Liu v Ye

1. [1]

   The plaintiff filed a statement of claim in the Local Court on 17 March 2023 seeking damages for the failure of the defendant to return an emerald to her which she had entrusted to him for sale in China.

2. [2]

   Although the parties appear to have argued the matter before the Magistrate on the basis that the causes of action involved were, breach of contract, bailment, agency, conversion, detinue and specific restitution (as the Magistrate noted in his judgment) the focus appears to have been on detinue, and that was the only cause of action relied upon in the appeal to this Court.

3. [3]

   The proceedings were defended on two bases. First, it was pleaded that the emerald did not belong to the plaintiff; rather, it belonged to a joint venture between the defendant and a person named Norman Keith Stringer. Secondly, it was defended on the basis that the claim was statute barred because the cause of action in detinue arose sometime in 2015 or 2016 when demands were first made by the plaintiff for return of the emerald.

4. [4]

   On 3 July 2024, the Magistrate found judgment for the defendant on the basis that the claim was statute barred. The Magistrate found further that if he was in error on the limitation defence, the plaintiff was entitled to damages for a failure to return the emerald.

5. [5]

   The plaintiff, by summons filed on 25 July 2024 seeks that the judgment of the Magistrate be set aside and that the defendant pay the plaintiff the sum of $24,568.00 with interest from 17 October 2022, being the date of a letter of demand written by the plaintiff to the defendant. Although the plaintiff in the summons appeals as of right under s 39 of the Local Court Act 2007 (NSW), the plaintiff accepts in her submissions that the issues in the appeal are questions of mixed law and fact, with the result that leave to appeal is needed.

6. [6]

   The grounds of appeal in the summons are these:

7. [7]

   There is no cross-appeal by the Defendant in respect of the determination that, if the proceedings are not statute-barred, he is liable in damages to the plaintiff.

The emeralds and the demands

1. [8]

   The plaintiff and the defendant married in 1996 in China. They moved to Australia and were divorced in 2004. Thereafter the plaintiff commenced a de facto relationship with Mr Stringer. The defendant and Mr Stringer subsequently went into business together.

2. [9]

   The plaintiff said that she had a discussion with the defendant in about 2013 when the defendant told her that if she bought expensive stones in Australia he could take them to China and sell them for her.

3. [10]

   In 2014 the plaintiff gave the defendant three rings which she had purchased at First State Auctions. During 2014 the defendant travelled to China and, on his return, he paid the plaintiff the original amount payable on each ring together with an amount for GST.

4. [11]

   On 8 June 2014 the plaintiff purchased an emerald (“the First Emerald”) at First State Auctions. She gave it to the defendant for him to sell in China. Although he did not sell it, he paid to her the amount of the purchase price together with GST and returned the emerald to her.

5. [12]

   Subsequently, on 10 July 2014 the plaintiff purchased a further emerald (“the Second Emerald”) at First State Auctions. The purchase price was $24,568.

6. [13]

   A friend of the plaintiff’s, Jenny Yan, also bought a green emerald ring at First State Auctions. With Ms Yan’s agreement, in late 2014, the plaintiff gave both the First Emerald and the Second Emerald and the one purchased by Ms Yan to the defendant to sell in China.

7. [14]

   The plaintiff said that in early 2015 she called the defendant when she was with Jenny Yan. They had a conversation to this effect:

8. [15]

   At the end of 2015 the defendant returned Ms Yan’s ring to the plaintiff. The parties then had this discussion:

9. [16]

   Later in 2015 the plaintiff and defendant had a further discussion where the plaintiff asked where the Second Emerald was and the defendant that it was in a safety deposit box in Shanghai because someone in China was interested in it, and he might be able to sell it. The plaintiff said, “Bring it back”. The defendant said he would do so the next time he visited China.

10. [17]

    The plaintiff and the defendant had a further conversation to similar effect in early January 2016 and subsequently in 2017. The plaintiff asserted that there were similar discussions from 2017 to 2020 and the defendant did not return the Second Emerald to her.

11. [18]

    On 17 October 2022, the plaintiff wrote a letter to the defendant in these terms:

12. [19]

    The defendant said that he ignored this letter because he had already returned the Second Emerald to Mr Springer.

13. [20]

    The defendant’s account of the matter differs somewhat from the plaintiff’s account. He said that by July 2013 he had got to know Mr Stringer well and they worked together in the business of importing building materials. They began to discuss selling low quality sapphires from the gem fields in Queensland to China.

14. [21]

    The defendant said that in about June 2014 Mr Stringer gave him the First Emerald and asked him to sell it in China. He took it to China but was not able to sell it. He explained to Mr Stringer that it was of poor quality and no one was interested. He cannot recall when he brought it back to Australia.

15. [22]

    In relation to the Second Emerald, he annexed to his affidavit a copy of the same tax invoice that the plaintiff annexed showing her purchase of the second emerald. However, the defendant’s copy contains the words “customer Thomas picked up the goods on 15 Sept 2014” and there is a signature by someone called Alex who the defendant says is a staff member from First State Auctions.

16. [23]

    Thereafter, the defendant borrowed $100,000.00 from Mr Stringer on a short-term basis to assist in paying for a property. He appears to have used the two emeralds and some sapphires as some form of security.

17. [24]

    He said that on 5 September 2016 he returned the Second Emerald and the sapphires to Mr Stringer.

18. [25]

    He said that when the plaintiff demanded the return of the emeralds in mid-September 2016 and 2017 he said that he had given them back to Mr Stringer because they belonged to him. As noted earlier, he said that was the reason he ignored the plaintiff’s letter of 17 October 2022.

The Magistrate’s judgment

1. [26]

   The Magistrate first made reference to ss 14, 21, 63 and 65 of the Limitation Act 1969 (NSW). His Honour then set out paragraphs 40 to 56 of the defendant’s submissions followed by extracts from the plaintiff’s written submissions. Both extracts of the submissions were concerned with the limitation issue raised by the defendant.

2. [27]

   In the section of his judgment headed “Consideration” the learned Magistrate said this:

3. [28]

   There is no appeal about the finding on concealment in paras 21 and 22.

4. [29]

   His Honour then went on to consider the substance of the claim in the event that he was in error about the limitation issue. As noted, there is no cross-appeal in relation to that determination, and it is sufficient to state briefly what the Magistrate found.

5. [30]

   The Magistrate said that it was common ground that the plaintiff paid for the Second Emerald although the defendant may have picked it up from First State Auctions. The Magistrate found that if the defendant gave the Second Emerald to Mr Stringer he was never authorised to do so. Accordingly, the Magistrate found that the plaintiff had a cause of action in bailment, conversion or detinue. The Magistrate said he would have ordered damages and not the return of the emerald because he was not persuaded that the defendant still had the emerald.

Grounds of appeal

1. [31]

   The plaintiff submitted that the “demands” she made in 2015 and 2016 were not demands for the purposes of the tort of detinue, and the “refusals” of the defendant were not refusals for the purposes of the tort of detinue.

2. [32]

   The plaintiff submitted that a demand for goods must:

3. [33]

   The plaintiff submitted further that a refusal to provide the goods must be:

4. [34]

   In oral submissions, the plaintiff focused on the matters in paras [32](b) and [33](b) above.

5. [35]

   The plaintiff submitted that none of the discussions recorded by the plaintiff satisfied the requirements of a demand because they were not unequivocal in the sense that the plaintiff was prepared to accept that the defendant would return the stones to her after he had an opportunity to visit China, and because the demand did not specify a time and place at which goods were to be delivered.

6. [36]

   The plaintiff submitted that the defendant’s response to what the plaintiff asked could not be a refusal because it was conditional and was not deliberate, clear, unequivocal and unqualified. The defendant did not delay in responding to the demand but responded each time by promising to return the Second Emerald once he had the opportunity to go to China to collect it. In those circumstance the plaintiff submitted that no refusal could be inferred from the circumstances.

7. [37]

   The defendant submitted that on the plaintiff’s own evidence there were clear, emphatic and unconditional requests by her for her emerald. The defendant pointed to her statements, “Can you bring…my two stones back to Australia”, “I want my stones back”, and “Bring it back”.

8. [38]

   The defendant submitted that there was no ambiguity as to what the plaintiff wanted and no conditions were attached to the return.

9. [39]

   The defendant submitted that on the plaintiff’s analysis, the plaintiff would have failed in an action for detinue if she had brought her claim prior to the writing the letter on 17 October 2022 because no unconditional demand had been made. The defendant submitted that that was absurd.

10. [40]

    The defendant submitted that it was clear the emerald was to be returned to her. It was not necessary in the circumstances for a time and a place to be specified in that regard.

11. [41]

    The defendant submitted that there was no evidence that the plaintiff was prepared to accept that the defendant would return the stones to her after he had an opportunity to visit China. The defendant submitted that that was at odds with the plaintiff’s repeated demands.

12. [42]

    The defendant submitted that the evidence clearly demonstrates that he refused to comply with her demands over some years. The defendant submitted that the plaintiff never agreed to any condition that he needed the opportunity to go to China to collect it. If, as the Magistrate accepted at para 35 of his judgment, the defendant gave the Second Emerald to Mr Stringer, that constituted a refusal to comply with the plaintiff’s demands. In doing so the defendant put it out of his power to comply with her demands to return to emerald to her.

13. [43]

    The defendant submitted that a failure over a reasonable time to comply with the plaintiff’s demands amounted to a refusal. Given the period during which the plaintiff’s demands were made more than a reasonable time had passed long before 17 March 2017.

14. [44]

    In Grant v YYH Holdings Pty Ltd [2012] NSWCA 360 McColl JA (with whom Tobias AJA agreed) said at [43]:

15. [45]

    Her Honour said at [45]:

16. [46]

    In Fitzgerald v Kellion Estates Pty Ltd (1977) 2 BPR 9181 Hutley JA (with whom Hope and Mahoney JJA agreed) said, in answer to an argument put in that case that an effective demand had to enumerate the goods whose return was demanded and that a mere general demand was not sufficient:

17. [47]

    The plaintiff submitted that a demand must specify a time and a place at which, and the person to whom, goods are to be delivered. The particular authority relied on for this proposition was Lloyd v Osborne (1899) 20 LR (NSW) 190. Darley CJ (with whom Owen and G B Simpson JJ agreed) said at 194:

18. [48]

    In Flowfill Packaging Machines Pty Ltd v Fytore Pty Ltd (1993) Aust Torts Reports 81-244, Young J considered that passage and noted, thereafter, what Hutley JA had said in Fitzgerald that the demand cannot throw any burden on the person in whose possession the chattels are. Justice Young went on to say:

19. [49]

    The contractual arrangements between the plaintiff and the defendant meant that the general principle established in cases like Fitzgerald could not apply. It was not possible for the plaintiff to do other than attend on the defendant to require the return of the emerald. She was in no position to be given access to the emerald itself because, by the contractual arrangements made between them, the emerald had been taken to China with the intention of selling it.

20. [50]

    In the circumstances, the only obligation on the part of the defendant was to return the emerald to the plaintiff after the defendant had brought it back from China as he said he would. However, there was no requirement that any demand on the part of the plaintiff needed to identify a particular time or place when that would occur. The factual situation was far removed from the situations in cases like Fitzgerald, Flowfill, Grant or CHEP Australia Ltd v Bunnings Group Ltd [2010] NSWSC 301.

21. [51]

    In my opinion, the demands made by the plaintiff in 2015 and 2016 (paras [14], [15], and [16] above) were clear, specific, unequivocal and unconditional. Nothing more was required.

22. [52]

    In relation to what must be shown to constitute a refusal, the plaintiff relied on what was said in Clayton v Le Roy [1911] 2 KB 1031 at 1048 where Fletcher Moulton LJ said:

23. [53]

    In Zarfati v McMillan [2021] NSWSC 944, Harrison AsJ said at [31]:

24. [54]

    In Slaveski v State of Victoria and Others [2010] VSC 441, Kyrou J said at [323]:

25. [55]

    What was said in Slaveski was adopted by Thawley J in JWR Productions Australia Pty Ltd v Duncan-Watt (No 2) [2020] FCA 236; (2020) 377 ALR 467 at [699].

26. [56]

    However, a refusal, can be demonstrated by an ignoring of the demand or where a reasonable period of time has passed and the demand has not been met.

27. [57]

    The claim in Ming Kuei Property Investments Pty Ltd v Hampson [1995] 2 Qd R 251 was a claim for return of a motor cruiser seized by the Australian Customs Service. Section 225 of the Customs Act 1901 (Cth) imposed a six month limitation period for bringing the proceedings. The question was whether the cause of action arose on one or other of two dates.

28. [58]

    Justice Kiefel said (at 256):

29. [59]

    In Helga Henriette Schwarzschild v Harrods Ltd [2008] EWHC 521, Eady J said at [22]:

30. [60]

    The issue of what constitutes a refusal was subsequently considered in R v The Secretary of State for the Home Department [2011] EWHC 1388 (Admin). In that case, Stephen Morris QC, sitting as a Deputy Judge of the High Court, said:

31. [61]

    In a similar way, in Crowther v Australian Guarantee Corporation Ltd [1985] Aust Tort Reports 80-709, Bollen J said at [69,103]:

32. [62]

    In my opinion, the conversation between the parties in early 2015, when Ms Yan was present, (para [14] above) constituted a sufficient demand by the plaintiff for the emerald to be returned. The terms of the conversation are sufficient to infer that the plaintiff was prepared to accept that the defendant needed to go to China to comply with her demand.

33. [63]

    The plaintiff’s evidence then records that at the end of 2015 the defendant returned Ms Yan’s ring. The clear inference that I draw from that, together with the conversation the defendant had with the plaintiff about them “checking my arse at airport security” (para [15] above), is that the defendant had been to China between the two conversations. Accordingly, it can be reasonably inferred that the defendant’s failure to have complied with the demand made in early 2015 to return the Second Emerald was a refusal. He had indicated that he would bring it back when he next went to China, a matter the plaintiff accepted, and he did not do so.

34. [64]

    Even if that is not correct, the defendant’s subsequent behaviour in saying each time he was asked for the stones that he would do it next time he went to China, and the reason he gave in late 2015 (para [16] above) that it was still in China because someone was interested in it and he may be able to sell it, is all a clear indication that the defendant was refusing to comply with the plaintiff’s demands. As in Crowther, where a long delay under the guise of seeking legal advice amounted to a denial of the plaintiff’s rights, so too the constant fobbing-off by the defendant in the present case under the guise of needing to go to China, similarly amounts to a refusal.

35. [65]

    When the demand was made early in 2015 and the defendant had not returned it by the end of 2015 in the circumstances that I have identified, more than a reasonable time had elapsed, with the result that the defendant’s failure constitutes a clear refusal to comply with the demand.

36. [66]

    Although the Magistrate did not rely in the way I have dealt with the matter, his Honour was clear that the failures to comply over a period of time amounted to a refusal (see paras 18 and 19 of his judgment).

37. [67]

    I do not, however accept the defendant’s submission that the giving of the Second Emerald to Mr Stringer (on the assumption that that is what occurred) meant that the limitation period commenced to run at that time. Such a submission is inconsistent with what is said in John F Goulding Pty Ltd v Victorian Railways Commissioner (1932) 48 CLR 157 at 166, 167 and 169. That act may have constituted a conversion of the Second Emerald, but it did not amount to a refusal to return for the reasons given in John F Goulding.

38. [68]

    The plaintiff submitted that where a demand is made but where there is then inaction by the party requested to provide the goods, that party will have a reasonable time to get the goods into his own hands. In that way, the cause of action only arises after the period of reasonable time. The plaintiff submitted that the Court did not determine what was a reasonable period of time. In that way, the plaintiff submitted, the Court failed in its obligation to provide adequate reasons for its decision.

39. [69]

    The defendant submitted that it was not necessary for the Magistrate to specify precisely what constituted a reasonable time, if such was to be provided to the defendant. That is because, whatever the answer to the question is, it did not encompass a period of years from early 2015 to 17 March 2017, being the date six years before the proceedings were instituted.

40. [70]

    Paragraphs 18 and 19 of the Magistrate’s judgment effectively dealt with the question of what constituted a reasonable time. The Magistrate found that refusal was evidenced by the failure to return the stone within a reasonable period of the demands in 2015 and 2016. The Magistrate, whilst considering a number of the causes of action together, found that detaining the goods up until 2017 when the demands were made in 2015 and 2016 was sufficient to demonstrate both conversion and unjust enrichment, as well as detinue.

41. [71]

    Further, in paragraph 20, the Magistrate expressly found that the omission to return the goods within a reasonable time of 2015 and 2016 was the omission that amounted to a refusal.

42. [72]

    I accept the defendant’s submission that the Magistrate was not obliged to identify precisely when a reasonable time had passed in the circumstances of the case. When clear demands were made in early 2015 for the return of the second emerald, the failure of the defendant to have returned it by 17 March 2017 was a clear and unconditional refusal.

Conclusion

1. [73]

   In my opinion, the issues raised in relation to the tort of detinue were significant enough issues to justify a grant of leave to the plaintiff. However, the Magistrate did not err in his judgment.

2. [74]

   Accordingly, I make the following orders: