Xie & Ors v Qin & Anor; Qin v Taylor International Investment Pty Ltd [2023] NSWSC 254 | Case summary

Supreme Court of NSW|2022-11-15|Before: Kunc J

Credit

In considering the evidence, I have applied two principles in particular in assessing the reliability of the witnesses' evidence.
First, there is the oft cited statement of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-9: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not … attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712."
Second, the concept of actual persuasion was elucidated by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (in liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48]: "Under s 140(2) of the Evidence Act 1995 (Cth) (the Evidence Act), the Court must, in deciding whether it is satisfied that a case has been proved to the requisite standard, take into account: • the nature of the cause of action or defence; • the nature of the subject matter of the proceeding; and • the gravity of the matters alleged. When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-2)."
The fundamental factual disputes, including as to the Impugned Transactions, involved Ms Qin's or Mr Qin's word against Mr Jiang's. Having seen them give their evidence, even through an interpreter, it was clear that there was no love lost between Ms Qin and Mr Jiang, and I was left with the impression that each had persuaded themselves that they had been badly let down or deceived by the other.
In assessing Mr Jiang's evidence, I bear in mind that it was given in Mandarin from China by video link. It was interpreted into English in the court room in Sydney. There were occasional interruptions to the signal and imperfections in sound. While Ms Qin gave her evidence in the court room, it was also given in Mandarin through an interpreter. As the trier of fact, I do not speak Mandarin and have no relevant knowledge or experience of Chinese culture. These issues of language and culture mean the Court cannot safely rely on demeanour insofar as in other contexts it might be of some assistance in assessing whether a witness appears to be telling (or trying to tell) the truth. The Court must take the evidence as it finds it as interpreted into English and weigh it against contemporaneous material and inherent probability.
Given their obvious antipathy and the passage of time since the relevant events, I do not consider I can accept the evidence of either Mr Jiang or Ms Qin in reaching a state of actual satisfaction about any fact on the balance of probabilities unless that evidence is inherently probable, not seriously in issue, against interest or independently corroborated, in particular by the contemporaneous documentary record. However, in this case, even that is not free from doubt. Even the objective evidence produced in the form of WeChat transcripts must be approached with caution. As became apparent during the hearing, not all of the translated WeChat transcripts were a complete and continuous account of the conversations to which they purported to relate.
Another reason why I propose to be cautious in accepting the evidence of Ms Qin and Mr Jiang is that on their own respective evidence, each was willing to acquiesce in arrangements that were plainly ethically or legally questionable. By his own admission (see [106] below), Mr Jiang was at least unconcerned about what, on his evidence, was a plan to avoid tax. If, as Ms Qin asserts, that statement was untrue, then it casts doubt on his veracity because he is lying. It is not necessary for the Court to decide which it is.
On her case, Ms Qin sought to persuade the Court that she did not see any difficulty in the Hongyi Payment of $185,000 because it was not part of the consideration for the purchase of the Property when, on the defendants' version of events, it is arguable that it was (although I make no finding on that point because it was not strictly an issue before the Court).
In relation to Mr Qin, I propose to take the same approach to his evidence given his obvious, but entirely understandable, desire to support his wife. My concern about the reliability of the evidence of each of Mr Qin and Ms Qin is heightened by the fact that their affidavit evidence purporting to set out the terms of a conversation about one of the Impugned Transactions (the $86,435.60) between Ms Qin and Mr Jiang overheard by Mr Qin was in identical terms.
The Court cannot accept that two people recalling conversations in Chinese four years after the event would remember them identically not only in Chinese, but then also produce identical interpretations of them into English. Based upon just how similar those two accounts are, the Court finds that Mr and Ms Qin must have colluded in this evidence such that it cannot be satisfied that the account of either of them can be relied upon as true.
It is uncontroversial that such a finding is open to a court when confronted with otherwise unexplained (as is the case here) identical evidence of conversations: see, for example, Rosebanner Pty Ltd v Energy Australia (2009) 223 FLR 406; [2009] NSWSC 43 at [326] to [327] per Ward J (as her Honour then was). Furthermore, because it goes to one of the Impugned Transactions, it casts doubt upon the reliability of their evidence generally on any controversial matter of importance.

Facts

In or around early 2018, Mr Jiang approached Mr Qin and Ms Qin to engage their assistance in the Venture. It was not clear exactly how the arrangement came about. Mr Jiang alleged in his affidavit that he had spoken to Ms Qin about it. However, she denied this, claiming that any ideas of that nature would have been discussed between Mr Jiang and Mr Qin.
Nevertheless, it was uncontroversial that Mr Qin and Ms Qin were responsible for making arrangements for the Venture in Australia, including identifying potential grape suppliers and farmland for purchase. Mr Jiang was responsible for gathering finance in China.
Ms Qin claimed to have conducted a Google search for grape suppliers in Australia through which she identified Pasquale Cufari (Pat) who operated Sylina Pty Ltd and Sylina Investments Pty Ltd ATF Sylina Family Trust (Sylina Investments)
At that time, Sylina Investments was also the vendor of the Property. It was to be sold by auction.
On 12 April 2018, Mr Qin sent a WeChat message to Mr Jiang which stated: "Another vineyard is 50-acre, land plus vineyard business is about A$ 2.5 million (vineyard has higher economic value) so price is higher!"
According to Mr Qin's evidence, which the Court accepts as not seriously in issue, this message referred to the Property.
Sometime in April or May 2018, Mr Jiang travelled to Australia and inspected the Property with Mr Qin and Ms Qin, and met Pat.
On 1 June 2018, Mr Qin wrote to Mr Jiang via WeChat: "I had meetings with an accountant and a lawyer this afternoon regarding investing in the vineyard. In summary, details are as follows: 1. A company must be set up in Australia to acquire the farm (takes about 4 days). But there must be an Australian citizen involved otherwise the company can't be registered. 2. A company with an Australian citizen does not need Foreign Investment Review Board's (FIRB) approval for the acquisition and enjoys the same tax rates as Australian residents …"
The following day, Mr Qin wrote to Mr Jiang to advise him that a $20,000 "good faith" payment was required to prevent the Property being sold at auction.
On 2 June 2018, Mr Qin messaged Mr Jiang: "Aiyi will pay A$20,000 to Pat first (to have them stop the upcoming auction so we can secure the farm). Please arrange A$250,000 to be transferred to Australia as deposit (10%). We will pay for the remaining amount of A$230,000 to complete the deposit. After that the lawyers from both sides can commence working (Contract of sale and purchase and the Management agreement).
Another message from Mr Qin to Mr Jiang was sent on 3 June 2018, which stated: "… Hello! We have paid Pat A$20,000 holding deposit for the farm acquisition! Also have contacted the lawyer and accountant! Now we are officially in the acquisition process! First, our four parties, must engage an accountant to register an Australian company with the Australia government! All transactional and operational activities must be carried out under this company! We need to do the following first: 1. Come up with an English name for the company. 2. Send the names, residential addresses, dates of birth and places of birth of the four investors to. 3. Confirm shareholding percentages of the four investors. Please get back to us with the above information as soon as possible. Tomorrow the accountant will proceed to register the company with the government's registry! [Smile emoji]"
On 5 June 2018, Mr Jiang and Mr Qin exchanged WeChat messages confirming the name, date of birth and address of each of the prospective shareholders in the proposed company. After confirming the details of the shareholders, Mr Qin sent this message to Mr Jiang: "Registering the company now! What's the name of the company?"
There was no response to this in evidence.
On 6 June 2018, the Trust Deed was executed.
A Westpac Choice transaction receipt showed two withdrawals for $10,000, said by Ms Qin to be in satisfaction of the "good faith" payment. The first withdrawal occurred on 7 June 2018 and the second on 8 June 2018. Both withdrawals were made with the description "PYMT Sylina Inv Pat". Ms Qin and Mr Qin both gave evidence that the account was their joint account, and Mr Qin added that transactions were often made on behalf of Hongyi from that account. The Court accepts this evidence about the Westpac Choice account as uncontroversial. The Court also accepts, by reason of the contemporaneous records and messages referred to in the preceding paragraphs that $20,000 was paid from Ms Qin's and Mr Qin's joint bank account to Sylina Investments as a "holding deposit".
On 9 June 2018, Ms Qin sent a text message to Pat which stated: "Second $10000 was paid".
On the same day, Mr Jiang sent a WeChat message to Ms Qin which included a photo of a message from Mr Adrian Caia to an individual named "Jenny" which stated: "Had a look, most are 10 years plus and the ones that are 2-3 years are on old root stocks, farm is ok but it's [sic] best years are nearly done, best productivity is in the first 15 years then quality and yield declines. Also grafts on old rootstock risk of getting white ant [ant emoji] problems. On our farms we never graft on old rootstock"
According to Mr Qin, the assessment of Mr Caia (to whom Mr Qin referred to as "Andrew" in cross-examination) was the catalyst for Mr Jiang to instruct Ms Qin to renegotiate the purchase price for the Property.
In her affidavit evidence, Ms Qin said she had further negotiations with Pat in which she put a figure of $2.2 million for the purchase price, culminating in a conversation with Pat on or about 9 June 2018 to this effect: "[Pat] When can you settle? [Ms Qin] The Chinese investors intend to establish a new entity as the purchaser, I will expect the earliest date of the settlement in or around the end of August this year. [Pat] It is too late, the local settlement only takes 4-6 weeks, I need funds for my business; if you can only settle in August or even later, I will only consider the price of $2.2 million on the condition that the sum of $200,000 is to be paid in advance before the settlement, so I can resolve the issue of the shortfall in my business. $2 million can be recorded in the contract and paid according to the terms of the contract. [Ms Qin] You may decrease your CGT if $200,000 is not recorded in the contract. How about $2,185,000.00? The contract price is fixed as $2 million, and we pay you $185,000 additionally. [Pat] Bella, you are a really good negotiator; ok, I accept your offer. However, the buyer must bear all expenses and costs in connection to the land from 1 July 2018. [Ms Qin] Ok. [Pat] You shall arrange the payment of $185,000 as soon as possible. [Ms Qin] Ok, let me inform the Chinese investors and get back to you."
It is this payment of $185,000 to which I have referred as the Hongyi Payment. Ms Qin says she then told Mr Qin about the agreement with Pat.
Mr Qin attested that he had the following conversation with Mr Jiang, a conversation denied by Mr Jiang: "[Mr Qin]: We have negotiated with the Vendor for the purchase price of the Farm Land and insisted that we should not purchase the Farm Land if the price is $2.5 million. Finally, they compromised. [Mr Jiang]: So how much is the price now? [Mr Qin]: the contract price is $2 million, but we must pay it a sum of $185,000 in addition to the contract price. So now total price for the purchase is nearly $2.2 million. [Mr Jiang]: the most important thing is to pay a less price, I do not care about how to pay. Please proceed at your discretion. [Mr Qin]: ok, but the total funds for this investment of the Farm Land will still stand on nearly $2.5 million, as we have to pay the stamping duty, legal costs and other associated costs and fees. [Mr Jiang]: Got it."
Ms Qin's evidence was that she telephoned Pat to confirm the agreement in a conversation to the following effect: "[Ms Qin] Hi Pat, the Chinese investors in principle agree with the offer of $2 million in the contract plus $185,000 by cash before settlement, and they have no objection to pay the costs in connection to the land from 1 July 2018. [Pat] Got it."
At the hearing of these proceedings, a certificate pursuant to section 128 of the Evidence Act 1995 (NSW) was sought and granted in respect of Ms Qin's evidence under cross-examination about the Hongyi Payment and the price for the Property, given the obligations imposed by the Duties Act 2000 (Vic).
During cross-examination, Ms Qin maintained that the conversation between herself and Pat at [95] above occurred. However, she denied that she had used "cash" to describe the payment.
On 12 June 2018, Taylor International was registered. The company's registered address was care of Elite 1Solution Pty Ltd (Elite 1Solution). Ms Qin was the sole director and shareholder.
ASIC records show that shares in Taylor International were held in these proportions: Mr Qian - 20 shares Mr Zhang - 35 shares Mr Xie - 5 shares Mr Shen - 30 shares Mr Qin - 10 shares
Also on 12 June 2018, the Trust Deed was stamped. The registered unitholders were identical to the shareholders of Taylor International, with each holding their units in the same proportion as their shares in the company to be paid at a rate of $1.00 per ordinary unit.
On 28 June 2018, Maloney Anderson Legal wrote on behalf of Sylina Investments to Ms Qin in her capacity as director of Taylor International. The letter included a copy of the contract for sale of the Property which noted the purchase price as $2,500,000 inclusive of a 10% deposit of $250,000.
An apparently subsequent unsigned contract, which Ms Qin confirmed during cross-examination reflected the final figures for the sale of the Property, specified a purchase price of $2,000,000 inclusive of a 10% deposit of $200,000. There is no evidence as to when this document was brought into existence.
Ms Qin opened the Taylor P account in July 2018 for Taylor International.
Ms Qin opened the Taylor U account in August 2018 in her name as trustee of the Unit Trust.
On 3 August 2018, $20,000 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of the defendants in evidence as to the reason for this payment. Mr Qin's evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.
Mr Jiang deposed in his affidavit to having the following conversation with Ms Qin in September 2018 (noting that this is a conversation which Ms Qin denied in a responsive affidavit): "[Mr Jiang]: You advise previously that the purchase price of Farm Land is $2,500,000.00. Why the contract price is only $2,000,000.00? [Ms Qin]: Because of which $500,000.00 is to be paid by cash for the purpose of avoiding tax. [Mr Jiang]: Ok, I trust you. I did not ask further about the issue of a $500,000 cash transaction."
On 13 September 2018, the Venture's solicitor emailed Sylina Investments' solicitor confirming agreement as to the final amendments to the terms of the contract for sale of the Property (being between Sylina Investments and Ms Qin as trustee of the Unit Trust) and a management agreement (being between Sylina Pty Ltd as manager and Taylor International as operator of the business to be conducted on the Property) (Management Agreement). The amendments included agreeing that the adjustment date (contract for sale) and commencement date (Management Agreement) should be amended to 1 August 2018. The email concluded with "please seek your client' (sic) instruction at your earliest convenience, our client prefer to sign the documents tomorrow". The email refers more than once to three invoices to be attached to the Management Agreement, but no other invoice is referred to.
On 14 September 2018, $200,000 was withdrawn from the Taylor U Account. Because the next entry in the Taylor U bank statement after the withdrawal is a bank cheque fee, I infer that a bank cheque for $200,000 was purchased. That is confirmed by a text message in evidence from Ms Qin to Pat of the same date at 11:56am saying "I just made a bank cheque" with a photo of the bank cheque in favour of Maloney Anderson Legal (Sylina Investments' solicitors) for $200,000. At the same time, Ms Qin messaged Pat with the address and other contact details (including listing herself as contact person) for Hongyi.
The Court was not taken to any evidence that demonstrated when the bank cheque was provided to Maloney Anderson Legal, noting that the contract for sale and the Management Agreement were not signed until early October
Also on 14 September 2018, Ms Qin received an email from Sylina Pty Ltd's administration assistant sent at 3:15pm attaching four invoices from Sylina Pty Ltd. The email read (emphasis added): "Please see attached invoices due for payment once you have signed the contract. Invoices 9, 10, 11 previously sent and Invoice 593 for Introductory Fee."
Invoices 9, 10 and 11 were the invoices to Taylor Investments that were attached to the Management Agreement (see [117] below) (the TI Invoices).
Invoice 593 was addressed to Hongyi and referred to a charge of $185,000 (exclusive of GST, which was added later in the invoice) described as "Introduction to Orange & Grape growers July 2018-June 2019" payable by 26 September 2018 (the Hongyi Invoice). It also gave credit for three amounts that it recorded as having been paid: $10,000 on 7 June 2018; $10,000 on 8 June 2018 and $20,000 on 6 August 2018. It then recorded a discount of $33,000 so that the balance owing including GST was $123,200.
It was alleged by Mr Norrie for the plaintiffs that these funds were never paid on behalf of Taylor International, but instead were paid as part of a separate business arrangement between Hongyi and Sylina Pty Ltd. Hongyi, it was alleged, was engaged in its own fruit export enterprise. Mr Norrie based this assertion on several pieces of evidence. First, the invoices noting the receipt of $185,000 were addressed to Hongyi. Second, Ms Qin had provided Hongyi's bank details to Pat for the purpose of that payment. Third, the discount of $33,000 suggested a commercial relationship between Hongyi and Sylina Pty Ltd.
Ms Qin refuted the suggestion that at this time Hongyi had a separate business venture with Sylina Pty Ltd and there was no contemporaneous records to which the Court was taken that suggested otherwise. To the first point, Ms Qin's explanation was that at the time the Property was being purchased, she was unsure if Taylor International had sufficient capital in its accounts or if the purchase of the Property would ultimately be successful, so she chose to make the transactions from the accounts of Hongyi. To the second point, the fact that the TI Invoices had been issued to Taylor International was explicable on the basis that they were issued in relation to the Management Agreement (see [117] below) and not the purchase of the Property. Ultimately, Ms Qin was unconcerned with the nuances of the paperwork involved so long as the $185,000 payment was received by Pat through one of his companies for the purchase of the Property.
As to the third point, and the Hongyi Invoice generally, Ms Qin's interpreted evidence was that the description on the invoice was "wrong" and that she had inferred it was invented by Pat for the purposes of his company's bookkeeping, but that the invoice was in fact for the Hongyi Payment. Ms Qin said she did not know what the discount was for, and that she had elected not to look a gift horse in the mouth by querying it.
On 10 October 2018, Ms Qin entered into the contract for sale (in which she was expressly described as acting in her capacity as trustee of the Unit Trust) to purchase the Property for a stated consideration of $2,000,000 including a deposit of $200,000. The contract for sale was signed by Pat on behalf of Sylina Investments on 16 October 2018.
Also on 16 October 2018, Ms Qin on behalf of Taylor International executed the Management Agreement, which was expressed to commence on 1 August 2018. It contained a schedule of the three TI Invoices from Sylina Pty Ltd to Taylor International totalling $166,196.80 (GST inc), each dated 28 August 2018 and specifying a due date of 3 September 2018: "Invoice 9 for "pruning vines" - $148,816.80 Invoice 10 for "management fee for August 2018" - $13,200 Invoice 11 for "mulching and sweeping - hourly" for $4,180"
On 1 November 2018, $100,000 was transferred from Hongyi to Sylina Pty Ltd. There is no written contemporaneous record of Hongyi's in evidence as to the reason for this payment. Mr Qin's evidence was that he had directed Hongyi to make this payment as part of his contribution to the Venture.
Settlement of the purchase of the Property took place on 9 November 2018. The settlement statement provided to the State Revenue Office of Victoria stated that $2,000,000 consideration had been paid by the Unit Trust for the purchase. A settlement sheet prepared by the Unit Trust's solicitors includes among the sums to be paid three cheques to Sylina Pty Ltd in satisfaction of the TI Invoices in the schedule to the Management Agreement set out in [11] above. However, the settlement sheet does not refer to either the $20,000 "holding deposit" or to the Hongyi Payment.
When pressed during cross-examination about why there was no reference to the additional $185,000 she claimed to have paid to Sylina Pty Ltd in what was provided to the State Revenue Office of Victoria, Ms Qin stated that she understood the payment to be an "additional condition to make this 2 million deal work" (Tcpt, 7 November 2022, pp 269(31-2)). It was not, strictly speaking, to her mind part of the purchase price because it was an advance payment made to ensure Sylina Pty Ltd could continue to operate its business before the purchase was finalised.
Ms Qin said that she did not inform Taylor Investment's lawyers of the Hongyi Payment because, in her view, it formed part of the business deal with Sylina Pty Ltd and was not strictly relevant to the purchase price for the Property. Rather, it was an extra inducement to secure the overall agreement between Sylina Pty Ltd and Taylor International.
On 12 November 2018 at 2:51pm, Ms Qin received another email from Sylina Pty Ltd's Administration Assistant which said: "Please see attached Amended Invoice 593. Apologies the GST amount was incorrect. I have also updated it with the most recent payment of $100,000.00 Please pay at your earliest convenience."
The amended Hongyi Invoice credited a payment of $100,000, leaving a balance said to payable of $27,200 (GST inc).
Also on 12 November 2018, $20,000 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of Hongyi's in evidence as to the reason for this payment. Mr Qin's evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.
On 13 November 2018, $7,200 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of Hongyi's in evidence as to the reason for this payment. Mr Qin's evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.
The payments from Hongyi to Sylina referred to in [88], [105], [140], [124] and [125] above totalled $167,200. It will be recalled that the claim for account against Ms Qin is for $162,802.
The salient facts which the Court finds established by the matters set out in [77] to [126] above - whether as primary facts or matters of inference - are: 1. Mr Qin identified the Property in April 2018 (see [78] above). 2. Mr Jiang inspected the Property in April or May 2018 with Mr Qin and Ms Qin and they met Pat (see [80] above). 3. The Property was to be sold by auction (see [77] and [83] above). 4. As at 1 and 2 June 2018, the purchase price for the Property was $2,500,000 (noting the 10% deposit referred to in [83] above and the draft contract referred to in [101] above). 5. On 7 and 8 June 2018, Ms Qin and Mr Qin transferred $10,000 on each day from their joint bank account to Sylina Investments as a "good faith" payment to take the Property off the market (see [82], [83], [84] and [88] above). 6. On or around 9 June 2018, Mr Adrian Caia inspected the Property and gave it a qualified report. Given that the contract price for the Property did become $2,000,000, the Court infers that Mr Caia's report provided the basis for an attempt by the putative purchasers to renegotiate the price down. 7. I interpolate for convenience that the conversation in which Ms Qin alleges she renegotiated the price for the Property, including the Hongyi Payment, is said to have occurred on 9 June 2018. 8. On 3 August 2018, $20,000 was transferred from Hongyi to Sylina Pty Ltd. 9. On 14 September 2018, a bank cheque for $200,000 was drawn with funds from the Unit Trust's bank account in favour of Sylina Investments' solicitors (see [109] above). Given the purchase price of $2,000,000, the Court infers this was the deposit. By reference to this amount being $200,000 and the terms of the settlement sheet which was in evidence that recorded a deposit of $200,000 but nowhere else refers to the $20,000 "good faith" payment (see [119] above), the Court also finds that no credit was given for that payment towards the purchase price of the Property. 10. On the same day, the three TI Invoices to Taylor International together with the Hongyi Invoice to Hongyi were sent to Ms Qin from Sylina Pty Ltd under cover of an email saying that all four invoices were "due for payment once you have signed the contract". While "the contract" could refer to the contract for sale (which was with Sylina Investments), I find that it refers to the Management Agreement because that was with Sylina Pty Ltd, which agreement itself only attached and referred to the three invoices to Taylor International. 11. The Hongyi Invoice gave credit for payments which, by reason of the dates recorded and [82], [83], [84] and [88] above, the Court finds to be the $20,000 good faith payment, together with the payment made on 6 August 2018. 12. On 1 November 2018, Hongyi paid Sylina Pty Ltd a further $100,000. In an updated version of the Hongyi Invoice sent on 12 November 2018, this further payment was recorded as reducing the balance of the invoice to $27,200. That balance was paid by Hongyi to Sylina Pty Ltd on 12 November 2018 ($20,000) and 13 November 2018 ($7,200).
The fundamental issue is whether the Court accepts Ms Qin's evidence of the conversation with Pat set out in [92] above, together with Mr Qin's evidence that he directed the various payments from Hongyi to Sylina Pty Ltd in fulfillment of his obligation to contribute to the Venture. Given the Court's approach to Ms Qin's and Mr Jiang's evidence (noting his denial of the relevant conversation), the question is whether the facts and circumstances which I have set out in the preceding paragraph provide sufficient corroboration or circumstantial evidence for the Court to be actually satisfied on the balance of probabilities that Pat and Ms Qin came to the arrangement evidenced in that conversation, which arrangement was then given effect by means of the issuing and payment of the Hongyi Invoice.
For the following reasons, I answer that question in the affirmative and find accordingly: 1. The identity of the corporate vehicles is irrelevant. It is the identity of their principals that matters: Mr Qin and Ms Qin (Hongyi and Taylor International), and Pat (Sylina Pty Ltd and Sylina Investments). Ms Qin was representing the interests of the Venture and Pat was the controlling mind of the vendor of the Property. 2. The original sale price for the Property of $2.5 million was reduced to $2 million. 3. At least part of the alleged conversation is corroborated by what in fact occurred. Ms Qin says Pat imposed this term: "the buyer must bear all expenses and costs in connection to the land from 1 July 2018". The email from the solicitor for the Venture (see [107] above) demonstrates this was renegotiated to 1 August 2018 and was given effect by the three TI Invoices to Taylor International, which was the operating entity of the Venture. 4. The fact that the same solicitor's email fails to mention the Hongyi Invoice corroborates Ms Qin's evidence that she did not tell her solicitor about the Hongyi Payment. 5. The exclusion of the "good faith" payment from the deposit or purchase price and its allocation to the Hongyi Invoice bespeaks a continuing connection to the purchase of the Property because that purchase had, in the first instance, been secured by the "good faith" payment. 6. The solicitor's email intimated a desire for exchange on 14 September 2018 (the Court was not taken to any evidence why it did not happen then). All of the events on 13 and 14 September 2018 (see [107] to [112] above) are clearly directed to signing the two contracts in relation to the purchase and management of the Property. Both the terms of those contracts, and the fact that they are both dealt with in the solicitor's email, demonstrate they were part and parcel of the same commercial transaction. If contemporaneity is insufficient to make out a commercial connection between the Hongyi Invoice and the purchase of the Property, the matter is put beyond doubt by the covering email from Sylina Pty Ltd specifying that the Hongyi Invoice also become payable on execution of the Management Agreement, notwithstanding that there was no mention of it in the Management Agreement (in sharp distinction to the three TI Invoices which formed a schedule to the Management Agreement). 7. The totality of the evidence is consistent with the parties and Pat being focussed in the months between June and November 2018 on negotiating and completing the purchase of the Property and putting the Venture in funds to do so. There is no reason for, and no evidence to suggest that, Hongyi would at that time be negotiating an entirely separate business venture with Pat. 8. The vague terms of the work the subject of the Hongyi Invoice, and the fact that such a large sum was being paid in a lump sum at the start of the 12 month period (rather than, say, monthly), is itself a cause for suspicion about the genuineness of the Hongyi Invoice. That suspicion becomes actual persuasion about its lack of genuineness when combined with the other matters to which I have referred in these sub-paragraphs.
Mr Norrie submitted that a Jones v Dunkel inference should be drawn against the defendants by reason of their failure to call Pat. I do not agree. Pat is a third party witness who it could not be said by reference to any other matter would be in "the camp" of the defendants. It is therefore not the case that the Court would conclude, as the first step in the application of Jones v Dunkel, that it would be expected that Pat would be called by the defendants rather than the plaintiffs. In my view, each party had an equal connection to Pat through the Venture, including the Management Agreement, and were equally likely to call him in their case, but neither has done so.
The Court therefore finds that: 1. The Hongyi Payment pursuant to the Hongyi Invoice was related to securing the purchase of the Property and therefore for the benefit of the Venture; 2. The Hongyi Payment was made at the direction of Mr Qin and (insofar as relevant) Ms Qin for the benefit of the Venture in discharge of his obligation to contribute to the Venture; 3. Ms Qin has demonstrated that Mr Qin's contribution to the Venture in the form of the Hongyi Payment was applied for the purposes of the Venture such that she has no obligation to account for it to the plaintiffs.
The plaintiffs' claim in relation to the Hongyi Payment therefore fails. If, however, I am wrong in this conclusion, the plaintiffs' claim still fails for the reasons set out in [59] to [61] above.

The plaintiffs' claim for declaratory relief

It will be recalled that the plaintiffs sought these declarations: "1 An order declaring the Unit Trust to be valid and enforceable. 2 An order declaring the removal of the First Defendant as trustee of the Unit Trust to be valid. 3 An order declaring the appointment of the First Plaintiff as trustee of the Unit Trust to be valid."
It was common ground that the making of the declarations was discretionary. While the defendants did not oppose the declaratory relief, they submitted it was a matter for the plaintiffs to satisfy the Court of its utility.
The plaintiffs submitted that there was utility in the declarations because: 1. While the defendants had admitted in their defence that the plaintiffs had executed the Trust Deed, the defendants had not admitted that they (the defendants) had executed it; and 2. The defendants had "expressed concern" in their evidence about their inability to attend the unitholders' meeting on 8 January 2020 at which Ms Qin was removed as trustee.
Neither reason is persuasive.
The answer to the first is that the relevant pleading admitted by the defendants only alleged that the plaintiffs had executed the Trust Deed, so there was no reason for them to have said more. In any event, there was no suggestion over the entire hearing from the defendants that they had not executed the Trust Deed or that they were not bound by it. During the hearing a copy of the Trust Deed apparently signed by the plaintiffs and the defendants was tendered without objection.
The answer to the second is that whatever the defendants' "concern" may have been, the hearing was conducted by all parties on the basis that Ms Qin had been validly removed as trustee. Her case was that she had discharged her duty to vest the assets of the Unit Trust in Mr Xie as the successor trustee.
In short, there was by the time of the hearing no dispute between the parties that required resolution by the making of the declarations. The Court is not satisfied there is any utility in making the declarations and, in the exercise of its discretion, declines to do so.
There is an additional matter upon which the Court relies, being the entirely unsatisfactory nature of Mr Xie's evidence about his role as trustee. At the end of his cross-examination, I was left with the overwhelming impression that he had no interest in the affairs of the Venture and even less, were that possible, in his role as trustee (in respect of which he seemed to leave everything to Mr Qian).
Mr Xie's evidence was that: 1. He had not read the Trust Deed; 2. He took no active role in the Unit Trust or the Company; 3. He did not take his role as trustee seriously because "I was forced into it" (Tcpt, 1 November 2022, p 87(39)); and 4. He did not care about being a trustee.
The Court regards Mr Xie's attitude towards the office of trustee that this evidence demonstrates as being completely unsatisfactory. There was, by the time of the hearing, no dispute between the parties about the validity of Mr Xie's appointment. That is sufficient reason not to make the declaration of validity that was sought. However, while Mr Xie's fitness to be the trustee was not an issue before the Court, nor does the Court wish to perhaps be seen as approving his purported discharge of that role by making a declaration as to the validity of his appointment.

The Debt Claim

Ms Qin claimed to have loaned Taylor International $30,000 for the payment of tax invoices issued to that company by Sylina Pty Ltd. Copies of the invoices she alleged had been paid were tendered in the proceedings.
The Court finds the facts to be as set out in [145] to [166] below.
A statement from Sylina Pty Ltd to Taylor International dated 20 September 2019 summarised the amounts due as follows: 1. $13,444.20 for "Management Fee"; 2. $2,306.02 for "Irrigation Fee"; 3. $2,660.90 for "Weedicide"; 4. $2,128.13 for "Weedicide Chemicals"; and 5. $445.28 for "Fertigation Chemicals".
The total of these amounts was stated to be $20,984.53 and was due to be paid by 30 September 2019.
On 1 October 2019, Ms Qin sent a WeChat message to Mr Qian at 5:08pm, the English translation of which stated: "Can I file the tax return now? A roughly $90,000 prepaid tax can be refunded, and we don't have much cash in our company to maintain business operation, please advise! Some bills are due with around $30,000 payable!"
On the same day, Mr Qian sent a copy of Ms Qin's message to a WeChat group that included Mr Jiang and the other plaintiffs. Mr Xie responded to Mr Qian's message: "… [M]ake it clear to her that it is not allowed to lodge tax before shareholders examine and approve the report. Otherwise, we will affix legal liability on her."
At 6:30pm that day, Mr Qian replied to Ms Qin: "Decision from everyone: Tax return cannot be filed before shareholder's approval, otherwise legal actions will be taken."
Ms Qin sent a further message to Mr Qian at 6:41pm on the same day: "What to do with the overdue payables? Please refer to the email forwarded!"
On 2 October 2019 at 1:22pm, Ms Qin sent a copy of her messages with Mr Qian at [147] to [150] immediately above to Mr Jiang. She then sent Mr Jiang a further message which stated: "What shall I do? Not planning to run the business anymore? Please check! Qian didn't reply to me."
Also on 2 October 2019, a deposit of $10,000 from the joint account of Ms Qin and Mr Qin was made into the Taylor P account.
Mr Jiang responded to Ms Qin the following day, being 3 October 2019, at 4:19am: "Qian has been in hospital these days. I'll check with him tomorrow."
At 2:19pm on 3 October 2019, Ms Qin sent a follow-up message to Mr Qian: "Two days passed without any reply. It's okay to hold me accountable if I make a mistake, but it's a big deal for creditors to hold the company accountable! Hope you guys take it seriously! It is my responsibility to do the right thing, but you must understand that a company operating in Australia needs to follow Australian laws!"
Mr Qian replied at 2:21pm on the same day: "I see. I've forwarded the email I received."
On 7 October 2019, another deposit of $10,000 was received by the Taylor P account from the joint account of Ms Qin and Mr Qin.
Several days later, on 9 October 2019, a further exchange took place between Ms Qin and Mr Qian on WeChat: "[Ms Qin] Good morning! Please tell me how to deal with the $30000 overdue? Please don't sidestep my question. [Mr Qian] Let me check, haven't received any reply yet"
On 16 October 2019, Ms Qin again contacted Mr Qian on WeChat, with no apparent reply until 29 October 2019 (see [165] below): "[Ms Qin] It's been a week and you haven't provide any reply for the above. Do I still need to communicate with you?"
Also on 16 October 2019, a third deposit of $10,000 was received into the Taylor P account from the joint account of Ms Qin and Mr Qin.
On 21 October 2019, a letter was prepared by Elite 1Solution "to whom it may concern" which stated: "Elite 1Solution Pty Ltd is the accountant and tax agent of Taylor International Investment Pty Ltd. I hereby confirm that Ms Aiyi Qin, as Director of the company, lent Taylor International Investment Pty Ltd $30,000 to fund the company's operation. $10,000 - 2/10/19 $10,000 - 7/10/2019 $10,000 - 16/10/19 …"
The letter was signed by Ya Wang. Its contents could only have come from instructions given by Ms Qin.
On 22 October 2019, Ms Qin sent a WeChat message to Mr Jiang: "How's your communication with those shareholders? Could you please give me a response?"
No response from Mr Jiang is recorded. On 28 October 2019, Ms Qin sent another WeChat message to Mr Jiang which resulted in this exchange: "[Ms Qin] It's been two days since 26th, and you don't even reply to me. What's the outcome of your discussion? [Mr Jiang] Sorry I'm on something else at the moment. Didn't Qian say he had replied to you already? And also Gong QIN would come over to attend the board meeting? [Ms Qin] No, he didn't reply to me. I'm asking how about the issue that the company is running out of operating fund?"
No further WeChat messages were provided to confirm whether Mr Jiang had ever responded to Ms Qin.
On 29 October 2019, Mr Qian sent this message to Ms Qin via WeChat: "I just got back in China, Mrs Qin. Regarding the company's operating capital issue, all shareholders believe that there are problems with the company's operations, so we are following the legal procedures."
On 31 October 2019, a letter was sent by Revolance Legal that was addressed to the "Shareholders of Taylor International Investment Pty Ltd" on behalf of Ms Qin. The contents of that letter as it relates to the alleged $30,000 loan are set out below: "… Director's Loan We are also instructed that your clients refused to provide further capital to the operation of the business to cover the outgoings despite our client's repeated request. In order to avoid the risks of putting the Company be potentially exposed to the risks of statutory demand pursuant to s 459E(2) of the Corporations Act, our client has caused director's loan be made to sustain the business. The amount, as at the date of this letter, is around $28,000. Having said that, we note that the parties had previously engaged in a discussion in relation to a share transfer regime to buy out our client's interest in the Company and to resign from the directorship. If that is still of one of your client's options, we are open for further negotiation. Also, our client has frankly advised that she had discussion with the shareholders that the account holder of Company's bank account cannot simply be transferred to a person from overseas, bank procedure needs to be followed strictly including verification of the identity of that person. However, our client is willing to assist the process if your clients can work out a feasible plan …"
It is no criticism of Mr Norrie to characterise his submissions opposing the Debt Claim as faint. It could not be - and was not - suggested that the $30,000 was a gift to Taylor International. Both the payments and the need for them emerge clearly from the contemporaneous documents and communications set out above. On the basis of the corroboration provided by that evidence, the Court accepts Ms Qin's evidence that she advanced the $30,000 to Taylor International as a loan. In the absence of evidence of a term otherwise, the loan was repayable on demand, that demand being at least made by the Debt Claim being filed in the Local Court. The Court also finds it has not been repaid. Ms Qin is therefore entitled to judgment for $30,000 and interest against Taylor International.

Conclusion

The plaintiffs' claim will be dismissed. There will be judgment for Ms Qin on the Debt Claim. Mr Xie will be directed, by his solicitors, to send a copy of these reasons to the State Revenue Office of Victoria. In making that direction, I emphasise that I have not made a finding that additional duty is payable by the Unit Trust on the purchase of the Property by reason of the Hongyi Payment because that was not an issue before me. Subject to any application for special costs orders, the costs of the respective claims should follow the event. The parties will be given an opportunity to bring in short minutes to give effect to these orders, including with agreed interest calculations.

Consideration on the assumption that the Court's conclusions in relation to the Impugned Transactions are incorrect

Onus

What follows assumes that the plaintiffs established that the Impugned Transactions involved funds that were assets of the Unit Trust.
Whether framed as an account or for an order to vest trust assets, Mr Lees, with respect correctly, accepted that the onus was on Ms Qin to satisfy the Court that she had Mr Jiang's authority to engage in the Impugned Transactions.

$67,016.10 withdrawal

The defendants alleged that the amount of $67,016.10 represented repayment on Mr Jiang's authority (conveyed in a conversation on 27 or 28 July 2018 between Mr Jiang and Mr Qin) of a loan of RMB 400,000 that had been advanced to Mr Jiang by Mr Yuan Tian. Mr Jiang denied the conversation with Mr Qin. Mr Qin and Yuan Tian were, according to Mr Qin, close friends of several decades.
I will next set out the evidence as it emerged about this Impugned Transaction. Given that there is evidence from the IMBK records that on 9 June 2018 records RMB 1,250,000 as being converted to $252,016.10, in what follows I will assume that A$1 is approximately equivalent to RMB 5. Therefore, $67,016.20 is approximately RMB 335,080 - on any view not the same amount as the RMB 400,000 loan.
Mr Qin gave evidence that Mr Jiang was experiencing financial difficulties in early 2018 and that, during a visit to Mr Jiang in Shanghai on or about 1 May 2018, Mr Qin had offered to seek a loan from Mr Tian on Mr Jiang's behalf (the Yuan Tian Loan). Mr Qin attested that Mr Tian agreed to loan Mr Jiang RMB 400,000 to be repaid within two months. It would appear that this recollection is wrong and that the term was three months (see [187] below).
A WeChat exchange between Mr Qin and Mr Jiang on 2-3 May 2018 stated: "[Mr Jiang] [Picture of Mr Jiang's bank card] [Mr Jiang] XX Branch, Agriculture Bank of China, Donghua JIANG [Mr Qin] Okay! I will make the transfer tomorrow after I get the it [sic]. I am making an appointment with Tian! [Grin emoji] [Mr Qin] Tian has transferred RMB 400,000 to me, RMB 250,000 of which will be transferred to Aiyi as the transportation fees for the 5 cartons of red grapes (detailed calculation and invoices will be done after the grapes are received). The rest RMB 150,000 I will transfer to you when I am at the bank! I promised to repay him this RMB 400,000 before 1 August! And I have given him an IOU! [Grin emoji]"
After he was shown a copy of the WeChat message above during cross-examination, Mr Jiang accepted that Mr Qin had arranged the Yuan Tian Loan for him because he (Mr Jiang) was experiencing financial difficulties. However, Mr Jiang's evidence was that the Yuan Tian Loan was unrelated to Taylor International. Rather, the Yuan Tian Loan was provided in respect of the Juji Fruit Company (Juji) (a company connected with Mr Jiang), who according to Mr Qin appointed him (Mr Qin) as Juji's procurement director (Mr Qin had a business card to this effect). He refuted the notion that he would have mixed the funds of the two companies.
On 4 May 2018 at 11:52am, Mr Qin sent a WeChat message to Mr Jiang which stated: "Hello! ¥250,000RMB to Aiyi; ¥150,000RMB to you; Total of ¥400,000 RMB has been transferred!"
Mr Jiang responded a few hours later at 2:48pm: "Ok".
In her first affidavit. Ms Qin attested that she had received a transfer of funds on 29 June 2018 from Mr Jiang totalling $67,016.10. These funds were, on her evidence, for the purpose of "repaying Jiang's personal loan occurred in China". A screenshot of messages between Ms Qin and Mr Jiang on 29 June 2018 showed a message from Ms Qin which stated "AUD received".
However, Ms Qin's later affidavit stated that Mr Jiang had deposited an amount of $252,016.10 into his account with IMBK and she had later withdrawn $67,016.10 because that was the amount of cash available at the IMBK branch on that day. Ms Qin reiterated this version of events during cross-examination.
I have already noted that the IMBK foreign exchange record dated 29 June 2018 showed a transfer of RMB 1,250,000 (the equivalent of AUD $252,018.10) by Mr Jiang and included an amount of $67,016.10 which was recorded to have been withdrawn in cash by Ms Qin.
Ms Qin maintained that the reason she had withdrawn the funds in cash was because there was, at that time, no bank account for Taylor International or the Unit Trust. There is no doubt that neither of those bank accounts had been opened at that time. According to Ms Qin, Mr Jiang had authorised the withdrawal because he did not want his money to remain with IMBK which was a foreign exchange company and not a bank. Ms Qin stored the money for safekeeping, apparently under her bed although it is unclear whether "under the bed" was simply shorthand for the funds being within her possession.
On 23 July 2018, Mr Qin and Mr Tian had this exchange via WeChat: "[Mr Qin] Hello! I have transferred RMB110,000 to you today. I am getting the funds to transfer to you! Thanks again! [emoji] … [Mr Tian] RMB110,000 received, thank you! [Mr Qin] Doing my best to repay you faster! …"
Mr Qin claimed the RMB 110,000 was money from his own personal funds because Mr Jiang had failed to repay Mr Tian.
On or around 27 or 28 July 2018, Mr Qin claimed to have had a conversation with Mr Jiang about repaying the Yuan Tian Loan which included an exchange to the following effect: "[Mr Qin]: Jiang, the repayment cannot be delayed anymore, Yuan Tian's loan was overdue and must be repaid. [Mr Jiang]: I do not have money. [Mr Qin]: How about your payment to Aiyi last month? You said it was your money, didn't you? [Mr Jiang]: Yes, it is my money. [Mr Qin]: So you have money to pay your other investment, but you do not have money to repay the loan? And how about your funds for fruits? [Mr Jiang]: En, I called Aiyi a few days ago, she said that the money I transferred to her has not been used yet, part of money in your company's account, you can use the money in your account to pay for the fruits orders, and ask Aiyi to use the balance in cash to repay Yuan Tian. [Mr Qin]: Okay, who informs Aiyi of your money arrangement? [Mr Jiang]: It is ok if you tell her."
Mr Jiang denied this conversation in his affidavit and during cross-examination.
On 1 August 2018, Mr Qin sent a message to Mr Jiang via WeChat which included what appeared to be Mr Qin's bank account details. Mr Jiang confirmed receipt of the message. Mr Qin then sent this message to Mr Jiang: "The loan amount of RMB 400,000 will be repaid to [Yuan Tian] first. He will provide urgent assistance, if we suffer from significant difficulties later."
That message from Mr Qin to Mr Jiang was accompanied by a photograph of a handwritten document which, when translated from Chinese, was a "Loan Agreement" dated 3 May 2018. The terms stated in the document were: "Peihong QIN borrows RMB 400,000 from Mr Yuan TIAN today. I will make the repayment to Mr Yuan TIAN in three months. Many thanks. … PEI HONG QIN"
The following day, on 2 August 2018, Mr Qin sent a further WeChat message to Mr Jiang which stated: "… The bank transfer amount has been received. I will make the transfer to [Yuan Tian]. Thank you."
There was disagreement as to the proper translation of this message. The Mandarin interpreter assisting Mr Qin to give his evidence was asked to sight-translate the original message in Chinese. The interpreter stated that the message was: "… bank money received [exclamation point]. I shall - I will go and wire it to Tian [exclamation point]. Thank you [exclamation point]" (Tcpt, 9 November 2022, pp 419(4-6)).
Mr Jiang immediately responded: "No worries, I ought to do that."
No transfer receipt or other record was tendered as evidence of the above transfer. During cross-examination, Mr Jiang explained that he "couldn't really locate such a thing. I really forgot which bank account this money was transferred into Pei Hong Qin's account" (Tcpt, 3 November 2022, pp 206(34-7)). Mr Qin then objected to the word "bank" in the translation, which he argued was inaccurate. However, nothing turned on this because he nevertheless accepted the contents of subsequent correspondence on 2 August below.
Mr Qin transferred a further RMB 261,312 to Mr Tian on or about 2 August 2018, evidenced by this exchange between them on WeChat: "[Mr Qin] I am on the way to the bank to transfer funds to you! Thank you very much for helping me with this payment! Because for all fruit orders must pay 30% deposite [sic] 4 months in advance of the purchase! Very difficult! Otherwise the farmers will not accept the order! [emoji] … [Mr Tian] RMB 261312 received. You are welcome! [emoji] [Mr Qin] My sincere thanks!"
Mr Jiang's initial version of events in his affidavit was that he had repaid the Yuan Tian Loan directly in Shanghai. However, during cross-examination he recalled that he had made the repayment to Mr Qin and it was Mr Qin who then repaid the Yuan Tian Loan to Mr Tian.
However, on 9 August 2018, Mr Jiang sent this message (within the body of a broader message related in full at [220] below) to Mr Qin: "… I made the payment of RMB 140,000 for Bin Lu and I also repaid the amount of RMB 400,000 to Lao [Yuan] Tian …"
Mr Qin stated that this referred to Mr Jiang having paid money to Ms Qin and not to a separate payment from Mr Jiang to Mr Tian.
Mr Qin responded on even date with this WeChat message (also within the body of a broader message related in full at [220] below): "… Making repayment for [Yuan Tian] is the thing that should be done. There is nothing that I should commend you. [Yuan Tian] just provided assistance and did not charge any interest. You should not even tell me about this! …"
Mr Jiang sent a further response which included: "[Mr Qin] please consider the issue calmly. Talking about the matters of [Yuan Tian] and Bin Lu is to tell you 540,000 has been paid and capital is tighter! When do I mean to ask for commend from you?"
Ms Qin said during cross-examination that it was her understanding that Mr Qin had repaid Bin Lu on Mr Jiang's behalf from Mr Qin's own funds. Mr Qin also asserted that he had repaid at least part of the loan from his personal funds during cross-examination.
To confuse matters further, in re-examination Mr Qin was shown two transaction receipts from Bank of China dated 4 October 2018 showing a transfer of RMB 220,000 and RMB 180,000. Mr Qin claimed these were transfers he made to the IMBK account of Ms Qin from his own funds. However, the bank documents clearly record the payees as two other people and not Ms Qin. I regard Mr Qin's explanation as an example of his unreliability as a witness.
Finally, Ms Qin gave evidence in cross-examination that she felt that the $67,016.10 that she had been keeping was money owed to the couple by Mr Jiang for having repaid the Yuan Tian Loan. She could not account for where the funds were currently because "I started using a bit of here, a bit of there, and on occasional basis" until there were no longer any funds left. After what she regarded as the "finalisation" of the Yuan Tian Loan by Mr Jiang and her husband, "it became my money, then how…I use it, it's my business" (Tcpt, 7 November 2022, pp 297(1-22)).
Attempting to analyse this evidence, the only evidence of Mr Jiang authorising Ms Qin to apply the $67,016.10 towards the repayment of the Yuan Tian Loan is Mr Qin's uncorroborated account of a conversation with Mr Jiang. For reasons set out at [71] and [72] above, the Court does not accept Mr Qin's uncorroborated evidence of the conversation. That is enough to support the conclusion that Ms Qin has failed to discharge the onus which they carry to make out their case of authorised use of the funds.
However, there is also nothing in the surrounding contemporaneous evidence to support such an authorisation. The documents establish that on 2 or 3 May 2018 Mr Qin did obtain on behalf of Mr Jiang a loan from Mr Tian of RMB 400,000 repayable in two or three months. RMB 250,000 appears to have been transferred to Ms Qin and RMB 150,000 to Mr Jiang. Ms Qin's initial evidence that she withdrew the amount for the purposes of the repayment of the Yuan Tian Loan is plainly wrong because the withdrawal antedates the alleged conversation between Mr Qin and Mr Jiang. The documents also show that Mr Qin paid Mr Tian RMB 371,000 (RMB 110,000 on 23 July 2018 and RMB 261,000 on 2 August 2018). However, in their message exchange of 9 August 2018, Mr Qin did not traverse Mr Jiang's assertions that he (Mr Jiang) had repaid Mr Tian.
There is no doubt that Ms Qin considered herself entitled to apply the $67,016.10 cash, which she kept "under the bed", for her own purposes. However, for the reasons set out in [201] and [202] above, the Court concludes that she has failed to discharge the onus of demonstrating on the balance of probabilities that she was authorised to use the money for something other than the Unit Trust and would, but for the Court's conclusion in [53] above, be liable to repay that amount with interest to Mr Xie as trustee of the Unit Trust.

$185,000.00 transfer

Ms Qin's answer to this claim depended, as a starting point, on the Court accepting Mr Qin's evidence (set out at [184] above) that Mr Jiang had authorised the balance of the $252,016 transfer (being $185,000, see [45] to [47] above) to pay for purchases of fruit that had been made by Mr Jiang.
But for the conclusion in [53] above, the Court accepts Mr Norrie's submission that this aspect of Ms Qin's defence to an action for account would fail for want of corroboration, not just of that conversation, but also in relation to the disbursement of the funds to pay for fruit purchases at all.
The Court relies on three matters.
First, Ms Qin's evidence about the reason for the transfer was inconsistent. In her affidavit she said she had transferred the money to Hongyi "because I do not want to push so much cash at home". Other evidence she gave was to the effect that the transfer was made by Mr Jiang for the original purpose of "his procuring fruits", however, she asserted during cross-examination that the purpose later changed in accordance with Mr Jiang's circumstances. Ms Qin also said that Mr Jiang was made aware that the funds had been transferred to Hongyi, but she could not recall exactly when or how this had occurred, or whether it had in fact been her or her husband who had told Mr Jiang.
Second, there was no evidence in WeChat, text or other documentary form at or at any time after the transfer evidencing that Mr Jiang (or any of the plaintiffs) knew of the transfer to Hongyi or had authorised it to be used to pay for fruit purchases or anything else.
Third, the defendants have not been able to produce any records, including bank statements or invoices, to prove the application of the $185,000 to the purchase of fruit. Ms Qin's claim in cross-examination that this was because Hongyi operated two separate bank accounts was as illogical as it was unconvincing.

$86,435.60 withdrawal

Mr Qin alleged that the $86,435.60 cash withdrawal over 13 and 14 September 2018 represented partial repayment of a loan of approximately RMB 950,000 (A$189,456) by Mr Bin Lu to Mr Jiang which Mr Qin had repaid (the Bin Lu Loan). It was the defendants' evidence that in a telephone conversation between Ms Qin and Mr Jiang on 13 September 2018 which was overheard by Mr Qin, Mr Jiang had authorised Mr Qin receiving the balance of funds left in the IMBK account after a transfer of $270,000 into the Taylor U account.
Before considering the contemporaneous documented exchanges between the parties, a convenient overview of the course of events was provided by Bin Lu in an affidavit filed for the plaintiffs. Bin Lu was not required for cross-examination and the Court accepts his evidence, which was also corroborated by the documents to which he refers: "11. On 29 July 2018, Peihong invited me to his home in Shanghai to talk about the Australian fruits market. I had a conversation with Peihong in Mandarin in words to the following effect: Peihong said: "I ordered Australian orange for Donghua Jiang in Australia and two containers of them will arrive in Shanghai very soon and need to be paid immediately. However, Jiang does not have money to pay for it. Do you have money to pay for these two containers instead?" "I promise that the current market is pretty good Trust me, if you buy these fruits, I am sure that you will make profits." I said: "Okay, I trust you. I will pay for those two containers within two days." Peihong said: "You transfer the monies to Jiang's business account and Jiang will transfer the monies lo my trading company in Australia." 12. Because of my trust In Peihong and the rush of time, I did not contact Jiang to verify the truth. 13. On 30 July 2018 and 31 July 2018, I transferred the total sum of RMB956,753 (equivalent to AUD189,456) to Jiang's business account by five transactions as directed by Peihong. Annexed and marked 'A' is a copy of WeChat conversation with Peihong and transactions receipt. 14. On 18 August 2018, as directed by Peihong, I transferred another RM8162.601.79 to Shanghai Kaiyi International Trading Co., ltd ('Shanghai Kaiyi') for the import tariffs and value-added tax of two containers of Australia orange. I was told by Peihong that Shanghai Kaiyi was his trading company in China, and he used this company for paying the import tariffs and value -added tax. Annexed and marked 'B' is a copy of WeChat conversation with Peihong. 15. On or around 3 September 2018, I received the repayment of RMB800,000 from Peihong, RMB250,000 of which was transferred by EFT and RMB550,000 of which was paid in cash. Annexed and marked 'C' is a copy of WeChat conversation with Peihong. We also had a conversation in Mandarin in words to the following effect: Peihong said: "The market situation is not as good as expected, so we sold the most of fruits at a low-price dumping. The total income is only RMB800,000. The balance of fruits will be stored in the freezer until the market turns around " 16. On or around 5 November 2018, I received the payment of RMB170,000 from Peihong for the sale proceeds of the balance of fruits. Annexed and marked 'D' is a copy of WeChat conversation with Peihong. 17. I made a loss of around RMB150,000 in this transaction."
During his cross-examination, Mr Jiang confirmed that he had been experiencing issues with his capital and Mr Qin had suggested to him that he might borrow funds from Bin Lu. Mr Lu was acquainted with Mr and Ms Qin since he had asked for their assistance to enrol his daughter in an Australian school in 2017.
On 29 July 2018, Mr Jiang sent this message to Mr Qin via WeChat: "Money is an issue but it's more dependent on the market. Fruit dealers in this trade for a long time say doing fruit business is gambling. The market changes constantly and hard to predict plus we are green. Though brother you work very hard but we have to admit our problems. Getting impatient is not helpful and we will have to pay the costs to learn, though I think the less the better. Is there any issue with this strategy? In my opinion, it would be the best we do not ask Lu. What if he refuses?"
No response is recorded from Mr Qin, however, the following day, Mr Jiang sent a picture of his bank card to Mr Qin and details of his account, being "XX Branch, Agriculture Bank of China, Donghua JIANG".
In his affidavit, Mr Jiang said that in late July 2018 he had a conversation with Mr Qin to this effect: "[Mr Qin]: Bin Lu would purchase fruits for nearly RMB 950,000. [Mr Jiang]: As the custom clearance is applied under JUJI FRUIT's name, all purchase money should be made through JUJI FRUIT. To avoid the late payment, I will make the payment on behalf of Bin Lu first, then you as him to transfer the money to my bank account. I will give you my bank account details later."
On 29 July 2018, Mr Qin sent this message to Mr Lu on WeChat: "Here is the bank account of Jiang's company! Use the Currency Exchange rate below! [Grin emoji]"
WeChat messages between Mr Qin and Mr Lu dated 30-31 July 2018 stated: "[Mr Qin] Bin LU, good morning! Jiang has asked when will the money for the two containers be received by their company! They will pull all funds together and transfer to Australia today! [Bin Lu] How much is the total? [Mr Qin] AUD 189,456 = RMB 956,753 [Bin Lu] 800,000 will be before close of business today, and the other 150,000 will be transferred the first thing tomorrow morning [Mr Qin] Okay! [Mr Qin] Bin LU, sorry to bother you! Could you try to make the transfer before noon? Because the funds need to be transferred via a customs clearance agent after Jiang's company receives it! Every step costs time but the customs clearance agent must transfer the funds to Australia before 3 o'clock! [Fist palm salute emoji x 3] [Bin Lu] I will push again. [Mr Qin] [Photograph of Mr Jiang's bank card] [Mr Qin] XX Branch, Shanghai Agriculture Bank of China, Donghua JIANG [Bin Lu] Okay … [Bin Lu] Total of 930,000 has been transferred [Bin Lu] There is still RMB 20,000 plus to be transferred to you tonight … [Mr Qin] Okay! [Grin emoji]"
On 5 August 2018 at 1:01pm, Mr Jiang sent a WeChat message to Mr Qin which stated: "Messages shows there are 5 tranches and there is just a 140,000 shortfall. The figures contain decimals, which means his transfers are made after detailed calculations. We have received the other 4 tranches. Just this shortfall of 140,000."
Mr Qin replied one minute later at 1:02pm: "The messages I've seen show he transferred RMB 950,000 plus! How much have you received? I have asked him to transfer the rough figures (after detailed calculations)."
On 9 August 2018, WeChat messages record this exchange between Mr Qin and Mr Jiang: "[Mr Qin]: [Donghua Jiang] tell you a situation that MFC Australian oranges that originally were arranged to arrive Shanghai port today (9 August) cannot be delivered to Shanghai port (because the payment is made too late, the payment was transferred yesterday, and I have not received the payment today). The only available final unloading terminal by the shipping company is Hongkong (another customer of mine will collect those goods). We will send a container of Late Lane on 26 August again, and this is the first batch of Late Lane available in Shanghai, which will be the chance. Price difference can be corrected later! The customs broker also knows the situation! Because the receipt of payment is delayed and the payment is not received, we cannot sent [sic] them the bill of lading! This is just the procedure of international trade! Currently, you will be clearer about the meaning of payment deadline! I have nothing to say about this! Please understand! [Mr Jiang]: I cannot understand! You kept chasing up me to make the payment when you clearly knew that the goods cannot be delivered to Shanghai because of late payment. I made the payment of RMB 140,000 for Bin Lu and I also repaid the amount of RMB 400,000 to [Yuan Tian]. Because of Xiao Ding's guarantee and friendship between us, I tried all means to arrange the payment. What do you mean by doing so? [Mr Qin]: 1. First of all, the purchase payment shall be made before fruit picking. This is international common practice that all of us shall confirm (normally, 5 weeks before arriving the port). 2. Because I believe in you, I made the payment in advance for you. However, the payment deadline of this container of MFC Australian oranges is 5 August (arrived in Shanghai port in the small hours of 9 August). But, actually, the payment was made yesterday. We have not received the payment until now. This has passed the final confirmation time for unloading with the shipping company. Therefore I can't give the bill of lading to Xiao Zheng (She [sic] is clear about this. My practice complied with standards and nobody could blame me for this) 3. In terms of the two containers for Bin Lu, because when making the final confirmation we gave the bill of lading in advance, so many troubles have been caused! The same mistake shall not be made again. All things shall be processed according to regulations. 4. Making repayment to [Yuan Tian] is the thing that should be done. There is nothing that I should commend you. Lao Tian just provided assistance and did not charge any interest. You should not even tell me about this! 5. I believe the payment issue of Bin Lu is a technical issue. You two have WeChat accounts and there is no need for me to get involved! Also I have asked him. 6. Current market of Australian oranges is stagnant. My consideration of changing to Late Lane on 26 August is for your benefits (being fire and objective, and it is difficult to find out this kind of chance). 7. This ship arrives in Hongkong first followed by Shanghai. It is 300% entirely your fault to cause such a mess and the the [sic] situation that we are so passive! You cannot blame anyone else for this! One thing that should be remaindered again is that fruit picking is futures. Based only on experience, fruit picking should be for the whole season. The conclusion of winning or losing should be made for the whole season. You always say your fruit picking plan is around 50 to 60 containers. Current number is only 9 containers! There is no solution for the stagnant market! But it is unfair to shift all bad results to me! Every payment you made exchanges a container of goods, which does not involve any problem! The above requirement or blame is excessive! [Mr Jiang]: [Mr Qin], please consider the issue calmly. Talking about the matters of [Yuan Tian] and Bin Lu is only to tell you 540,000 has been paid and capital is tighter! When do I mean to ask for commend from you? You have arranged goods to be collected in Hong Kong ready, but you kept chasing up me to make the payment. Can't this make the situation worse? I agree with the point that you said winning or losing should be concluded for the whole season. However, just because the market is unstable and unpredictable, amount of payment should be smaller and we should be cautious. Is there anything wrong with this? To be honest, you have made me lose more than 1,000,000 until now since fruit picking and purchasing. I have never blamed you for this in my mind. However, losing money has occurred. Is there anything wrong for us to discuss issues of picking and purchasing? Why do you evade the question to avoid talking about it? Even though it is not suitable to discuss it that day, is it necessary for you to be so angry? Because we have arguments, you dealt with the remaining goods by yourself. Is this shifted by me? To be honest, I always [sic] grateful that I have you as my friend. What's done is done. We all need to think about why it happened. You never review yourself and you mistake! [sic] Why is there a loss of 1,000,000? You purchased goods making me lose 1,000,000. This is all my fault? Is there any humanity in you? Who do you think you are? [Mr Qin]: I am discussing with A Ding calmly! Do not provoke me and ruin my mood! [Mr Jiang]: Is what I said the truth? [Mr Qin]: Bullshit! [Mr Jiang]: You are not even worthy of being a man!"
On 16 August 2018, Mr Qin wrote to Mr Lu via WeChat requesting payment of RMB 162,601.79 for import taxes. Mr Qin instructed Mr Lu to make this payment to Mr Qin's company, Shanghai Kaiyi International Trading Co. Ltd (Kaiyi). Mr Qin's explanation for this was that Kaiyi had been enlisted to assist in selling the two containers of mandarins in order to ensure Mr Lu received his money back, and this had purportedly been done with the knowledge and consent of Mr Jiang.
On 3 September 2018, Mr Qin repaid RMB 800,000 to Mr Lu, partly by electronic transfer and partly in cash. According to Mr Qin, the source of these funds was from the proceeds of sale of the mandarin containers. No documentary evidence of this was provided. During cross-examination, Mr Qin said that he was unable to obtain many of the relevant financial records because the documents were located in Shanghai. According to Mr Qin's calculations, RMB 170,000 remained to be paid to Mr Lu.
Ms Qin initially attested that in or around mid-September 2018, she received a sum of $86,435.60 from Mr Jiang. Her later affidavit clarified that on 13 September 2018 she had received RMB 1,800,000 (AUD$356,435.60 equivalent). Ms Qin withdrew $40,000 cash from the IMBK on the same day and withdrew a further $46,435.60 cash the following day, being 14 September 2018. The details of this transaction are recorded in [50] and [51] above.
Ms Qin said in cross-examination that she had to have withdrawn the funds in these amounts because the Eastwood IMBK branch did not have sufficient cash on the premises for her to withdraw the entirety of the amount in one transaction. It was unclear why she had not simply transferred the funds into her personal bank account rather than withdrawing it as cash, but her evidence was that she took the view that transferring large sums of money would attract unnecessary issues, for example, scrutiny from the Australian Taxation Office.
WeChat messages with Yanyan from IMBK on 13 September 2018 record this exchange with Ms Qin: "[Yanyan]: At 145/At Eastwood, it has $40,000. [Ms Qin]: I will go now and collect it, please keep them informed for me! Thank you (emoji) [Yanyan]: Ok, auburn now has some, can you go there? [Yanyan]: Today is definitely impossible to do it"
Yanyan and Ms Qin exchanged further WeChat messages on 14 September 2018: "[Yanyan]: I have arranged it (to be done) at 145 /at Eastwood [Yanyan]: About $60,000 [Ms Qin]: (emoji) [Ms Qin]: Already collected the cash, what's left being $270,000 - please transfer in [Yanyan]: hao [Ms Qin]: Taylor International Investment Unit Trust BSB XXXXXX Acc XXXXXXXXX ABN: XXXXXXXXXXX [Yanyan]: ok [Yanyan]: Doing it now"
Ms Qin's affidavit evidence was that on 13 September 2018 she had a conversation with Mr Qin in which the latter expressed discontent that Mr Jiang had transferred money to Ms Qin for the Venture in circumstances where Mr Jiang had not reimbursed him (Mr Qin) for the money he had repaid to Bin Lu. Ms Qin said she immediately relayed this to Mr Jiang in a telephone conversation in these terms: "[Ms Qin] Jiang, your money has arrived in Australia. [H]owever, Qin said that you owed him money in China, could you call him to resolve the issue? [Mr Jiang] I do not have money. [Ms Qin] These debts related to Bin Lu and the third party; you have to resolve it. [Mr Jiang] I don't have funds currently. [Ms Qin] Given the debts in China is more urgent, why do you only pay for the Farm Land but not resolve the money issues in China? [Mr Jiang] I do not have money in China now. [Ms Qin] Delay is not the way to resolve the problem. [Mr Jiang] Ok, I contributed partial funds among the transferred money to you, you can withdraw the money from my contribution. [Ms Qin] How much is your contribution? [Mr Jiang] [H]ow much have you received? [Ms Qin] The sum is $356,435.60. [Mr Jiang] You transfer the sum of $270,000 to Taylor company, the balance can be paid to Qin. [Ms Qin] Ok."
Mr Qin claimed that he had overheard the conversation and related the contents of that conversation in identical terms to Ms Qin in his own affidavit. Mr Qin's explanation for this was that it was an error in the English translation of the affidavits because it was not natural for the conversations to be related in exactly the same words by both of them. Mr Jiang denied this conversation took place.
On 5 November 2018, Mr Qin paid RMB 170,000 to Bin Lu. On that day, Mr Qin sent a WeChat message to Mr Lu which stated: "Unpaid amount of RMB 170,000 mentioned last time will be transferred (RMB 100,000 is transferred to you, the balance will be paid by Aiyi in Australia in AUD)"
Later that day, Mr Qin sent a follow-up email to Mr Lu which stated: "Payments have been made!"
In his affidavit, Mr Qin explained that the $86,435.60 was split, with $30,000 paid to Kaiyi and a farmer who had retained two containers of fruit in Australia, $25,000 to a representative farmer in China, and the remaining $29,000 to Bin Lu. Mr Qin maintained his evidence during cross-examination. However, as was the case with the source of his RMB 800,000 repayment (see [222] above), Mr Qin was unable to produce any supporting records.
But for the finding in [53] above, the Court would not have been actually satisfied on the balance of probabilities that Mr Jiang had authorised Ms Qin to use the $86,435.60 balance to pay to Mr Qin. The only evidence of that authority is a conversation which completely lacks independent corroboration by any means. Furthermore, I have already concluded (see [72] above) that the conversation - recorded in identical terms in the defendants' respective affidavits - is the product of collusion and cannot be relied upon. Given the view the I have taken of the protagonists' credit, I am unable to be actually satisfied on the balance of probabilities that the conversation occurred.
I make three concluding observations about this Impugned Transaction.
First, I accept that Mr Qin and Ms Qin had every reason to feel that Mr Qin was entitled to reimbursement by Mr Jiang. However, proving a basis for a sense of entitlement (not dissimilar to that to which I referred in [203] above) is not the same thing as satisfying the Court that authority for the reimbursement had actually been given.
Second, the circumstances surrounding the Bin Lu Loan are well established by the parties' WeChat and text messages. It is remarkable, and productive of further doubt in my mind, that there is no such record of Mr Jiang's alleged authorisation.
Finally, while not of itself dispositive, my doubt is also based on the order of events compared to what Ms Qin said she was authorised to do: "You transfer the sum of $270,000 to Taylor company, the balance can be paid to Qin". It strikes me as odd, to say the least, that allegedly having just had that conversation, the IMBK records (see [50] and [51] above) establish that Ms Qin proceeded in the opposite order and did not instruct the transfer to the Taylor U account to be done until the next day, 14 September 2018.
The result of paragraphs [169] to [236] is that, but for the Court's conclusion in [53] above, Mr Xie would have been entitled to a judgment on behalf of the Unit Trust against Ms Qin in the amount of the Impugned Transactions plus interest. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 March 2023

Trade Practices Act 1974(Cth)

What was the plaintiffs' case?

It is fundamental to the conduct of litigation in accordance with the overriding purpose that a party be held to its pleaded case or, if the matter has been conducted otherwise, to the case the parties chose to litigate. This well understood approach was recently reaffirmed by the Court of Appeal in Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 (per Leeming JA, with whom Kirk JA and Griffiths AJA agreed): "38. The appellants submitted, correctly, that the case upon which Ms Bale succeeded at trial had not been pleaded. They also recognised, correctly, that that was not sufficient to entitle them to success on appeal. The pleadings are important, but when the parties choose to litigate a case outside the pleadings, the pleadings cease exhaustively to delineate the issues raised for resolution by the court. The principles were stated by Mason CJ and Gaudron J in Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 287; [1990] HCA 11 in respect of a comparable situation: Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference. 39. The judgments of Brennan J at 288-290 and Toohey J at 302-305 are to substantially the same effect. In Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 at [26] the joint judgment endorsed the fundamental principle stated in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517; [1916] HCA 81 that "no man ought to be put to loss without having a proper opportunity of meeting the case against him" which requires that "pleadings should state with sufficient clearness the case of the party whose averments they are". Where as here, and as was the case in Akhil Holdings, the unpleaded case amounts to an allegation of fraud, the need for a clear enunciation of the case is all the greater, as explained in Admiral International Pty Ltd v Insurance Australia Ltd [2022] NSWCA 277 at [88]-[94] and the cases there cited."
It is also fundamental that the facts to be proven and who must prove them can only be determined by reference to the pleadings or the legal issues otherwise litigated by the parties. It is therefore necessary before going further in these reasons to identify what was the plaintiffs' case. That task can be most clearly undertaken against the background of some basic facts that were not in dispute: 1. On 6 June 2018, the Unit Trust was established by the parties executing a deed styled "Unit Trust - Fixed Deed establishing the Taylor International Investment Unit Trust" (Trust Deed). The Trust Deed recorded the initial unitholders as the plaintiffs and Mr Qin, and that Ms Qin was the trustee of the Unit Trust. 2. On 12 June 2018, Taylor International was registered with Ms Qin as the sole director and secretary. The shareholders were the plaintiffs and Mr Qin, with their shareholdings being in the same proportion as their interests in the Unit Trust. 3. In the following months, by a series of thirty-three transfers (made on 29 June; 30 August; 13, 25, 27 and 28 September; and 31 October), Mr Jiang transferred RMB 13,550,000 (approximately A$2.67 million) to an account with an Australian foreign exchange company called IMBK Pty Ltd (IMBK) for the purposes of the Venture conceived by Mr Jiang. 4. Two bank accounts had been opened with the National Australia Bank by Ms Qin: the "Taylor P" account for Taylor International in July 2018 (being in the name of that company) and the "Taylor U" account for the Unit Trust in August 2018 (being styled "Aiyi Qin ATF Taylor International Investment Unit Trust"). 5. Ms Qin agreed to Mr Jiang's request that she would be the local manager of the Venture. She withdrew funds from IMBK to apply for the purposes of the Venture (initially in most cases by depositing them into either the Taylor P or the Taylor U account), with the factual dispute between the parties being whether she applied all of the funds for that purpose and, if she didn't, whether she was authorised by Mr Jiang to apply the funds otherwise. 6. On 10 October 2018, Ms Qin entered into a contract for sale (in which she was expressly described as acting in her capacity as trustee of the Unit Trust) to purchase a vineyard in Red Cliffs, Victoria (the Property) for a stated consideration of $2,000,000 including a deposit of $200,000. The purchase was completed on 9 November 2018. 7. In November 2019, Ms Qin was removed as the director of Taylor International. In January 2020, Ms Qin was removed as trustee of the Unit Trust and replaced by Mr Xie. No issue arises in relation to Mr Xie being a unitholder as well as trustee, because clause 76 of the Trust Deed expressly permits the trustee to be a unitholder.
The plaintiffs moved on their Further Amended Statement of Claim of 23 July 2021 (FASOC), which sought this relief: "1 An order declaring the Unit Trust to be valid and enforceable. 2 An order declaring the removal of the First Defendant as trustee of the Unit Trust to be valid. 3 An order declaring the appointment of the First Plaintiff as trustee of the Unit Trust to be valid. 4 An order that the First Defendant hand over outstanding property of the Unit Trust to the First Plaintiff comprising monies which are unaccounted for and which total $512,685.10 … 5 An order that the First Defendant do everything necessary to vest the outstanding assets of the Unit Trust comprising monies which are unaccounted for and which total $512,685.10 … in the First Plaintiff. 6 Alternatively to orders 4 and 5 above, a declaration that the First Defendant holds monies which are unaccounted for and which total $374,607.10 … on trust for the First, Second, Third and Fourth Plaintiffs. 7 Further to order 6 above, judgment … against the First Defendant in the sum of $374,607. … 10 Declaration that the First Defendant breached her fiduciary duties owed to the Fifth Plaintiff. 11 An order pursuant to section 1317H of the Act that the First Defendant pay compensation to the Fifth Plaintiff in such amount as the Court thinks fit … 11A An order that the Second Defendant pay his outstanding contribution to the grape growing business (Business) of the Fifth Plaintiff in the amount of $138,078.00. 11B Interest on the Second Defendant's outstanding contribution to the grape growing business of the Fifth Plaintiff in the amount of $138,078.00 in such amount as the Court thinks fit. …"
By the end of the hearing, the plaintiffs had abandoned all of their claims other than for the declarations in paragraphs 1, 2 and 3, and for an order or orders against Ms Qin to the effect of those in paragraphs 4, 5 or 6. It is the nature of the case made in relation to the latter relief that is the subject of this section of the judgment.
The FASOC pleaded: "60 As noted at [16A] above, at the direction of the First Defendant, the First, Second, Third and Fourth Plaintiffs transferred RMB 13,500,000.00 (equivalent to approximately AU$2,707,919.90 in late 2018) over thirty-three (33) transactions to IMBK Pty Ltd for their investment in the Business. 61 As noted at [16B] above, the First Defendant represented that the Second Defendant contributed $300,880.00 as his investment in the Business. 62 By reason of the matters referred to at [60]-[61] above, the total of monies invested by the First, Second, Third and Fourth Plaintiffs and the Second Defendant was $3,008,799.90. 63 As noted at [20] above, the monies which were paid into the Taylor U Account from monies invested by the First, Second, Third and Fourth Plaintiffs amounted to $2,120,871.80. 64 As noted at [21E] above, the monies which were paid into the Taylor P Account from monies invested by the First, Second, Third and Fourth Plaintiffs amounted to $212,441.00. 65 Contrary to the representation of the First Defendant at [16B] above, the Second Defendant only contributed $1,000.00 to the Taylor U Account and $161,802.00 to the Taylor P Account. 66A As the holder of 10 units in the Unit Trust and as a holder of 10 shares in the Fifth Plaintiff, the Second Defendant was required to contribute $300,880.00 to the Business. 66 The First, Second, Third and Fourth Plaintiffs have requested the First Defendant to provide transaction receipts confirming the Second Defendant's contribution to the Business in the amount of $300,880.00. The First Defendant has failed and/or refused to provide any confirmation of the Second Defendant's contribution to the Business [sic] in the amount of $300,880.00. 67A Accordingly, there is a shortfall of contributions made to the Business by the Second Defendant in the amount of $138,078.00. 67 By reason of the matters referred to at [63]-[67A] [63]-[66] above, the total amount of monies actually paid into the Taylor U Account and the Taylor P Account was $2,496,114.80. 68 The difference between the total amount of monies invested by the First, Second, Third and Fourth Plaintiffs and the Second Defendant into the Business and those monies actually paid into the Taylor U Account and the Taylor P Account is $512,685.10. 69 By reason of the matters referred to at [63]-[64] above, the total amount of monies paid into the Taylor U Account and the Taylor P Account from monies invested by the First, Second, Third and Fourth Plaintiffs was $2,333,312.80. 70 The difference between the total amount of monies invested by the First, Second, Third and Fourth Plaintiffs into the Business and those monies actually paid into the Taylor U Account and the Taylor P Account is $374,607.10. 71 The figure of $374,607.10 represents the shortfall in monies invested by the First, Second, Third and Fourth Plaintiffs into the Business with such shortfall being otherwise unaccounted for by the First Defendant."
The defendants responded in their pleading: "44. In relation to paragraphs 60 to 71 of the Amended Statement of Claim, the first and second defendants: (a) repeats paragraphs [7], [11] and [15] above; (b) say that the paragraphs are embarrassing and do not disclose a cause of action; (c) say that the paragraphs are liable to be struck out; (d) say that any claim for damages which is made is contrary to the principles of reflective loss; and (e) otherwise deny the balance of the paragraphs."
The plaintiffs' written opening outline of submissions recorded that "the Plaintiffs seek orders for payment of monies which were invested into the Business and which are otherwise unaccounted for by the First Defendant", nominating the amount said to be missing from those transferred to IMBK as $374,607.10.
Although the legal characterisation of the claim may have been opaque on the pleadings, there was no doubt from the outset that the defendants understood the central factual issue. So much appears from this exchange I had with Mr Lees during the openings (Tcpt, 31 October 2022, p 3(12-50)): "HIS HONOUR: But is there a dispute as to how much actually went in? That's a matter of just bank statements, isn't it? NORRIE: It is, your Honour. HIS HONOUR: Yes, Mr Lees? LEES: Perhaps not only an issue of bank statements, in that, as I understand it, there's the $338,000, or $378,000, I think the dispute there is around the exchange rate that was applied and the amount of Australian dollars received, but that may be able to be resolved. I think the factual issue that your Honour would need to determine in relation to that amount is that my client's evidence is, essentially, that she was authorised by Mr Jiang to withhold or apply some of the monies he transferred to other debts or obligations that he had, and I understand that's disputed by the plaintiffs. And so, if she was authorised by Mr Zhang, then she's entitled to retain those monies, but if she wasn't, then there's an obligation there. HIS HONOUR: Just pausing there, Mr Lees. Is it the case that there's clear evidence about what she, in fact, did with the money? LEES: Yes. HIS HONOUR: So, the issue is not where it's gone; the issue is, was she authorised to do with it what she did? LEES: Yes. And in the course of my opening, I do have an aide‑memoire which goes through each transaction and where the money came from and went to, which may assist your Honour. So, there's that issue, and then the other issue is the contributions made by the second defendant to the trust or the company. Some of those contributions were, on our case, paid on behalf of the trust to a related entity of the vendor of the farm land. And I understand it's disputed by the plaintiffs whether or not that was actually a contribution to the trust or the company, or whether it had some other characterisation or perhaps even if - well, I don't know if they dispute that the payment was made, but the character of the payment. And then the other issue, at the end of the matter, so to speak, is the question of whether Mr Qin can be obligated to make up any shortfall in contributions, if there is any, and the legal basis for that. So, that's not an accounting question, but a legal issue."
By the end of the hearing, the two sources of confusion about the plaintiffs' case became apparent. The first was the pleading in paragraph 71 of the FASOC (reproduced in [23] above) that seemed to suggest a claim by the first to fourth plaintiffs in respect of money they had invested into the "Business" (earlier defined as the "grape growing business", i.e. the Venture) but not identifying the capacity in which Ms Qin received the funds. The second was the lack of clarity about which (including whether it was all) of the plaintiffs who sought particular relief without regard to their respective capacities.
This confusion was brought into sharp focus by two submissions made on behalf of the defendants in relation to the claims for the "unaccounted funds": 1. The nature of the cause of action determined who had standing to bring it. The plaintiffs did not have standing to make the claims in equity which they apparently sought to make because the advances could only be loans to Ms Qin as trustee. The various plaintiffs had not established their individual advances and Mr Jiang was not a party. No claim had been brought against Ms Qin personally (as opposed to as trustee of the Unit Trust or as the director of Taylor International). 2. It was left to Ms Qin whether she applied the funds from Mr Jiang to either the Unit Trust or Taylor International. No claim in respect of the "unaccounted funds" had been brought by Taylor International and the Court could not be satisfied which of the Unit Trust or Taylor International was the intended recipient of the "unaccounted funds".
Prior to the parties making their final submissions, I drew the parties' attention to the judgment of Brereton J (as his Honour then was) in Torlonia v Wright [2016] NSWSC 1139 (Torlonia) concerning the action for account open to those in an accounting relationship such as between beneficiaries and trustees. I put to Mr Norrie that what his clients sought was an account from their former trustee, a proposition to which Mr Norrie acceded (Tcpt, 15 November 2022, p 448(36)). In response to my suggestion that I should order an account, I then had this exchange with Mr Lees (Tcpt, 15 November 2022, pp 448(47)-449(30)): "LEES: Well, it's not the way the case has been put. I just need to confirm some instructions, but I anticipate my instructions would be to oppose an account. And could you excuse me, one moment? HIS HONOUR: Yes, of course. LEES: Yes. The defendants would oppose an account. Firstly, that's not the way the plaintiffs put their case or conducted this hearing. The second problem is that in my submission, be inconsistent with s 56 of the Civil Procedure Act because these proceedings have now been on foot since 2020. We're at the end of a two-week hearing and ultimately the amount in dispute is probably $338,000. And the amount of legal costs already incurred is likely to exceed that amount. And the difficulty is if an account is ordered, essentially splits the hearing into a two stage process. HIS HONOUR: But account is always done that way. The first question in a hearing of this kind is whether there is an accounting relationship. Plainly there is an accounting relationship between the beneficiaries and the former trustee. So it is quite normal to order an account at the end of a case. LEES: Yes. Although if an account was going to be sought, it ought to have been sought at the beginning of the case. And then there could have been a short preliminary hearing if there was any dispute about standing for an account. Instead of all the cost and time that's been spent getting to the point where we are now. Which raises the other issue that in my submission -presuming, your Honour, would carry out the account - the evidence that would be before, your Honour, on an account is in by and large already before the court on this hearing. And so, your Honour, can potentially determine some of those questions, but without a two-stage formal account being ordered. The other issue is that there is a question as to who the account is in favour of. There's a legal argument, legal question about whether the funds advanced by Mr Jiang to Ms Qin ever became part of the trust assets. And we say they were not; they were a loan from some of the investors to the trustee of the trust."
I then asked Mr Norrie to clarify the cause of action on which his clients sued. This exchange ensued (Tcpt, 15 November 2022, pp 451(23-44); 452(27)-453(12)): "HIS HONOUR: All right. Well, Mr Norrie, what is your cause of action? Explain it to me very simply. What is the cause of action in relation to these moneys? NORRIE: Yes, your Honour. HIS HONOUR: is it [tort], contract, trusts? What is it? NORRIE: Trust, your Honour. HIS HONOUR: All right. NORRIE: The moneys that were advanced, by what the [plaintiffs] say were P1 to P4 - plaintiff one to plaintiff four, were moneys that were received by the first defendant on trust for them, and for the purpose of investing in the farmland and all that that entailed, your Honour. HIS HONOUR: So, it was received on trust for them? What were the terms of the trust? NORRIE: Your Honour the terms were for the purchase of the farmland, and the setup costs that accompanied that. … HIS HONOUR: Where does it say the money was received on trust? It doesn't, I don't think. Please tell me if I'm wrong. But I've now read your pleading about ten times. NORRIE: Yes, your Honour. I can see what your Honour says. It's not specified. HIS HONOUR: Well, it's a pleading. So, what is your cause of action? NORRIE: It's a trust cause of action that the monies were held on trust, notwithstanding the fact that the pleading doesn't specifically use the word that it was held on trust. It's clear from their role that the first defendant played and the role in which the first defendant received the monies that they were received on trust. HIS HONOUR: By whom, for whom and on what term? Received by the first defendant. NORRIE: Yes. They were received by the first defendant for the benefit of the first to fourth plaintiffs. There was evidence-- HIS HONOUR: What are the terms of the trust? Are they oral or written? Express or implied? NORRIE: They are implied. HIS HONOUR: Alright. Where's that in the pleading? Where is there an assertion that funds were held on an implied trust? And what are the facts-- NORRIE: There are none. There is no reference to that. I can say this, however. There is reference to - this is in para 45 - the unaccounted monies, as pleaded, which we're totalling $512,000. That, I must pause to note, is asserted to be on behalf of the first to fourth plaintiffs as well as the second defendant, as he was a beneficiary under this trust. And that they are unaccounted for. There is a pleaded reference that there needs to be a vesting of those assets."
I do not accept that the case which Mr Norrie sought to articulate in the preceding paragraph was either pleaded by the plaintiffs or argued between the parties before me. However, noting Mr Lees' statement (see [29] above) that "the evidence that would be before [the Court] on an account is in by and large already before the Court on this hearing", and the parties' mutual acknowledgement of the live factual issue that had been fully explored in the evidence was whether Ms Qin was authorised by Mr Jiang to deal with the "unaccounted funds" as she said she had, the plaintiffs' case was either for an account or to enforce the obligation on Ms Qin to vest the assets of the Unit Trust in Mr Xie as the new trustee.
The obligation to vest assets in the new trustee arises both as a matter of the general law of trusts and, in this case, pursuant to clause 86 of the Trust Deed: "The transfer of assets 86 On retirement or removal of a trustee, or automatic termination of a trustee's appointment, the trustee must immediately do each of the following at the trust's expense: · hand over the books, accounts, documents and property of the trust to the new trustee; · do everything necessary to vest the assets of the trust in the new trustee; · do everything reasonably required by the new trustee to hand over to the new trustee possession and control of any assets in the hands of third parties; · do everything reasonably required by the new trustee to inform the new trustee of the full state of affairs of the trust."
The obvious plaintiff to seek to enforce the vesting of assets is Mr Xie as the new trustee, although any of the unitholders as beneficiaries would also have standing to seek such an order, the former trustee's obligation to vest assets in the successor trustee being an obligation for their benefit.
Insofar as the action for account is concerned, the proper plaintiffs include the unitholders as beneficiaries, noting that under clause 14 of the Trust Deed, "the trustee holds the assets of the trust as a separate fund on trust for the unit holders". For obvious reasons, although Mr Qin is a unitholder, it is sufficient that he has been joined as a defendant. Furthermore, although not strictly an issue given that Mr Xie is also a unitholder, in my view he also is the most obvious plaintiff to seek an account as the successor trustee as against Ms Qin as the former trustee of the Unit Trust.
Before leaving this topic, one other matter should be noted. The defendants submitted, and to the extent necessary the Court finds, that the funds forwarded by Mr Jiang through IMBK were funds provided by persons other than the plaintiffs. There was no evidence which would enable the Court to determine, if it had to, what the arrangements (if any) were between those persons, Mr Jiang and the plaintiffs. However, given it is clear that the funds were intended for the Venture (and thereby for one or other of the Unit Trust or Taylor International), the plaintiffs have standing to assert the causes of action which I have identified as unitholders, and the identity of those who provided the funds is not an issue.

Xie & Ors v Qin & Anor; Qin v Taylor International Investment Pty Ltd

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