Tang v Yu

Factual background 5 Mr Tang is a Chinese national who is now retired, but previously managed a fleet of motor vehicles for a property development company in Shanghai. Mr Tang's son, Terry Tang, is a project manager in the construction industry. In 2016, Terry obtained a skilled worker visa and moved to Australia. Terry lives in Point Cook, Vic, and Mr Tang spends much of the year in Australia with his son and his family. Mr Tang does not speak English. 6 Mr Yu is originally from China but has resided in Australia since 2008. He holds a Bachelor of Accounting from Central Queensland University and a Master's in Applied Finance from the University of Western Sydney. Since 2014 he has worked for various finance companies in Sydney. In 2015, Mr Yu was hired by Mr Roths to work at Moshav Financial. His role included marketing financial products to Chinese-speaking investors in Australia and China. In 2018, those financial products included Moshav and non-Moshav products. In relation to the latter, Mr Yu was paid a commission by Mr Roths on successful investments. 7 Mr Yu met Terry in around 2016 and assisted him in connection with securing his Australian visa, after which the two became friends. Mr Tang and Mr Yu were first introduced at a dinner at Terry's home in Point Cook in May 2017. Mr Tang and Mr Yu did not otherwise have any contact until April 2018. 8 The circumstances surrounding Mr Tang's investment of the $700,000 in 2018 are squarely in dispute and it is necessary to examine what the parties say about those circumstances in some detail. For present purposes, the following is a summary of what I understand to be uncontentious that emerges from the pleadings and the evidence. 9 In late March or early April 2018, Mr Roths told Mr Yu about an upcoming investment opportunity. That opportunity was a reverse takeover or "backdoor listing" transaction whereby it was proposed that investors would obtain a controlling interest in PLC, a shell company, and a majority of the units in the Hyperbuild Unit Trust. PLC would then take over the operations of Hyperbuild Pty Ltd (a construction company and the trustee for the Hyperbuild Unit Trust), generating a substantial return. Mr Roths was seeking to raise at least $1.4 million from investors to effect the backdoor listing. 10 Mr Yu approached Terry about the investment opportunity, as well as a Ms Yinghua Gu. Ms Gu had invested in an opportunity promoted by Mr Yu in the past. Terry was not interested in investing himself, but indicated to Mr Yu that Mr Tang may be interested. 11 On 23 April 2018, Terry forwarded emails he had received about the investment opportunity to Mr Tang and Mr Tang attempted to translate these emails into Mandarin using an online translation tool. Mr Tang and Mr Yu began exchanging WeChat messages. Those messages conveyed at least the following: (1) There was an opportunity which stemmed from Mr Roths for Mr Tang to invest in a backdoor listing involving the Hyperbuild Unit Trust and PLC; (2) The operation of the Hyperbuild Unit Trust was worth around $60 million; (3) A Unit Subscription Agreement was prepared bearing Mr Yu's name; and (4) If the acquisition was unsuccessful, Mr Tang's money could be refunded. 12 On 26 April 2018, Mr Yu sent an email to Mr Tang attaching a letter from Mr Roths. The letter was in the following terms (as written): Would you please instruct your clients to deposit the settlement funds into the below trust account [of Piper Alderman solicitors] as soon as possible as we are on a very restricted timetable to complete before 7 may 2018. We will also require the Unit Subscription Agreement signed by either subscriber. … We confirm that funds held in trust will be released to facilitate the purchase of shares in PLC Financial Solutions Limited. If this transaction does not eventuate and we do not acquire shares in PLC your clients will be informed on 7 May 2018 (following the AGM) and receive the choice for a full refund within 7 days… 13 On 27 April 2018, Mr Tang travelled to Sydney to meet with Mr Yu. Mr Yu picked Mr Tang up from the airport and drove him to Moshav Financial's office where Mr Tang signed some paperwork. Mr Tang then transferred $700,000 into the Piper Alderman trust account. 14 On 28 April 2018, Mr Tang messaged Mr Yu on WeChat asking whether the money had been received by the law firm. In response, Mr Yu sent Mr Tang a screenshot of a Piper Alderman trust account statement, which appeared to show that each of Mr Tang and Mr Yu had deposited $700,000 on 27 April. There are several versions of the Piper Alderman trust account statement in evidence, a matter to which I will return. The copy of the Piper Alderman trust account that was produced on subpoena by Piper Alderman shows that Mr Tang and Ms Gu each deposited $700,000 into the Piper Alderman trust account on 27 April 2018, but does not show any deposit from Mr Yu. 15 In the afternoon on 30 April 2018, Mr Roths instructed Piper Alderman to pay the funds in the Piper Alderman trust account, including the $700,000 deposited by Mr Tang, into an account in the name of Hyperbuild Pty Ltd. The funds were transferred on 1 May 2018. 16 On the face of share transfer forms, it appears that Mr Yu was allotted 3.5 million shares in PLC, and each of Mr Tang and Ms Gu were allotted 3 million shares in PLC, on 3 May 2018. The relevant shares were transferred between 6 and 11 May 2018. 17 Later in May 2018, Mr Tang was sent a number of documents including his Unit Subscription Agreement, his Unit Trust Certificate, and a Circulating Resolution dated 3 May 2018 from the directors of Hyperbuild Pty Ltd as trustee for the Hyperbuild Unit Trust. The Circulating Resolution refers to Mr Tang and Ms Gu as "the Subscribers" who have paid a subscription amount of $700,000 and does not refer to Mr Yu. 18 It is common ground that the backdoor listing was unsuccessful and that PLC never acquired the operations of Hyperbuild Pty Ltd. Mr Tang was not offered, and did not receive, a refund of his $700,000 investment. 19 On 5 October 2018, PLC was suspended from official quotation by the ASX at its own request on the grounds that it "may need to make further disclosure about its financial condition sufficient to warrant the continued quotation of [its] securities." On 6 October 2020, PLC was removed from the ASX on the basis that its securities had been suspended from trading for a continuous period of 2 years. 20 Mr Yu accepted that as at the date of trial, there is no value in the shares that Mr Tang holds in PLC or the units he holds in the Hyperbuild Unit Trust (T63-64). Mr Yu did not, however, accept that there was no value in the shares or units at the time that they were transferred to Mr Tang in May 2018.

The statutory framework 21 Section 12DA(1) of the ASIC Act is in the following terms: A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. 22 Section 12GF(1) of the ASIC Act provides that a person who suffers loss or damage "by conduct of another person" that contravenes s 12DA may recover the amount of the loss or damage. However, s 12GF(1B) provides for reduction on the recoverability of damages to the extent the court considers just and equitable if certain conditions are satisfied, notably if the person suffered loss as a result partly of their own failure to take reasonable care. 23 In Self Care IP Holdings v Allergan Australia [2023] HCA 8; 408 ALR 195 at [80]-[82], the High Court summarised the principles applicable to misleading or deceptive conduct under s 18 of the Australian Consumer Law, which is analogous to s 12DA of the ASIC Act. There is no material dispute about the principles to be applied.

The evidence 24 In the course of the trial, I made evidentiary rulings upholding some objections to Mr Tang's evidence: Tang v Yu (evidence rulings) [2023] FCA 1541. 25 Taking those rulings into account, the corpus of evidence that is before the Court may be broadly summarised as follows: The affidavit and oral evidence of Mr Tang and Mr Yu; Screenshots of the WeChat messages exchanged between Mr Tang and Mr Yu accompanied by certified translations of those messages; Contemporaneous documentary evidence including emails exchanged between relevant persons, documents related to relevant corporate entities and relevant records maintained by ASIC and the ASX. 26 Mr Tang and Mr Yu deposed to four and two affidavits respectively, which were read at trial. Because the case turns in part on disputed conversations between Mr Tang and Mr Yu that took place via telephone or in person, I required to hear about the disputed conversations directly from Mr Tang and Mr Yu. I allowed the parties' evidence in chief by way of affidavit save that I did not allow the parties to read the paragraphs of those affidavits that dealt with the key conversations in dispute. The parties accepted that course (T65-66). 27 Given the importance of the witness testimony at trial to the resolution of this case, it is necessary to characterise that evidence.

Mr Tang's evidence in the witness box 28 Mr Tang gave oral evidence with the assistance of an interpreter. Mr Tang presented as someone with a keen sense of the justness of his case, which may have influenced his evidence. Mr Tang was occasionally argumentative and, even allowing for the challenges involved in relying on an interpreter to tell one's story to the Court, sometimes failed to give concise and direct responses to the particular question he was being asked. Those deficiencies notwithstanding, Mr Tang gave a comprehensive and consistent account of his dealings with Mr Yu in the relevant period. As a general proposition, I accept his evidence.

Mr Yu's evidence in the witness box 29 Mr Yu's evidence was at times inconsistent and difficult to reconcile with the documentary evidence. By way of example, Mr Yu pleads at [25(a)] of his defence to the amended statement of claim that he personally invested $700,000 into the backdoor listing opportunity and that it was later decided that Mr Yu's aunt in China would be the investor and so his investment was novated into his aunt's name. However, in the witness box, Mr Yu agreed that his defence is wrong insofar as it pleads that he personally invested $700,000, he could not recall why his defence said that he had invested $700,000 and he accepted that his story had changed between the time that his defence was filed on 25 May 2023 and the time that his affidavit was prepared in September 2023 (T232-233). On another occasion, Mr Yu eventually accepted that what he had told Mr Tang in a WeChat message about Mr Roths having allocated 10% of the investment to him to attract investors was wrong - the correct figure was 20% (T186.26-187.31). 30 Mr Yu's evidence was at points difficult to follow. In cross-examination, Mr Yu gave evidence that he did not know how many PLC shares he received in May 2018. He suggested that he may have signed an "empty form" and only later understood that he had acquired 3.5 million shares. In any event, Mr Yu was unable to explain why he said to Mr Tang on 25 May 2018 that it was "correct" that he (Mr Yu) had acquired 3 million PLC shares (T230-232). 31 My overall impression of Mr Yu is that he had a tendency to give answers which he thought would best support his case and that he could not always be relied upon to give truthful evidence of his recollections. I am fortified in my characterisation of Mr Yu's evidence by the justifiably frank admission by his counsel in closing submissions that he was deliberately deceitful in discussing the investment opportunity the subject of this proceeding with Mr Roths: "Mr Yu lied to Mr Roths" about needing time to move money out of China "because he wanted to sort out his commission". 32 Counsel for Mr Tang submits that Mr Yu's evidence should not be accepted unless it is corroborated by reliable evidence or it is adverse to his interest. Counsel for Mr Yu in closing submissions does not dispute that real issues of credit arise with respect to Mr Yu's evidence per se. Rather, it is put on behalf of Mr Yu that the approach urged by Mr Tang's counsel is "too harsh" and that "[t]o the extent there is nothing to contradict Mr Yu's evidence, the Court should not automatically reject Mr Yu's version." In my view, the circumstances addressed above justify that I approach Mr Yu's evidence with caution and in particular look to see whether it is consistent with other evidence and with the overall probabilities and human experience.

The pleaded representations 33 By reference to his further amended statement of claim (FASOC), Mr Tang alleges that Mr Yu made misleading or deceptive representations in relation to financial services in trade or commerce that may be grouped into six categories: (1) "Joint investment representations": Mr Yu represented to Mr Tang on 23 and 24 April 2018 that Mr Roths had informed Mr Yu of an investment opportunity for the sum of $1.4 million but that Mr Yu could only afford to invest 50% of the investment stake, being $700,000. Mr Yu represented that there was accordingly an opportunity for Mr Tang to invest the remaining $700,000 alongside Mr Yu. Mr Yu also represented that his $700,000 investment had "arrived last Friday" and that he was a party to a Unit Subscription Agreement with Hyperbuild Pty Ltd: FASOC [3.1]-[3.3], [7.9], [8]. (2) "Time pressure representations": Mr Yu represented to Mr Tang on 23 and 24 April 2018 that there was an urgent need for funds and so Mr Tang's $700,000 had to arrive by that Friday: FASOC [3.8], [7.9]. (3) "Value representations": Mr Yu represented to Mr Tang on 23 April 2018 that the proposed investment was to acquire units in the Hyperbuild Unit Trust, a trust which owned several companies in the business of property development in Australia, and which had a combined value of $60 million. In making those representations, Mr Yu impliedly represented that there were reasonable grounds for the $60 million valuation. See FASOC [3.4], [3.5], [3.5A], [7.1], [7.2], [7.2A]. (4) "PLC, return on investment and ownership representations": Mr Yu represented to Mr Tang on 23 April 2018 that in a "reverse takeover process", the investors would acquire a majority stake in PLC, then PLC would acquire "our construction group" and that Mr Tang would own 5% of this new listed enterprise. Mr Yu represented that the transaction would increase the value of the enterprise, and PLC would then raise $1 billion in the Australian financial market to carry out property development. Mr Yu represented that Mr Roths estimated the return on investment at ten times but that Mr Yu conservatively estimated that a return of five times "is guaranteed". See FASOC [3.6], [3.7], [3.9], [7.3], [7.4], [7.7]. (5) "Refund representations": Mr Yu represented to Mr Tang on 23 and 26 April 2018 that Mr Tang's investment funds that were to be used to purchase shares in PLC would be held in a trust account, and that if the acquisition of a majority stake in PLC was unsuccessful, Mr Tang would be informed by 7 May 2018 and he would have the option of receiving a full refund: FASOC [7.10], [9.1]-[9.3]. (6) "Post-investment representations", comprising: (a) "Mr Yu's investment": Mr Yu represented to Mr Tang on 28 April 2018 that Mr Yu had invested $700,000 into the relevant trust account: FASOC [22]. (b) "Completion of PLC acquisition": Mr Yu represented to Mr Tang on 7 May 2018 that the PLC acquisition was completed: FASOC [24]. 34 Mr Yu accepts that if the representations were made, they were made in trade or commerce and in relation to financial services. 35 Mr Tang pleads that the representations were conveyed by Mr Yu in oral conversations as well as in WeChat voice and text messages. In closing submissions, Mr Tang submits that the representations "were mostly made over the WeChat electronic messaging platform." Mr Yu does not contest the existence and content of the WeChat messages. Accordingly, the dispute between the parties primarily concerns what meaning was conveyed by Mr Yu's representations made via WeChat, whether the representations were misleading or deceptive and, if they were, the extent to which the misrepresentations were causative of Mr Tang's loss. 36 I consider each group of representations in turn.

The joint investment representations 37 Mr Tang submits that the joint investment representations conveyed that the proposed backdoor listing was "an exclusive investment opportunity" offered by Mr Roths in which Mr Yu intended to personally invest, but could not afford by himself. 38 In closing submissions, Mr Tang draws particular attention to the WeChat voice messages sent from Mr Yu to Mr Tang on 23 April 2018. Those voice messages include the following: This is an opportunity our boss has given me. He gave me 10%, that is 1.4 million. I am not able to eat it all and can only eat 5%, therefore I am thinking, the other 5% can be handed over to anyone who is familiar with this and can manage this. … My 10% is not something brought out to sell. It is what our boss has given me, but he is unwilling to give it to me for free, so he said, I can hand over 10% to you, but I would like to set the price at AUD 1.4 million. This is not a capital increment, we do not offer this to the public, this is not open to the public, it is only to me. But I can't eat it all… … I can only say that my relative is investing in this thingie with me, that is half each person, 5%. I have asked my boss about this, and my boss has agreed. Anyway this 10% is for me, and then this company will not have any more share transfer to external parties. That is, it will be jointly held by our boss, and me, and those several bosses of that construction company. … My 700,000 arrived last Friday, so I am waiting to see who is willing to contribute another 700,000, arriving just this Friday, and then the contract can be signed. … [My boss] was of the view that I have been contributing to the company for so many years, which is rather significant, therefore since I have asked for it, he will give it to me, but at a reasonable price… … We are both 5% each, and then the total is 10%. … My money arrived last Friday, so I have asked for a day off today, I am taking a break, and tomorrow I will go back and sign the contract, and transfer the money to the lawyer. 39 In relation to Mr Yu also investing, which would include Mr Yu signing a subscription agreement, on 24 April 2018 Mr Yu told Mr Tang that "[i]t has been signed this morning" and Mr Tang asked Mr Yu to send him what Mr Yu had signed. In response to that request, Mr Yu sent Mr Tang a video of a Unit Subscription Agreement bearing Mr Yu's name and the name of Hyperbuild Pty Ltd as trustee for the Hyperbuild Unit Trust. The video shows several pages of the agreement including a signatory page signed by Mr Yu and pages showing the subscription amount of $700,000 for 5% fully paid ordinary units. That was intended to convey, and did convey, that Mr Yu had signed such an agreement. That carried the representation that Mr Yu was investing $700,000 in the scheme. 40 The WeChat messages and video establish that the pleaded joint investment representations were made by Mr Yu to Mr Tang. Mr Yu's messages particularly emphasised the exclusivity of the opportunity, that it had been given to Mr Yu because of his role in what he referred to as "our company", and Mr Yu and Mr Tang would be the only ones enjoying the opportunity. But most of all, Mr Yu unequivocally represented that he was participating in the investment with his own $700,000. 41 Mr Yu attacks Mr Tang's alleged joint investment representations in different ways. 42 First, Mr Yu takes issue with the pleading in FASOC [7.9] which is expressed as follows: My 700,000 arrived last Friday, so I am waiting to see who is willing to contribute another 700,000, arriving just this Friday, and then the contract can be signed. 43 Mr Yu complains that the meaning of "arrived" is ambiguous and so he is left to guess the case that he must meet. This submission is somewhat contrived as the language in FASOC [7.9] is taken directly from a voice message sent by Mr Yu to Mr Tang on 23 April 2018. In any event, it is clear from the surrounding context of the WeChat messages exchanged between Mr Yu and Mr Tang that "arrived" means $700,000 sent from China to Australia, the $700,000 being ready to use and disburse. There is a detailed discussion between Mr Yu and Mr Tang in the WeChat voice messages regarding the practicality of how to send funds from China to Australia, including the use of remitters to "send Chinese Yuan" into a "designated Chinese account" to be converted to "Australian dollars to you over here, with the transfer arriving within two days." Mr Yu in fact reassured Mr Tang that the process of getting money from China to Australia "is very simple". 44 There is thus no substance to Mr Yu's contention. 45 Secondly, Mr Yu submits that to the extent the Court is satisfied that the joint investment representations were made, those representations did not cause Mr Tang to invest. In other words, issue is taken with Mr Tang's claimed reliance on the representations, but it is not clear that Mr Yu seriously disputes that the representations themselves were misleading or deceptive or likely to mislead or deceive. 46 Mr Yu's position on this issue is difficult to discern with clarity. On the one hand, Mr Yu summarises his evidence in his closing submissions as follows: "when he contacted Mr Tang, Mr Yu had already found Ms Gu to be his co-investor, but his boss Mr Roths was impressed and asked him to find additional investors." That accepted state of affairs is inconsistent with what Mr Yu told Mr Tang, namely that this was an investment opportunity that was "not open to the public, it is only to me". 47 On the other hand, Mr Yu also maintains in his closing submissions that "[h]e was committed to invest $700,000. He just had not made the transfer yet." However, that statement is inconsistent with Mr Yu's evidence that it was "family money" rather than his money that was always intended to be invested (T164.22-34). 48 If Mr Yu is disputing that the joint investment representations were misleading or deceptive, it is difficult to see how that position can be maintained in the face of Mr Yu's telling evidence in cross-examination. Mr Yu sent Mr Tang the following WeChat voice message at 6:15pm on 23 April 2018: My money arrived last Friday, so I have asked for a day off today, I am taking a break, and tomorrow I will go back and sign the contract, and transfer the money to the lawyer. 49 When asked about this message in cross-examination, Mr Yu: (1) Agreed that he was saying to Mr Tang in this message that on 24 April he (Mr Yu) would transfer money to the lawyer (T206.1-5). (2) Agreed that $700,000 had not in fact arrived in Australia "last Friday" (T205.14-29). (3) Agreed that on 23 April 2018, he had no intention of transferring money to the lawyer the next day (T206.15-23). (4) Said that he could not remember why he told Mr Tang that he would be transferring money to the lawyer the next day (T206.20-25). (5) Agreed that he had previously given evidence that he (Mr Yu) had signed the contract on 20 April (T206.36-39). (6) Said that he could not recall why he told Mr Tang that he was going to sign the contract on 24 April (T206.40-44). 50 Mr Yu accordingly accepted that he was not truthful when communicating with Mr Tang on 23 April 2018. While Mr Yu said that could not recall the reason why, the most plausible explanation and the explanation which I accept is more probable than not is that Mr Yu stood to gain from Mr Tang committing to the investment opportunity. Mr Yu was tasked by Mr Roths with finding investors. Mr Yu was expecting "at least" a one percent commission (T165.15-16) and wanted more (T164.39-165.16). Ultimately, Mr Yu received 3.5 million PLC shares in May 2018 without investing any of his own money (T225-226). Whatever the exact arrangement may have been between Mr Yu and Mr Roths, I infer that Mr Yu was incentivised to encourage Mr Tang to invest. Mr Yu was prepared to and did lie to secure that outcome. 51 Mr Yu's references to "the contract" bring me back to the video of Mr Yu's purported signed Unit Subscription Agreement that was sent to Mr Tang on 24 April 2018. Mr Yu's evidence was that he signed a Unit Subscription Agreement given to him by Mr Roths on 20 April 2018 (T208.33-47) but that he was never issued any units because he still had to "sort it out" with Mr Roths (T210.34-40), "it" apparently being Mr Yu's commission (T211.34). Mr Yu could not offer any explanation as to why the copy of the Unit Subscription Agreement that he said that he signed differed from the one that Mr Tang signed (T213.9-23) or indeed the Unit Subscription Agreement signed by Mr Yu's relative, Ms Peng Hua (T242-243.21). 52 I reject Mr Yu's evidence that he signed a genuine Unit Subscription Agreement on 20 April 2018. If he had signed a genuine Unit Subscription Agreement on that date, why would Mr Yu have told Mr Tang on 23 April 2018 that he would be signing the contract "tomorrow"? And why would "sorting out" his commission with Mr Roths have prevented Mr Yu from being issued any units in the Trust? 53 Counsel for Mr Tang put to Mr Yu that Mr Yu fabricated the document he sent to Mr Tang via WeChat video message. It was put to Mr Yu that Mr Yu modified a draft version of the agreement by inserting certain information and signing it to give Mr Tang the impression that Mr Yu had invested in the backdoor listing opportunity (T210.20-32). Mr Yu denied this. Mr Yu submits that the Court should be hesitant to make a positive finding that he fabricated the document. However, the version of events proposed by Mr Tang explains why there are placeholders such as square brackets and highlighting in Mr Yu's document, the discrepancies in the information recorded in Mr Tang's document compared with Mr Yu's document, why Mr Yu apparently mistakenly signed as a director rather than in his personal capacity, and why Mr Yu never paid for, and was never issued, any units (T229.5-10). 54 On the balance of probabilities, I am comfortably satisfied that Mr Yu fabricated the document that appears in the video he sent to Mr Tang on 24 April 2018. The conduct of Mr Yu in sending the video to Mr Tang amounts to the deliberate perpetuation of the falsehood that Mr Yu was personally investing in the backdoor listing opportunity alongside Mr Tang. 55 In summary, contrary to what he represented to Mr Tang, Mr Yu did not intend to and did not invest his own $700,000, or indeed any amount. Also, he did not have $700,000 available ("arrived") to invest, and he was not party to a genuine subscription agreement. All those representations were not only misleading; to Mr Yu's knowledge, they were false. 56 In all of the circumstances, I am satisfied that in making the joint investment representations, Mr Yu contravened s 12DA(1) of the ASIC Act. 57 As mentioned, Mr Yu contends that even if he did engage in misleading or deceptive conduct by reason of the joint investment representations - even if the joint investment representations were actually false - they "played no material role" in causing Mr Tang to invest. In closing submissions, Mr Yu refers to "varieties of causes" of Mr Tang's investment including: 1. Thinking Mr Yu would invest together. 2. Terry was working in the same company, and Terry said "nothing to be afraid of". 3. Mr Tang's personality of liking to speculate on the stock market. 4. Mr Tang's understanding that there was an attractive upside, despite also having an understanding that there would be devastating downside. 58 The difficulty with this submission is that a misleading or deceptive representation which is objectively likely to induce the representee to enter into a contract need only be a cause of the representee's loss; it "need not be the sole inducement"; it is sufficient so long as it plays "some part": Lord Buddha v Harpur [2013] VSCA 101; 41 VR 159 at [159] citing Gould v Vaggelas [1984] HCA 68; 157 CLR 215. 59 Mr Tang gave evidence about the influence of the joint investment representations on his decision to invest to support his reliance case. In his affidavit evidence, Mr Tang deposed that he "thought that the amount [he] was investing was a good amount because Mr Yu had told [him] that he was investing the same amount". Mr Tang further deposed that: It was very important for me that Mr Yu had already transferred the money and was signing the contract, because I was relying on a lot of information from Mr Yu. It was reassuring for me that Mr Yu was not just advising me to make the investment, but he was also doing the same thing with his own money. 60 Mr Tang's evidence in cross-examination was consistent (T132.13-22): What I was thinking about was if - because Jinyang Yu has made the investment, if it failed then he lost money as well, just like in Shanghainese we would say if you die everybody dies. 61 Taking into account the summary of the relevant principles in Lord Buddha at [159] and the state of the evidence, I am comfortably satisfied that the joint investment representations were a cause, and a material cause, of Mr Tang's decision to invest. 62 The fact that Mr Yu can point to other possible causes of Mr Tang's decision does not detract from the joint investment representations being a cause of Mr Tang's loss. In any event, I am persuaded that in the circumstances of this case, the joint investment representations played a significant role compared with the other causes suggested by Mr Yu. 63 It does not appear that Mr Tang's son, Terry, played any substantial role in Mr Tang's decision to invest beyond Mr Yu approaching Terry first and Terry putting the two in touch. Mr Yu says that Terry told Mr Tang that there was "nothing to be afraid of" and that Mr Tang relied on his son's opinion, but Mr Tang's evidence provides important context to that conversation with Terry. Mr Tang gave evidence that Terry told him that Mr Yu had made the investment and that was why there was "nothing to be afraid of" (T130.1-14, T132.16-17, T139.30-32). 64 Nor do I accord significant weight to what Mr Yu says is "Mr Tang's personality of liking to speculate on the stock market." Mr Yu describes Mr Tang as "a sophisticated stock-market speculator" who was attracted by the "potential upside" of the investment and paid less regard to what he understood to be the "high risk involved." Mr Tang disputes this characterisation. Although Mr Tang had over the course of about twenty years invested in shares in the Shanghai stock market, Mr Tang submits that he is far from a seasoned investor who had experience conducting due diligence on property development projects (closing submissions T21). 65 Mr Tang's evidence was that he had never invested in a backdoor listing before (T104.7-13). Although Mr Tang appreciated that there was risk involved with the investment, he was reassured by the "refund condition" (T143.30-38) and the fact that Mr Yu was putting his own money in (T132.13-22). Of course, it may be accepted as a general proposition that people who make financial investments are motivated by the potential return. However, it is not surprising in circumstances where Mr Yu introduced Mr Tang to an investment opportunity in a foreign country being conducted in a language that Mr Tang did not understand that Mr Tang took comfort in the knowledge that Mr Yu was personally investing and that he was inclined to rely on what Mr Yu had told him. 66 As a consequence of what I have found to be deliberate deception on the part of Mr Yu to induce Mr Tang to invest, Mr Yu is unable to invoke the apportionment regime in s 12GF(1B) of the ASIC Act. That is because Mr Yu is unable to satisfy s 12GF(1B)(c)(ii). Mr Yu concedes that if fraudulent misrepresentations are made out, the apportionment defences are not available. 67 Save for the question of ascertaining Mr Tang's loss, an issue to which I will return, the conclusions I have reached in relation to the joint investment representations are dispositive of Mr Tang's case. I consider the other pleaded representations for completeness.

The time pressure representations 68 It is not in dispute that Mr Yu said the following to Mr Tang via WeChat voice message on 23 April 2018: Correct, the time is rather short, because first of all, I am not able to eat it, but I am familiar with the overall situation of our company … Timewise it is a bit rushed, that is the fund has to arrive before this Friday, because they want to carry out this acquisition. … If you want to do it, do it now. My 700,000 arrived last Friday, so I am waiting to see who is willing to contribute another 700,000, arriving just this Friday, and then the contract can be signed. … it is rather urgent, so if you have confirmed, then it can be done tomorrow, and I will tell others that the new shareholder has been found. 69 Nor is it in dispute that Mr Yu said to Mr Tang via WeChat voice message on 24 April 2018: Therefore it is better that you make up your mind and tell me ASAP, so that I can make arrangements. If you are not doing it, I will need to find someone else quickly, because my side is also running out of time. I will need to find another person quickly. 70 The time pressure representations are accordingly established. 71 While it may readily be accepted that telling Mr Tang that he had to make a decision quickly and that time was short amounted to a sales tactic, the real question is whether the time pressure representations were misleading or deceptive. 72 Mr Tang submits that the representation that Mr Tang's $700,000 had to arrive in Australia "that Friday" (or by the end of April 2018) was false and misleading. Mr Tang submits that, to the extent that the time pressure representations are representations as to future matters, Mr Yu has not established that he had reasonable grounds to make them and that even if they are representations as to present matters, no such reasonable grounds exist. Mr Tang says that Mr Yu never explained why the transfer of Mr Tang's $700,000 was "urgent" and describes Mr Yu's representations about timing as being designed to apply pressure to Mr Tang and make him feel as though he had to make a quick decision to avoid missing out. 73 Mr Yu submits little of substance on the subject of the time pressure representations. Mr Yu again makes a pleading complaint, contending that he "does not know what case he is asked to meet". The basis of that complaint is that in the FASOC, Mr Tang characterises the time pressure representations as being a "present matter" and, alternatively, a "future matter" which Mr Yu says is procedurally unsound and contrary to authority, relying on ACCC v Woolworths Ltd [2019] FCA 1039 at [111] and ACCC v Woolworths [2020] FCAFC 162; 281 FCR 108 at [132]. To the extent the Court finds that Mr Yu made the time pressure representations, Mr Yu concedes that these representations would create a sense of urgency but says that they played little, if any, role in causing Mr Tang to invest. 74 Mr Yu's pleading point is misconceived. The authorities he refers to do not speak against the propriety in an appropriate case of pleading a representation to be as to a present matter or alternatively a future matter. In the case of uncertainty, of which this is one, it is quite appropriate to plead in the alternative in that way. No prejudice arises from doing so. 75 In any event, in my view the time pressure representations are representations as to a present matter, the representation being that there is a present, pressing need for funds to enable a transaction to be carried out in the immediate future. However, whether the time pressure representations are best characterised as "present" or "future" seems to me to be of peripheral relevance to the real issues in dispute. 76 Mr Tang transferred $700,000 to the Piper Alderman trust account on Friday, 27 April 2018. Email correspondence between Mr Roths and Piper Alderman records that on Monday 30 April 2018, Mr Roths directed Piper Alderman to transfer funds held in the Piper Alderman trust account to an account in the name of Hyperbuild Pty Ltd. The next day, on 1 May 2018, Piper Alderman transferred $1.4 million ($700,000 of which had been invested by Mr Tang) to Hyperbuild Pty Ltd. Although the date on which the funds were transferred out of the Piper Alderman account was contrary to what Mr Yu had told Mr Tang (ie that the money would remain in the Piper Alderman trust account until 8 May 2018), the timing of the transfer provides some basis for Mr Yu telling Mr Tang that there was a degree of time pressure attached to his investment decision. Also, the letter from Mr Roths quoted at [12] above states that there was "a very restricted timetable" to complete the investment before 7 May 2018. 77 I am not satisfied that the time pressure representations are independently misleading or deceptive in their own right. While the need to act quickly may have been emphasised by Mr Yu in his WeChat messages with Mr Tang on 23 and 24 April 2018, the premise of the investment opportunity was a backdoor listing that was to take place in early May 2018. That was always the timeframe in contemplation and is consistent with the letter from Mr Roths. 78 However, I do consider that the time pressure representations are relevant to the overall context and character of the exchanges between Mr Yu and Mr Tang. The very fact that Mr Tang's funds were transferred out of the Piper Alderman trust account at the first opportunity after they were deposited and contrary to what Mr Tang was told casts serious doubt upon the legitimacy of the whole scheme in which Mr Yu was encouraging Mr Tang to invest. The consistent pressure that Mr Yu applied to Mr Tang to invest his money "ASAP" also supports Mr Tang's case that Mr Yu was inclined to employ any strategy to secure that outcome.

Value representations and PLC, return on investment and ownership representations 79 The evidence about the alleged value representations and PLC, return on investment and ownership representations is interconnected and so I deal with them together. 80 In WeChat messages on 23 April 2018, Mr Yu represented to Mr Tang that the proposed investment was for 5% of the shares in a construction group comprising four companies, with a combined value of $60 million. The representation as to the value of the enterprise being $60 million may be seen as a statement of opinion rather than fact, but in that event it carried with it the implied representation that the opinion was based on reasonable grounds: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [33]. 81 Mr Tang submits that Mr Yu's representation that the backdoor listing investment opportunity was for 5% of the shares in a construction group comprising four companies with a combined value of $60 million, and Mr Yu's implied representation that he had reasonable grounds for the $60 million valuation, were false and misleading for three reasons. 82 First, Mr Tang contends that the valuation was not supported by the ASIC searches attached to an email sent by Mr Roths to Mr Yu on 20 April 2018. Secondly, Mr Tang contends that the administrators of Hyperbuild Pty Ltd appointed in July 2019 were unable to identify any valuable assets of the Hyperbuild Unit Trust over which Hyperbuild Pty Ltd could exercise its right of indemnity as trustee, from which Mr Tang says that it is open to infer that the Trust did not have $60 million in assets in April 2018. Thirdly, even if the Hyperbuild Unit Trust did hold interests in the construction companies as claimed by Mr Roths and Mr Yu, those companies were loss-making companies with weak asset positions according to the contemporaneous ASIC searches and the insolvency reports produced in 2019. 83 Mr Yu also represented in the same series of WeChat messages to Mr Tang that "our company" would acquire a majority stake in PLC, then PLC would acquire "our construction group", and Mr Tang would own 5% of this new listed enterprise. He said that the transaction would increase the value of the enterprise, and PLC would then raise $1 billion in the Australian financial market to conduct property development. He said that Mr Roths estimated the return on investment at ten times, but Mr Yu conservatively estimated it at five times. 84 I note for now that there is an issue about the translation of the figure of "$1 billion" which should perhaps be "$100 million". I will return to that. 85 Mr Tang submits that those representations were representations as to future matters, which Mr Yu made with no reasonable basis. The only basis Mr Yu can point to is Mr Roths' emails, which do not support what Mr Roths said, and Mr Yu acknowledges that he did not read any other documents. 86 In response, Mr Yu submits that he was a mere conduit of information between Mr Roths and Mr Tang. Mr Yu submits that in the whole of the circumstances, Mr Yu was only translating the content of Mr Roths' emails and that Mr Tang had the opportunity to translate and read Mr Roths' emails for himself. If Mr Yu did impliedly represent anything to Mr Tang, it was only that "Mr Roths said" that the companies were worth $60 million. If the Court finds that Mr Yu adopted Mr Roths' representations as to value, Mr Yu submits that Mr Tang has not adduced sufficient evidence to show that the companies had a combined value of less than $60 million. In any case it was reasonable, so he submits, for Mr Yu to rely on what he was told by Mr Roths, his boss, in relation to value and the potential return on investment. 87 On 20 April 2018, Mr Roths sent two emails to Mr Yu regarding the proposed backdoor listing, which Mr Yu forwarded to Terry Tang on or around 23 April 2018. The emails were forwarded by Terry to Mr Tang, but without the attachments. Mr Tang used an online translation tool to translate parts of the emails. 88 The first email attached a "consolidated financial summary", several ASIC searches and a draft Hyperbuild Unit Trust subscription agreement. Mr Roths said in the first email that it was proposed that a new unit holder would obtain 5% of the Hyperbuild Unit Trust and 5% of shares in PLC and that the Hyperbuild Unit Trust "effectively owns" GLFB Pty Ltd trading as Harvest Homes, Harvest Homes (Properties) Pty Ltd, Holz DC Pty Ltd and Hyperbuild Pty Ltd. In the second email, Mr Roths said that after obtaining 51% of the shares in PLC on 7 May 2018, he planned to sell the Hyperbuild and Barrington Homes operations into PLC at a combined value of $60 million on a 10x earnings rationale and PLC would then raise $100 million in development funds. 89 If Mr Tang's case on the value representations relied on the forwarding of these emails alone, it may be that Mr Yu could be seen as a mere conduit. However, the WeChat messages exchanged between Mr Yu and Mr Tang paint a different picture. The way that Mr Yu described the backdoor listing opportunity to Mr Tang, using language such as "we" and "our", suggests that Mr Yu was endorsing what Mr Roths had told him about the scheme: … we will use this cell [ie shell] company to acquire our construction group. When that happens, the price of this segment of the company shares will go up, and then we will use the current company to raise another one billion in the Australian financial market to carry out property development. This is our final goal. … because our construction company is currently a company yet to be listed, it does not have a share capital, it only has a market value. So the current total market value for the four companies is estimated at 60 million Australian dollars. 90 This is far removed from a hypothetical situation where Mr Yu says to Mr Tang "this is what my boss says about the backdoor listing, here is the information he has given me, you should decide for yourself whether this is attractive to you". An ordinary and reasonable person in Mr Tang's position receiving the communications from Mr Yu, including in the context of Mr Yu saying that he was himself investing in the opportunity and that it was exclusive, would have understood that Mr Yu was adopting or endorsing what Mr Roths had said as opposed to merely passing it on: Google Inc v ACCC [2013] HCA 1; 249 CLR 435 at [15]. 91 I do not consider that the suggested mistranslation of the "100 million" versus "1 billion" assists Mr Yu's case in any material way. Even if Mr Yu misspoke or has been mistranslated, the essential point is that Mr Yu represented to Mr Tang that, after the backdoor listing, a significant amount of funds would be raised to carry out property development. Surveying Mr Yu's WeChat voice messages to Mr Tang as a whole, Mr Yu was making positive representations to Mr Tang about the value and anticipated profitability of the proposed investment. The very large figure that he gave, whatever it was, was meant to give support to those representations. 92 Mr Yu clearly conveyed to Mr Tang that Mr Yu had made his own assessment of the opportunity: Regardless, all-in-all, in terms of the return, our boss is saying it will be ten times, but I am conservative and so I make my own estimation. Five times is guaranteed. … so over the weekend I went through the material I obtained this … last Friday-Saturday, and I am satisfied there is no issue 93 I am therefore satisfied that Mr Yu made the alleged representations to Mr Tang himself and that Mr Yu was not a mere conduit. 94 The question is then whether Mr Yu had reasonable grounds to make those representations. I accept in relation to the PLC, return on investment and ownership representations that these were representations as to future matters. Pursuant to s 12BB(2) of the ASIC Act, they are taken to be misleading unless there is evidence adduced establishing that Mr Yu had reasonable grounds to make them. 95 I consider first whether the documents attached to Mr Roths' two emails of 20 April to Mr Yu constitute reasonable grounds for the value and PLC, ownership and return on investment representations. The ASIC searches show the following with regard to share ownership: (1) Hyperbuild Pty Ltd - 100% by Theo Pasialis (2) Hyperbuild Holdings Pty Ltd - 100% by Hyperbuild Pty Ltd (3) GLFB Pty Ltd - 51% by Hyperbuild Holdings Pty Ltd and the remainder split equally between Stephen Mark Taylor and Dean John Turner (4) Harvest Homes (Properties) Pty Ltd - 100% by GLFB Pty Ltd. 96 That means, in effect, that at the time of the searches, 18 April 2018, Hyperbuild Pty Ltd, the trustee of the Hyperbuild Unit Trust, had a 51% indirect interest in GLFB and Harvest Homes (Properties). There is no mention in the searches of Holz DC. 97 There was also a "consolidated financial summary" attached to one of the emails. On its face, it appears to show that Hyperbuild Pty Ltd and GLFB were profitable companies and, assuming that Hyperbuild Pty Ltd held its assets in trust for the Hyperbuild Unit Trust, could provide some basis for Mr Yu's $60 million valuation and five times return opinions. However, closer scrutiny of the documents shows that they do not provide any reasonable grounds for those opinions. 98 First, the consolidated financial summary shows net assets in GLFB, Harvest Homes (Properties) and Hyperbuild Pty Ltd of approximately $15 million, of which about $2.8 million should be credited to the other shareholders in GLFB, ie net assets for the Trust of about $12.2 million. There is also "work in progress" with a "value" of about $82 million, or $55 million for the Trust when the other shareholdings are taken into account. On its face, the "value" represented in the schedule is the value of the projects, and not the anticipated profits which would obviously be much less. In short, the document simply does not support a valuation of $60 million, and there is nothing in it to support a five-times return on investment. 99 Mr Yu accepted in cross-examination that he had no knowledge of the finances of the operation of the Hyperbuild Unit Trust and that he had not seen and had no access to the financial reports or records (T164.15-20, T175.7-22). Other than merely relying on Mr Roths, he sought to justify the $60 million valuation opinion on the basis that he knew many of the construction projects that were underway. However, without knowing the financial position of the companies undertaking those projects, and of the projects themselves, that is no reasonable justification for the opinion. In relation to the five-times return opinion, Mr Yu said that it was justified on the basis of his knowledge of so-called backdoor listing transactions. However, he admitted to having had no prior experience of such transactions (T185.25-31). He therefore had no reasonable basis for the return on investment representations. 100 Further, I do not consider that it was reasonable for Mr Yu to rely on what Mr Roths told him via email at face value notwithstanding that Mr Roths was his boss in circumstances where Mr Yu told Mr Tang that he had been through "the material" and was "satisfied there is no issue" when in fact, as he accepted in cross examination, he had not read the other documents that were made available to him, including an Ernst & Young advisory document, because it was much too big and complicated (T165.33-46). In other words, Mr Yu had considerable other information available to him, which he falsely told Mr Tang he had considered. He therefore had no reasonable basis to rely on Mr Roths alone. 101 I consider that the value and PLC, return on investment and ownership representations were objectively likely to induce Mr Tang to invest in the opportunity that Mr Yu was promoting. Given Mr Tang entered into the investment, reliance on those representations can be inferred. I also accept Mr Tang's evidence that his understanding was that he was investing in a part of a $60 million business. I therefore find that Mr Tang has established this aspect of his case.

The refund representations 102 In WeChat messages on 23 and 24 April 2018, Mr Yu represented to Mr Tang that Mr Tang's investment funds would be held in a lawyer's trust account and used to purchase shares in PLC, and if the acquisition of a majority stake in PLC did not succeed as planned, his investment would be refunded. On 26 April 2018, as a further assurance to Mr Tang, Mr Yu forwarded a letter from Mr Roths to the same effect - which also said that Mr Tang would be informed by 7 May 2018 if the transaction had not been successful, and offered a refund. 103 I accept that the refund representations were representations as to future matters. Those representations are taken to be misleading unless there is evidence adduced establishing that Mr Yu had reasonable grounds to make them: s 12BB(2) ASIC Act. 104 Mr Tang draws attention to Mr Yu's evidence in cross-examination that he had no idea what Mr Tang's money would be used for (T185.39-186.25; T216.40-217.27) and contends that Mr Yu took no step to satisfy himself that Piper Alderman had been so instructed notwithstanding that Mr Tang had repeatedly raised concerns about the availability of a refund. 105 Mr Yu again submits that he was a mere conduit between Mr Roths and Mr Tang and that it was reasonable to rely on what Mr Roths told him about the backdoor listing opportunity. 106 If Mr Tang's case relied only on Mr Yu providing him with the letter from Mr Roths which referred to the refund, it may be that Mr Yu could be seen as a mere conduit. However, Mr Tang also relies on the WeChat voice messages exchanged between himself and Mr Yu. In those WeChat voice messages, Mr Yu did not couch what he said to Mr Tang in terms of what he understood about the investment opportunity or what he had been told about it by Mr Roths. Rather, Mr Yu made positive assertions about the payment of a refund in a context where, it must be recalled, he was representing that he (Mr Yu) would also be investing on the same terms: … I am also doing it through the money shop … It will arrive in two days. And then, it will be transferred to the lawyer's trust account directly. If the acquisition is unsuccessful, the money will be refunded to you. … Yes. It is all included in this contract, because the money is not in our account either, it is all in the lawyer's trust account. What kind of trust account, it is an account that is easy for money to go in, but signature will be required to authorize the money to get out of the account. We will no doubt follow the contract, that is we won't … that is, if the money is not transferred to our company successfully, it will definitely be returned to you. 107 I do not consider that Mr Yu had reasonable grounds to make the refund representations. Mr Yu's evidence is that he believed Mr Tang's money would be refunded because Mr Roths told him so (T200.10-23). However, Mr Yu agreed that he did not know what Mr Roths was planning to do with Mr Tang's money (T200.25-27). Given that Mr Yu's evidence is that he knew extremely little about the mechanics of the investment opportunity, it is difficult to conceive of how Mr Yu could possibly be in a position to tell Mr Tang that his money would "definitely" be returned if the PLC acquisition was not successful. 108 As with the other misrepresentations that I have found that Mr Yu made to Mr Tang, the refund representations were objectively likely to induce Mr Tang to invest and so reliance on those representations can be inferred. In the case of the refund representations, I also accept Mr Tang's evidence that the refund condition did indeed reassure him and contributed to his decision to invest (T119.23-30. T143.35-38). 109 Mr Yu submits that to the extent that the refund representations are found to be misleading or deceptive and causative of Mr Tang's loss, Mr Tang should be found to be contributory negligent and Mr Yu's liability reduced by 80%. That is said to be on the basis either that the contract that Mr Tang signed was inconsistent with the refund representations and Mr Tang failed to obtain independent legal advice, or on the basis that Mr Tang did obtain independent legal advice and that advice was poor. 110 In light of what I have found to be Mr Yu's fraudulent conduct, the apportionment regime in the ASIC Act is not available so this point is not strictly necessary to decide. Even if a finding of contributory negligence were open, I am not satisfied that Mr Tang failed to take reasonable care or that it would be appropriate to reduce Mr Yu's liability given Mr Yu's consistent and repeated obfuscations in his dealings with Mr Tang about the true state of affairs.

The post-investment representations 111 Mr Yu's conduct in sending Mr Tang an image of what purported to be a Piper Alderman trust account statement on 28 April 2018 in response to Mr Tang asking whether the money had arrived in the trust account conveyed a representation that Mr Yu had invested $700,000 of his own funds into the backdoor listing opportunity. For the reasons that follow, that representation was false. 112 Mr Yu says that he cannot recall whether the trust statement he sent to Mr Tang was doctored and in any event denies doctoring the statement. Mr Yu urges the Court to be cautious in making a finding that it was Mr Yu who doctored the statement. Mr Yu characterises Mr Tang's evidence about the post-investment representations as self-serving and says that it is improbable that Mr Tang did not notice that the statement sent to him by Mr Yu was fake. Mr Yu also says that he does not understand the relevance of the representation that the PLC acquisition was successfully completed. 113 Undoubtedly, a finding of fraud should not be made lightly. Although the standard of proof in a civil proceeding such as this is "the balance of probabilities", a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence, including the gravity of the matter alleged: Evidence Act 1995 (Cth), s 140; Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336. 114 In the present case, the inference that Mr Yu forged the doctored Piper Alderman trust statement that he sent to Mr Yu on 28 April 2018 is irresistible. There can be no doubt that Mr Tang was sent a doctored document. That much is apparent from a comparison of the genuine statement produced on subpoena by Piper Alderman and the document that was sent to Mr Tang. The genuine statement shows Ms Gu as having deposited $700,000 on 27 April 2018. The forged document has Mr Yu's name in the same typeface but ever so slightly larger font in place of Ms Gu's name. When compared side-by-side, the forgery is obvious, although if one only had regard to the forged document, which is the position Mr Tang was in when he received it from Mr Yu, the forgery is reasonably credible and not easy to detect. 115 Mr Yu's evidence that he obtained the statement from Mr Roths and cannot remember whether the statement was doctored or not at the time he sent it to Mr Yu is not credible. Mr Yu would have known very well that as at 28 April (or any other time) he had not transferred any money to the Piper Alderman trust account (T219.15-39). If indeed Mr Yu had obtained the statement from Mr Roths, Mr Yu would have known that the statement was false and should not have sent the statement to Mr Tang. However, the inescapable inference is that it was Mr Yu who altered the Piper Alderman trust account statement and not Mr Roths. Mr Yu had repeatedly told Mr Tang that he was going to invest his own funds. At the time that Mr Tang transferred his $700,000 on 27 April 2018, in circumstances where Mr Yu had picked Mr Tang up from the airport, accompanied him to the offices of Moshav Financial and to the bank and took him out for lunch, Mr Yu had not transferred any money to Piper Alderman, a fact which he failed to mention to Mr Tang. 116 Mr Yu could not think of any reason why Mr Roths might have put Mr Yu's name on the Piper Alderman trust account statement (T220.43-45). However, Mr Yu agreed in cross-examination (at T220-221) that: (1) He had been telling Mr Tang all week that he was putting in $700,000, that it had "arrived last Friday" and that he told Mr Tang he was going to transfer the money. (2) If he (Mr Yu) had transferred money to the Piper Alderman trust account, it would be recorded in the trust account statement. (3) He knew that if he sent the trust account statement to Mr Tang and that statement did not show his (Mr Yu's) name, Mr Tang would know that he had been lied to. 117 I am satisfied on the balance of probabilities, having regard to the strength of the evidence and my finding that Mr Yu is not reliably a witness of truth, that Mr Yu forged the trust account statement that he sent to Mr Tang on 28 April 2018 to perpetuate the falsehood that he had personally invested in the opportunity that he had promoted to Mr Tang. I find that Mr Yu wilfully misled Mr Tang by representing that he had invested $700,000 into the Piper Alderman trust account. 118 Mr Tang's evidence that he would have taken steps to recover his investment had he known that Mr Yu had not invested is inherently plausible in circumstances where I have found that the representation that Mr Yu was investing his own money was a material factor in Mr Tang's decision to invest (see [59]-[62] above). As the money was not paid out from Piper Alderman's trust account until Tuesday 1 May 2018 on the instruction of Mr Roths given in the afternoon on Monday 30 April, had Mr Tang been told the true position rather than a lie on Saturday 28 April, he would have been in a position to halt the onward payment. I accept that he would immediately have raised the issue with Piper Alderman and he is likely to have been successful in stopping the payment. 119 I do not consider that Mr Tang's failure to notice that the trust account statement that was sent to him was a doctored document at the time he received it counts against him. He was the victim of a well-concealed fraud. It does not lie in the mouth of the fraudster to complain that their victim should not have been deceived. 120 Reviewing the evidence, I am led to the inevitable conclusion that Mr Yu was brazenly and steadfastly committed to maintaining the lie he told Mr Tang that he had invested. On 25 May 2018 when Mr Tang queried via WeChat text message why Ms Gu's name appeared on the circulating resolution showing units in the trust being issued to Mr Tang and Ms Gu and Mr Tang suggested that Mr Yu did not purchase units, Mr Yu replied saying "I did purchase it" and that the reference to Ms Gu was "probably an error". Mr Yu gave that response despite knowing full well that it was not an error as Ms Gu had in fact purchased units while he had not (T228.22-230.7). 121 As to the representation that the PLC acquisition was successful, Mr Tang's evidence is that on 8 May 2018, he and Mr Yu spoke on the telephone. In that conversation, Mr Tang asked Mr Yu how the acquisition was going and Mr Yu told Mr Tang that Mr Roths had successfully completed the acquisition. The WeChat messages exchanged between Mr Tang and Mr Yu record that on 8 May, Mr Tang asked Mr Yu how the backdoor listing was progressing, Mr Yu asked to speak over the phone, and Mr Tang provided Mr Yu with his Chinese phone number. The next WeChat messages exchanged between Mr Tang and Mr Yu are a message from Mr Tang to Mr Yu on 16 May 2018 that he would be "back to Melbourne again" and a reply from Mr Yu that he would send Mr Tang "all the documents as they become available". 122 On the basis of that evidence, I find that Mr Yu represented to Mr Tang on 8 May 2018 that the investment was progressing as planned. The evidence as to what actually happened in May 2018 is somewhat murky. Mr Yu gave evidence in cross-examination that Mr Roths and his associates did acquire a controlling interest in PLC by 7 May 2018, but Mr Yu was unable to explain why the acquisition of the Hyperbuild business never occurred and had "no idea" when or why the investment scheme collapsed (T218.8-31). 123 Although Mr Tang does not press a claim for misleading or deceptive conduct in relation to the PLC acquisition aspect of the post-investment representations, it is relevant to the question of damages, to which I now turn.

Loss and damage 124 As a person who suffered loss and damage owing to Mr Yu's conduct, which conduct breached s 12DA of the ASIC Act, Mr Tang is entitled to recover damages pursuant to s 12GF(1). By reason of Mr Yu making multiple, knowingly false representations to Mr Tang about various matters, including representing via WeChat messages that he was personally investing in the backdoor listing opportunity, sending Mr Tang the video of a fabricated subscription agreement, and sending Mr Tang a doctored trust account statement, the apportionment regime in s 12GF(1B) is not available to Mr Yu. The relevant inquiry is therefore one of ascertaining the loss and damage suffered by Mr Tang. 125 In circumstances where Mr Tang was induced by misrepresentations to acquire an investment asset, Mr Tang submits that the appropriate measure of his loss is the difference between the amount he invested and the "real value" of the asset. To arrive at the "real value", Mr Tang submits that the Court should have regard to subsequent events, excluding events brought about by an independent, extrinsic, supervening or accidental cause: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640 at [34]-[40]; Kizbeau Pty Ltd v WG&B Pty Ltd [1995] HCA 4; 184 CLR 281 at 291. Mr Tang submits that an informed investor would have ascribed no value to the assets that Mr Tang paid for: ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; 224 FCR 1 at [969]-[971]. 126 Further, even if intervening events do occur, the entire amount of the loss may be recovered in the event that the investor was "locked in" to the investment, in the sense that it was not practically possible, or it was unreasonable, for the investor to dispose of the assets: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; 73 NSWLR 653 at [177]. Mr Tang submits that he was in effect "locked in" to his investment because he was misled into doing nothing to recover his investment by Mr Yu's representations that he had deposited $700,000 in the Piper Alderman trust account and Mr Yu's representation on 8 May 2018 that the backdoor listing had been successful. Mr Tang was not disabused of the notion that his and Mr Yu's joint investment was proceeding as planned until the beginning of 2019. 127 Mr Tang contends that the units in the Hyperbuild Unit Trust and the shares in PLC that he acquired had no real value at the date that they were acquired and continue to have no real value at the time of trial. The basis of that submission is the relatively scant evidence of the financial position of the Hyperbuild Unit Trust - ASIC searches and insolvency reports - which support the conclusion that the Hyperbuild Unit Trust did not have any significant assets, and the fact that PLC was a shell company with no assets or trading activity that was suspended from official quotation several months after Mr Tang acquired his shares and removed from official quotation two years later. 128 Mr Yu submits that Mr Tang has not discharged his onus of proving that he has suffered loss because he has failed to prove the value of the benefit that he received when he made the $700,000 investment, relying on Mills v Walsh [2022] NSWCA 225 at [111]-[130]. Mr Yu points in particular to the lack of an expert valuation report. Mr Yu also contends that the relevant date to assess the value of the units and shares is the date that they were acquired, being April 2018. 129 In HTW Valuers, the High Court considered the rule established in Potts v Miller [1940] HCA 43; 64 CLR 282 that an approach to assessing damages is to deduct the value of the acquisition from the purchase price. The High Court noted that the so-called rule "is not universal or inflexible or rigid" (at [35]), referring (at [38]) to the remarks of Dixon J in Potts v Miller in the context of shares that: [T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company. 130 The High Court went on to say (at [39]-[40]): … The limpid words of Lord Macnaghten about the duty of an arbitrator in determining compensation are far too well known to escape repetition: "Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?" … [A]lthough the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. "If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be 'independent', 'extrinsic', 'supervening' or 'accidental', then the additional loss is not the consequence of the inducement. (Citations omitted.) 131 That today the units that Mr Tang holds in the Hyperbuild Unit Trust and the shares he owns in PLC are of no value is therefore relevant to the assessment of damages. The pertinent question is whether the lack of value in those assets was inherent in the assets at the time that Mr Tang acquired them or whether there was some sort of intervening cause. 132 In ABN AMRO Bank, the Full Court held (at [971]) in relation to assessing loss and damage in the context of a structured credit derivative transaction that: The true comparator was between the price paid and the "real value" of the notes. The real value of the notes was what was paid on cash out (or sale to LGSS) because no-one knowing the true creditworthiness of the notes would have paid any more than that amount. And the fact that the loss is measured at that time (the time when the notes cashed out or sold and not at the time of purchase) is necessary because the decline in value was attributable to the notes themselves, not to an extrinsic event. That analysis demonstrates two further reasons why the so-called "rule" in Potts v Miller is inapposite in assessing the true measure of LGFS' loss. It would assess the measurable loss at the wrong date and would direct attention to an extrinsic event which did not exist thereby ignoring a loss inherent in the thing bought. 133 I am satisfied that a fully informed and reasonable investor who was not misled would have assessed the shares acquired by Mr Tang as being of no real value at the time at which they were purchased. PLC was a shell company with no trading activity of its own, as Mr Yu accepted in cross-examination (T177.10-14), and it was suspended from official quotation only months after Mr Tang invested. 134 The position is more difficult with respect to the units in the Hyperbuild Unit Trust as there is little evidence about the true position of the Trust. I make no criticism of Mr Tang in that regard as I accept that Mr Tang has produced all that is in his power to produce in relation to the financial position of the Trust: Blatch v Archer (1774) 1 Cowp 63; 98 ER 969. Taking into account the whole of the admissible evidence, and in particular the ASIC records and what those records do not show, I am satisfied that a fully informed investor who was not misled would have assessed the units as being of no real value at the time that Mr Tang purchased them. 135 Even if I am wrong in that conclusion, I accept Mr Tang's submission that he was in a practical sense "locked in" to his investment by reason of Mr Yu's misleading representations first, that Mr Yu had personally invested, and second, that the planned backdoor listing was successful in May 2018 which led Mr Tang not to take steps to recover his funds. The former misrepresentation is especially pertinent. If Mr Yu had told Mr Tang the truth that he had not personally invested $700,000 on 27 or 28 April as he ought to have done, there would still have been time for Mr Tang to recover his investment before the funds were transferred out of the Piper Alderman trust account and Mr Tang would not have suffered any loss. 136 In consequence, I assess Mr Tang's loss and damage at $700,000 plus interest from the time that the investment was made, ie 27 April 2018 to date of judgment. At the hearing, I agreed to give the parties the opportunity to calculate that interest. 137 As Mr Tang has been wholly successful in his claim, he ought to have a costs order made in his favour. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.