Uy v Ng

Uy v Ng - [2021] NSWSC 605 - NSWSC 2021 case summary — Zoe

[3]

WITNESSES

The plaintiff gave evidence, as did his former assistant, Elaine Tang. Both were cross-examined. No issues of credit arose in respect of Ms Tang. Ms Tang was a loyal employee who had no vested interest in the outcome of this case. Wherever her evidence was at odds with the plaintiff, I have preferred Ms Tang's evidence.
The plaintiff was an unsatisfactory witness. He proved a poor historian. His answers were frequently non-responsive or unlikely: see [7], [79]. The plaintiff gave unsolicited remarks with a view to advancing his case, for example, referring to Mr Ng as a "loan shark" who "scammed a lot of money from me. I'm in my 60s." The plaintiff made unflattering remarks about the defendants and blamed others where possible. For example, when asked why something did not appear in his affidavit, the plaintiff said that, "I wanted to include a lot of things in there but my lawyer at the time said to me, just keep it simple". The plaintiff became loud, emotional and demonstrative when it was suggested in cross-examination that he was lying: see also [30].
Although the plaintiff appears to have lived in Australia for some 30 years, the plaintiff says he speaks and understands only limited English. He speaks in Cantonese. The plaintiff's ability to read, speak and understand English was likely better than he admitted: see [16], [21], [80], [83]. The plaintiff was sent communications in English by people who he worked with, including Ms Tang and long-time employee, Kurt Vegners, who presumably had formed an assessment of the plaintiff's ability to read such communications. The plaintiff also signed transaction documents, statutory declarations, statements and affidavits without the assistance of an interpreter. Some of these documents were witnessed by his solicitor, who had acted for him for several years and presumably had formed a view as to whether the plaintiff was able to understand the import of the document he was signing without the assistance of a translator. When asked how it was that he signed a witness statement without the assistance of a translator, the plaintiff said, "After signing this document, my lawyer said to me, if you don't understand this statement then you go and ask your friends". I think it is unlikely that a qualified solicitor would have said such a thing.
By my rough count, the plaintiff sent or was sent some 37 communications in Chinese and sent, or was sent, some 48 communications in English. The bulk of the Chinese communications were WeChat messages. Of particular interest to me is an email from the plaintiff in respect of an insurance claim following a break-in at the Development. The insurers appear to have been investigating foul play and sent a detailed list of questions for consideration. Ms Tang forwarded the insurer's questions to the plaintiff, identifying those questions which required his response and asked that he respond "where it has your name on it". The fact that Ms Tang, who had worked with the plaintiff for many years, sent him an email in the English language must have reflected her understanding that the plaintiff could read such an email and action its contents. Four hours later, the plaintiff sent an email providing the information sought in English. It is likely that he did read and answer the email unassisted as, if he had required assistance, it seems likely that Ms Tang would have sent an email herself conveying his responses, as she often did in the transaction generally. The questions posed by the insurer, and the answers given, suggest that the plaintiff's command of English was good.
The communications apparently penned by the plaintiff in English are not perfect and I accept that the plaintiff's mastery of the English language is also imperfect. Probably more relevant is that the plaintiff's understanding of business concepts was far from perfect. He does not appear to have been a very sophisticated businessman.
The defendants relied on evidence given by Mr Ng, fellow Everest director Vivian Moo, digital and cyber specialist Yian Sun and translator Thomas McConochie. Mr Ng and Ms Moo were cross-examined. Mr Ng made reasonable concessions and gave simple, direct and accurate answers. Ms Moo was a professional and intelligent woman. Both were impressive. I accept their evidence.

[5]

The Development

In 2010 or 2011, the plaintiff met Wensheng Liu. In 2013 or 2014, the plaintiff became interested in the Development. The developer was Mr Liu through his company, GR Capital. Ms Tang began working closely with Mr Liu and GR Capital in relation to the Development. Ms Tang said she had "two bosses". Ms Tang said that the plaintiff controlled GR Capital in the sense that he gave instructions on what she needed to do, which she confirmed with Mr Liu before implementing those instructions.
The plaintiff says that he agreed with Mr Liu that GR Capital would purchase the site and the plaintiff would provide investment monies for this purpose. In July 2014, a bilingual Syndicate Agreement was prepared to enable GR Capital to raise some $13 million in funds from overseas investors to purchase the site. By January 2015, the plaintiff had raised some $8 million from friends and family in Hong Kong, as well as from his personal savings. These monies were deposited into GR Capital's bank account and used to purchase the site, undertake demolition and excavation and construct the basement car park. This work was undertaken by Gencorp.
In April 2015, Hurstville City Council approved construction of an 11-storey building on the site, with 75 apartments and commercial premises. GR Capital and Gencorp signed a building contract, with construction costs expected to be some $31 million.
According to Mr Ng, the plaintiff arranged for Mr Ng to meet Mr Liu, who needed assistance with a Significant Investor Visa. The plaintiff described himself as a "business partner" of Mr Liu. Mr Ng arranged for Baker McKenzie to attend the meeting. Mr Ng says that everybody spoke in English during the meeting "including Phillip, who did a lot of the talking".
Mr Ng became aware of the Development, which he understood to be funded and well advanced, as they were then selling apartments "off the plan". Mr Ng's only involvement in the Development at this stage appears to have been enquiring whether any apartments remained for sale, as one of his clients was interested in buying one.
By October 2016, GR Capital was looking for finance for the Development. Mr Liu signed a draft term sheet for some $42 million finance to be provided by PAG Assets Ltd. This did not proceed. Ms Tang said that GR Capital approached brokers to try and get as much interest as possible in lending to the Development. Lots of lenders were approached.

[6]

Everest

In September 2016, Mr Ng and Ms Moo were both leaving Sun Hung Kai and wished to set up their own private banking business. Everest Financial was incorporated and became the holder of an Australian Financial Services Licence. In January 2017, Mr Ng and Ms Moo informed Mr Liu that they had set up an investment management company and were interested in collaborating on projects. A meeting was arranged.
In March 2017, Mr Ng approached Mr Liu again, advising that they had been busy setting up their new company and, now that everything had settled down, he and Ms Moo were hoping to explore joint business opportunities. A meeting was arranged at GR Capital's offices in Hurstville to discuss Everest's business. According to Mr Ng, the Development was not discussed, save that Mr Liu tried to interest them in buying some apartments 'off the plan'.
Soon after this meeting, Mr Ng received a call from the plaintiff who asked whether Mr Ng had money to lend and was interested in providing funds for the Development. The plaintiff said, "We can get you the opportunity to fund". The plaintiff, Mr Liu and Ms Tang came to Everest's offices in Barangaroo. The meeting was conducted in English. Mr Ng got the impression that Mr Liu and the plaintiff were desperate for funding, although the plaintiff said, "We're trying to help you here because you are a new start-up business. … I have James Packer wanting to lend us but I'm asking Mr Liu to give you a chance …"
Everest retained a consultant, Sharon Chuang, to conduct due diligence in respect of the Development and consider the commercial terms for the proposed loan. On 6 April 2017, Ms Moo and Mr Ng sent a non-binding indicative term sheet to Ms Tang for consideration. It was proposed that Everest Financial would advance $6 million to fund construction at the Development. The plaintiff says he was never provided with a copy of this document: Usually for documents regarding loan, it is given to Liu to read, not to myself, because I did not have the authority to read it. … This document was not meant for me.
Ms Tang said she provided the document to both the plaintiff and Mr Liu. According to Ms Tang, the plaintiff instructed her as to how to proceed with the negotiations for the finance. A. He actually instructs me what to discuss with Everest, and so if he needed something done, he'd say, "Elaine, could you ask Vivien", because I would communicate with Vivien, I think, 90% of the time and he would speak to Kenny. So, during that time, Phillip would say, "Do this", or "Do that", then I would actually approach Vivien and say, "This is what we're asking for", and they'll say yes or no, and I'll relay the message back to Phillip. … Q. You took instructions from Phillip in relation to those negotiations? A. Mainly from Phillip, and also from GR, because GR is actually the borrower. … Q. You kept Phillip appraised of the progress of those renegotiations; correct? A. Yes. Everyone's aware of - yes.
On 28 April 2017, a further non-binding indicative term sheet was provided, proposing that Everest Financial would lend $27.5 million to GR Capital to fund construction of the Development. The term sheet included the following condition: Advanced but unexpended Facility Principal is to be deposited into a designated account with the Lender being joint signatories. Funds to then be withdrawn from designated account to pay invoices directly related to the Development Project. I will refer to this as the "Cash Account".
The plaintiff said, "I did not receive this document". Ms Tang said she provided the term sheet to the plaintiff and Mr Liu and discussed the term sheet with the plaintiff. It's - how the setup worked was Mr Uy would negotiate with Kenny, and then Mr Uy would tell me, "Oh we're going to" - for example "We're going to borrow 27 and a half mill" and then they - Everest would then send us the indicative term sheet and then I would just discuss it with Phillip and Mr Liu just to confirm that all these here are correct. And then they'll say yes or no. The term sheet was signed by Mr Liu.
On 10 May 2017, Mr Liu signed a deed with the plaintiff and investors in the Development agreeing that, upon the first drawdown of the loan from Everest, he would return $5 million to investors on a proportional basis. The plaintiff said that, in negotiations with Mr Ng, it was agreed that the loan could be drawn down to repay his investors, but Mr Ng later reneged on this deal and would only allow funds to be drawn down in accordance with the Facility Agreement, that is, on provision of a quantity surveyor's report. The plaintiff said as much to Ms Tang. This became a recurring complaint by the plaintiff: see also [37].
On 11 May 2017, Everest Private was incorporated as a special purpose vehicle to provide the proposed funding for the Development.

[7]

Commission

According to the plaintiff, at the end of 2016 or in early 2017, Mr Ng sought his assistance to provide finance for the Development saying, "If you successfully facilitate the deal between Everest and GR Capital, I agree to pay you $500,000 as an introducer's fee. I won't tell Mr Liu…" Mr Ng is said to have agreed to give the plaintiff $10,000 cash once GR Capital had agreed, and the rest within 21 days of the occupation certificate being issued. The plaintiff then describes further meetings with Mr Liu in relation to finance being provided by Everest although, as the defendants point out, the plaintiff does not suggest that, in any of these meetings, he said anything to promote Everest.
In any event, arrangements were made to have lunch at a Chinese restaurant in Hurstville. Mr Ng says the purpose of the meeting was to establish the Cash Account referred to in the term sheet: see [24]. On the morning of 12 May 2017, Ms Tang sent a message to the plaintiff, Mr Ng and Ms Moo confirming the booking, "We will have lunch first and the discussions there after". Ms Tang asked Mr Ng and Ms Moo to bring their identification and customer account number for the Commonwealth Bank, if they had one, "It is easier for us at the Commonwealth Bank as we already have several accounts there". Mr Ng replied that all their funding accounts were with Westpac.
According to the plaintiff, when Mr Ng arrived at the lunch, he handed him an envelope containing $10,000 in cash. (When asked whether he deposited the money into his bank account, the plaintiff said, "Of course not, why would I need to do that".)
On 12 May 2017, Everest Private opened two accounts with Westpac. The Cash Account was also opened for GR Capital. The accounts had a nil balance for about a month, until the loan was drawn down: see [36].
On the morning of 15 May 2017, Mr Ng flew from Sydney to Hong Kong. His flight departed at 10.00 am. The significance of this is, when the plaintiff initially pleaded the commission and the part-payment of $10,000, it was said to have taken place on 15 May 2017 when, as it turned out, Mr Ng was overseas.

[8]

The loan

On 13 June 2017, the transaction documents were executed by both parties, comprising a Facility Agreement between Everest, GR Capital, Mr Liu and his wife, and associated companies, as guarantors. In addition, guarantees and indemnities were signed by Mr and Mrs Liu. Further, a Building Tripartite Deed was executed between Everest, GR Capital and Gencorp. The plaintiff signed the Building Tripartite Deed for Gencorp.
The plaintiff says he was never provided with a copy of the Facility Agreement. Ms Tang said that the plaintiff and Mr Liu had a solicitor who went through all of the transaction documents with them; "I know that Phillip is aware of this [facility] agreement".
Under the Facility Agreement, all interest was capitalised. Thus, Everest did not receive any payments of principal or interest until December 2018, when the Development was expected to be completed. The Facility Agreement provided for the establishment of the Cash Account, with Everest and GR Capital as joint signatories. This account had already been opened on 12 May 2017: see [31].
On 14 June 2017, the first drawdown of $1.5 million occurred and, on 20 June 2017, the second drawdown of some $13 million occurred.
On 2 August 2017, the plaintiff sent Mr Ng a series of messages, including two forwarded from an investor, pressing for repayment of $1 million apparently invested under the Syndicate Agreement, which investment had matured on 31 July 2017. Mr Ng sought Ms Chuang's advice, "Sharon, Philip calling me day and night asking us to release another $1mm to them not based on qs report as he claims this is money he himself invested in order to partner with mr Liu on the project. … It maybe money they promise investor to return July end and now mature and investor chasing for their money back". Ms Chuang enquired why the plaintiff was asking for such funds, when the borrower was GR Capital, not the plaintiff. Mr Ng replied: He asked me to release this money to GR capital and he will get the money from GR. He said in order to partner on the project he personally need to put in $1mm. He said initially he think the $15mm lending is up to them to use and not according to progress claim. (as you rightly concluded that both GR and Gencorp are tied together) He went as far as making a small threatening tone that if we don't help him[, h]e won't help us … He said he is pushing for GR to give us the lending even there are plenty of others offering better terms blah blah. … I'm not sure why he needed another $1mm but GR and mr Liu didn't even ask.
Mr Ng told the plaintiff that he could not release the money except as set out in the Facility Agreement. By 5 August 2017, the plaintiff had withdrawn his request for funds. The plaintiff advised Mr Ng, "there's no problem now. I've solved my own matter. Sorry about that. Sorry for bothering you during this period".
The plaintiff's request that $1 million be paid by Everest to GR Capital, so that the plaintiff could be reimbursed for funds he had outlaid to the Development, is perhaps inconsistent with the plaintiff's suggestion that he had already agreed to be paid $500,000 commission. It may also be noteworthy that no commission is referred to in these communications, which may indicate that there was no such agreement.

[9]

Refinance

In April and May 2018, Project Control Group reports and meetings indicated delays and cost overruns of some $12 to $13 million. Mr Ng was becoming increasingly concerned as to how GR Capital would fund these costs and repay the loan on time. In addition, in May 2020, the Land and Environment Court of New South Wales approved a variation of the development consent for the Development, permitting additional levels to be added to the building. It was unclear how the cost of these additional levels would be funded. Everest Financial's Legal & Compliance Officer sought various information from Ms Tang, which reflected Everest's concerns. Separately, Mr Ng considered engaging an independent specialist to review the position and advise on strategy given the risk of default.
It was apparent that the Facility Agreement would need to be extended. On 18 June 2018, Mr Ng communicated with Ms Chuang regarding negotiations to extend the loan facility: Ng: They are looking at paying half of the interest due by December. Refinance the 30m plus interest for 6 months plus 2 months. Chuang: They can't pay the full interest? … Ng: Vivian and Elaine been having qui[et] chat and [V]iv said can accept half interest. I think Elaine told her if they need to pay full interest and the additional $5.5mm it's difficult.
From Everest's perspective, a non-negotiable requirement of any refinance or extension of the loan facility was that there would be some payment down of the debt as Everest had not received any returns over the last 12 months and needed to lower its risk profile. On 27 July 2018, Ms Moo sent Ms Tang a Non-Binding Indicative Refinance Term Sheet for the proposed new loan facility. Everest proposed to increase the facility to $30.85 million, being the existing loan together with 50% of the interest then owing and a further $1.5 million. A condition of the loan was that half of the outstanding interest, being $1.85 million, be paid.
The plaintiff says he was never provided with a copy of the term sheet and was not involved with any negotiations concerning the refinance, "I knew a little bit, but I was not involved. … I rarely make any decisions [on term sheets] because myself, I was only an investor … I did not participate in such discussion". The plaintiff did, however, agree that Ms Tang told him that as part of any refinancing, Everest wanted some of the loan and accrued interest repaid but "it was a matter [for] Liu to do instead of myself".
Ms Tang said she showed the term sheet to the plaintiff and Mr Liu and discussed it with them, including the condition that half of the outstanding interest be repaid from the loan principal. Ms Tang also said that the plaintiff attended the meetings where these terms were discussed, although there were no negotiations as such, as "Everest had the upper hand and … dictated what we had to do". The plaintiff gave her instructions on what position GR Capital should take in the negotiations, "Phillip had involvement in this because he's actually one of the major investors on this development … he wasn't just the builder". I prefer Ms Tang's evidence to that of the plaintiff.
On 12 August 2018, Everest's solicitors, Ashurst, sent Ms Tang a draft Facility Agreement in respect of the re-finance. The plaintiff says he was never provided with a copy of the document and was not aware that Everest was requesting GR Capital to pay 50% of the accrued interest. Ms Tang says she made the plaintiff and Mr Liu aware of the document, and that is inherently likely. Ms Tang said she kept the plaintiff and Mr Liu updated as to the content of her discussions with Everest, usually in face-to-face meetings. Ms Tang understood that it was a consistent feature of Everest's position that GR Capital needed to pay down some of its loan to reduce Everest's risk. It was made clear to Ms Tang on many occasions that Everest wanted some money back, and she discussed this with the plaintiff.

[10]

A surprise

Meanwhile, Xinfeng Australia International Investment Pty Ltd lodged a caveat on the title of Development site, claiming a proprietary interest in the land by reason of mortgage and finance documents dated 19 August 2016, that is, before Everest's loan. On 9 August 2018, Xinfeng commenced proceedings in this Court against GR Capital and Mr Liu to recover a loan of $10 million.
On 17 August 2018, in the course of due diligence in relation to the re-finance, Mr Ng became aware of Xinfeng's caveat. Everest was unaware of any loan to Xinfeng, or that GR Capital had used the Development land as security for such a loan. The Facility Agreement and Everest's security prohibited other encumbrances on the Development land. At the time, there was about $6.3 million remaining under the Facility Agreement, of which about $1.3 million was held in the Cash Account and $5 million was held in a term deposit in GR Capital's name. On becoming aware of Xinfeng's caveat, Mr Ng was keen to retrieve these funds and GR Capital agreed. Mr Ng confirmed that the funds would continue to be available to GR Capital in accordance with the Facility Agreement.
On 10 September 2018, Mr Ng sent a reminder to Ms Tang, "please also remind your two bosses about the $2.5mm to get things going". The $2.5 million was "the 50% of interest and the refinancing fees". On 11 September 2018, Mr Ng sent an email to Ms Tang asking, "could you also let us know if Mr Liu and Philip has confirmed the $2.5mm and the refinancing matter?" On 13 September 2018, Mr Ng sent a series of messages to Ms Tang asking, "[I]f Mr Liu and Philip has any answer for the $2.5mm we discussed and the refinancing?" On 17 September 2018, Ms Tang sent confirmation, "we have the $2.5m ready as discussed. We would like to continue with the refinancing negotiations". Ms Tang said she obtained confirmation from Mr Liu and the plaintiff before sending confirmation.
The plaintiff says he was not aware that GR Capital, Mr Liu or Ms Tang were raising $2.5 million to pay Everest, "I was not involved in raising these funds". This is not consistent with the contemporaneous documents already described, which refer to the plaintiff repeatedly.
On 21 September 2018, Mr Ng sent Ms Tang the draft conditions for the re-finance including: GR Capital will be required to make a payment to Everest in an amount of $2.5 million on the amendment date to be applied to the payment of capitalised interest, outstanding principal and application fees to be allocated as determined by Everest.
On 8 October 2018, following discussions with Ms Tang, Mr Ng sent a further draft of conditions, requiring GR Capital to pay between $2.5 million and $2.7 million, to be applied to interest, principal and application fees, with the final amount to be determined by reference to when the refinancing occurred. Ms Tang said she was very busy dealing with the Xingfeng proceedings and would resume the refinance negotiations when she could.

[12]

Agreement to pay $1 million

On 22 October 2018, Mr Ng arranged a meeting with Mr Liu, Ms Tang and the plaintiff, who had just returned from overseas. In advance of the meeting, the plaintiff sent a message to Mr Ng, "I hope you'll help me out this time". At the meeting, Mr Ng noted that the $2.5 million had yet to be paid. Ms Tang asked if this amount could be reduced and a figure of $1 million was agreed. According to Mr Ng, Mr Liu told the plaintiff: Sort it out Phillip. This time it's your turn to take some burden. I will fly out to Beijing and I will get more funding to complete the additional levels [of the building] for Everest.
Ms Tang recalled this: I do recall Mr Liu saying to Phillip that, "Phillip, you caused this problem. You're responsible." Yes, he did say that.
Ms Moo recalls that Mr Liu pointed to the plaintiff and said, "I am going to take care of raising the additional funds, and you need to take care of the $1 million payment". After the meeting, Ms Moo telephoned Ms Tang and asked how the plaintiff was going to take care of the $1 million payment and Ms Tang replied, "Phillip owes Mr Liu money and favours. He will sort it out". Ms Tang agreed that she may have said this.
As GR Capital was now in administration, it was decided that the money should be paid directly by Mr Liu to Everest, rather than be paid by GR Capital as, otherwise, the administrators and Xinfeng may claim to be entitled to the money. As Mr Liu had given a personal guarantee to Everest, there could be no issue taken with payments being made under the guarantee. After midnight, Mr Ng sent a message to the plaintiff, "Philip, I've already done everything I can for what I promised you. I've informed Elaine of the conditions that we can get". The plaintiff replied, "Thank you very much". The plaintiff says he only sent this as a courtesy, but I think it more likely that the plaintiff's text message indicated that he agreed with what had been discussed at the meeting that day and was grateful that Everest had delayed appointing a receiver.
On 23 October 2018, Mr Ng contacted Ms Tang, asking "exactly what Mr Liu can deliver. We are doing above and beyond and trying our very best/last effort". Ms Tang replied, "I know you have tried very very hard. Thank you." Ashurst circulated a draft priority deed to be signed by GR Capital and Xinfeng.
According to the plaintiff, Mr Ng asked him for $1.5 million to pay GR Capital's interest; the plaintiff said this had nothing to do with him and Mr Ng should speak to Mr Liu. The plaintiff said he may be able to raise $500,000, "but the money must be returned to me and must not be paid to GR Capital and i[s] to be in the solicitor's trust account". They spoke again on 25 October 2018, when the plaintiff said the most he could borrow was $500,000, "This money would need to be returned to me. … It must be paid into a solicitor's trust account. The money is not for your company, I need it back. If it's for your company, I'm not going to give you the money". Mr Ng agreed that he would give the money back. The plaintiff understood that Mr Ng needed the money, "to show his investors" that Everest had financial capacity.

[13]

Paying the builders

By then, Gencorp had issued an invoice for October 2018 in the amount of $859,905.74. On 22 October 2018, GR Capital issued a Release of Funds Notice to Everest, requesting a release of funds under the loan facility to pay the invoice. On 23 October 2018, Mr Ng sent GR Capital a letter setting out Everest's conditions to release payments to the builder. Everest proposed to pay Gencorp's invoice in two tranches. On execution of the letter by the parties to the Facility Agreement, $400,000 would be released on various conditions being satisfied by 5.00 pm on 24 October 2018 including: [T]he Borrower makes payment, or procures that there is made payment, to the Lender in an amount of A$500,000 to be applied by the Lender to the Amount Owing (with the application of such payment against the Amount Owing to be determined by the Lender in its sole discretion). The balance of Gencorp's invoice would be paid on provision of a further $1 million paid to Everest.
Mr Ng asked Ms Tang to confirm the agreement, noting, "I will work out with Ashurst and pay to builder on time even we won't be able to get [Xinfeng] priority deed". Ms Tang did so and again thanked Mr Ng for his efforts, "I appreciate you and vivian being so helpful and still trying to help even though you could have taken everything from us. Thank you and that is from [m]e personally".
On 25 October 2018, Ms Tang sent a message to Ms Moo and Mr Ng asking, "[C]an you release all the funds excluding gst to gencorp today …" Mr Ng advised that only half of the funds would be released that day, as set out in the letter. Ms Tang replied: Yesterday in the meeting, you agreed to the full amount … Now if you only release half, then we have to come up with more funds. … Can you please release the funds to gencorp. It's not for GR or anyone else. Please. Ms Moo reassured Ms Tang that the full amount would be paid, but Everest would initially pay 50% as had been requested by Mr Vegners, "the remaining will be given to Gencorp once $1m transfer to Everest by Tuesday. That was also agreed by you and Mr. Liu too."
On 26 October 2018, Everest appointed receivers and managers to the collateral and secured property of GR Capital.

[14]

Paying $500,000

The plaintiff spoke to Sin Kit Tam and asked to borrow $630,000, being an amount which the administrators requested be paid to them by way of an indemnity. The plaintiff then told Ms Tang that $500,000 of these funds was to be paid to Mr Ng. Ms Tang corroborates this. On 26 October 2018, Ms Tang sent a text message to Mr Tam saying, "[P]hilip ask that the funds be paid to my account". Mr Tam deposited the funds to her bank account. On 27 October 2018, Mr Ng advised the receiver, "we are expecting some repayment back from the director on Tuesday and would like to use that money to pay Gencorp". On 29 October 2018, Ms Tang contacted Ms Moo by WeChat, "I need to arrange for money to go to you guys? $500k. Also to arrange a meeting with plan tomorrow to vote VA out".
Mr Ng said he decided to put the money in a trust account rather than in Everest's bank account. He no longer trusted the plaintiff and Mr Liu and was concerned that they might tell third parties to deposit the money into Everest's account so that Everest would manage or invest the money for them, rather than use the payments in reduction of monies owed under the Facility Agreement. Mr Ng thought that the risk could be removed by using Ashurst's trust account. Certainly, there are text messages sent between Mr Ng and Ms Moo at the time in which he said that he did not trust the plaintiff and Mr Liu. On 29 October 2018, Mr Ng sent an email to Ashurst advising: As discussed, I would like any further repayment from the director monies to be paid into a solicitor trust account. Pending further decision to be made regarding the [Development].
Ms Tang agreed that the instructions to pay the monies into Ashurst's trust account came from Mr Ng. Mr Ng forwarded Ms Tang details of Ashurst's trust account "for the transfer". Later that evening, Ms Tang confirmed that $100,000 had been transferred (being the daily transfer limit on Ms Tang's account). The monies were paid into Ashurst's trust account. Ms Moo requested that the balance of the funds be paid by bank cheque delivered to Ashurst. Ms Tang obtained a bank cheque for $400,000, payable to Ashurst's trust account, and delivered the cheque to Ashurst.
As to the remaining $130,000 of the monies borrowed from Mr Tam, Ms Tang says the plaintiff directed her to use the remaining monies at the direction of Mr Liu. The money stayed in Ms Tang's account until Mr Liu gave her directions and then she paid it whenever Mr Liu asked her to. This is consistent with the plaintiff having agreed with Mr Liu to obtain funds to be used by Mr Liu, as discussed at the meeting on 22 October 2018.
On 30 October 2018, Everest Private entered into a funding agreement with the receivers of GR Capital, agreeing to provide funding of $464,855.74, to be paid to Gencorp ($459,905.74) and a valuer ($4,950).

[15]

Paying $300,000

On 1 November 2018, Luke Trenfield of Gencorp sent a request to Mr Ng to pay an insurance premium then due. Mr Ng contacted Ms Tang as to the plaintiff's whereabouts, and was told that he was in Hong Kong "Trying to organize the $1m for you guys next [week]". This is consistent with the plaintiff being aware of Everest's letter of 23 October 2018, which made the second tranche of payments to Gencorp conditional upon the provision of a further $1 million paid to Everest (contrary to the plaintiff's evidence that he was never provided with a copy of the letter and was not aware of the conditions imposed by Everest on paying Gencorp's invoices).
Notwithstanding the agreement at the meeting on 22 October 2018 for $1 million to be paid, Ms Tang told Ms Moo, "$800,000 is all they have". On 9 November 2018, Ms Tang asked Mr Ng for the name for the bank cheque, "So that I can send it to Philip. [F]or the $300k". Mr Ng advised that the cheque should be made payable to Ashurst's trust account. On 9 November 2018, Ms Tang delivered a bank cheque for $300,000 made payable to Ashurst's trust account. The monies were deposited into Ashurst's trust account.
In contrast, the plaintiff said that in early November 2018, he spoke to Mr Ng on the phone, who asked for more money. The plaintiff said he had $300,000 but needed it to settle on the purchase of a property, "All the money needs to be returned to me. If that is not the case, I cannot hand over the money". Mr Ng said, "I am not going to use your money". On 9 November 2018, the plaintiff said he met with Mr Ng and repeated that he needed to use the money for his property, "If you are going to use it, I won't give it to you". Mr Ng said, "I promise that I won't use it without asking you first". On this basis, the plaintiff says he handed over a bank cheque to Mr Ng in the sum of $300,000. The plaintiff's version is inherently unlikely. It is not clear why, at this time of great financial uncertainty and where GR Capital was in default and, indeed, in administration, that Mr Ng would request funds without intending to use those funds to redress those problems.
On 15 November 2018, the plaintiff exchanged messages with Mr Ng, "I hope you can help me with this. You're the only one who can. I beg you". "I hope you can help us". The plaintiff said the help that he was referring to was immigration assistance for his brother in Hong Kong. This seems most unlikely. The plaintiff and Mr Ng arranged to meet. According to Ms Tang's text messages, the plaintiff was trying to work out strategies to vote out the voluntary administrators. Mr Ng says the plaintiff wanted to enlist Everest's support in opposing a resolution to put GR Capital into liquidation.

[16]

Moneys transferred to Everest Private

On 19 November 2018, Everest issued a notice of default to Mr Liu. Mr Ng understood that the notice was issued to formalise the fact that Mr Liu was making payments under his guarantee; Everest Private treated the $800,000 payments as having satisfied the demand. Ms Moo explained that the purpose of the default notice was to get $800,000 out of Ashurst's trust account and to Everest, to fund the receivers.
On 20 November 2018, Everest Private entered into a second funding agreement with the receivers and managers, agreeing to fund a further $4,123,643.65. On 21 November 2018, Ashurst submitted a proof of debt for Everest in advance of a second creditors' meeting. The proof of debt noted payment received from GR Capital since the appointment of administrators as: Three payments for an aggregate amount of $800,000 were made by Mr Wensheng Liu's liability under his personal guarantee with the Creditor dated 13 June 2017; and The amounts of $400,000 and $464,855.74 were applied by the Creditor from the amounts held in the Cash Account … on 25 October 2018 and 30 October 2018, respectively.
After the second meeting of creditors, Everest gave instructions to transfer $800,000 from Ashurst's trust account to Everest's bank account. On receipt, the monies were treated as a credit to the amount owing by GR Capital. Everest decided to continue to fund the Development and, through a series of funding agreements with the receivers and managers, advanced some $14 million to fund the completion of the Development.
According to Mr Ng, in late December 2018 or early January 2019, the plaintiff called Mr Ng and said he needed the money back, "Remember the $800,000 that Mr Liu paid you, $300,000 of that was actually my company funds". Mr Ng explained that the funds were paid to reduce the debt owed by Mr Liu and, as the company was now in receivership, he could not simply give the money back. According to the plaintiff, he met with Mr Ng in a café and asked for his money back so that he could settle on the purchase of his property, but Mr Ng said he had given the money to the receiver. On 11 January 2019, the plaintiff sent a text message, "300 thousand is the funding our company used. I also want to finish this job soon. I hope you can help." Mr Ng advised that "we have given all the funds we had to the Receiver. It's all under the judicial process."

[17]

The plaintiff seeks payment

On 22 July 2019, the plaintiff made a statutory declaration in respect of requests made by Mr Ng between November and December 2018 for money. According to the statutory declaration, Mr Ng telephoned the plaintiff saying that he had been trying to get in touch with Mr Liu, who needed to pay $1 million. Mr Ng apparently said that, if Mr Liu could not be reached, then the plaintiff should pay Mr Ng the $1 million. The plaintiff said he did not have $1 million and Mr Ng said that, if he wanted to help Mr and Mrs Liu and save GR Capital, then he would pay him. The plaintiff said he did not have $1 million but had $300,000 in his personal account. Mr Ng said, "Give me then $300,000 if you want to save GR Capital and I will have to put the money in a Lawyers Trust Account, I will not use these monies at all and will be returned to [you] very quickly". Otherwise, Mr Ng would ask for GR Capital to be wound up at the next meeting, have Mr and Mrs Liu made bankrupt and stop making funds available to Gencorp to complete the project. Under duress, the plaintiff says he agreed to obtain a bank cheque for $300,000. However, when the plaintiff asked Mr Ng to return the money in January 2019, Mr Ng refused.
When asked why the statutory declaration referred to $300,000 rather than the $800,000 now claimed, the plaintiff said he told his solicitor that the claim was for $800,000, but the solicitor made "a lot of mistakes". This is unlikely.
On 15 August 2019, the plaintiff lodged a caveat over property owned by GR Capital, claiming an equitable charge by reason of an agreement dated 27 January 2016, signed by the plaintiff and Mr Liu, by which Mr Liu agreed to amend the Syndicate Agreement for the plaintiff so that the money invested in the land could be secured by caveat and mortgage. (Xinfeng later submitted that the agreement was belatedly produced and not authentic, which Ward CJ in Eq did not decide: Xinfeng Australia International Investment Pty Ltd v GR Group Pty Ltd [2019] NSWSC 1547 at [10] and [31].) The same day, the plaintiff swore an affidavit in the Xinfeng proceedings (without the assistance of a translator) in advance of a hearing on 19 August 2019, in support of an application for leave to appear in the proceedings, set aside the consent orders made in favour of Xinfeng and enforce an unregistered mortgage.
In addition, the plaintiff signed a witness statement (in English, without the assistance of a translator) setting out his negotiations with Mr Ng, Ms Moo and Mr Liu which led to the Facility Agreement. Noteworthy, no mention is made of the commission. The statement also described Mr Ng's requests for money in November 2018, leading to the plaintiff paying $300,000. The statement also referred to a further request for $500,000, said to have been accompanied by threats and duress. The statement does not correspond with how events unfolded, by reference to the contemporaneous documents. This is perhaps not surprising as the plaintiff likely did not have the contemporaneous documents to hand. But his general recollection, as recorded in the statement, is materially incorrect.
On 20 August 2019, the plaintiff sent his witness statement to Mr Ng advising, "I'm representing my investors. Will you be able to give me that 500 AUD you promised to my investors and my own 800 thousand by the end of this week, 5pm, 30th August, 2019?". The plaintiff advised he had instructed lawyers to act on his behalf. On 24 September 2019, the plaintiff's solicitor sent a letter of demand to Ashurst, noting the plaintiff's instructions that "he has loaned the sum of $800,000.00 to Everest between October and December 2018". Allegations of duress were repeated. (It is wholly unlikely that Mr Ng threatened the plaintiff or subjected him to any form of duress. Mr Ng was a quiet, professional, quietly spoken gentleman whilst the plaintiff was a much older, more experienced and volatile person. I do not doubt that the plaintiff would have had the upper hand in any robust discussions.)
On 23 October 2019, the plaintiff gave evidence in the Xinfeng proceedings on his motion to be joined. He gave evidence, initially with the assistance of an interpreter, and then without the interpreter. On 8 November 2019, Ward CJ in Eq gave judgment, dismissing the plaintiff's motion with costs: Xinfeng Australia International Investment Pty Ltd v GR Group Pty Ltd.
On 22 November 2019, Mr Vegners sent an email to the plaintiff attaching a letter of completion for signature saying, "I don't understand what the issue is as you have signed these for the past 20 years for all the projects we have done". On 24 November 2019, the plaintiff sent a detailed response - in English - setting out his reasons. (The plaintiff says that his friend wrote the email for him.) Further emails were sent by the plaintiff, in English, making plain that no one was authorised to sign the occupation certificate until he gave authorisation. The plaintiff appears to have endeavoured to thwart completion of the Development given his unanswered demands for repayment of the $800,000. The plaintiff was taking steps to prevent the issue of the occupation certificate which, on his version of events, was the pre-condition to the full amount of the commission becoming payable. This suggests there was no such agreement for commission.
On 29 November 2019, the plaintiff commenced these proceedings. Notwithstanding the plaintiff's efforts, an occupation certificate was issued on 19 December 2019. On 21 January 2020, the plaintiff sent Mr Ng two text messages demanding the repayment of "My $800,000" and also suggested: Previously, with your request and my help, Boss Liu was introduced to your 1-5 Treacy St. project. Signed your company's construction loan contract. After it was done. Your company would give me a personal remuneration of AUD 500,000. At Imperial Dynasty Restaurant Hurstville, you already gave me 10,000. Now still owe me AUD 490,000.
This is the first mention of an agreement regarding commission, now made some three years after agreement is said to have been reached. On 3 April 2020, the plaintiff commenced proceedings in the District Court of New South Wales, suing Everest Private and Mr Ng for $490,000.

[18]

CLAIM FOR COMMISSION

As pleaded, the plaintiff claims to have introduced Mr Ng to Mr Liu and, over the period from October 2016 to April 2017, reached an agreement with Everest Private (which I note was not incorporated until 11 May 2017) to the effect that: the plaintiff would promote Everest's lending business to GR Capital; Everest would pay the plaintiff $500,000 commission if GR Capital entered into a finance agreement with Everest; Everest would pay the plaintiff $10,000 as a first instalment upon GR Capital entering into the finance agreement, with the balance upon issue of an occupation certificate for the Development. In the alternative, the agreement was entered into between the plaintiff and Mr Ng in his personal capacity.
The first instalment is said to have been paid by Mr Ng to the plaintiff in cash at the lunch. Such a payment would not accord with the suggested agreement, which obliged Everest to pay the $10,000 upon entry in the Facility Agreement, which did not happen for another month. The plaintiff seeks an order that Everest Private or, alternatively, Mr Ng, pay the plaintiff the remaining $490,000.
Mr Ng denies making any payment of $10,000 to the plaintiff at the restaurant. To begin with, he was not in Australia on the day that the payment was said to be have been made in the pleadings and the affidavits of the plaintiff and Ms Tang: see [32]. Mr Ng says he has never in his life handed anyone $10,000 cash in an envelope and would never consider doing so. Further, the plaintiff never asked for, and Mr Ng never offered, any money to be paid to him during any conversations or meetings prior to the Facility Agreement being entered into. In addition, it made no commercial sense to pay commission of $500,000 to the plaintiff and, if the plaintiff had asked for this, Mr Ng would have refused.
Ms Moo says she was not aware of the plaintiff ever asking for, or being offered, a commission of $500,000. Having worked with Mr Ng for about 18 years, Ms Moo believes he would have mentioned such discussions with her and she would be very surprised if Mr Ng had ever agreed or offered such a commission payment. Mr Ng and Ms Moo made joint decisions about Everest and, had Everest been asked to pay such a commission, Ms Moo would have refused.
Ms Tang, who attended the lunch, says nothing about commission.
There were no withdrawals from Everest Financial's bank accounts on 11 or 12 May 2017, and none in the preceding days which would have readily accounted for $10,000 cash. Everest Private did not have a bank account at the time; its bank accounts were only opened after the lunch and had nil funds for about a month until the loan documentation was executed. Mr Ng readily accepted that he would have been able to find $10,000 if need be, and did not rule out the possibility of agreeing to pay a finder's fee or commission, but such a fee or commission would have to be factored into the proposed deal to ensure that it remained viable from Everest's perspective.
Mr Ng does recall a telephone call with the plaintiff about a week after the Facility Agreement was signed, in which the plaintiff said, "You know you should have paid me half a million. [This is] market standard! … This is market expectation. You should have paid me a red pocket of half a million." They both laughed; Mr Ng did not think for a moment that the plaintiff was being serious. He immediately told Ms Moo of the conversation. Ms Moo said the plaintiff was crazy and also laughed. Soon afterwards, Mr Ng and Ms Moo attended the Development for a site visit and were shown around by the plaintiff, who again suggested that they should be paying him, "a red pocket". This was said in a teasing and jovial manner, and Mr Ng did not think he was being serious. The plaintiff denies these conversations.
Ms Moo also recalls that, after the Facility Agreement was entered into, she was with Mr Ng and the plaintiff and the plaintiff said, "You guys should pay me commission. You guys don't know how to return a favour. Normal people pay me half a million". Ms Moo spoke to Mr Ng afterwards about what the plaintiff had said, which Ms Moo thought should not be taken seriously.
The onus of proof in respect of the oral agreement to pay $500,000 commission rests on the plaintiff. The standard of proof remains, of course, the civil standard being proof on the balance of probabilities but qualified having regard to the gravity of the questions to be determined: section 140(2), Evidence Act 1995 (NSW); Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] HCA 34. As the High Court explained in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 at 170-171 (citations omitted): The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.
The plaintiff has not discharged this onus. I am not satisfied that there was any such agreement. The conversation described by the plaintiff is not well-supported by the contemporaneous documents, which rather suggest that it was Mr Ng who got in touch with Mr Liu to promote Everest. What is notable from the contemporaneous documents is the almost complete absence of the plaintiff from any contemporaneous communications. Rather, Ms Moo and Mr Ng communicated with Mr Liu and Ms Tang. It is doubtful that Mr Ng sought to enlist the plaintiff's support in order to secure this deal; nor is there any evidence that the plaintiff did anything to promote Everest as the preferred financier. Rather, it appears that the plaintiff and Mr Liu were actively seeking finance in the marketplace, using brokers, and were probably pleased when Everest was prepared to lend.
I do not doubt that the plaintiff requested a "red pocket" from Everest after the deal was done. His requests were never embraced by Mr Ng or Ms Moo. Everest's approach to this proposed transaction, and throughout the transaction, appears to have been considered and professional.
The fact that an entitlement to commission was never mentioned until three years later, in the context of numerous demands by the plaintiff to Mr Ng for payment of various monies, is consistent with the fact that there was no such agreement. A finding that there was such an oral agreement depends upon acceptance of the plaintiff's evidence. I do not accept his evidence. This claim fails.

[19]

TRUST CLAIM

The plaintiff contends that the monies paid into Ashurst's trust account on 29 October 2018, 30 October 2018 and 9 November 2018 were paid by the plaintiff at the request and direction of Mr Ng and were impressed with a trust that the monies were to be held in the trust account and not be dealt with other than in accordance with the plaintiff's instructions. The plaintiff seeks equitable compensation from Mr Ng in the amount of $800,000 and says Everest Private was a knowing participant in, and took the benefit of, Mr Ng's breach of fiduciary duties such that Everest Private is also liable to pay equitable compensation. In the alternative, the plaintiff claims that the monies were advanced as a loan repayable on demand.
These monies are said to have been paid by the plaintiff in response to two requests from Mr Ng. The first request was made in October 2018, when Mr Ng requested that the plaintiff provide him with $1 million. Prior to providing any money, it is said that the plaintiff and Mr Ng orally agreed that the monies would only be provided on the condition that the monies were not to be used by Mr Ng or Everest Private, the monies were to be held in Ashurst's trust account and not to be dealt with other than in accordance with the plaintiff's express instructions. The $100,000 and $400,000 payments were made in answer to this request. A second request is said to have been made in November 2018, when it is said that the plaintiff only agreed to provide a further $300,000 if the monies were paid into Ashurst's trust account, not to be paid to Everest Private and to be returned to the plaintiff upon his request and not to be used by the defendants.
As to the claim against Everest Private, the rule in Barnes v Addy (1874) LR 9 Ch App 244 extends liability for breach of trust to third parties in certain circumstances. In Barnes v Addy itself, Lord Selborne LC (with whom James and Mellish LJJ agreed) said, after referring to trustees de son tort and fraudulent participants in breach of trust (emphasis added): But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees.
The emphasised portion is said to give rise to the two "limbs" of Barnes v Addy: "knowing receipt" and "knowing assistance": Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [112]. As the learned authors of Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) note at [13-34], the essential characteristic of the first limb is transfer of property in breach of a fiduciary obligation, whilst the second limb deals with assistance by a third party not involving the receipt of property. As Jacobs' explains, the remedies available on a Barnes v Addy claim include (citations omitted): A defendant who retains property or its traceable proceeds will be subject to a constructive trust of a proprietary kind, and will be liable to restore what is retained. The defendant is also liable to pay equitable compensation or to an account of profits, subject to questions of election. Interest may be payable at mercantile rates on a compound basis. The defendant may be jointly and severally liable with the fiduciary in relation to money remedies, and may be jointly and severally liable to account for profits made by the fiduciary.
In Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405; (2014) 17 BPR 33,717, Gleeson JA, with whom Beazley P and Barrett JA agreed, summarised what needs to be proved to establish a claim for equitable compensation under the first or second limb of Barnes v Addy at [88], [90], [92] and [111]-[115].
Again, the onus of proof is on the plaintiff. It has not been discharged. The circumstances in which the plaintiff paid $800,000 to Everest, as evidenced in copious contemporaneous documents supplemented by the evidence of Ms Tang, Mr Ng and Ms Moo, is as set out at [42]-[59], [65]-[71] and [74]-[76]. Negotiations had been on foot for some time to extend and increase the loan facility. As part of those negotiations, of which the plaintiff was aware, despite his denials, GR Capital required that $2.5 million be paid, being a portion of the capitalised interest on the facility together with establishment fees for a new facility.
Through a series of unfortunate events, an earlier lender emerged, Xingeng, who obtained judgment, by consent, against GR Capital for $10 million, secured by a caveat over the Development land, being land which also secured Everest's loan. GR Capital went into voluntary administration. All this was done without notice to Everest.
In the tense negotiations which followed - where Mr Liu was seeking to avoid Everest enforcing its rights in the event of GR Capital's default - it was agreed that $1 million would be paid to Everest instead. Rather than the monies being paid by GR Capital - which may excite the attention of the administrators or Xinfeng - it was agreed that the monies would be paid by Mr Liu under his personal guarantee. Between themselves, the plaintiff agreed to provide the $1 million, as Mr Liu blamed the plaintiff for the position in which GR Capital found itself.
The precise nature of the business arrangements between the plaintiff and Mr Liu are not known. It was always intended, though, that the $1 million would be paid to Everest to reduce GR Capital's indebtedness. The plaintiff paid the money, albeit only $800,000 of the agreed $1 million. There was no express or implied trust. This claim also fails.

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