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

“I don’t know if you Westerners understand this” (Tcpt, 3 November 2022, p 199(47-8)). So said Mr Donghua Jiang (Mr Jiang) in giving his evidence about an aspect of the commercial arrangements that have given rise to the present dispute. Mr Jiang was neither a party to these proceedings nor did he have a formal role in any of the relevant legal entities. He was, however, the instigator and architect of those arrangements.

Any attempt by the Court to understand the relevant financial dealings between the parties has been complicated by a lack of documentation, inconsistent versions of events, and habits of business which, while not in themselves unlawful, appear to have been intended to obscure the identity and contributions of the various participants. Plausible deniability seems often to have been preferred over plain dealing. These features may in part explain the other difficulty which the Court has encountered, which is to identify the main cause of action that was ultimately propounded by the plaintiffs.

The parties engaged in a venture in Victoria to grow grapes and export them to China (the Venture). The Venture was conceived by Mr Jiang, who lives and works in China, and was funded from China (with the exception of a contribution from the second defendant). The plaintiffs and defendants were brought together by Mr Jiang. The Venture was managed by the first defendant, Ms Aiyi Qin (Ms Qin) (also known as Bella), who is the wife of the second defendant, Mr Peihong Qin (Mr Qin). The defendants live in Australia. The legal entities created for the purposes of the Venture were the fifth plaintiff company, Taylor International Investment Pty Ltd (Taylor International) and a unit trust (the Unit Trust). Ms Qin was the trustee of the Unit Trust and the sole director and secretary of Taylor International. She no longer occupies any of these positions.

The Court has heard two proceedings. They were heard together with the evidence in one being evidence in the other. I will identify the parties by their roles in what I shall refer to as the main proceedings (2020/00141132). A cross-claim by Mr Qin in the main proceedings was dismissed by consent. The other proceedings (2020/202959) had been transferred to this Court from the Local Court and were a claim by Ms Qin against Taylor International for the recovery of an alleged $30,000 debt (the Debt Claim).

By the end of the ten hearing days, the issues had narrowed to four matters. The first two were not clear; the second two were straightforward.

The first issue - which was attended by conceptual confusion, but was the most significant in monetary terms - was the legal characterisation of the plaintiffs’ claim in the main proceedings that in her former capacity as trustee of the Unit Trust Ms Qin had improperly failed to apply $338,451.70 of the funds made available to her for the purposes of the Venture. Her defence was that she had applied those funds as directed by Mr Jiang (the Impugned Transactions). The claim the plaintiffs advanced was ultimately one for an account or for an order that the funds be vested in the first plaintiff, Mr Teng Xie (Mr Xie), as the successor trustee of the Unit Trust. The Court has found this claim fails because the plaintiffs have not proven that the funds ever became assets of the Unit Trust as opposed to Taylor International.

The second issue, which was also less than clear until after the plaintiffs abandoned an inconsistent allegation that Mr Qin had not paid his full contribution, became a claim against Ms Qin disputing the defendants’ claim that part of Mr Qin’s financial contribution to the Venture was a payment to the vendor of the land on which the Venture was to be conducted (the Hongyi Payment). The Court accepts the defendants’ submission that the abandonment of the claim against Mr Qin meant the claim in account against Ms Qin could no longer arise. In my respectful view, that must be so as a matter of logic. If the defendants made out their case in relation to the Hongyi Payment then the action in account fails. The Court has concluded that the defendants have made out that case. A consequence of that outcome is that the Court will direct Mr Xie by his solicitors to send a copy of these reasons to the State Revenue Office of Victoria in relation to the adequacy of the duty paid on the Unit Trust’s purchase of the property on which the Venture was to be operated.

However, if the defendants had failed to prove that the funds applied to the Hongyi Payment could be attributed to Mr Qin’s contribution to the Venture, then those funds could not be the subject of an account because there is no suggestion otherwise that the funds formed part of the assets of the Unit Trust. In other words, on either outcome this claim had to fail.

The third issue (also in the main proceedings) was whether the plaintiffs (or some of them) were entitled to declarations as to the validity of the current trust arrangements, including confirming the status of Mr Xie as trustee of the Unit Trust. By the time of the hearing, there was no dispute between the parties to quell by the making of such declarations and the Court declines to make them because, in summary, there is no utility in doing so.

The fourth issue was the Debt Claim. The Court has concluded that the contemporaneous documentary evidence enables the Court to find that the Debt Claim has been made good.

The plaintiffs were represented by Mr A Norrie of Counsel. The defendants were represented by Mr S Lees of Counsel.

The first to fourth plaintiffs together with Mr Qin are the shareholders in Taylor International in the same proportion that they are also unitholders in the Unit Trust, formally known as the Taylor International Investment Unit Trust.

With the exception of Mr Xie, and the second plaintiff, Mr Yinjun Qian (Mr Qian), the plaintiffs were largely uninvolved in these proceedings. The third plaintiff (Xinhua Shen) and the fourth plaintiff (Ying Zhang) did not give evidence. Instead, much of the plaintiffs’ case rested on the evidence of Mr Jiang. Mr Jiang is the former husband of Ying Zhang and an old friend of the defendants. Despite being neither an officeholder nor shareholder of Taylor International, nor a unitholder of the Unit Trust, Mr Jiang was central to these proceedings.

Mr Xie is currently a director of Taylor International (with Mr Qian) and is also the current trustee of the Unit Trust. However, his evidence at the hearing of these proceedings revealed that he was only a director and trustee in the most formal sense. He might best be described as a reluctant cypher for Mr Jiang and Mr Qian. Mr Xie had no real interest or desire to be involved in Taylor International or the Unit Trust and it was clear from his brief time in the witness box that he was very reluctant to be involved in these proceedings in any way. He had never paid any funds towards his shares or units and, based on his evidence and demeanour, barely participated (if at all) in the expected duties of a director or trustee.

Ms Qin is the former sole director and shareholder of Taylor International and trustee of the Unit Trust. Mr Qin is a shareholder in Taylor International and a unitholder in the Unit Trust.

Ms Qin and Mr Qin are also the operators of Hongyi Australia Pty Ltd (Hongyi). Mr Qin is a director and the couple are equal shareholders. Ms Qin handles Hongyi’s financial affairs, including arranging for the payment of invoices.

Mr Jiang and Mr Qian were cross-examined by audio-visual link from China. Mr Xie attended for cross-examination in person. The other witness who had sworn an affidavit in the plaintiffs’ case (Bin Lu) was not required for cross-examination. The defendants appeared in person.

Each of the witnesses who was cross-examined (with the exception of an accountant, Ms Ya Wang, who gave evidence for the defendants) gave their evidence through Mandarin interpreters.

It is fundamental to the conduct of litigation in accordance with the overriding purpose that a party be held to its pleaded case or, if the matter has been conducted otherwise, to the case the parties chose to litigate. This well understood approach was recently reaffirmed by the Court of Appeal in Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 (per Leeming JA, with whom Kirk JA and Griffiths AJA agreed):

It is also fundamental that the facts to be proven and who must prove them can only be determined by reference to the pleadings or the legal issues otherwise litigated by the parties. It is therefore necessary before going further in these reasons to identify what was the plaintiffs’ case. That task can be most clearly undertaken against the background of some basic facts that were not in dispute:

The plaintiffs moved on their Further Amended Statement of Claim of 23 July 2021 (FASOC), which sought this relief:

By the end of the hearing, the plaintiffs had abandoned all of their claims other than for the declarations in paragraphs 1, 2 and 3, and for an order or orders against Ms Qin to the effect of those in paragraphs 4, 5 or 6. It is the nature of the case made in relation to the latter relief that is the subject of this section of the judgment.

The FASOC pleaded:

The defendants responded in their pleading:

The plaintiffs’ written opening outline of submissions recorded that “the Plaintiffs seek orders for payment of monies which were invested into the Business and which are otherwise unaccounted for by the First Defendant”, nominating the amount said to be missing from those transferred to IMBK as $374,607.10.

Although the legal characterisation of the claim may have been opaque on the pleadings, there was no doubt from the outset that the defendants understood the central factual issue. So much appears from this exchange I had with Mr Lees during the openings (Tcpt, 31 October 2022, p 3(12-50)):

By the end of the hearing, the two sources of confusion about the plaintiffs’ case became apparent. The first was the pleading in paragraph 71 of the FASOC (reproduced in [23] above) that seemed to suggest a claim by the first to fourth plaintiffs in respect of money they had invested into the “Business” (earlier defined as the “grape growing business”, i.e. the Venture) but not identifying the capacity in which Ms Qin received the funds. The second was the lack of clarity about which (including whether it was all) of the plaintiffs who sought particular relief without regard to their respective capacities.

This confusion was brought into sharp focus by two submissions made on behalf of the defendants in relation to the claims for the “unaccounted funds”:

Prior to the parties making their final submissions, I drew the parties’ attention to the judgment of Brereton J (as his Honour then was) in Torlonia v Wright [2016] NSWSC 1139 (Torlonia) concerning the action for account open to those in an accounting relationship such as between beneficiaries and trustees. I put to Mr Norrie that what his clients sought was an account from their former trustee, a proposition to which Mr Norrie acceded (Tcpt, 15 November 2022, p 448(36)). In response to my suggestion that I should order an account, I then had this exchange with Mr Lees (Tcpt, 15 November 2022, pp 448(47)-449(30)):

I then asked Mr Norrie to clarify the cause of action on which his clients sued. This exchange ensued (Tcpt, 15 November 2022, pp 451(23-44); 452(27)-453(12)):

I do not accept that the case which Mr Norrie sought to articulate in the preceding paragraph was either pleaded by the plaintiffs or argued between the parties before me. However, noting Mr Lees’ statement (see [29] above) that “the evidence that would be before [the Court] on an account is in by and large already before the Court on this hearing”, and the parties’ mutual acknowledgement of the live factual issue that had been fully explored in the evidence was whether Ms Qin was authorised by Mr Jiang to deal with the “unaccounted funds” as she said she had, the plaintiffs’ case was either for an account or to enforce the obligation on Ms Qin to vest the assets of the Unit Trust in Mr Xie as the new trustee.

The obligation to vest assets in the new trustee arises both as a matter of the general law of trusts and, in this case, pursuant to clause 86 of the Trust Deed:

The obvious plaintiff to seek to enforce the vesting of assets is Mr Xie as the new trustee, although any of the unitholders as beneficiaries would also have standing to seek such an order, the former trustee’s obligation to vest assets in the successor trustee being an obligation for their benefit.

Insofar as the action for account is concerned, the proper plaintiffs include the unitholders as beneficiaries, noting that under clause 14 of the Trust Deed, “the trustee holds the assets of the trust as a separate fund on trust for the unit holders”. For obvious reasons, although Mr Qin is a unitholder, it is sufficient that he has been joined as a defendant. Furthermore, although not strictly an issue given that Mr Xie is also a unitholder, in my view he also is the most obvious plaintiff to seek an account as the successor trustee as against Ms Qin as the former trustee of the Unit Trust.

Before leaving this topic, one other matter should be noted. The defendants submitted, and to the extent necessary the Court finds, that the funds forwarded by Mr Jiang through IMBK were funds provided by persons other than the plaintiffs. There was no evidence which would enable the Court to determine, if it had to, what the arrangements (if any) were between those persons, Mr Jiang and the plaintiffs. However, given it is clear that the funds were intended for the Venture (and thereby for one or other of the Unit Trust or Taylor International), the plaintiffs have standing to assert the causes of action which I have identified as unitholders, and the identity of those who provided the funds is not an issue.

Accepting for the sake of the argument that the plaintiffs’ case was in account or for the vesting of trust assets, Mr Lees submitted that the plaintiffs’ case failed at the outset in relation to the Impugned Transactions because they had not proven that the funds the subject of the Impugned Transactions were in fact assets of the Unit Trust. He submitted that the evidence demonstrated that Mr Jiang provided funds to Ms Qin and that it was in her discretion to appropriate them to the Unit Trust (as its trustee) by deposit into the Taylor U account, or to Taylor International (as its director) by deposit into the Taylor P account.

Although there was no joint venture or other written agreement about this, it was common ground that it was the Unit Trust which came to acquire the Property and it was Taylor International that operated the grape growing business on the Property, although no rent was charged by the Unit Trust to Taylor International. Unless it was shown that the Impugned Transactions involved funds that had been appropriated to the Unit Trust, so the argument ran, the plaintiffs had not made out the claim they were apparently litigating.

The plaintiffs never engaged with this argument and the Court accepts it for the following reasons.

The plaintiffs’ case focussed on the funds being provided for the Venture and never descended to the detail of the funds being applied to either the Unit Trust or Taylor International. This failure appears to be the reason why, at the heel of the hunt, the plaintiffs sought to suggest that their case was as set out in [30] above. As will become apparent, the difficulty for the plaintiffs is that none of the Impugned Transactions involves the withdrawal of funds from the Taylor U account.

There was no dispute that:

Although this point was little explored in the evidence, in particular by reference to the records of IMBK (as I shall next explain) the Court is satisfied that insofar as funds were to be applied to the Venture, how the funds that were sent via IMBK were to be applied specifically was left to Ms Qin. I do not accept Mr Jiang’s affidavit evidence that “I was merely directed by the First Defendant to transfer the investment fund in the total sum of RMB 13,550,000…to nominated accounts provided by the First Defendant…” (emphasis added). The evidence is plain that the only account to which he transferred funds was his account with IMBK. As Mr Jiang admitted in cross-examination (Tcpt, 3 November 2022, p 178(15-16)), “I didn’t have any means to transfer the money actually into the company’s bank account”.

There is no suggestion that Mr Jiang ever tried to tell Ms Qin how the funds were to be applied as between the Unit Trust and Taylor International. The Court accepts, because it is supported by the IMBK records, Ms Qin’s evidence in cross-examination about the IMBK account (Tcpt, 7 November 2022, p 290 (28-30)): “Those monies, when they were transfer into that account, that account is not mine; that’s Mr Jiang’s. It’s just, Mr Jiang trust me a lot, so he allowed me to use his account”.

The evidence included records subpoenaed from IMBK, and it is by reference to these that the Court will consider the Impugned Transactions. In all cases, the IMBK documents record Mr Jiang as the customer and the Court finds that he was at least the legal owner of the funds in that account. It is not necessary for the Court to determine who the beneficial owners were, but it is clear that until she withdrew any funds, Ms Qin did not have an interest in them. The fact that she was entitled to operate the account is an insufficient basis for the Court to find otherwise.

The Impugned Transactions comprised three transactions in four separate withdrawals from IMBK.

The first Impugned Transaction is a cash withdrawal by Ms Qin on 29 June 2018. The relevant IMBK document is a “foreign exchange record” in two identical halves, the top half being a “customer copy” and the bottom half the “company copy”. The document is printed on 29 June 2018 at 16:28, records the “bought amount” as RMB 1,250,000 and the “sold amount” as $252,016.10. Under a heading “Customer Payable Account Withdraw Activity” there is a reference to “E-Transfer”, an amount of $67,016.10, which has next to it under “Payee” “DSF773570 Qin AIYI PICK”. The line underneath has the amount $185,000 and under “Payee” the word “LATER”. Given Ms Qin picked up $67,0160 in cash that afternoon, I infer the reference to “later” meant that the $185,000 would be dealt with later.

A signed “Customer Withdraw Receipt (customer copy)” signed by Ms Qin and printed at 16:32 on 29 June 2018 evidences her withdrawal from Mr Jiang’s IMBK account of $67,016.10 in cash. The counterpart “company copy”, also signed by Ms Qin, to like effect was also in evidence.

The second Impugned Transaction is a transfer from the IMBK account to Hongyi. A similar “Customer Withdraw Receipt” dated 2 July 2018 proves, and the Court finds, that the $185,000 balance in Mr Jiang’s IMBK account was paid by electronic transfer on that date to Hongyi’s bank account.

There was no dispute that the Taylor U bank account was not established until August 2018. What emerges from paragraphs [40] to [47] above is that there is no basis on which the Court can conclude in what capacity Ms Qin took the funds from Mr Jiang’s IMBK account or on which it can otherwise conclude that any of those funds were appropriated to the Unit Trust (or, for that matter, the Company). Assuming the Court otherwise were to accept Mr Jiang’s evidence, the only available finding would be that Ms Qin had taken the money from the IMBK account for a purpose not authorised by Mr Jiang, namely a purpose other than the Venture. That, however, is not sufficient for the plaintiffs to succeed in a claim which depends upon those funds being assets of the Unit Trust.

The IMBK records tell a similar story in relation to the third Impugned Transaction, being the cash withdrawals by Ms Qin from the IMBK account over two days of $86,435.60 - $40,000 on 13 September 2018 and $46,435.60 on 14 September 2018.

The origin of those funds was not explored by the parties, but should not be passed over. The evidence includes an IMBK foreign exchange record printed at 10:23 on 13 September 2018 for Mr Jiang’s account showing the conversion of a payment of RMB 1,800,000 into $356,435.60. Under “Payee” the words “PAYOUT LATER” appear. There is then another such form printed at 12:10 on 13 September 2018 which records the payee as being the Unit Trust. There is no evidence explaining why these documents were produced as they were.

However, what the IMBK records then show occurred, and the Court finds, was as follows. A “Customer Withdraw Receipt” printed at 17:41 on 13 September 2018 and signed by Ms Qin shows a cash withdrawal by her of $40,000 from the $356,435.60. A similar IMBK document printed at 15:44 on 14 September 2018 and signed by Ms Qin shows a cash withdrawal by her of a further $46,435.60, leaving a balance of $270,000. There is then a “Customer Withdraw Receipt” printed at 15:57 on 14 September 2018 showing the transfer of the balance of $270,000 to the Unit Trust. A bank record shows the receipt of that balance into the Taylor U account.

As with the first two Impugned Transactions, what emerges from paragraphs [49] to [51] above is that there is no basis on which the Court can conclude in what capacity Ms Qin took the funds from Mr Jiang’s IMBK account or on which it can otherwise conclude that any of those funds were appropriated to the Unit Trust (or, for that matter, Taylor International). Assuming the Court otherwise were to accept Mr Jiang’s evidence, the only available finding would be that Ms Qin had taken the money from the IMBK account for a purpose not authorised by Mr Jiang, namely a purpose other than the Venture. That, however, is not sufficient for the plaintiffs to succeed in a claim which depends upon those funds being assets of the Unit Trust.

It follows that the plaintiffs’ claim in relation to the Impugned Transactions fails for want of proof that the funds were in fact assets of the Unit Trust. I will next consider the remaining issues between the parties. However, against the possibility that my conclusion in relation to the Impugned Transactions is wrong, I will then set out at the end of these reasons the result to which I would have come if I had been satisfied that the Impugned Transactions involved assets of the Unit Trust.

Confusion also attended this issue for two reasons. First, because it was for a similar amount to the second Impugned Transaction of $185,000 referred to in [47] above. Second, and more significantly, because it presented the plaintiffs with an insurmountable logical difficulty, which I will next discuss.

This claim turned on how Mr Qin made (or had not made) his financial contribution to the Venture. The plaintiffs alleged that, as the holder of a 10% interest, Mr Qin had an obligation to contribute $300,880 to the Venture. Mr Qin’s evidence was that he had contributed $330,002. While nothing turns on it, it may be observed that this was more than the amount referred to in a WeChat message sent by Ms Qin to Mr Jiang on 18 December 2018, “So far, total amount received from Shanghai is $2,707,919.9 plus $300,880 (270.9199/9 [sic]) from [Mr Qin]”.

There were various contemporaneous bank and other records which demonstrated that Mr Qin, or Ms Qin on his behalf, transferred into the Taylor P and Taylor U accounts a sum of $162,802. The Court finds Mr Qin had contributed that amount to the Venture.

At the start of the hearing, the plaintiffs pressed for this relief:

It will be obvious that this claim accepted the payment of $162,802 had been made by or on behalf of Mr Qin and sought what was said to be the balance on the basis of his alleged obligation to contribute $300,880.

By the end of the hearing, the plaintiffs abandoned their claim against Mr Qin and pressed a claim for account against Ms Qin for the $162,802. However, such a claim was based only on the unpleaded and unproven assumption that those funds had to be assets of the Unit Trust if the Court did not accept the defendants’ case about the balance of Mr Qin’s contributions. So much appears from the defendants’ final written submissions:

The plaintiffs’ logical difficulty is as follows. If the defendants made out their case in relation to the Hongyi Payment (as the Court has concluded they have done), then the plaintiffs’ action in account fails. However, even if the defendants had failed to prove that the funds applied to the Hongyi Payment could be attributed to Mr Qin’s contribution to the Venture, then those funds could not be the subject of an account. That is because there is no evidence that those funds were otherwise assets of the Unit Trust. On the evidence, which I will set out below, those funds were payments by Hongyi to Sylina Pty Ltd which, in this alternative outcome, the defendants would have failed to satisfy the Court can be attributed to Mr Qin’s contribution to the Venture.

For any other result, the plaintiffs would had to have brought a case (and, more importantly, evidence) in reply, that if the Court did not accept the defendants’ case about the Hongyi Payment, those funds were nevertheless assets of the Unit Trust.

In other words, on either outcome this claim had to fail. In order to explain why the Court has concluded the defendants have proven their case about the Hongyi Payment, it will be necessary to make findings as to the credit of the principal witnesses and to examine some of the facts in detail.

In considering the evidence, I have applied two principles in particular in assessing the reliability of the witnesses’ evidence.

First, there is the oft cited statement of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318–9:

Second, the concept of actual persuasion was elucidated by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (in liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48]:

The fundamental factual disputes, including as to the Impugned Transactions, involved Ms Qin’s or Mr Qin’s word against Mr Jiang’s. Having seen them give their evidence, even through an interpreter, it was clear that there was no love lost between Ms Qin and Mr Jiang, and I was left with the impression that each had persuaded themselves that they had been badly let down or deceived by the other.

In assessing Mr Jiang’s evidence, I bear in mind that it was given in Mandarin from China by video link. It was interpreted into English in the court room in Sydney. There were occasional interruptions to the signal and imperfections in sound. While Ms Qin gave her evidence in the court room, it was also given in Mandarin through an interpreter. As the trier of fact, I do not speak Mandarin and have no relevant knowledge or experience of Chinese culture. These issues of language and culture mean the Court cannot safely rely on demeanour insofar as in other contexts it might be of some assistance in assessing whether a witness appears to be telling (or trying to tell) the truth. The Court must take the evidence as it finds it as interpreted into English and weigh it against contemporaneous material and inherent probability.

Given their obvious antipathy and the passage of time since the relevant events, I do not consider I can accept the evidence of either Mr Jiang or Ms Qin in reaching a state of actual satisfaction about any fact on the balance of probabilities unless that evidence is inherently probable, not seriously in issue, against interest or independently corroborated, in particular by the contemporaneous documentary record. However, in this case, even that is not free from doubt. Even the objective evidence produced in the form of WeChat transcripts must be approached with caution. As became apparent during the hearing, not all of the translated WeChat transcripts were a complete and continuous account of the conversations to which they purported to relate.

Another reason why I propose to be cautious in accepting the evidence of Ms Qin and Mr Jiang is that on their own respective evidence, each was willing to acquiesce in arrangements that were plainly ethically or legally questionable. By his own admission (see [106] below), Mr Jiang was at least unconcerned about what, on his evidence, was a plan to avoid tax. If, as Ms Qin asserts, that statement was untrue, then it casts doubt on his veracity because he is lying. It is not necessary for the Court to decide which it is.

On her case, Ms Qin sought to persuade the Court that she did not see any difficulty in the Hongyi Payment of $185,000 because it was not part of the consideration for the purchase of the Property when, on the defendants’ version of events, it is arguable that it was (although I make no finding on that point because it was not strictly an issue before the Court).

In relation to Mr Qin, I propose to take the same approach to his evidence given his obvious, but entirely understandable, desire to support his wife. My concern about the reliability of the evidence of each of Mr Qin and Ms Qin is heightened by the fact that their affidavit evidence purporting to set out the terms of a conversation about one of the Impugned Transactions (the $86,435.60) between Ms Qin and Mr Jiang overheard by Mr Qin was in identical terms.

The Court cannot accept that two people recalling conversations in Chinese four years after the event would remember them identically not only in Chinese, but then also produce identical interpretations of them into English. Based upon just how similar those two accounts are, the Court finds that Mr and Ms Qin must have colluded in this evidence such that it cannot be satisfied that the account of either of them can be relied upon as true.

It is uncontroversial that such a finding is open to a court when confronted with otherwise unexplained (as is the case here) identical evidence of conversations: see, for example, Rosebanner Pty Ltd v Energy Australia (2009) 223 FLR 406; [2009] NSWSC 43 at [326] to [327] per Ward J (as her Honour then was). Furthermore, because it goes to one of the Impugned Transactions, it casts doubt upon the reliability of their evidence generally on any controversial matter of importance.

In or around early 2018, Mr Jiang approached Mr Qin and Ms Qin to engage their assistance in the Venture. It was not clear exactly how the arrangement came about. Mr Jiang alleged in his affidavit that he had spoken to Ms Qin about it. However, she denied this, claiming that any ideas of that nature would have been discussed between Mr Jiang and Mr Qin.

Nevertheless, it was uncontroversial that Mr Qin and Ms Qin were responsible for making arrangements for the Venture in Australia, including identifying potential grape suppliers and farmland for purchase. Mr Jiang was responsible for gathering finance in China.

Ms Qin claimed to have conducted a Google search for grape suppliers in Australia through which she identified Pasquale Cufari (Pat) who operated Sylina Pty Ltd and Sylina Investments Pty Ltd ATF Sylina Family Trust (Sylina Investments)

At that time, Sylina Investments was also the vendor of the Property. It was to be sold by auction.

On 12 April 2018, Mr Qin sent a WeChat message to Mr Jiang which stated:

According to Mr Qin’s evidence, which the Court accepts as not seriously in issue, this message referred to the Property.

Sometime in April or May 2018, Mr Jiang travelled to Australia and inspected the Property with Mr Qin and Ms Qin, and met Pat.

On 1 June 2018, Mr Qin wrote to Mr Jiang via WeChat:

The following day, Mr Qin wrote to Mr Jiang to advise him that a $20,000 “good faith” payment was required to prevent the Property being sold at auction.

On 2 June 2018, Mr Qin messaged Mr Jiang:

Another message from Mr Qin to Mr Jiang was sent on 3 June 2018, which stated:

On 5 June 2018, Mr Jiang and Mr Qin exchanged WeChat messages confirming the name, date of birth and address of each of the prospective shareholders in the proposed company. After confirming the details of the shareholders, Mr Qin sent this message to Mr Jiang:

There was no response to this in evidence.

On 6 June 2018, the Trust Deed was executed.

A Westpac Choice transaction receipt showed two withdrawals for $10,000, said by Ms Qin to be in satisfaction of the “good faith” payment. The first withdrawal occurred on 7 June 2018 and the second on 8 June 2018. Both withdrawals were made with the description “PYMT Sylina Inv Pat”. Ms Qin and Mr Qin both gave evidence that the account was their joint account, and Mr Qin added that transactions were often made on behalf of Hongyi from that account. The Court accepts this evidence about the Westpac Choice account as uncontroversial. The Court also accepts, by reason of the contemporaneous records and messages referred to in the preceding paragraphs that $20,000 was paid from Ms Qin’s and Mr Qin’s joint bank account to Sylina Investments as a “holding deposit”.

On 9 June 2018, Ms Qin sent a text message to Pat which stated: “Second $10000 was paid”.

On the same day, Mr Jiang sent a WeChat message to Ms Qin which included a photo of a message from Mr Adrian Caia to an individual named “Jenny” which stated:

According to Mr Qin, the assessment of Mr Caia (to whom Mr Qin referred to as “Andrew” in cross-examination) was the catalyst for Mr Jiang to instruct Ms Qin to renegotiate the purchase price for the Property.

In her affidavit evidence, Ms Qin said she had further negotiations with Pat in which she put a figure of $2.2 million for the purchase price, culminating in a conversation with Pat on or about 9 June 2018 to this effect:

It is this payment of $185,000 to which I have referred as the Hongyi Payment. Ms Qin says she then told Mr Qin about the agreement with Pat.

Mr Qin attested that he had the following conversation with Mr Jiang, a conversation denied by Mr Jiang:

Ms Qin’s evidence was that she telephoned Pat to confirm the agreement in a conversation to the following effect:

At the hearing of these proceedings, a certificate pursuant to section 128 of the Evidence Act 1995 (NSW) was sought and granted in respect of Ms Qin’s evidence under cross-examination about the Hongyi Payment and the price for the Property, given the obligations imposed by the Duties Act 2000 (Vic).

During cross-examination, Ms Qin maintained that the conversation between herself and Pat at [95] above occurred. However, she denied that she had used “cash” to describe the payment.

On 12 June 2018, Taylor International was registered. The company’s registered address was care of Elite 1Solution Pty Ltd (Elite 1Solution). Ms Qin was the sole director and shareholder.

ASIC records show that shares in Taylor International were held in these proportions:

Also on 12 June 2018, the Trust Deed was stamped. The registered unitholders were identical to the shareholders of Taylor International, with each holding their units in the same proportion as their shares in the company to be paid at a rate of $1.00 per ordinary unit.

On 28 June 2018, Maloney Anderson Legal wrote on behalf of Sylina Investments to Ms Qin in her capacity as director of Taylor International. The letter included a copy of the contract for sale of the Property which noted the purchase price as $2,500,000 inclusive of a 10% deposit of $250,000.

An apparently subsequent unsigned contract, which Ms Qin confirmed during cross-examination reflected the final figures for the sale of the Property, specified a purchase price of $2,000,000 inclusive of a 10% deposit of $200,000. There is no evidence as to when this document was brought into existence.

Ms Qin opened the Taylor P account in July 2018 for Taylor International.

Ms Qin opened the Taylor U account in August 2018 in her name as trustee of the Unit Trust.

On 3 August 2018, $20,000 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of the defendants in evidence as to the reason for this payment. Mr Qin’s evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.

Mr Jiang deposed in his affidavit to having the following conversation with Ms Qin in September 2018 (noting that this is a conversation which Ms Qin denied in a responsive affidavit):

On 13 September 2018, the Venture’s solicitor emailed Sylina Investments’ solicitor confirming agreement as to the final amendments to the terms of the contract for sale of the Property (being between Sylina Investments and Ms Qin as trustee of the Unit Trust) and a management agreement (being between Sylina Pty Ltd as manager and Taylor International as operator of the business to be conducted on the Property) (Management Agreement). The amendments included agreeing that the adjustment date (contract for sale) and commencement date (Management Agreement) should be amended to 1 August 2018. The email concluded with “please seek your client’ (sic) instruction at your earliest convenience, our client prefer to sign the documents tomorrow”. The email refers more than once to three invoices to be attached to the Management Agreement, but no other invoice is referred to.

On 14 September 2018, $200,000 was withdrawn from the Taylor U Account. Because the next entry in the Taylor U bank statement after the withdrawal is a bank cheque fee, I infer that a bank cheque for $200,000 was purchased. That is confirmed by a text message in evidence from Ms Qin to Pat of the same date at 11:56am saying “I just made a bank cheque” with a photo of the bank cheque in favour of Maloney Anderson Legal (Sylina Investments’ solicitors) for $200,000. At the same time, Ms Qin messaged Pat with the address and other contact details (including listing herself as contact person) for Hongyi.

The Court was not taken to any evidence that demonstrated when the bank cheque was provided to Maloney Anderson Legal, noting that the contract for sale and the Management Agreement were not signed until early October

Also on 14 September 2018, Ms Qin received an email from Sylina Pty Ltd’s administration assistant sent at 3:15pm attaching four invoices from Sylina Pty Ltd. The email read (emphasis added):

Invoices 9, 10 and 11 were the invoices to Taylor Investments that were attached to the Management Agreement (see [117] below) (the TI Invoices).

Invoice 593 was addressed to Hongyi and referred to a charge of $185,000 (exclusive of GST, which was added later in the invoice) described as “Introduction to Orange & Grape growers July 2018-June 2019” payable by 26 September 2018 (the Hongyi Invoice). It also gave credit for three amounts that it recorded as having been paid: $10,000 on 7 June 2018; $10,000 on 8 June 2018 and $20,000 on 6 August 2018. It then recorded a discount of $33,000 so that the balance owing including GST was $123,200.

It was alleged by Mr Norrie for the plaintiffs that these funds were never paid on behalf of Taylor International, but instead were paid as part of a separate business arrangement between Hongyi and Sylina Pty Ltd. Hongyi, it was alleged, was engaged in its own fruit export enterprise. Mr Norrie based this assertion on several pieces of evidence. First, the invoices noting the receipt of $185,000 were addressed to Hongyi. Second, Ms Qin had provided Hongyi’s bank details to Pat for the purpose of that payment. Third, the discount of $33,000 suggested a commercial relationship between Hongyi and Sylina Pty Ltd.

Ms Qin refuted the suggestion that at this time Hongyi had a separate business venture with Sylina Pty Ltd and there was no contemporaneous records to which the Court was taken that suggested otherwise. To the first point, Ms Qin’s explanation was that at the time the Property was being purchased, she was unsure if Taylor International had sufficient capital in its accounts or if the purchase of the Property would ultimately be successful, so she chose to make the transactions from the accounts of Hongyi. To the second point, the fact that the TI Invoices had been issued to Taylor International was explicable on the basis that they were issued in relation to the Management Agreement (see [117] below) and not the purchase of the Property. Ultimately, Ms Qin was unconcerned with the nuances of the paperwork involved so long as the $185,000 payment was received by Pat through one of his companies for the purchase of the Property.

As to the third point, and the Hongyi Invoice generally, Ms Qin’s interpreted evidence was that the description on the invoice was “wrong” and that she had inferred it was invented by Pat for the purposes of his company’s bookkeeping, but that the invoice was in fact for the Hongyi Payment. Ms Qin said she did not know what the discount was for, and that she had elected not to look a gift horse in the mouth by querying it.

On 10 October 2018, Ms Qin entered into the contract for sale (in which she was expressly described as acting in her capacity as trustee of the Unit Trust) to purchase the Property for a stated consideration of $2,000,000 including a deposit of $200,000. The contract for sale was signed by Pat on behalf of Sylina Investments on 16 October 2018.

Also on 16 October 2018, Ms Qin on behalf of Taylor International executed the Management Agreement, which was expressed to commence on 1 August 2018. It contained a schedule of the three TI Invoices from Sylina Pty Ltd to Taylor International totalling $166,196.80 (GST inc), each dated 28 August 2018 and specifying a due date of 3 September 2018:

On 1 November 2018, $100,000 was transferred from Hongyi to Sylina Pty Ltd. There is no written contemporaneous record of Hongyi’s in evidence as to the reason for this payment. Mr Qin’s evidence was that he had directed Hongyi to make this payment as part of his contribution to the Venture.

Settlement of the purchase of the Property took place on 9 November 2018. The settlement statement provided to the State Revenue Office of Victoria stated that $2,000,000 consideration had been paid by the Unit Trust for the purchase. A settlement sheet prepared by the Unit Trust’s solicitors includes among the sums to be paid three cheques to Sylina Pty Ltd in satisfaction of the TI Invoices in the schedule to the Management Agreement set out in [11] above. However, the settlement sheet does not refer to either the $20,000 “holding deposit” or to the Hongyi Payment.

When pressed during cross-examination about why there was no reference to the additional $185,000 she claimed to have paid to Sylina Pty Ltd in what was provided to the State Revenue Office of Victoria, Ms Qin stated that she understood the payment to be an “additional condition to make this 2 million deal work” (Tcpt, 7 November 2022, pp 269(31-2)). It was not, strictly speaking, to her mind part of the purchase price because it was an advance payment made to ensure Sylina Pty Ltd could continue to operate its business before the purchase was finalised.

Ms Qin said that she did not inform Taylor Investment’s lawyers of the Hongyi Payment because, in her view, it formed part of the business deal with Sylina Pty Ltd and was not strictly relevant to the purchase price for the Property. Rather, it was an extra inducement to secure the overall agreement between Sylina Pty Ltd and Taylor International.

On 12 November 2018 at 2:51pm, Ms Qin received another email from Sylina Pty Ltd’s Administration Assistant which said:

The amended Hongyi Invoice credited a payment of $100,000, leaving a balance said to payable of $27,200 (GST inc).

Also on 12 November 2018, $20,000 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of Hongyi’s in evidence as to the reason for this payment. Mr Qin’s evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.

On 13 November 2018, $7,200 was transferred from Hongyi to Sylina Pty Ltd. There is no contemporaneous record of Hongyi’s in evidence as to the reason for this payment. Mr Qin’s evidence was he had directed Hongyi to make this payment as part of his contribution to the Venture.

The payments from Hongyi to Sylina referred to in [88], [105], [140], [124] and [125] above totalled $167,200. It will be recalled that the claim for account against Ms Qin is for $162,802.

The salient facts which the Court finds established by the matters set out in [77] to [126] above – whether as primary facts or matters of inference – are:

The fundamental issue is whether the Court accepts Ms Qin’s evidence of the conversation with Pat set out in [92] above, together with Mr Qin’s evidence that he directed the various payments from Hongyi to Sylina Pty Ltd in fulfillment of his obligation to contribute to the Venture. Given the Court’s approach to Ms Qin’s and Mr Jiang’s evidence (noting his denial of the relevant conversation), the question is whether the facts and circumstances which I have set out in the preceding paragraph provide sufficient corroboration or circumstantial evidence for the Court to be actually satisfied on the balance of probabilities that Pat and Ms Qin came to the arrangement evidenced in that conversation, which arrangement was then given effect by means of the issuing and payment of the Hongyi Invoice.

For the following reasons, I answer that question in the affirmative and find accordingly:

Mr Norrie submitted that a Jones v Dunkel inference should be drawn against the defendants by reason of their failure to call Pat. I do not agree. Pat is a third party witness who it could not be said by reference to any other matter would be in “the camp” of the defendants. It is therefore not the case that the Court would conclude, as the first step in the application of Jones v Dunkel, that it would be expected that Pat would be called by the defendants rather than the plaintiffs. In my view, each party had an equal connection to Pat through the Venture, including the Management Agreement, and were equally likely to call him in their case, but neither has done so.

The Court therefore finds that:

The plaintiffs’ claim in relation to the Hongyi Payment therefore fails. If, however, I am wrong in this conclusion, the plaintiffs’ claim still fails for the reasons set out in [59] to [61] above.

It will be recalled that the plaintiffs sought these declarations:

It was common ground that the making of the declarations was discretionary. While the defendants did not oppose the declaratory relief, they submitted it was a matter for the plaintiffs to satisfy the Court of its utility.

The plaintiffs submitted that there was utility in the declarations because:

Neither reason is persuasive.

The answer to the first is that the relevant pleading admitted by the defendants only alleged that the plaintiffs had executed the Trust Deed, so there was no reason for them to have said more. In any event, there was no suggestion over the entire hearing from the defendants that they had not executed the Trust Deed or that they were not bound by it. During the hearing a copy of the Trust Deed apparently signed by the plaintiffs and the defendants was tendered without objection.

The answer to the second is that whatever the defendants’ “concern” may have been, the hearing was conducted by all parties on the basis that Ms Qin had been validly removed as trustee. Her case was that she had discharged her duty to vest the assets of the Unit Trust in Mr Xie as the successor trustee.

In short, there was by the time of the hearing no dispute between the parties that required resolution by the making of the declarations. The Court is not satisfied there is any utility in making the declarations and, in the exercise of its discretion, declines to do so.

There is an additional matter upon which the Court relies, being the entirely unsatisfactory nature of Mr Xie’s evidence about his role as trustee. At the end of his cross-examination, I was left with the overwhelming impression that he had no interest in the affairs of the Venture and even less, were that possible, in his role as trustee (in respect of which he seemed to leave everything to Mr Qian).

Mr Xie’s evidence was that:

The Court regards Mr Xie’s attitude towards the office of trustee that this evidence demonstrates as being completely unsatisfactory. There was, by the time of the hearing, no dispute between the parties about the validity of Mr Xie’s appointment. That is sufficient reason not to make the declaration of validity that was sought. However, while Mr Xie’s fitness to be the trustee was not an issue before the Court, nor does the Court wish to perhaps be seen as approving his purported discharge of that role by making a declaration as to the validity of his appointment.

Ms Qin claimed to have loaned Taylor International $30,000 for the payment of tax invoices issued to that company by Sylina Pty Ltd. Copies of the invoices she alleged had been paid were tendered in the proceedings.

The Court finds the facts to be as set out in [145] to [166] below.

A statement from Sylina Pty Ltd to Taylor International dated 20 September 2019 summarised the amounts due as follows:

The total of these amounts was stated to be $20,984.53 and was due to be paid by 30 September 2019.

On 1 October 2019, Ms Qin sent a WeChat message to Mr Qian at 5:08pm, the English translation of which stated:

On the same day, Mr Qian sent a copy of Ms Qin’s message to a WeChat group that included Mr Jiang and the other plaintiffs. Mr Xie responded to Mr Qian’s message:

At 6:30pm that day, Mr Qian replied to Ms Qin:

Ms Qin sent a further message to Mr Qian at 6:41pm on the same day:

On 2 October 2019 at 1:22pm, Ms Qin sent a copy of her messages with Mr Qian at [147] to [150] immediately above to Mr Jiang. She then sent Mr Jiang a further message which stated:

Also on 2 October 2019, a deposit of $10,000 from the joint account of Ms Qin and Mr Qin was made into the Taylor P account.

Mr Jiang responded to Ms Qin the following day, being 3 October 2019, at 4:19am:

At 2:19pm on 3 October 2019, Ms Qin sent a follow-up message to Mr Qian:

Mr Qian replied at 2:21pm on the same day:

On 7 October 2019, another deposit of $10,000 was received by the Taylor P account from the joint account of Ms Qin and Mr Qin.

Several days later, on 9 October 2019, a further exchange took place between Ms Qin and Mr Qian on WeChat:

On 16 October 2019, Ms Qin again contacted Mr Qian on WeChat, with no apparent reply until 29 October 2019 (see [165] below):

Also on 16 October 2019, a third deposit of $10,000 was received into the Taylor P account from the joint account of Ms Qin and Mr Qin.

On 21 October 2019, a letter was prepared by Elite 1Solution “to whom it may concern” which stated:

The letter was signed by Ya Wang. Its contents could only have come from instructions given by Ms Qin.

On 22 October 2019, Ms Qin sent a WeChat message to Mr Jiang:

No response from Mr Jiang is recorded. On 28 October 2019, Ms Qin sent another WeChat message to Mr Jiang which resulted in this exchange:

No further WeChat messages were provided to confirm whether Mr Jiang had ever responded to Ms Qin.

On 29 October 2019, Mr Qian sent this message to Ms Qin via WeChat:

On 31 October 2019, a letter was sent by Revolance Legal that was addressed to the “Shareholders of Taylor International Investment Pty Ltd” on behalf of Ms Qin. The contents of that letter as it relates to the alleged $30,000 loan are set out below:

It is no criticism of Mr Norrie to characterise his submissions opposing the Debt Claim as faint. It could not be – and was not – suggested that the $30,000 was a gift to Taylor International. Both the payments and the need for them emerge clearly from the contemporaneous documents and communications set out above. On the basis of the corroboration provided by that evidence, the Court accepts Ms Qin’s evidence that she advanced the $30,000 to Taylor International as a loan. In the absence of evidence of a term otherwise, the loan was repayable on demand, that demand being at least made by the Debt Claim being filed in the Local Court. The Court also finds it has not been repaid. Ms Qin is therefore entitled to judgment for $30,000 and interest against Taylor International.

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

What follows assumes that the plaintiffs established that the Impugned Transactions involved funds that were assets of the Unit Trust.

Whether framed as an account or for an order to vest trust assets, Mr Lees, with respect correctly, accepted that the onus was on Ms Qin to satisfy the Court that she had Mr Jiang’s authority to engage in the Impugned Transactions.

The defendants alleged that the amount of $67,016.10 represented repayment on Mr Jiang’s authority (conveyed in a conversation on 27 or 28 July 2018 between Mr Jiang and Mr Qin) of a loan of RMB 400,000 that had been advanced to Mr Jiang by Mr Yuan Tian. Mr Jiang denied the conversation with Mr Qin. Mr Qin and Yuan Tian were, according to Mr Qin, close friends of several decades.

I will next set out the evidence as it emerged about this Impugned Transaction. Given that there is evidence from the IMBK records that on 9 June 2018 records RMB 1,250,000 as being converted to $252,016.10, in what follows I will assume that A$1 is approximately equivalent to RMB 5. Therefore, $67,016.20 is approximately RMB 335,080 – on any view not the same amount as the RMB 400,000 loan.

Mr Qin gave evidence that Mr Jiang was experiencing financial difficulties in early 2018 and that, during a visit to Mr Jiang in Shanghai on or about 1 May 2018, Mr Qin had offered to seek a loan from Mr Tian on Mr Jiang’s behalf (the Yuan Tian Loan). Mr Qin attested that Mr Tian agreed to loan Mr Jiang RMB 400,000 to be repaid within two months. It would appear that this recollection is wrong and that the term was three months (see [187] below).

A WeChat exchange between Mr Qin and Mr Jiang on 2-3 May 2018 stated:

After he was shown a copy of the WeChat message above during cross-examination, Mr Jiang accepted that Mr Qin had arranged the Yuan Tian Loan for him because he (Mr Jiang) was experiencing financial difficulties. However, Mr Jiang’s evidence was that the Yuan Tian Loan was unrelated to Taylor International. Rather, the Yuan Tian Loan was provided in respect of the Juji Fruit Company (Juji) (a company connected with Mr Jiang), who according to Mr Qin appointed him (Mr Qin) as Juji’s procurement director (Mr Qin had a business card to this effect). He refuted the notion that he would have mixed the funds of the two companies.

On 4 May 2018 at 11:52am, Mr Qin sent a WeChat message to Mr Jiang which stated:

Mr Jiang responded a few hours later at 2:48pm: “Ok”.

In her first affidavit. Ms Qin attested that she had received a transfer of funds on 29 June 2018 from Mr Jiang totalling $67,016.10. These funds were, on her evidence, for the purpose of “repaying Jiang’s personal loan occurred in China”. A screenshot of messages between Ms Qin and Mr Jiang on 29 June 2018 showed a message from Ms Qin which stated “AUD received”.

However, Ms Qin’s later affidavit stated that Mr Jiang had deposited an amount of $252,016.10 into his account with IMBK and she had later withdrawn $67,016.10 because that was the amount of cash available at the IMBK branch on that day. Ms Qin reiterated this version of events during cross-examination.

I have already noted that the IMBK foreign exchange record dated 29 June 2018 showed a transfer of RMB 1,250,000 (the equivalent of AUD $252,018.10) by Mr Jiang and included an amount of $67,016.10 which was recorded to have been withdrawn in cash by Ms Qin.

Ms Qin maintained that the reason she had withdrawn the funds in cash was because there was, at that time, no bank account for Taylor International or the Unit Trust. There is no doubt that neither of those bank accounts had been opened at that time. According to Ms Qin, Mr Jiang had authorised the withdrawal because he did not want his money to remain with IMBK which was a foreign exchange company and not a bank. Ms Qin stored the money for safekeeping, apparently under her bed although it is unclear whether “under the bed” was simply shorthand for the funds being within her possession.

On 23 July 2018, Mr Qin and Mr Tian had this exchange via WeChat:

Mr Qin claimed the RMB 110,000 was money from his own personal funds because Mr Jiang had failed to repay Mr Tian.

On or around 27 or 28 July 2018, Mr Qin claimed to have had a conversation with Mr Jiang about repaying the Yuan Tian Loan which included an exchange to the following effect:

Mr Jiang denied this conversation in his affidavit and during cross-examination.

On 1 August 2018, Mr Qin sent a message to Mr Jiang via WeChat which included what appeared to be Mr Qin’s bank account details. Mr Jiang confirmed receipt of the message. Mr Qin then sent this message to Mr Jiang:

That message from Mr Qin to Mr Jiang was accompanied by a photograph of a handwritten document which, when translated from Chinese, was a “Loan Agreement” dated 3 May 2018. The terms stated in the document were:

The following day, on 2 August 2018, Mr Qin sent a further WeChat message to Mr Jiang which stated:

There was disagreement as to the proper translation of this message. The Mandarin interpreter assisting Mr Qin to give his evidence was asked to sight-translate the original message in Chinese. The interpreter stated that the message was: “… bank money received [exclamation point]. I shall – I will go and wire it to Tian [exclamation point]. Thank you [exclamation point]” (Tcpt, 9 November 2022, pp 419(4-6)).

Mr Jiang immediately responded:

No transfer receipt or other record was tendered as evidence of the above transfer. During cross-examination, Mr Jiang explained that he “couldn’t really locate such a thing. I really forgot which bank account this money was transferred into Pei Hong Qin’s account” (Tcpt, 3 November 2022, pp 206(34-7)). Mr Qin then objected to the word “bank” in the translation, which he argued was inaccurate. However, nothing turned on this because he nevertheless accepted the contents of subsequent correspondence on 2 August below.

Mr Qin transferred a further RMB 261,312 to Mr Tian on or about 2 August 2018, evidenced by this exchange between them on WeChat:

Mr Jiang’s initial version of events in his affidavit was that he had repaid the Yuan Tian Loan directly in Shanghai. However, during cross-examination he recalled that he had made the repayment to Mr Qin and it was Mr Qin who then repaid the Yuan Tian Loan to Mr Tian.

However, on 9 August 2018, Mr Jiang sent this message (within the body of a broader message related in full at [220] below) to Mr Qin:

Mr Qin stated that this referred to Mr Jiang having paid money to Ms Qin and not to a separate payment from Mr Jiang to Mr Tian.

Mr Qin responded on even date with this WeChat message (also within the body of a broader message related in full at [220] below):

Mr Jiang sent a further response which included:

Ms Qin said during cross-examination that it was her understanding that Mr Qin had repaid Bin Lu on Mr Jiang’s behalf from Mr Qin’s own funds. Mr Qin also asserted that he had repaid at least part of the loan from his personal funds during cross-examination.

To confuse matters further, in re-examination Mr Qin was shown two transaction receipts from Bank of China dated 4 October 2018 showing a transfer of RMB 220,000 and RMB 180,000. Mr Qin claimed these were transfers he made to the IMBK account of Ms Qin from his own funds. However, the bank documents clearly record the payees as two other people and not Ms Qin. I regard Mr Qin’s explanation as an example of his unreliability as a witness.

Finally, Ms Qin gave evidence in cross-examination that she felt that the $67,016.10 that she had been keeping was money owed to the couple by Mr Jiang for having repaid the Yuan Tian Loan. She could not account for where the funds were currently because “I started using a bit of here, a bit of there, and on occasional basis” until there were no longer any funds left. After what she regarded as the “finalisation” of the Yuan Tian Loan by Mr Jiang and her husband, “it became my money, then how…I use it, it’s my business” (Tcpt, 7 November 2022, pp 297(1-22)).

Attempting to analyse this evidence, the only evidence of Mr Jiang authorising Ms Qin to apply the $67,016.10 towards the repayment of the Yuan Tian Loan is Mr Qin’s uncorroborated account of a conversation with Mr Jiang. For reasons set out at [71] and [72] above, the Court does not accept Mr Qin’s uncorroborated evidence of the conversation. That is enough to support the conclusion that Ms Qin has failed to discharge the onus which they carry to make out their case of authorised use of the funds.

However, there is also nothing in the surrounding contemporaneous evidence to support such an authorisation. The documents establish that on 2 or 3 May 2018 Mr Qin did obtain on behalf of Mr Jiang a loan from Mr Tian of RMB 400,000 repayable in two or three months. RMB 250,000 appears to have been transferred to Ms Qin and RMB 150,000 to Mr Jiang. Ms Qin’s initial evidence that she withdrew the amount for the purposes of the repayment of the Yuan Tian Loan is plainly wrong because the withdrawal antedates the alleged conversation between Mr Qin and Mr Jiang. The documents also show that Mr Qin paid Mr Tian RMB 371,000 (RMB 110,000 on 23 July 2018 and RMB 261,000 on 2 August 2018). However, in their message exchange of 9 August 2018, Mr Qin did not traverse Mr Jiang’s assertions that he (Mr Jiang) had repaid Mr Tian.

There is no doubt that Ms Qin considered herself entitled to apply the $67,016.10 cash, which she kept “under the bed”, for her own purposes. However, for the reasons set out in [201] and [202] above, the Court concludes that she has failed to discharge the onus of demonstrating on the balance of probabilities that she was authorised to use the money for something other than the Unit Trust and would, but for the Court’s conclusion in [53] above, be liable to repay that amount with interest to Mr Xie as trustee of the Unit Trust.

Ms Qin’s answer to this claim depended, as a starting point, on the Court accepting Mr Qin’s evidence (set out at [184] above) that Mr Jiang had authorised the balance of the $252,016 transfer (being $185,000, see [45] to [47] above) to pay for purchases of fruit that had been made by Mr Jiang.

But for the conclusion in [53] above, the Court accepts Mr Norrie’s submission that this aspect of Ms Qin’s defence to an action for account would fail for want of corroboration, not just of that conversation, but also in relation to the disbursement of the funds to pay for fruit purchases at all.

The Court relies on three matters.

First, Ms Qin’s evidence about the reason for the transfer was inconsistent. In her affidavit she said she had transferred the money to Hongyi “because I do not want to push so much cash at home”. Other evidence she gave was to the effect that the transfer was made by Mr Jiang for the original purpose of “his procuring fruits”, however, she asserted during cross-examination that the purpose later changed in accordance with Mr Jiang’s circumstances. Ms Qin also said that Mr Jiang was made aware that the funds had been transferred to Hongyi, but she could not recall exactly when or how this had occurred, or whether it had in fact been her or her husband who had told Mr Jiang.

Second, there was no evidence in WeChat, text or other documentary form at or at any time after the transfer evidencing that Mr Jiang (or any of the plaintiffs) knew of the transfer to Hongyi or had authorised it to be used to pay for fruit purchases or anything else.

Third, the defendants have not been able to produce any records, including bank statements or invoices, to prove the application of the $185,000 to the purchase of fruit. Ms Qin’s claim in cross-examination that this was because Hongyi operated two separate bank accounts was as illogical as it was unconvincing.

Mr Qin alleged that the $86,435.60 cash withdrawal over 13 and 14 September 2018 represented partial repayment of a loan of approximately RMB 950,000 (A$189,456) by Mr Bin Lu to Mr Jiang which Mr Qin had repaid (the Bin Lu Loan). It was the defendants’ evidence that in a telephone conversation between Ms Qin and Mr Jiang on 13 September 2018 which was overheard by Mr Qin, Mr Jiang had authorised Mr Qin receiving the balance of funds left in the IMBK account after a transfer of $270,000 into the Taylor U account.

Before considering the contemporaneous documented exchanges between the parties, a convenient overview of the course of events was provided by Bin Lu in an affidavit filed for the plaintiffs. Bin Lu was not required for cross-examination and the Court accepts his evidence, which was also corroborated by the documents to which he refers:

During his cross-examination, Mr Jiang confirmed that he had been experiencing issues with his capital and Mr Qin had suggested to him that he might borrow funds from Bin Lu. Mr Lu was acquainted with Mr and Ms Qin since he had asked for their assistance to enrol his daughter in an Australian school in 2017.

On 29 July 2018, Mr Jiang sent this message to Mr Qin via WeChat:

No response is recorded from Mr Qin, however, the following day, Mr Jiang sent a picture of his bank card to Mr Qin and details of his account, being “XX Branch, Agriculture Bank of China, Donghua JIANG”.

In his affidavit, Mr Jiang said that in late July 2018 he had a conversation with Mr Qin to this effect:

On 29 July 2018, Mr Qin sent this message to Mr Lu on WeChat:

WeChat messages between Mr Qin and Mr Lu dated 30-31 July 2018 stated:

On 5 August 2018 at 1:01pm, Mr Jiang sent a WeChat message to Mr Qin which stated:

Mr Qin replied one minute later at 1:02pm:

On 9 August 2018, WeChat messages record this exchange between Mr Qin and Mr Jiang:

On 16 August 2018, Mr Qin wrote to Mr Lu via WeChat requesting payment of RMB 162,601.79 for import taxes. Mr Qin instructed Mr Lu to make this payment to Mr Qin’s company, Shanghai Kaiyi International Trading Co. Ltd (Kaiyi). Mr Qin’s explanation for this was that Kaiyi had been enlisted to assist in selling the two containers of mandarins in order to ensure Mr Lu received his money back, and this had purportedly been done with the knowledge and consent of Mr Jiang.

On 3 September 2018, Mr Qin repaid RMB 800,000 to Mr Lu, partly by electronic transfer and partly in cash. According to Mr Qin, the source of these funds was from the proceeds of sale of the mandarin containers. No documentary evidence of this was provided. During cross-examination, Mr Qin said that he was unable to obtain many of the relevant financial records because the documents were located in Shanghai. According to Mr Qin’s calculations, RMB 170,000 remained to be paid to Mr Lu.

Ms Qin initially attested that in or around mid-September 2018, she received a sum of $86,435.60 from Mr Jiang. Her later affidavit clarified that on 13 September 2018 she had received RMB 1,800,000 (AUD$356,435.60 equivalent). Ms Qin withdrew $40,000 cash from the IMBK on the same day and withdrew a further $46,435.60 cash the following day, being 14 September 2018. The details of this transaction are recorded in [50] and [51] above.

Ms Qin said in cross-examination that she had to have withdrawn the funds in these amounts because the Eastwood IMBK branch did not have sufficient cash on the premises for her to withdraw the entirety of the amount in one transaction. It was unclear why she had not simply transferred the funds into her personal bank account rather than withdrawing it as cash, but her evidence was that she took the view that transferring large sums of money would attract unnecessary issues, for example, scrutiny from the Australian Taxation Office.

WeChat messages with Yanyan from IMBK on 13 September 2018 record this exchange with Ms Qin:

Yanyan and Ms Qin exchanged further WeChat messages on 14 September 2018:

Ms Qin’s affidavit evidence was that on 13 September 2018 she had a conversation with Mr Qin in which the latter expressed discontent that Mr Jiang had transferred money to Ms Qin for the Venture in circumstances where Mr Jiang had not reimbursed him (Mr Qin) for the money he had repaid to Bin Lu. Ms Qin said she immediately relayed this to Mr Jiang in a telephone conversation in these terms:

Mr Qin claimed that he had overheard the conversation and related the contents of that conversation in identical terms to Ms Qin in his own affidavit. Mr Qin’s explanation for this was that it was an error in the English translation of the affidavits because it was not natural for the conversations to be related in exactly the same words by both of them. Mr Jiang denied this conversation took place.

On 5 November 2018, Mr Qin paid RMB 170,000 to Bin Lu. On that day, Mr Qin sent a WeChat message to Mr Lu which stated:

Later that day, Mr Qin sent a follow-up email to Mr Lu which stated:

In his affidavit, Mr Qin explained that the $86,435.60 was split, with $30,000 paid to Kaiyi and a farmer who had retained two containers of fruit in Australia, $25,000 to a representative farmer in China, and the remaining $29,000 to Bin Lu. Mr Qin maintained his evidence during cross-examination. However, as was the case with the source of his RMB 800,000 repayment (see [222] above), Mr Qin was unable to produce any supporting records.

But for the finding in [53] above, the Court would not have been actually satisfied on the balance of probabilities that Mr Jiang had authorised Ms Qin to use the $86,435.60 balance to pay to Mr Qin. The only evidence of that authority is a conversation which completely lacks independent corroboration by any means. Furthermore, I have already concluded (see [72] above) that the conversation – recorded in identical terms in the defendants’ respective affidavits - is the product of collusion and cannot be relied upon. Given the view the I have taken of the protagonists’ credit, I am unable to be actually satisfied on the balance of probabilities that the conversation occurred.

I make three concluding observations about this Impugned Transaction.

First, I accept that Mr Qin and Ms Qin had every reason to feel that Mr Qin was entitled to reimbursement by Mr Jiang. However, proving a basis for a sense of entitlement (not dissimilar to that to which I referred in [203] above) is not the same thing as satisfying the Court that authority for the reimbursement had actually been given.

Second, the circumstances surrounding the Bin Lu Loan are well established by the parties’ WeChat and text messages. It is remarkable, and productive of further doubt in my mind, that there is no such record of Mr Jiang’s alleged authorisation.

Finally, while not of itself dispositive, my doubt is also based on the order of events compared to what Ms Qin said she was authorised to do: “You transfer the sum of $270,000 to Taylor company, the balance can be paid to Qin”. It strikes me as odd, to say the least, that allegedly having just had that conversation, the IMBK records (see [50] and [51] above) establish that Ms Qin proceeded in the opposite order and did not instruct the transfer to the Taylor U account to be done until the next day, 14 September 2018.

The result of paragraphs [169] to [236] is that, but for the Court’s conclusion in [53] above, Mr Xie would have been entitled to a judgment on behalf of the Unit Trust against Ms Qin in the amount of the Impugned Transactions plus interest.