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Legislation Cited: Corporations Act 2001 (Cth), s 500

Cases Cited: Neilson v Overseas Projects Corporation of Victoria Limited and Anor (2005) 223 CLR 331; [2005] HCA 54

Texts Cited: Nil

Category: Principal judgment

Parties: Tai Li Xing Development Limited (Plaintiff)
Golden Capital Commercial Logistics Pty Ltd (First Defendant)
Zhaohua Ma (Second Defendant)

Representation: Counsel:
M W Young SC (Plaintiff)
Solicitors:
Dixon Holmes du Pont Lawyers (Plaintiff)

File Number(s): 2024/00141298

Publication restriction: Nil

JUDGMENT (Ex tempore – revised from transcript)

1. These proceedings were commenced by the plaintiff, Tai Li Xing Development Limited (Tai Li), on 16 April 2024 by way of summons and commercial list statement.

2. The relief claimed in the summons is judgment for the plaintiff against the defendants in the sum of $16,990,389.13.

3. The two defendants are Golden Capital Commercial Logistics Pty Ltd (Golden) and Zhaohua Ma (Mr Ma), who is alleged to have been a director of Golden at the time of the events in question in the proceedings.

4. Before the Court for hearing today are two separate questions ordered by Rees J on 28 February 2025.

5. There has been no appearance for either of the defendants this morning. This is understandable in the circumstances which I describe below.

Brief procedural background

6. As I have set out above, the proceedings were commenced on 16 April 2024. Golden filed a commercial list response on 27 June 2024.

7. On 28 February 2025, Rees J heard Golden’s motion to transfer these proceedings to the Common Law Division. From my brief view of the transcript of that hearing, I understand that the motion was intended to have these proceedings travel with proceedings in the Common Law Division concerning certain proceeds of crime allegations.

8. The proceedings were not transferred to the Common Law Division. Rather, Rees J ordered that, in substance, the defences raised by Golden, other than what I will generally describe as a defence associated with the proceeds of crime, be determined now as separate questions.

9. At the time that Rees J made the orders for separate determination, there was a proposed amended commercial list response from Golden. The orders that were made by Rees J were by reference to that document. Ultimately, an amended commercial list response was filed by Golden on 7 March 2025.

10. The separate questions ordered by Rees J are in the following terms:

Pursuant to UCPR 28.2, the decision of the following questions to be determined separately from any other question in the proceedings:

a) the question of whether the defence raised in paragraph 3 of the Proposed Amended Commercial List Response is entitled to succeed, noting the matters raised in 3(b) are limited to the matters pleaded in 3(a), (c)-(g) only; and

b) the question of whether the loan agreement is unenforceable in New South Wales by reason of a lack of a license under Hong Kong law “Money Lender Ordinance” to carry on a money-lending business.

11. I set out below the relevant paragraphs of the amended commercial list response.

12. At the same time as the amended commercial list response was filed, a cross-summons and commercial list statement of cross-claim were also filed by Golden. The second defendant, Mr Ma, is the only cross-defendant to the cross-summons.

13. Mr Ma filed a notice of appearance in the proceedings on 3 April 2025. He has not, however, taken any active steps in the proceedings.

14. On 5 May 2025, Golden was placed into voluntary liquidation. On 4 July 2025, Golden’s liquidators wrote a letter to Tai Li stating that they were unfunded, did not intend to participate in the proceedings, and that they did not object to the proceedings being continued by Tai Li.

15. On 3 July 2026, Brereton J granted leave to Tai Li, pursuant to s 500(2) of the Corporations Act 2001 (Cth) to proceed with the present proceedings, notwithstanding the liquidation.

16. In these circumstances, it is understandable that there was no appearance for either of the defendants today.

Evidence relied upon

17. Tai Li relies on two affidavits made by Jianwei Guo (Mr Guo), the chief financial officer of Tai Li. In addition to those two affidavits, Tai Li relies upon two affidavits of an interpreter, Linxue Hu, together with an affidavit of Donald Junn, the solicitor on the record for Tai Li in these proceedings, dated 19 May 2026.

18. In addition to this affidavit evidence, including the exhibits to those affidavits, Tai Li also relies upon a bundle of land title transfers, together with historical title searches of certain land, which I describe below.

Facts established by the evidence

19. The evidence establishes the following facts.

20. Tai Li was incorporated on 13 May 2022 for the purpose of manufacturing and trading in electrical products. Due to COVID-19, the troubled China-US trade relationship, and a downturn in China’s general business environment, Tai Li has not, in fact, conducted much business.

21. Mr Guo has known Mr Ma for more than ten years. Mr Ma was a director of Golden during October and November 2022.

22. In late October and early November 2022, Mr Guo and Mr Ma had a series of conversations, the effect of which was that Mr Ma’s company, Golden, was trying to buy land near the new Sydney airport for development purposes. Golden needed to borrow $20 million to fund the purchase. Mr Guo agreed that Tai Li would lend the $20 million to Mr Ma’s company, Golden. An oral agreement was reached to the effect that $20 million would be loaned on an unsecured basis. The interest rate would be 15% per annum, but if paid on time, the rate would be reduced to 13%. The loan would be for a period of three years. Mr Ma also agreed to guarantee the loan.

23. A draft loan agreement was subsequently prepared and sent by Golden’s solicitor through WeChat to Mr Guo. There then was a discussion between Mr Guo and Mr Ma in relation to the draft loan agreement and each party indicated that they were happy with the terms of the draft loan agreement.

24. Mr Guo then arranged for Tai Li’s director to execute the draft loan agreement. He then provided the executed loan agreement to Golden’s solicitor by email on 9 November 2022. It appears that no loan agreement executed by Golden has been returned to Tai Li.

25. Between 9 November 2022 to 22 November 2022, Tai Li advanced to Golden a total of $14,003,891 under the agreement, by bank transfers from Tai Li’s bank account in Hong Kong to Golden’s National Australia Bank account. This appears to have occurred by eight separate transfers. It is not necessary in these reasons to set out each of those transfers.

26. On or about 23 November 2022, Mr Ma and Mr Guo had a further conversation to the following effect:

Ma: We have now received enough funding for purchasing the land. We have now received about 14 million from your loan. Thank you so much. But, you can stop providing further funding for now. This way, we can save some interest.

Guo: Sure.

27. It appears that, in or about early February 2023, Mr Guo was told by Mr Ma’s wife that he had been arrested.

28. No interest has been paid under the agreement. On 30 November 2023, Tai Li served on both Golden and Mr Ma a notice pursuant to cl 11 of the agreement that, by reason of the defaults in payment of interest, Tai Li had accelerated the loan such that the principal was repayable immediately.

29. Neither Golden nor Mr Ma has repaid any part of the $14,003,891 principal advanced, nor any of the outstanding interest.

30. The evidence also establishes that, in December 2022, Golden purchased certain land at Cawdor in Western Sydney. This is consistent with the purpose for which Mr Ma told Mr Guo the loan funds were required. A bundle of land title transfers, together with historical title searches of this land, prove these matters.

31. It also appears that Mr Ma ceased to be a director of Golden on 5 December 2022.

32. It is against this background that I now turn to consider the defences raised by Golden in its amended commercial list response.

Defences raised

33. Paragraph 3 of the amended commercial list response, filed 7 March 2025, is in the following terms:

3. In relation to paragraph C.3, GC [Golden]:

(a) denies that it entered into the “Tai Agreement” or any form of loan agreement with Tai;

(b) denies that the Tai Agreement is valid and enforceable;

(c) says that the alleged “Tai Agreement” was not executed by GC and GC was not a party to that agreement;

(d) says that there was never any intention on the part of GC to create legal relations with Tai;

(e) says further that:

(i) on and around 9 November 2022, GC had two directors (Ying Zhou and Ma) and a secretary (Ying Zhou);

(ii) the Tai Agreement was not executed in accordance with s 127 of the Corporations Act 2001 (Cth);

(iii) pursuant to s 129(5) of the Corporations Act 2001 (Cth), Tai was not entitled to assume that the Tai Agreement had been duly executed by GC;

(iv) Ma did not have any authority to enter into the Tai Agreement on behalf of GC; and

(f) says further, or in the alternative, that Tai did not conduct itself in accordance with the alleged Tai Agreement;

Particulars

i. The alleged Tai Agreement purported to include terms for a loan amount of $20 million to be advanced to GC, which did not occur. Further particulars will be provided after evidence.

(g) in the alternative, GC says that the Tai Agreement is unenforceable as there is no certainty in respect of its operative terms.

34. It is the validity of each of these defences that is the subject of the first part of the separate question that I am asked to answer.

35. The first matter raised in paragraph 3(a) is whether Golden entered into any form of agreement with Tai Li.

36. I am comfortably satisfied on the evidence that it did. The company search for Golden establishes that Mr Ma was a director of Golden when he and Mr Guo had their discussions.

37. The evidence given by Mr Guo as to the discussions that he had with Mr Ma clearly establishes that an agreement was reached on the terms alleged by Tai Li in these proceedings.

38. There is no evidence advanced to support any contention that Mr Ma lacked authority from Golden either to negotiate a loan with Tai Li or to conclude a loan agreement. A director in the position of Mr Ma has, at least, the implied authority to negotiate on behalf of a company.

39. Even if there was some issue with Mr Ma’s authority, there is clear evidence to demonstrate the subsequent ratification by Golden of Ma’s authority to contract on its behalf. The clearest evidence of this is the receipt of the funds loaned and the use of those funds by Golden to purchase the land at Cawdor.

40. The second defence raised in paragraph 3(c) is that Golden did not execute the written agreement and was not a party to it. I do not accept that contention. The fact that the written document was not executed does not establish that no agreement was reached. The terms of the conversation between Mr Guo and Mr Ma evidence an agreement. In any event, even if they did not, the conduct of the parties thereafter clearly establishes that an agreement was reached and carried into effect: the money was advanced to and received by Golden, then used for the purpose that was discussed. Mr Ma made it clear in the discussions that he had with Mr Guo as to who the borrower was to be, namely, Golden. It is Golden that is named in the written agreement that was prepared, and the money was, in fact, advanced to, and used by, Golden.

41. Paragraph 3(d) alleges that there was never any intention on the part of Golden to create legal relations with Tai Li. Again, I do not accept this contention. The evidence clearly establishes an objective intention to create legal relations.

42. Paragraph 3(e) of the amended commercial list response raises issues with Mr Ma’s authority. I have dealt with this above. In my view, Mr Ma, as a director of Golden, clearly had authority to negotiate on behalf of the company of which he was a director. In any event, what he did was subsequently ratified by Golden.

43. Paragraph 3(f) alleges that Tai Li did not conduct itself in accordance with the alleged agreement. This is because it did not advance the full amount of $20 million, but only advanced $14,003,891. In my view, the contention goes nowhere. Mr Ma indicated to Mr Guo that Golden did not require any further funds to be advanced.

44. It is unclear how the failure to provide the full $20 million referred to in the agreement could constitute a defence to a claim for the repayment of the $14,003,891 that was in fact advanced.

45. In any event, having regard to the statements made by Mr Ma to Mr Guo that no further funds were required, Golden clearly waived its rights to receive any further loan monies, at least at that time. There is also no evidence that Golden subsequently sought to reverse its position and seek that the balance of the $20 million be paid.

46. Paragraph 3(g) of the amended commercial list response says that in the alternative, Golden says the agreement is unenforceable as there is no certainty in respect of its operative terms. No further particularisation is given of this contention.

47. It is not apparent to me what matters were not made certain in the discussions between Mr Guo and Mr Ma. The amount of the loan is identified, its term, the interest rate payable and when, and also the fact that Mr Ma personally guaranteed the loan.

48. For these reasons, I am of the view that none of the defences pleaded in paragraph 3 of the amended commercial list response are entitled to succeed. Accordingly, the answer to question 1(a) is N****o.

49. I now turn to consider question 1(b), concerning an alleged lack of a license under Hong Kong law.

50. Paragraphs 17 to 22 of the amended commercial list response are in the following terms:

17. By advancing funds under the Tai Agreement, Tai was a “money lender” and carried on business as a “money lender” as defined in s 2 of the Money Lenders Ordinance Cap 163 (Hong Kong) (the “MLO”).

18. By reason of s 29 of the MOL, it is an offence to carry on business as money lender without a licence granted under s 11 of the MLO or renewed under s 13 of the MLO.

19. At the time of advancing the funds under the Tai Agreement, Tai did not hold a licence granted under s 11 of the MLO or a licence renewed under s 13 of the MLO.

20. By reason of s 23 of the MLO, no money lender shall be entitled to recover in any court of Hong Kong any money lent by it or any interest in respect thereof or to enforce any agreement made in respect of any loan made by it unless it satisfied the court of Hong Kong by the production of a licence at the date of the loan.

21. By reason of the above matters, it would be contrary to public policy to enforce the Tai Agreement in New South Wales contrary to the MLO, to which Tai is subject as a resident of Hong Kong, a foreign country with which Australia is not at war, and as such this Court should decline to do so.

22. Further or in the alternative, the Tai Agreement is an agreement governed by the laws of Hong Kong such that it is unenforceable by reason of the MLO.

Particulars

i. See paragraphs 18 - 20 above.

51. No evidence has been advanced by Golden in support of these contentions.

52. The apparent Ordinance referred to in the paragraphs has not been put into evidence.

53. In N**eilson v Overseas Projects Corporation of Victoria Limited and Anor (2005) 223 CLR 331; [2005] HCA 54, Gummow and Hayne JJ stated at [115]:

The courts of Australia are not presumed to have any knowledge of foreign law. Decisions about the content of foreign law create no precedent. That is why foreign law is a question of fact to be proved by expert evidence. And, it is why care must be exercised in using material produced by expert witnesses about foreign law. In particular, an English translation of the text of foreign written law is not necessarily to be construed as if it were an Australian statute. Not only is there the difficulty by translation of the original text, different rules of construction may be used in that jurisdiction.

(Footnotes omitted.)

54. In circumstances where the apparent Ordinance has not been put into evidence, the defence does not get off the ground.

55. Some evidence was included in Mr Guo’s affidavit to the effect that Tai Li is not in the business of money lending, and that this is, in fact, the only loan that it has ever made. In the absence of the Ordinance, and in particular, what is necessary to fall within the Ordinance, this evidence put forward by Mr Guo does not enable me to form any view as to whether or not Tai Li falls within the Ordinance. The simple point is, that in the absence of the Ordinance being put before the Court and submissions made as to why it is that the conduct of Tai Li falls within it, the defence fails.

56. For these reasons, the answer to question 1(b) of the separate questions is N****o.

57. In circumstances where I have determined each of the two separate questions in favour of Tai Li, it seems to me that costs should follow the event. Accordingly, I order that the costs of the separate determination be paid by the defendants.

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