CPF Group Pty Ltd v Everest Index International Pty Ltd (Receivers and Managers Appointed)

The plaintiff, CPF Group Pty Limited (CPF), as the lender, entered into a loan transaction by way of a loan deed, a security deed and a mortgage all dated 25 May 2023, as varied by a supplemental deed of variation dated 14 July 2023. The first defendant, Everest Index International Pty Ltd (Everest) was the borrower and the second defendant, Mr Richie Lin Ze Wang (who without any disrespect will be referred to as Richie), the third defendant, Li Qing Zhuang (Ms Zhuang) and the fourth defendant, Ding Seng Wang (Mr Wang) were the guarantors. Ms Zhuang and Mr Wang, who are Richie’s parents, were also the mortgagors who gave the mortgage over their property in Vaucluse to secure repayment of all amounts due to CPF. The transaction is, for convenience, referred to as the CPF loan and mortgage.

The purpose of the CPF loan and mortgage was to discharge the obligations owed by Ms Zhuang, Mr Wang and Richie, as guarantors, and another company, as borrower, under a loan transaction between them and ALS428 Pty Ltd (ALS) secured by first registered mortgage over the Vaucluse property (the ALS loan and mortgage).

Everest, of which Ms Zhuang and Mr Wang were directors and the only shareholders, has not repaid the amounts due under the CPF loan and mortgage. Everest is under external administration following the appointment of a receiver and manager on 23 September 2024.

In order to understand the issues that arise in this matter, it is necessary to review the pleaded cases.

By a statement of claim filed on 3 April 2024, CPF in substance alleges that Everest, Ms Zhuang, Mr Wang and Richie have defaulted on their obligations under the CPF loan and mortgage and seeks the following:

Everest has not filed an appearance or a defence. It was not in dispute that the receiver and manager did not wish to take any part in the proceedings.

Ms Zhuang and Mr Wang filed their amended defence on 18 July 2024. That amended defence includes admissions as to the entry into the CPF loan and the mortgage of the Vaucluse property as varied with non-admissions as to the precise effect of certain documentation in relation to the CPF loan and mortgage. They admit that a notice of demand was sent on 1 March 2024 but in substance deny any alleged defaults under the CPF loan or the mortgage or any liability as alleged in the statement of claim. These denials are made on the basis set out in the first cross claim in these proceedings which has been brought by Ms Zhuang and Mr Wang against:

Ms Zhuang and Mr Wang’s further amended statement of cross claim in respect of the first cross claim was filed in court on 17 March 2026 and seeks relief which can be summarised as follows:

The basis for claiming this relief can be summarised as follows:

CPF’s defence to the first cross claim was filed on 10 October 2024 and this was taken by the parties as dealing adequately with that cross claim notwithstanding that a further amended statement of cross claim in respect of the first cross claim was filed in court on 17 March 2026. In substance, CPF’s defence to the first cross claim raised the following:

Mr Green’s further amended defence to the first cross claim was filed on 17 March 2026 and raised in substance the following:

Richie is self-represented and only belatedly decided to participate actively in these proceedings in the circumstances outlined in the judgment of Faulkner J delivered shortly before the hearing (CPF Group Pty Ltd v Everest Index International Pty Ltd, 6 March 2026 unreported). Richie filed his defence on 3 March 2026. Faulkner J, however, refused him leave to rely on his affidavit sworn on 3 March 2026 for the reasons given by his Honour on 6 March 2026. There has been no appeal against the orders made by Faulkner J on 6 March 2026. Nor did Richie renew his application for leave to rely on his affidavit during the hearing which commenced on 16 March 2026 before me.

Richie’s defence includes essentially the same admissions, non-admissions and denials as his parents’ amended defence and says that he repeats various paragraphs of the pleading in his parents’ first cross claim as if they were set out in his defence.

CPF also brought a second cross claim against the partners of Pikes & Verekers (P&V), including Mr Green. The statement of cross claim was filed on 11 October 2024. In this second cross claim, CPF claimed damages or equitable compensation as well as costs against P&V. The claim was essentially based on the following:

In general terms, P&V’s defence to the second cross claim essentially admitted that Mr Green acted for both CPF and Everest, Ms Zhuang, Mr Wang and Richie for the purposes of the refinancing of the ALS loan and mortgage and that he breached his duties to CPF as alleged. P&V deny, however, that CPF would not have entered into the transaction if there had been no breach of duty and deny any loss or damage being suffered by CPF. In addition, it was admitted that Mr Green’s conduct was engaged in in the course of P&V’s partnership business. Finally, P&V relied on the limitation of liability under the New South Wales Professional Standards Scheme under the Professional Standards Act.

In this matter, the evidence included most significantly the documentary evidence admitted without objection as well as oral evidence from:

There were also two witnesses called by CPF whose evidence was not challenged:

Mr Reed was a director of CPF at the relevant times and gave evidence of how the CPF loan and mortgage came to be entered into as well as providing evidence of default and calculations of amounts due under the CPR loan and mortgage at various times and on various bases and other similar information.

Mr Reed was cross examined but was not effectively challenged as to any of his evidence. There was nothing of substance in the documentary evidence which was inconsistent with his affidavit or oral evidence. Mr Kabilafkas of counsel who appeared for Mr Wang and Ms Zhuang did put to Mr Reed that it was his father rather than Mr Reed who was the final decision maker in relation to whether the transaction to refinance the ALS loan and mortgage was entered into by CPF in light of correspondence such as Mr Green’s letter of 26 May 2023 addressed to Mr Reed’s father rather than Mr Reed. Mr Reed’s evidence was to the effect that both he and his father decided to go ahead with the CPF loan. Although Mr Reed was a director of CPF and his father was not at the relevant times, both Mr Reed and his father, as well as others, were shareholders in CPF. Having regard to the evidence as a whole, there did not appear to me to be any basis for not accepting Mr Reed’s evidence in relation to decision making. Generally, Mr Reed’s evidence was inherently credible and consistent with the documentary evidence. In the witness box, he appeared to be straightforward in his answers and genuinely responding to the questions asked. I accepted Mr Reed’s evidence as honest and reliable.

In respect of Mr Wang and Mrs Zhuang’s evidence, it was submitted that due to the circumstances, including age and the proximity between the relevant events and the present, “their memory of dates and events was not very good”, and that these and related proceedings were causing “great stress”. I have considered these matters among others in assessing their evidence.

Particular care was also required in assessing Mr Wang’s evidence as it was given through an interpreter. In addition, Mr Wang is senior in years and the difficulties in communication through an interpreter requiring significant concentration over long periods should not be underestimated. Watching and hearing Mr Wang give evidence, I formed the view that he was intelligent and generally seeking to be precise in his understanding of the question and in his answers. This meant that on some occasions questions were required to be asked a number of times before a responsive answer was given.

On other occasions, however, it appeared to me that Mr Wang was trying to make a point which he believed assisted his case rather than attempting to answer the question he was asked. For example, the transcript records: [1]

On other occasions, Mr Wang’s answers indicated that he was attempting to avoid answering when he thought the answer might harm or not assist his case. For example: [2]

On another occasion Mr Wang’s answers in cross examination appeared to be inconsistent with his affidavit evidence. Mr Wang had said in par 9 of his affidavit, “I have always relied on my family, especially Richie, to help with financial matters”. In cross examination, his evidence was: [3]

Passages such as these from the cross examination caused me concern as to whether Mr Wang’s evidence was entirely reliable. They illustrated Mr Wang attempting to avoid giving answers which he perceived at the time might not assist his case and to give answers which he perceived might assist his case even if not responsive to the question. It was based on this type of evidence from Mr Wang together with observing him give evidence, his lengthy pauses when an answer might not assist his case and his drawing distinctions which were not responsive to the question asked that I formed the view that Mr Wang’s evidence should not be accepted in toto.

In particular, as a result of this type of evidence, I did not accept Mr Wang’s evidence where he denied that he relied on Richie to assist him and his wife by translating from English into Mandarin correspondence, documents and conversations relating to refinancing the ALS loan with CPF.

I was confirmed in the view that Richie did assist Mr Wang with translating correspondence, documents and conversations not only by par 9 of his affidavit but also by earlier evidence Mr Wang gave in cross examination such as the following: [4]

As I understood it, part of what Mr Wang was saying was that he and his wife did rely on Richie to help with financial matters by translating English documents or conversations into Mandarin. When it came, however, to the financial rationale for a deal or transaction and whether or not to enter into the transaction, Mr Wang and his wife relied on their own judgment and experience rather than receiving financial advice from Richie. Thus, I accepted Mr Wang’s evidence when he said, “He just helped me with translation, not in terms of dealing with the financial matters. If it’s a dealing itself, it’s me and my wife.” This was consistent with Mr Wang and his wife being involved with various companies including Everest for a number of years, with his evidence that he had worked in business until about 2016 when he had retired, and with his evidence that his wife worked in and dealt with the business, including using email, when she was working. It was also confirmed by their circumstances including their owning the Vaucluse property.

I also accepted other parts of Mr Wang’s evidence where he acknowledged making financial decisions based on his own experience and understanding about matters such as interest rates, fees and charges associated with refinancing the ALS loan and mortgage, offers for the sale of the Vaucluse property and similar matters. [5] I did not accept his evidence where Mr Wang effectively denied that he understood the substance of relevant transactions or denied that correspondence and documentation concerning the CPF loan and mortgage were explained to him in Mandarin by Richie. On the contrary, on the whole of the evidence including Mr Wang’s acceptance that there was a general practice that where letters were sent to Mr Wang and his wife by Mr Green, Richie either translated the letters or told them the substance of what was in them, [6] I was satisfied that Richie did explain to his parents in Mandarin the substance of the relevant transactions and in particular he explained to them the correspondence and documentation concerning the CPF loan and mortgage which was sent to Mr Wang and Ms Zhuang by email or by letter.

I also find that Mr Wang and Ms Zhuang authorised Richie to communicate on their behalf with Mr Green concerning the refinancing of the ALS loan and mortgage. [7] I was also satisfied that Mr Wang would not sign legal documentation without knowing the substance of what that documentation contained. This was confirmed to a certain extent by his evidence in relation to a different loan by Vereker Administration Pty Limited (VAPL) to another company of which Ms Zhuang and Mr Wang were directors, Harvestone Wellmas Pty Ltd (Harvestone), entered into on 20 December 2022, which was guaranteed by Mr Wang, Ms Zhuang, Richie and Everest, and which was to refinance a loan to Harvestone from PCL Money Pty Limited. His evidence was: [8]

Finally, I accept the non-controversial parts of Mr Wang’s evidence but otherwise I treated his evidence with caution, especially when it was not supported by contemporaneous documentation.

As to Ms Zhuang’s evidence, once again caution was required to be exercised in reaching any negative view concerning her evidence because of the difficulties with interpretation, the length of the cross examination and her senior years. From seeing her give evidence and the answers she gave, I formed the view that she also was an intelligent woman with some experience in, and understanding of, business matters including interest rates, fees and charges relating to refinancing the ALS loan and mortgage and similar matters. [9] I also formed the view that she could be forthright and was not acting under the influence of Richie or her husband. Indeed, she was clear that Richie was to do what she instructed him to do. Ms Zhuang said: [10]

Similar to Mr Wang, however, Ms Zhuang also at times appeared to be attempting to avoid answering questions where the answer might not assist her case or to give an answer that was unresponsive but she thought assisted her case. Nonetheless, on occasion Ms Zhuang eventually did answer the question. An example of this type of evidence is: [11]

Another example of this type of evidence where Ms Zhuang attempted at first to advance her case by her answers but eventually conceded what was being put to her was: [12]

In addition, I find that Ms Zhuang generally did not sign legal documentation without knowing the substance of what the documentation contained. I was also concerned that Ms Zhuang’s command of English may not be as limited as she said. At one point in cross examination, she put on her reading glasses apparently to read a document in English to which her attention had been directed. [13] In this regard, Mr Kabilafkas submitted that this did “not mean she could read English”. Taking that into account, from my observations, I formed the view that her gesture was inconsistent with her being totally unable to read English. This conclusion was supported by her husband’s observation that while Ms Zhuang was working in the garment manufacturing business in Australia she would use emails which I infer would at least on some occasions be written in English.

In summary, I accepted parts of Ms Zhuang’s evidence, especially those parts that were not in controversy, but I did not accept that she did not understand the nature or effect of the transactions that she entered into or that Richie did not translate or explain the substance of the correspondence and documentation that was sent to her and others by Mr Green concerning financial transactions including the CPF loan and mortgage. Otherwise, I treated her evidence with caution, especially when it was not supported by contemporaneous documentation.

It can be observed here that Mr Green, having admitted breach of fiduciary duty, did not give evidence in the proceedings. Thus, for example, apart from what is recorded in Mr Green’s correspondence to Ms Zhuang and Mr Wang and others, there was little evidence of what Mr Green said to Ms Zhuang and Mr Wang in conference or what occurred when relevant documentation was signed. Nor, for example, could Mr Green be cross examined as to his knowledge or disclosure. Mr Kabilafkas of counsel, on behalf of Ms Zhuang and Mr Wang, raised the issue of what consequences the failure to call Mr Green should have in light of the principle in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8. As explained in Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17, by French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [167], Jones v Dunkel stands for a proposition which can be cast in the following terms: any inference favourable to a party for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the opposing party and the evidence provides no sufficient explanation of the absence of that person.

In the present case, one inference that Ms Zhuang and Mr Wang sought to have drawn was that the details of the various transactions they entered into, including the CPF loan and mortgage, were not explained to them in a way which allowed them to understand the transactions. They did not, however, generally deny that what was recorded in Mr Green’s correspondence occurred or that the advice and information provided in that correspondence was not given in English. Their principal contentions, and the inferences that they sought to have drawn, were that the advice and information was not explained to them in Mandarin by a qualified interpreter and that Richie was not qualified to explain those matters.

In reaching my conclusions in relation to those contentions and in relation to other inferences sought to be drawn about which Mr Green might have been able to give evidence, I have borne in mind that the failure to call Mr Green without any sufficient explanation for his absence should be taken into account in favour of drawing the inferences Ms Zhuang and Mr Wang sought to have drawn. Notwithstanding that, however, my assessment of Ms Zhuang’s and Mr Wang’s evidence, the evidence of their general practice of having Richie explain correspondence and documents to them in Mandarin and the evidence of their understanding of real estate and their other commercial activities and transactions, considered in light of the evidence as a whole and even taking into account the unexplained absence of Mr Green, led me to reject inferences that the advice and information provided by Mr Green was not sufficiently explained to them in Mandarin with the result that they were not properly aware of the nature, extent and content, of the CPF loan and mortgage and other transactions and the rights, obligations and risks associated with those transactions. Similarly, in considering other inferences which Ms Zhuang and Mr Wang sought to have drawn and in relation to which Mr Green might have been able to give evidence, I took into account the absence of his evidence as a factor in Ms Zhuang’s and Mr Wang’s favour in making my findings set out elsewhere in this judgment.

In addition to the more general findings made above in relation to the evidence of the witnesses who were cross examined, my findings include what is recorded in the letters, emails, records, contractual documentation and other similar primary documentation in evidence. I made these findings on the basis that none of that material, to the extent that it recorded factual matters or events, was challenged as being inaccurate or false. Similarly, where that material included opinions or reflected the state of mind of the author of a document, that material was not challenged and I also accepted that these were opinions or states of mind that the author held. I shall not set out in full all of that material. For present purposes, my findings can be adequately summarised as also including what is set out in the paragraphs which follow.

Mr Wang was born in 1946 and has been married to his wife Ms Zhuang who was born in 1947 for almost 50 years. In around 1990, Mr Wang began working in a garment trading business in Australia. Mr Wang’s role was to oversee production schedules and quality control at the garment factory. Ms Zhuang came to Australia in about 1993 and also worked in the garment business overseeing quality control.

In September 2007, Everest was incorporated with Mr Wang and Ms Zhuang as the only two shareholders and directors. They have remained the directors and shareholders ever since. In addition, between January 2022 and March 2023, Richie was also a director of Everest. From the material in Mr Wang’s and Ms Zhuang’s affidavits I infer that Everest was, at least for some of the time from September 2007, the company through which the garment manufacturing business was operated.

Since about early 2016, both Mr Wang and Ms Zhuang have been effectively retired.

Mr Wang and Ms Zhuang have at all material times been the registered proprietors of the Vaucluse property. They gave a number of mortgages over the Vaucluse property to secure the repayment of loans in the years preceding 2023.

Mail addressed to one or more of Mr Wang, Ms Zhuang and Richie relating to loans and related transactions involving them sent either by post or by email was received by them at Vaucluse. Since at least about 2022, and probably before, the general practice in respect of such mail was that Richie would translate the correspondence and any documents enclosed into Mandarin for his parents or explain the substance of them in Mandarin to his parents. When required, Richie helped his father with using a computer. Ms Zhuang had used emails while she was working and I am satisfied that Ms Zhuang did not lose the ability to use emails to any significant extent after retiring. At relevant times, both Richie and Ms Zhuang had personal email addresses identified by their names to which correspondence was sent.

In late December 2021 and early 2022, Mr Green acted for Everest, Mr Wang, Ms Zhuang and Richie in relation to a loan of $13.325 million from ALS428 Pty Ltd (ALS) to Everest to refinance existing borrowings, with Richie and his parents as guarantors and the loan secured by a registered first mortgage over the Vaucluse property. Summer Lawyers acted for ALS.

Richie was authorised by his parents to deal with Mr Green on their behalf in relation to the ALS Loan and mortgage and he did so as their agent.

On 11 January 2022 Mr Green sent letters by email to Ms Zhuang and Richie attaching a letter addressed to Everest and to Mr Wang and Ms Zhuang, as the directors of Everest, outlining details of the ALS loan and mortgage and providing advice in relation to that transaction. The letter of advice outlined the parents’ obligations as guarantors and gave an explanation of the proposed loan. Mr Green also stated:

Mr Green also noted that based on his knowledge of the directors’ past commercial experience he obtained from the lender agreement to release the directors from the requirement to obtain independent financial advice and separate legal advice. Mr Green’s assessment of Mr Wang’s and Ms Zhuang’s financial experience and understanding manifested by that approach accords with the view I have formed that Mr Wang and Ms Zhuang had considerable commercial understanding and experience by 2022.

On 25 January 2022, Mr Green sent an email to Summer Lawyers who acted for ALS attaching a number of documents including:

Schedule A stipulated the terms of the loan, with the principal amount being $13,325,000, the lower interest rate being 7.35%, the higher rate being 13.50%, the term of the loan being 12 months and the security being a first registered mortgage over the Vaucluse property. It was also a term of the loan that the lender might in its discretion agree to extend the final payment date by not longer than 36 months provided certain conditions were met.

On 31 January 2022, ALS advanced the funds, National Australia Bank was paid out $8,050,923.58, PCL Money Pty Ltd was paid out $3,800773.68 and the previous mortgage of the Vaucluse property was discharged. On that same day, Mr Green wrote to Everest, copied to Richie and his parents, informing them that the settlement was effected on 31 January 2022 and noting the amelioration of the terms of the ALS loan and mortgage obtained by Mr Green as a result of his submissions to the lender. Nonetheless, Mr Green continued and said, “[a]s I have advised, the terms of this loan are onerous” and he provided further legal and commercial advice as to the options available to Everest, Mr Wang, Ms Zhuang and Richie during the term of that loan.

On 8 February 2022, Mr Green wrote another letter to Everest, Mr Wang, Ms Zhuang and Richie in which he provided further legal and commercial advice concerning the ALS loan and mortgage together with a Chinese translation of the letter. In the covering email by which that letter was sent, Mr Green said:

In the attached letter, Mr Green said that:

He went on to suggest that the debt should be repaid on or before 14 December, with the loan repayment date being 28 December 2022. Additionally, Mr Green said he understood there were discussions about selling the Vaucluse property, and if this were to occur, he advised the completion of the sale should be after 28 June 2022 but before 28 November 2022 to keep costs to a minimum.

On 1 August 2022, Richie emailed Mr Green requesting he prepare a sale contract for the Vaucluse property, with the vendors being Mr Wang and Ms Zhuang as registered proprietors.

On 2 August 2022, Mr Green emailed a letter, together with a Chinese translation of the letter, to Ms Zhuang and Mr Wang, copied to Richie, advising that subject to their providing the name of their proposed selling agent, a draft contract had been prepared for the sale of the Vaucluse property and providing advice as to various options for them to consider.

On 19 August 2022, Mr Green received an email from ‘conveyancing@juriscorlegal.com.au’ which purported to make several requests for the alterations to the contract of sale for a prospective purchaser of the Vaucluse property. This email was forwarded to Richie and copied to Ms Zhuang’s email. In responding to this email Richie indicated that that a potential buyer had made an offer of $18.5 million but that his parents said this amount was “too lower [sic]”. In a subsequent email on the same day, Richie said:

The Vaucluse property was not sold at that time.

On 11 October 2022, Mr Chrisp of Summer Lawyers emailed Mr Green requesting that he remind his clients that the term of the ALS loan and mortgage expires on 28 December 2022, and advise as to whether arrangements for the discharge of the ALS mortgage were in place. Mr Green forwarded the email shortly after receiving it to Richie, with queries as to how they proposed to pay out the ALS loan and mortgage. Mr Green advised that penalties were likely to be high if they did not put in place a plan to deal with it.

On 9 November 2022, Richie responded to the 11 October email and said that they “were refinancing” the Vaucluse property and requested Mr Green inform ALS. Mr Green responded to Richie requesting details as to the loan approval and the identity of the lender and advised of risks and timing difficulties. The same day, Mr Green emailed Mr Chrisp of Summer Lawyers and informed Richie that he had done so by email copied to Ms Zhuang.

On 17 November 2022, Mr Chrisp advised Mr Green that his client’s indicative payout figure for 20 December 2022 was $13,340,529.87. This email was forwarded by Mr Green to Richie and copied to Ms Zhuang. Mr Green sought information as to an approval letter relating to any refinancing that Richie and his parents had secured. He also expressly warned:

On 18 November 2022, Richie emailed Mr Green indicating that they were working on refinancing at that time and saying that he was fully aware of the 28 December 2022 date. That same day, Mr Green responded to Richie advising that because of the close of business over the Christmas period he should be working towards 20 December or possibly negotiating an extension. Richie responded saying that he was aware of that and was aiming to get refinancing done by 16 December.

The refinancing that Richie and his parents were trying to put in place at that time did not come to fruition.

Furthermore, by about 20 December 2022, Harvestone Wellmas Pty Ltd (Harvestone), another company of which the parents were directors, required funds to repay a debt to PCL Money Pty Ltd. This debt was guaranteed by Mr Wang, Ms Zhuang, and Richie.

On very short notice, Mr Green organised for Vereker Administration Pty Ltd (VAPL), a company of which Mr Green was an officer and which was associated with his firm, Pikes & Verekers, to make funds available for the benefit of Mr Wang, Ms Zhuang and Richie which were said to be going to be used to repay the existing debt to PCL Money Pty Ltd and make payment of then overdue amounts to ALS.

On 20 December 2022, a deed of loan was executed between VAPL and Harvestone as borrower, with Mr Wang, Ms Zhuang, Richie and Everest as guarantors. The facility limit of the loan was $550,0000, with the “higher rate” of interest being 23.4% per annum, the “lower rate” being 16.1% per annum and security being a mortgage over a property in Strathfield. On that same day, Mr Green wrote to Harvestone, copied to Mr Wang, Ms Zhuang and Richie, reporting on this interim finance facility. Mr Green noted that he was initially instructed to represent them in respect of a loan of $2,170,000 in order to secure the required funds to complete the sale of another property in Strathfield but this loan could not be completed given the proximity of the dealings to Christmas and instead, Mr Green raised “short term of finance” of $550,000 for them. In that letter Mr Green also noted:

Given the distinctive name “Vereker” in VAPL’s name and the name of Mr Green’s firm, Pikes & Verekers, which appeared on the letterhead of Mr Green’s letters and in the signature block on Mr Green’s emails, the circumstances in which the funds were made available by VAPL and the fact that Mr Wang, Ms Zhuang and Richie signed documentation with VAPL named as the lender or financier in order to obtain funds for their benefit, I find on the balance of probabilities that they were aware that VAPL was associated with Mr Green and his firm but that this was not a matter of particular concern to them. Their principal concern was that sufficient funds were raised at that time to repay the loan to PCL Money Pty Ltd.

By 28 December 2022, Mr Wang, Ms Zhuang, Richie and Everest did not have the means or capacity to repay the ALS Loan, to service the ongoing interest obligations or fund payment of any forbearance fees as were then sought by ALS, except by sale of the Vaucluse property or refinancing.

On 30 December 2022, Summer Lawyers sent an email to Everest, Richie, Ms Zhuang and Mr Wang stating that those lawyers had received instructions that an extension of the ALS mortgage’s final repayment date was being sought. The letter proposed extending the initial final repayment date from 28 December 2022 to 28 March 2023 with various conditions including a variation payment of $204,861.46 due on 5 January 2023 and an increase of the lower interest rate from 7.35% to 9.35% for the relevant period as well as a new special condition 8 which permitted ALS in its sole discretion at any time to vary the higher rate of interest or lower rate of interest by the amount of any increase in the Bank Bill Swap Rate and/or ALS’s costs of making, funding or maintaining the ALS mortgage. The letter also contained a form of acceptance which was to be signed by Everest as the borrower, Mr Wang, Ms Zhuang, Richie and Everest Capital Index International Pty Ltd as the guarantors.

On 3 January 2023, Mr Green had a conference with Richie and his parents at which he provided advice to them concerning the loan extension. At Mr Green’s office, Everest as the borrower, and Mr Wang, Ms Zhuang, Richie and Everest Capital Index International Pty Ltd (Everest Capital) as the guarantors, executed the acceptance page of the extension letter. All of the signatures were witnessed by Mr Green. Mr Green wrote a letter to Richie and his parents on 9 January 2023, in which he noted that during the conference on 3 January 2023, he touched on the fact that:

Between 4 and 9 January 2023, Richie and Mr Green exchanged emails concerning the extension of the ALS loan and mortgage and Richie thanked Mr Green for his assistance in relation to his family’s financial situation.

On 9 January 2023, Mr Green emailed Richie, copied to Ms Zhuang and Mr Wang, in which he referred to the conference on 3 January 2023, provided some additional commercial advice or comments concerning the sale of a property in Lindfield and “your working capital” of $40,000 and continued:

On 14 February 2023 and as permitted by new special condition 8, ALS updated the lower interest rate on the loan by 0.25%, increasing it from 9.35% to 9.60%. Subsequent increases in March, May and June 2023 resulted in interest accruing at 14.45% per annum by the time the ALS loan and mortgage were ultimately repaid.

On 20 March 2023, Mr Green and Richie made arrangements for the Vaucluse property to be valued. In the email sent by Richie, Richie informed Mr Green that ALS “is initially asking for funds of $1,500,000 in repayment of the extension of the loan, after negotiation they will consider around $1,000,000 for the exten[sion] of the loan”. Apparently, Richie had been in direct contact with ALS.

The ALS loan and mortgage were not repaid by 28 March 2023, the extended final repayment date, and no further extension had been agreed by that date.

On 5 April 2023, Summer Lawyers issued a Notice of demand for $13,828,768.28 to Richie, Ms Zhuang, Mr Wang and Everest Capital. On the same day they also issued a Notice of Default to Everest. By that time, Ms Zhuang and Mr Wang were each aware that ALS had issued a demand and they understood that, if the amount claimed was not repaid, they would lose the Vaucluse property and it would be sold. Everest, Ms Zhuang, Mr Wang and Richie did not have the ability to repay the amounts payable to ALS under the ALS loan and mortgage unless funds were made available by a third party by way of refinancing or by selling the Vaucluse property.

On 28 April 2023, ALS offered to forbear from enforcement of the ALS loan and mortgage on certain terms. To this end, on that day, Ms Azar of Summer Lawyers emailed Richie a proposed deed of forbearance with regards to the ALS loan and mortgage for signature and the same document was also sent to Mr Green. It was said that the signed deed was to be returned by no later than 3 May 2023. In a letter of the same date, addressed to Everest and marked to the attention of Richie, Ms Zhuang and Mr Wang, Mr Green outlined the principal terms of the deed as follows:

At that time, each of Mr Wang and Ms Zhuang:

In late April or early May 2023, Richie on behalf of his parents reached out to Mr Green for assistance and support to refinance the ALS loan and mortgage with another lender.

From about 3 to 10 May 2023, Mr Green and Mr Chrisp, Ms Azar and Mr Reese of Summer Lawyers engaged in discussions via email as to the proposed deed of forbearance and related arrangements. Summer Lawyers towards the end indicated that Mr Green’s clients had until 11 May 2023 to sign the deed, failing which ALS would exercise all or any of its rights.

On 4 May 2023, Mr Green discussed with officers of CPF a proposed arrangement where they would provide a short-term loan to be secured by a first registered mortgage over the Vaucluse property. After those discussions, Mr Green sent an email to Geoff Reed, Mr Reed’s father, and copied to Mr Reed attaching a valuation for the Vaucluse property and outlining possible terms of the refinancing arrangement. Mr Reed responded indicating he knew the house well and that CPF would be interested in contributing along with others to an offer to the borrower on the following terms:

Also on 4 May 2023, Mr Green emailed Richie saying:

The reference to “client” in that email indicated to Richie that the proposed lender was a client of Mr Green.

On 8 May 2023, Richie responded to Mr Green’s 4 May 2023 email saying:

From this email, I infer that this was an example of Richie passing on to his parents the information he received from Mr Green in relation to the refinancing proposal in this and other regards, in accordance with their general practice outlined above.

On 10 May 2023, Mr Green emailed Richie sending him a draft letter he was proposing to send to the lawyers for ALS and also saying:

From this it was clear that Mr Green was organising the lenders and the loan which was to be used to refinance the ALS loan and mortgage.

Later on 10 May 2023, Richie sent Mr Green a copy of the agency agreement for the sale of the Vaucluse property signed by his parents and the agency in August 2022. That agreement stated that the then current estimated selling price of the Vaucluse property was $20 to 22 million.

On 11 May 2023, Mr Reed indicated that CPF should be the mortgagee for the transaction.

On 16 May 2023, Mr Green advised Ms Zhuang, Mr Wang, Richie and Everest that he had arranged a new loan for them, being the proposed loan from CPF, which was possible on the basis that they had given an irrevocable commitment to sell the Vaucluse property and that the loan was at a lower cost than dealing with the forbearance demands of ALS. More particularly, on 16 May 2023, Mr Green wrote a letter addressed to Everest care of Ms Zhuang and Mr Wang addressing the refinancing of the ALS loan via a new loan from CPF. That letter included the following:

In a further letter to Everest, care of Ms Zhuang and Mr Wang, of the same date Mr Green outlined proposed provisions of the proposed deed of loan, drawing attention to the following aspects:

As reported to Mr Reed and his father by email dated 17 May 2023, Mr Green struck some resistance from Richie, Ms Zhuang and Mr Wang on the condition that interest would increase to 15% on 1 September if Ms Zhuang and Mr Wang did not have an unconditional exchanged contract for the sale of the Vaucluse property by that time. This confirmed my view that Ms Zhuang and Mr Wang were aware of the proposed transaction in some detail and were concerned about the impact of higher interest rates on their financial position in relation to the Vaucluse property.

In light of the evidence as a whole, I am satisfied on the balance of probabilities that Richie translated for his parents these documents and letters and communicated to them in Mandarin the substance of the proposed transaction as set out in the documents and letters including that, inter alia, the loan was only for six months and that the loan was advanced on the basis that Ms Zhuang and Mr Wang would sell the Vaucluse property in order to repay the loan.

On 17 May 2023, Mr Green sent Everest, care of Ms Zhuang and Mr Wang, two letters, one providing a security deed for Everest to execute and the other providing a draft mortgage and accompanying advice. In respect of the mortgage, Mr Green drew attention to the following:

There was no suggestion in the evidence that any of the statements in Mr Green’s letter concerning the mortgage were incorrect and I accept that they accurately represent the circumstances in which Ms Zhuang, Mr Wang and Richie entered into the CPF loan and mortgage. In light of the evidence as a whole, I am also satisfied on the balance of probabilities that Richie translated for his parents these documents and communicated to them in Mandarin the substance of the proposed transaction as set out in Mr Green’s letters including that, inter alia, the loan was only for six months and that it was a requirement that the Vaucluse property be sold within the term of the loan.

On 25 May 2023, Ms Zhuang, Mr Wang and Richie attended Mr Green’s office and executed the initial CPF loan and mortgage documentation. Ms Zhuang and Mr Wang wanted to complete the refinance of the ALS Loan and mortgage at this time. The deed of loan which was executed included as the parties:

The deed contained recitals or “Background” which I accept were accurate and which were as follows:

Various aspects of the facility were set out in cl 2 as follows:

Clause 1.1 defined the following relevant terms:

Terms dealing with “interest payment and repayment of all financial indebtedness” were contained cl 4, extracted in full below.

Clause 1.1 defines the following relevant terms:

The terms of the mortgage, dated the same day as the deed of loan, incorporated a mortgage memorandum registered number Q860000. Mr Wang and Ms Zhuang were listed as mortgagors, and CPF as the mortgagee.

Clause 3, later varied by the supplemental deed of variation of loan dated 14 July 2023, noted that, for the purpose of the mortgage, the parties acknowledged and agreed that:

Clause 5 was an acknowledgement of the borrower and Guarantors that:

Notwithstanding that Ms Zhuang and Mr Wang were very keen for the refinancing to be completed, this was delayed because of an injunction in family law proceedings involving Richie and his ex-partner which in effect prevented the mortgage over the Vaucluse property being given in favour of CPF.

On 13 June 2023, ALS capital updated the lower variable interest rate on the loan by 0.21% increasing it from 10.180% to 10.390%.

On 16 June 2023, ALS commenced proceedings in this Court against Ms Zhuang and Mr Wang seeking an order for possession of the Vaucluse Property and leave to issue a writ of possession forthwith. Ms Zhuang and Mr Wang were aware of the commencement of those proceedings.

On 3 July 2023, the injunction in the family law proceedings involving Richie and his ex-partner was dissolved and Richie and his parents were able to pursue the refinancing of the ALS Loan and mortgage with CPF. In the circumstances and given the passage of time, adjustments to the documentation for the CPF loan and mortgage signed on 25 May 2023 were required.

As at 9 July 2023, Ms Zhuang and Mr Wang as well as Richie were very keen to have the ALS loan and mortgage refinanced and understood that they would need Mr Green’s support to do so. This was reflected in Richie’s email to Mr Green on that day which included:

On 11 July 2023, Mr Green wrote a letter to Everest, care of Mr Wang and Ms Zhuang, and Richie enclosing a draft supplemental deed of variation of loan, and provided advice as follows:

On 12 July 2023, Richie, Ms Zhuang and Mr Wang attended Mr Green’s office to execute the supplemental deed of variation with respect to the CPF loan and mortgage, as well as a deed of release in respect of the proceedings commenced by ALS. While Richie, Ms Zhuang and Mr Wang were at Mr Green’s office to sign the documentation, there was a conference during which Mr Green gave advice to Richie and his parents. As usual, Richie translated the substance of that advice into Mandarin for his parents during the conference. That advice was also confirmed in writing by Mr Green the next day, 13 July 2023, in a letter to Everest, care of Ms Zhuang and Mr Wang. That letter confirmed that the advice given at the time Ms Zhuang, Mr Wang and Richie signed the supplemental deed of variation was as follows:

Also on 12 July 2023, Mr Green sent a letter to Ms Azar of Summer Lawyers enclosing the executed deed of release to be held in escrow pending settlement as proposed for 14 July 2023.

The Background or recitals to the supplemental deed of variation provides information which confirmed the circumstances giving rise to the supplemental deed. It provided:

In these circumstances, the supplemental deed of variation provided in cl 1.1 as follows:

As to the payment of interest and repayment, cl 4 provided: [14]

Clause 8 (b) provided:

Clause 9.1 of the supplemental deed of variation provided:

On 13 July 2023, Mr Green sent an email to Richie, Ms Zhuang and Mr Wang in which he noted that settlement of the refinancing was scheduled for the following day. Attached to that email was the letter to Everest, care of Ms Zhuang and Mr Wang, confirming the advice he had provided the previous day when they had signed the supplemental deed of variation, which has already been quoted above. Richie confirmed receipt of this letter by email on 14 July 2023 and in effect instructed Mr Green to go ahead with settlement of the refinancing.

In summary, at the time of execution of the supplemental deed of variation and completion of the CPF loan and mortgage:

On the evidence as a whole and based on my findings set out above, I was also satisfied on the balance of probabilities that:

In addition, I am satisfied on the balance of probabilities that Richie was aware that the incoming financier who was to provide the funds to refinance the ALS loan and mortgage had been organised by Mr Green and the 4 May 2023 email from Mr Green to Richie indicated to him that a person associated with the financier who was going to provide the funds for the refinancing was Mr Green’s “client”. I also accept on the balance of probabilities that part of the information that Richie conveyed in Mandarin to his parents when discussing with them how the ALS loan and mortgage might be refinanced included that Mr Green had organised for a client of his to provide the refinancing funds. I am confirmed in this view by some evidence given by Mr Wang, although it was not entirely satisfactory. It relevantly included the following: [15]

As I understood Mr Wang’s last answer it was to the effect that he did not know the name of the lender was CPF. Thus, in this evidence, Mr Wang was saying that at the time of entry into the CPF loan and mortgage he knew that the financier or lender who would provide the funds to refinance the ALS loan and mortgage was a client of Mr Green but he did not find out that the lender’s name was CPF until February 2024. Nonetheless, in order to avoid any misunderstanding, I asked the following questions: [16]

This reinforced my view as to what Mr Wang was saying. In subsequent questions by Mr Krochmalik of counsel who appeared for CPF, Mr Wang appeared to resile from that evidence as follows: [17]

Having seen Mr Wang giving his evidence, I formed the view that his evidence that was initially volunteered and confirmed in answer to my questions was correct and his later evidence in response to Mr Krochmalik of counsel who appeared for CPF to the extent to which it was to the contrary should not be accepted. The later evidence appeared to me to be the result of Mr Wang realising that the evidence he volunteered would not assist his case.

Furthermore, I accept that at the time of execution of the supplemental deed of variation and completion of the CPF loan and mortgage, Ms Zhuang and Mr Wang both considered the transaction was more favourable for them compared to obtaining a further extension from ALS in relation, inter alia, to the interest rate and the fees to be charged, as Mr Green had explained in his letters to them. They also understood it was more favourable to them compared to ALS pursuing and succeeding in its proceedings for possession because they would control the sale of the Vaucluse property rather than ALS. Accordingly, they were keen to enter into the refinancing transaction with CPF, as it gave them breathing space in which to sell the Vaucluse property themselves rather than there being a mortgagee sale.

On 14 July 2023, the CPF loan and mortgage was settled. It was not in dispute that, as set out in the spreadsheets at annexure A to Mr Reed’s 13 March 2026 affidavit:

There appear also to have been other small amounts relating to charges such as PEXA fees which were also paid out but it was not suggested that anything turned on this.

ALS’s registered first mortgage over the Vaucluse property was discharged and CPF’s first mortgage over the Vaucluse property was registered.

As to when the CPF loan and mortgage were due for repayment, it can be noted at this point that cl 1.1 of the loan deed defines the “Final Repayment Date” as the date which is six months from the “Drawdown Date”. The clause however provides that in the event that the contract for sale of the Vaucluse property has been exchanged prior to 1 September 2023, the Final Repayment Date will be the earlier of, the date of completion of the sale of the property or, two months from the date a contract is exchanged for the sale of the property. Given no contract for sale of the property was exchanged at all, the final repayment date was 6 months after the Drawdown Date.

The “Drawdown Date” was defined as the first to occur of the date two days after the borrower requests that the advance be made and, the date upon which the advance is or is to be made.

The repayment or settlement of the ALS loan and mortgage was originally to be completed on 26 May 2023, following the execution of the relevant documentation by Ms Zhuang, Mr Wang, Richie and the other parties on 25 May 2023. Nonetheless, this did not occur because of the injunction in the family law proceedings. Mr Green reported to the lender’s representative on 26 May 2023:

In a letter addressed to Richie and the parents dated 3 July 2023, following ALS initiating proceedings in this Court to gain possession of the Vaucluse property, Mr Green again stated:

In these circumstances, it might be considered that the “Drawdown Date” was 26 May 2023, that is the date upon which the advance was to be made. If so, the Final Repayment Date, 6 months later, would be 26 November 2023. Alternatively, if the Drawdown Date was the date on which the advance was actually made on 14 July 2023, the Final Repayment Date would be 14 January 2024. It does not appear that anything turns on this as, in either case, the loan was not repaid by the relevant date.

On or about 17 July 2023, ALS’s proceedings in the Supreme Court against Ms Zhuang and Mr Wang were discontinued.

On 17 July 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang and Richie providing advice on the sale of the Vaucluse property in light of the refinancing. The letter included the following:

On 29 August 2023, Mr Green sent a letter to Mr Wang, Ms Zhuang and Richie, referring to his letter of 17 July and providing an update as to the accrual of interest on loan with CPF:

At some time prior to 1 September 2023, Richie indicated to Mr Green that his parents may decide not to sell the Vaucluse property and would seek an extension of time for repayment of the CPF loan and mortgage subject to a payment of $1,000,000 in reduction of the debt.

On 1 September 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang regarding the sale of the Vaucluse property. He relevantly included the following:

On 15 September 2023, Mr Green wrote to Mr Wang and Ms Zhuang informing them of CPF’s concern, based on its independent inquiry, as to the lack of ongoing efforts to sell the Vaucluse property.

On the basis of that correspondence and subsequent correspondence which was in evidence and Richie’s practice of informing his parents in Mandarin of the substance of correspondence addressed to them, I accept that in the months after the CPF loan was settled, Ms Zhuang and Mr Wang were told many times that they were obliged to sell the Vaucluse property and that Ms Zhuang and Mr Wang knew that they were obliged to do so.

In October 2023, Richie was making enquiries with another lender with the intention of refinancing the CPF loan and mortgage.

On 13 October 2023, Richie sent an email to Mr Green as follows:

The reference to “not to cause any inconvenience or losses to your business” indicates that Richie was aware that the CPF loan and mortgage were arranged as part of Mr Green’s business and is consistent with Richie and his parents being aware of VAPL’s role in bringing together the persons who funded the CPF loan and mortgage in a similar way to the way in which VAPL had done in December 2022, to assist Harvestone, Richie and his parents with refinancing.

On the same day, Mr Green responded noting he would pass Richie’s and his parents’ position on to CPF and that he thought CPF’s preference would be to be paid out.

On 22 November 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang regarding the refinancing on the CPF loan, providing some background to the ALS loan and mortgage and the CPF loan and mortgage before relevantly advising:

On 20 December 2023, Mr Green sent a letter to Mr Wang and Ms Zhuang summarising a history of the CPF loan and mortgage to that date and offering insight into the concerns of CPF:

On 14 January 2024, the last potential Final Payment Date for the CPF loan and mortgage passed without the loan being repaid.

On 17 January 2024, Mr Green wrote to Everest, Ms Zhuang, Mr Wang and Richie concerning default by failing to repay the amount owed under the CPF loan and mortgage and by failing to sell the Vaucluse property.

On 19 January 2024, Addaces Investments Pty Ltd (Addaces), another company of which Ms Zhuang and Mr Wang were directors, entered into a loan and mortgage transaction under which Addaces borrowed $555,000 from Pronto Funds Pty Ltd (Pronto) with Ms Zhuang, Mr Wang and Richie as guarantors secured by a second registered mortgage over the Vaucluse property. The mortgage documentation was signed on 23 January 2024 and the mortgage was registered on 15 February 2024. The term of the loan was three months from the date of draw down and the interest rates specified were a standard rate of 4.99% per month and a discount rate of 2% per month. It can be noted that the address given for each of Addaces, Ms Zhuang, Mr Wang and Richie in the loan documentation was an address in Strathfield. On this occasion, Ms Zhuang, Mr Wang and Richie apparently retained a solicitor in Campsie to act for them and not Mr Green.

On 19 February 2024, CPF received a payment of $260,000 in respect of the CPF loan and mortgage. No further repayment has been made. Nor has the Vaucluse property been sold.

On 1 March 2024, CPF issued a letter of demand to Everest Index International Pty Ltd, Richie Lin Ze Wang, Li Qing Zhuang and Ding Sen Wang.

On 6 March 2024, CPF issued a Notice of Default to Li Qing Zhuang and Ding Sen Wang. The relevant clauses of the notice are extracted as follows, and reiterate those in the letter of demand:

There was no dispute that the requisite demands and notices relating to default under the CPF loan had been served on Everest, Ms Zhuang, Mr Wang and Richie.

On 28 February 2025, Pronto obtained judgment for possession of the Vaucluse property and, on 28 March 2025, a writ of possession was issued. Subsequently, a notice to vacate the Vaucluse property was issued by the New South Wales Sheriff’s Office.

On 13 May 2025, Ms Zhuang and Mr Wang entered into a Sales Inspection Report and Auction Agency Agreement with a real estate agent relating to the sale of the Vaucluse property which included a then current estimated selling price of $21-23 million. Later in May, two offers well below the estimated selling price were submitted.

On 27 May 2025, Ms Zhuang and Mr Wang filed a notice of motion in the proceedings brought by Pronto seeking a stay of the writ of possession “issued on 11 April 2025” (although it appears that the writ was issued on 28 March 2025).

On 18 June 2025, an offer of $19 million was received for the Vaucluse property.

On 19 June 2025, Lonergan J refused Ms Zhuang’s and Mr Wang’s application for a stay of the writ of possession: Pronto Funds Pty Ltd ACN 669796847 v Zhuang [2025] NSWSC 641.

Nothing in the CPF loan and mortgage and nothing in relation to that transaction prevented Ms Zhuang and Mr Wang from selling the Vaucluse property and after July 2023 they, as the registered proprietors, were responsible for deciding whether or not to sell the property. I do not accept Mr Wang’s evidence in that regard which was as follows: [18]

Based on that evidence and in light of the evidence as a whole, I am satisfied on the balance of probabilities that Mr Wang and Ms Zhuang chose not to sell because they thought that the market was not good at that time, possibly as a result of advice from an estate agent, and they hoped that it would improve and thus allow them to sell for more in the future.

There was no dispute that as at 31 March 2026, which is the most recent Interest Payment Date, being the last day of each consecutive month for which secured money is owed by Everest to CPF, the amount owing under the CPF loan and mortgage was $21,621,915.54.

There was in effect no dispute that CPF will be entitled to the relief it claims against Everest, Ms Zhuang, Mr Wang and Richie unless Ms Zhuang, Mr Wang and Richie are successful:

The claims for declarations that the contracts constituting the CPF loan and mortgage have been rescinded by Ms Zhuang and Mr Wang did not appear to be based on any circumstances other than those relied on to support the unconscionable conduct and CRA claims. The rescission claims were not addressed separately from the unconscionability and CRA claims in oral or written submissions. As I understood it, they amounted to claims that simply rephrased the nature of the relief sought even though the statutory regimes relied upon did not permit in terms a remedy by way of rescission.

Ms Zhuang’s and Mr Wang’s claim rested primarily upon s 12CB(1) of the ASIC Act which prohibits engagement in conduct which is unconscionable in all the circumstances in the supply (and possible supply) to, or acquisition (or possible acquisition) of, financial services. Counsel for Ms Zhuang and Mr Wang in his written submissions submitted that provision of the CPF loan and mortgage constituted both a “credit facility” and a “security” and were therefore a “financial service” for the purposes of the ASIC Act. Alternatively, s 21 of the ACL was relied on if the conduct did not relevantly relate to financial services. In addition, reliance was placed on ss 7 and 9 of the CRA on the basis that the CPF loan and mortgage were unjust when made. Counsel drew attention to the remedial provisions including s 12GM of the ASIC Act and s 7 of the CRA.

Counsel submitted that the CPF loan and mortgage were unconscionable and unjust because CPF obtained the benefit of security of the home of elderly retired persons who had no capacity to repay the loan, and who would have been better off if ALS had simply exercised its security in circumstances where they were not getting independent advice from Mr Green, and CPF should be taken to have had knowledge of those matters.

It was also submitted that if Ms Zhuang and Mr Wang had obtained independent advice, the Vaucluse property would have been sold and they would have preserved some equity with which to purchase another domicile.

It was contended that the knowledge of Mr Green should be attributed to CPF for the purposes of considering unconscionability and unjustness on the basis of general principles of agency and the provisions of s 12GH of the ASIC Act (or the corresponding provision in respect of the ACL).

It was accepted by Ms Zhuang’s and Mr Wang’s counsel that if Mr Green’s knowledge should not be attributed to CPF, the unconscionability and unjust claims would not succeed. [20]

With respect to relief, it was accepted by Ms Zhuang and Mr Wang that, on the evidence, not entering into the facility with CPF would have resulted in the ALS loan and mortgage being enforced and the Vaucluse property being sold in 2023. The amount claimed, by way of equitable compensation, was the amount of their liability to CPF in excess of their liability to ALS as at 26 May 2023, or alternatively, as at 14 July 2023. It was submitted in the alternative that should the Court not find loss, Ms Zhuang and Mr Wang would be entitled to, in effect, an account of profits.

In opposition to the claims of unconscionability and unjust contracts, CPF submitted that there should be no attribution of knowledge to CPF either under general law agency principles or sections such as s 12GH of the ASIC Act, and also that the unconscionability and unjust contracts claims were not made out in the factual circumstances of the present case.

Section 12CB of the ASIC Act applies in relation to the supply of financial services. Section 21 of the ACL applies generally to conduct in trade or commerce and in connection with goods and services but does not apply in relation to financial services, by virtue of s 131A of the Competition and Consumer Act 2010 (Cth) (CCA). Otherwise, the two provisions are essentially the same.

The definitions of “financial product” and “financial service” in ss 12BAA and 12BAB respectively, are not without their difficulties. Nonetheless, s 12BAB(1AA) provides that, for presently relevant purposes, “a financial product is a financial service”. By virtue of s 12BAA(7)(k) of the ASIC Act and reg 2B of the Australian Securities and Investments Commission Regulation 2001 (Cth), the provision of credit for any period is a “credit facility” and therefore a “financial product”. Since the CPF loan and mortgage transaction involved the provision of credit for a period, it was a financial product and thus a financial service for the purposes of s 12CB of the ASIC Act. Accordingly, Ms Zhuang’s and Mr Wang’s unconscionability claim fell to be dealt with under s 12CB of the ASIC Act. In any event, given the similarity of the relevant provisions in the ASIC Act and the ACL, it was not in dispute that the type of conduct involved in the present case would fall within either the ASIC Act or the ACL depending on whether or not the conduct involved providing financial services. Nothing turns on whether the ASIC Act or the ACL applies.

Section 12CB relevantly provides:

Section 12CC of the ASIC Act contains lists of potentially relevant factors in determining whether conduct is unconscionable for the purposes of s 12CB. Section 12CC relevantly provides:

The principles relating to the application of the unconscionability provision in s 12CB of the ASIC Act (and s 21 of the ACL) were not generally in dispute. They can be briefly but adequately summarised as follows.

In the context of a commercial dealing, the unconscionability of conduct for the purposes of s 12CB turns on whether the alleged unconscionable conduct is “so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience”: Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 (Kobelt) at [92] (Gageler J).

In Productivity Partners Pty Ltd v Australian Competition and Consumer Commission (2024) 281 CLR 338; [2024] HCA 27, Gageler CJ and Jagot J explained, at [60]:

Further, the values that inform the standard of conscience include those identified by Allsop CJ in Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 at [296], as referred to by Kiefel CJ and Bell J in Kobelt at [14] are as follows:

In addition, since Ms Zhuang’s and Mr Wang’s case depended on the attribution of knowledge of Mr Green to CPF, they relied on s 12GH of the ASIC Act which deals with the attribution of knowledge of an agent of a body corporate to that body corporate. Section 12GH of the ASIC Act relevantly provides:

The claim based on the CRA raised the issue of whether the CPF loan deed, the security deed, the mortgage and the supplemental deed of variation with Everest, Ms Zhuang, Mr Wang and Richie were “unjust” in the circumstances at the time they were made. Section 7 of the CRA provides:

The word “unjust” in s 7 is defined in s 4(1) of the CRA as including “unconscionable, harsh or oppressive”. As a result, there is considerable overlap between the considerations which might lead to a contract being unjust for the purposes of the CRA and unconscionable for the purposes of s 12CB of the ASIC Act. Furthermore, s 9, like s 12CC, establishes a list of matters relevant to determining whether a contract is relevantly “unjust”, although in the case of s 9 these matters must be taken into account. Section 9 is in the following terms:

The application of s 7 of the CRA involves a three step process: Huynh v Ledinh Sovereign Super Pty Ltd [2024] NSWCA 78 (Huynh) at [69] (Bell CJ with Payne and Kirk JJA agreeing), citing Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [97] and Perpetual Trustee Company Limited v Albert and Rose Khosaba [2006] NSWCA 41; (2006) 14 BPR 26,639 at [106] (Basten JA). The first step is making findings of primary fact. The second step involves evaluating, in light of those findings, whether or not the contract is unjust. The third step is the exercise of the power to grant relief under the CRA which, may, but need not, follow from a conclusion that a contract is unjust.

Section 9 lists non-exhaustive sets of matters which the Court is to consider when determining at the second stage whether a contract is unjust pursuant to s 7. That determination involves a broadly based value judgment to be made having regard to the relevant circumstances.

Bearing in mind those provisions and principles, I turn to consider Ms Zhuang and Mr Wang’s unconscionability and unjust contract claims.

Based on my findings set out above and the parties’ cases as pleaded and relied on at the hearing, I accept that Mr Green, as a partner of the firm Pikes & Verekers, agreed to act as the solicitor for Ms Zhuang, Mr Wang and Richie and their companies in about April or May 2023 in relation to the refinancing of the ALS loan and mortgage. The retainer was informal and specifically involved Mr Green acting in relation to the negotiation and execution of the CPF loan and mortgage documentation, and advising generally in relation to the transaction.

This retainer was in effect a continuation of Mr Green’s previous assistance to Ms Zhuang, Mr Wang and Richie in relation to refinancing their extensive borrowings. By April or May 2023, Ms Zhuang, Mr Wang and Richie were familiar with Mr Green acting for them as a solicitor in relation to loan transactions as well as being familiar with him assisting to arrange loans through VAPL as he had done previously for them and their companies. Instances of this included when Mr Green acted for Ms Zhuang, Mr Wang and Richie when they entered into the ALS loan and mortgage in late 2021 and early 2022 to refinance existing borrowings and when they obtained the extension of the ALS loan and mortgage in January 2023. An instance of Mr Green arranging funds and also acting for them in relation to their entry into a loan and mortgage transaction was when Ms Zhuang, Mr Wang and Richie contracted with VAPL in order to obtain urgently needed funds for Harvestone in December 2022 to repay an existing loan from PCL Money Pty Ltd. In relation to that Harvestone transaction, Ms Zhuang, Mr Wang and Richie knew that Mr Green organised making available the funds for the refinancing through VAPL, a company associated with his firm, Pikes & Verekers. To the extent that VAPL had the services of a solicitor in relation to that transaction, it appears that Mr Green performed that role. Mr Green’s involvement in the Harvestone refinancing on behalf not only of Ms Zhuang, Mr Wang and Richie and their companies but also on behalf of the lender, VAPL, was not a matter which caused Ms Zhuang, Mr Wang and Richie any concern at that time or afterwards.

When Richie, on behalf of his parents and their companies, reached out to Mr Green for support and assistance to refinance the ALS loan and mortgage with another lender in late April or early May 2023, this was not limited to Mr Green acting as their solicitor. It was inherent in Richie’s approach that Mr Green was also being requested to provide support to Ms Zhuang, Mr Wang and Richie and their companies by organising funding from a lender for that refinancing as Mr Green had previously done in relation to the Harvestone transaction. Mr Green provided the support sought by contacting Mr Reed and his father and having VAPL administer the arrangements between the persons who were to provide the funds to refinance the ALS loan and mortgage for Ms Zhuang, Mr Wang and Richie and their companies. The funders nominated CPF as the lender by which the funds would be advanced and as the mortgagee in the mortgage.

From Mr Reed and his father’s previous dealing with Mr Green, when Mr Green had organised funds to be lent to them and their companies, Mr Reed and his father were also familiar with Mr Green acting as the solicitor for both the lender and the borrower in relation to financing transactions in which Mr Green had also organised the availability of the funds to be advanced.

In relation to the refinancing of the ALS loan and mortgage by way of the CPF loan and mortgage, CPF retained Mr Green to act as its solicitor on their behalf. That retainer appears to have been informal but involved Mr Green acting for CPF in relation to negotiating and executing the CPF loan and mortgage documentation, and VAPL providing administrative services by way of organising the arrangements between the persons who were to make the funds available. To the extent that Mr Green was involved with VAPL as an officer of that company, I accept Richie’s submission that Mr Green was doing more in relation to CPF than acting as the lender’s solicitor.

In these circumstances, Mr Green came to be the solicitor acting both on behalf of CPF and on behalf of Ms Zhuang, Mr Wang and Richie and their companies in relation to the CPF loan and mortgage. Similarly to Ms Zhuang, Mr Wang and Richie in relation to the Harvestone transaction, Mr Reed and CPF did not have any concerns arising out of Mr Green acting both for them and for Ms Zhuang, Mr Wang and Richie and their companies in light of Mr Reed and his father’s previous experience with Mr Green. In evidence, Mr Reed accepted that Mr Green was CPF’s “intermediary” with Richie, Ms Zhuang and Mr Wang. [21]

By reason of his retainer by Ms Zhuang, Mr Wang and Richie and their companies, Mr Green owed them a fiduciary duty not to allow his duty to another party to conflict with his duties to them.

Mr Green admitted that while acting for Ms Zhuang, Mr Wang and Richie and their companies, he failed adequately to disclose to them that he was an officer of VAPL, that VAPL assisted CPF in the management of the funds to be made available under the CPF loan and mortgage and that he was acting on behalf of CPF. Furthermore, Mr Green admitted that this failure adequately to disclose those matters was in breach of the fiduciary duty that he owed to, inter alios, Ms Zhuang and Mr Wang.

In addition to the admitted breach of fiduciary duty, Ms Zhuang and Mr Wang also relied on the contentions that since Mr Green was CPF’s agent in relation to the CPF loan and mortgage transaction, Mr Green’s knowledge obtained in the course of negotiating the terms of the CPF loan and mortgage documentation, which was conduct within his actual authority, was to be attributed to CPF. Mr Green’s knowledge which was said to be attributed to CPF in this way and which led, or contributed to, CPF’s conduct being unconscionable was not, however, specifically pleaded or particularised. In written closing submissions on behalf of Ms Zhuang and Mr Wang, however, the following was said, which gave an indication of the relevant knowledge said to be imputed to CPF. Those submissions were relevantly as follows: [22]

Elsewhere it was submitted that Richie had led his parents into a situation where they were at grave risk of losing their house and that it was his “irrational optimism” in effect that led them to seek to put off the fateful day. I do not accept this submission. The evidence as to the nature of, and reasons for, the original borrowings which were refinanced by ALS was exiguous and was not such as to allow me to be satisfied on the balance of probabilities that those original borrowings were only or principally for the benefit of Richie or his companies, rather than for the benefit of his parents and companies that they owned or controlled. Nor was I satisfied on the balance of probabilities that Richie “led” his parents into any relevant transactions. Richie’s parents did rely on him to translate and explain information provided in English to them in Mandarin, but it does not follow from this that they were ignorant as to what was going on or were under Richie’s influence, so as to enter into transactions without independent understanding or consideration. I do accept, however, the parents’ submission to the effect that Mr Green’s communications were often expressed in terms which even native English speakers would require experience and commercial knowledge to understand fully.

In that latter regard, I was satisfied on the evidence that Ms Zhuang and Mr Wang had, despite their lack of proficiency in English, substantial commercial knowledge and understanding. They were both the directors of Everest and Harvestone as well as other companies. The evidence also established that neither Ms Zhuang nor Mr Wang were, because of their age or retired status or otherwise, under the influence of Richie. Rather, they relevantly instructed Richie what to do; as Ms Zhuang phrased it, “[s]o basically I tell Richie what my instructions are and he would follow”. [23] They were both well aware of their borrowings and the effect of interest rates on their financial position and they had an appreciation of the value of the Vaucluse property relative to the amount they owed, their obligations to repay loans made to them and the consequences which might follow if they defaulted in repayment of their loans or related obligations. They both had considerable time and, I infer, experience as directors of companies. Further, although Mr Green’s letters were in some cases quite long and complex, I was satisfied that Richie kept Ms Zhuang and Mr Wang sufficiently informed of their contents that they were not misled as to, inter alia, the nature or effect of the relevant transactions, their obligations and the consequences of non-compliance with their obligations. This was confirmed by the fact that Mr Green’s letters often, if not invariably, invited Ms Zhuang and Mr Wang to raise with him any queries or issues they may have and it does not appear that they ever did so.

In these circumstances and based on the written submissions quoted above, for the purposes of considering the unconscionability or unjustness of the CPF loan and mortgage, Mr Green’s relevant knowledge said to be attributed to CPF was that Ms Zhuang and Mr Wang were elderly, retired persons with no capacity to repay the CPF loan, who had not received independent advice (including advice independently from Richie) and who would be better off if they allowed ALS to take possession of the Vaucluse property and sell it to repay the ALS loan and mortgage.

As noted above, Mr Kabilafkas confirmed in oral closing submissions that his case as to unconscionability and unjustness depended on the attribution of Mr Green’s knowledge to CPF. [24] In my view, however, it is not necessary to determine whether Mr Green’s knowledge of these alleged matters should be attributed to CPF under s 12GH of the ASIC Act and s 139B of the CCA or otherwise in the present case. This is so because, even if Mr Green’s knowledge as relied on by Ms Zhuang and Mr Wang were attributed to CPF, this would not lead to the conduct of CPF, with that knowledge, being unconscionable within the meaning of s 12CB of the ASIC Act or being unjust within the meaning of s 7 of the CRA. There are a number of reasons for this conclusion.

First, knowledge that Ms Zhuang and Mr Wang were elderly and retired with no capacity to repay the CPF loan from their own labour must be considered in the light of circumstances known to them and to CPF. By way of example, these circumstances included the matters set out in the recitals or “Background” to the CPF loan deed entered into on 25 May 2023, the acknowledgements by, inter alios, Ms Zhuang and Mr Wang in the CPF mortgage and the similar material in the supplemental deed of variation dated 14 July 2023. The recitals to the CPF loan deed included that the CPF loan and mortgage were being made available, in effect, as a short term interim facility, to refinance an existing facility with ALS which had not been repaid when due, and on the basis that Ms Zhuang and Mr Wang would use their best endeavours to sell the Vaucluse Property and enter into an unconditional Contract for Sale prior to 1 September 2023 and all monies not otherwise repaid would be repaid from the proceeds of sale of the Vaucluse property.

In addition, cl 5 of the CPF mortgage included acknowledgements by Ms Zhuang and Mr Wang that:

These circumstances and CPF’s knowledge of them means that the fact that Ms Zhuang and Mr Wang were elderly and retired did not support to any significant extent the conclusion that CPF’s conduct in relation to Ms Zhuang’s and Mr Wang’s entry into the CPF loan and mortgage was in any way unconscionable or unjust in any relevant sense. It was never intended that Ms Zhuang and Mr Wang, or Everest or Richie, should repay the CPF loan otherwise than through the sale of the Vaucluse property. Ms Zhuang’s and Mr Wang’s lack of earning capacity because of age and retired status was irrelevant to that matter. Similarly, it is not correct to say that they lacked the capacity to repay the loan when the sale of the Vaucluse property was the accepted means of repayment. Indeed, the purpose of the CPF loan and mortgage was to allow Ms Zhuang and Mr Wang the breathing space to manage that sale themselves rather than have the property sold by a mortgagee in possession. In addition, if the CPF loan and mortgage were not entered into, Ms Zhuang and Mr Wang had only two realistic alternatives as guarantors and mortgagors under the ALS loan and mortgage, namely, either entering into the proposed forbearance agreement with ALS or allowing ALS to take control of the sale of the Vaucluse property as a result of ALS obtaining judgment for possession and costs. There is nothing in all these circumstances which would take CPF’s entry into the CPF loan and mortgage so far outside societal norms of acceptable commercial behaviour as to warrant condemnation of CPF’s conduct in entering into that transaction as offensive to conscience.

Secondly, at the time the CPF loan and mortgage were entered into, it was not the case that Ms Zhuang and Mr Wang would have been better off if they entered into the proposed ALS forbearance agreement or allowed ALS to take possession of the Vaucluse property and sell it to repay the ALS loan and mortgage. Some of the advantages for Ms Zhuang and Mr Wang in entering into the CPF loan and mortgage in order to refinance the ALS loan and mortgage are evident from the terms of the CPF loan deed, the security deed, the mortgage and the supplemental deed of variation compared to the ALS loan and mortgage and the forbearance agreement proposed by ALS. Those advantages included that:

Consequently, the CPF loan and mortgage was not so disadvantageous to Ms Zhuang and Mr Wang that this bespoke unconscionability or unjustness in the relevant senses. The evidence indicated that although Richie, on behalf of Ms Zhuang and Mr Wang, had tried to find another lender to refinance the ALS loan and mortgage, they were unsuccessful and they could not obtain equivalent financial services from a financier other than CPF. Nor did the evidence suggest that any unfair tactics were used against them in order to have them sign the documentation for the CPF loan and mortgage.

Thirdly, the evidence viewed as a whole did not establish to the requisite standard that Ms Zhuang’s and Mr Wang’s age and retired status, lack of capacity to repay from their own labour or any other circumstance affecting them meant that they had limited commercial knowledge or understanding and little involvement in Everest’s business affairs or those of Harvestone. As noted above, the evidence concerning Ms Zhuang’s and Mr Wang’s previous commercial dealings and the genesis of the borrowings which were refinanced by ALS and ultimately by CPF was exiguous and, such as it was, suggested that Ms Zhuang and Mr Wang were directors of a number of companies at relevant times and not lacking in commercial understanding or experience. In addition, I have found that Richie did translate the relevant letters and documents for his parents or provide them with the substance of those letters and documents to them in Mandarin. Thus, there was no basis for concluding that they were not able to understand the documentation for the CPF loan and mortgage or the advice given in relation to it. Nor, for the reasons given above, was there a proper basis for concluding that any undue influence or pressure was exerted on them by Richie or CPF or Mr Green. Rather Richie relevantly acted on their instructions.

While it was in effect contended that Richie’s interests did not align or were contrary to those of his parents, there was no explanation proffered as to the particular circumstances which might support this submission. Nor was it a matter about which Ms Zhuang or Mr Wang gave evidence. I was not satisfied on the evidence as a whole that there was a material misalignment between Richie’s interests and those of his parents.

Moreover, Mr Green gave detailed advice including as to the risks and commercial realities involved in the CPF loan and mortgage and applied no pressure on them to sign any documentation. CPF did not engage in any conduct or seek to apply any pressure in relation to Ms Zhuang’s and Mr Wang’s executing the relevant documentation to enter into the CPF loan and mortgage.

It was not suggested that the legal and financial advice received by Ms Zhuang and Mr Wang from Mr Green was inaccurate or wrong so as to lead to them being misled as to the nature of their obligations or the risks involved in the CPF loan and mortgage.

For these reasons and in all the relevant circumstances, I conclude that Ms Zhuang’s and Mr Wang’s age, lack of English or other circumstances relied on by them did not mean that they were not reasonably able to protect their own interests. Nor did Mr Green’s knowledge of those matters, if it were attributed to CPF, render CPF’s conduct unconscionable or the CPF loan and mortgage unjust.

Fourthly, in so far as Ms Zhuang and Mr Wang relied on attributing to CPF Mr Green’s knowledge of his failure to disclose his breach of fiduciary duty to them and obtain their informed consent to his continuing to act, I do not accept that this rendered CPF’s conduct in entering into the CPF loan and mortgage with Ms Zhuang, Mr Wang, Richie and their companies outside what was acceptable commercial behaviour such as to warrant condemnation as offensive to conscience. In all the circumstances recounted above, the CPF loan and mortgage were advantageous to Ms Zhuang and Mr Wang, especially if they complied with their obligation in cl 9.1(c) of the supplemental deed of variation and sold the Vaucluse property. Their obligation in cl 9.1(c) was consistent with the purpose of the CPF loan and mortgage and with Ms Zhuang’s and Mr Wang’s reason for entering into the transaction. Clause 9.1(c) provided that they were to:

This conclusion as to the advantageous and beneficial nature of the CPF loan and mortgage from the perspective of Ms Zhuang and Mr Wang was reinforced by cl 8(b) of the supplemental deed of variation which was:

These terms and conditions to which Ms Zhuang and Mr Wang agreed to be bound as well as the other specific provisions relating to repayment, interest and security, especially given the short term and purpose of the loan were reasonably necessary for the protection of the reasonable interests of CPF and, in any event, were not harsh or oppressive as against Ms Zhuang and Mr Wang in all the circumstances.

Fifthly, to the extent that Ms Zhuang and Mr Wang rely on the contentions that the CPF loan and mortgage are unconscionable or unjust because, if they had received independent advice, they would not have entered into the CPF loan and mortgage and the Vaucluse property would have been sold by ALS and they would have preserved some equity with which to purchase another domicile, I do not accept those contentions.

I am satisfied that, if Ms Zhuang and Mr Wang had been informed of Mr Green’s breach of fiduciary duty as a result of his conflict of duties and, as a result, sought and obtained independent legal, or even financial, advice, they would not have received advice materially different from that provided by Mr Green in relation to the CPF loan and mortgage, which has been set out above in some detail. This was because, if they wished to control the sale of the Vaucluse property themselves rather than there being a mortgagee in possession sale, as was the case, the CPF loan and mortgage was the more advantageous, practically available means of doing do so. To the contrary, however, Mr Kabilafkas submitted in effect that Ms Zhuang and Mr Wang should and would have been advised, by an independent legal or financial adviser, in effect: [25]

It was accepted in submissions that this amounted to being advised that they should give up and not oppose ALS obtaining an order for possession in the proceedings brought in this Court by ALS.

I do not accept that, if Ms Zhuang and Mr Wang had sought and obtained independent legal or financial advice, they would have been advised as Mr Kabilafkas submitted. His contention was not supported by any expert evidence from a solicitor or financial adviser that such advice would actually have been given in all the circumstances. As a consequence, that contention could not be tested in cross examination of such a witness.

In addition, such advice would not make commercial or legal sense in the particular circumstances of the present case:

The submissions on behalf of Ms Zhuang and Mr Wang did not identify anything in the particular drafting of the documentation for the CPF loan and mortgage or any of the specific terms which were said to be harsh or oppressive in the circumstances or which would have led an independent legal or financial adviser to have advised Ms Zhuang and Mr Wang not to enter into the CPF loan and mortgage, if they wished to have the opportunity to manage the sale of the Vaucluse property themselves, as they proposed. The provisions of the CPF loan and mortgage were not, given Ms Zhuang and Mr Wang’s motivation to seek breathing space to allow them to sell the Vaucluse property themselves, unreasonably difficult for them to comply with.

In all the circumstances and given their motivation, I was not prepared to infer that advice to “stop” and allow ALS to sell as mortgagee in possession would have been given to Ms Zhuang and Mr Wang, if they had sought independent advice as a result of being informed of Mr Green’s breach of fiduciary duty by his acting for both sides in the CPF transaction without informed consent and by his involvement with VAPL in assisting to administer the funds. Furthermore, even if such “stop” advice had been given, I do not accept that the evidence established that Ms Zhuang and Mr Wang would have acted on it. Their previous conduct referred to in Mr Green’s letter of 17 November 2022, quoted above at [62], and their conduct in entering into the Harvestone transaction and their entering into the Pronto loan and mortgage, were all consistent with a willingness on Ms Zhuang’s and Mr Wang’s part to take on onerous terms and conditions in order to obtain urgently needed funds. It was not suggested that in any of those transactions, Ms Zhuang and Mr Wang did not appreciate what they were doing or why.

Thus, I do not accept that the absence of independent legal or financial advice, as a result of Mr Green’s breach of fiduciary duty and failure to disclose relevant matters to Ms Zhuang and Mr Wang led to, or contributed to any significant extent to, it being unconscionable or unjust for CBF to have entered into the CPF loan and mortgage with Ms Zhuang and Mr Wang.

Sixthly, there was nothing to suggest that CPF’s conduct in the present case was different from or inconsistent with the way in which it acted or would have acted in similar transactions with another borrower in a similar situation. Nor was it suggested that CPF or Ms Zhuang and Mr Wang did not act in good faith and I am satisfied that they all acted in good faith.

In summary, taking into account the consequences of compliance with the provisions of the CPF loan and mortgage including, in particular, cl 9.1(c)(i), and of non-compliance with all the provisions as to repayment, as well as the aspects of the public interest and the factors in s 9(2) of the CRA which were relevant in the present case, I formed the view that neither the CPF loan and mortgage nor any of its terms was unjust, in the sense of being unconscionable, harsh or oppressive or otherwise, in the circumstances relating to the contract at the time it was made. Similarly, all the circumstances relevant to Ms Zhuang and Mr Wang and to CPF and the factual background to the CPF loan and mortgage assessed in light of the relevant factors in s 12CC of the ASIC Act, led me comfortably to the conclusion that CPF could not be said to have engaged in conduct that was unconscionable in all the circumstances in entering into the CPF loan and mortgage with Ms Zhuang and Mr Wang. I reached those conclusions even taking into account Mr Green’s knowledge which was said to be attributed to CPF.

In these circumstances, I did not consider it necessary to determine whether Mr Green’s knowledge should be attributed to CPF. If it were necessary to decide that matter, I would consider myself bound by the principles stated by the Court of Appeal in City Garden Australia Pty Ltd (in liq) v Meng Dai (2024) 115 NSWLR 468; [2024] NSWCA 238 at [61]-[69] (Basten AJA with Kirk and Stern JJA agreeing) and in particular the statement in relation to a solicitor acting for both sides of a transaction, at [64]:

It did not appear to me that Mr Green’s informal retainer by CPF involved a duty on his part to communicate relevant knowledge he obtained concerning Ms Zhuang and Mr Wang and any other circumstances relevant to their unconscionability and unjust contract claims to CPF. Thus, Mr Green’s knowledge, as relied on by Ms Zhuang and Mr Wang, would not be attributed to CPF. In addition, attribution of knowledge under s 12GH(1) was relied on.

Section 12GH(1) of the ASIC Act applies “[i]f, in a proceeding … in respect of conduct engaged in by a body corporate, being conduct in relation to which the Division applies, it is necessary to establish the state of mind of the body corporate”. In that situation, the state of mind, and thus knowledge, [26] to be attributed to the body corporate is the state of mind of the “director, employee or agent by whom the conduct was engaged in within the scope of the person’s actual or apparent authority” In this case, the relevant conduct that was the subject of the proceeding is CPF’s entry into the CPF loan and mortgage. The director, employee or agent who engaged in that conduct was, at least, the person who executed the CPF loan and mortgage documentation on behalf of the company and would probably include the persons who decided to have CPF advance the funds, be the nominated mortgagee and enter into the CPF loan and mortgage. On the evidence the relevant decision makers were Mr Reed and his father. Mr Green was not the director, employee or agent of CPF who actually engaged in the relevant conduct of entering into, or deciding to enter into, the CPF loan and mortgage. Nor would that have been within the scope of Mr Green’s actual or apparent authority under his retainer with CPF. In these circumstances, s 12GH(1) does not operate to attribute Mr Green’s knowledge to CPF.

As noted above, it was not in dispute that if Mr Green’s knowledge was not to be attributed to CPF, the unconscionability and unjust contracts claims would fail.

For all these reasons, I would dismiss Ms Zhuang’s and Mr Wang’s cross claim against CPF. It then follows that Ms Zhuang and Mr Wang have no defence to CPF’s claims in its statement of claim. Furthermore, Everest has not filed a defence to CPF’s claims and Richie relied on Ms Zhuang’s and Mr Wang’s cross claim as the only basis for his defence to CPF’s claims.

In those circumstances and in light of my findings and reasons set out above, CPF is entitled to judgment against Everest, Ms Zhuang, Mr Wang and Richie, in their various capacities under the CPF loan and mortgage in the sum of $21,621,915.54, which includes interest at the applicable rate in accordance with the CPF loan and mortgage to 31 March 2026, which is the latest monthly interest accrual date. No post-judgment interest under s 101 of the Civil Procedure Act was sought by CPF.

As to costs, there was no reason or factor which in my view would militate against costs following the event and an award of costs being made in CPF’s favour as sought. In addition, CPF’s contractual rights to recover costs and expenses incurred in enforcement of its rights under the CPF loan and mortgage provide sufficient support in the present case for the claims for indemnity costs awards against Ms Zhuang, Mr Wang and Richie, as sought in the statement of claim. CPF also seeks as against the mortgagors, Ms Zhuang and Mr Wang, interest on any costs incurred in enforcement of the CPF loan and mortgage recoverable in these proceedings from the date on which those costs were paid. Given the terms concerning the amount secured by the mortgage which includes costs of enforcement and the compounding of interest on that amount daily, it is appropriate to order interest on costs against the mortgagors compounding daily at the rate of 16%, which is consistent with the relevant provisions of the CPF loan and mortgage.

For these reasons, orders in CPF’s favour should be made as follows:

In the event that the Court did not make an order in favour of Ms Zhuang and Mr Wang against CPF setting aside the CPF loan and mortgage, they submitted that Mr Green’s breach of fiduciary duty entitled them to claim equitable compensation for the loss suffered by them as a result of entering into the CPF loan and mortgage. In this regard, it was contended that in the ordinary course Ms Zhuang and Mr Wang would be required to establish that Mr Green’s breach of duty “materially contributed to the fact that their equity in the Vaucluse Road Property has eroded substantially since the ALS428 Loan fell into default such that they may realise nothing from the sale of that property”. [27]

Nonetheless, Ms Zhuang and Mr Wang’s ultimate submissions were that:

Mr Green submitted that the application of Brickenden for which Ms Zhuang and Mr Wang contended was misconceived when the factual basis for that decision was understood and in light of more recent authorities. In summary, it was submitted that Brickenden does not stand for the proposition for which Ms Zhuang and Mr Wang contend in this case, namely, that wherever a fiduciary does not obtain “fully informed consent”, the fiduciary is “prohibited from contesting causation”. It was also submitted in effect that Ms Zhuang and Mr Wang had not established that they would not have entered into the CPF loan and mortgage if they had known of Mr Green’s conflict.

As noted above, Mr Green admitted that he breached his fiduciary duty to, inter alios, Ms Zhuang and Mr Wang by failing adequately to disclose to them that he was acting on behalf of CPF and also that he was an officer of VAPL which assisted CPF in the management of the funds to be made available under the CPF loan and mortgage. Ms Zhuang and Mr Wang claimed equitable compensation in respect of the loss caused by Mr Green’s breach and in respect of disgorgement of profits.

Equitable compensation seeks to restore a claimant, as close as possible, to the position it would have been in, had no equitable breach occurred: Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [40]-[41] (Gleeson J, Griffiths AJA and Mitchelmore JA agreeing). A causal connection sufficient for the fiduciary to be liable to the equitable remedy of compensation will exist if a loss to the person to whom the fiduciary obligation is owed would not have been sustained but for the breach: Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 (Ancient Order) at [88] (Gageler J). Similarly, a causal connection between a fiduciary’s breach of fiduciary obligation and a benefit or gain sufficient for the fiduciary to be liable to the equitable remedy of account will exist if the benefit or gain to the fiduciary or knowing participant would not have been obtained “but for” the breach: Ancient Order at [88].

Ms Zhuang and Mr Wang relied on the principle in Brickenden to contend that their claim for equitable compensation should be upheld and Mr Green should not be entitled to rely on a counterfactual position that they would have entered into the CPF loan and mortgage even if there had been no breach of fiduciary duty. In Brickenden, Lord Thankerton, delivering the advice of the Privy Council, stated: [28]

The operation of the principle depended upon a threshold finding that the non-disclosed information was material, in that the information which the solicitor was obliged to disclose was the very information upon which the third party had to act. The facts of Brickenden have been noted by the Court of Appeal in Beach Petroleum NL v Kennedy (1998) 48 NSWLR 1; [1999] NSWCA 408 (Beach Petroleum) at [436] and [442]-[444]. In brief summary, Brickenden concerned a solicitor acting for both mortgagor and mortgagee while having undisclosed personal interests in prior mortgages over the same property which were to be discharged as a result of the transaction. Those interests were found to be material, and the fiduciary was not permitted to contend that disclosure would have made no difference to the lender’s decision. As White J explained in Short v Crawley (No 30) [2007] NSWSC 1322 (Short) at [410]:

It is important to note that Brickenden is not authority for the general proposition that in no case involving breach of fiduciary duty may the Court consider what would have happened if the duty had been performed: Beach Petroleum at [444]. In this regard, there is no equitable by-pass of the need to establish causation: Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [44] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).

In Mao v Bao (2023) 113 NSWLR 26; [2023] NSWCA 278 (Mao) Ward ACJ (with whom White and Mitchelmore JJA agreed) said at [175]:

The facts in the present case are materially different from those in Brickenden in that Mr Green did not have any interest in the ALS loan or mortgage which were to be discharged through the refinancing by way of the CPF loan and mortgage. In addition, Ward ACJ continued in Mao at [176]-[177]:

In Short, White J also observed at [413] and [428]:

Recently, Faulkner J considered the application of the principle in Brickenden in a somewhat similar situation to the present in Tekin v Stratford [2025] NSWSC 541. In that case at [273], his Honour said:

The Court of Appeal dismissed an appeal from this decision: Tekin v Stratford [2026] NSWCA 54 holding at [87]-[89]:

Thus, in my view in order for Ms Zhuang and Mr Wang to be successful in claiming equitable compensation in the present case, it was necessary for them to establish on the evidence that loss has actually been suffered by them as a result of the breach of fiduciary duty. [29]

As to the factual question of causation of loss to Ms Zhuang and Mr Wang or benefit to Mr Green, the present case depended on whether Ms Zhuang and Mr Wang would not have entered into the CPF loan and mortgage had they known of Mr Green’s conflict. In the present case, Ms Zhuang and Mr Wang expressly pleaded that:

In this regard, it can be noted that their evidence was not precisely to that effect.

Both Ms Zhuang’s and Mr Wang’s evidence was effectively confined to what they would have done initially if they had been told of Mr Green’s conflict of interest. In that situation, they both said in effect that they would have sought independent legal advice and at least would not have signed the documentation until that had been obtained. It does not follow from this that they would not have entered into the CPF loan and mortgage after they received such independent legal advice. Given the circumstances outlined in detail above, the relatively advantageous terms of the CPF loan and mortgage documentation compared to the proposed ALS forbearance agreement and their motivation to gain some breathing space to allow them to control the sale of the Vaucluse property themselves rather than having a mortgagee sale, I am comfortably satisfied that, if they had received independent legal advice, it would not have been materially different from that provided by Mr Green and, after receiving that advice, Ms Zhuang and Mr Wang would then have signed the CPF loan and mortgage documentation in order to refinance the ALS loan and mortgage and obtain the breathing space they wanted. Thus, their claim fails at the factual level.

This conclusion is confirmed by a consideration of the fact that Ms Zhuang and Mr Wang entered into the Harvestone refinancing transaction when they were aware that the lender was VAPL, a company associated with Mr Green and his firm, when Mr Green was acting on both sides of the transaction and did not seek, or did not consider it appropriate to obtain, independent legal advice in that case. On this basis and given all the relevant circumstances, I inferred that even if Ms Zhuang and Mr Wang had been properly informed of Mr Green’s involvement with VAPL and his acting for CPF as well as themselves in relation to the CPF loan and mortgage, they would still have been prepared to sign the documentation as they did for the Harvestone transaction, without seeking independent legal advice, in light of the more advantageous terms and the breathing space to sell the Vaucluse property themselves, both of which I am satisfied they clearly understood and wanted to obtain.

In addition, such evidence as to what parties believe they would have done if they had been informed of certain matters is often found to be unreliable because of the natural human tendency to believe that one would not have taken certain action if an undesired outcome which came to pass could have been avoided thereby when that action would actually have been taken at the relevant time.

Moreover, the evidence established that there was no other viable refinancing option available to Ms Zhuang, Mr Wang or Richie at the relevant times and that was the reason why Richie reached out to Mr Green to seek his support. The principal support sought was not that Mr Green should act as their solicitor but that he should find a funder to refinance the ALS loan and mortgage for them. Mr Green’s acting for them on that refinancing transaction was likely to have been considered a matter of convenience for them and I am satisfied on the balance of probabilities that they were not concerned whether Mr Green also acted for the lender, as similarly they had not been concerned that Mr Green acted for both them and the lender in relation to the Harvestone transaction.

Given those circumstances, the unreliability of evidence, the lack of options available to Ms Zhuang, Mr Wang and Richie and their desire not to have a mortgagee sale of the Vaucluse property and having regard to the evidence as a whole, I was not satisfied on the balance of probabilities that Ms Zhuang’s and Mr Wang’s evidence as to what they would have done if they had been informed of Mr Green’s full involvement in the CPF transaction should be accepted. It was more probable, in my view, that they would have entered into the CPF loan and mortgage even if they had been informed of the full extent of Mr Green’s involvement in the CPF loan and mortgage, whether or not they obtained independent legal or financial advice.

Accordingly, at the factual level I do not accept that Ms Zhuang and Mr Wang would not have entered into the CPF loan and mortgage if they had been aware of the full extent of Mr Green’s involvement in the transaction. Consequently, I do not accept that they have established that they suffered any loss as a result of Mr Green’s failure to disclose fully his involvement as claimed.

Furthermore, even if Ms Zhuang and Mr Wang had established that they would not have entered into the CPF loan and mortgage at all, their claim for equitable compensation has an additional flaw. The flaw is that they have not established that they actually suffered any loss of the nature identified in their submissions, namely, “their equity in the [Vaucluse property] has eroded substantially since the ALS428 Loan fell into default such that they may realise nothing from the sale of that property”. The speculative nature of this asserted loss is emphasised by the fact that the loss is referred to as being “that they may realise nothing” (emphasis added). This reflects the fact that there was no expert valuation evidence concerning the Vaucluse property if it had been sold by ALS as a mortgagee in possession at some time after ALS had obtained a judgment for possession in ALS’s proceedings in this Court. Nor was there any expert evidence as to the value of the Vaucluse property at any other relevant time, including if it had been sold by Ms Zhuang and Mr Wang in accordance with their obligation under cl 9.1(c)(i) of the CPF supplemental deed of variation or, for that matter, at any other time after entry into the CPF loan and mortgage. In the absence of such evidence, it could not be concluded whether or not Ms Zhuang and Mr Wang would have been better or worse off in relation to the equity in their property depending on whether they submitted to ALS obtaining judgment for possession in their Supreme Court proceedings or they entered into the CPF loan and mortgage and complied with their obligation under cl 9.1(c)(i) or failed to comply with that obligation. Thus, even if there were no other difficulty with their claim for equitable compensation, Ms Zhuang and Mr Wang failed to adduce evidence to establish that they had suffered a relevant loss of diminution in the value of their equity in the Vaucluse property that might have been recoverable on the basis they contended.

It can be noted here that, in the absence of expert evidence as to the value of the Vaucluse property at any relevant times, it is also not possible to reach a properly informed view as to whether or not Ms Zhuang and Mr Wang caused their own loss or failed to mitigate any loss by refusing to sell the Vaucluse property in accordance with cl 9.1(c)(i) of the supplemental deed of variation.

For these reasons, Ms Zhuang’s and Mr Wang’s claim for equitable compensation fails on the factual level in that causation of any loss claimed was not established and in that no loss was actually proved even if causation might have been established.

In relation to their claim that Mr Green and his partners pay equitable compensation by way of disgorging of profits made by them as a result of Mr Green acting both for Ms Zhuang, Mr Wang, Richie and Everest and for CPF, and VAPL assisting to administer the funds, this appears to be in substance a claim for an account of profits. There were no material facts pleaded or particulars of the specific basis for, or amount of, such a claim. In any event, there was also no evidence identified in submissions which was said to establish the nature and extent of any profits made by Mr Green or his partners as a result of Mr Green’s involvement in the CPF transaction. Consequently, I reject the claim on those bases.

For these reasons, I reject the whole of Ms Zhuang’s and Mr Wang’s claim for equitable compensation under the first cross claim.

In these circumstances, issues relating to proportionate liability, contributory negligence and the New South Wales Professional Standards Scheme do not arise.

Nonetheless, for the sake of completeness in relation to the first two matters, it can be noted that the Court of Appeal in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 (Rahme) held:

Had it been necessary to decide, I would have considered myself bound by the judgment of the Court of Appeal in Rahme, despite subsequent comments in Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232.

As to whether any liability of Mr Green would have been subject to the limit established by the Law Society of New South Wales Professional Standards Scheme established under the Professional Standards Act 1994 (NSW), it can be noted that it was not in dispute that this scheme would operate in the case of Mr Green and the other partners in Pikes & Verekers so as to limit their liability to $1.5 million, if the scheme is applicable in the circumstances of the present case.

The objects of the Professional Standards Act are set out in s 3 as follows:

Section 21 of the Professional Standards Act provides:

Section 26 relevantly provides:

Section 28 of the Act is in the following terms:

Section 29 provides:

The operation of the scheme has recently been summarised by Peden J in GEMI 169 Pty Ltd v Suria Global (L) Pty Ltd [2025] NSWSC 975 as follows, at [483]:

The only substantive issue between the parties in relation to the scheme was whether it applied to Mr Green and his partners in the present case. This turned on whether Ms Zhuang and Mr Wang were claiming “damages” as a result of Mr Green having engaged in a “breach of trust”. If so, by virtue of s 5(1)(c) of the Professional Standards Act, that Act and therefore the scheme would not apply. Section 5(1) provides as follows:

In s 4(1) of the Professional Standards Act, “damages” is defined as meaning:

Recently, Jackman J considered the issue of whether “damages” in the Professional Standards Act should be construed broadly to include equitable compensation in DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16 (DC Rd). At [442], his Honour held:

I understand his Honour’s first sentence in [442] to refer to the fact that the definition of “damages” in s 4(1) of the Professional Standards Act does not provide a definition which delimits the denotation of that term but in par (a) of the definition effective leaves “damages” undefined except that they are limited to “damages” that are “awarded in respect of a claim or counter-claim or claim by way of set-off” and by virtue of pars (b) and (c) damages includes costs and interest, which would not normally fall within the description “damages”.

After the hearing, it was brought to my attention, with the consent of the parties, that Peden J had also briefly dealt with the issue of “damages” in s 5(1) in Council of the City of Broken Hill v Redenbach Group Pty Ltd trading as Redenbach Legal [2026] NSWSC 262 at [311]-[317] relevantly as follows:

It does not appear that Jackman J’s decision delivered about a month earlier was brought to her Honour’s attention. Without the benefit of Peden J’s detailed consideration of the matters raised by Jackman J, I respectfully agree with the reasoning of, and the conclusion reached, by his Honour.

In my view, there is much to recommend Jackman J’s conclusion that “damages” for the purposes of the Professional Standards Act should be construed broadly as referring to monetary compensation for loss, including common law damages, equitable compensation or other pecuniary relief of a compensatory nature. This construction appears to me to be one which promotes the objects of the Act, especially those in pars (a), (b) and (c) of s 3. The use of “damages” in the chapeau to s 5(1) indicates that the Parliament intended “damages” to include a remedy involving monetary compensation for, inter alia, a breach of trust. The construction is also consistent with the way in which “damages” is used, and the purpose for which it is used, in provisions such as ss 21, 22, 23, 26 and 29 of the Act. Accordingly, I accept that “damages” for the purposes of the Professional Standards Act means monetary compensation for loss, whether that be common law damages, equitable compensation or other pecuniary relief of a compensatory nature, notwithstanding the use of “cause of action” in some relevant provisions.

The expression “breach of trust” in s 5(1)(c) is not defined in the Professional Standards Act. As the issue has been raised in the present case, the question can be framed as whether a “breach of trust” in this context includes any breach of fiduciary duty.

It is often appropriate to draw a distinction between a breach of trust and a breach of fiduciary duty, especially in the context of claims arising out of the professional relationship between a solicitor and client. [30] In Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23, Brennan CJ, Gaudron, McHugh and Gummow JJ observed at [31]:

Their Honours also noted at [63] and [66]:

The context in which the expression “breach of trust” occurs in s 5(1) and, in particular, that it is being used as a criterion for excluding a particular type of claim from the operation of the scheme, indicates that the expression should not be given a broad construction so as to include breaches of fiduciary duty not involving a trust relationship. In the case of solicitors, a monetary claim may be based on a breach of contract, negligence and a breach of fiduciary duty arising out of the same factual circumstance not involving a trust relationship. It would be unlikely that the Parliament intended to exclude the claim based on breach of a non-trust based fiduciary duty but not the contractual and tortious claims in such a case.

This approach to the construction of “breach of trust” is confirmed by consideration of the Second Reading Speech which contained the following concerning s 5(1): [32]

Although not expressed with the precision which might be found in a judgment or equity text book, it appears clear that the Parliamentary intention was to limit the exclusion from the operation of a scheme under the Act established by s 5(1)(c) to liability arising out of a breach of an obligation arising from “a trust relationship”, that is a formal relationship in which there is trust property, a trustee and a cestui qui trust and which imposes “greater obligations”. The Second Reading Speech does not support the approach that “breach of trust” should be construed as including any breach of fiduciary duty whether arising out of a trust relationship or otherwise.

It was also submitted by Ms Zhuang and Mr Wang that because a “breach of trust” in the context of debts that are not provable in bankruptcy in s 82(2) of the Bankruptcy Act 1966 (Cth) has been held to include a breach of fiduciary duty, a similar construction should be adopted in relation to that same wording in s 5(1)(c) of the Professional Standards Act.

Section 82(2) of the Bankruptcy Act provides:

In Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236; 29 ACLC 11-018, Perram J considered the expression “breach of trust” in s 82(2) and noted the different views in that regard at [116]-[118] as follows:

Accordingly, there does not appear to be any definitive determination of the construction of the expression “breach of trust” in the Bankruptcy Act, although if I were required to decide the matter I would adopt the conclusion and reasoning of Bryson AJ in Auto Group Ltd v England [2008] NSWSC 402; 6 ABC(NS) 72 at [8]-[22] and in particular the following:

This conclusion provides some, albeit limited, support for the construction of s 5(1)(c) I have put forward above.

Having regard to all of these considerations, in my view, “breach of trust” in s 5(1)(c) of the Professional Standards Act should not be construed as including a breach of fiduciary duty arising otherwise than out of a trust relationship involving trust property, a trustee and a cestui qui trust.

Consequently, if Mr Green and his partners were liable to pay equitable compensation to Ms Zhuang and Mr Wang in the present case, contrary to my conclusion above, Mr Green and his partners would be entitled to rely on the limitation of liability to $1.5 million provided for by the Law Society of New South Wales Professional Standards Scheme.

CPF’s claim against Mr Green and his partners in the second cross claim in these proceedings was contingent on CPF not being entitled to recover the monies owing under the CPF loan and mortgage in full. Since I have concluded that CPF is entitled to recover those monies in full, CPF’s claim against Mr Green and his partners falls away and it is not necessary to determine it.

When the orders of the Court were initially announced on 24 April 2026, the parties noted that the judgment sum was mistaken and, by consent, the orders and reasons for judgment were amended to reflect the correct position. In addition, submissions were made in relation to certain aspects of the costs orders and amended costs orders were made, to which the parties had no objection.

For all of these reasons and in the circumstances, the orders of the Court were: