H. 4.1 The evidence
1179 This requires analysis of all the relevant conduct. The evidence is as follows.
1180 On 2 April 2015, Zheng Xu appointed Austar Suzhou as her agent (CB 20873). The agreement records that it is the responsibility of Zheng Xu to make the investment in funds "as required by the Australian Government in complying investment products in the prescribed time". Zheng Xu was required to pay a non-refundable fee of 3000 yuan and an intermediary service fee of 5000 yuan, the latter being refundable if the visa application was unsuccessful. It further provides that the intermediary service fee:
[D]oes not include notary fee, physical examination fee, translation fee, investment plan fee, audit fee, visa fee, passport fee, property/asset appraisal fee, English training fee, air ticket, interview accompanying fee and other fees and expenses, and such expenses, if any shall be borne by [Zheng Xu].
1181 Zheng Xu accepted in cross-examination that she could have obtained translation services from Austar Suzhou or "from other people in China" and disclosed that during the application process "the agent organise translation for me and all my Chinese documents were included in there" (T 707). She also accepted that she had the financial capacity to pay for a translation service of "any document" at the time.
1182 On 4 June 2015, Zheng Xu lodged her application for a Business Skills (Provisional) (Class EB) Visa. On 20 August 2015, she received an email (in English and Mandarin) from a representative of the State Government of Victoria which congratulated her on being nominated for a significant investor visa. In November 2015, an application was made to the ANZ bank in her name for a home loan to purchase a property in Victoria. A rogue mortgage broker took it upon himself to fill out the application documents and to forge her signature. This is not a matter that counts adversely to Zheng Xu's credit, because I accept her evidence that she appointed an agent in good faith and trust of the individual to "take care of everything" (T 691).
1183 On 14 April 2016, the Department sent email correspondence to Austar Suzhou advising that Zheng Xu's visa application had reached the stage where she was invited to select and make a complying investment of at least $5 million. It records that the assets that were to be used to make the investment were: 4.1 million yuan in cash in a bank account and two real estate assets in China. The letter is otherwise in the same form as sent to Li Xu and Jingyi Li including the statement on the second page that the Commonwealth of Australia "does not approve or endorse those investments, or provide advice on their performance, and will not accept any liability whatsoever, whether for negligence or otherwise, for any loss you may suffer as a result of making a Complying Investment".
1184 Zheng Xu's evidence about whether she read this letter was not very satisfactory. She acknowledged receipt of the letter in her affidavit and gave unparticularised evidence that Jeanetta Jin told her that she was required to make the complying investment within 28 days (CB 10128). In cross-examination, when asked whether she read the letter at the time, her initial answer was (T 693):
I wouldn't be able to read the letter, and my agent told me what the letter was about, and for the details of the letter, I don't have a memory of.
1185 Later when asked about the 28-day time and whether an extension had been granted, Zheng Xu stated that she could not recall anything about an extension (T 713), and when asked again whether she had read the letter answered: "yes, I - I knew that" (T 714). On that evidence, I am only satisfied that Zheng Xu was aware that the letter had been received by her agent and that Jeanetta Jin had told her about some of the details in it.
1186 However, I reject her further affidavit evidence that she was under "immense time pressure" to make the complying investment (CB 10129). She did not say anything about being under time pressure in oral evidence-in-chief (T 654) and accepted in cross-examination that an extension of time was obtained for the making of her investments with Salter Brothers and VIMG until June 2016 (T 694). The objective fact is that the initial 28-day period was due to expire on 12 May 2016, and Zheng Xu did not sign the application form with Atlas Capital until 7 June 2016.
1187 On 2 June 2016, Zheng Xu and her husband met Jeanetta Jin at the office of Austar Suzhou in Shanghai. Of that meeting in a paragraph that was not excised from her affidavit, Zheng Xu said that during the meeting she told Jeanetta Jin in "words to the effect" that the safety of her investment was very important, to which Jeanetta Jin responded that the funds had been selected by lawyers and were very safe. None of that was put as an exact quote. In her oral evidence-in-chief, she said (T 654):
THE INTERPRETER: Yes. We discussed the fund and we learned from Ms Jin that this fund was compliant to the significant investor visa requirements. So there's a requirement of investment for a four-year period before we can get the residency visa. So we also understood that this fund was compliant - visa compliant, or CIV visa compliant. And when I get my permanent residency after four-years period, I can redeem my investment.
MS BENNETT: And which fund are you referring to? You said you discussed a fund. Which fund were you talking about?
THE INTERPRETER: Yes, we were given five funds to choose from, and we were also told that these funds had been chosen by the lawyers.
MS BENNETT: Yes.
THE INTERPRETER: Yes.
MS BENNETT: And so are you able to tell his Honour which particular fund you were discussing with Ms Jin at the meeting?
THE INTERPRETER: Yes. Because it happened too long ago, so a lot of things I can't remember exactly. But in the end, I chose two funds. One is Salter Brothers Fund.
THE WITNESS: VIMG.
MS BENNETT: And VIMG.
MS BENNETT: VIMG, yes.
MS BENNETT: Okay. And The Salter Brothers Fund, do you remember what that was called?
THE INTERPRETER: I am sorry, I can't remember.
MS BENNETT: And what did she tell you about the characteristics of the Salter Brothers Fund?
THE INTERPRETER: There are quite a few types, but I was interested in the hotel fund. Because in 2012, I visited Australia. At that time, the hotel industry was booming. So I thought that the prospect was good.
MS BENNETT: Can you tell me about - no I will leave that. Let's - when you said it was safe, why did you - well, she just said it was safe. What made you think it was a safe investment?
THE INTERPRETER: Because SIV Funds are kind of - well, promoted by the government and we thought that the - these funds were kind of linked with the government initiatives.
MS BENNETT: And how did you get that impression from this meeting?
THE INTERPRETER: So because I want to have this done, then I need to be trusting.
1188 What is clear from this evidence is that Zheng Xu was aware that an investment in at least some of the Salter Brothers funds related to the hotel industry in Australia. In contrast, in cross-examination (T 727) she said that when she made her initial investment, she did not know about several hotels operated by the Hotels Group and that she did not become aware "about the hotel investment until after I came to Australia" in September 2017. Ms Bennett submits that evidence is somewhat ambiguous, and I agree. The focus of the cross-examination at that point concerned the fund report for the Atlas Capital Fund K to 30 June 2016 (CB 6101). I find that the extent of Zheng Xu's knowledge when she made her application in June 2016 was limited to some understanding that there was a connection between the Atlas Capital funds and the Hotel Group.
1189 On 7 June 2016, Zheng Xu signed the application form to invest $3 million in the Atlas Capital Fund K (CB 10165). Apart from her signature, the handwriting on the form is not hers. In her affidavit she stated that Jeanetta Jin completed it. In cross-examination, she could not identify who completed the form (T 709) and when confronted with apparently contradictory evidence (T 710), at one point stated that she could not remember what had been said in her affidavit. When pressed further, she stated that Jeanetta Jin "was leading a team, and I'm not too sure whether the form was filled in by herself, or someone on this team. I didn't see that." She refused to make the obvious concession that she had simply overlooked the earlier statement in her affidavit (T 710-711). The form records that the main purpose of the compliant investment was to obtain the visa and "gain".
1190 Zheng Xu was next asked in cross-examination whether she understood at the time of signing the application form that she was entering into a contract. She did not directly answer that question and said that the agent "was just telling me that it was just a subscription form" (T 711). That evidence was not in her affidavit. Zheng Xu denied that she understood that she was applying to invest in a fund with other investors, the fact of which she only became aware in 2017 when Hannah Zhu told her that the fund was designed exclusively for Chinese investors as part of the SIV Program. The cross-examination continued during which Zheng Xu admitted that she was aware in June 2016 that there were a number of funds available for investment by SIV applicants in China and repeated her contention, which was not responsive to the question, that representatives of Austar Suzhou had assured her that the funds were "compliant and safe" (T 712).
1191 Eventually Zheng Xu admitted that she was aware that she was entering into a contract when she signed the application form, but did not understand at the time that the words immediately above her and signature were important (T 714). The paragraph was translated for her, which took less than one minute. She accepted that it contains various warnings about investment risks and when questioned as to whether she could have obtained a translation before signing the document answered (T 715):
Okay. We were thinking about that option, but the agent told me that the funds were safe and compliant, so we chose to trust in him - trust in them.
…
MR PETERS: And you agreed with me that you chose not to get a translation.
THE INTERPRETER: Because we trusted in the agent that these funds were safe and secure and compliant.
1192 Zheng Xu was next cross-examined about her knowledge of investment risk at the time. She did not obtain independent financial advice. Zheng Xu denied that when selecting Fund K, she sought a higher rate of investment then available in a term deposit. When asked the open question why she did not simply choose a bank deposit she answered in part that she "did not know about investment", did not have a good knowledge about government bonds, had travelled to Australia as a tourist and found the tourism industry was "very nice" and for that reason decided to invest in the Hotel Fund (T 722). Zheng Xu agreed that she understood at the time that there is no such thing as an investment without risk, but when she considered making the investment she "was not thinking too much about those risks" (T 723 - 724).
1193 I find that Zheng Xu was aware at the time that investments carry risk but was unconcerned about the degree of risk due to the assurances that she had received from Jeanetta Jin, or some other representative of Austar Suzhou, to the effect that an investment with Atlas Capital was safe, secure and compliant. As I explain later in these reasons, that finding is significant because those representations were not made on behalf of Salter Brothers and, in any event, because they were made in China, are incapable of founding any cause of action in this proceeding. There is no Ministerial consent, unlike in the Li Xu proceeding.
1194 On 8 June 2016, Zheng Xu received an email from Kevin Fan (in Mandarin and English) which acknowledged receipt of her investment application form and provided details for the bank transfer of funds (CB 10171).
1195 On 17 June 2016, Zheng Xu received a further email from Kevin Fan which attached, in English, a MAP Capital welcome letter, confirmed the placing of her investment in units in Fund K and provided an accompanying unit certificate (CB 10176). Zheng Xu responded and requested Kevin Fan to translate the attachments to the letter for her (CB 10463). When questioned further as to why she did not make a request of that type before signing the application form, Zheng Xu answered that she did not do so because: "I trusted in the agent as to this statement about funds being safe and compliant" (T 725). Kevin Fan provided the requested explanation in Mandarin on 18 June 2016 (CB 10183). On 21 June 2016, Zheng Xu received confirmation of the making of her investment of $2 million in the VIMG Property Fund.
1196 On 31 August 2016, Zheng Xu received an email from Kevin Fan which attached in Mandarin and English a report for Fund K to 30 June 2016 (CB 6101). That document clearly disclosed that the largest investment of Fund K was in the SB&G Hotel Group. Another attachment provided commentary about the Australian property market and in turn attached a report from the SB&G Hotel Group in Mandarin and English (CB 6105), which at a high level of analysis gave some detail about the trading performance of individual properties in the Hotel Group. In cross-examination Zheng Xu initially contended that she had not received this document. When it was pointed out to her that it was discovered by her, she accepted that it had been received and then expanded her answer in a non-responsive way to include the contention that she had not seen this document when making her initial investment which is obvious (T 727). Zheng Xu clearly did receive the document and had she read it, could not have misunderstood that the primary investment of Fund K was in the Hotel Group from 31 August 2016. She did not, however, request a redemption of her investment at that time.
1197 On 15 September 2016, Zheng Xu received correspondence from Atlas Capital in English and Mandarin which advised of the change of the name of the Trustee from MAP Capital to SBAM and which on the third page disclosed that a portion of her investment in Fund K was in the Hotel Group, with the additional benefit of three nights complimentary accommodation in one of the portfolio hotels (CB 6108).
1198 On 17 October 2016, Zheng Xu received from Dulcie Du an email (CB 10185) in Mandarin which attached the Atlas Capital Information Memorandum dated 1 February 2016 (in English) and the VIMG Property Fund Information Memorandum dated 1 February 2016 (in English and Mandarin) together with Atlas Capital Fund Performance Report (in English and Mandarin) (CB 10321). The first line of the email notes that the attachments "provide detailed explanations of the fund's structure" (CB 10458). In cross-examination, Zheng Xu stated that she did not read the VIMG Information Memorandum before making a $2 million investment in the VIMG Property Fund (T 720). Amongst various disclaimers and warnings about investment risk, the VIMG Investment Memorandum stated (CB 10295 - 10296):
[A]n investment in the fund should be viewed as a long-term investment and fixed term. It is illiquid. The unit holders must hold their investment for four-years.
…
The Constitution provides limited circumstances for an investor to transfer your Units. Please refer to the Constitution. The Trustee has an absolute discretion to refuse a transfer of the whole or any part of your holding of Units.
1199 On 31 March 2017, Zheng Xu received email correspondence (in English and Mandarin) from Paul Salter which attached fund reports and a distribution statement for her investments for the period to 31 December 2016 (CB 6114). The attachments were also provided in English and Mandarin. There is clear disclosure that the largest investment of Fund K is in the Hotel Group (CB 6115). Similarly worded investment reports were provided to her on 6 September 2017, 2 March 2018, 7 September 2018 and 1 April 2021. In cross-examination: Zheng Xu revealed that she never read these reports and was "only checking how much money was received in my bank account. To be honest, I did not understand the report" (T 735).
1200 Zheng Xu pleads that in late 2017 she met with Hannah Zhu who repeated the four-year investment representation to her. That meeting in fact occurred on 1 February 2018, which is confirmed by a meeting invitation (CB 29447). In evidence-in-chief, Zheng Xu said that the purpose of the meeting was to understand her investment and to discuss the performance of the fund (T 655). Her oral evidence about what was discussed was (T 656):
THE INTERPRETER: Okay. We - I wanted to understand the operational scope of the company and, in particular, the security or safety of my investment.
MS BENNETT: Yes. And what else did you want to know about the investment itself?
THE INTERPRETER: Yes, mostly safety.
MS BENNETT: Can you tell His Honour about the discussions you had about the safety of the fund?
THE INTERPRETER: Yes, I sought confirmation with regard to the funds and also, in particular, the period of investment, which is four-years, and also, after the four-years period, would I be able to redeem my investment.
MS BENNETT: And what was the answer to that inquiry?
THE INTERPRETER: The answer was affirmative.
MS BENNETT: And why was that important to you?
THE INTERPRETER: Because initially this is what we wanted to get, to obtain a visa and also to redeem the capital of our investment.
MS BENNETT: And why did you want to redeem the capital of your investment?
THE INTERPRETER: Because this would be - this would support our life in Australia.
1201 There is no mention in the WeChat messages (CB 29423), which directs one to the native Excel translated file) leading to this meeting between Zheng Xu and Hannah Zhu about the operation of the Hotel Group or the security or safety of the investment. The relevant messages begin on 30 January 2018 and the discussion is about Zheng Xu's tax file number. Zheng Xu stated that she had received her tax file number, and Hannah Zhu requested that it be provided to her so that certain forms could be updated. They agreed to meet on 1 February 2018 for that purpose. The WeChat discussion about fund performance and fund return did not commence until 2 February 2018, when Zheng Xu stated that she had looked at the earnings for "this time" and had noted that they were lower than for the same period in 2017. Hannah Zhu responded to the effect that the return of the fund cannot be examined only by reference to the dividends and consideration must also be given to the long term strategic direction of the fund capital growth. As an example, she referenced the significant increase in the valuation of the hotel at Potts Point and noted that renovations had commenced on the Crowne Plaza Hotel in Melbourne.
1202 In cross-examination, Zheng Xu accepted that what she "really wanted" to discuss was her tax file number (T 734). A little later Zheng Xu added: "And to learn about their company, by the way" (T 735). Her next series of answers confirmed that she had not read the Fund K reports as periodically provided to her, but did have knowledge of the returns as deposited to her bank account and:
MR PETERS: Do you recall that's something you wanted to discuss with Miss Zhu, at your meeting with her?
THE INTERPRETER: I was only wanting to find out about some basic information about the trading of a fund, and to also learn about the safety of the fund. That's what I am concerned about.
1203 Zheng Xu's attention was next directed to paragraph [60] of her affidavit, where her evidence was that for the first two years of her investment (i.e. to June 2018) she received a return and:
We did not discuss the liquidity of the SIV K Fund at this time because for the first two years, my focus was not on the operation of the SIV K Fund or any return, but on getting my visa. This was why I did not consider switching my investment to other more profitable funds, unlike other people who had invested in the SIV K Fund.
1204 Zheng Xu did not accept that evidence to be incorrect, contending that the issues were related (T 738). Her oral evidence continued that in February 2018, she "did not have an idea of any liquidity issue" (T 739). Her evidence when directly challenged about what was discussed was (T 741-742):
MR PETERS: Okay. Now, when you met with Ms Zhu, you say that Ms Zhu said to you that after the four-year period, you would be able to redeem your investment. Is that what she said in early 2018, before Chinese New Year?
THE INTERPRETER: Right. Because I asked her.
MR PETERS: Yes. I want to suggest to you redemption was not discussed between you and Ms Zhu at that meeting.
THE INTERPRETER: I'm sorry, you want to suggest that to her; right?
MR PETERS: Yes.
THE INTERPRETER: Yes, we did.
MR PETERS: I want to suggest you made no reference to redemption in your WeChat messages that we spoke about before lunch.
THE INTERPRETER: Right. Not in the WeChat history.
MR PETERS: All right. But you understand from me, I suggest redemption was not discussed at that meeting.
THE INTERPRETER: Based on what you have there, did you have that conclusion or thoughts?
MR PETERS: I'm not here to argue with you, Ms Xu; I'm just challenging you.
THE INTERPRETER: But in fact we did talk about it. Because that was - because we have - we met with each other more than once. We met with each other in the office on several occasions, and we have also met in person. We discussed the operation of the funds, the security, so the safety of the funds, and also some personal matters.
1205 In re-examination (T 771), Zheng Xu said:
At the end of 2017, before the Chinese New Year, I had an appointment with Ms Zhu, in her office. Okay. The purpose for that meeting was to find out something about their company, and also to confirm the safety of my principal. Ms Zhu's statement was quite positive that the fund was operating well, and the fund's prospect was also well.
1206 Hannah Zhu gave oral evidence-in-chief to the effect that the purpose of the meeting was to update her tax file number. As to what was discussed, her evidence was (T 1060):
So the meeting was scheduled at 10 am and agenda was to help Ms Xu to update her tax file number. But Ms Xu was running late, and when she arrived at office was nearly 11, and I just quickly met Ms Xu, help her complete her change of contact details form, and I keep the original form for the process and I made a copy, passed to Ms Xu, because I need to run for another meeting that's outside the office. Ms Xu knew that.
When we scheduled the meeting, I asked Ms Xu what time she will be arriving, she told me 10, and I told Ms Xu because in the afternoon I had another meeting outside the office and Ms Xu didn't tell me she want to discuss any further stuff or anything else. So the meeting was only scheduled for half hour, but actually it was quite quick. It only took about 10/15 minutes to complete the form.
1207 Hannah Zhu denied that there was any discussion with Zheng Xu about her investment at that meeting (T 1061). When Hannah Zhu was cross examined about his evidence (from T 1246), she initially accepted that there was a discussion the effect of which was that Zheng Xu requested confirmation that her investment was safe, which Hannah Zhu provided. Her evidence was:
MS BENNETT: Sorry. Now, can I suggest to you that, at this meeting, that she asked you for some confirmation that the fund in which she had invested was safe. Do you agree with that?
THE WITNESS: Yes, I agree.
MS BENNETT: Yes. And she - you assured her that it was safe.
THE WITNESS: Yes, I agree with you.
MS BENNETT: And she asked for your confirmation that, after a four-year investment period, she would be able to redeem her investment. Do you accept that?
THE WITNESS: We didn't have this conversation.
MS BENNETT: Well, it was common, wasn't it, for significant investors to talk about the four-year horizon, wasn't it?
THE WITNESS: I would say, if Ms Xu had such queries, she should ask Rob and myself at the first meeting in July 2017.
MS BENNETT: I will return to that. But, this meeting, she did ask you about that and she asked you if she could redeem her - and you told her she could redeem her investment after four-years. What do you say to that?
THE WITNESS: She did not, and Ms Xu knew I'm in a junior position. She would like to discuss her investment with a senior director level. So if she had such queries, she would let me know before the meeting and I will invite a senior staff come to the meeting with me and, also, I will book a meeting room for a longer period of the discussion. Not half an hour.
MS BENNETT: The matter of the safety of the fund is not a controversial matter for you, was it?
THE WITNESS: Sorry. I will just clarify controversial.
THE INTERPRETER: What is not controversial?
MS BENNETT: Something you - - -
THE WITNESS: Can you repeat your question again?
MS BENNETT: You considered the investment to be safe, didn't you?
THE WITNESS: From my knowledge, if an investor asks me her investment is safe, I would ask more questions, like, what it's referring to. What does she mean by the safe.
MS BENNETT: Well, I suggest to you that that's not what you did on this occasion. Now, can I take you to one-three - - -
HIS HONOUR: Well, there was no answer to that question.
MS BENNETT: Sorry, your Honour.
HIS HONOUR: Do you agree with that?
THE WITNESS: Disagree. We didn't have this conversation.
MS BENNETT: Well, have a look at 137 in the WeChats there. So this picks up now 2 February, and this Ms Xu saying:
Dear - I have had a look and the earnings this time is lower than the same period last year.
Do you see that?
THE WITNESS: Yes.
MS BENNETT: So can I suggest to you that you've had a discussion about the fund on the 1 February and then she has gone back and looked at her documents and texted you about it on 2 February. Do you agree with that?
THE WITNESS: I disagree. So if we had a discussion, that means she shouldn't ask me on the second day. This query should be addressed.
1208 Hannah Zhu made no reference to this meeting in her affidavit. She responded to the affidavit of Zheng Xu made on 24 March 2024, where it was contended that there was a meeting in late 2017. Hannah Zhu stated that she had no record of that meeting but then denied "ever saying" to Zheng Xu words to the effect that her investment was "safe and legitimate" or that she could redeem her investment at the end of the four-year period. She went further and said that Zheng Xu did not ask her about redemption until 2020. Hannah Zhu should not be criticised for not referencing this meeting in her affidavit, for the reason that it was not until a late amendment to the pleading on 6 April 2024, that this contention was inserted, and it was not until Zheng Xu gave oral evidence that she corrected the date and the year in which the meeting had occurred. Hannah Zhu made her affidavit on 10 May 2024 and Zheng Xu did not file a correcting affidavit contemporaneously with the date of her amendment.
1209 I am not satisfied that Zheng Xu's evidence about the meeting on 1 February 2018 was sufficiently precise to enable me to be satisfied as to what was discussed and more particularly what was said by Hannah Zhu. The pleaded contention is that in late 2017, Hannah Zhu "repeated and reinforced" the Four-Year Investment Representation. That is, the SIV Funds were suitable for investments of four-years duration, may be suitable for long-term (at least four-years) investors who were seeking, relevantly, an actively managed portfolio. The evidence of Zheng Xu does not match that representation as either repeated or reinforced. Her pleaded case makes no reference to any discussion about the safety of her investment. The pleading wrongly dates the meeting, which error was repeated in Zheng Xu's affidavit. The contemporaneous documents that led to the meeting, the WeChat exchanges, reveal only that its purpose was concerned with Zheng Xu's tax file number and the necessity to record it within the information systems of Salter Brothers. If the purpose of the meeting was to seek information about the ability to redeem her investment at the end of the four-year period, then logically that topic would also have been mentioned by her in the WeChat exchanges.
1210 Her evidence-in-chief was that she was mostly concerned about the safety of her investment and in introducing what she sought by way of "confirmation" Zheng Xu rolled up the concepts of safety, the four-year investment and the ability to redeem into a single statement. When asked what answer was given to that inquiry, she simply said that it was "affirmative", which begs the question, affirmative as to what? If there was some form of affirmation from Hannah Zhu, Zheng Xu failed to give evidence as to what proposition was affirmed and in what way. Her evidence was vague and unpersuasive.
1211 There is no mention of this meeting, or of the representation attributed to Hannah Zhu, in the detailed letter that Zheng Xu sent to Salter Brothers on 1 February 2022 which contained 72 questions and required a response by 14 February 2022 (CB 10390). Nor is there any mention of the meeting and the representations in the earlier versions of Zheng Xu's pleadings - her Concise Statement of 15 March 2022 or her Narrative Statement or the amendments thereto of 6 June 2022 and April 2023. The first mention of this meeting, albeit wrongly dated, was in Zheng Xu's affidavit of March 2024. The failure to mention a meeting that assumed importance at the trial at an earlier time is telling.
1212 There is further relevant evidence that Zheng Xu gave in cross-examination. She was questioned about the focus of her attention on her investments in 2018 and 2019. Her evidence was (T 743):
MR PETERS: Ms Xu, your focus throughout 2018 and 2019 was about the performance - the earnings and profits from this hotel fund that you've invested in.
THE INTERPRETER: My real focus was on the principal of my investment. My - if the hotel fund operated normally my principal should be safe.
MR PETERS: All right. Well, look at - before I come to the China deck - look at entry 267, 268, 269 and 270 of your WeChat history. This is February 19. Nowhere in there do you talk about redemption, do you?
THE INTERPRETER: There was nothing about redemption here.
MR PETERS: No. You're looking about - asking about dividends and date of distribution, aren't you?
THE INTERPRETER: Yes.
MR PETERS: That's correct, isn't it? And nowhere, up until 2020, do you ask her about - in the WeChats - ask Ms Zhu about redemptions.
THE INTERPRETER: It was because my investment was not material.
MR PETERS: Don't tell me why it was because, I just - I'm going to cut you off because it's non-responsive. I asked you - I put to you; nowhere in your WeChats in 2018 and 2019 do you talk about redemption. Do you agree, or disagree?
THE INTERPRETER: I agree. We talked in person.
1213 It is implausible that a matter that was so central to Zheng Xu's concern about her investment in 2018 and 2019, about which on her case, a representation was repeated and reinforced to her at a meeting with Hannah Zhu in February 2018, is not mentioned by her in the contemporaneous WeChat exchanges of which there are hundreds commencing on 29 September 2017 and concluding with entry 429 on 12 September 2019.
1214 Although Hannah Zhu accepted that there was a discussion about the safety of Zheng Xu's investment, she denied that there was any discussion about the ability to redeem the investment at the conclusion of the four-year term. The issue of the safety of the investment is not one that arises on the pleadings. I am not persuaded in accordance with the evidence of Zheng Xu, and I am actually persuaded in accordance with the evidence of Hannah Zhu, that the repetition and reinforcement discussion did not take place at the meeting on 1 February 2018.
1215 On 16 May 2018, during a WeChat exchange, Hannah Zhu provided to Zheng Xu, in Mandarin and English, the SB&G Group New Opportunities document dated May 2018. On the second page, there is an important notice about investment risk, including (CB 6150):
All investments are subject to risks and no guarantee or assurance is given by Salter Brothers AM or any of its related bodies corporate or the respective officers or representatives in relation to the performance of the investment opportunities or that any specific rate of return will be achieved or that there will be no loss of capital invested.
1216 Zheng Xu acknowledged in evidence that she received this document but stated: "I didn't look at it, because I don't - I didn't understand" (T 742). Nonetheless, she confirmed that at the time she was aware that Fund K invested in the Hotel Group.
1217 Although not pleaded as a separate meeting, Zheng Xu gave oral evidence-in-chief of a meeting with Hannah Zhu and Kevin Fan in early 2019 at the office of Salter Brothers in Melbourne. Her evidence was (T 656 - 658):
MS BENNETT: Can you tell his Honour what you remember discussing?
THE INTERPRETER: Because before the meeting, I learned from my accountant that the interest - or dividend or interest was taken out of the capital. That made me nervous about the safety of my capital. And I wanted to have an appointment with someone who can speak Mandarin and who is more senior than Hannah Zhu so that I can discuss these matters with them, and they told me that there was no problem with the operation of the fund.
MS BENNETT: And so who was it that told you that?
THE INTERPRETER: Kevin Fan.
MS BENNETT: And when did Kevin Fan tell you that?
THE INTERPRETER: At the meeting.
MS BENNETT: And who else was present at the meeting?
THE INTERPRETER: And Hannah Zhu, so three of us.
MS BENNETT: And you - what language were you all three speaking?
THE INTERPRETER: Chinese.
MS BENNETT: And did you discuss - you said earlier that - well, sorry. Let me go back. What did Kevin Fan tell you about the operation of K Fund?
THE INTERPRETER: He used quite a lot of jargon, so I do not understand much of it, but I understood that what he said was that the fund was safe.
MS BENNETT: And what was the main area of your concern when you were having that conversation about the safety of the fund?
THE INTERPRETER: The depreciation of capital.
MS BENNETT: And what were your plans for the fund at that point?
THE INTERPRETER: So in four-years' time I could redeem my capital in a safe way.
MS BENNETT: And four-years from when?
THE INTERPRETER: From confirmation of my investment.
MS BENNETT: And when was that?
THE INTERPRETER: Roughly in June or July of 2017, when a government document confirmed my application for visa.
MS BENNETT: And what was the response to that discussion from Kevin Fan?
THE INTERPRETER: Their response to me was that the operation of the fund and the safety is okay - was okay and was safe as well.
MS BENNETT: And so what did you understand that meant for your redemption plans?
THE INTERPRETER: So I thought in four-years' time I could get my capital back in a safe way.
MS BENNETT: And so roughly when were you planning to do that?
THE INTERPRETER: So when I have met the requirement of the timing of investment set by the government.
1218 Kevin Fan could not recall this meeting, and Hannah Zhu denies that she was in attendance. In cross-examination, Zheng Xu accepted that it was possible that Hannah Zhu was not at the meeting, stating that she met twice with Kevin Fan and could not recall the occasion on which Hannah Zhu was present (T 749). When questioned one day after having given her evidence-in-chief about this meeting, and by reference to the transcript, Zheng Xu said that she could not recall what she had said in evidence and then stated that Kevin Fan "briefed me on the management of the fund - of the company, and also the safety of the fund". When questioned further, her evidence was (T 755):
MR PETERS: Look at line 27. You say, "he used quite a lot of jargon, so I do not understand much of it", but I understood that what he said was that the fund was safe.
THE INTERPRETER: Yes. He told me not to worry.
MR PETERS: That's what he said, is it?
THE INTERPRETER: Yes.
1219 Once again, I am not satisfied that Zheng Xu's evidence was given with sufficient precision to enable me to find that there was a discussion between her, Kevin Fan and perhaps also Hannah Zhu in early 2019, at which time a statement was made to her to the effect that she would be able to redeem her investment after four-years. Zheng Xu's evidence elided between being told that there was "no problem with the operation of the fund", the use of jargon which was not fully comprehensible to her and her understanding that her investment capital was safe and consistent with her redemption plan. I am not able to find as a fact that there was a discussion during which Kevin Fan and or Hannah Zhu made a representation that redemption would be met or available after four-years, as distinct from an understanding to that effect which Zheng Xu formed based on jargon that she did not understand.
1220 Further, I am satisfied in accordance with the evidence of Hannah Zhu that she was not at the meeting, and I reject the evidence of Zheng Xu to the contrary. The repetition and reinforcement case is not made out. That conclusion considerably undermines the credibility of Zheng Xu's account.
1221 That leaves for consideration, the IM Representations case. There is nothing in these findings to relevantly distinguish my reasons in the Jingyi Li proceeding concerning the IM Representations case. Considered in context, the February 2016 Information Memorandum did not convey the Four-Year Investment Representation, the Investment Assessment Representation, the Structured Investment Representation or the Diversification Representation. However, it did convey the Conflict Representation.