had actually purchased the restaurant. According to Ms Sun, her mother-in-law could not satisfy her either. For the reasons already given I do not accept this evidence. Ms Sun was already aware that her mother-in-law had deceived her and she in turn had co-operated in Mrs Park's scheme and deceived Ms Fang. 88It was in this context that Ms Sun says that a meeting was arranged with Mr Kim, so she could explore with Mr Kim the true purchase price of the restaurant. This was an important moment in assessing Ms Sun's credibility: if she could show that she was genuinely enquiring about the true purchase price of the restaurant from Mr Kim in September 2012, it would bolster her story that she did not know of the $450,000 purchase price before then. But I accept Mr Kim's account of this September 2012 meeting, which is not at all consistent with Ms Sun then first discovering the true purchase price. The September 2012 Meeting with Mr Kim 89Mrs Park and Ms Sun requested a meeting with Mr Kim in September 2012. Ms Sun says, and I accept that the meeting took place at the Regis Hotel in Liverpool Street, Sydney. The only persons present were Mrs Park Ms Sun and Mr Kim. 90Ms Fang did not attend; just why is unclear. A preliminary puzzle about this meeting is why Ms Sun did not insist that Ms Fang be there. If Ms Sun's story is to be accepted, she was an innocent party just like Ms Fang, equally deceived by Mrs Park. There seems no good reason why Ms Sun, who claims to have then had a clear conscience, would not want Ms Fang to discover the truth from Mr Kim at the same time as she did. 91If Ms Sun really planned to use this meeting for the genuine purpose of discovering what the purchase price of the business was, it is to be expected that early in the meeting she would have enquired about that very subject. She says she did. She says that she asked Mr Kim, "How much did you sell? I just want to know the truth?". 92Mr Kim gives a very different account of this meeting, one that I accept. He has no recollection that Ms Sun inquired about the purchase price. He says that Ms Sun explained that Ms Fang was now in Australia and "she wants to see the contract for sale of business. We really need your help." To this Mr Kim responded quite correctly, "There was no contract. You just have to show her the record of payment." He was a little intrigued by their enquiry and said, "Why do you need my help?". 93And then Ms Sun confessed involvement in the deception to Ms Fang. She said to Mr Kim, "We told my aunty that the purchase price was $750,000, when it was just $450,000." To this, he colourfully replied, "Why have you done that? You are both fucked." This exchange appears to have been an indirect invitation to Mr Kim to help out Mrs Park and Ms Sun in their self-made predicament. But he wanted nothing to do with this any more and was angry that he had become even associated with this deception. 94His recollection was unmistakable: that Ms Sun was aware that the purchase price was $450,000 and that she and Mrs Park had jointly misled ("we told") Ms Fang; and, that Ms Sun did not ask whether the purchase price was $450,000 or $750,000. 95Many aspects of his account ring true. Mr Kim does not recall any argument at the meeting between Ms Sun and Mrs Park, such as might take place if Ms Sun had just had confirmed to her that the purchase price was only $450,000. Nor does he recall either of them seeking to contradict him and claim that the purchase price had actually been $750,000. 96If either Ms Sun or Mrs Park had any belief that the receipt Exhibit B was genuine, they could then have used it to support putting a contention to Mr Kim that the purchase price was really $750,000. But neither they nor Mr Kim say that they attempted to use it in this way. I infer that neither Mrs Park nor Ms Sun held any belief at that time that Exhibit B was genuine. 97Ms Sun did acknowledge to Mr Kim her involvement in the deception of her aunt at the September 2012 meeting. And her acknowledgement was truthful on this occasion. Analysis of the Issues

The Parties Reduce the Pleaded Issues 98These proceedings were conducted efficiently. The issues contracted as a result. The pleaded issues included whether the following representations were made to the plaintiff (Statement of Claim [65]): (a) the Korean restaurant was available for sale at the price of $750,000. (b) the Korean restaurant had a market value in excess of $750,000. (c) if the plaintiff provided $450,000, then Mrs Park would provide $300,000 in order to make up the purchase price. (d) Mrs Park was very experienced when it came to the restaurant business and managing restaurants. (e) Mrs Park and the plaintiff would own the Korean restaurant together as partners. (f) Mrs Park would operate the restaurant while the plaintiff remained in China and would do so to a standard to be expected of an experienced and competent restaurant manager. (g) Mrs Park and Xiaodan had inspected the restaurant on a daily basis in the last couple of weeks themselves. (h) The business and custom of the restaurant was good. (i) The Korean restaurant was a profitable one. (j) The Korean restaurant would turn a profit within the first month of operation. (k) Mrs Park estimated that the profits each month would be $10,000 per month and that the plaintiff's share would definitely be at least $30,000 per month. (l) If, upon the plaintiff arriving in Australia, the plaintiff did not wish to carry on the business of the Korean restaurant, then Mrs Park would be prepared to buy out the plaintiff's share. 99But in final submissions the parties' submissions reduced to deal with the issues pleaded in Statement of Claim at [65] (a) and (c), relating to the amount of the restaurant purchase price and Mrs Park's contribution of $300,000 to that purchase price. As a result, these reasons are confined to those issues. 100Ms Fang pursued two actions in these proceedings: one under the FTA s 41, and the other for breach of fiduciary duty. The analysis that follows deals with each of these two actions in turn.

The FTA Claim 101The FTA applies here. Ms Sun's conduct was all "in trade and commerce" within FTA s 4. It related to the acquisition of an interest in a business to satisfy a business investment visa. Although Ms Sun and Ms Fang were as close as family in 2009, that does not negative the business character of the transaction. All the parties to the transaction in which Ms Sun was involved, Mr Kim, Mrs Park and Ms Fang, were attempting to do a genuine business deal for the sale and purchase of an interest in the Zozo Korean Restaurant. 102These proceedings initially raised the question of the extent to which a person, not the author of information, but who is passing it on, may nevertheless be found to contravene either the Trade Practices Act, s 52 or the Fair Trading Act, s 42. The principles on this question are well established. The fact that a person representing information is not the author of the information may be of no consequence when questions of contravention of these statutory provisions are determined, unless the person in question makes clear that he or she is merely passing on information and not vouching for its accuracy: Grecko v Bendigo Machinery Pty Limited (1985) 8 VPR 40/521 and Trade Practices Commission v JNR Enterprises Pty Limited (1991) 99 ALR 325. The High Court considered this question in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60, ("Butcher"), emphasising the well established principle (at [39] and [40]) that the Court must look at the whole of the defendant's conduct that is said to be misleading and deceptive. 103But in the end this question was not in issue, because Ms Fang conceded that Ms Sun was speaking only on behalf of Mrs Park. The parties therefore fought out the case on the basis that if Ms Fang could establish that Ms Sun knew the correct purchase price and therefore Mrs Park's lack of contribution to it, then her conduct was misleading and deceptive. As a result of the Court's findings it should be determined that her conduct was misleading and deceptive. 104On behalf of Ms Sun, Mr McGrath SC also raised issues whether Ms Fang relied on Ms Sun's conduct and whether she suffered any loss or damage. But for the following reasons none of these issues assist Ms Sun. 105Ms Fang relied on what Ms Sun said to her. First, Mr McGrath SC sought to expound Ms Sun's lack of experience in restaurants compared to that of Mrs Park. He also pointed to her career history as a shop assistant, compared with Ms Fang's greater sophistication as a business owner in Beijing. Forceful though Mr McGrath SC's submissions were, these are not the only relevant characteristics of these parties. Ms Sun and Mrs Park were in Australia speaking about Australian life, Australian people, and Australian business to Ms Fang, who then knew little of Australia and who was looking to them for guidance. And Ms Fang's evidence about the conversations, which I accept, shows that Ms Sun offered guidance about the relative merits of different kinds of investments in an Australian context in a way that did not differentiate her own opinions from those of Mrs Park. Whatever Ms Fang's sophistication may have been in Beijing, she was dependent upon local Australian expertise in this particular transaction. Whatever Ms Sun's business inexperience might have been, her capacity as an observer of business here in Australia was a valuable source of information inherently likely to be relied upon by Ms Fang in Beijing. I find Ms Fang did rely upon it. 106And Ms Sun spoke in evaluative terms to Ms Fang, saying to her "the restaurant's position and price is very good" and "it is located in the centre of Sydney city and the price is only $750,000. The price is only $750,000 because Mr Kim and my mother-in-law are friends". And again Ms Sun's statements such as "Aunty Fang if you want to buy a business you should not buy small businesses for $200,000, because it is very difficult to make a profit from such a small business. If you operate a larger business you will make profits". These statements make judgments about the quality of Zozo Korean Restaurant, and imply that Ms Fang could rely on Ms Sun's capacity to make such judgments, whatever her career experience. 107The character of this transaction also assists the inference of reliance in the plaintiff's favour. Ms Fang wanted permanent residency in Australia. She needed to invest in a business to achieve that objective. She had few other people in Australia that she knew she could trust to assist her with a secure investment in this country. I infer from Ms Fang's oral evidence and from the fact that she did migrate to Australia in June 2012 that in 2009 she was very keen to resettle in this country. She had a present desire to make an investment such as this one to facilitate her path to Australia. Because of her desire to resettle and her trust in the people she was dealing with, she was more naturally credulous of what she was told than she would have been in a business environment in Beijing. This was not a transaction she could just "take or leave" as she might in Beijing. Because it was a stepping-stone to a new life in Australia this was a transaction with natural momentum for her. 108Ms Sun offered no clear disclaimers. I accept Ms Fang's version of these conversations rather than Ms Sun's. On Ms Fang's version Ms Sun seamlessly moves between her own opinions about Zozo Korean Restaurant and Mrs Park's ideas, without seeking to qualify the extent of the commitment that Ms Sun was making in her opinions or as to the facts implicit in what she was saying. Ms Sun's statements were calculated to produce the effect and had the effect that Ms Fang should accept them as reliable. And in my judgment she did. Ms Fang would not have entered into this transaction in the absence of Ms Sun's assurances and other conduct. 109Mr McGrath SC also sought to challenge Ms Fang's claim that she had suffered loss. But Mr Pesman SC effectively answered this contention. This is a "no contract" case. Ms Fang paid away money that she would not have paid away but for the representations made to her. None of that money has been returned. There is no evidence that any valuable assets survived the collapse of the business. No assets have been realised for Ms Fang's benefit. It was common ground that the restaurant had ceased trading. All the money Ms Fang paid over to Ms Sun went to third parties such as Mr Kim, or to creditors, or for renovations, none of which were likely to result in any realisable value after the business ceased trading. All the monies Ms Fang paid over have been lost.

The Fiduciary Duty Claim 110Ms Fang also alleges that Ms Sun was her fiduciary and that Ms Sun breached her fiduciary duty to Ms Fang. The source of the fiduciary duty is said to be Ms Sun's statements to Ms Fang on the telephone that she would look after Ms Fang's interests. The Court finds that in the September conversations Ms Sun did say to Ms Fang that she would act as Ms Fang's "representative" in relation to Ms Fang's investment in Australia. Ms Sun denied that this statement was made. But Ms Fang's distance from the proposed investment makes such a statement very likely, especially in the context of personal trust that the Court has found Ms Fang actually placed in Ms Sun and Ms Fang's then lack of knowledge of Ms Sun's mother-in-law, Mrs Park. She needed someone to protect her interests in Australia. Ms Sun knew that and gave her the assurance that Ms Fang has described. 111But were it necessary, even without Ms Sun's words of assurance that she would act as Ms Fang's "representative", the Court would draw the same inference from the objective circumstances. Ms Fang only knew the detail of her proposed investment through Ms Sun. All Ms Fang's investment was paid to Ms Sun as her minister to bring it into effect. All reports as to the progress of the investment were to come back through Ms Sun. The nature of the investment was such that its value could not be verified on public exchanges. And Ms Fang's high degree of trust in Ms Sun in the execution of her functions is evidenced in her failure in 2009 to insist on documentary proof that her instructions had been carried out. Ms Sun speaks of "paperwork" being sent to China for the transaction but none is evident, apart from the receipts. 112Ms Sun assured Ms Fang that she would act in her interests. To apply the words of the High Court in context, she undertook or agreed "to act for on behalf of or in the interests of [Ms Fang] in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense": Hospital Products Limited v US Surgical Corporation (1984) 156 CLR 41 (Hospital Products) at 96-7 per Mason J. 113What is the scope of Ms Sun's fiduciary duty? Ms Sun's relevant Hospital Products power or discretion is akin to that of an agent managing the money of his/her principal. One duty of such an agent is only to use money entrusted by the principal within the scope of the agency and to apply the monies so received for purposes that the principal has authorised and not to make any profit at her principal's expense. Equity imposes an obligation on an agent not to profit from his/her position: Meagher, Gummow and Lehane, Equity - Doctrines and Remedies, 4th Edition, 2002, at [5-195]. Ms Sun's duty was to administer the monies she had received from Ms Fang only for the purposes that Ms Fang had authorised. Ms Sun was not entitled to profit from any misapplication of funds beyond that purpose by, for example, applying the monies to fund an acquisition that would in substance gift to her mother-in-law a substantial interest in the Zozo Korean Restaurant without her mother-in-law making any financial outlay for that interest. Ms Sun was delivering a profit to Mrs Park of an almost 50 per cent interest in the Zozoen Korean Restaurant at Ms Fang's expense. 114Ms Sun breached that duty. It follows from the Court's earlier findings that Ms Sun knew Ms Fang had remitted the funds to her, to apply in her role as Ms Fang's fiduciary, only for the jointly-funded purchase with Mrs Park of the Zozo Korean Restaurant for a purchase price of $750,000. But she applied the funds without Ms Fang's knowledge for quite different purposes: (1) for a restaurant acquisition for only $450,000; and (2) for a non-jointly funded acquisition. In so contravening Ms Fang's authority to her, Ms Sun breached her fiduciary duty. 115What are the acts in breach? Ms Sun breached her fiduciary duty with each one of the payments detailed earlier in these reasons that Ms Sun either made or permitted to be made out of the several bank accounts and into which she had caused funds to be received from Ms Fang. The breach covers Ms Fang's first payments between November 2009 and January 2010 to meet the $450,000 purchase price. But it also extends to the application of the later monies paid to maintain the business, for the bank guarantee, for the supplier, for the restaurant renovations, and even for the other debts. Ms Fang would not have advanced any of these monies had she been aware that the original investment was not as she had understood. 116Ms Sun disputes that she had full control of the accounts other than the ones in her name. But I do not accept that she did not have a right of veto over the use of account funds. And in any event it was not consistent with her duty to pay the funds into accounts over which her control was limited. 117Ms Sun is liable to reimburse Ms Fang for the funds she disbursed in breach of fiduciary duty. Where a breach of fiduciary duty cause loss to his/her principal it is well established that compensation is available in equity's exclusive jurisdiction to make good the loss: Nocton v Lord Ashburton [1914] AC 932 and Catt v Marac Australia Limited (1987) 9 NSWLR 639. Considerations of causation, forseeability and remoteness do not readily enter into the matter: Re Dawson (Deceased) [1966] NSWLR 211. The issues of proof of loss and discounting any residual value in Zozo Korean Restaurant that Ms Sun fielded against the plaintiff's FTA action are not engaged in Ms Fang's action for breach of fiduciary duty. Ms Sun has not accounted to Ms Fang for the monies she misapplied. 118Ms Sun knew the limits of her authority from Ms Fang. She knew she was in breach of those limits when she applied the funds to this purchase. And she was aware when Ms Fang remitted the subsequent funds to her at her request that Ms Fang was only continuing to send her money upon the supposition that the original purchase of the restaurant had proceeded in accordance with Ms Fang's original instructions. Ms Sun's breaches were all dishonest breaches of fiduciary duty. 119Where a trustee or fiduciary has misapplied funds or dealt improperly with them special rules may apply at the beneficiary's option to the calculation of interest due on the misapplied funds. The Court may award a mercantile rate of interest referable to the official bank rate or minimum lending rate in operation from time to time: Wallersteiner v Moir (No 2) [1975] QB 373 and Hagan v Waterhouse (1991) 34 NSWLR 308, at 391-393. Whether any higher rate of interest applies and if it does whether it would cover the whole of the moneys claimed, or only the benefit received by Mrs Park are not matters that the parties have yet assessed in submissions. 120These interest-related considerations may lead to debate between the parties about the calculation of any interest due to Ms Fang as a result of these reasons. Before the entry of final judgment the Court will allow an opportunity to the parties to put submissions on this issue.

Conclusions and Orders 121The Court has found that Ms Sun represented in September 2009 to her aunt Ms Fang that she could jointly fund the acquisition of the Zozo Korean Restaurant with Ms Sun's mother-in-law Mrs Park for a total purchase price of $750,000. The Court has also found that Ms Sun was aware that the restaurant was purchased for $450,000, not $750,000, and that the purchase was fully funded by Ms Fang alone, and not by joint funding with Mrs Park. The Court has found that Ms Fang relied upon Ms Sun's representations and would not have entered into the transaction had she known the true situation and has lost her whole investment as a result. The Court has found that Ms Sun's conduct was dishonest. 122The Court has also found that Ms Sun was Ms Fang's fiduciary with respect to the administration of all the funds Ms Fang remitted to her from China. Ms Sun was in breach of fiduciary duty by misapplying the funds to transactions not authorised by Ms Fang. Ms Sun is now liable to account to Ms Fang for the full amount of Ms Fang's advances that she misapplied. Of the $704,850 claimed the Court has found all but an advance of $50,000 in November 2010 established, and has reserved that alleged $50,000 advance for further consideration. The parties can address any other calculation issue at the same time. But there will now be a judgment for $654,850 for the plaintiff. 123Questions of the calculation of an appropriate rate of interest may arise in this case. Authorities suggest that where a court has found a dishonest breach of fiduciary duty that interest may be claimed on a mercantile basis against the delinquent fiduciary. That principle may apply here and so may involve further submissions from the parties about the extent of overlap between the Fair Trading Act and fiduciary duty remedies. I will therefore give directions for the parties to put on any submissions in relation to interest. 124Ordinarily costs would follow the event. But one or other party may seek a special costs order. The Court will allow an opportunity for any submissions in relation to costs. 125The Court will therefore make the following orders: (1)Judgment for the plaintiff against the first defendant in the sum of $654,850 exclusive of interest. (2)Reserve for further consideration the questions of the plaintiffs' alleged $50,000 advance in November 2010, of what interest is payable by the first defendant to the plaintiff on the judgment sum in order (1), and of costs. (3)List the proceedings for further argument on any remaining issues of interest and costs at 9.30am on 7 August 2014. (4)Direct the parties to exchange written submissions on the issues of interest and costs by 4.00pm on 5 August 2014. (5)Grant liberty to apply in respect of the implementation of these orders and in respect of the matters reserved for further consideration. (6) Stay the operation of the judgment in (1) until the Court determines all other issues reserved for further consideration.

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: 10 June 2014

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