Yang v American International Assurance Company

FACTS 5 Mr Yang arrived in Australia from China in March 1989. He had been educated in China to a secondary school level and had undertaken a variety of occupations. On arrival in Australia he undertook an English language course, worked as a general hand at a supermarket and worked as a part time clarinet teacher and Mandarin tutor. For a period Mr Yang was the President of the Chinese Student's Human Rights Organisation in Sydney. 6 In November 1996 Mr Yang read an AIA advertisement in a Chinese daily newspaper which sought expressions of interest from persons wishing to be engaged as insurance agents with AIA. In response to the advertisement Mr Yang telephoned AIA and spoke to Ms Aileen Chen ('Ms Chen') who was then an Agency Organiser with AIA. 7 Since Mr Yang has a very limited understanding of English all conversations in which Mr Yang participated, unless otherwise stated, were conducted in Mandarin. 8 Mr Yang claims that in the initial telephone conversation with AIA, Ms Chen recognised his name and spoke of his reputation, asking 'are you the especially famous Chinese student leader Jun Yang?'. Ms Chen then allegedly said that he would easily succeed in AIA and that he only needed to work for two years after which he would be able to retire and have a secure income for life. Ms Chen denies making such statements. 9 Ms Chen offered Mr Yang an interview. He duly attended the offices of AIA at 220 George Street Sydney in November 1996 where he was interviewed by Ms Chen and Kwai Ying Lin ('Ms Lin'), the then New South Wales State Manager of AIA. Mr Yang claims he was introduced to Amy Li ('Ms Li'), an AIA Agency Organiser supervised by Ms Chen, who was present at the meeting. Mr Yang says that he was handed brochures published by AIA entitled 'A Career for Life' and 'Security for Life'. 10 Mr Yang claims that during such interview various representations were made to him to the following effect: if he became an agent with AIA he would only need to work for about two years then he would have a secure income for life; AIA was a 'big family' that takes care of its members; he could build up his business agency to be his own and it could be transferred, sold or closed; there would be commissions and financial benefits which would be protected for his lifetime and the commission was guaranteed for the duration of the policies he sold; he would need to only work for about three years to be financially secure and financially free for his lifetime; he would be his own 'boss'; AIA would take full responsibility for his conduct even if he did something wrong and he would have no need to be scared or concerned once he signed the agreement because of this protection; that 'an agency career is guaranteed to last for a lifetime'; and that 'your income will be secured for life'. 11 Ms Chen and Ms Lin both deny the making of any statements as alleged. Further, Ms Li said she was not present at the meeting. 12 At the conclusion of the meeting Mr Yang was introduced to Kenneth Juneau ('Mr Juneau') who was the National Director of Agencies for AIA Australia. Mr Yang claimed that Mr Juneau said the following words in English: Welcome Mr Yang. I have heard about you. You are a very famous leader of Chinese Students. We feel honoured that you are here to work with AIA. You are like a tiger coming down the mountain. Working at AIA, you will be successful and make a lot of money. I believe you will be the best agent and a key person in AIA. There is now a training course. You should attend the training course immediately so that you can begin to sell AIA's products and earn big money. Only this insurance company AIA will in very short time, allow you to be financially free with secured lifetime income.

13 Mr Juneau denies that he made any statements to Mr Yang to the effect that Mr Yang was 'like a tiger coming down the mountain' or any similar words. He also denies he said that the AIA agency business was a guaranteed lifetime career; that the income would be guaranteed for life; that Mr Yang could work hard for three to five years then enjoy unlimited income for the rest of his life; that the business could be sold back to AIA or transferred or sold to anyone he chose; or that AIA guaranteed his agency business was a career for the whole of his life. Mr Juneau acknowledges that he did say that an AIA agency business was a career that could build throughout an agent's life; that the income potential was unlimited depending upon how hard an agent was willing to work; and that an agent could be their own boss and manage their own business. 14 Mr Juneau says that the term 'security for life' was used in the context of the benefits that AIA offers to its clients through its products, not what is offered by AIA to its policy sales agents. Mr Juneau has referred to an AIA marketing document entitled 'Security for Life' which is provided for clients and which contains the words: AIA has the strength and international resources to provide "security for life" to its much valued customers.

15 Similarly Mr Juneau referred to an AIA brochure which is provided to agents which incorporates the words, 'Your products are for a lifetime. Your relationship with clients is one for life'. However such brochure did not suggest that an agency career or income is guaranteed for the lifetime of the agents. 16 In November 1996 Mr Yang attended a training course conducted by AIA to qualify him for appointment as an AIA agent. Mr Yang claims statements were made concerning the lifestyle which an agent could expect. One agent allegedly spoke of his lavish lifestyle in Hong Kong. He claims statements were made similar to those made during his interviews with Ms Chen and Ms Lin, namely that appointment as an agent was a 'lifelong course'; 'you just work hard for 3 to 5 years and you will enjoy a comfortable and extravagant lifestyle for the rest of your life'; 'AIA is a big family'; 'we will own our own business'; and 'AIA will support us from the beginning to the end, which is a guarantee for the whole life because it's a big company'.

Signing of the Agreement 17 In December 1996 Mr Yang was informed that he had passed the requisite exams and was offered appointment as an agent. On 23 December 1996 Mr Yang attended at the offices of AIA where he signed an agency agreement in the presence of Ms Chen and Ms Lin. Mr Yang claims that he told Ms Chen that he was unable to understand the agreement because it was in English and accordingly asked her to explain the agreement to him.Mr Yang claims Ms Chen told him not to worry about the agency agreement because it was a standard contract which complied with all relevant laws. Mr Yang alleges that he then asked to take the agreement home because his friend was a lawyer who could explain the agreement to him. Mr Yang claims that Ms Chen replied that AIA would not deceive him and that the agreement could only be signed at AIA's offices. 18 Mr Yang alleges that Ms Chen then drew his attention to the back of her AIA business card which stated in print: The insurance adviser is authorised to sell all AIA products. AIA takes full responsibility for the adviser's conduct and the adviser's primary duty is to AIA. The remuneration received by the agent is commission on the sale of a product.

19 Mr Yang claims that Ms Chen then said: See, the back of every one of AIA's business cards states 'AIA takes full responsibility for the adviser's conduct'. If you have any problem or any complaint from any customer, or any legal problem, AIA will resolve and take care of them for you. What are you afraid of?! 20 Mr Yang claims that Ms Lin made statements to the effect that 'if you did anything wrong, you don't need to be responsible…Once you sign the Agreement, you will have secure lifetime income from and career with AIA'. Mr Yang says that he relied upon the representations of Ms Chen and Ms Lin as constituting an indemnity granted by AIA in respect of any act in which he engaged as an agent of AIA. 21 During the hearing counsel for the applicant was directed to specify the representation regarding indemnity that was alleged to have been made during the conversation between Mr Yang, Ms Chen and Ms Lin at the meeting of 23 December 1996 and in writing on the back of Ms Chen's business card. The alleged representation was formulated as follows: Representation that in the event of there being a dispute between the agent and AIA or an allegation of misconduct or breach of the agency agreement by the agent that the respondent would assume liability for the agent's conduct and not act so as to terminate the agency agreement because of that breach or alleged misconduct.

22 Both Ms Chen and Ms Lin deny making any of the statements attributed to them by Mr Yang. Ms Chen said that the alleged statement relating to the security of engagement would have made a significant impression upon her given the circumstance that her husband had been terminated as an agent of AIA only three months prior to the meeting of 23 December 1996 for misleading a client. 23 Ms Chen agrees that she informed Mr Yang that the agency agreement was a standard contract signed by all agents which defined their relationship with AIA. Ms Chen also says that she warned Mr Yang that he was not to mislead any clients otherwise AIA would terminate the agency agreement. Ms Chen testified that it was her invariable practice to say to new recruits words to the effect: An agency career with AIA can be very rewarding as you have unlimited income potential. You must, however, be very careful to comply with the rules and laws and to never mislead your clients, otherwise your agency will be terminated immediately by AIA.

24 Ms Chen has no recollection of being asked by Mr Yang if he could take the contract home. She says that her practice was to allow a prospective agent to take a contract home although she always made them aware that the standard terms of the agreement were non-negotiable. 25 Mr Yang alleges that Ms Lin told him that 'the business with AIA will be your own, owned by you… you can do anything you want with it'. Ms Lin denies such allegations. She also denies allegations to the effect that the commission and other financial benefits were guaranteed for the duration of the policies which he sold. 26 Mr Yang also claims that Ms Lin said at the meeting: AIA is like a large family. AIA will care for and provide support to each and every one of its member agents. Look at how good my English is. I didn't even read the Agency Agreement when I signed it too. AIA is the largest insurance company in the world. You don't need to read the Agency Agreement. AIA's standard Agency Agreement will protect the best interests of all agents of AIA. All the AIA's agents signed the same Agent Agreement. AIA will not trick you or take unfair advantage of you. There is nothing in the Agent Agreement that you need to be concerned with.

27 Ms Lin denies such allegations. She believes she may have said 'AIA is like a large family. AIA will care for and provide support to each and every one of its member agents', however she has no recollection of making any of the other remarks attributed to her by Mr Yang. 28 Mr Yang claims that he signed the agency agreement relying upon the representations he alleges were made to him. He took a copy of the agreement home with him which he kept for the ensuing years of his engagement. 29 Mr Yang's wife, Jie Wu ('Ms Wu'), had been a student in accounting at TAFE and worked part-time in an accountancy role until March 1997 when she ceased her full time employment to assist her husband in his agency business. She speaks Mandarin and English. Ms Wu refers to a conversation that took place at her home in Ultimo in or about January 1997. In this conversation she claims that Ms Li made certain statements concerning the income that an agent might make with AIA and the security that was offered. 30 Ms Li says that she visited Mr Yang and Ms Wu's apartment in Ultimo on one occasion in 1997 but no business was discussed on that occasion. She denies that she ever had a conversation as alleged by Ms Wu. 31 Ms Wu also attended an insurance agency training course at the office of AIA in or about March 1997 where she claims that Ms Lin made statements to her concerning the income that might be obtained from working as an agent for AIA. Ms Wu claims that such statements repeated the words 'guaranteed' and 'secure for a lifetime' in the context of an agency income. 32 Ms Lin does not recall having the conversation with Ms Wu and claims that if the conversation did occur, she would not have used the terms 'guaranteed' or 'secure for a lifetime' in relation to the income of an agent. 33 Ms Wu also alleges that she and Ms Lin had a conversation in 1997 at the offices of AIA in which the issue of the transferability of Mr Yang's insurance accounts were raised. Ms Wu claims that she said: So do you mean if one day Jun Yang misleads some clients, and he is unwilling or unable to work in his AIA agency business he will be able to transfer all his AIA business to me?

Ms Lin allegedly responded 'Yes. That's why Jun Yang's and your AIA agency business is secured for life'. Ms Wu says that Ms Lin allegedly stated that the business could be sold or transferred, that nobody could take it, and that 'this is why your AIA agency business is for life'. Ms Lin denies that any such conversation occurred. 34 Diana Huang ('Ms Huang') had been an agent with AIA from 1999 to 2000. Ms Huang claimed that in the course of her training in 1999 Mr Juneau stated words to the effect: At AIA you are your own boss. You can make as much money as you want by hard work. You can build up your business and your team as if it is your own business.

35 Mr Juneau does not dispute that he made such statements or words to that effect at training meetings. However he denies ever representing verbally or in writing that an agency career, an agency income, or both, were guaranteed for life. 36 Yong Li Zhang ('Mr Zhang') was an agent with AIA from approximately April 1998 to December 1998. He claimed that during the course of a training meeting in 1998 Ms Lin said that the AIA agency business was a career for life and guaranteed to be so. Ms Lin denies that she would have made any statements to any agent to the effect of those statements alleged in Mr Zhang's affidavit.

Subsequent events 37 Throughout 1997 Mr Yang became a successful sales agent. On 28 August 1998 Mr Yang incorporated Aulian to operate his agency business. He was the sole director and he and his wife were the only two shareholders. 38 Agents of AIA were entitled to receive commissions on the sale of policies and were also entitled to receive benefits in the form of bonuses, known as performance ratio bonuses. Upon termination of an agent, such entitlements were transferred to that agent's supervisor. Mr Yang became aware of agents who were terminated for failing to achieve sales targets. He also became aware that in those circumstances the agent's business passed to their supervisor. As a supervisor, Aulian and Mr Yang became the beneficiary of some of the business of terminated agents. 39 In October 1998 Mr Yang met with Ms Lin for the purpose of entering into a new agency agreement by executing on behalf of Aulian both an Agency Agreement no. 2T7510945 appointing Aulian as an agent of AIA and an Agency Supervisor's Agreement no. 2S7511191. By Deed of Guarantee dated 28 October 1998 Mr Yang and Ms Wu guaranteed the performance of Aulian of its obligations under the agency agreement. 40 Mr Yang alleges that he was told by Ms Lin at the time of signing the new agency agreement that it was 'just like the agency contract. We are a big company. You can trust us'. He said that he asked that his wife who was at the meeting be allowed to see the agreement. Ms Lin allegedly said 'you don't need to look at it. Just sign it', and accordingly both Mr Yang and Ms Wu signed the documents. Mr Yang claims that he asked to take the documents home to examine them, but such request was refused. Ms Lin denies that she refused him such opportunity and denies the words attributed to her by Mr Yang. 41 On 7 June 2000 Mr Yang registered the trading name 'Jun Yang'. On 26 June 2000 he applied to AIA to transfer the clients and responsibilities of Aulian to 'Jun Yang'. On 29 June 2000 Ms Lin signed a memorandum acknowledging the transfer of the business previously conducted by Aulian to 'Jun Yang'. On 1 July 2000 a Deed of Assignment was signed by Aulian and 'Jun Yang' giving effect to the assignment.

Mr Xu's policies 42 Mr Yang met Wen Jin Xu ('Mr Xu') in 1999. Mr Xu was apparently a wealthy businessman who owned a mango farm in Darwin. In October 1999 Mr Yang arranged for the purchase by Mr Xu of two policies of life insurance. One was known as a 'Golden Life' Policy No. 10632098 and the other was known as a 'Life Security' Policy No. 10632104 (together, 'Mr Xu's policies'). Mr Xu's policies required renewal premiums of $11,415.01 to be paid annually on 17 October, or within a period of grace of 30 days thereafter. 43 Mr Yang then participated in some unspecified business ventures with Mr Xu during 2000. Mr Yang believed that an association with Mr Xu would lead to many opportunities to increase sales of AIA policies through Mr Xu's business associates. 44 Mr Xu's policies became due for renewal on 17 October 2000. On 28 October 2000 Mr Yang issued receipts to Mr Xu for the amount of the premiums due on Mr Xu's policies to renew the policies for a further 12 months. Such receipts record that the payments of the due premiums of $7,505.01 and $3,910 were made in cash on that day. However, no premiums were received by AIA in respect of the payments of cash acknowledged by the receipts during the ensuing 12 months. 45 Mr Xu was under the impression that his policies were current until 17 October 2001, but understood that a period of grace applied before the next premium was payable. He accordingly believed his policies would expire on or about 18 November 2001. Mr Xu was puzzled because he had not received any renewal notices by this date and accordingly had his wife, Ms Hong Chen, telephone AIA to enquire why he had not received such notices. Ms Hong Chen was then informed by AIA that the policies had lapsed on 17 November 2000 because of non-payment of the premiums which were due on 17 October 2000. 46 On 5 December 2001 Mr Xu, who does not understand English, had his sister-in-law write a letter of complaint to AIA demanding an explanation for the lapse of his policies. The letter stated that Mr Xu had paid the premiums due in October 2000 to Mr Yang in cash. Copies of the receipts issued to him by Mr Yang dated 28 October 2000 which acknowledged the cash payments accompanied the letter. 47 In his letter Mr Xu demanded a waiver of premium for the ensuing year. When this request was declined by AIA hecomplained to the Life Insurance Complaints Service Limited and asked to have his insurance plans with AIA cancelled and requested that he receive a full refund of premiums paid to AIA. AIA subsequently offered to reinstate the policies. Although Mr Xu alleged that all records of his policies had been removed from AIA's computer database, such allegation was without foundation. 48 On the afternoon of the same day as Mr Xu lodged his complaint (5 December 2001), Mr Yang attended at the AIA cashier's office and made payment of the premiums which were owing as at October 2000 in respect of Mr Xu's policies. Mr Yang claims that when he did so, the clerk altered the carbon copy of the receipt to record the date of the year of receipt as 2000 instead of 2001. At the time he made payment, Mr Yang applied for reinstatement of Mr Xu's policies, and as a reason for such reinstatement told the clerk that Mr Xu had been overseas and was very anxious to have the policies reinstated. Mr Yang acknowledges that his statement to the clerk was false.

Mr Yang's explanation 49 Mr Yang admits issuing the receipts to Mr Xu but denies receiving any cash from him. As detailed hereunder, Mr Yang offers an explanation for the issue of the receipts and acknowledges that no monies were paid by him to AIA in respect of such premiums until 5 December 2001. He claimed that he issued the receipts to enable Mr Xu to submit them to a lender for the purpose of obtaining a loan. He claimed that he did so because it would be to his personal financial advantage to be on good terms with Mr Xu in the hope of achieving business referrals from him. 50 Ms Wu says her husband told her that he had issued the receipts because Mr Xu needed to obtain some loans and that 'he [Mr Xu] needs more documents to increase his credit. So he has asked for a receipt and he will pay it later'. Ms Wu says she questioned her husband about the arrangement. Her husband said: Xu Wen Jin has said that if I help him he will help me to develop the business in China and in Darwin where he has invested one million dollars in a mango farm. He knows a lot of business persons in Darwin. He would introduce me to them and ask them to buy insurance policies from AIA.

51 Mr Xu was called as a witness by the applicant and gave his evidence by telephone from China. Contrary to his claims made to AIA and the Life Insurance Complaints Service Limited, Mr Xu denied having paid cash to Mr Yang for the renewal of his policies in October 2000. Mr Xu also denied that he had wished to use the two receipts to apply for any loans, and claimed that he never did so. Rather, he claimed that he requested Mr Yang to issue the receipts because he was going to China and asked Mr Yang to make payment of the premiums and that he expected to be able to pay AIA 'in three to four months in early 2001'. 52 Mr Xu also claimed that the receipts were issued to him prior to October 2000, and that payment for premiums would be made by Mr Yang to effect a discharge of monies then owing by Mr Yang to Mr Xu. Alternatively Mr Xu claimed that if the premium was paid by Mr Yang, Mr Xu would owe Mr Yang the amount of the premium. Each of such claims are inconsistent with the claims of Mr Yang. 53 Ms Hong Chen deposed that her husband informed her that 'some time before October' 2000 he had already asked Mr Yang to pay the premiums and then he (Mr Xu) would repay Mr Yang later. She deposed that 'around October 2000' Mr Xu handed her the originals of the receipts. 54 Sui Hobbs ('Ms Hobbs'), who became acquainted with Mr Yang in 1999, provided evidence of a conversation between Mr Yang and Mr Xu on an occasion in 2000 at the Ultimo home of another acquaintance. Ms Hobbs claims that Mr Yang reminded Mr Xu that he had not paid his owed AIA insurance product premiums, to which Mr Xu replied 'We are good brothers. You lent the money to me first and pay on behalf first. I will pay you back later'. Ms Hobbs claims she then saw Mr Yang write the receipt and tear it out of his receipt book and give it to Mr Xu. Accordingly on her version of events the receipts were issued after the due date for renewal on the basis that Mr Yang would make the payment to AIA on behalf of Mr Xu and that Mr Xu would then be indebted to Mr Yang.

Alleged authorisation for issue of Mr Xu's receipts 55 In August 2007 (shortly before the hearing of these proceedings) Mr Yang alleged for the first time that in 2000 he had approached Ms Lin in her office and asked her whether he could issue the receipts without payment of the premiums. He claims that Ms Lin authorised him to do so. Mr Yang claims that in his conversation with Ms Lin he said that the receipts were needed for Mr Xu's 'tax or a loan, something'. 56 Mr Yang's claim of Ms Lin providing authority to issue false receipts is supported by the testimony of Mr Zhang sworn 15 August 2007. Mr Zhang claimed that in or about October 2000 he drove from Canberra to Sydney and had a meeting with Ms Lin. Mr Zhang said that he discussed outstanding commissions which he said were owing to him by AIA in the office of Ms Lin. Whilst he was in her office he claimed that Mr Yang entered the room and said to Ms Lin: Mr Xu wants AIA to provide a receipt to him first without paying for the relevant insurance product premium first. He wants the receipt for loan purposes. He said that he will pay AIA the relevant premium later. Is that ok with AIA?

In response Mr Zhang claimed that Ms Lin nodded her head and said words to the effect of 'okay'. Mr Zhang claimed that he remembered that the name of the client was Xu as it happened to be the same name as one of his old school friends. 57 Ms Lin denies that any such meeting occurred, and denies that any such authority would ever have been given.

Termination of Agency 58 Between December 2001 and January 2002 an investigation was conducted by AIA into the non-receipt by it of Mr Xu's premiums. As a result of this investigation Mr Yang resigned from AIA on 30 January 2002. Mr Yang's version of the events relating to the issue of the receipts leading up to and occurring on 30 January 2002 differs entirely from those of the witnesses of AIA. 59 AIA's records show that meetings with Mr Yang occurred on 7, 14, 22 and 30 January 2002. Mr Yang's affidavits originally referred to only one meeting, held on 30 January 2002, and made no reference to the meetings of 7, 14 and 22 January 2002. However during the course of oral evidence and in his affidavit in reply he admitted attending the meetings of 7 and 14 January 2002. Mr Yang denied that any meeting was held on 22 January 2002. 60 The records of AIA establish that the first meeting with Mr Yang concerning Mr Xu's policies was held on 7 January 2002 in the office of Martin Chinnery ('Mr Chinnery'), the New South Wales State Manager for AIA. At such meeting the complaint of Mr Xu was raised directly with Mr Yang. Mr Yang provided an explanation that he gave the receipts to Mr Xu without payment of monies on the understanding that Mr Xu would follow up with payment. Mr Yang did not suggest at that time that Ms Lin authorised the issue of the receipts to Mr Xu. The meeting took place in the presence of Dennis Lee ('Mr Lee'), the George Street Office Branch Manager of AIA, who translated from Mandarin to English. 61 Mr Chinnery deposed that a second meeting occurred in his office on 14 January 2002 between Mr Yang, Mr Lee and himself. To Mr Chinnery's best recollection he asked Mr Yang to provide a written explanation of the events that precipitated the 14 January 2002 meeting. Mr Chinnery estimated that 'within an hour or two' Mr Yang had provided Mr Chinnery with the written report. 62 Mr Chinnery deposed that a further meeting took place between Mr Yang, Mr Lee and himself on 22 January 2002. At this meeting the seriousness of Mr Xu's complaint was again discussed. According to the diary note made of that meeting, Mr Yang acknowledged that because of his knowledge of the AIA system he was aware that the policies would not lapse for 13 months. He claimed at the meeting that he had not received any cash from Mr Xu on the day he issued the receipt to Mr Xu. He also acknowledged that he remitted the monies to AIA on 5 December 2001 and changed the date on the receipt to 2001 from the original 2000. 63 On 30 January 2002 a meeting took place between Mr Yang, Ms Wu, Mr Lee, Mr Chinnery, and Mr David Murray, the National Director of the Career Agency of AIA. It was explained to Mr Yang that he had committed a very serious breach of his contract with AIA because of his failure to account to AIA for the cash received from Mr Xu. He was told that he had the choice of either resigning or that AIA would terminate the agency agreement. A discussion thereafter ensued during which Mr Yang requested that his wife take over his agency. This request was declined. A resignation letter was then produced and was signed by Mr Yang. On 4 February 2002 a letter was sent to Mr Yang by Mr Chinnery confirming his resignation. 64 By letter dated 8 February 2002 Mr Yang wrote to Edmund Tse ('Mr Tse'), the President of AIA. In such letter Mr Yang complained of his treatment at the meeting on 30 January 2002 and alleged that he had been treated unfairly and sought reinstatement. Such letter makes no mention of the meetings which preceded that of 30 January 2002, nor does it refer to the reason why AIA required his resignation or to the authority allegedly provided by Ms Lin to issue the receipts for Mr Xu's policies. 65 Mr Chinnery has provided the Court with a record of the meeting held on 30 January 2002 which was made on or about 11 February 2002. The record does not suggest that there was any threatening behaviour towards Mr Yang nor intimidation or bad language as alleged by Mr Yang. Mr Chinnery was cross examined, but no challenge was made to the accuracy of his reports.

Summary of Applicants' submissions 66 The applicants submit that AIA engaged in unconscionable conduct in breach of the Act, and rely upon the following claims: a. AIA took advantage of the vulnerability of Mr Yang prior to the signing of the first agency agreement in 1996 by creating a false impression of the benefits offered to AIA agents. This false impression was created through verbal representations and through reference to AIA documentation. b. AIA continually repeated these representations in training meetings, conventions and seminars after the signing of the first agency agreement in 1996. c. AIA used AIA contractual and promotional material which was intended for AIA clients to describe its relationship with Mr Yang. This created a false sense of job security in Mr Yang. d. AIA continued the relevant conduct prior to, during, and following the signing of the second agency agreement by Mr Yang and Aulian. e. AIA did not give Mr Yang adequate opportunity to respond to Mr Xu's claims. f. AIA failed to take into account the written and verbal explanations provided by Mr Yang in relation to Mr Xu's claims. g. AIA failed to give Mr Yang a final opportunity to respond to Mr Xu's claims at the meeting held on 30 January 2002. h. AIA terminated all agency agreements between AIA and Mr Yang and between AIA and Aulian. i. AIA did not permit Ms Wu to take over Mr Yang's insurance accounts. j. AIA did not respond positively to Mr Yang's request for re-consideration and a further meeting. 67 In respect of Mr Xu's complaint to AIA, Mr Yang submits that: a. Mr Yang did not engage in any misconduct. b. Mr Yang did not withhold client moneys for thirteen months. c. Mr Xu's complaint was an opportunistic attempt to fraudulently obtain moneys from the respondent. d. Mr Yang was expressly authorised by Ms Lin to issue the receipts to Mr Xu on the understanding that Mr Xu would pay the premiums at a yet to be decided later date. Mr Yang relied on the statement of Ms Lin because he was a successful agent and because he considered himself a part of the AIA 'family'. The conversation between Mr Yang and Ms Lin was witnessed by Mr Zhang and corroborated by his evidence. e. Despite having issued Mr Xu with a receipt for the payment of $11,415.01, Mr Xu had not paid Mr Yang any money. Mr Yang claims that Mr Xu asked him to pay the insurance premiums on Mr Xu's behalf on the understanding that Mr Xu would pay Mr Yang back at a yet to be decided later date. Mr Yang then issued Mr Xu a receipt. Both the conversation between Mr Yang and Mr Xu and the issuing of the receipt was witnessed by Ms Hobbs and corroborated by her evidence. The evidence of Mr Xu confirmed that he had not paid Mr Yang any money at the relevant time. Mr Xu confirmed that the assertions in his complaints to AIA that he had paid cash to Mr Yang were false.

Claim for relief 68 The applicants' claim is brought under ss 51AA and 51AC of the Act. The applicants also rely on s 51A insofar as the claimed misrepresentations were made with respect to future conduct. Section 51A of the Act provides: (1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. (3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead. Section 51A(2) provides for a reversal of onus so that the onus lies on AIA to prove that any representations found to have been made were made reasonably. 69 Section 51AA provides: (1) A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories (2) This section does not apply to conduct that is prohibited by section 51AB or 51AC. 70 For conduct to be actionable as unconscionable under s 51AA it must be unconscionable under the unwritten law. The requirements of a finding of unconscionability in equity were described by the High Court in Louth v Diprose (1992) 175 CLR 621. At 637 Deane J said: It has long been established that the jurisdiction of courts of equity to relieve against unconscionable dealing extends generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that special disability was sufficiently evident to the other party to make it prima facie unfair or "unconscionable" that that other party procure, accept or retain the benefit of, the disadvantaged party's assent to the impugned transaction in the circumstances in which he or she procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable.

71 The High Court in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd & Ors (2003) 214 CLR 51 discussed the concept of unconscionable conduct as used in s 51AA of the Act. Gleeson CJ at 62 accepted that 'special disadvantage' meant a disabling circumstance seriously affecting the ability of the innocent party to make a judgment in that party's own best interests. Gleeson CJ (referring to the decision of the Full Court of this Court in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd and Others (2002) 117 FCR 301) said in Berbatis 214 CLR 51 at 64: A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power. Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.

72 In The Commercial Bank of Australia Limited v Amadio and Another (1983) 151 CLR 447 Mason J referred to the underlying general principle applicable where one party takes unfair or unconscientious advantage of an opportunity created by the special disadvantage of another. Mason J said at 462: I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. 73 Section 51AC of the Act proscribes unconscionable conduct in business transactions. The relevant prohibition is found in s 51AC(1)(a): A corporation must not, in trade or commerce, in connection with:

(a) the supply or possible supply of goods or services to a person (other than a listed public company); … engage in conduct that is, in all the circumstances, unconscionable.

74 Section 51AC commenced operation on 1 July 1998 and as such the applicants can only rely on their claim under this section in relation to the events alleged to have taken place after this time. Pursuant to s 51AC(6)(b) of the Act the Court is entitled to take into account circumstances existing prior to the commencement of the section but is not entitled to take into account alleged conduct prior to the commencement of the section in determining post commencement breaches: see Australian Competition and Consumer Commission v Leelee Pty Ltd and Anor (2000) ATPR 41-742 at [72]-[92]. 75 Section 51AC(3) of the Act sets out a non-exhaustive list of factors to which a court may have regard in determining whether a corporation has contravened s 51AC(1). They include the relative strengths of the bargaining positions of the supplier and the business consumer as defined and whether, as a result of the supplier's conduct, the business consumer was required to comply with conditions not reasonably necessary for the protection of the legitimate interests of the supplier. Other factors include the capacity of the business consumer to understand documents relating to the supply or possible supply of goods or services and whether any undue influence or pressure was exerted on, or unfair tactics used against, the business consumer. Also relevant is the extent to which the supplier unreasonably failed to disclose to the business consumer any intended conduct that might affect the interests of the business consumer and the risk involved. The extent to which the supplier was willing to negotiate the terms and conditions of any contract for the supply of goods or services with the business consumer and the extent to which the supplier and the business consumer acted in good faith are also relevant factors. 76 The relevant conduct for the purposes of s 51AC(1)(a) relied upon by the applicants must be in connection with the supply or possible supply of services to a person. For the applicants to succeed in a claim within this section the services provided by AIA to the applicants must be identified. 77 As relief for the breaches claimed above, the applicants seek damages pursuant to s 82 of the Act and for other orders under s 87 of the Act. Item 20 of Schedule 1 of the Trade Practices Amendment Act (No.1) 2001 (Cth) extended the limitation period for actions to be brought for damages under s 82 to six years to the extent that the previous three year limitation period under s 82 had not expired prior to the commencement of the amendment on 26 July 2001. Any cause of action by Mr Yang must have accrued on or after 26 July 1998 (being three years before the commencement of the amendment to the section) to be actionable. The proceedings were commenced in October 2003, well outside the limitation period for any claim for damages based upon Mr Yang entering into an agency agreement with AIA as a consequence of misrepresentation in 1996. The applicants however claim that the misrepresentations were not confined to those made at the time of entry into the 1996 agency agreement but that such representations were continuing throughout the currency of all of the applicants' contractual relations with AIA.

Credit of applicant and of the applicant's witnesses 78 During the course of the hearing, Mr Yang made numerous claims which had not been referred to in either of his original affidavits or in his later affidavits. In relation to the representations allegedly made to Mr Yang by Ms Chen and Ms Lin at the introduction to AIA, or at the training session, no note or record exists. AIA provided Mr Yang with a workbook for the training session. Entries were made in his workbook for the initial training but Mr Yang denies that they were made by him. There is no contemporaneous record or note of any of the alleged representations. 79 Mr Yang claimed that Ms Lin and Ms Li provided the answers to his examination questions during his training. He then claimed that answers were provided to all other candidates. However, subsequent questions and answers advanced different factual scenarios which were irreconcilable. Mr Yang also claimed that he had never seen the agency agreement and that it had not been shown to him. Although several memoranda from AIA complaining of Mr Yang's conduct exist, Mr Yang denied receiving any such memoranda. 80 In his letter dated 8 February 2002 to Mr Tse, Mr Yang made no reference to any of the representations he now relies upon in relation to his engagement by AIA. The allegations concerning the representations are made for the first time in affidavits filed in these proceedings in June 2007. The fact that no mention had been made by Mr Yang in such letter of the authority provided by Ms Lin to issue the receipts for Mr Xu's policies is extraordinary. 81 On 5 July 2004 an affidavit sworn by Mr Yang was prepared in respect of proceedings against AIA in NSD1497/2003 which raised the same claims as are made in these proceedings. Those proceedings, instituted with others, did not continue because the Court ordered separate trials. The allegations now made extend far beyond those contained in that affidavit, even though Mr Yang testified in this hearing that his 2004 affidavit was comprehensive. 82 The Court does not accept the evidence of Mr Yang and Ms Wu that AIA represented that it would take full responsibility for Mr Yang's conduct as an agent. Insofar as they rely upon the writing on the business card, it did not constitute a representation as alleged. Rather it gave notice to any client of the fact that AIA would indemnify the client in respect of any default by the agent. 83 Ms Wu is a director of Aulian. Her evidence demonstrated that she was not an independent witness. She was supportive of her husband, and after initially providing vague responses in answer to questions relating to the translation of her husband's most recent affidavit, she acknowledged that she had translated it for him. She testified that during AIA's training sessions she did not recall any warnings being made by AIA relating to an agent's conduct, yet she vividly recalled statements supportive of her husband's claims. The Court finds the statements of Ms Wu regarding her conversation with Ms Lin about the transfer of Mr Yang's business to her to be unconvincing. Ms Wu's evidence relates to an event which occurred a decade ago. It is denied by Ms Lin. The Court is not satisfied that the conversation occurred as alleged. 84 Mr Ji Yu Zhang had been an agent of AIA between March 2001 and June 2001. He claimed to recall statements made at a training course in March 2001 by an instructor Ms Wong to the effect that if agents worked hard they would be entitled to a life of wealth and income. However there is no evidence to suggest that Mr Yang was present when such statements were made, nor is there any evidence that Mr Yang relied upon any statements of Ms Wong. 85 Ms Huang gave evidence of statements made by Ms Lin during training in 1999. The Court cannot infer that any words spoken to her by Ms Lin at that time were the same as those represented to Mr Yang in 1996. Her evidence does not add any weight to the applicants' case. 86 Qing Na Rong ('Ms Na Rong') became an agent in 1993 with AIA and ceased in 1998. She claimed that she had frequently heard Mr Juneau state words at conferences relating to the income that agents could earn. Her evidence does not define the time when such statements were allegedly made, other than that such statements were made at conferences in Bali, Shanghai and Las Vegas. Her evidence does not establish that Mr Yang was present when such words were claimed to have been spoken. Her evidence also does not support the applicant's claims that any income was guaranteed for life or that the appointment as agent was for life. She maintained that portions of her affidavit were correct until other facts were brought to her attention which indicated clear inconsistency. It is also apparent that Ms Na Rong bore ill-will to AIA because of her dismissal as an agent. She had maintained proceedings against AIA and provided evidence which was inconsistent with allegations she had made against AIA in her own proceedings. She refused to acknowledge the accuracy of facts relating to her termination. Accordingly the Court is unable to draw any assistance from her affidavit. 87 Ms Hong Chen (Mr Xu's wife) had made a formal complaint to AIA that Mr Yang had completed a proposal for her in respect of an insurance policy which contained false details. In respect of such complaint she received a settlement of $39,200.56 from AIA. Surprisingly, she initially denied any knowledge of such event. Ms Hong Chen was also aware of the complaints made by Mr Xu regarding the conduct of Mr Yang. Despite her and her husband's adverse experiences involving Mr Yang, she would not say anything contrary to Mr Yang in her evidence before this Court. The Court gives no weight to her evidence. 88 Mr Xu's evidence relating to the payment of cash is entirely inconsistent with his earlier conduct. For the reasons stated hereunder, the Court does not accept his evidence.

Claimed representations 89 The Court is required to distil from the facts a version of the events which it considers is established by the evidence. In doing so the Court refers to the observations of McLelland CJ in Watson v Foxman and Others (1995) 49 NSWLR 315 at 318-9, cited with approval in Lahoud & Ors. v Lahoud & Anor. [2006] NSWCA 169 at [91]. With regards to allegations of misleading and deceptive conduct claimed to be within s 52 of the Act, his Honour said at 318: … 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.

See also Ingot Capital Investments Pty Ltd and Others v Macquarie Equity Capital Markets Ltd and Others (No 6) (2007) 63 ACSR 1 at 107. 90 McLelland CJ in Foxman 49 NSWLR 315 also observed at 319 that 'in the absence of some reliable contemporaneous record or other satisfactory corroboration' an applicant who relies upon spoken words as a basis for an allegation of misrepresentation or unconscionable conduct may encounter 'serious difficulties of proof'. 91 The Court is also guided by the observations of the High Court of Australia in Fox v Percy (2003) 214 CLR 118 at [31] where the High Court referred to the preference for courts to make findings on the basis of contemporary materials, objectively established facts and the apparent logic of events rather than on the appearances of witnesses at the hearing. 92 The detail contained in the affidavits provided by Mr Yang is carefully constructed and suggests recent invention in English. The same observation can be made of the other witnesses for the applicants. In this case the translation from Mandarin to English and the grammatical and semantic nuances lost in that process engender too much scope for uncertainty and do not establish the precision necessary for a finding of misrepresentation. The claimed representations by Ms Chen and Ms Lin were allegedly made to Mr Yang in Mandarin. The Court is not satisfied that any representations were made by them as alleged. 93 The only alleged oral representations made in English were made by Mr Juneau to Mr Yang. The Court is guided by the judgment of Heydon JA in Moukhayber v Camden Timber and Hardware Co Pty Ltd [2002] NSWCA 58 where his Honour said (at [29]) 'the risks of misunderstanding…were doubtless increased by the plaintiff's lack of skill in speaking English'. Given Mr Yang's very limited grasp of the English language, the Court is not satisfied that the alleged representations of Mr Juneau were in fact made. 94 The representation alleging indemnity by AIA to Mr Yang and the evidence in support of such alleged representation lacks the required precision to constitute a representation. In summary the Court is not satisfied on the balance of probabilities that any representations were made to Mr Yang by Ms Lin, Ms Chen or by Mr Juneau as alleged. 95 The terms relied upon by Mr Yang as constituting part of the representations, namely 'security for life' and 'guaranteed for life', exemplify the language difficulties and imprecision associated with the representations alleged in these proceedings. Identical words are contained in AIA's brochures but in an entirely different context to that claimed by Mr Yang. Such phrases are published by AIA in brochures for the benefit of clients, not for its agents. The brochure entitled 'Security for Life' states, inter alia, 'AIA has the strength and international resources to provide "Security for Life" to its much valued customers'. The brochure published solely for use by agents entitled 'A Career for Life' states, inter alia, 'In Australia, we give our clients 'Security for Life' - we will always be there to help them when they need us no matter where they might be'. The brochure does not suggest that the term 'security for life' was to be interpreted as applying to agents. Rather it clearly applies to 'clients'. 96 The Court finds that the evidence of the applicants does not overcome the 'serious difficulties of proof' that attend their reliance upon spoken words. The Court is not satisfied that any of the alleged representations claimed by Mr Yang were in fact made.

Conclusion relating to representations 97 The Court finds that no false impression as alleged was given to Mr Yang by AIA in the signing of the agency agreement in 1996, nor in 1998 when the applicants signed the agency agreement and supervisor's agreement, nor in 2000 when the last agency agreement was signed by Mr Yang. The Court finds that Mr Yang was willing to work as an agent for AIA in accordance with the provisions of the agreement. Mr Yang implicitly accepted its terms. The Court is not satisfied that any representations were made as alleged guaranteeing non-terminable agency; guaranteeing any income for life; indemnifying the applicant for any wrongdoing; or guaranteeing the transferability of the Agency to Ms Wu in such eventuality.

The agency agreement 98 The agency agreement signed by Mr Yang governed the relationship between him and AIA. It created the relationship of principal and independent contractor (Cl 2.3) and contained provisions requiring the agent to observe specific codes of conduct. The agreement could be terminated immediately by AIA in the event of fraud, dishonesty or breach of trust (Cl 2.10). 99 The agreement required the agent to comply with relevant statutory regulations, and to remit premiums for new insurance business (Cl 3.1). Premiums received were to be remitted to AIA within five working days of receipt by the agent (Cl 14.2). 100 The agreement also made provisions for termination and cessation of the agency (Cl 17.3). Automatic termination resulted on the happening of any breach or default of the provisions of the agreement, dishonesty or failure to meet certain contracted requirements (Cl 17.1). In addition, either party was entitled to terminate the agreement on 15 days notice being provided to the other (Cl 17.2). 101 The court is satisfied that even if Mr Yang could not understand the English text of the agreement, he was prepared to enter contractual relations with AIA voluntarily in the belief that it would provide him with an opportunity to earn a good income. He was provided with a copy which his wife, who understood English, could have translated for him if he asked. 102 The relationship of principal and agent continued for almost two years. In October 1998 Mr Yang voluntarily requested a new arrangement with AIA. He signed a new agency agreement on behalf of Aulian, which he knew would govern the relationship of Aulian and himself with AIA. In 2000 he signed a further agency agreement in his own name. In doing so Mr Yang did not rely upon any absolute, unqualified guarantees and promises in relation to the benefits Mr Yang might earn, as claimed. 103 Mr Yang was well aware, if not from the original agreement then as a result of his experience as an agent with AIA, that AIA had the right to terminate agents. Mr Yang and Aulian had themselves benefited from the business generated by agents who were terminated. Mr Yang's own memorandum to AIA asking for the business of terminated agents to be transferred to him demonstrates his very acute knowledge of the operation of that system. Mr Yang was accordingly aware that agents who were unsatisfactory were liable to have their agreements terminated, in which event their business passed to their supervisor. 104 In view of the finding that no misrepresentation was made prior to the execution of the agency agreements, and that no mistake or fraud induced Mr Yang into its execution, Mr Yang's wilful signing of the agency agreements binds him and Aulian to its provisions: see Equuscorp Pty Limited and another v HGT Glengallen Investments Pty Limited (2004) 218 CLR 472 at [32]-[36].

Mr Xu's premiums 105 Mr Yang claimed that he paid the premium to AIA as Mr Xu was his friend. Based upon Mr Xu's oral evidence cash would be paid by Mr Xu to reimburse Mr Yang at a later date in respect of the premiums paid by Mr Yang to AIA. Contrary to such evidence, Mr Yang testified that when asked by Mr Xu for a loan to pay the premium on Mr Xu's policies, Mr Yang refused. Mr Yang claimed to have lent Mr Xu approximately $20,000 from June 2000 to October 2000. There was a falling out between Mr Yang and Mr Xu in consequence of which Mr Yang said that by October 2000 he would not make any further payments for Mr Xu. Accordingly, the Court does not accept that Mr Yang would have made the payment for Mr Xu as an act of friendship. 106 Mr Yang further claimed that it was important for Mr Xu's policies to be renewed so that he could obtain credit for his persistency ratio. However as at December 2001 Mr Xu's policies, subject to the payment of premiums, had been in place for two years. The benefits available pursuant to AIA's persistency ratio scheme depended upon the status of policies during their second year. Accordingly, as at December 2001 Mr Xu's policies would not have been taken into consideration in determining Mr Yang's entitlements under the persistency ratio scheme for the quarter ended 31 November 2001. Mr Ma of AIA testified that Mr Xu's policies ceased to be relevant to a calculation of such ratio for the quarter ended 30 August 2001 and the payment of the premiums on 5 December 2001 was irrelevant to Mr Yang's persistency ratio status. Accordingly such reason for reinstating the policy is unsustainable. 107 The Court finds the evidence of Ms Hobbs relating to the issue of the receipts to be unreliable. She claimed that the receipts were issued by Mr Yang immediately upon request by Mr Xu. The evidence she provided of the alleged conversation concerning the issue of the receipt was vague and unconvincing. It also conflicts with the evidence of Mr Yang and Ms Wu, each of whom claimed that the permission of Ms Lin was obtained before the issue of the receipts. The Court finds Ms Hobbs' evidence to be implausible. 108 The evidence of Ms Wu concerning the issue of the receipts on 28 October 2000, namely that the receipts were issued to Mr Xu because he wished to use them to obtain a loan, conflicts with Mr Xu's evidence. The Court gives no weight to her evidence. 109 In summary, the evidence of the applicants' witnesses conflict regarding the payment of the premium for Mr Xu's policies. It is impossible to construct a rational scenario bearing in mind the differences in the evidence provided by each of the above witnesses.

Attempted reinstatement of Mr Xu's policies 110 AIA's account system entry for 5 December 2001 contains the following record: AGT RANG & CLAIMED CLT JUST RET'D BK FR OVERSEAS. HE REALLY WANTS TO REINSTATE IT. ADV'D SEND A MEMO TOGETHER WITH T + APPT'N FOR REINSTATEMENT & 2 YRS OUTSTANDING $ FOR U.W APPROVAL IN SEVEN DAYS.

111 Such notation records that the AIA clerk was told by Mr Yang that the reason for the application for reinstatement of the policy was because the client had just returned from overseas. Mr Yang acknowledges that his statement to the clerk concerning Mr Xu was false. 112 Mr Yang also acknowledged in cross-examination that his statements made to the clerk regarding the reason for seeking the reinstatement of Mr Xu's policies were made without instruction from Mr Xu and were without foundation. The Court finds that Mr Yang was untruthful to the clerk and rejects the assertion by Mr Yang that the clerk, to whom payment was made, changed the date on the copy of the receipt from 28 October 2001 to 28 October 2000. The Court accepts AIA's submission that Mr Yang altered the date on the receipt in a further attempt to conceal his retention of the cash payments.

Mr Xu's claim on AIA 113 The entry made in December 2001 in the AIA account system records Mr Xu's complaint, namely that he had paid the premium for the second year of the policy. Mr Xu stated 'in fact I have paid cash to your agent which I bought the insurances from. I attach the receipts to you'. In his letter dated 18 December 2001 to the Managing Director of AIA Mr Xu again confirmed that he had made payment in cash to Mr Yang. Further, Mr Xu went so far as to complain to the Life Insurance Complaints Service Limited. 114 The Court finds Mr Xu's evidence that he paid no monies to Mr Yang to be entirely inconsistent with his complaint to AIA and the Life Insurance Complaints Service Limited. 115 Having considered the evidence, the Court concludes that Mr Yang received cash from Mr Xu on the date specified on the receipt, namely 28 October 2000, and that his testimony to this Court is false. 116 The Court also finds that Mr Yang made the payment on 5 December 2001 because he was aware that his failure to account to AIA for the premium which he had held for 12 months would be revealed by Mr Xu to AIA. To conceal this circumstance he provided the clerk with a false reason for reinstatement. 117 The Court is satisfied that Mr Yang withheld the money from AIA for over 13 months, in breach of the agency agreement which required any monies received in cash to be remitted to AIA within five working days. The retention by Mr Yang of the premium monies constituted a breach of s 37 of the Insurance (Agents and Brokers) Act 1984 (Cth). Section 37 provided that monies paid to a person as agent of the insurer are impressed with a trust in favour of the insurer and must be paid to the insurer as soon as reasonably practicable.

Involvement of Ms Lin in the issue of the Xu receipts 118 Mr Yang's claim of Ms Lin's authorisation for the issue of the receipts was not made to Mr Yang's superiors during the meetings held in January 2002 to investigate Mr Yang's issue of the receipts. Nor did Mr Yang make any reference to authority having been given to him in his 8 February 2002 letter to Mr Tse. The affidavits of Mr Yang filed early in these proceedings also made no mention of the authority from Ms Lin. AIA could not initially locate Ms Lin in order to respond to certain of Mr Yang's allegations relating to the representations. The allegation of Ms Lin's authorisation first arose in Mr Yang's affidavit in reply of 17 August 2007. However Ms Lin was subsequently located and refuted Mr Yang's allegations. 119 The failure by Mr Yang to raise such a vital factual allegation before August 2007 is inexplicable. The Court observes that the effect of Mr Yang's allegation would have been to implicate Ms Lin in a fraud on her employer. The Court also notes that Ms Wu did not refer to the alleged authorisation by Ms Lin to issue receipts until she swore her affidavit on 16 August 2007. Both Mr Yang and Ms Wu did not refer to the Ms Lin's authorisation until after it became apparent that Ms Lin could not be located. 120 The Court observes that between October 2000 and 15 August 2007 Mr Zhang had no reason to recollect the contents of any conversation with Ms Lin. Further, he had been terminated as an agent of AIA and acknowledged that he bore ill-will to AIA. During his examination he produced fuel receipts which he claimed verified his visit to Sydney. However during cross examination it became apparent that he had no real way of knowing whether the receipts produced had any relationship to the visit. Further, Mr Zhang acknowledged that no commissions were owing to him at the time of his alleged meeting with Ms Lin, which he claimed was the reason for his visit. 121 Ms Lin said she had no recollection of any meeting ever taking place concerning the receipt. She claimed that she did not know the former agent Mr Zhang and denied that she would have authorised the issue of receipts without the premium being paid. 122 The Court is not satisfied that a meeting occurred as claimed by Mr Yang and Mr Zhang and gives no weight to the evidence of Mr Zhang.

Consequence of findings concerning receipts 123 The Court's findings that Mr Yang failed to account to AIA for a period of 13 months after receiving the insurance premiums from Mr Xu have contractual consequences. Section 3 of the agency agreement referred to 'Major Requirements of this Agreement'. The obligation to comply with all relevant provision of 'the Acts' was incorporated as the first requirement, as provided by Clause 3.1(a). Under s 14 entitled 'Handling of Monies' an agent agreed to remit within five working days: all monies received for any Insurance business whether received directly by You or paid to You by any Agent, or which is subject to this Agreement.

The failure of Mr Yang to account constituted a failure to comply with the requirements of the agency agreement. 124 As referred to previously, s 17(1) of the agency agreement permitted AIA to terminate the agreement without notice if there were any breach or default of the agreement; any act of dishonesty, breach of trust or fraud by the agent in the conduct of its business; or a failure to comply with all the relevant provisions of 'the Acts'. Other causes for termination are also provided for by s 17(1) of the agency agreement.

Summary of conclusions concerning Mr Xu's policies 125 The Court finds that Mr Yang received cash in the amount of $11,415.01 from Mr Xu in respect of premium for Mr Xu's policies on 28 October 2000; that Mr Yang issued receipts for the cash payment; that Ms Lin did not give authorisation for the issue of the receipts in respect of Mr Xu's policies; that Mr Yang failed to account to AIA for such monies until 5 December 2001; and that on 5 December 2001 Mr Yang gave the clerk an untruthful reason for the attempted re-instatement of Mr Xu's policies. 126 The Court finds that Mr Yang was provided a full opportunity by AIA to respond to such claims at meetings held on 7, 14 and 22 January 2002. The Court finds that the applicant's conduct in withholding Mr Xu's premiums constituted a breach of the agency agreement and of s 37 of the Insurance (Agents and Brokers) Act 1984.

Grounds for termination 127 AIA submits that, but for the resignation, it would have been entitled to terminate the agreement because of: (i) the failure to account for the monies received from Mr Xu; (ii) Mr Yang's conduct in seeking to conceal the payments; and (iii) matters arising during the course of his agency with AIA. 128 As to the failure to account and concealment, the Court agrees with AIA's submission. With regard to the third submission, AIA's evidence discloses that Mr Yang has a history of violent behaviour. On 15 September 1998 a memorandum was written to him by Ms Lin, warning him of the consequences that may flow if he continued his repeated 'pattern of misbehaviour'. This was followed by another memorandum dated 10 June 1999 concerning Mr Yang's emotional outbursts. Such memoranda gave him notification of being placed on probation for a period of three months, effective immediately. An incident occurred as recorded in a memorandum dated 28 November 1999 in which Mr Yang allegedly damaged office furniture and a wall at the offices of AIA. A further incident occurred when a crystal trophy which had been awarded to Mr Yang for second place in an AIA sales promotion competition was smashed by him shortly after its receipt. 129 Another example of misconduct related to unauthorised advertising by Mr Yang using the AIA logo in his advertisement as a mortgage consultant. All agents had been advised in writing that the AIA logo was not be used in any advertisement seeking income from personal exertion, and that agents of AIA were full-time employees. 130 A warning was issued by AIA to Mr Yang on 20 July 2000 regarding his misconduct. However, the records of AIA establish that despite an agreement by Mr Yang to desist, his advertisement including the AIA logo was again published in the Australian Chinese Daily Magazine. 131 AIA also relies upon two instances when Mr Yang falsely represented to AIA the insurance risks of two customers, namely Ms Hong Chen and Mr Xu. In each case certain details in the proposal forms contained incorrect detail in respect of material matters. 132 Despite such facts, it is not apparent that the temperament of Mr Yang was the cause of AIA's action to procure his resignation, nor was there any other cause relied upon by AIA. In view of this fact, the Court will make no finding on AIA's third submission that other grounds were available to AIA to terminate the agency agreement.

Termination of agreement 133 Mr Chinnery's evidence of the meetings of 7, 14, 22 and 30 January 2002 is detailed and supported by records that were made shortly after each of those meetings. For this reason, and in the absence of any reliable evidence provided by Mr Yang or Ms Wu, the Court considers that the events relating to the termination as stated by Mr Chinnery are accurate and that the evidence of Mr Chinnery concerning the meetings held with Mr Yang to be more reliable than the evidence of Mr Yang and Ms Wu. The Court accepts the evidence of witnesses of AIA that Mr Yang attended meetings on the 7, 14, 22 and 30 January 2002 in the offices of AIA. 134 The Court finds that Mr Yang resigned from AIA and therefore effectively terminated the two agency agreements on 30 January 2002.

Applicant's claims under the Act 135 As noted above the Court does not find that the claimed representations were made by AIA. Accordingly there is no requirement for AIA to establish that they were made reasonably as required by s 51A(2). It follows that the applicants have not established their claim pursuant to s 51A of the Act. 136 Further the Court is unable to identify a special disability of Mr Yang within the meaning of the unwritten law of unconscionability within the meaning of s 51AA of the Act. In relation to a claim that Mr Yang was unconscionably induced to enter the agreements in 1996 the applicants have not been able to point to any special exploitation of Mr Yang. There is no suggestion that he was offered terms any different from those offered to all prospective agents nor that the terms themselves were inherently unfair. Further the limitation period contained in s 82(2) of the Act prevents the applicants from being able to claim damages for any alleged unconscionable representations which occurred in the first two years of the operation of the 1996 agency agreement which includes the period prior to Mr Yang's entry into the agreement. The alleged continuation of the representations throughout Mr Yang's agency does not assist the applicants in light of the above findings of the Court that the alleged representations, as a matter of fact, are not established. There is no proven unconscionable conduct on the part of AIA. Accordingly this claim must fail. 137 The second basis upon which the applicants claim unconscionable conduct on the part of AIA is in relation to the events leading up to the resignation of Mr Yang on 30 January 2002. AIA accepts that a strict application of legal rights may be unconscionable if exercised harshly, oppressively or capriciously: see Legione and Another v Hateley (1983) 152 CLR 406 at 444. However there is nothing to suggest that the effective termination (by resignation) of Mr Yang was exercised by AIA harshly, oppressively or capriciously. The dishonesty of Mr Yang in relation to the issue of the receipts in respect of Mr Xu's policies, the false completion of the application forms for Mr Xu, the false representations to the AIA clerk on 5 December 2001, the false alteration of the receipt presented to AIA and the false versions of events given to Mr Chinnery in January 2002 together with the choice of resignation offered to Mr Yang, support a conclusion that the cessation of Mr Yang's agency was not in any way brought about by the unconscionable conduct of AIA but rather by the conduct of Mr Yang himself. 138 As discussed above, for the applicants to succeed in a claim under s 51AC of the Act the services provided by AIA to the applicants must be in connection with the supply or possible supply of services to the applicants. The Court accepts AIA's submission that the principal 'right' acquired by the applicants under the various agreements is the right to be paid remuneration in the form of commissions and other benefits. In Queensland Aggregates Pty. Ltd. and Another v Trade Practices Commission (1981) 57 FLR 314 at 319 the Full Court held that a payment of money does not comprise a supply of services under the Act. Such 'right' to remuneration is not a connecting factor for the purposes of s 51AC(1)(a) of the Act. Accordingly the requirements of s 51AC have not been met. 139 As such the applicants have not made out their claim under either ss 51A, 51AA or 51AC of the Act and the Court dismisses the application with costs. I certify that the preceding one hundred and thirty-nine (139) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

Associate: Dated: 12 March 2008 Counsel for the Applicant: I. G. Archibald

Dates of Hearing: 27 - 31 August, 3 - 6 September, 10 - 14 September, 19 - 21 September, 4 - 6 December 2007