Liu v Lam

Background as to the Parties

1. The plaintiff is a Chinese citizen who lives in Beijing. As earlier mentioned, he speaks Mandarin but not English. The defendant is an Australian citizen who primarily lives in Sydney. However, it is appropriate to mention additional parts of his background.
2. The defendant was born in Hainan, which is an island in the south of China, on 26 June 1970. His native language was Hainanese, which is spoken in the Hainan province of China.
3. In 1979, the defendant's family left Hainan for Macau. While in Macau the defendant learned and started to speak Cantonese. He also learned to speak Mandarin at that time. Cantonese became his primary language.
4. He finished High School in Macau. However, in 1991 the defendant came to Australia to complete the Higher School Certificate. He then studied at Macquarie University from 1993.
5. In 1997, the defendant travelled to Hong Kong to pursue work in the financial services area. While in Hong Kong the defendant was employed as a financial advisor which also dealt with share broking.
6. In 2001, the defendant returned to Australia and ultimately became engaged in a cleaning business.
7. In 2008, the defendant returned to Hong Kong to set up a share broking firm. He kept that share broking business until 2011.
8. Between 2008 and August 2020, the defendant travelled for substantial periods of the year overseas on business to various countries including Hong Kong, Macau, China and Singapore.
9. The plaintiff and the defendant first met by no later than October 2011.
10. From time-to-time, between when they met until at least August 2015, the plaintiff and the defendant discussed and introduced each other to business opportunities, primarily related to the buying and selling of commodities.
11. In or about 2012, the plaintiff introduced the defendant to Zhang Xi Long ("Mr Zhang") of, or who had a relationship with, Tianhe.
12. Throughout 2013, the plaintiff and the defendant discussed potential future collaboration by which they would introduce business opportunities to each other under which they could each earn commission. The evidence does not suggest at this juncture that they had agreed to equally share all profits and liabilities.
13. In May 2013, the plaintiff and the defendant travelled together to Hong Kong and met with several parties interested in acquiring natural gas, oil and coal and investing in waste disposal, but none of these projects eventuated.
14. In 2014, Tianhe was listed on the Hong Kong Stock Exchange with a market capitalisation of HK 30 billion.

The CAN deal and the Jiayi Loan Agreement

1. As earlier mentioned, from March 2014, the defendant became involved in possible funding for CAN.
2. The defendant's evidence as to the background to these transactions was in, summary, as follows: 1. in the beginning of 2014, the defendant met Mr Lai from CAN having been introduced by two of his business associates, Albert Wong ("Albert") and Gami Chiu ("Gami"); 2. the defendant visited CAN's offices in Hong Kong and was impressed with their 'One-Plug technology', being a technology relating to industrial pipes; 3. CAN told the defendant that it needed EUR 10 million to buy land for a larger factory and as, a second stage, EUR 40 million to build a production facility; and 4. in exchange for the defendant assisting with obtaining finance, Mr Lai would give the defendant a 10% share in the business. This involved the entry into a joint venture agreement ("JVA"), under which Millennium (being a company incorporated and registered in Hong Kong of which the defendant was a shareholder and sole director), being given 10% of the shares in a CAN entity. The plaintiff was not a party to the JVA and it did not confer any benefit on him. Nor did the plaintiff hold any shares in Millennium.
3. Accordingly, the defendant needed to raise money in relation to the CAN deal (being EUR 10 million). Albert and Gami suggested the defendant contact BS Tech. The defendant was told by Albert and Gami that: 1. BS Tech may be able to source funds for a fee of 4% of the face value of the instrument to introduce a bank lender to provide a facility in the amount of EUR 10 million (being a fee of EUR 400,000); and 2. "Jiaso", a Malaysian industrial company, would provide assets as security to BS Tech, although it is unclear why BS Tech would need security given its role was to introduce a lender which would advance the funds, and would charge EUR 190,000 or 1.9% of face value.
4. Ultimately, the funds required by BS Tech and Jiaso were borrowed from Jiayi.
5. In April 2014, the defendant told the plaintiff about the potential CAN deal in Beijing. It was the defendant's evidence that during their conversation it was agreed there would be a sharing of profits and losses between the plaintiff and the defendant which was denied by the plaintiff and remains a considerable controversy in the proceeding.
6. In his first affidavit, the defendant gave his account of the conversations that occurred between himself and the plaintiff in Beijing in this respect, which incorporated the following: 1. the plaintiff offered to assist with finding a lender for the CAN deal (being Jiayi) and allegedly stated "let's work together and share equally on this deal"; and 2. the defendant said, "The way to share the 10% is for you to become a half owner of Millennium" to which the plaintiff allegedly replied "[m]y 50% share in Millennium should be held by Huge Fairway Trading Ltd", (Huge Fairway Trading Ltd was a company owned by a third party to the proceedings), Ms Linjiao Meng ("Ms Meng").

Tianhe

1. The plaintiff and the defendant visited the offices of Tianhe in March or April 2015, although there was a dispute as to the purpose of the visit, namely, whether, on the plaintiff's account, it was to "market the CAN pipeline technology and other projects to Tianhe" or on the defendant's account to discuss a possibility of a relationship between Tianhe and BNP Paribas. In any event, on the defendant's account no such relationship eventuated.
2. Between March and June 2015, the plaintiff said to the defendant in Beijing that: 1. Tianhe had been suspended from the Hong Kong Stock Exchange (Tianhe was suspended on 16 March 2015 because its auditors refused to sign off on its accounts); 2. he was working on the removal of that suspension; 3. Tianhe needed to find a new auditor because its current auditor, Deloitte, would not sign off on its accounts; and 4. the defendant knew a lot of professional people in Hong Kong and could introduce them to Tianhe to help Tianhe resume trading.
3. In about June 2015, the plaintiff said to the defendant, in Beijing, words to the following effect (translated into English): "We have an opportunity in Hong Kong to do some work together. Mr Zhang is now the Vice General Manager of Tianhe. As you know, I know Mr Zhang very well. The Tianhe company, HK1619, has been suspended from the Hong Kong stock exchange. I am working on the removal of that suspension. Tianhe has a problem because its auditor, Deloitte will not sign Tianhe's audit certificate and will not resign. We need to find professions, lawyers, forensic accountants, auditors to help Tianhe and to resume trading. You know a lot of professional people in Hong Kong and we need you to introduce these people to Tianhe. Can you help find a new auditor so that we can move to the next step."
4. In about June 2015, the defendant introduced the plaintiff to Mr Cheng, an accountant, with a view to Mr Cheng assisting Tianhe. In July to August 2015, Mr Zhang (on behalf of Tianhe) agreed with the plaintiff, the defendant, and Mr Cheng to pay them an amount to provide services to Tianhe to enable it to re-list on the Hong Kong Stock Exchange by the appointment of an auditor. The agreed amount is disputed.

What was agreed to be paid by Tianhe

1. It was common ground that the Tianhe monies would be channelled through the plaintiff. He had bank account in China and agreed to receive the payment from Tianhe and distribute the defendant's and Mr Cheng's respective shares to them in Hong Kong dollars.
2. The plaintiff stated that the amount agreed to be paid was RMB 5,000,000 in total. The defendant stated the amount is RMB 5,000,000 for "each" of the three. The plaintiff's account of the exchange with Mr Zhang was as follows: "I refer to the conversation which is alleged at paragraph 114 of the First Lam Affidavit. During the meeting, I recall Mr Zhang saying words to the following effect: "l will pay you 5 million for your work in progressing the reorganisation of arrangements to allow Tianhe to be relisted. That will be paid once Deloitte has resigned and Zhonghui has taken over as auditor." (RMB 15 million)"
3. The defendant's evidence was that Mr Zhang offered to pay the plaintiff, the defendant and Mr Cheng, RMB 5 million each which would be paid "once Deloitte has resigned and Zhonghui has taken over as auditor" and give them (collectively) 1% of the shares issued in Tianhe once it is relisted.
4. On 11 September 2015, the defendant received, and forwarded to the plaintiff, a draft agreement from Zenith Group Holdings Limited ("Zenith"), Mr Cheng's accountant firm, which referred to Zenith's fee being equivalent to RMB 15,000,000. The agreement was not entered. The contemplated payment terms were staggered as follows: 1. HKD 9,150,000 to be paid at the time of signing the agreement/ commencement of the work; and 2. HKD 9,150,000 to be paid on the date of resumption of trading in Tianhe shares (which never occurred).
5. In those circumstances, it would appear Mr Cheng's understanding was inconsistent with both the plaintiff and the defendant's understanding, given he seems to have prepared a draft engagement letter (which was not entered into) which refers to a payment to him of the equivalent of RMB 15 million. The draft agreement also referred to the payment they made in two tranches, the second upon Tianhe's resumption of trading on the Hong Kong stock exchange. That never occurred and as such there must be real doubt, even if a payment of RMB 15 million had been contemplated (which the plaintiff denied), that such a payment would have been made by Tianhe.

Events leading to the Lower Court Proceedings

1. From around May 2015, Jiayi began to make demands that the defendant repay the Loan Amount under the Jiayi Loan Agreement. In the first defendant's affidavit, he claimed that two representatives of Jiayi had locked him in a hotel room for a day, demanded repayment of the monies owed and upon him leaving the hotel room, around midnight, a number of "Jiayi enforcers" had seized his possessions including his passports. The defendant claimed that he told the plaintiff of these circumstances and asked him to pick him up at the hotel.
2. The plaintiff's account of the circumstances was as follows: "63. I refer to paragraph 131 of the First Lam Affidavit. I recall receiving a telephone call from Mr Lam on 20 May 2015 at approximately 10:00pm. Mr Lam and I had a conversation in words to the following effect: Mr Lam said: I last [sic] my passport in Tianjin and it's too late to get a replacement from the embassy. Can you book me a hotel room at the King ParkView Hotel using your lD card? I said: OK, I will meet you there. 64. Following the telephone conversation with Mr Lam I travelled to the King ParkView Hotel and met Mr Lam in the lobby. When I arrived, Mr Lam said: "l lost my passport but the embassy will issue me with a new one tomorrow.""
3. It is ultimately unnecessary to resolve whether the defendant's account of "Jiayi enforcers" notwithstanding its rather unusual aspects. It is sufficient to note at this junction that, consistent with the plaintiff's account, the defendant did make an application to the Australian embassy to have a 'lost' passport replaced. The circumstances of that application, when taken with the defendant's account of "Jiayi enforcers", adversely reflects on the defendant's credibility (which I will discuss below).
4. In the General Declaration by Passport Applicant ("the Declaration") given to the Department of Foreign Affairs and Trade ("the Department") signed by the defendant on 21 May 2015 in support of an application for an emergency passport ("the Passport Application") the defendant declared that he had "a very drunk night" in Beijing and that he "probably left [his document] bag somewhere". At the time he provided that declaration, the defendant must have known it to be false.
5. Again, senior counsel made a submission seeking to explain the defendant's actions in this respect to meet challenges as to the defendant's credibility as a witness. That submission was as follows: "As for the declarations Mr Lam signed in connection with applying for a new passport in China, Mr Lam's evidence that he did not reveal the true position because he did not want the Chinese police investigating Jiayi for detaining him, thereby jeopardising Mr Liu's relationship with Jiayi, is cogent, makes sense in its context, and is consistent with the other evidence of Mr Lam taking steps to help Mr Liu or preserve his interests. Mr Lam had no reason, other than to protect Mr Liu's relationship with Jiayi for avoiding the disclosure that his passport had been forcibly taken from him by Jiayi enforcers, as opposed to simply lost. Accordingly, the fact these declarations were filled out does not infect Mr Lam's general credibility so as to cast doubt on all of his evidence, as Mr Lam anticipates Mr Liu will submit."

Immediate Steps leading to the Lower Court Proceedings

1. On 13 July 2016, Jiayi commenced proceedings against the plaintiff in the Lower Court Proceedings.
2. The plaintiff had identified four bases for defending the Lower Court Proceedings in his first affidavit as follows: "I believed that Hong Kong Jiayi could not sue me as guarantor before first enforcing its security over the defendant's property in Australia. I believed that liability under the guarantee could not exceed the amount of the principal owed by the defendant under the Loan Agreement. I believed that the term of the guarantee had expired prior to the claim made against me by Hong Kong Jiayi. I believed that the amount claimed by Hong Kong Jiayi was too large and that it exceeded the prescribed standard annual interest rate of 24%."
3. The plaintiff engaged the law firm, AMO Law Office and was represented by a partner of that firm Mr Weining Yuan. Mr Yuan was assisted by Mr Yang Wang. The plaintiff told his lawyers all of the circumstances about the case.
4. As mentioned, the defendant affirmed an affidavit dated 6 April 2017 in the plaintiff's case in the Lower Court Proceedings in China. The plaintiff's lawyers were involved in amending the defendant's initial statement and evidence. Drafts or amendments were prepared on 29 November 2016, 6 December 2016 and 12 February 2016.
5. The defendant's initial statement was written in Traditional Chinese, amended versions included both traditional and simplified Chinese, and the final version was written in simplified Chinese. This will be explored later in this judgment.
6. In her report of 1 June 2021, Ms Zhao explains and describes the use of simplified and traditional characters. She stated in her report: "In Mainland China The government of the People's Republic of China in Mainland China has promoted simplified Chinese for use in printing and writing since the 1950s and 1960s to encourage literacy. The Law of the People's Republic of China on the National Common Language and Characters implies simplified Chinese as the standard script, which are now generally and commonly used in Mainland China, Malaysia, and Singapore, while traditional Chinese characters are used in Hong Kong, Macau, the Republic of China (Taiwan). Schools in Mainland China use simplified characters exclusively, while schools in Hong Kong, Macao, and Taiwan use traditional characters exclusively. Generally speaking, people from Mainland China usually use simplified Chinese for written. However, it is legal and permitted to use traditional Chinese if people choose to in some special circumstances such as ceremonies or for cultural purpose. Dictionaries published in Mainland China generally show both simplified and their Traditional counterparts, therefore, it is still the case people from Mainland China can read and use traditional Chinese. However, people in Mainland China use simplified Chinese for most of time as it is the written language people learn from primary and commonly used in community. In Hong Kong People from Hong Kong generally use traditional Chinese and data and media show no signs of moving to use simplified Chinese characters even it is legal to use in Hong Kong. … Conclusion Even though there is always an argument that whether people from different places should use different written Chinese, people from Mainland China still use simplified Chinese in daily life. However, there are some exceptional cases when people would like to choose traditional Chinese characters for specific purpose. On the contrary, people from Hong Kong and Taiwan use traditional Chinese and rarely to see them use simplified Chinese instead."

26 November 2016

1. The defendant attended a meeting on 26 November 2016 with the plaintiff and his lawyers. The plaintiff denied the defendant attended this meeting in his affidavit evidence, but in cross-examination he agreed that this meeting occurred and that, at the meeting, the plaintiff's lawyers asked the defendant to prepare a statement and discussed how the case would be defended.
2. The plaintiff denied in cross-examination that his lawyers and himself told the defendant what to put in his statement. He also stated the lawyers advanced that the statement should be the truth. That is hardly surprising, but it does seem to be suggested by the defendant (on a number of occasions in this matter) that the Chinese lawyers advised the defendant to include matters which were, on the defendant's case, known to be untrue. In the absence of cogent evidence that the Chinese lawyers would behave in such a fashion (and I do not find that to be the case), I do not consider that a finding should be made in those terms. As I have found, the defendant's evidence alone does not establish the truth of such a proposition when taken with my other findings as to his credibility. I accept the plaintiff's evidence.

The 29 November 2016 Email

1. The defendant sent an email to the plaintiff on 29 November 2016 which described the circumstances in which the Jiayi Loan Agreement was entered into which stated that, if he did not have sufficient collateral, he would not have involved the plaintiff as the guarantor ("the 29 November 2016 email").
2. In the email the defendant stated: "…Between June 1st and 3rd of the same year, the two parties signed a personal loan agreement in Beijing with Liu Tuo as the guarantor. However, I provided Australian land that was without caveat as a collateral. The value of the collateral was much higher than the amount of personal loan. They also knew this, but they said that they need a local guarantor to complete the project. Liu Tuo and I didn't think there was nothing wrong. In the worst case, if the payment were to be overdue, the collateral provided by me would be transferred to the name of the creditor. They also know this, but they said that they need a local guarantee to complete the project. Liu Tuo and I also think there is nothing wrong. In the worst case, if the payment is overdue, my collateral will be transferred to the name of the creditor. That's all. I was willing to take initiative to provide the collateral because of our confidence and sincerity in this transaction. If I didn't have sufficient collateral, I wouldn't ask Liu Tuo to do so, and he wouldn't have signed the guarantee agreement. Legal representative Liu Weizhu was not present that night, so he did not sign it…" (Emphasis added.)
3. The defendant stated that this statement was incorrect and was only included at the behest of the plaintiff. This was denied by the plaintiff.
4. Notwithstanding the defendant said he discussed the content of the email with the plaintiff and his lawyers, the defendant confirmed in cross-examination that the contents of this email were true as he understood it to be at the date that he sent the email. This admission is inconsistent to the position adopted by the defendant in these proceedings where he asserted the Jiayi Loan Agreement was entered into by himself and the plaintiff as a partnership or that there was security provided by the defendant in support of the plaintiff becoming a guarantor.
5. The statement that the defendant only included the content of the 29 November 2016 email at the behest of the plaintiff sits ill with the fact that he forwarded an almost identical WeChat message to the plaintiff on 9 March 2018 as a draft of the evidence he is willing to give (which was signed with his English signature).

30 November 2016

1. The plaintiff sent a WeChat to the defendant on 30 November 2016 containing a modified version of the defendant's 29 November 2016 email ("the 30 November 2016 WeChat message"). The modifications included the addition of the words "general guarantor" which the defendant stated was not a term that the defendant understood at the time.
2. The plaintiff's evidence was that, upon the receipt of the draft statement from the defendant, his lawyer, Mr Yuan, amended the draft "so that the issues were clear and so the statement was in a proper form to be evidence in Court…". The plaintiff sent the amended document to the defendant by WeChat but did not know if his lawyer spoke to the defendant in relation to those amendments.
3. That message was in the following form: "I found a good lawyer in Beijing. Let's talk on the phone if convenient 1. Hong Kong Jiayi reached a financing agreement on 29 May 2014 in Hong Kong. Liu Weizhu and Lam Kin, the juridical person directors of the two parties respectively, attended the signing ceremony in a law firm; 2. Between 1 and 3 June of the same year, I signed a private lending agreement in Beijing, adding Liu Tuo as the general guarantor. The collateral I put up was a fully paid up land in Australia that I personally owned, of which the value far exceeded the borrowed amount. They were aware of this, but said there must be a local guarantor. Liu Tuo and I did not see that as a problem, because in the worst-case scenario, if I was unable to pay the debt, the collateral could be transferred to the creditor. I offered the collateral out of my sincerity and confidence about the deal. If I did not have a collateral valuable enough, I would not have asked Liu Tuo to be the general guarantor. If he was a guarantor with joint liability, he would not have signed the guarantee agreement. The legal person of the other party Liu Weizhu was not present and did not sign the lending agreement at that night. 3. Which one among the two signed agreements would be executed was up to them, and they were supposed to notify us of their decision. However, we never received any notification in regard to that, so we did not know which agreement went into effect. 4. Two payments, one of 1 million and the other 4 million, were transferred to my personal account with the Industrial and Commercial Bank of China on 4 June. Later, Mr. Liu Tuo repaid them RMB 1 million at my request. 5. Things did not go well after that. When the two sides were negotiating debt repayment, I suggested that we go by the agreement and I transfer the title of the land I owned to a person nominated by them so that the agreement could be terminated. However, they changed their mind and demanded cash repayment instead of collateral. I told them I did not have enough cash and I needed time to get it. During that period, they pushed me into signing several Promise to Pay Letters without providing me any copy. They also repeatedly made physical threats against me, restricted my personal freedom and illegally held my passport. We kept in touch with them the whole time and never tried to avoid them. 6. Now, what is supposed to be the agreement we singed [sic] back then, obtained from the Court and sent to us by our lawyer, is completely different from the one I signed. There are two crucial pages in the agreement that do not bear my and Liu Tuo's signatures, nor do they contain terms and conditions related to the land collateral, Liu Tuo's joint liability or abandonment of collateral to the creditor. There are two crucial pages in the agreement that do not bear my and Liu Tuo's signatures, nor do they contain terms and conditions related to the land collateral, Liu Tuo's joint liability or abandonment of collateral to the creditor. 7. Further, the agreement was signed in a private club in Beijing Qianmen, not Tianjin as shown in the alleged agreement, so there are grounds for us to question the authenticity of the alleged agreement. On the day of signing, a business partner of ours, Ms. Meng Jiaolin, was also present. She read the agreement and witnessed our signatures. Party to lawsuit: Attachment: land documents"

The 6 December 2016 Email

1. Emerging from this process, on 6 December 2016, the defendant signed an email bearing that date ("the 6 December 2016 email") which contained the following entries: "2. Between 1st and 3rd of June of the same year, a personal loan agreement was signed in Beijing. LIU Tuo provided general guarantee as the guarantor in this agreement. However, I provided my unencumbered land in Australia as security, and the value of the security far exceeded the amount of the personal loan. They knew that. But they said that the procedures could only be completed if a local resident could act as a guarantor. LIU Tuo and I did not consider this as inappropriate. In worst case scenario, if the money could not be repaid, my security would be transferred to the creditor. I proactively offered my security because we had faith in this transaction and we wished to show sincerity, If I did not have sufficient security, I would not ask LIU Tuo to act as a general guarantor. If it was jointly liability, he would not consent to sign the guarantee agreement. The company representative, LIU Weizhu, was not there that night and therefore did not sign on the agreement. 3. There were two signed agreements. They would decide which one would be executed and then inform us. However, we were never informed. Therefore, we did not know which version of the agreement was executed. 4.Two sums of money, being 1 million and 4 million respectively, were paid into my personal account with Industrial and Commercial Bank of China on 4 June. Later, under my arrangements, Mr. LIU Tuo paid 1 million CNY on my behalf as the repayment for the principal. 5. Things did not go well later. When the other party requested a negotiation for repayment, I said we should proceed in accordance with the agreement. I would transfer my land to a person appointed by them, and the agreement could then be formally discharged. However, the other party suddenly changed its idea and requested cash, not the security. I said I did not have so much cash so I needed time. During that period, they forced me to sign multiple letters of assurance but did not give a single copy to me. They also made multiple physical threats against me personally, restricted my personal freedom and detained my passport. During this period, the parties maintained communication and meetings with each other. There was no avoidance. 6. The current agreement obtained by the lawyer from the court was absolutely not the one I signed. The key issue is that there were two pages without the signatures of me and LIU Tuo. It did not contain the contents of the using the land as security but contained clauses such as requesting LIU Tuo to be jointly responsible and abandoning the security. 7. Also, the location for signing the agreement was a private club in Qianmen, Beijing, not Tianjing, which was added after the signing of the agreement. We have reasons to doubt the genuineness and validity of this agreement. On the date of signing, Ms. MENG Linjiao, who was a business friend of us, also presented and witnessed the agreement and the signing." (Emphasis added.)

The Chinese Court Proceedings Affidavit

1. The defendant met with the plaintiff and his lawyer, Mr Yuan and Mr Yuan's assistant in Beijing on 7 April 2017.
2. The defendant stated in his first affidavit that the following conversation occurred after he was provided with a hard copy of the Chinese Court Proceedings Affidavit. That conversation was recorded in his affidavit as follows: "Mr Yuan said: This is according to what we have received from you before (in relation to the affidavit). We have prepared an affidavit for you to sign." Mr Yuan or Tuo Liu said to me: "This is to show you are fulfilling your obligations as a borrower and the loan repayment was not from Tuo Liu if this payment was from Tuo Liu, it would show that his obligation was as a guarantor…"" "…I said: "The payment was from our joint money:" Mr Yuan or Tuo Liu said: "We are trying to avoid the position that both of you will be liable. Tuo Liu was a guarantor in form only, really just a witness.""
3. In the second plaintiff affidavit, the plaintiff denied the content of the above conversation recorded in first defendant affidavit except for the second entry attributed to either himself or Mr Wang.
4. It appears that this affidavit was prepared because the plaintiff's lawyers told him that the 6 December 2016 email which the defendant signed could not be used as evidence.
5. At the meeting, the defendant signed the Chinese Court Proceedings Affidavit. He also signed the 26 September 2015 email which accompanied it.
6. The 26 September 2015 email was signed by the defendant with a Traditional Chinese signature. The Chinese Court Proceedings Affidavit and 26 September 2015 email were both written in Simplified Chinese.
7. As earlier mentioned, the defendant denied that he sent the 26 September 2015 email. He contended that it was not written by him and did not recall seeing it prior to 7 April 2017 although he stated he was given the 26 September 2015 email at the meeting of that date. He also contended that the email was written in a script that he does not and cannot use to write. Again, I will return to that question, but will find that I do not accept the defendant's evidence in that respect.
8. I return then to the content of the Chinese Court Proceedings Affidavit.
9. Paragraph 3 of the Chinese Court Proceedings Affidavit was in the following terms: "On 3 June 2014, LIU Tuo, Hong Kong Jiayi and I signed a Loan Agreement, The circumstances at the time of signing were: first of all, TIAN Hao, the representative of Hong Kong Jiayi, suggested that LIU Tuo should be included in the agreement as a general guarantor. The reason was that the company needed a local person as a guarantor when signing an agreement with a foreign national. Because security was offered and the priority of LIU Tuo's guarantee was placed after the security, I agreed to let LIU Tuo sign his name. Secondly, when reaffirming the contents of the agreement, I clearly remembered that there were very detailed descriptions about the security in the agreement, and the information of the security was hand-written. Other people who presented also saw the information about the land size. Finally, after finishing reading the agreement, TIAN Hao suggested to have dinner first and the agreement would be signed after the dinner. After the dinner, LIU Tuo and I signed the agreement, TIAN Hao stated that since the company representative LIU Weizhu did not present, the agreement had to be taken back to the company, and therefore he took away all the documents." (Emphasis added.)

The Lower Court Judgment

1. It is appropriate that some particular attention be given to the Lower Court Judgment.
2. Under the introduction 'Facts and reasons', the Lower Court observed: "However, after the loan under the Loan Agreement became due, LAM Kin failed to perform relevant duties for repayment. Only the defendant LIU Tuo made a repayment of RMB 1 million yuan to the plaintiff as the interests for overdue payment on 8 October 2015. The plaintiff subsequently requested the repayments multiple times but the efforts were unsuccessful."
3. The arguments presented by the plaintiff, were summarised by the Lower Court as follows: "The defendant LIU Tuo argued that: 1. The Loan Agreement provided by the plaintiff was not true. The true Loan Agreement should contain a mortgage as guarantee and the guarantee provided by such mortgage should have priority over the guarantee provided by a person. 2. In this case, the loan was part of the business cooperation between the plaintiff and the borrower Kin. The plaintiff was at fault for the overdue of the repayments for the loan. This was a sum of deposit paid to a company in Singapore for the issuing of a letter of credit. The plaintiff also sent someone to Singapore for investigation and the loan was issued to the defendant with the approval of the plaintiff. The plaintiff had misunderstandings about the fact that the company in Singapore failed to obtain a letter of credit. 3. The term of the guarantee has expired, so the defendant is exempted from the liabilities. The term of the loan was 15 days, which started on 4 June 2014. 15 days after that date was 19 June 2016. As a result, the period for guarantee had passed already. The remittance made by the defendant on 8 October 2015 to a third party was a remittance made on behalf of LAM Kin. 4. The amount of the plaintiff's claim was too large. The daily interest rate for the interests for overdue payment claimed by the plaintiff was 0.1%/day. The annual interest rate was as high as 36%. Meanwhile, the plaintiff claimed liquidated damages and litigation fees. According to Article 29 and 30 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases, the plaintiff's claim exceeded the prescribed standard of an annual interest of 24%. In relation to the litigation fees claimed by the plaintiff, the defendant argued that due to the subordinative nature of guarantee, the guaranteed debts should not exceed the scope of the principal debts. In the current case, the plaintiff did not form any agreement with LAM Kin in relation to the payment of litigation fees, but reached an agreement on litigation fee within the scope of the guarantee. The scope of the guarantee is clearly larger than the scope of the principal debt. This breached the fundamental principles and the relevant rules in the Guarantee Law of the People's Republic of China. Even according to the agreed terms in the agreement, the litigation fee should be categorised as other costs prescribed by relevant rules of the Supreme People's Court and shall not exceed the 24% requirement for the annual interest rate. To sum it up the defendant believed that the defendant should not bear relevant liabilities for guarantor, and the amount of the plaintiff's claim was too large." (The defendant emphasised in submissions the italicised passages above.)

The Appeal Proceedings and Preceding Events

1. The Appeal Proceedings were heard on 9 March 2018. I will return to those proceedings after considering some intermediate circumstances.

6 March 2018

1. On 6 March 2018, the plaintiff sent the defendant a WeChat message ("6 March 2018 WeChat message") which, translated into English, stated: "We need to appear in court. The key issue would be how to calculate the interest and how to deal with the 1,000,000. You probably need to go to Tianjin on Thursday the 8th." (I note that the defendant gave evidence that the WeChat message contained the words "You need to say we have money." immediately before this extract.)
2. In the period 2014 to 2018, Ms Meng and the plaintiff were business partners in China. Ms Meng is also a friend of the plaintiff and defendant. There was a dispute as to the precise relationship between Ms Meng and the plaintiff. In the first defendant affidavit, the defendant adduced that the description of Ms Meng as a business partner of the plaintiff and himself was incorrect. Rather, the defendant alleged that Ms Meng was a "domestic partner" of the plaintiff.
3. The plaintiff denied that Ms Meng "is or was ever my domestic partner" in the second plaintiff affidavit. However, the plaintiff accepted in cross-examination he had a romantic relationship with Ms Meng prior to 2014. "Q. What was your relationship with Ms Ming in the period 2014 to 2018? A. INTERPRETER: You mean Ms Meng? Q. Ms Meng. A. INTERPRETER: We were business partners in China. Q. Did you have any other relationship with Ms Meng at that time? A. INTERPRETER: For a very brief period of time, we were in a romantic relationship. Q. What was that time? A. INTERPRETER: Before I became known to Mr Lam - prior to 2014, Mr Lam. Q. What about after 2014? A. INTERPRETER: For various reasons, we became friends."
4. The defendant gave evidence as to the relationship between the plaintiff and Ms Meng in the Appeal Proceedings as follows: "Presiding Judge: What was the location for signing this agreement. LAM Kin: A restaurant in Beijing. I forgot its name. LIU Tuo knows that. Presiding Judge: Who was there? LAM Kin, TIAN Sheng and WANG Yi from the respondent company and SHI Shanxin, SHI Guang from the respondent company, and LIU Tuo, MENG Linjiao and me. Presiding Judge: What is your relationship with MENG Linjiao? Why she was there? LAM Kin: MENG Linjiao and LIU Tuo were lovers."
5. Ms Meng appeared as a witness in the Appeal Proceedings and gave the following evidence: Presiding Judge: Witness MENG Linjiao, what is your relationship with the parties of this case? MENG Linjiao: I have long term cooperation with the appellant LIU Tio, it is a relationship of business cooperation… … Presiding Judge: When the agreement was signed, were you there? MENG Linjiao: Yes, I was. Presiding Judge: How were you related to the signing of this contract? MENG Linjiao: I was a partner of LAM Kin and LIU Tuo. I organised a dinner with them."

8 March 2018

1. It appears to be common ground that a meeting occurred between the plaintiff, the plaintiff's lawyers, the defendant and Ms Meng. The plaintiff stated that Ms Meng was present at the meeting because she would give evidence at the Appeal Proceedings.
2. The defendant gave evidence that that meeting occurred at a coffee shop located on the first floor of the Wanda-Vista-Tianjin Hotel to discuss the Appeal Proceedings. The defendant stated that one or both of the lawyers acting for the plaintiff discussed the amount of RMB 1 million that had been repaid to Jiayi by the plaintiff and stated, "This should be a payment from you, not from Tuo Liu." The defendant then stated one or both of the plaintiff's lawyers asked him to send a statement to the plaintiff on WeChat that identified him as the true borrower under the Jiayi Loan Agreement to show that the borrowing was not connected with the plaintiff and that he was merely a witness.
3. The plaintiff denied the conversation between the defendant's lawyers and the defendant or that the request to send a statement of the kind identified above was made.
4. I prefer the evidence of the plaintiff in this respect for the following reasons: 1. As mentioned earlier, the Court should not lightly infer that one of the plaintiff's lawyers asked the defendant to give false evidence. 2. The proposition in (1) is true as a general proposition, but it is buttressed by two factors operating in this matter: 1. in cross-examination in these proceedings the defendant accepted that on no occasion did the plaintiff's lawyers suggest that he "should give false evidence"; and 2. the serious allegation was made in circumstances where the defendant could not articulate who made the statement from the lawyers and where no allegation against the lawyers of this kind was pleaded. 1. The request which is attributed to the lawyers may be doubted because the lawyers were already in possession of the Chinese Court Proceedings Affidavit which went some way towards the propositions they were allegedly proposing would be put and because the defendant was due to give evidence the next day.
5. The plaintiff gave evidence that, during a meeting he had with the defendant on 8 March 2018, he told the defendant that his lawyer, Mr Yuan, suggested that he should prepare an agreement which sets out the terms for the repayment of the money which the plaintiff had paid, and would have to pay, in the event that the plaintiff was unsuccessful in the Appeal Proceedings, to which the defendant agreed.

9 March 2018 - The Appeal Proceedings

1. As earlier mentioned, the Appeal Hearing was on 9 March 2018.
2. The plaintiff did not give evidence at the trial or in the Appeal Proceedings. It was suggested he was present with the defendant which he denied.
3. The Court is in receipt of the transcript of the Appeal Proceedings which form a basis for the following portion of the judgment.
4. Two witnesses gave evidence on the plaintiff's behalf at the hearing of the appeal, one being the defendant.
5. The issues of fact raised by the plaintiff in the Appeal Proceedings were as follows: "Attorney for the Appellant: Yes, we do. The contents of the agreement signed by the parties are different from what we consider as the facts. This is the content of the entire agreement. The signed agreement should contain the information about a piece of mortgaged land. The appellant did not assume joint liability under the guarantee. He only provided a general guarantee, with the land as a precondition. The right to counterplea was abandoned in the guarantee, but there should be no such terms. These are the main inconsistencies."
6. In the Appeal Proceedings, the Court described the issues as follows: "Presiding Judge: The court has listened to the opinions of both parties and now the key points of the dispute are summarised as the following: 1. Whether the Loan Agreement of this case is genuine? Is it the representation of the true intention of the parties? Is it the agreement between the parties? 2. Whether the term of the guarantee provided by the appellant has expired? What is the nature of the 1 million yuan paid by the appellant to the third party LIU Xiuying?"
7. One aspect of Ms Meng's evidence was: "MENG Linjiao: I have looked at the so-called agreement for joint guarantee. I am doubts about several issues. The original copy of the agreement which I had looked at is inconsistent with the facts in three aspects. First, Mr. LAM Kin mortgaged a piece of land in Australia. It was a piece of mortgaged land of more than 40000 acres. It was real. I read the agreement very carefully. It was an agreement of several pages and I read every page carefully. Mr. LIU Tuo did not assume joint liabilities. On the last page of the agreement, it contained the information that the location for court arbitration was Tianjin, while I dare to say that I am sure that the location for signing the agreement was Beijing. I have certain disagreements with these three issues."

Aftermath of the Appeal Proceedings

1. In 2018 to 2019, the People's Court of Tianjin Binhai New Area could enforce its judgments by: 1. seizing property of the judgment debtor; 2. selling property of the judgment debtor, including by auction; 3. freezing bank accounts of the judgment debtor; 4. automatically deducting funds from bank accounts of the judgment debtor; and 5. restricting the ability of the judgment debtor to travel, including by plane or train.

10 March 2018

1. The day after the Appeal Hearing, the plaintiff forwarded to the defendant a message from his lawyers summarising what had occurred in Court the day before. The defendant submitted that the report focused on the need to explain the initiative for the RMB 1 million payment was from the defendant, not the plaintiff and quoted the following passage: "On the guarantee period we argued that it was Director Mr Lam who offered to pay the debt, so it should be recognised that Mr Lam, rather than our side made the payment."
2. This submission again related to the conduct of the plaintiff's lawyers.
3. The full text of the relevant paragraph from the plaintiff's lawyer was as follows: "Director Liu, today's hearing mainly focused on the authenticity of the agreement and if the guarantee period had expired. We argued that there were more than one version of the agreement, and that the other party had replaced the original one with another version. We requested that they provide all versions. The other party denied it all and insisted that the original agreement was prepared in triplicate, of which two were provided to our party and Director Lam respectively, and that there was no other version of the agreement. On the guarantee period, we argued that it was Director Lam who offered to pay the debt, so it should be recognized that Lam, rather than our side, made the payment. The other party held that since the first-instance judgement had a definite ruling in that regard, it should be upheld."
4. When seen in the context of the full version of the lawyer's report, it is clear that the lawyer's report is consistent with the solicitor acting professionally and providing a report to his client in the course of the proceedings. The lawyer's report reflects upon the arguments in the Chinese Court Proceedings on behalf of the plaintiff. That argument does not exactly correspond with the evidence given by the defendant in those proceedings, even though his evidence as to the true nature of the guarantee arrangement would be consistent with the submissions made as recorded in the report.

Late March / early April 2018

1. The defendant also stated that in late March or in early April 2018, the plaintiff said to him: "I have discussed with my lawyer how to deal with repayment, The Court wouldn't accept that Jiayi should take money back from you, not me. My lawyers say that one way to buy more time is to get an agreement from you that you will repay and that looks to be binding. The lawyer says you have to say that you are expecting money soon to satisfy the debt." This was the first time I had heard of the possibility that there should be such an agreement: "If I can't get more time and I can't pay the money, they will put me on a [bad person's / defaulters] list and this will be public."
2. The plaintiff agreed that a conversation occurred in this period but denied the conversation deposed by the defendant.
3. The plaintiff stated that a conversation occurred between his lawyer, Mr Yang, and the defendant during that period. The plaintiff stated that he was present and the conversation was to the following effect: "Lawyer Yuan said: Mr Liu might lose the case. I am preparing a testimony for the proceedings. Did you borrow money from Hong Kong Jiayi? Mr Lam said: Yes. Lawyer Yuan said: Did you suggest that Mr Liu should be a guarantor? Mr Lam said: Yes. Lawyer Yuan said: If Mr Liu loses the case then he will be liable to make repayments. To be fair, there should be an agreement between you and Mr Liu."
4. Whilst the time periods identified in the respective accounts generally correspond there may be a temporal difference as the defendant's account plainly relates to a period after the Appeal Judgment and the plaintiff's account concerns the period beforehand (which, given the date range, must at least have been immediately before the Appeal Judgment).
5. In many respects, the defendant's version of this conversation is unexceptional. There is contemplation of putting an agreement before the Chinese Court which would be relevant to enforcement proceedings if the Agreement was binding. That approach is entirely consistent with the plaintiff's account of the conversation albeit that it occurred between Mr Wang and the defendant.
6. However, the defendant introduced into his version of the conversation the words "an agreement from you that you will repay and that looks to be binding". The implication of that attribution is that the plaintiff and the defendant would enter into a non-binding agreement with a view to deceiving the Chinese Court or a Public Official handling the Chinese Court Proceedings.

13 and 14 April 2018

1. On 13 April 2018, the plaintiff's lawyer, Mr Wang, sent a WeChat message with a draft of the Agreement to the plaintiff. The message with the plaintiff's reply was as follows: "Chief Manager Liu, I have prepared an agreement according to your requirements. Please have a look at it. Received. I will have a look. Thank you."
2. On 14 April 2018, the plaintiff replied to the message on the previous day at 9:47am in the follow terms: "1. LIU Tuo's nationality should be included. Also, note down clearly the residential address, telephone number and email of both Party A and; Party B. 2. Clause 9: This contract will come into effect after being signed by both parties. The contract will be have English and Chinese versions and each version will be in in quadruplicate. If these is any inconsistencies between the English and Chinese versions, the English version shall prevail. The Chinese version will have 4 copies and the English version will also have 4 copies. Party A and Party B will hold 2 copies for every version respectively. The copies shall have same effects in law. ... 3. Clause 10:…the court of the State in which the land of Party A locates has exclusive jurisdiction."
3. A short time later the plaintiff stated: "Maybe it is better to agree that the place of judgment should be the place in which the land locates. Maybe it is better to agree that the place of the hearing should be the place in which the land locates."

27 April 2018

1. The amended form of the Objective Facts Document stated that, on 27 April 2018, the plaintiff sent a WeChat message to the defendant which stated: "Also, the Judge and lawyer said please provide an effective proof of repayment, agreements between the borrower and lender and related documents as soon as possible."
2. That entry corresponds to SOAF 32.
3. The Objective Facts Document prepared by the defendant referred to the WeChat message stating, "an effective proof of repayment".
4. However, the WeChat message of 27 April 2018 ("the 27 April 2018 WeChat message") was as follows: "@Tony Chief Manager Liu, please check for the revised agreement. Since Australian law might be applicable to the agreement, it might be wiser to let an Australian lawyer review it. Of course, it will be eventually decided by you and Chief Manager Lam. Also met with the enforcement judge this time. Documents for reliability should also be provided in order to avoid being listed on the list of people with bad credits. Also, it is necessary to talk to TIAN Hao. He is waiting for our documents. You need to look at the agreement between us and see if it has any problem. This needs to be submitted to the judge. The evidence for the repayment from Singapore will only be recognised with the support of documents for relevance. Also, please let me know whether I should go as soon as possible."
5. The defendant made the following submission in writing about this message: "The Plaintiff's Opening Submissions also rely upon a message appearing as if sent from Mr Liu to Mr Lam, which states "it might be wiser to let an Australian lawyer review it", which Mr Liu, in submissions, accepts is a message from Mr Liu's lawyer passed on from Mr Liu's to Mr Lam. The message was advice from the lawyer given to Mr Liu for him to act on. Mr Liu did not bother to obtain any Australian advice. You would expect him to do so if it was intended to sue on this document in New South Wales."
6. It is plain, as accepted by the plaintiff, that the first entry in the WeChat message is a copy of a message from the plaintiff's lawyer. But that fact simply signifies that the plaintiff was conveying to the defendant the advice he had received.
7. When the defendant was challenged in cross-examination as to why the plaintiff would pass on to the defendant his lawyer's suggestion that Australian legal advice be obtained (as the Agreement would be governed by Australian law), if the agreement was never intended to have legal effect, the defendant stated that the process was to make the Agreement "look real". This suggestion seems nonsensical, as presumably the defendant meant "look real" to a Chinese Court Official, as the plaintiff only made a threat to sue in December 2018. Just why a Chinese Court engaged in Enforcement Proceedings would be influenced by the Agreement being assessed by an Australian lawyer is unclear and ultimately reflects poorly on the defendant's credit.

1 May 2018

1. On 1 May 2018, the plaintiff sent the defendant a copy of the Agreement via WeChat, which the plaintiff had caused to be prepared (notwithstanding the WeChat message of 27 April 2018 containing a request to check the revised Agreement, it apparently only reached the defendant at this date). It was identical to the Agreement signed by the defendant on 9 May 2018.
2. As at 1 May 2018, the plaintiff had RMB 4.5 million in his bank account. The plaintiff refused to answer where this money was from.
3. On 7 May 2018, execution of the Appeal Judgment was commenced against the plaintiff's assets.

8 May 2018

1. On 8 May 2018, the plaintiff sent a message to the defendant ("the 8 May 2018 WeChat message") which stated: "Chief Manager Lam needs to sign every page of the above document (and also fill in the information for the land). I can then forward it to the Enforcement Division of the court. Urgent! Give me the hard copy when meeting with me. Call me when it is convenient to you."
2. The defendant's evidence about that document (in an expanded form in anticipation of the discussion of later issues) was as follows: "Q. I showed you a WeChat message, before we came to this document, where Mr Liu asked you to bring a hard copy I'm paraphrasing. He asked you to bring the original copy of the agreement with you to the hotel, or words to that effect. Do you remember that message? A. Yes. Q. Let me be precise about this because it's important evidence. A. Yep. Q. Page 449, tab 68. Just let me know when you have that page 449, sir. A. Yes. Q. Can you see the language in the text from Mr Liu to you, "Give me the hard copy when meeting with me"? Do you see that? A. Yes. Q. That's referring to the copy of the agreement that we sue on, which you have signed in English; is that right? A. No. Q. What's he referring to there, with "the hard copy"? A. Like a we never discussed this message. We did not discuss this message. Q. He says, "Chief Manager Lam needs to sign every page of the above document". You accept we're talking about the agreement at this point? A. Yes. Q. "and also fill in the information for the land", that's referable to the agreement we sue on, as well; is that right? A. I didn't fill in the land information. Q. I'm sorry, I didn't hear that answer. A. I didn't fill in the land information. Q. We will come back to the agreement in a moment. A. He didn't ask me for the land information, either. Q. That answer is not responsive. A. Okay. Sorry. Q. Please, just attend to my question. A. Sorry. Q. The statement, "and also fill in the information for the land", we're talking here about the agreement that we sue on; is that right? A. Yes. Q. Rather, Mr Liu is talking, in his message, about the agreement we sue on. Do you agree with that? A. Yes. Q. Then, when he says, "I can then forward it to the enforcement division of the Court", he's, again, talking about the agreement we sue on; is that right? A. Yes. Q. Then the word "urgent", he's then also talking about the agreement we sue on? A. Yeah. Q. And the statement, "Give me the hard copy when meeting with me", he's also talking about the agreement we sue on, isn't he? A. Yes. Q. Let's turn back to the agreement, behind tab 73, page 465. Did you bring a hard copy of the agreement, signed in English, to the hotel in Shenzhen on the 14th? A. No. Q. That was "No", was it? A. No. No any copy. Q. Did Mr Liu ask you about that? A. No. Q. Why do you think he didn't ask you about that? A. I don't know. We didn't discuss. Q. He's saying to you, isn't he, that he needs the agreement, it's urgent? He's clearly A. Yes. Q. Would you accept that he's almost panicked about the fact that he needs this document signed? Would that be a fair description? A. There's assumption, you know. Q. What I'm asking is you observed him, you spoke with him. Would you accept there was almost a degree of panic exhibited in his behaviour, because he wanted this agreement signed? Would you accept that? A. Yes. Q. He knew that, if he didn't have the agreement signed and provide it to the Court, he might be put on what's called "the bad persons list"? A. Yes. Q. He knew that, if he was put on that list, he might lose some of his personal liberties? A. Yes. Q. He might not be able to travel on certain types of transport, or that sort of thing? A. Yes. Q. He might have his assets sold? A. Yes. Q. So it's pretty important to him to have this agreement, isn't it? A. Yes. Q. I put to you that, if you didn't bring the agreement with you to the meeting with Mr Liu, he would have asked about it, wouldn't he? A. We did not discuss this. Q. He just forgot about it? Is that what you think happened? A. I don't know. Q. You know that Mr Liu says that he wanted the agreement signed with your Chinese signature. Do you understand that that's what he says in this case? A. You refer to the WeChat message? Q. No. I'm just talking generally about his position in this case. You were here when he was giving evidence, over the last few days, weren't you? A. Yes. Q. You heard the evidence that he gave? A. Yes Q. You understand his position to be that he wanted you, as well as your English signature, to sign the document with a Chinese signature? You understand that's his position; right? A. Yes. Q. You understand it's his position that he wanted that because you had signed other documents in the Chinese proceedings, such as the appeal transcript, with a Chinese signature. He wanted the signature on the agreement to match those other signatures. A. I did not sign the Chinese signature. Q. No. I'm talking about Mr Liu's view of the case. You understand that's his position, don't you? A. Yes." (Emphasis added.)

9 May 2018

1. As mentioned earlier, the defendant admitted that on 9 May 2018 he signed, with an English signature, the Agreement that had been provided to him by the plaintiff and sent it (in the identical form as was provided to him) to the plaintiff by WeChat.
2. On 9 May 2018, the defendant also signed the Advocatus Law Document with an English signature (Advocatus Law are the Singapore lawyers of BS Tech). The defendant also signed a two-page letter from Ignatius to Advocatus law dated 2 May 2018 (which was not pleaded as part of the Agreement).
3. He sent these documents to the plaintiff in three files over WeChat.
4. The Agreement was subsequently executed by the plaintiff. The time and manner of execution of the Agreement (except in relation to the defendant's English signature) is in dispute. I will return to consider these questions.

11 May 2018

1. On 11 May 2018, the plaintiff paid approximately RMB 4.219 million to the Chinese Court. The plaintiff said he obtained this money from "many different businesses" and from savings. Issues were raised as to the responsiveness of the answers in this respect.
2. The defendant submitted that the source of the money was material as he contended it was partnership funds derived from Tianhe. The plaintiff submitted that it was from his own account, as noted, from various possible sources. The issues raised by the defendant as to the plaintiff's responses in this respect were reasonable, even though it appeared the plaintiff was trying to keep private his business dealings. However, the availability and use of Tianhe funds is dealt with extensively later in this judgment.

14 May 2018

1. The plaintiff stated that the defendant met with him in the defendant's hotel room in Shenzhen on 14 May 2018 and the parties signed the Agreement. The defendant's case was that he was not at the hotel room in Shenzhen at the time the Agreement was (on the plaintiff's case) signed and the Agreement was signed at some other time by the plaintiff. This aspect of the evidence is highly controversial, and I will return to it below under a separate heading dealing with the same.

28 May 2018 to December 2018

1. Between 28 May 2018 and 3 August 2018, the defendant transferred SGD 200,000 to Huge Fairway, being half the funds, the defendant received in payment of the Singapore judgment against BS Tech.
2. By 24 June 2018, the plaintiff had submitted a repayment schedule to the People's Court of Tianjin Binhai New Area in relation to the Judgment Debt.
3. On 9 October 2018, the defendant transferred RMB 300,000 to the People's Court of Tianjin Binhai New Area in partial satisfaction of the Judgment Debt.
4. Between 2017 and 2019, the defendant caused payments to be made to Bai Hua, the ex-wife of the plaintiff, at the plaintiff's request.
5. The plaintiff was in constant communication with the defendant from May 2018 onwards in relation to obtaining funds to pay the judgment, however he did not refer to suing the defendant under the Agreement until 20 December 2018.
6. The plaintiff has never expressly asked to be reimbursed by the defendant for the RMB 1 million paid by the plaintiff "out of his own money" to Jiayi on 8 October 2015.
7. On 20 December 2018, the plaintiff sent the defendant a WeChat message in which he threatened to sue the defendant ("the 20 December 2018 WeChat message"). The WeChat message, relevantly, stated: "Only by paying off the debt, can I solve the problem. 1) can you actually borrow some money?, (2) Will Singapore be able to solve part of the problem?, (3) I will sue you first, (4) I am in a total mess..."
8. The plaintiff and the defendant agreed that they had a telephone conversation which followed this WeChat message but have differing accounts of the conversation.
9. The plaintiff alleged, and the defendant denied, that they had a conversation to the following effect: "Mr Lam: "Your message says that you will sue me. What is this about?" Mr Liu: "I need to sue you because none of your promises were realised. You should pay the money back to me in accordance with the agreement as soon as you can.""
10. The defendant alleged, and the plaintiff denied, that the conversation was in the following terms: "Mr Lam: "Your message says that you will sue me. What is this about?" Mr Liu: "I may need to sue you so that I can show the Court that I am doing this to get more time to avoid the Court taking action against me. I need to show the Court that I am being active.""

The 26 September 2015 Email

1. The relevant portions of the 26 September 2015 email was set out earlier in this judgment (at [183]). The gravamen of the email was, in my view, that the debt to Jiayi was the defendant's debt ("payment on my behalf") and that the plaintiff should be reimbursed for the payment. The reference in the document to "profits of our cooperation" is an apparent reference to the Tianhe Venture.
2. If the email was sent by the defendant to the plaintiff then it is an admission by him as to those matters, inconsistent with the notion of a partnership between the plaintiff and the defendant and, because the communication predates the commencement of the Lower Court Proceedings, cannot be said to be a document prepared to assist the plaintiff with his defence of those proceedings (as the defendant advanced with respect to later documents, earlier discussed in this judgment). The question is, however, should the Court find the email was one produced by the defendant.
3. The defendant's case in that respect is that the 26 September 2015 email was fabricated by the plaintiff and reflects adversely on his credit. I agree with the counsel for the plaintiff that, having regard to the way in which the defendant constructed his argument in this respect the allegation made is serious and is tantamount to an allegation of fraud. It should be assessed having regard to the standard in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56 at [48].
4. The defendant's arguments in this respect were reflected in arguments addressed in written submissions as to the plaintiff's credit and as to the RMB 1 million payment although it should be noted in that context the defendant argued that, if the Court found the plaintiff had received RMB 7 million sometime after 11 September 2015 from Tianhe and used RMB 1 million of that money to repay Jiayi, it must follow that the plaintiff recognised the liability which he and the defendant owed to Jiayi as a joint partnership liability. I note that I will find that it was not established on the evidence that the plaintiff did receive RMB 7 million and that the defendant's argument as to the existence of a joint partnership liability was not accepted.
5. Ultimately, I do not accept that the defendant has established the 26 September 2015 email is a fabrication at the hands of the plaintiff.

Whether the Statement of Agreed Facts and Issues in Dispute is an "agreement" for the purposes of s191 of the Evidence Act 1995 (NSW)

1. At the commencement of this judgment and later in the discussion of monies paid by Tianhe, the Court identified an issue in relation to the SOAF or, more particularly, the component of that document described as "Agreed Facts". By way of brief reminder, the dispute concerned the word "paid" in paragraphs 17 and 18 of the Agreed Facts. The plaintiff contended that the word in each case should be read as or changed to "payable".
2. That issue manifested late in the proceedings after the formal close of the defendant's case but not before the tendering of some documentary evidence. Counsel for the plaintiff essentially made an application to vary the form of the Agreed Facts. At that point, the Court raised the question of s 191 of the Evidence Act under the understanding that the SOAF had been tendered on that basis.
3. On the following day and immediately before the commencement of closing submissions, the senior counsel for the defendant identified that the SOAF had not been tendered at all and sought to rectify that oversight by tendering the Agreed Facts component of the SOAF. The plaintiff objected to that tender. Arrangements were made for the resolution of the issue by written submissions which were received as supplementary written submissions. I shall respectively refer to the supplementary submissions of the plaintiff and the defendant.
4. In the light of those submissions, two issues were ventilated for resolution by the Court as follows: 1. Whether the SOAF was an "agreement as to facts" for the purposes of s191 of the Evidence Act. This part of the judgment deals with that question. 2. If the answer to the first question is in the affirmative, what use may the Agreed Facts be put to in dealing with the evidence in the proceedings. That question will be dealt with in the next section of the judgment.
5. The first question is, strictly speaking, not a question of fact but of law, but it is convenient to deal with the issue at this juncture because it directly bears upon the further findings of fact which will follow this consideration.
6. I will commence that discussion by first considering some background considerations.

The Order of Justice Chen

1. The Agreed Facts and Issues document was filed on 13 October 2023 pursuant to orders made by Chen J on 12 May 2023.
2. Chen J had directed the parties to file a detailed Statement of Agreed Facts and Issues in dispute, with such Statement to be signed by counsel for each party.

The Process of Agreement of the Agreed Facts and Issues

1. The communications by which the Agreed Facts and Issues were initiated, negotiated, and came to be finalised are included in Exhibit 17.
2. Exhibit 17 contains 20 communications between the parties in the period 26 July 2023 to 13 October 2023.
3. The first draft of the proposed Agreed Statement of Facts and Issues contained a predecessor set of words to those ultimately settled upon as Agreed Facts 17 and 18, proposed by the defendant, as follows: 18. On 6 October 2015, Lam receives HKD 780,000 from Huge Fairway Trading Limited (Huge Fairway) a company associated with Liu. 19. On 8 October 2015, Lam received HKD 420,000 from Huge Fairway.
4. The response to that first draft, from Piper Alderman for the Plaintiff, was by letter dated 1 August 2023. The solicitors for the Plaintiff amended Agreed Facts 18 and 19 to include the words now sought to be varied, as follows (with the amended marking as included in the document from the Plaintiff's solicitors): "18. On 6 October 2015, Lam received HKD 780000 from Huge Fairway Trading Limited (Huge Fairway) a company associated with Liu- being part payment of the amount paid by Tianhe. 19. On 8 October 2015, Lam received HKD 420,000 from Huge Fairway being part payment of the amount paid by Tianhe."
5. In the correspondence which followed, from 4 August 2023 to 22 September 2023, seven revised versions of the SOAF were exchanged. In every one of these revisions, the form of paragraphs 18 and 19 (renumbered from 1 September 2023 as Agreed Facts 17 and 18) of the Agreed Facts remained unchanged, adopting the words proposed for the Plaintiff.
6. The Agreed Facts and Issues were signed by the three counsel for the parties and filed on 13 October 2023.

The chapeau to the SOAF

1. The SOAF contained a chapeau which was expressed in bold in the following terms: "This document has been prepared in accordance with the orders made by Chen J on 12 May 2023 to assist the Court in considering the issues in dispute on the Statement of Claim and Amended Defence, and is without prejudice to the argument the parties might have pursued in the absence of this document, each of the parties being entitled to rely on the terms of the above pleadings which they have filed in the proceedings. The document is not intended to, and does not, enlarge or narrow the issues in dispute but instead seeks to provide a convenient summary of the questions posed in these proceedings."

Agreed Facts 17 and 18 found elsewhere

1. The same agreed factual position as stated in [17] and [18] of the Agreed Facts component of the SOAF is also found in the Joint Chronology and reflected in the plaintiff's opening submissions.
2. The Joint Chronology signed by legal representatives for the parties, was filed on 2 February 2024 contains the same terminology.
3. In the plaintiff's opening submissions, the plaintiff advanced, again, Agreed Facts [17] and [18] in the same terms as they appear in the Agreed Facts and Issues. The reference sources cited by the plaintiff as set out in those opening submissions are the Agreed Facts and Issues and the affidavit of the defendant. However, the reference to the first defendant's affidavit incorporates a reference to payment he received from Huge Fairway on 6 and 8 October and an assertion as to a statement attributed to the plaintiff which was contested in the proceedings as part of a dispute as to whether the plaintiff received RMB 7 million in addition to a payment of RMB 6.5 million from Tianhe.
4. In oral opening submissions, the plaintiff's counsel did not address the timing of individual payments from Tianhe to the plaintiff or from the plaintiff to the defendant, but made a submission as to the timing of the Tianhe payments consistent with Agreed Facts [17] and [18]: "…whatever money was paid by Tianhe to them, and ultimately was paid directly to my client, would then be distributed one third each to the person who actually did the work, Mr Bowie Cheng, to Mr Lam for the referral and to my client. There is a dispute in the proceedings, and this is really the gravamen of the factual dispute about how much was paid by Tianhe deal to my client which was then to be distributed one third each to those parties. My client says he was paid 6,500,000 RMB."
5. This is not a concession as to the accuracy of pars [17] and [18] of the SOAF but, when properly understood, in terms of the issues in the proceeding, the reference to RMB 6.5 million sits contrary to what is contained in those paragraphs.

Legislative provisions

1. Section 191 of the Evidence Act provides: 191 Agreements as to facts (1) In this section-- "agreed fact" means a fact that the parties to a proceeding have agreed is not, for the purposes of the proceeding, to be disputed. (2) In a proceeding-- (a) evidence is not required to prove the existence of an agreed fact, and (b) evidence may not be adduced to contradict or qualify an agreed fact, unless the court gives leave. (3) Subsection (2) does not apply unless the agreed fact-- (a) is stated in an agreement in writing signed by the parties or by Australian legal practitioners, legal counsel or prosecutors representing the parties and adduced in evidence in the proceeding, or (b) with the leave of the court, is stated by a party before the court with the agreement of all other parties.
2. Section 192 then provides in relation to any issue of the Court granting leave: 192 Leave, permission or direction may be given on terms (1) If, because of this Act, a court may give any leave, permission or direction, the leave, permission or direction may be given on such terms as the court thinks fit. (2) Without limiting the matters that the court may take into account in deciding whether to give the leave, permission or direction, it is to take into account-- (a) the extent to which to do so would be likely to add unduly to, or to shorten, the length of the hearing, and (b) the extent to which to do so would be unfair to a party or to a witness, and (c) the importance of the evidence in relation to which the leave, permission or direction is sought, and (d) the nature of the proceeding, and (e) the power (if any) of the court to adjourn the hearing or to make another order or to give a direction in relation to the evidence.
3. The status of facts agreed under s191(2) must depend upon whether the defendant can satisfy the pre-conditions set out under s191(3): 1. The agreed fact is to be stated in an agreement in writing. 2. The agreement in writing must be signed by (for present purposes) legal counsel representing the parties. 3. The agreed fact must be adduced in evidence.
4. It follows for the aforementioned discussion that the following requirements of s 191(3) are satisfied in the present case: 1. stated in an agreement in writing; and 2. have been signed by legal counsel for the parties.
5. As to the third requirement the SOAF has sought to be tendered with respect to the Agreed Facts with an objection made to the tender so far as it concerns the aforementioned aspects of paragraphs [17] and [18].

Consideration of the application of s 191

1. The plaintiff made the following submissions as to why the Agreed Facts component of the SOAF was not an agreement as to facts for the purposes of s 191 of the Evidence Act: 1. The chapeau relevantly stated that the document was "without prejudice to the arguments the parties might have pursued in the absence of this document". What the chapeau makes plain is that the document is, in substance, an aide memoire or, at the very least, makes plain that the plaintiff preserved his right to raise an argument concerning factual matters (including about the timing of when the funds were "paid" by Tianhe). 2. Whilst not determinative, it is informative that there is no statement in the document to the effect that it has been prepared pursuant to s 191 of the Evidence Act. It would expect that if the defendant had intended the document to have this effect, he would have included such a notation. 3. Whilst not determinative, it is informative that the orders made by Chen J on 12 May 2023 did not refer to s 191 of the Evidence Act, nor indicate that the document would be binding on the parties. The order reflected what is provided for in paragraph (d) of the Usual Order for Hearing found in Practice Note SC CL 1. It cannot be the case that the usual order for Hearing requires parties to enter into an agreement for the purposes of s 191 of the Evidence Act. 4. At the very least, the chapeau would have cast doubt on the question as to whether the plaintiff regarded the document as constituting an agreement for the purposes of s 191 of the Evidence Act and the defendant could have, but did not, write to the plaintiff to confirm the position. Rather, counsel for the defendant remained silent on the issue and through the adoption of a very strained construction of the document, they sought to deploy it after the evidence had closed. 5. The Court may readily infer that it did not even occur to the defendant that the SOAF could operate as a statement of agreed facts until after the close of evidence. Section 191(2)(b) provides that evidence may not be adduced to contradict or qualify an agreed fact, yet very experienced senior counsel did not object to the plaintiff adducing such (allegedly) contrary evidence and elected to cross-examine on the fact as if it were a live issue in the proceedings.
2. My assessments of the contentions advanced by the plaintiff in this respect are as follows: 1. The chapeau says nothing about reserving a change of position in relation to Agreed Facts. Were it to do so, the document would not be compliant with Chen J's orders. That is plain from the use of the words "the issues in dispute" and "the document is not intended to, and does not, enlarge or narrow the issues in dispute". The reference to "without prejudice to the argument the parties might have pursued in the absence of this document" in the chapeau was, in my view, directed to considerations of the issues in dispute and the questions in the proceedings. 2. It is not a necessary condition for the provisions of s 191 of the Evidence Act to operate that a notation would be incorporated in the Agreed Facts document. The clearer indication that it was intended to be caught by the provision is the signature of all counsel. 3. There is nothing in the orders of Chen J which characterises the SOAF as anything other than a formal binding document intended to have operative effect, and to the extent admissions were contained, as admissions with the purpose of facilitating the conduct of these proceedings. 4. Whether the use of the Agreed Facts within the SOAF by the defendant is strained is immaterial to the determination here under consideration. 5. It was not necessary for counsel for the defendant to alert the plaintiff who was legally represented, to that which, on the face of the document is obvious. 6. There is some real force to the fifth proposition advanced by the plaintiff, particularly given the timing of the tender of the SOAF and cross-examination of the plaintiff. However, those considerations do not change the character of the document such as to render it other than what is purports to be, even though they do relevantly and directly concern the next question I will address below. Nor do those considerations alter the fact that the preconditions under s 191(3) are met. There is of course the issue of objection taken by the defendant to the tender of the SOAF, but that objection was relevantly confined to a part of paragraphs [17] and [18] of the Agreed Facts component of the SOAF, which, as expressed, conveyed the content of what was agreed between the parties. The fact that that position was reached after long negotiations simply serves to confirm the fact that the parties intended to incorporate the words which are found in those paragraphs. 7. When viewed in light of all of those considerations, there is no proper basis, in my view, to object to the admissibility of the SOAF, even if tendered late in the proceedings.

The use to which the SOAF can be put

1. In its written submissions, the defendant exposed in fairly stark terms a use to which it intended to employ the admissions found in paragraph [17] and [18] of the Agreed Facts component of the SOAF. Most of those issues relate to the subject matter of the next heading within this judgment. It is convenient to capture them here whilst minimising, so far as possible, repetition in that following section. The intersection with the defendant's case is as follows: 1. The withdrawal of the admission in paragraph [17] and [18] is tantamount to a withdrawal of an admission that HKD 1.2 million was paid to the defendant from Huge Fairway, a company associated with the plaintiff, being a part payment of the amount paid by Tianhe by 8 October 2015. The defendant went further to submit that the withdrawal of the admission that the alteration to paragraphs [17] and [18] amount to a withdrawal of an admission that funds had been paid by Tianhe before 6 October 2015 and before 8 October 2015. 2. The admissions need to be considered in the light of the evidence the plaintiff gave in the proceedings concerning his receipt of a payment from Tianhe in September and October 2015. The defendant submitted that the plaintiff's evidence on the subject was confused, equivocal and unsatisfactory. The defendant also contended that the plaintiff's confusion appeared to arise from his attempt to provide a logical explanation for, on one version of events, his payment of money to the defendant in September and October 2015, while he sometimes said that he did not receive Tianhe money until March 2016. 3. Reference was made to a number of statements made during cross-examination in relation to the payment receipt of monies in connection with Tianhe in September to October 2015, which, whilst bearing heavily on the subject matter of the next heading of this judgment, are convenient to set out in the light of the immediate issue and the later issue. It was submitted that the plaintiff gave the following evidence: 1. asserted he was paid by Tianhe in February 2015 and March 2016 2. agreed he was paid 5,000,000 RMB on 22 March 2016 and 1,500,000 RMB on 2 August 2016. This is consistent with his affidavit evidence; 3. said he paid the defendant in September and October 2015 with his own money as an "investment"; 4. said he received a payment in September and October 2015; 5. said he was not paid money in September and October 2015; 6. said money he paid out after March 2015 was out of money received from Mr Zhang; 7. said he received 5 million in March 2015; 8. said he could not remember if anybody received any money in March 2015 from this venture; 9. said he received 1.5 million in March 2015; 10. said he did not receive any payments from Tianhe in September and October 2015, but received payments in 2016. 1. Ultimately, the defendant wished to advance the following propositions in his case in this respect: 1. the agreed payment in respect of the Tianhe Venture from Tianhe to the plaintiff, the defendant and Bowie Cheng, to be split equally, was for far more than RMB 5 million; 2. the plaintiff did receive a large payment, being an amount of, or up to, RMB 7 million around but prior to 8 October 2015; 3. of that sum, the plaintiff disbursed HKD 1.2 million to the defendant; 4. of that sum, the defendant disbursed the equivalent HKD 1.2 million or greater sum to Bowie Cheng; 5. to the extent that some of the plaintiff's evidence under cross-examination sought to deny receipt of a substantial amount of funds from Tianhe in respect of the Tianhe Venture around or prior to 8 October 2015, that evidence was false; and 6. the inherent probability was that the RMB 1 million paid to Jiayi on 8 October 2015 came from the same source as the HKD 1.2 million paid to the defendant.

What did the Plaintiff Receive as Payments from Tianhe? What was the source of the RMB 1 million Payment made to Jiayi by the plaintiff?

1. I will commence by discussing, in the broad, the respective cases of the parties as to these issues.
2. On the plaintiff's account and on his pleadings, he received: 1. RMB 5 million on 22 March 2016, being the amount paid by Tianhe for the work conducted; and 2. RMB 1.5 million on 2 August 2016, being an amount paid as reimbursement for costs incurred.
3. I note that the defendant submitted that the plaintiff changed his evidence in respect of the second payment from being for an unidentified costs and expenses as opposed to what the defendant quoted as being "to start a new project, but that project was not a very big one - not a familiar one - it's only for 1,500,000 only". However, I do not consider this criticism is based upon a fair representation of the plaintiff's evidence, which in a full extract from the evidence the defendant was referring to was as follows: "A. INTERPRETER: The 1.5 was not to reimburse previous expenses. It's to start a new project, but that project was not a very big one - not a familiar one - it's for 1.5,000,000 only."
4. Particularly having regard to some of the difficulties of the evidence being taken through an interpreter I do not consider that it may be concluded that the plaintiff's evidence is inconsistent in that respect.
5. The defendant challenged the veracity of the plaintiff's evidence on this saying there was only his account in cross-examination to substantiate the payment as an expense as there was no documentary recording and no list of expenses.
6. In the second plaintiff affidavit, the plaintiff acknowledged he had received RMB 6.5 million from Tianhe in two payments, one of which was RMB 1.5 million. In the same affidavit he referred to a promise from Mr Zhang to pay RMB 5 million to him shared equally with the defendant Mr Cheng and the plaintiff for the acquisition of a new auditor. Later in that affidavit he described the source of the RMB 1.5 million to be a reimbursement for costs but nonetheless attributed the payment to the agreement with Tianhe.
7. The plaintiff's evidence in this respect is unsatisfactory. However, he ultimately accepted that the payment of RMB 6.5 million not only came from Tianhe but as part of the Tianhe deal. I make a factual finding in those terms.

The Circumstances of entry of the Agreement and was the Agreement executed by both parties?

1. As earlier discussed, the defendant received a copy of the Agreement on 8 May 2018 from the plaintiff by WeChat message in which he was asked to sign the Agreement. I have found that the evidence indicated that the defendant understood that he was being asked by the plaintiff to do so and to bring a hard copy of it to a meeting.
2. The defendant stated that he signed the Agreement with his English signature and returned the document, so executed, to the plaintiff by WeChat on 9 May 2018.
3. The defendant submitted that he also signed the Advocatus Law document with his English signature and returned it in a pdf form to the plaintiff.
4. The first three pages of the Agreement before the Court contained 2 signatures other than the defendant's English signature. One of those signatures is that of the plaintiff in the lower left-hand corner. The other is a signature in Simplified Chinese character which appears on the lower right-hand side of the English signature of the defendant. The plaintiff contended that the signature is that of the defendant and the defendant resisted that notion. A related consideration is whether the Agreement was signed by the defendant at a meeting between himself and the plaintiff at the Grand Hyatt Hotel in Shenzhen, China ("the Grand Hyatt") on 14 May 2018 in the defendant's hotel room.
5. In part, those considerations require consideration of the evidence given by the plaintiff and the defendant. In part, those issues attract a consideration of the report of Mr Dubedat. I will commence with further consideration of the defendant's evidence.
6. In the first defendant affidavit, the defendant stated that he did sign the Agreement with his English signature (as he did for the Advocatus Law document). He stated that he did not sign a Chinese signature to the Agreement. He then gave the following evidence as to a meeting in Shenzhen on 14 May 2018: "I was in Shenzhen on 14 May 2018. I travelled to Shenzhen from Beijing on China Southern Airlines flight C2156, with an arrival at Shenzhen at 12.25pm. I travelled to the Grand Hyatt Hotel directly from the airport arriving not before 2.00pm. A copy of my travel itinerary from Australia Peace Travel dated 13 May 2018 is at page 315 of Exhibit KL-1. On this stay I met with Tuo Liu, including in my hotel room."

THE OFFER AND ACCEPTANCE ISSUES

1. On the first day of the hearing of this matter, senior counsel for the defendant articulated an unpleaded allegation concerning a contended deficiency in the offer and acceptance of the Agreement. As earlier mentioned, ultimately, with some procedural adjustments, the proceedings were braced to deal with that issue.
2. Although expressed in a different order in written submissions, ultimately the plaintiff advanced its case to demonstrate offer and acceptance on two alternative bases. 1. The primary basis was that there was offer and acceptance when the plaintiff and the defendant signed the Agreement in the defendant's hotel room in Shenzhen of 14 May 2018. 2. Alternatively, offer and acceptance was completed by the defendant signing the Agreement with his English signature and forwarding it to the plaintiff on 9 May 2018 because: 1. the offer was made by the plaintiff when the Agreement was sent to the defendant by WeChat message for execution on 8 May 2018 with an accompanying statement in the WeChat message which I have earlier set out in this judgment; and 2. the offer was accepted (and the acceptance was communicated) when the defendant sent the Agreement, signed with an English signature, back to the plaintiff via WeChat on 9 May 2018.
3. At the outset of dealing with the defendant's submissions I note my acceptance of the principles articulated by the defendant as bearing upon the resolution of this issue. These were as follows: 1. The conventional analysis of whether a binding agreement has arisen is by reference to the existence of offer and acceptance: Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678; The Crown v Clarke (1927) 40 CLR 227 at 234, 239-240, 243. 2. An offer is conduct which a reasonable person in the position of the offeree would understand to be an expression of willingness to contract on specified terms: Heydon on Contract (Thomson Reuters, 1st edition, 2019) ("Heydon on Contract") at [2.10]. 3. By contrast, an invitation to treat is an offer to negotiate, not an offer to be bound by a contract: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 266. 4. The offer and acceptance must precisely correspond. Any departure from the offer will result in the purported acceptance being ineffective. 5. In Redowood Pty Ltd v Mongoose Pty Ltd (2004) 49 ACSR 172; [2004] NSWSC 101, Einstein J extracted from Anson's Law of Contract, 27th Edition at [85] as follows: 1. If a contract is to be made, the intention of the offeree to accept must be expressed without leaving room for doubt as to the fact of acceptance or as to the coincidence of the terms of the acceptance proposed and those of the offer. These requirements may be summed up in a general rule sometimes called the mirror image rule. 2. This statement of principle was adopted on appeal: Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 at [130] (Bryson JA, Spigelman CJ agreeing). See also Quadling v Robinson (1976) 137 CLR 192 at 201. 3. As the author of Heydon on Contract at [2.350] states, "normally an apparent variation in the acceptance of terms in the offer, or the introduction of some additional term, will prevent the purported acceptance from being an acceptance."

WAS THE JIAYI LOAN AGREEMENT ENTERED INTO BY ANY PARTNERSHIP

Were the plaintiff and defendant in a partnership?

1. In respect of the Jiayi Loan Agreement, the CAN deal and the Tianhe Venture, the defendant contended that he and the plaintiff entered into a partnership (or two separate partnerships) in respect of the Jiayi Loan Agreement and the Tianhe Venture. The defendant accepted that he, as the party alleging the existence of the partnership, bears the onus of proving it, in the sense of a factual or evidentiary onus.
2. The relevant pleaded allegations regarding the proposition that the Jiayi Loan Agreement was entered into by a partnership were as follows: 1. the Partnership was said to have been entered into in China (FAD 3) 2. the terms of the Partnership Agreement were said to have been partly oral and partly implied (FAD [3(c)], with the only pleaded terms being that: 1. the parties would share equally all profits and liabilities arising from various business ventures entered into by the Partnership ([3(e)(i]); and 2. liability for loans taken out by or on behalf of the Partnership would be shared jointly including any right of indemnity arising pursuant to the guarantee given by the plaintiff pursuant to the Jiayi Loan Agreement (FAD [3(e)(ii)]); 1. a non-exhaustive list of the Partnership's activities includes: (i) entry into the Loan Agreement; (ii) the receipt and use of the funds advanced under the Loan Agreement; (iii) the payment of the Judgment Debt; and (iv) the Tianhe Venture (but only so far as it concerned the plaintiff and the defendant and not Mr Cheng) FAD.[3(d)], and the cross-references to [3(f)], [5(b)], [5(d)], [9(a)], [20(b)] and [26]; and 2. the Partnership was said to have been terminated in early 2020 (being a matter in respect of which there is no evidence, nor any pleaded allegation as to the fact or event that resulted in the termination of the partnership) (FAD [3(g)].
3. The pleadings in relation to the existence of a partnership with respect to the Tianhe Venture were unclear. FAD [3(d)] has a cross-reference to FAD [26] which stated that the Tianhe Venture was undertaken within the scope of, and by, the partnership and a third-party Mr Cheng. The "partnership" is defined in FAD [3] by reference to the Jiayi Loan Agreement which says that the partnership was continued or alternatively entered or varied to include various activities, as I have mentioned, which included the Tianhe Venture. The plaintiff and defendant were said to be equal partners in the Tianhe Venture and, in particular, had equal shares to a payment of RMB 7 million made by Tianhe to the plaintiff in and about early September 2015.

No partnership with respect to Jiayi Loan Agreement or the CAN deal

1. It is useful to make a number of preliminary observations with respect to this issue.
2. Firstly, it should be emphasised that the conclusions reached under this heading are very much dependent upon the findings of fact already made by the Court under the section of the judgment dealing with fact finding.
3. Secondly, counsel for the plaintiff is correct to submit that, if the Court were to find that the Jiayi Loan Agreement was entered into as a partnership transaction, it would follow that, each of them would be liable for half of the Jiayi Loan. In contrast, the Agreement would have the effect of casting sole responsibly for the Jiayi loan liability onto the defendant. In those circumstances, counsel for the plaintiff is correct to submit that a finding that there was a partnership with respect to the Jiayi Loan Agreement is incompatible with the obligation cast by the Agreement. The notion of a partnership agreement and the Agreement cannot, in that respect, stand together.
4. Thirdly, counsel for the plaintiff is also correct in submitting that, if there was a partnership in respect of the Jiayi Loan Agreement, the plaintiff must fail in relation to the test whether or not the Agreement was intended to have legal effect. The converse is also the case, namely, that, if the Agreement did have legal effect, the Court may find that there was no partnership agreement. As will be evident from the structure of this judgment I have approached the partnership issue first in order but will ultimately find that there was an intention to create legal relations with respect to the Agreement; a conclusion that sits ill with any proposition that there was a partnership arrangement with respect to the Jiayi Loan Agreement. Nonetheless I will address the entirely of the partnership issues below.
5. Fourthly, the defendant contended that the partnership arose "in and after 2011" when the defendant and the plaintiff entered into business partnerships in China such, that by June 2014, when the Jiayi Loan Agreement was signed the defendant and plaintiff had been in an ongoing partnership which was continued. It was contended, in the alternative, that a partnership agreement was entered or varied to include the Jiayi Loan Agreement. Thus, it was argued that the Jiayi Loan Agreement was entered into in or by an existing partnership between the plaintiff and defendant or alternatively the agreement between the plaintiff and the defendant in relation to the CAN deal and Jiayi Loan Agreement gave rise to a partnership.

No Tianhe Venture partnership

1. I nextly propose to deal with the question of whether there was a partnership between the plaintiff and the defendant in relation to the Tianhe Venture.
2. This issue was raised as a defence. It is a flawed defence because I will find against the existence of a partnership in this respect and also contrary to the defendant's factual contentions underpinning claims in this respect. There are other flaws in this aspect of the defendant's case which I will discuss below.
3. I will turn firstly to the consideration of whether there was a partnership between the plaintiff and the defendant in relation to the Tianhe deal.
4. In my view, there is cogent reasons why a partnership of this character was not formed for the following reasons: 1. the Tianhe deal was, in substance, a single referral which does not constitute the "carrying on of a business" or possess the quality of something of a permanent character": Hope at 582; (Mason J); Forbes at [78] (Crennan J); although, see United Dominions at 15 where Dawson J suggested that the emphasis which will be placed on continuity "may not be heavy"; 2. Mr Cheng was in the same position as the plaintiff and the defendant in relation to the Tianhe deal. There is no proper basis upon which the Court may conclude that a partnership arose between the plaintiff and the defendant, but not between the plaintiff, the defendant and Mr Cheng; and 3. the Tianhe deal is consistent with the plaintiff's evidence that from time to time he and the defendant would refer opportunities and business contacts to each other with the expectation of a financial reward. The Tianhe deal was offered to the plaintiff. What followed was the defendant being asked to help the plaintiff locate someone who could assist by doing the necessary auditing work. The defendant did just that when he identified and introduced Mr Cheng to the deal.
5. In any event, the defendant has not established on the evidence that the defendant has received less than his full entitlement to the fees paid by Tianhe. That conclusion proceeds from the findings that I have made that the plaintiff received from Tianhe RMB 6.5 million (and not an additional RMB 7 million) and by reference to the totality of the so-called partnership accounts of which there is no evidence and by reference to the actual payments made by the plaintiff to the defendant. That assessment proceeds on the basis that it is relevant to the plaintiff's entitlement to recover damages under the Agreement that a partnership was formed between himself and the defendant in relation to the Tianhe Venture. The further issues arising in this respect will be dealt with later in this judgment in considering whether there was a set-off or a repayment.

Conclusion

1. It follows in answer to issue 4 is that the plaintiff did not hold any monies for any partnership with the defendant. It also follows that for the purposes of issue five that given there was no partnership between the plaintiff and the defendant, no partnerships were used to repay Jiayi.

WHETHER THE AGREEMENT WAS INTENDED TO CREATE ENFORCEABLE LEGAL RELATIONS

1. As stated in Heydon on Contract (at [4.20]), the "rule protects a promise who reasonably relied on the apparent intention inherent in the promise from the risk that the promisor can escape liability by relying on an uncommunicated intention not to be bound".
2. The inquiry may take account of: (i) the subject‑matter of the agreement; (ii) the status of the parties to it; (iii) the parties' relationship to one another; and (iv) other surrounding circumstances: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [25] (Gaudron, McHugh, Hayne and Callinan JJ) ("Ermogenous").
3. In determining the issue of whether there was an intention to create legal relations, what is required is an objective assessment of the state of affairs between the parties as distinct from the identification of any subjective reservation or intention and it does not involve a search for the uncommunicated subjective motives or intentions of the parties: Ermogenous at [25]. The "intention" in this context concerns what would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements or actions happened.
4. In addition to their pre-contractual conduct, the parties' subsequent conduct is relevant and admissible on the question of whether they intended to form a legally binding agreement: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] (Heydon JA); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 at [99]-[105] (Giles JA, with whom Hodgson JA and Campbell JA agreed).
5. There was an issue between the parties as to onus and whether any presumptions operated upon the determination of whether there was an intention to create enforceable legal obligations by the making of the Agreement. In particular, the question was raised as to whether there is a presumption that, in commercial transactions, there is an intention to create legal relations, and, the onus of proving the absence of such intention, rests with the party who asserts that no legal effect is intended ("the presumption"). The conclusion I will reach in that respect is ultimately in conformity with the judgment of Chen J in OLI 1 Pty Ltd (in liq) v OLG 1 Pty Ltd (No 2) [2022] NSWSC 1199 at [49], namely, the legal onus of establishing the existence of establishing an agreement and the intention to create legal relations remains with the party asserting it.

Conclusion: Intention to create legal relations

1. The evidence, including the objective circumstances to which I have referred, results in the conclusion that the plaintiff and the defendant intended to affect legal relations when entering into the Agreement. The Agreement was also used by the plaintiff to assist him in delaying the enforcement of the Judgment Debt, but that fact is not inconsistent, in all the circumstances, with the Agreement also having legal effect as between the plaintiff and the defendant.
2. Issue 2 should be answered that the Agreement was intended to give rise to enforceable legal obligations.

ALLEGATIONS OF TRUST AND FIDUCIARY RELATIONSHIPS

1. In the FAD the defendant makes various pleadings under the heading "Plaintiff holds monies for the Partnership or the Defendant - Tianhe Payments".
2. The pleadings under that heading were as follows: 28. In and about early September 2015, a payment of RMB $7,000,000 was made by Tianhe to the Plaintiff arising from the Tianhe Venture for the benefit of the Plaintiff, the Defendant and Bowie Cheng in equal shares (the Tianhe 7 million tranche). 29. The Plaintiff has paid to the Defendant two payments from or in respect of the Tianhe 7 million tranche, by or through the account of Huge Fairway Trading Limited (Huge Fairway) being: (a) HK$780,000 on or about 6 October 2015; and (b) HK$420,000 on or about 8 October 2015. 30. Between September and December 2015 the Plaintiff paid the Lender RMB$1,000,000 from or in respect of the Tianhe 7 million tranche. 31. During the period On or about 22 March 2016 to 25 May 2016, a payments totalling of RMB$6,500,0005,000,000 were was made by Tianhe arising from the Tianhe Venture for the benefit of the Plaintiff, the Defendant and Bowie Cheng in equal shares (the Tianhe 6.55 million tranche). 32. The Tianhe 6.55 million tranche was paid by Tianhe to the Plaintiff for the benefit of the Plaintiff, the Defendant and Bowie Cheng. 33. On or about 6 April 2016, the Plaintiff paid the Defendant HK$702,987 from the Tianhe 6.55 million tranche. 34. On or about 2 August 2016 Tianhe made a payment of RMB$1,500,000 arising from the Tianhe Venture, for the benefit of the Plaintiff, the Defendant and Bowie Cheng in equal shares (the Tianhe 1.5 million tranche). 35. On or about 11 August 2016 the Plaintiff paid to the Defendant HK$341,490 in respect of the Tianhe 1.5 million tranche, by and through the account of Huge Fairway. 36. By reason of the matters set out in paragraphs 28, 31 and 34 the Plaintiff has already received RMB$10,000,0009,000,000 of Partnership funds, arising from the Tianhe Venture, or alternatively received RMB$5,000,0004,500,000 on trust for the Defendant; 37. To the extent the DefendantPlaintiff has used Partnership funds to repay monies to the Lender, then such repayment is: (a) a partial payment in satisfaction of the Agreement, or alternatively (b) in equity to be set off against the Plaintiff's claim in these proceedings; 38. To the extent the DefendantPlaintiff has not used Partnership funds received from the Tianhe Venture to repay the Lender and has not paid to the Defendant the portion of those funds to which the Defendant is entitled under the Partnership then the Plaintiff is in breach of the term of the Partnership Agreement pleaded in paragraph 3(e) (ii) above and his fiduciary dutiesduty to account to the Defendant for Partnership dealings and transactions and: (a) the Plaintiff's liability to the Defendant for those breaches is in equity to be set off against the Plaintiff's claim in these proceedings; and (b) the Plaintiff's claim cannot proceed without recognising the Plaintiff's fiduciary duty to account to the Defendant.

EQUITABLE SET-OFF AND REPAYMENT

1. There was no dispute as to the principles stated by the defendant with respect to this defence.
2. In HP Mercantile Pty Ltd v Dierickx (2013) 306 ALR 53; [2013] NSWCA 479, Emmett JA stated (Beazley P and Meagher JA agreeing) at [136]: "For there to be an equitable set-off, the set-off must essentially be bound up with and go to the root of, challenge, call in question, or impeach the title of the claimant. Equitable set-off is available where the party seeking it can show a recognised equitable ground for being, to the relevant extent, protected from its adversary's demand."
3. Emmett JA then (at [137]) gave three examples of situations in which impeachment will exist: where a mortgage is granted to a solicitor as security for costs and the mortgagor client has a cross-claim against the solicitor for faulty work; where a builder has a claim for money due under a building contract and there is an unliquidated claim against the builder for damages for breach of that contract; and where a lender fails to provide promised further advances for a development project and the borrower is, therefore, unable to complete the project and repay the advances actually made.
4. In Hawes v Dean [2014] NSWCA 380, the Court of Appeal (at [63]) endorsed the statement of principle extracted above and said (at [65]): "In all the hypothetical cases to which Emmett JA referred, two wrongs or defaults are so closely connected that a net position or result ought in equity to prevail between the parties because it would be unconscionable to allow one of them to insist on its legal right without first accommodating the other's countervailing legal right. It is the existence of that unconscionability that causes the first party's claim to be "impeached" (that is, undermined and defeated) by the second party's claim."
5. There must be such a connection between the claim and the cross-claim that the cross-claim can be said to impeach the claim so as to make it unfair for the claim to be allowed without taking account of the cross-claim: Forsyth v Gibbs [2009] 1 Qd R 403; [2008] QCA 103 ("Forsyth") at [10] (Keane JA, McMurdo P and Fraser JA agreeing).
6. One example where equitable set-off may arise is where the defendant's liability under the originating claim arose only because of, or was contributed to by, the originating claimant's breach of duty.

WHETHER INTEREST CLAIMED UNDER THE AGREEMENT IS PENAL

1. The issue raised by the defendant in this respect is whether the interest rate for overdue payments of 0.05% per day (18.25% per annum) prescribed in cl III of the Agreement is a penalty and, if so, whether any other interest rate should apply (Issue 7(b)). The plaintiff claimed interest at this rate from the date the SOC was filed, namely 20 April 2020. Alternatively, he claimed interest at the lower contractual rate of 0.02% per day, or in accordance with the Civil Procedure Act 2005 (NSW), s 100.
2. The relevant principles were adequately stated in the defendant's written submissions as the correct approach to a commercial contract. The following is based on those principles.
3. A contractual provision prima facie imposes a penalty if it is collateral to a primary stipulation and, upon the failure of the primary stipulation, imposes on the first party an additional detriment to the benefit of the second party: Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30 at [10].
4. A provision will be penal where the stipulated sum is extravagant or out of all proportion to, or unconscionable in comparison with, the maximum amount of damage that might be anticipated to follow from the breach: Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 ("Paciocco") at [29], [54], [158]-[162], [221] [331]. In Paciocco at [331], Nettle J stated: "For the same reason, the fact that the late payment fee may have been set by reference to what other banks were charging in the context of a competitive banking market is essentially irrelevant. As Lords Neuberger and Sumption observed in Cavendish, although the penalty rule originated out of equity's concern to prevent exploitation at a time when credit was scarce and borrowers were particularly vulnerable, the modern rule is substantive, not procedural. It does not normally depend for its operation on establishing that advantage was taken of one party. An obligation to pay a fee does not cease to be penal just because the obligee's competitors impose similar penalties on their customers. Where there is an incentive constituted of an obligation to pay a sum of money conditioned on a breach of contract of which the amount is wholly disproportionate to the greatest costs which would have been conceived of at the time of entry into the contract, the obligation will be regarded as penal unless there be some aspect of the contract which makes it possible to say that the amount of the obligation is not wholly disproportionate to the interest protected by the bargain."

MITIGATION OF LOSS

1. In my view there has been mitigation of loss by the plaintiff.
2. The plaintiff's defence in the Lower Court Proceedings and the Appeal Proceedings proceeded on the basis that he had no liability to Jiayi. It is reasonable that he would not make payments to Jiayi in respect of his liability as guarantor until such time as the judgment in the Appeal Proceedings was handed down (which occurred on 19 March 2018). Retaining lawyers to assist in defending the Lower Court Proceedings and pursuing the Appeal Proceedings was not an unreasonable act of mitigation.
3. As mentioned above, the plaintiff started making payments toward the Judgment Debt promptly after the judgment in the Appeal Proceedings was handed down on 19 March 2018 (with the first three payments being made on 7 May 2018).
4. On the evidence, the plaintiff did his best to obtain funds to pay the Judgment Debt as promptly as possible, which he ultimately did, notwithstanding the defendant's failure to make payment under the Agreement.

CONCLUSION

1. Subject to the question of adjustment for payment made by the defendant of RMB 300,000 to the second Intermediate People's Court, there should be judgment for the plaintiff.
2. The interest under cl III of the Agreement has been found to be penal and unenforceable. There remains a question as to what interest rate, if any, should be applied from 20 August 2020. The Court has expressed a preliminary view but makes provision for further submissions in this respect. The program for the same should be reflected in the Short Minutes of Order which the Court has directed will be filed and served.
3. No submissions on costs have been received. If there is an agreed position then that may be reflected in the Short Minutes of Order the Court will direct to be filed. If not, those Short Minutes of Order should provide for directions as to the receipt of submissions and evidence as to costs.

Orders

1. The Court orders and directs: 1. The plaintiff shall file and serve Short Minutes of Order reflecting this judgment within 28 days of the publishing of the judgment. 2. If there is any dispute as to the form of the Short Minutes of Order filed and served by the plaintiff in accordance with Order (1), then the defendant shall file and serve an alternative form of Short Minutes of Order within 35 days of the publishing of this judgment. 3. The Short Minutes of Order shall make provision for the receipt by the Court of submissions as to any adjustment to the judgment sum for any monies paid into a Chinese Court by the defendant, interest and costs (not exceeding five pages) in the event of any dispute as to those matters. The Short Minutes of Order shall also make provision for the filing and service of evidence in the case of a dispute as to costs. 4. In the event any one or more of the issues concerning monies paid into a Chinese Court by the defendant, interest and costs are resolved, the parties shall provide a note accompanying the Short Minutes of Order to that effect in which case the Court may deal with the consent orders administratively in Chambers.

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: 18 October 2024