//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2025] NSWCA 86
respondent. Appeal dismissed with costs. The primary judge's dismissal of Mr Sui's $1,499,000 claim remained in place; the unchallenged award of $150,000 plus interest was unaffected.
The Agreement gave Mr Sui choices about his investment from June 2020, but it did not force him to make one. Those choices had to be communicated by 31 December 2020, when the Agreement ended. Mr Sui's earlier requests for his money back and his attempt to terminate the Agreement did not clearly communicate that he was choosing the share-sale option. His later email and sale of the shares were outside the permitted period. He therefore did not acquire the right to claim the shortfall under Scenario 3, and his appeal was dismissed.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2,511 words · generated 07/10/2026
In 2017, Guangyi Sui agreed to invest $1.5 million in Australian Fulin Agriculture Pty Ltd (the Company), associated with Zhaoqing Jiang. The Company was intended to hold Crown Leases over undeveloped land in the Northern Territory. The written Agreement, signed on 26 May 2017 and mostly drafted in Mandarin, provided for Jiang to transfer 40% of the Company shares to Sui and for Sui to pay the investment. Those steps occurred in June 2017 ([6]-[9]).
1 cited instrument linked from this judgment.
Clause 4 first guaranteed Sui an annual return of 10% for three years. The parties did not dispute that this meant three payments of $150,000, due on 15 June 2018, 2019 and 2020. The first two were paid; the third was not ([10], [19]). The primary judge later awarded Sui the unpaid $150,000 plus interest, and Jiang did not challenge that part of the judgment ([16]-[17]).
The appeal concerned a separate claim for $1,499,000. From 15 June 2020, clause 4 described three scenarios. Sui could request an increased return, choose to participate in the Company’s operation as a “true 40% shareholder”, or choose to leave the Company by transferring his shares. Under the third scenario, Jiang promised to make up the difference if the sale price was below $1.5 million ([12], [26]). Clause 5 stated that the Agreement was valid from signature “to December 31, 2020” ([13], [42]).
Sui had sought repayment before that choice period. On 30 August 2019 his solicitors purported to terminate the Agreement, and in September 2019 he began earlier proceedings. During the 2020 period, his litigation position continued to assert that the Agreement had been terminated and that he was entitled to damages on a different interpretation of its terms ([11], [103]-[111]).
Sui did not sell his shares until 17 May 2023, when he transferred them for $1,000. A solicitor’s email in February 2022 had referred to his right to sell the shares and seek a shortfall from Jiang, but both events were after the Agreement’s stated end date ([118]-[121]). The Court of Appeal dismissed Sui’s appeal with costs ([127]).
The Court’s analysis proceeded from the wording and commercial function of clauses 4 and 5. It rejected Sui’s submission that the three scenarios were mutually exclusive alternatives that he was obliged to elect between by 31 December 2020. The clause said that Sui was “entitled to” request or choose. The Court treated that as language conferring rights, not imposing a duty. Nor did it find another contractual basis for requiring him to choose ([32]).
That reading meant Sui could make no choice. The Court called this a possible “fourth” or default scenario: Sui remained a 40% shareholder without taking one of the affirmative steps described in clause 4 ([33]). Since there was no obligation to choose, failing to do so could not be the breach of contract for which Sui argued ([34]). The Court also rejected the suggestion that the default position was necessarily identical to Scenario 2. Scenario 2 could give Sui an additional contractual right to participate in the Company’s operation, beyond his ordinary rights as a shareholder ([58]-[63]).
The commercial purpose supported the reading of clause 4 as protective of Sui. For the first three years, Jiang bore the risk of the investment through the guaranteed annual return. Scenario 3 could let Sui exit with, in effect, the return of his $1.5 million capital. But the other scenarios contemplated continuing the investment on different terms or taking a more active role ([35]-[37]). Clause 5 then limited the period during which Jiang remained exposed to the contractual risk. The Court reasoned that allowing Sui to wait indefinitely before choosing could undermine that allocation of risk ([48]-[49]).
Clause 5 did not merely set a deadline for one particular option while leaving the rest of the Agreement alive. It said the Agreement itself was valid “to December 31, 2020”. The Court read that as a fixed term ending on that date. Because the Scenario 3 promise was part of the Agreement, Sui’s right to choose that scenario expired with the Agreement unless he had exercised it beforehand ([42]-[47]). Any rights already unconditionally acquired could survive termination, but the necessary steps to acquire the Scenario 3 rights had not occurred ([51]-[55]).
The Court next considered how a choice had to be made. The Agreement did not prescribe a particular form. The Court concluded that the choice had to be communicated to Jiang by words or conduct between 15 June and 31 December 2020 ([65]-[67]). Because choosing Scenario 3 meant taking a package of rights and giving up other possibilities, the communication had to be clearly and unequivocally referable to Scenario 3 ([79]-[86]).
Sui argued that the common law doctrine of election allowed a more nuanced inference from conduct. The Court distinguished that doctrine. It concerns a party faced with a mandatory choice between inconsistent rights, generally a binary choice. Clause 4 did not compel Sui to choose and set out three scenarios, with the possibility of choosing none. The central question was therefore not which right Sui had elected between in the technical sense, but whether he had communicated the exercise of his contractual Scenario 3 right ([71]-[73]).
The Court also explained why cases concerning affirmation of a contract did not change the result. In those cases, courts may need to decide whether conduct, sometimes equivocal, amounts to affirmation rather than rescission or termination. The possibility of drawing an inference from less unequivocal conduct is tied to that problem of attributing a binary choice. It did not displace the clear-communication requirement for Sui’s contractual choice ([74]-[78]).
Finally, the Court assessed the actual communications. The WeChat messages were sent well before the clause 4 window opened. They concerned repayment, termination, or a new arrangement, not a sale of Sui’s shares under Scenario 3 ([91]-[101]). The 2019 termination notice was also inconsistent with exercising Scenario 3: it asserted that the Agreement was at an end and sought repayment or damages ([103]-[106]). The litigation position during the 2020 window continued to claim termination and an entitlement relating to transfer of land, rather than communicating a choice to sell shares under Scenario 3 ([107]-[116]). The later email and share sale were too late ([118]-[122]).
The judgment does not purport to change the law. It applies established principles of contract construction and election to the text and commercial operation of this particular Agreement.
The relevant pre-existing doctrine of election was described through Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW). The Court quoted the proposition that election involves being confronted with mutually exclusive courses between which a party must choose ([71]). It also referred to Sargent v A.S.L. Developments Ltd, in which the relevant choice was between rescinding and affirming a contract ([75]-[77]). The judgment’s contribution is its explanation of why that doctrine did not determine the clause 4 question: there was no mandatory choice and no need to attribute a binary election to Sui’s conduct ([73], [78]).
For contractual choices, the Court relied on the requirement for clear and unequivocal communication. It discussed Ballas v Theophilos [No 2], where an option had to be exercised by a definitive communication, and Quadling v Robinson, in which the court considered acceptance of the rights and liabilities created by an option ([68]-[69]). The judgment’s conclusion was that, on this Agreement’s terms and nature, a choice had to be clear and unequivocally referable to the particular scenario ([80]).
On termination, the Court applied the distinction between rights already acquired and rights that depend on further contractual performance. It referred to McDonald v Dennys Lascelles Ltd for the survival of rights unconditionally acquired before termination ([51]). It also considered Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd and FPM Constructions Pty Ltd v Council of the City of Blue Mountains in explaining why a right dependent on a further act of performance cannot arise after the agreement has ended ([53]-[54]). In this case, choosing Scenario 3 was the necessary step to acquire its rights, and no such step occurred before termination.
The judgment also relied on the earlier Sui v Jiang appeal for the meaning of the reference to “40% equity” in the land. That earlier decision treated the reference as one to shares in a land-rich company, rather than a transfer of the land itself. The current appeal proceeded on that basis, which was not challenged ([29]-[30]). The earlier case addressed the subject matter of Scenario 3, not when or how its rights had to be exercised.
The supplied judgment contains no later decisions applying or distinguishing Sui v Jiang (No 2). Any account of how later courts have treated this judgment would therefore go beyond the available source.
At [32], the Court said that clause 4 “plainly confers rights on Mr Sui; it does not impose obligations on him.” In plain English, Sui was permitted to select one of the described courses; the clause did not make him liable for failing to select one.
At [33], the Court said that it was open to Sui not to choose any of the three scenarios. That means the contract allowed him to remain in his existing position as a shareholder without making an affirmative election under clause 4.
At [46], the Court said the “plain meaning” of clause 5 was that the Agreement was for a fixed term and would end on 31 December 2020. The significance was not simply that one option expired on that date. The Agreement containing the promise to make up a shortfall ended then.
At [51], the Court recognised that termination would not extinguish rights Sui had “unconditionally acquired” before the end date. But the qualification matters: an unexercised right that required a further act to bring it into existence was not already acquired.
At [80], the Court said the words or conduct used to communicate a clause 4 choice had to be “clearly and unequivocally referable to the particular Scenario”. In everyday terms, conduct that merely suggested dissatisfaction or a wish to recover money was not enough. It had to communicate that Sui was choosing the specific package of rights under Scenario 3.
At [114], the Court rejected the argument that the economic objective of recovering the investment could transform Sui’s actual words and conduct into an exercise of Scenario 3. The legal assessment turned on what those words and actions communicated, not only on what financial result Sui wanted.
At [122], the Court concluded that Sui “never validly exercised his Scenario 3 rights.” The conclusion followed from both the timing limit and the absence of a qualifying communication during the relevant period.
The reasoning is most relevant where a written agreement provides a time-limited right to select among different contractual courses, but does not expressly prescribe how the selection must be communicated. In that setting, the judgment indicates that the court will examine the actual text, the commercial purpose, whether choosing is optional or mandatory, and whether the agreement itself expires ([25], [32]-[38], [42]-[48]).
It is also relevant where a party argues that conduct should count as a choice because it pursued an economic outcome consistent with one option. The judgment distinguishes the desired outcome from the legal effect of the conduct. Seeking repayment or commencing litigation did not, without more, communicate an intention to exercise the share-sale scenario ([103]-[115]).
The decision may matter where a party relies on a technical doctrine of election to argue that ambiguous conduct should be treated as selecting one of several rights. The court’s analysis cautions that mere inconsistency between rights does not necessarily invoke the doctrine. The party must be confronted with a mandatory choice of the kind the doctrine addresses ([71]-[78]).
Timing is central. Here, the Agreement expressly ended on 31 December 2020, and the choice rights arose from 15 June 2020. The result may be different in a contract with different wording, no fixed expiry date, a separately stated exercise period, or a term preserving rights after expiry. This judgment does not decide those hypothetical cases; its reasoning depends on this Agreement’s terms and purpose ([39]-[55]).
The supplied judgment is dated 2 May 2025 and does not discuss any later treatment of itself. No later cases are identified in the materials provided, so it is not possible to state whether subsequent courts have followed, distinguished, or otherwise applied Sui v Jiang (No 2).
The judgment does explain how earlier authorities informed its reasoning. Immer supplied the description of election as a choice between mutually exclusive courses that a party must select between. Sargent and Elder’s Trustee were considered in connection with conduct said to affirm a contract, including the role of knowledge and the difficulty of attributing a binary choice from conduct ([71]-[78]). Ballas and Quadling were discussed in relation to communicating and exercising contractual options ([68]-[70], [79]).
The decision also drew on McDonald, Westralian Farmers and FPM Constructions for the distinction between rights already accrued when an agreement ends and rights that depend on an unperformed contractual step ([51]-[54]). Those authorities were not treated as establishing that a post-termination choice could create the rights Sui claimed. Rather, the contract’s end date and the unperformed requirement to communicate a choice controlled the result.
The Court expressly left unresolved the meaning of “the then market price” in Scenario 3. It noted a possible construction under which the relevant market price was the price when Sui exercised his choice, with later movements in share value falling to Sui’s risk or benefit. It did not decide the point because Sui had not validly exercised Scenario 3 ([123]-[124]).
The Court also did not determine whether the February 2022 solicitor’s email would, had it been sent within the exercise period, have been sufficient to communicate a Scenario 3 choice. It was unnecessary to decide that question because the email was sent after 31 December 2020 ([119]-[120]).
The judgment noted, but did not resolve, whether Scenario 1’s right to request an increased return might carry an additional obligation on Jiang to consider the request in good faith ([56]). It also left unexplored the circumstances in which Jiang might have made time of the essence by issuing a notice requiring Sui to elect, a submission made on Sui’s behalf on the assumption that the Agreement remained on foot ([50]).
More broadly, the decision does not establish a universal rule that all contractual choices require the same form of communication, or that every choice clause is subject to the same deadline analysis. It construed this Agreement, whose clause 4 conferred optional rights and whose clause 5 fixed an end date. The Court’s reasoning leaves the effect of materially different contractual wording to be assessed in its own context.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on, relying on, or using this analysis, have a qualified Australian lawyer check it.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Sui v Jiang (No 2) [2025] NSWCA 86
Hearing dates: 28 March 2025
Date of orders: 2 May 2025
Decision date: 02 May 2025
Before: Payne JA at [1];
Stern JA at [2];
McHugh JA at [3].
Decision: The appeal be dismissed with costs.
Catchwords: CONTRACTS — Construction — Whether contract imposed an obligation to elect between mutually exclusive scenarios — Whether valid election could be made after contract terminated
CONTRACTS — Construction — Requirement of clear and unequivocal communication or conduct to exercise rights — Where no relevant communication or conduct within relevant period
Cases Cited: Allianz Australia Insurance Limited v Delor Vue Apartments (2022) 277 CLR 445; [2022] HCA 38
Ballas v Theophilos [No 2] [1957] HCA 90; (1957) 98 CLR 193
Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603
FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26
McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457
Quadling v Robinson [1976] HCA 31; (1976) 137 CLR 192
Sargent v A.S.L. Developments Ltd [1974] HCA 40; (1974) 131 CLR 634
Sui v Jiang [2021] NSWCA 285
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; (1936); 54 CLR 361
Category: Principal judgment
Parties: Guangyi Sui (Appellant)
Zhaoqing Jiang (Respondent)
Representation: Counsel:
M Young SC (Appellant)
SA Lawrance SC; BJS Smith (Respondent)
Solicitors:
Dixon Holmes Lawyers (Appellant)
Sunfield Chambers Solicitors & Associates (Respondent)
File Number(s): 2024/00399278
Publication restriction: Nil.
[This headnote is not to be read as part of the judgment]
On 26 May 2017, Mr Guangyi Sui and Mr Zhaoquing Jiang entered into a written agreement (the Agreement) which regulated the terms on which Mr Sui would invest in a company (the Company) that was to hold Crown Leases in undeveloped land in the Northern Territory. The Agreement was mostly written in Mandarin. Pursuant to cll 2 and 3 of the Agreement, Mr Jiang agreed to transfer to Mr Sui 40% of the shares in the Company and Mr Sui agreed to pay $1.5 million into the Company’s bank account. Those steps occurred in June 2017.
Clause 4 provided that from the commencement of the fourth year after Mr Sui made his investment (i.e., from 15 June 2020), Mr Sui could choose between three different scenarios. In Scenario 3, Mr Sui would “leave the company” by selling his shares “at the then market price”, in which case Mr Jiang promised to “make up the difference” if the “sale price is for less than AUD1.5 million.” Clause 5 provided that the Agreement was “valid from the date of signature to December 31, 2020.”
Mr Sui sold his shares in the Company for $1,000 on 17 May 2023. He commenced proceedings claiming that he had validly elected to choose Scenario 3 and that he was entitled to $1,499,000 from Mr Jiang, being the difference between the figure of $1.5 million in cl 4 and the price at which Mr Sui had sold his shares. The primary judge rejected this claim on the basis that Mr Sui had not exercised his “option” to leave the Company and sell his shares during the “option window” between 15 June and 31 December 2020. Mr Sui appealed against that decision.
The Court held (McHugh JA, Payne JA and Stern JA agreeing), dismissing the appeal:
(1) Clause 4 provided for three inconsistent Scenarios but it did not impose on Mr Sui an affirmative obligation to choose among them. The clause operated to benefit Mr Sui, not to expose him to an action for breach in the event he failed to elect among the Scenarios by 31 December 2020: [1] (Payne JA); [2] (Stern JA); [26]-[27]; [32]-[37] (McHugh JA).
(2) The meaning of cl 5 was that the Agreement was for a fixed term ending on 31 December 2020. Mr Sui could not perform any obligation nor validly exercise any right to choose among the three Scenarios after that date: [1] (Payne JA); [2] (Stern JA); [39]-[55] (McHugh JA).
(3) The common law doctrine of election applies where a party must choose between inconsistent rights. The words or conduct ordinarily required to constitute an election must be unequivocal in the sense of being consistent only with the exercise of one set of rights and inconsistent with the exercise of the other. To the extent that the doctrine may tolerate “less unequivocal” conduct in cases of affirmation of a contract, that is because of the need to attribute to a party’s conduct the exercise of a binary choice: [1] (Payne JA); [2] (Stern JA); [67]-[78] (McHugh JA).
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26; Sargent v A.S.L. Developments Ltd [1974] HCA 40; (1974) 131 CLR 634; Allianz Australia Insurance Limited v Delor Vue Apartments (2022) 277 CLR 445; [2022] HCA 38; Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603, considered.
(4) Clause 4 did not involve an election in the relevant sense. It did not require Mr Sui to choose among the three Scenarios. There was no need to attribute a choice to Mr Sui’s conduct. It follows from the terms and nature of the Agreement that the word “choose” in cl 4 required clear and unequivocal conduct or communication referable to a particular Scenario: [1] (Payne JA); [2] (Stern JA); [73], [78]-[80] (McHugh JA).
(5) Mr Sui never validly exercised his Scenario 3 rights. There was no communication of any description between 15 June and 31 December 2020, whether by words or conduct, of Mr Sui’s intention to exercise those rights. The earliest communication which might have sufficed did not occur until after 31 December 2020: [1] (Payne JA); [2] (Stern JA); [87]-[120] (McHugh JA).
P****AYNE JA: I agree with McHugh JA.
STERN J****A: I agree with McHugh JA.
McHUGH JA: This appeal turns on the construction of a contract between commercial parties and its operation on uncontroversial facts. In order to succeed, the appellant needs to establish a series of related propositions which the language and purpose of the contract do not support. The appeal should be dismissed.
In 2017, Fortune Agribusiness Funds Management Pty Ltd (Fortune) was a company associated with the respondent, Mr Zhaoqing Jiang. It was the holder of Crown Leases in respect of two blocks of undeveloped land in the Northern Territory with a total area of 20 square kilometres (the Land). It was intended that another company associated with Mr Jiang, Australian Fulin Agriculture Pty Ltd (the Company), would acquire the Crown Leases from Fortune, as the Company later did.
The Crown Leases imposed phased conditions on Fortune to clear, cultivate, prepare and plant specified areas of the Land for commercial crops. Importantly, the leases could be converted into freehold title if the phased development conditions were met. The leases were originally for a term of 5 years expiring on 14 September 2020. The term was extended by a year, and the leases were ultimately terminated on 13 September 2021.
The appellant, Mr Guangyi Sui, entered a written agreement with Mr Jiang on 26 May 2017 (the Agreement). This regulated the terms on which Mr Sui agreed to invest $1.5 million in the Company. The Agreement was mostly written in Mandarin. By the time the case reached the primary judge, Stevenson J, the translation into English was agreed.
The Agreement is short. The translation is set out in full below. However, it was imperfectly drafted by lay business people. As this Court determined in separate and earlier proceedings involving the same parties (the Earlier Proceedings), the legal meaning of the Agreement departs from the literal meaning of the words used: Sui v Jiang [2021] NSWCA 285 at [42]-[43] per Leeming JA (Gleeson JA agreeing). That being so, before turning to those words, it is convenient to observe by way of overview that the operation of the Agreement may be divided into three periods.
In the initial period, cll 2 and 3 provided for two steps to occur.
Mr Jiang agreed to transfer to Mr Sui 40% of the shares in the Company. That share transfer occurred on 9 June 2017.
Mr Sui agreed to pay $1.5 million into the Company’s bank account. Mr Sui paid that money between 9 and 15 June 2017.
Also in that initial period, a transfer of the Crown Leases from Fortune to the Company was registered on 18 December 2017.
The second period covered the three years to 14 June 2020. Clause 4 of the Agreement provided that Mr Jiang “guarantees the safety of the funds of [Mr Sui] in [the Company] and guarantees an annual return of 10% for three years”. It is not disputed that the effect of this provision was that Mr Sui was entitled to receive a cash payment of $150,000 on each of 15 June 2018, 15 June 2019 and 15 June 2020. The first two payments were made; the third was not.
“Date 26/05/2017 Place: Sydney
After many meetings to negotiate, [Mr Jiang] and [Mr Sui] have reached the following agreement on the comprehensive development of agricultural land in Alice Spring, Northern Territory, Australia and on the transfer of the equity in 20 square kilometres of agricultural land:
1. The agricultural land is located at NT Por6108 MOARRD, NT Por 6110 Perry RD, with a total area of 20 square kilometres.
2. [Mr Jiang] agrees to transfer 40% of the equity in the 20 square kilometres of agricultural land to [Mr Sui], and [Mr Sui] agrees to pay AUD 1.5 million (one million five hundred thousand Australian dollars) to the account of the newly established Australian Fu Lin Agriculture Investment Co.Ltd, which takes up 40% of the shareholding in the company. Within three working days from the date of signature of this agreement, [Mr Sui] shall remit to the payee and account specified by [Mr Jiang] the RMB equivalent of AUD 150,000 as an advance payment. The balance shall be transferred to the account specified by [Mr Jiang] … no later than 6 June 2017.
3. [Mr Sui] shall transfer in total between RMB 10 million and RMB 12 million to the account specified by [Mr Jiang]. [Mr Jiang] guarantees that the funds be safely remitted to [Mr Sui's] Westpac personal account in Sydney whose details are as follows: Payee: [Account Number omitted]. The funds will be converted to AUD using the bank exchange rate on the day. [Mr Sui] shall transfer the investment funds of AUD 1.5 million to the account of the new company: [Account Number omitted]. Should problems arise out of the process of remitting funds from China to Australia, [Mr Jiang] shall bear full responsibility.
4. [Mr Jiang] guarantees the safety of the funds of [Mr Sui] in Australian Fu Lin Agriculture Investment Co., Ltd. and guarantees an annual return of 10% for three years, i.e. [Mr Jiang] shall pay AUD150,000 cash to [Mr Sui] by the 365th day from the date AUD1.5 million enters the account. Returns shall be paid in similar fashion in the second and third year. From the fourth year onwards, [Mr Sui] is entitled to request an increase in the return on his investment, or choose to take part in the company's operation and become a true 40% shareholder, or choose to leave the company, but [Mr Sui] is entitled to transfer the 40% equity in the 20 square kilometres to others at the then market price. In the event the sale price is for less than AUD1.5 million, [Mr Jiang] shall make up the difference. Prior to the transfer of the land, [Mr Jiang] guarantees that [Mr Sui] has legal ownership of 8 square kilometres of the agricultural land and shall provide [Mr Sui] with relevant legal documents.
5. This agreement is valid from the date of signature to December 31, 2020. Matters not covered by this agreement may be dealt with through friendly negotiation. Although this agreement is written in Chinese it has the legal effect of an agreement written in English.
Party A Party B Witness
JIANG Zhaoqing SUI Guangyi CUI Shangzhe
[signature] [signature] [signature]”
The primary judge found that Mr Sui paid Mr Jiang the $1.5 million between 9 and 15 June 2017. As to the first two sentences of cl 4, his Honour found that the three payments of $150,000 each were therefore due on 15 June 2018, 2019 and 2020. There was no challenge to that conclusion.
As to the words “[f]rom the fourth year onwards” in the third sentence of cl 4, the primary judge found that the fourth year commenced on 15 June 2020. Again, there was no challenge to that conclusion.
It is convenient to address the parties’ arguments about the construction of cll 4 and 5 by reference to the terms of the Agreement, rather than by following the scheme of numbered Grounds 1-4 in the notice of appeal, which substantially overlap.
The essential elements of Mr Sui’s construction of the relevant parts of cl 4 and 5 are as follows:
the Agreement provided for three inconsistent “alternatives” (Ground 2);
Mr Sui was obliged to “elect” among those three (i.e., they were not “options”; he had to make an affirmative choice among them; there was no fourth alternative in which he was permitted to choose none of the three) (Grounds 1, 2 and 4);
Mr Sui was obliged to make that election no later than 31 December 2020, such that the failure by Mr Sui to elect by that date would be a breach of contract sounding in damages (Grounds 2 and 3);
an election made after 31 December 2020 would nevertheless be valid (i.e., the failure to elect by that date would not result in Mr Sui’s losing his cl 4 right to “choose”); accordingly, Mr Sui could perform his obligation / validly exercise his right to elect after 31 December 2020 (Ground 3).
In circumstances in which, as will be seen, Mr Sui is unable to point to any clear and unequivocal words or conduct exercising his cl 4 right to choose in the period from 15 June to 31 December 2020, that construction would afford Mr Sui at least two forensic advantages:
if the question is framed in terms of an “election” that Mr Sui was obliged to make among three “alternatives” by 31 December 2020, it is arguable that there should be attributed to Mr Sui’s conduct in the relevant period, even if it was somewhat equivocal, a choice among the three alternatives;
if Mr Sui was permitted to perform his obligation / validly exercise his right to elect after 31 December 2020, he engaged in conduct no later than May 2023 (when he sold his shares) which sufficiently conveyed the exercise of his cl 4 right to choose.
However, as will be seen, the second, third and fourth elements of Mr Sui’s construction are not established.
Mr Sui challenges the primary judge’s use of the word “option”, which implies an absence of obligation to choose. The word “alternative” (which Mr Sui uses in his notice of appeal) may suffer from the converse vice. It is preferable to use the more neutral language of “scenarios”. The issues before the Court are primarily matters of construction of the Agreement, not of taxonomy or the application of a label. The questions of substance are what rights or obligations did cl 4 confer or impose (a question of construction of contract), when and how were they to be exercised or performed (questions of construction of contract but also to some extent of general law principles), and whether or not that occurred (a question of fact).
The third and fourth sentences of cl 4 contemplate three different (and at least to some extent inconsistent) scenarios (Scenarios), as follows. From 15 June 2020 onwards, Mr Sui was “entitled to”:
“request an increase in the return on his investment,” (“Scenario 1”)
“or choose to take part in the company’s operation and become a true 40% shareholder,” (“Scenario 2”)
“or choose to leave the company, but [Mr Sui] is entitled to transfer the 40% equity in the 20 square kilometres to others at the then market price. In the event the sale price is for less than AUD1.5 million, [Mr Jiang] shall make up the difference” (“Scenario 3”).
Thus re-framed in the neutral language of scenarios, the first element of Mr Sui’s construction is made out.
Mr Sui founds his claim in Scenario 3 — in particular, in Mr Jiang's promise to "make up the difference".
It is important to note the aspect of Scenario 3 considered by the Court of Appeal in the Earlier Proceedings. The language of Scenario 3 includes the words, “[Mr Sui] is entitled to transfer the 40% equity in the 20 square kilometres” (emphasis supplied). A majority in the Court of Appeal (Leeming JA, Gleeson JA agreeing) held that the correct reading, having regard to the entirety of the contract, was that these words referred to the transfer of shares in a land-rich company, as opposed to a transfer of the land itself: see Sui v Jiang [2021] NSWCA 285 at [40]-[43]. That was so notwithstanding the last sentence of cl 4, which provides: “Prior to the transfer of the land, [Mr Jiang] guarantees that [Mr Sui] has legal ownership of 8 square kilometres of the agricultural land and shall provide [Mr Sui] with relevant legal documents.”
The primary judge accordingly proceeded on the basis that Scenario 3 was concerned with a transfer of shares in the Company, and that the reference to the “sale price” in the fourth sentence of cl 4 was to the price of the shares. There was no challenge to that approach on appeal. It may be noted that the Earlier Proceedings went to the subject matter of Scenario 3, rather than to how or when the rights it conferred were to be exercised, and thus do not govern the issues now before the Court.
Before turning to Scenario 3, it is convenient to consider the overall operation of cl 4 and 5, and then to say something about Scenarios 1 and 2.
Contrary to the second element of Mr Sui’s construction, cl 4 plainly confers rights on Mr Sui; it does not impose obligations on him. The proposition that cl 4 imposed an affirmative obligation on Mr Sui to choose among the three Scenarios (Ground 2) is a central plank of Mr Sui’s arguments on appeal. The proposition finds no support in the language of the Agreement. The words “entitled to” (appearing twice) are words of right, not of obligation. In that context, the word “choose” (also appearing twice) is directed to the nature of the right. There is no language suggestive of obligation. Nor is there any reason to depart from the literal meaning of the language used, or to imply such an obligation. (A specific argument made in the context of Scenario 2 is addressed below). The clause operates to benefit Mr Sui, not to expose him (as Mr Sui contends in Ground 3) to an action for “breach … giving rise to a potential award of damages” in the event that he failed to elect among the three Scenarios by 31 December 2020.
It follows from the fact that cl 4 does not impose any obligation on Mr Sui that it was open to him not to choose any of the three identified Scenarios. He could, instead, “choose” to take no affirmative step at the end of the first three years — described in argument as a fourth, “default” scenario — at which point his rights would be those of a 40% shareholder.
Contrary to the third element of Mr Sui’s construction, it follows from the absence of any obligation on Mr Sui to choose that, whatever else might be the consequence of failing to make an election by 31 December 2020, it could not be a breach sounding in damages.
The operation of cl 4 as described above is consistent with its evident commercial purposes. As between Mr Sui and Mr Jiang, cl 4 cast the risk of the first three years of Mr Sui’s investment on Mr Jiang. The Agreement provided that in the three years to June 2020 Mr Sui was entitled to a guaranteed annual return of 10%. If Mr Sui then chose Scenario 3, he could exit his investment with, in effect, the guaranteed return of his $1.5 million capital. The economic effect of the Agreement was that in the first three years of his investment, Mr Sui’s role bore some similarities to that of a fixed-term debt provider, or the holder of a redeemable preference share. (Mr Sui’s position in his own statement of claim in the Earlier Proceedings had gone further, describing his initial payment of $1,500,000 as a “loan” at [7(b)], and his 40% shareholding “as security under the Agreement” at [4].)
But to exit the investment after three years under Scenario 3 might well not have been the most attractive choice for Mr Sui. One of the purposes of cl 4 was to record what else the parties were contemplating Mr Sui might choose to do with his investment, and what role he might take, at the end of the three-year period. In Scenario 1, which was necessarily subject to negotiation and Mr Jiang’s agreement, Mr Sui would continue in the same economic role, but with a better rate of return. In Scenario 2, he could “choose to take part in the company’s operation and become a true 40% shareholder”, which might be attractive if he saw upside in the shares exceeding $1.5 million. (The fourth, default, scenario is discussed below in relation to Scenario 2.)
For reasons developed below, contrary to the fourth element of Mr Sui’s construction, the effect of cl 5 is that the Agreement came to an end, and so the window within which Mr Sui could validly exercise his Scenario 3 rights closed, on 31 December 2020.
Clause 4 itself makes the rights it confers on Mr Sui exercisable from 15 June 2020. That much was not disputed.
Clause 4 does not identify the last time by which the rights were to be exercised. (As Mr Lawrance SC, who appeared with Mr Smith, submitted for Mr Jiang, that is another reason to reject the proposition that cl 4 imposed any obligation on Mr Sui.)
However, cl 5 provides: “This agreement is valid from the date of signature to December 31, 2020.”
Mr Sui explains cl 5 by arguing as follows (emphasis supplied).
The “three Clause 4 Scenarios” should not be viewed as “options”, but instead “as a set of three mutually-exclusive possibilities which the Appellant was obliged to elect between. This election was a choice the Appellant was directed by the Agreement to make by 31 December 2020 (this is the true meaning of the reference in Clause 5 to that date).”
It follows from that construction that “a failure to elect by 31 December 2020 means that the choice of scenario remains unresolved; although the appellant has breached the Agreement by failing to make an election between the scenarios by the said date (and would thus be liable for damages for that breach) the passage of that date is otherwise of little consequence”.
Mr Sui’s rights under Scenario 3 thus remained validly exercisable after 31 December 2020. In oral argument, this distinction between the operation of the Agreement and that of a contractual option was described as “very crucial” (Tcpt, 28 March 2025, 4.39).
That explanation of cl 5, which involves the proposition that the Agreement permitted Mr Sui to take advantage of his own breach of contract, should be rejected.
First, cl 5 is expressed in terms of the validity of the Agreement itself. That is not the language of a contractual promise, breach of which sounds in damages. It offers no support for Mr Sui’s construction that the true meaning of the reference to 31 December 2020 is that Mr Sui would be liable in damages if he did not elect among the three Scenarios by that date. Nor does the language of cl 5 convey that an election after that date would still be valid. It conveys the opposite.
The plain meaning of cl 5 is that the Agreement was for a fixed term, and would end on 31 December 2020. Mr Young SC, who appeared for Mr Sui, did not submit directly to the contrary. This is not a case where an option is merely expressed to be exercisable only before a certain date (which would be enough for Mr Jiang’s purposes). Here, the whole Agreement containing Mr Jiang’s Scenario 3 promise to “make up the difference” terminated on 31 December 2020. Mr Sui’s right “to choose” Scenario 3 necessarily expired with it.
“In general the termination of an executory agreement out of the performance of which pecuniary demands may arise imports that, just as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence if it depends upon a further act of performance. If the title to rights consists of vestitive facts which would result from the further execution of the contract but which have not been brought about before the agreement terminates, the rights cannot arise. But if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or is contingent upon some event, not involving further performance of the contract, does not prevent it maturing into an immediately enforceable obligation.”
Mr Lawrance particularly relied on the words, “no liability can be brought into existence if it depends upon a further act of performance.” He referred to what was said about this passage by Basten JA, Beazley JA agreeing, in FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [192], namely, that it “makes clear a distinction between a right to payment in the future which is contingent upon an event which does not involve further performance of a contract and one which does. It is only in the former case that an accrued right can be said to have arisen.”
In the result, the window within which Mr Sui could validly exercise his Scenario 3 rights closed on 31 December 2020. Contrary to the fourth element of Mr Sui’s construction, he could neither perform any obligation nor validly exercise his right to elect after 31 December 2020.
Scenario 1, which was “to … request an increase in the return on his investment,” is something that Mr Sui could have done in any event. It may be that Mr Sui’s express right to make that request imposed an additional obligation on Mr Jiang to consider any such request in good faith, but that would not go far.
Mr Young accepted in the course of argument on the appeal that if Mr Sui made a “request” which did not result in agreement as to the future return on his investment, Mr Sui could still choose to take up Scenario 2 or Scenario 3: Tcpt, 28 March 2025, 3.36. Indeed, the logic of Mr Sui’s argument on the appeal must be that if Mr Sui initially “elected” to pursue Scenario 1 but did not reach agreement with Mr Jiang about a future return on investment, and Mr Sui then failed to go on to choose one or the other of Scenarios 2 and 3, he would be in breach of contract and potentially exposed to damages. That would be somewhat surprising, and tells against the proposition that cl 4 positively obliged Mr Sui to elect among the three alternatives.
The background to considering Scenario 2 is that, as the Agreement itself provided, Mr Sui had owned 40% of the shares in the Company since 9 June 2017. At the time the cl 4 window opened, in law Mr Sui had the rights of such a shareholder.
Mr Young submitted that the primary judge’s description of each of the Scenarios “as an ‘option’ that might or might not be exercised necessarily implied that there was a fourth, default scenario that would apply if the Appellant failed to exercise any of the three ‘options’.” He submitted that the “default scenario was actually identical to the Second Scenario” (i.e., Scenario 2: “to … choose to take part in the company’s operation and become a true 40% shareholder”). He submitted that that would be an absurd result, which pointed strongly to the conclusion that the Scenarios did not represent “options” in the sense in which the primary judge used the word. He submitted that the “three Clause 4 Scenarios should instead be viewed as a set of three mutually-exclusive possibilities which the Appellant was obliged to elect between.”
These submissions should be rejected. Scenario 2 was not identical to the default fourth scenario. Under Scenario 2, Mr Sui would have an additional contractual right against Mr Jiang, who controlled 60% of the shares in the Company, “to take part in the company’s operation”. As Mr Lawrance correctly submitted, that would require the respondent to do what was necessary to permit the appellant to be or remain a director of the company. That could include voting the shares under his control in favour of necessary resolutions.
In any event, in the context of this Agreement, there would be no necessary absurdity even if Mr Sui was not required to take any affirmative step to “choose” Scenario 2. The Agreement was not drafted by lawyers. As noted above, one of the purposes of cl 4 was to record what the parties were contemplating might happen to the $1.5 million capital that Mr Sui had invested, and what role he might take, at the end of that three-year period.
In Scenario 2, the parties acknowledged that one of the possibilities might be for Mr Sui to adopt a different role, in which he “[chose] to take part in the company’s operation.” Even if that was only to the extent afforded by exercising his ordinary rights as a shareholder, that would be a change in his role. Those were rights which his shares in the Company already conferred on him. It is not to the point to ask whether or not that change in Mr Sui’s role would require any change to his legal rights, or the taking of any active step to give effect to the “election” for that purpose. The potential change in Mr Sui’s role, if not in his legal rights, was itself a matter that the parties considered appropriate to contemplate in their Agreement. That involved no absurdity.
The terms of Scenario 2 thus give no support to Mr Sui’s arguments that cl 4 imposed an obligation on him to take positive steps to “elect” among Scenarios 1, 2 and 3 by 31 December 2020.
What steps it was necessary for Mr Sui to take to exercise (and thereby accrue) his cl 4 rights is, in the first instance, a question of construction of the Agreement. The Agreement is not specific as to the means by which Mr Sui was to make any choice among the three Scenarios. The words used are “request” and (twice) “choose”.
To “request” (i.e., Scenario 1) is necessarily to communicate. And it follows from the nature of the three Scenarios, the commercial purpose of cll 4 and 5, and general principle that Mr Sui’s “choice” of Scenarios 2 or 3 also had to be communicated to Mr Jiang, either by words or by conduct manifesting the choice, between 15 June and 31 December 2020. The debate between the parties was as to how clear the substance of the communication had to be.
Mr Lawrance relied on Ballas v Theophilos [No 2] [1957] HCA 90; (1957) 98 CLR 193 at 196 per Dixon CJ:
“The clause contains no express provision saying how [the plaintiff] is to [exercise the option] and any definitive communication of an election would suffice. But it was necessary that the communication should express clearly and unequivocally the fact that the surviving partner, the plaintiff, then and there elected to acquire the deceased’s interest upon the terms of the clause.”
Ballas was an option case, but Mr Lawrance submitted that there was no relevant distinction between the exercise of an option and an election. He submitted that what was necessary was “conduct of the appellant that clearly and unequivocally conveyed to the respondent that the appellant was exercising the appellant's rights under the third alternative in the relevant sentence of cl 4”: Tcpt, 28 March 2025, 16.15). He adapted Gibbs J’s language in Quadling v Robinson [1976] HCA 31; (1976) 137 CLR 192 at 201, submitting that “there needed to be conduct that amounted to ‘an absolute and unqualified acceptance of the rights and liabilities conditionally created’ … by the relevant sentence of cl 4”: Tcpt, 28 March 2025, 16.21-23. Quadling was an option case.
Mr Young argued that, as the three Scenarios involved the exercise of alternative and inconsistent rights, cl 4 involved an “election”. He submitted:
“There is a significant legal distinction between what is required to exercise an option (which must be done in a clear and unequivocal fashion) and what is required to make an election (which can be done by means of more nuanced conduct inconsistent with the possibilities elected against)”.
“The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation [3rd ed. (1977), p. 313]: ‘It is of the essence of election that the party electing shall be “confronted” with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice.’”
Election is generally considered irrevocable: the purpose of the doctrine is as much to determine which right is lost as which has been exercised. As Mason J said in Sargent v A.S.L. Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 at 656, “the person electing should not have the opportunity of changing his election and subjecting his adversary to different obligations.” See Allianz Australia Insurance Limited v Delor Vue Apartments (2022) 277 CLR 445; [2022] HCA 38 at [51].
In the present case, it is true that Scenario 3 (sale of shares) is inconsistent with both Scenarios 1 and 2. It may also be assumed for present purposes that the result of any successful Scenario 1 negotiation would be inconsistent with Mr Sui’s taking part in the Company’s operation (as in Scenario 2). But Mr Sui was under no obligation to choose among any of the three Scenarios. Still less did cl 4 mandate a binary choice. Mr Young’s submission that the three Scenarios were “alternatives” in the relevant sense must be rejected. Clause 4 does not involve an election in the relevant sense. The common law doctrine is thus of little, if any, assistance in answering the present question, which is not what election did Mr Sui make, but whether he exercised his cl 4 rights to choose Scenario 3.
In any event, Mr Sui’s submission that an election may be made by more “nuanced” conduct oversimplifies the position. In Immer it was said at 39 that a party “can only be held to have elected ‘if he has so communicated his election to the other party in clear and unequivocal terms’”. That was because of the serious consequence of election, which “involves the abandoning of a right that is available.”
Mr Young relied on certain statements made in Sargent. Stephen J (McTiernan ACJ substantially agreeing) said at 646 that the “words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other”. However, Stephen J also observed that “less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election”: at 646 (emphasis supplied).
That statement must be understood in its context. Sargent was a case of election involving a contractual right to rescind a contract for the sale of land in the event that it was established prior to completion that the property was affected in certain respects. The election in Sargent was thus binary: the inconsistent rights were rescission and affirmation, and it was necessary for the party to choose between them. In particular, it was necessary for the Court to determine whether “the appellants were precluded by their subsequent acts from exercising the right of rescission”: at 655 per Mason J.
In light of that construction, in order for Mr Sui to “choose” Scenario 3, that is, to exercise his Scenario 3 rights, he had to communicate his choice to Mr Jiang by unequivocal words or conduct in the window between 15 June and 31 December 2020. The communication had to be clearly referable to the set of rights of which Scenario 3 consisted, which should be seen as exercisable together as a package.
Scenario 3 had the following elements:
Mr Sui was “entitled to … choose to leave the company”, for which purpose he was “entitled” to transfer his 40% shareholding in the Company “to others”;
“at the then market price”; and
Mr Jiang promised to “make up [any] difference” between “the sale price” and $1.5 million.
The significance of the rights conferred in the first element is that whether or not Mr Sui would otherwise have been “entitled” to sell his shares “to others” (a matter potentially regulated by the Company’s constitution), as between Mr Sui and Mr Jiang, Mr Jiang, who controlled 60% of the shares, could not object to the sale. In order to give effect to Mr Sui’s entitlement to sell, Mr Jiang would have been required to use such control as he had of the Company to permit it.
The significance of the second element (the reference to the then market price) is tied to the third element. One arguable construction is that Mr Jiang’s obligation to “make up the difference” arose only if “the sale price” of the shares had in fact been the market price. An alternative and more commercial view is that the purpose of the words “at the then market price” is to make clear that, whatever price Mr Sui actually obtained for his shares, Mr Jiang’s obligation to “make up the difference” was to be calculated by the difference between “the then market price” and the figure of $1.5 million.
The third element conferred a right upon Mr Sui to enforce Mr Jiang’s promise to fund the shortfall.
In view of those elements, words or conduct sufficient to communicate that Mr Sui chose Scenario 3 could have taken many forms. But in each case the words or conduct would have to communicate clearly and unequivocally that Mr Sui was choosing to exercise that set of rights under the Agreement.
The words and conduct by which Mr Sui claims to have exercised his Scenario 3 rights fall into several categories.
WeChat messages occurring prior to the window between 15 June and 31 December 2020.
A purported notice of termination dated 30 August 2019, also prior to that window.
The commencement of the Earlier Proceedings on 27 September 2019, and their continuation in the period between 15 June and 31 December 2020.
Although this was put somewhat indirectly, the sale of his shares and the giving of a notice after the window closed on 31 December 2020.
Mr Sui does not point to any WeChat communications within the window between 15 June and 31 December 2020 by which he claims to have exercised his Scenario 3 rights.
His inability to do so means the WeChat messages could not constitute the requisite clear and unequivocal communication of Mr Sui’s choice to exercise his Scenario 3 rights unless Mr Sui could point to a message or messages:
which, if they had been sent within the period 15 June to 31 December 2020, would have constituted the exercise of his Scenario 3 rights, and
the effect of which had not been withdrawn or superseded as at 15 June 2020.
The WeChat communications on which Mr Sui relies fail on both fronts.
The messages between Mr Sui and Mr Jiang occurred in the period 11 August 2017 to 22 January 2019 (i.e., all long before 15 June 2020). The primary judge set out the key communications and made findings about them: at J[43]-[56]. It is unnecessary to repeat all of that material here. The main points are as follows.
In WeChat communications in August and September 2017, Mr Sui made enquiries as to when the Land the subject of the two Crown Leases held by the Company would be converted to freehold. Mr Jiang’s responses were to the effect that there were some problems with transferring ownership.
On 7 November 2018, Mr Sui sent Mr Jiang the following message:
“Hello, Mr Jiang! This afternoon your accountant Elena sent me some files about [the Company], but the bank statement was not sent to me, which means that I don’t know where the investment money that I invested in [the Company] Account went, right? Also, the investment agreement signed with you, with Cui Shangze being the witness and introducer clearly states that before the land transfer, [Mr Jiang] guarantees that [Mr Sui] has the legal ownership of 8 square kilometres of agricultural land and provides [Mr Sui] with the corresponding legal documents. On the 11th of August 2017, you replied to me on WeChat that the title deed would be issued in two weeks. Now it is the 7th of November 2018. It has been nearly 17 months from the registration date of June 15 2017 till now. No title deed, and I don’t know where the money went! There is no guarantee for my investment of 1.5 million Australian dollars. This has violated the agreement signed on the 26th of May 2017. I require you, Mr. Jiang, to provide me with a copy of the bank statement, make the matter open, we have a good talk about how to solve it. If we can’t come to an agreement, I require you to terminate the agreement immediately and return the principal and interest to me. Of course, if you really can’t come up with the money, you can give me a property that worth 1.8 million Australian dollars as a security since we are good friend. The agreement can continue to be implemented until the 15**th of June 2020, and we will discuss then.”
(Emphasis supplied.)
It is clear from the first italicised sentence that Mr Sui was not proposing to exercise his Scenario 3 rights under the Agreement to sell his shares and look to Mr Jiang to make up any difference between the sale (or market) price and $1.5 million. Instead, Mr Sui was contemplating that the parties would either “come to an agreement” (i.e., a new and different arrangement), or else “terminate” the existing Agreement immediately. It is true that Mr Sui was seeking the return of his “principal and interest”. But that was on the basis that the Agreement would be terminated, not that Mr Sui could exercise any right under it (in particular, to sell his shares). Those rights would not become exercisable until 15 June 2020; so much was acknowledged in the italicised words of the final sentence.
Mr Jiang responded on 12 November 2018:
“I am on a business trip overseas, in a small city in Thailand, sometimes there is no reception. I will get back to you when I get in. You don’t have to worry. No one can cheat you of your money, especially me. This does not exist. It’s decided that you would exit, then I will arrange the money. You don’t have to worry anymore.”
The words, “[i]t’s decided,” suggest a new agreement under which Mr Jiang would “arrange the money” for Mr Sui’s “exit”. There was again no suggestion that the contemplated “exit” would entail the exercise of any right of Mr Sui pursuant to cl 4.
In early December 2018, Mr Sui sent a WeChat message to Mr Jiang saying, “Please hurry up on your endeavours to organise money to pay my investment out.” Again, there was no suggestion that Mr Sui was proposing to exercise any Scenario 3 right to sell his shares. Mr Jiang responded, “I am doing that right now.”
The final WeChat message in evidence was sent by Mr Jiang on 22 January 2019. In that message he abandoned the position he had described as “decided” on 12 November 2018.
“Mr Sui, I have read your message. I’ve been busy these two days, and I am also treating my back. The case is, firstly, the money is indeed as I said, the cash flow is not very good now. All the money invested has not been returned. Some are still in operation. Projects are still moving forward. Agricultural projects are also under continuous negotiation with the government. You are a shareholder, a director, and an investor. You have signed the agreement, but now it’s not possible to take money out even [if] it is desired. I will surely execute the rest according to the agreement. However, I definitely cannot achieve it with my current ability because I am not prepared.”
There was no evidence that Mr Sui responded indicating any intention to exercise his right to choose Scenario 3 (i.e., after 15 June 2020).
The primary judge found that the WeChat communications relied on fell “far short of an unequivocal or definitive communication by Mr Sui of an intention to exercise Option 3.” There was no error in that finding. As his Honour pointed out, Mr Sui would not become entitled to exercise what he had called “Option 3” for some 17 months following the last of these communications.
That being so, there was no clear and unequivocal communication in the WeChat messages which, if it had occurred within the period 15 June to 31 December 2020, would have constituted the exercise of Mr Sui’s Scenario 3 rights.
Moreover, whatever the WeChat messages might have said, they were superseded by Mr Sui’s solicitors’ purported notice of termination, which was sent before the cl 4 window opened.
“We refer to the agreement signed by you and Mr Guangyi Sui on 26 May 2017 (‘Agreement’) and advise that we act for Mr Sui.
In order to fulfil your obligations of the Agreement, you personally and the company Australian Fulin Agriculture Pty Ltd (‘the Company’, which we contend was also a party to the Agreement) needed to undertake the necessary steps and actions to develop the land as required under the Crown Leases governing the land in order to obtain freehold title thereof in order to transfer 40% of the land to our client if he so elected. You and the Company have failed to take such steps, such that it is now impossible to fulfil the conditions of the Crown Leases and obtain freehold title thereunder. As this will make it impossible to transfer 40% of the freehold title to our client, it amounts to an anticipatory breach of the Agreement by the Company and by you under the Agreement.
We therefore are instructed to, and do, hereby terminate the Agreement forthwith and demand the repayment of the $1,500,000 advanced to the Company by our client. If that sum is repaid within 7 days of the date of this letter our client will accept that sum in full satisfaction of your and the Company’s obligations to him. If payment is not forthcoming within that period, however, we are instructed that our client intends to commence Supreme Court proceedings against both you personally and the Company and that he will in those proceedings claim damages against you and the Company for breach of contract in excess of the amount of the $1,500,000 debt.”
(Emphasis supplied.)
Again, there was no suggestion in the letter that Mr Sui was purporting to exercise his Scenario 3 rights to sell his shares and look to Mr Jiang to make up any difference between the sale (or market) price and $1.5 million. Instead, Mr Sui was proposing two possibilities that were inconsistent with the exercise of any right conferred by cl 4. The first was termination of the Agreement for anticipatory breach. The second was a separate agreement to settle the dispute between the parties by the payment to Mr Sui of $1.5 million within 7 days.
Even if the purported notice of termination had been sent within the cl 4 window, it would not have constituted a clear and unequivocal communication of Mr Sui’s intention to exercise the Scenario 3 rights. To the contrary, it was a clear and unequivocal communication of a wholly inconsistent position, namely, that the Agreement was at an end.
The anticipatory breach asserted in the letter — the impossibility of transferring 40% of the freehold title to Mr Sui — depended on a construction of the Agreement which the Court of Appeal ultimately rejected. Mr Sui’s attempt to embrace that outcome is addressed below.
Mr Sui commenced the Earlier Proceedings on 27 September 2019.
While that was before the cl 4 window opened on 15 June 2020, the Earlier Proceedings continued throughout the period that the window was open until 31 December 2020. If Mr Sui’s conduct of the proceedings in that period manifested the requisite clear and unequivocal communication of an intention to exercise his Scenario 3 rights, it would have been effective to do so.
In fact the assertions Mr Sui made in those proceedings manifested the contrary intention. In his statement of claim, Mr Sui:
pleaded at [7(c)] that it was a term of the Agreement that the plaintiff was to elect between alternatives which included:
“To waive recovery of the loan of $1,500,000 in exchange for a transfer into the plaintiff’s name of freehold title to 40% of the Land, with the plaintiff being able to sell that land and the first defendant agreeing to make up the shortfall should the sale price of that land be less than $1,500,000”;
pleaded at [17]-[18] anticipatory breaches of the Agreement on the basis that it would be impossible for the Company to transfer 40% of the freehold title to the Land;
pleaded at [19]-[20] that he had terminated the Agreement by the letter of 30 August 2019; and
at [21] sought loss of bargain damages on the basis that he was “unable to make the promised election after 26 May 2020” to have 40% of the Land transferred into his name.
In Mr Sui’s opening submissions at trial dated 15 September 2020 (that is, within the window for making a cl 4 choice), he again asserted “that the 30 August 2019 termination by the Plaintiff of the Agreement was lawful” and that he was entitled to damages for breach.
The allegation from which that claim proceeded — that Mr Sui was entitled to receive “a transfer into [his] name of freehold title to 40% of the Land” — was erroneous, and his claim ultimately failed. But Mr Sui’s error cannot turn his pleading that he had terminated the Agreement because he could not “make the promised election” (which were affirmative assertions that he was not exercising his cl 4 rights) into a clear and unequivocal communication that he was exercising those rights.
Mr Young submitted that it was “common ground that election is a matter of objective conduct rather than a subjective intention”: Tcpt, 28 March 2025, 10.30-31. He said:
“My friends, I submit, are correct in saying it isn't a subjective test, so the mere fact that Mr Jiang obviously subjectively thought that Mr Sui was wrong in his interpretation of the contract is not directly relevant. I submit this hypothetical objective person would also be aware that Mr Sui was wrong in his interpretation of the contract because the hypothetical reasonable person would have come to the same correct interpretation that the majority of this Court ultimately came to when the matter was put before them. So that objective reasonable person would, looking at Mr Sui's previous communications with Mr Jiang, and the fact that he then commenced proceedings to get his money back, that person would consider that Mr Sui was definitely not exercising or electing for scenarios one and two, and that what he was really seeking to do was to exercise his rights by election of scenario three.”
(Tcpt, 28 March 2025, 11.2-14)
It might be noted that Mr Jiang’s submissions about objective assessment were directed not to the doctrine of election, but to what was necessary to exercise Mr Sui’s cl 4 rights (conceptualised as an “option”). In any event, the premises of Mr Sui’s argument, that the doctrine of election is purely objective, is contestable: see Sargent at 646 per Stephen J. So too is the proposition that when assessing Mr Sui’s words and conduct to determine whether he had chosen Scenario 3, a hypothetical reasonable person in Mr Jiang’s shoes would have come to the same correct interpretation of the Agreement as two out of three judges in the Court of Appeal. The position may be different as to the electing party: see again Sargent at 645, where Stephen J said, “Where election is in question between contracting parties and, as in these appeals, the contract itself confers the inconsistent rights there can be no question whether a party had knowledge of his choice of rights. He is deemed to know the terms of his own contract and the rights it confers, at all events he cannot take advantage of his own ignorance …” (emphasis supplied).
However, even accepting the premises of Mr Young’s argument, they do not assist Mr Sui. That is because, even if a hypothetical reasonable person would understand that Mr Sui’s interpretation of the Agreement was mistaken, and in what respect, the hypothetical reasonable person would nevertheless have to take Mr Sui’s words and conduct as they were. His actual words and conduct evinced an express intention to bring the Agreement to an end. There was no suggestion of selling his shareholding. It is not possible by some theory of false consciousness (“what he was really seeking to do”) to turn Mr Sui’s actual words and conduct into the “exercise [of] his rights by election of scenario three.” It is not enough that Mr Sui had commenced the Earlier Proceedings “to get his money back”. The question whether Mr Sui exercised his Scenario 3 rights turns upon the legal effect of his words and conduct in the circumstances, not upon the economic object he was seeking to achieve.
To the extent that Mr Sui’s submission turns on the proposition that he “was definitely not exercising or electing for scenarios one and two”, it loses any force once it is accepted that Mr Sui was not obliged to make any choice among the three Scenarios. In any event, it may just as easily be said that Mr Sui was definitely not electing for Scenario 3 when he purported to terminate the Agreement.
In the result, there was no communication of any description within the cl 4 window, whether by words or by conduct, of Mr Sui’s intention to exercise his Scenario 3 rights. Still less was there the requisite clear and unequivocal communication.
One further matter might be noted. Although Ground 3 was to the effect that a failure by Mr Sui to make a choice by 31 December 2020 “would be a breach merely giving rise to a potential award of damages”, the two grounds of appeal directed to the facts, Grounds 5 and 6, referred only to the appellant’s actions up to 31 December 2020. There was no ground of appeal to the effect that the primary judge erred in failing to find that Mr Sui exercised his Scenario 3 rights by words or conduct after 31 December 2020. Nevertheless, the appeal was, if somewhat indirectly, argued by reference to events after that time.
The earliest communication which might arguably have sufficed to exercise Mr Sui’s right to choose Scenario 3 did not occur until after 31 December 2020.
On 16 February 2022, Mr Sui's solicitor sent an email to Mr Jiang’s solicitor which referred to the result of the proceedings in the Court of Appeal. The email stated that “Mr Sui has the right to sell his shares in the Company and look to Mr Jiang for the difference (if any) between the amount invested in the Company and the sale price for his shares.” The email then sought copies of various documents and access to the Company’s books and records “[i]n order to enable the sale of Mr Sui’s shares”.
It is unnecessary to determine whether, in all the circumstances which obtained at the time, that email would have been sufficient to exercise Mr Sui’s Scenario 3 rights. On any view, it was too late. The cl 4 window had closed on 31 December 2020.
On 17 May 2023, Mr Sui sold the shares for $1,000 to a company associated with his solicitor’s brother. If that had occurred within the cl 4 window, it would (subject to the question of “the then market price”) undoubtedly have been conduct that was sufficiently clear and unequivocal to evince Mr Sui’s choice to exercise his Scenario 3 rights. But it was again on any view too late.
It follows that Mr Sui never validly exercised his Scenario 3 rights.
It is accordingly unnecessary to decide the effect of the words, “the then market price” in this respect. One of the commercial purposes of cl 4 was to allocate risk. Mr Jiang effectively guaranteed the return of Mr Sui’s capital until 31 December 2020, prior to which point Mr Sui had to determine what he wanted to do with his investment. There is much to be said for a construction by which the words “the then market price” mean the market price at the time Mr Sui exercised his Scenario 3 rights, which was necessarily before 31 December 2020. On this construction, Mr Sui was not obliged to sell at the market price; rather, Mr Jiang’s obligation to “make up the difference” was to be calculated by the difference, if any, between that price and the figure of $1.5 million. On that footing, and consistently with the analysis above of cl 5’s purpose, any movement in the price of the shares after Mr Sui communicated his Scenario 3 choice would be at the risk (and to the reward) of Mr Sui. To the extent that that legal meaning occasions any violence to the literal meaning of the words of cl 4, it is less than this Court did to the same clause in the Earlier Proceedings.
It is not clear whether the primary judge accepted or (as the parties seem to have assumed) rejected that construction: see J[78]-[79]. Mr Lawrance acknowledged that he did not challenge those findings. In light of the conclusion that Mr Sui did not validly choose Scenario 3, nothing turns on it.
Ground 7 is a catch-all: “The Trial Judge erred in dismissing the appellant’s claim for $1,499,000.”
For the reasons already stated, this Ground fails.
The appeal must be dismissed. The order I propose is:
The appeal be dismissed with costs.
**********
Sui
Jiang
(2022) 277 CLR 445
(1957) 98 CLR 193
(1941) 65 CLR 603
(1993) 182 CLR 26
(1933) 48 CLR 457
(1976) 137 CLR 192
(1974) 131 CLR 634
(1936) 54 CLR 361
Appeal dismissed with costs. The primary judge's dismissal of Mr Sui's $1,499,000 claim remained in place; the unchallenged award of $150,000 plus interest was unaffected.
Also in this second period, the Company failed to meet the phased development conditions under the Crown Leases. The prospect that the Company would be in a position to have the Crown Leases converted into freehold title receded. This was a major problem, not least because, on Mr Sui’s interpretation of the Agreement, it would give him the right to 40% (i.e., 8 square kilometres) of the Land. Mr Sui complained in WeChat communications with Mr Jiang, discussed in detail below. Mr Sui wanted his money back. Eventually, on 30 August 2019, he purported to terminate the Agreement for anticipatory breach. On 27 September 2019 he commenced the Earlier Proceedings, claiming loss of bargain damages. At trial, Mr Sui’s interpretation of the Agreement was rejected and his claim failed. His appeal, to which it will be necessary to return below, was dismissed on 19 November 2021.
The third period commenced on 15 June 2020. Clause 4 further provided for Mr Sui to choose at that point among three different scenarios concerning his investment. Whether Mr Sui was obliged to choose, or merely entitled to choose, is at issue on this appeal. Mr Sui claims, and Mr Jiang denies, that Mr Sui made a valid “election” by conduct in favour of the third scenario. In that scenario, Mr Sui was “to leave the company” by selling his shares “at the then market price”, Mr Jiang having promised to “make up the difference” if “the sale price is for less than AUD1.5 million”.
Clause 5 provided that the Agreement was “valid from the date of signature to December 31, 2020.” Although the parties are in dispute as to the legal effect of those words, on any view the third period ended on that date.
Long after that date, Mr Sui sold his shares in the Company for $1,000 on 17 May 2023.
In the proceeding giving rise to the present appeal, Mr Sui made two distinct money claims against Mr Jiang. One was for the third annual payment of $150,000, which had accrued in June 2020 but not been paid. The other was a claim for $1,499,000, being the shortfall between the figure of $1.5 million identified in cl 4 and the price at which Mr Jiang had sold his shares in the Company.
Stevenson J, sitting in the Commercial List, found in favour of Mr Sui with respect to the first claim but against him with respect to the second claim. His Honour gave judgment for Mr Sui in the sum of $150,000 plus interest, and otherwise dismissed the claim.
Mr Jiang does not challenge the judgment in respect of the $150,000. The matter at issue on Mr Sui’s appeal is whether the primary judge erred in failing to find that he was entitled to judgment for the $1,499,000.
As the words “entitled” and “choose” clearly convey, those were matters for Mr Sui to decide. In these respects, the commercial purpose of cl 4 was to benefit Mr Sui by granting him rights which cast the risk of his investment onto Mr Jiang. The purpose was not to impose obligations on Mr Sui, breach of which would expose him to economic risk.
But the other side of the same commercial coin was that the period within which Mr Jiang was exposed to economic risk, that is, within which it was open to Mr Sui to exercise his rights by making any choice (what the primary judge called the “Option Window”), was limited by cl 5.
Secondly, that reading of cl 5 works in harmony with the construction of cl 4 explained above. There is no basis in text, context or purpose for reading cl 4 as imposing any obligation on Mr Sui, still less one sounding in damages for breach. Instead cl 4 confers rights on Mr Sui. In the absence of any obligation to make an affirmative choice, the significance of the Agreement’s terminating on 31 December 2020 is that Mr Sui’s cl 4 rights could be validly exercised only until 31 December 2020.
That Mr Sui could not make a valid cl 4 choice after 31 December 2020 furthers the evident purposes of cll 4 and 5, read together, in allocating risk as between Mr Jiang and Mr Sui. While cl 4 cast the risk of the first three years of Mr Sui’s investment in the Company on Mr Jiang, cl 5 brought Mr Jiang’s state of risk to an end on 31 December 2020.
The proposition that Mr Sui could wait — on his case, indefinitely — to see if there was any upside in the shares before making his choice among the three Scenarios would defeat that commercial purpose. The effect of Mr Sui’s construction is that, potentially years after the event, he could enliven Mr Jiang’s obligation to make up the difference between the sale price (or perhaps the then market price) and the figure of $1.5 million, and that Mr Jiang’s only remedy would be in damages. On one view, those damages would be measured by the difference between (a) the price Mr Sui obtained for his shares and (b) their value as at the date of breach. That would require Mr Jiang to prove the value of the shares at the earlier time. Moreover, there might conceivably be limitation issues. The breach would have occurred no later than 31 December 2020, and the time within which to bring an action would run from then; whereas, on Mr Sui’s case, there would not appear to be any limit to the time within which he could exercise his Scenario 3 rights.
Appearing to recognise the tension between this commercial purpose of cl 5 (i.e., limiting Mr Jiang’s risk) and the consequences of Mr Sui’s construction, Mr Young made a submission which, it might be noted, appears to proceed on the assumption (which should not be accepted) that the Agreement remained on foot after 31 December 2020. He submitted that it would have been open to Mr Jiang to issue a notice to remedy the breach (i.e., to elect). On this submission, Mr Jiang would then be entitled to terminate the Agreement if Mr Sui failed to elect. The circumstances in which Mr Jiang could unilaterally make time of the essence by such a notice were not explored. Assuming that Mr Jiang could do so, the convoluted process and the risk of disputation that this solution entails do not make the construction any more attractive. In any event, if, as is concluded above, the Agreement terminated by its own terms on 31 December 2020, there would be no occasion for Mr Jiang to issue a notice and then terminate the Agreement.
No doubt, the automatic termination of the Agreement on 31 December 2020 would not affect any rights which had accrued to Mr Sui under the Agreement prior to that date. To use the language of Dixon J in McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 at 477, any rights which Mr Sui had “unconditionally acquired” under the Agreement prior to its termination would subsist. But no such rights could accrue unless Mr Sui did what was necessary to acquire them before 31 December 2020.
If, as is concluded above, cl 4 conferred a right to choose but imposed no obligation to do so, then unless Mr Sui took the necessary steps to exercise his right to choose Scenario 3 by 31 December 2020, no Scenario 3 rights would accrue and that would be the end of the matter. As will be seen, the necessary steps were words or conduct clearly and unequivocally referable to that choice.
If, contrary to the conclusion reached above, cl 4 imposed an obligation on Mr Sui to choose, then the accrual of any rights depended on his performance of that obligation. But it was not open to Mr Sui to purport to perform after the Agreement terminated. Mr Lawrance relied upon what was said by Dixon and Evatt JJ in Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; (1936) 54 CLR 361 at 379:
The significance of this point is again that, contrary to Mr Sui’s submissions, there is no need to attribute to Mr Sui’s conduct a choice among any one of the three Scenarios.
Since affirmation can occur by conduct, the need to determine whether a party has lost the right to terminate or rescind a contract gives rise to a practical problem: what choice is to be attributed to conduct which is equivocal, especially if it is protracted? That explains Stephen J’s observation, in a case about affirmation, that “less unequivocal conduct” may suffice “if coupled with actual knowledge of the right of election”. The authority his Honour cited, Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603 at 618, was again a case about election between inconsistent rights to rescind or affirm a contract (there, a statutory right to rescind the contract of membership of a company). On the facts of Elder’s Trustee, the conduct which Stephen J described in Sargent as “less unequivocal” was that the party faced with the election “did not exercise any rights adversely” to the other party, “did nothing inconsistent with renunciation or disaffirmance”, and “merely acted as if he were a shareholder and failed to disclaim that character”: at 618. Although the party had “so conducted himself that it might be considered a natural inference, if he knew that he had a right of election, that he had resolved to affirm”, nevertheless, “in the absence of knowledge of his rights … clearly it could not be inferred that he made an actual election.”
To the extent that the common law doctrine of election may tolerate “less unequivocal”, or more “nuanced”, conduct in cases of affirmation of a contract, the reasoning underpinning this aspect of the doctrine is driven by the need to attribute to a party’s conduct the exercise of a binary choice. Particularly in cases involving affirmation by conduct, that question may be answered having regard to what was known to the party. (Although the insistence on knowledge is well-established, the rationale is under-theorised: see Allianz at [52]). But the particular problems associated with affirmation of a contract by conduct are irrelevant in this case. There was no need to attribute a choice to Mr Sui’s conduct in this case.
Instead, cl 4 provided for three inconsistent Scenarios. Mr Sui had the right but no obligation to choose among them. The three Scenarios were radically different as to risk and economic effect. Mr Sui’s own case is that they were mutually exclusive. If, for example, he exercised the right to choose Scenario 3, that would entail, in the language of Quadling, “an absolute and unqualified acceptance of the rights and liabilities” in that Scenario. That would mean Mr Sui lost the right to choose Scenario 2, or to make no choice at all (i.e., to remain a 40% shareholder). He would be bound to sell his shares. That points strongly against Mr Sui’s submission.
It follows from the terms and nature of the Agreement that the word “choose” should be construed to require that the words or conduct by which Mr Sui communicated any cl 4 choice be clearly and unequivocally referable to the particular Scenario in order to exercise the right.