Wu v Yu[2018] QDC 169

DISTRICT COURT OF QUEENSLAND

1. [1]
   The plaintiff is suing the first and second defendants for money said to be loaned to one or both of them. He also sues the first defendant for a 60 per cent interest in a property at 14 Gagarra Street, Eight Mile Plains. In turn, the first defendant counterclaims against the plaintiff and the defendant added by counterclaim for amounts loaned to one or both of them in the sums of $274,000 on 25 February 2011 and $392,676.13 in or about July 2012.

Facts that are not in dispute

2. [2]
   All of the parties to this action are Chinese nationals. They lived in the city of Quingdao in China. Xingang Wu and Yan Gao are married and remain so. Hongbo Yu and Leiyan Zhao are married and remain so. Yu and Zhao have one child, Richard born on 15 April 2002. Wu and Gao have two children, a boy, 17 at the time of the trial and a girl six years old at the time of trial.

3. [3]
   Wu and Yu met when they both worked, in the mid 1990’s, for a state owned Chinese company called Shandong Province Marine Company. Wu worked on the shipping side of the company and Yu was working on the accounting side of the business. In 2000 they established a company together, and with three others, became shareholders and directors. The company was known as Qangdao Lianchuang Shipping Company but has been referred to in this trial as Pan Union. By 2004 the three other individuals had left the company and Wu and Yu remained. It is common ground that by this time Yu had an 80 per cent interest in Pan Union and Wu had a 20 per cent interest. Yu was the legal representative and chairman of the board and Wu was the general manager.

4. [4]
   In December of 2006 they bought an incorporated Samoan company called Bright Shipping. They were the sole directors and shareholders. Wu held 60 per cent of the shares and Yu held 40 per cent of the shares.

5. [5]
   On 13 April 2008 Pan Union sold 25 per cent of its interest in a company called Qingdao Hailufeng International Logistics Co Ltd to a Korean company Pantos Logistics Co Ltd which already had a 75 per cent interest in that company. Pantos paid Pan Union US $2 million for this purchase.

6. [6]
   In 2004 the plaintiff became the registered proprietor of a commercial property at 40 Xianggang Zhong Road, Qingdao City. It was leased to Tianjin Zhongtong International Freight Forwarding Company Limited. It may have been rented by other companies from time to time but it is accepted that the rent payments for the lease of that commercial property were paid into the plaintiff’s personal accounts in China.

7. [7]
   In 2006 two properties were purchased; one by the second defendant at Block 5, 201, 872 Tongan Road, Loashan, China (house 201) and one by the defendant added by counterclaim namely Block 8, 101, 872 Tongan Road, Loashan (house 101). Both of those properties cost $2.5 million RMB. At or around the same time the first defendant bought a property at 102, 872 Tongan Road, Loashan. It is not clear which block the property was in but it was in the same general housing development. All properties were mortgaged.

8. [8]
   By the time the plaintiff and the first defendant became sole shareholders in Pan Union it seems that their lives and the lives of their families were enmeshed. From the dealings that are the subject of this action and the evidence given at trial it is evident that there was a high degree of trust between the two men.

9. [9]
   In 2007 Wu and Yu met with migration agents in China namely Mr Fung and Ms Lin. There were discussions about applying for a 163 business visa to Australia. In March 2010 Wu and Yu visited Brisbane in each other’s company. Wu stayed for 10 days and Yu stayed for about a month. During the time Wu was in Brisbane they looked at houses together. After he left Yu was shown the property at 14 Gagarra St Eight Mile Plains.

10. [10]
    On or about 19 March 2010, $919,985 was transferred from an account held by Bright Shipping to an Australian account held by Yu. A property was purchased at 14 Gagarra Street, Eight Mile Plains for $770,000. The property settled on 5 May 2010 and title passed to Hongbo Yu. The two wives, that is Gao and Zhao, moved with their two boys to Australia in August 2011 and into the property at Gagarra Street. Around 8 June 2011 the first defendant obtained a mortgage over the Gagarra Street property. In or about May 2014 he appointed a real estate agent to sell the property and asked the plaintiff and defendant by counterclaim to vacate the premises and remove their property.

11. [11]
    On 20 February 2011 a total of $274,000 was transferred from a Suncorp account held by Hongbo Yu to accounts held by the defendant by counterclaim, Ms Gao. It was transferred in three separate sums namely $100,000, $84,000 and $90,000. On 11 March 2011, $415,100 was transferred from Yu’s Suncorp account to Ms Gao’s Suncorp account and a year later on 12 March 2012, $437,239.29 was transferred from Ms Gao’s account to the joint account of the first and second defendants.  On 31 July 2012, $392,676.13 was transferred from Hongbo Yu’s account through several jointly held accounts to Ms Gao’s account.  The first defendant claims that the sums of $274,000 and $392,000 were loans which have not been repaid.

Factual matters in dispute

12. [12]
    There are a number of matters in dispute however, the significant facts that need to be decided in this case are as follows:

1. (a)
   whether the commercial property in Wu’s name was actually owned by Pan Union and whether the rent paid for that property was used to pay the mortgages on the Laoshan properties;

2. (b)
   whether Wu and Yu intended to buy property in Brisbane together;

3. (c)
   whether Bright Shipping was a company used merely to hold and shift funds or whether it operated as a business;

4. (d)
   why the money transferred from Yu to Gao was transferred and whether it was a loan;

5. (e)
   whether money transferred from Bright Shipping to Yu and Gao in Australia represented their share of the dividend payment from the sale of the shares by Pan union to Pantos.

Missing documents and matters affecting credit

13. [13]
    A decision in this case has been significantly hampered by a lack of disclosure of pertinent documents. Significant documents are missing such as the bank records, minutes of meetings, declarations of dividends, tax returns both personal and company, any written agreements between the parties, mortgage documents, rental agreements and the Chinese bank records of the parties.

14. [14]
    Although it appears that a significant number of the documents were at least in the control of the plaintiff at the time of trial, it cannot be said that the fault or the lack of disclosure falls solely on his shoulders as there are also documents missing that the defendants could have provided.

15. [15]
    I also note that the action is old and the witnesses were asked to recall events occurring at times over 10 years ago, without the benefit of documents to refresh their memories. Additionally none of the parties spoke English so it is noted that assessment of credit through demeanour or expression is significantly diminished. It is also noted that there are likely to be cultural and linguistic nuances that have affected the understanding of questions and giving of answers.

16. [16]
    There is little doubt that the parties prior to the falling out which occurred sometime in 2014 were close. It would seem that business was conducted between them without significant amounts of paperwork and often by verbal exchange. Even allowing for this factor, the absence of records which would have been available to both of the parties, have hampered the objective assessment of the evidence. Both the plaintiff and the first defendant have given accounts which have proven to be inconsistent in significant ways.

Bright Shipping

17. [17]
    It is the first defendant’s case that Bright shipping was merely a holding company for funds and that it did not transact any business on its own. It is pivotal to his case in relation to the ownership of the Gagarra St property that money paid by Bright Shipping was no more than the payment of the money due to him from the sale of shares by Pan Union to Pantos. The plaintiff claimed that Bright Shipping was in its own right a shipping company and that it transacted business itself as well as having funds injected from other sources.

18. [18]
    It is accepted that Bright Shipping received significant amounts of money from Pan Union. Agreed documents tendered show large amounts of money being transferred between the two companies:

1. (i)
   USD 670,000 on 6/11/08 transferred from Pan Union to Bright Shipping;^[1]

2. (ii)
   USD 610,000 on 11/11/08 transferred from Pan Union to Bright Shipping;^[2]

3. (iii)
   USD 2,000,000 on 18/12/08 transferred from Bright Shipping to Pan Union;^[3]

4. (iv)
   USD 851,000 on 23/12/08 from Pan Union to Bright Shipping;^[4]

5. (v)
   USD 674,000 on 25/12/08 from Pan Union to Bright shipping.^[5]

19. [19]
    The first defendant claimed that these transactions represented the transfer of the share sale into Bright Shipping. They postulated that a further USD 720,000 was transferred from Pan Union to Bright Shipping between 6 November 2008 and 11 November 2008 and USD 425,000 from Pan Union to Bright Shipping between 23/12/08 and 25/12/08. There is no documentation to support this proposition.^[6]Further the first defendant himself would appear to be confused about the payment of this money. In an affidavit filed in the Supreme Court dated 30 September 2014 he swore:

“At completion of the share sale, USD $1,954,000 was ultimately paid into the Bright Bank Account by Pan Union from its account number 5329032526432803 USD $674,000 on 25 December 2008, and from account number 532802526432803 USD$670,000 on 11 November 2008 and USD $ 610,000 on 11 November 2008.”^[7]

20. [20]
    The plaintiff maintains that Bright Shipping was a shipping company that did business with Pan Union and that money was often sent between the companies for that purpose.^[8]There is some support for this proposition in the agreed bundle of documents namely:

1. (i)
   A bank statement for the period ending May 31, 2009 which shows Bright Shipping held two accounts, with one account holding USD 1,525,818.61 and the other holding AUD 548,649.61;^[9]

2. (ii)
   Fixture notes: one dated 5 January 2010 in relation to transport of cargo by Prosperity Materials (International) Ltd and one dated March 14, 2011 for transport of cargo by Globest Participacoes Ltda.^[10]

21. [21]
    The fixture notes were admitted by consent at the start of the trial however, during evidence Mr Yu indicated that he didn’t think the documents were genuine.^[11]Mr Yu indicated in evidence that Bright Shipping did not ever transport goods or operate any business, however, in answer to a question about the money in its account he indicated that money also came from rental and selling of 200 refrigerated containers.^[12]The money held in the Bright Shipping accounts in May 2009 suggests that there were other funds in this company accounts. I do not accept Mr Yu’s evidence when he says that Bright Shipping did not conduct any business of its own. I do not accept his assertion that the admitted documents were not genuine.

22. [22]
    On the basis of the documents in the agreed bundle and the evidence of the plaintiff and the first defendant that there was other business being conducted by Bright Shipping, I find that the company was more than a holding company for money from the sale of the shares by Pan Union.

Pan Union

23. [23]
    Document 5 in the agreed bundle of documents shows the sale of shares from Pan Union to Pantos in the sum of US 2,000,000. It is the defendant’s case that part of his share of this sale was used to buy the Gagarra St property. He maintains that the proceeds of the sale of shares went to Bright Shipping and was held there pending its use by himself and Wu.

24. [24]
    There is evidence that money was paid from Pan Union to Bright Shipping, however, there are no transactions that can be directly related to the money received for the sale of the shares. Absent the bank records from the companies, there are significant gaps in the evidence in that regard. The bank statement of Bright Shipping showing the account balances in May 2009 do not reflect that, as was suggested by the first defendant, that USD 1,950,000 was deposited into the Bright Shipping account as the sale proceeds of Pan Union and then disbursed through its Australian currency account into Yu’s Suncorp accounts in 2010 and 2011.^[13]

25. [25]
    The first defendant gave evidence that he received payments from Bright shipping that were the dividend payments representing his share of the 2 million USD namely 1.6 million USD. Those payments were in Australian dollars and were made as follows: $919,985.00 on 19/3/10, $549,900.85 on 22/02/11 and $415,085.00 on 8/3/11. This represents a total sum of $1,884,970.85. It was accepted by the parties that the conversion rate from US dollars to Australian dollars at the time was 1.47. It is unclear why the money, if it was payment of a dividend, was paid in such odd sums over such an extended period. In any event, Mr Yu says that the money represented the total of the dividend less the sum of 50,000 USD that he had already received.^[14]This proposition does not make sense. The remaining dividend if paid out should have resulted in a sum of $2,278,500.00 being transferred to the first defendant.

26. [26]
    For the reasons above, I do not accept that the money transferred from Bright Shipping was the dividend from Pan Union.

The purchase of the Gagarra Street property

27. [27]
    The plaintiff and the first defendant visited Australia in company with one another in March of 2010. Around 19 March 2010 $919,985 was transferred from the Australian Bright Shipping account to an Australian account held by Yu. The first defendant used approximately $780,000 of that money to purchase a residential dwelling at Gagarra Street, Browns Plains.

28. [28]
    It seems to be common ground that there had been discussions about getting 163 visas and that Mr Fung, a migration agent, was engaged to assist with that process. It is also common ground that both men came to Australian in March 2010 and were shown a number of properties.

29. [29]
    Mr Lam (the real estate agent involved in the sale of the property at Gagarra Street) remembers both the men coming into the office at Raine & Horne at Sunnybank:^[15]

“They walk into our office they indicated that they decided to acquire a house either in Robertson, Sunnybank or Eight Mile Plains.  They indicate to me they have acquired a temporary visa which enables them to purchase existing house.  So I introduced them a number of properties for them to inspect.”

And further:^[16]

“They indicate that they desired a house to a three minimum or a four bedrooms within two levels and that it would be a brick constructional masonry construction and the size of the land would be 600 square metres or above, and also it must be a stand-alone building – house.”

And further:^[17]

“I’m very sure from my point of view they walk in and ask me to show them a number of houses or a number of properties.  And also they indicated a number of suburbs in the conversation, so I’m very sure they were looking at more than one.”

He said at no stage did anyone say anything to the effect that they were buying a house for both families to live in.  Although later, after the contract for Gagarra Street was signed, he said that Mr Wu rang and asked for a copy of the floor plan because they needed to arrange to purchase and ship furniture from China to Australia for the property, and he did that:^[18]

“Interpreter: He was saying that well I would like to recall that – well why I was having – receiving the phone call from Mr Wu from China requesting the floor plan.  Over the conversation he did mention to me that, well, they – the two families intend to stay in that property together because they are friends.”

30. [30]
    At a later stage in 2010, 2011 or 2012, Mr Lam took Mr Wu to inspect farms and a number of big, vacant lots. In January 2013 Mr Wu asked to inspect two properties in Spring Hill, and he said that he wanted to send his son to study at Brisbane Grammar so he wanted to look at a property near the school. They also inspected a property at Amber Place, Eight Mile Plains in February 2013.

31. [31]
    Mr Fung gave evidence of the discussions leading up to immigration and the requirements for a 163 visa. He gave evidence of a meeting in his office with both men when they came to Queensland:^[19]

“What was discussed during that meeting at your office? – they were enquiring about purchasing properties in Queensland. 

Do you remember what Mr Yu said? –  they both wanted to purchase a property of their own and then Mr Yu sort of preferred to live on the south side near the Chinese community and Mr Wu seems would like to live somewhere else.

Did Mr Yu say something about why he liked the south side? - and so he said because it’s convenient to get access to the Chinese groceries and facilities, mainly, because their family – well – his wife and himself did not speak English. 

At any stage during that meeting did either Mr Yu or Mr Wu say they intended to purchase a house together that is as joint owners? – no they never discussed.” 

32. [32]
    Although there were some difficulties with the translation of Mr Lam’s evidence, both he and Mr Fung presented as independent witnesses who were doing their best to give an accurate recall of events. The evidence of Mr Lam did not, in my view, advance any particular case however his evidence was consistent with the evidence of Mr Yu and Mr Fung’s evidence did support Mr Yu’s contention that the intention of the parties was to buy their own houses. However, the passage of time will no doubt have affected the accuracy of Mr Fung’s recollection and in any event, the fact that there was discussion about the best area in which to live does not mean that ultimately the men did not intend to buy a house together. The reality is that only one house was purchased.

33. [33]
    The case for the plaintiff in relation to the purchase of the house is set out in paragraphs 3 to 5 and 13 of the second further amended Statement of Claim:

“3.  Whist living in China and working together and alleged, the plaintiff and the first defendant will have conversations in which they;

1. (a)
   discussed immigrating with their respective families to Australia;

2. (b)
   discussed the possibility of purchasing a residential property in Australia using drawings to which they are entitled from Bright Shipping Company;

3. (c)
   discussed the possibility of using income from Bright Shipping Co. to pay their respective living expenses once they emigrated;

4. (d)
   agreed that they and their families would live together in any such property after they immigrated.

4. In or about March 2010 the plaintiff and first defendant visited Australia in company with one another.

5. In or about March 2010 the plaintiff caused an amount of $920,000 to be transferred from Bright Shipping Company into an account held by the first defendant …

13. In the premises:

1. (a)
   It was the common intention of the plaintiff and the first defendant at the time of the alleged purchase that the house would be held on trust by the defendant in shares for himself and the plaintiff reflecting their relative shareholdings in Bright Shipping Company.

2. (b)
   Further and alternatively, by their conduct, the plaintiff and the first defendant engaged in a joint endeavour, that being to provide for their respective families (materially) by the purchase of the house.

3. (c)
   By the conduct alleged in paragraph 11 and 12 above the first defendant:

1. (i)
   indicated an intention and unconscionably to depart from the common intention identified above:

1. (ii)
   further and alternatively brought the joint endeavour to an end.”

34. [34]
    It is the plaintiff’s case that it was the common intention of the plaintiff and the first defendant at the time of the purchase of the property that the house would be held on trust by the defendant in shares for himself and the plaintiff reflecting their relative shareholdings in Bright Shipping. Alternatively that it was a joint endeavour to provide for the respective families by the purchase of the house. The plaintiff claims a constructive trust exists based on the principle enunciated in Muschinski v Dodds (1985) 160 CLR 583 at 620:

“Where the substratum of the relationship is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it.”

35. [35]
    In Nolan v Nolan [2015] QCA 199 at 61 Boddice J with whom Gotterson JA agreed adopted the following passage from West v Mead [2003] NSWSC 161:

“Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future.  Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit.  It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up.”

36. [36]
    It is the case for the plaintiff that the money to purchase the house was money paid by Bright Shipping on the basis that the contributions to the house would be in shares equal to the shares in Bright Shipping. Mr Yu’s contention is that the money was his being money provided to him as part dividend from Pan Union. I have already indicated that I do not accept that the money from Bright Shipping was nothing more than the part dividend from Pan Union. The question, however, is whether the payment was actually a payment made by Bright Shipping to the benefit of both the parties, meant solely for the benefit of Mr Yu, or money that belonged to Bright Shipping.

37. [37]
    The first defendant’s case is that there was no agreement to jointly purchase a house using funds from Bright Shipping. It was in fact the intention of both parties to buy separate houses.

38. [38]
    In relation to the purchase of the property Mr Wu said:^[20]

“We discussed about purchasing property in Brisbane and the Chinese community for two families to live in.  In supporting two families in terms of living expenses the money was from Bright Shipping.  The distribution was in accordance with a percentage of the shareholding in the company of Bright Shipping.”

And further:^[21]

“You told us a moment ago about the discussion you had before you transferred the $920,000. Apart from that discussion in the period between 2007 and 2009 do you recall any other discussions with Yu about emigrating? - We talked about purchasing a residential property for two families to live in and –and the living expenses and use the money to purchase a car for the families to use. We also talk about the money was provided by Bright Shipping Company.”

In cross-examination Mr Wu indicated that the $920,000 from Bright shipping was a dividend or distribution so that they could purchase the property in Brisbane.^[22]

“…You know what a dividend is, that’s the question? – Dividends is a method to transfer the company’s income to the shareholder income. It’s a distribution.

And the $920,000 that was a distribution in that sense wasn’t it? A dividend? – Yes. That’s actually what we did. We came here and we purchased the property. We did that.

Can I suggest to you that there is no document with in any way records a declaration that a dividend in that amount or indeed any other amount would be paid to you, that is yourself or Mr Wu – or Mr Yu? – Yes. There is no documents”^[23].

39. [39]
    Wu and Yu came to Australia in March of 2010. Mr Wu was only able to stay for a short time before returning to China. Mr Yu inspected the property at Gagarra Street after Mr Wu went back to China. He signed a contract on that house on 5 April 2010. On 21 April 2010 he received a copy of hand drawn floor plans of the house which he forwarded to Mr Wu on 26 April 2010.^[24]On 30 April 2010 Mr Lam sent through an email to Mr Yu (addressed to Mr Yu and Mr Wu) with further details and dimensions of the property together with a series of photographs of the interior and exterior. Mr Yu forwarded this email to Mr Wu on 11 June 2010.^[25] In cross-examination Mr Wu said that when he spoke to Mr Lam he indicated clearly that there had to be one house:^[26]

“It must be one house, one property.  We must buy one property and it turns out to be one property.  Why do we buy one property because at that time we did not know much about this country and we didn’t want to take out a loan and we didn’t know how to take out a loan.”

Mr Wu gave evidence that Mr Yu would report back daily to him on the purchase of the house.

40. [40]
    Mr Yu gave evidence that when they came to Brisbane in March 2010 he intended to buy a property and Wu wanted to see what he thought of Brisbane. This is why he only stayed for a short time.^[27]Mr Wu, he said, was not impressed by the Sunnybank suburb and that he preferred the river or the Gold Coast.^[28]Before he left for Australia, Yu signed an authority to transfer money as a blank document and later asked Liu Rong, the accountant for the money to be sent through.^[29]As it was a joint account with both signatories to sign, Wu also had to authorise the payment by signing.^[30]Mr Yu was asked whether there was an intention to jointly purchase the property:^[31]

“Now, around the time of this transfer in March 2010 had you ever had any discussion with Mr Wu about purchasing a property in Australia jointly? That is, together? – Never ever.

Was there ever, at any time, such a discussion? – No”.

41. [41]
    At this stage of their relationship, the lives of the two families were intertwined. They were friends, the men had a number of different business interests together, the families lived very close to each other, the children were friends, the wives were friends, they had joint meetings about immigration, they came to Australia together to look at property, they planned, at least initially, to live together in Australia. Mr Yu gave evidence that the living arrangements were not indicative of the intention when purchasing the house. He said that it was Wu’s suggestion that he and his family move into the house together.

42. [42]
    There are a number of factors that are not in doubt in relation to occupation of the property:

1. i)
   The two wives and the two boys lived in the property. Soon after settlement they moved to Brisbane in August of 2010 and they remained in the property.

2. ii)
   Wu’s wife, Gao and his child did not pay rent to Yu or his wife.

3. iii)
   There were shared expenses including electricity, rates, groceries and a car was shared between the parties.

4. iv)
   The wives had joint bank accounts and Ms Gao was a signatory to Mr Yu’s account and was free to use it.

5. v)
   Ms Gao was given the master bedroom and Ms Zhao and her child had the smaller bedrooms upstairs.

43. [43]
    When the children were enrolled at school there were questions raised by the principal about the proof of residence by Ms Gao. At that stage she did not assert that she or her husband were part owners of the property and instead a letter was drawn up by Mr Fung certifying that Ms Gao and her child lived in the house which was owned by Hongbo Yu.^[32]Similarly, immigration paperwork was filled out on behalf of Ms Gao which listed her assets as money in the bank but not a partial interest in the property.^[33]The defendants submit that this shows that there was no joint endeavour and no belief that the property was jointly held.

44. [44]
    I do not accept that this evidence leads to a conclusion that there was no joint endeavour. The plaintiff’s wife could not speak English. She was new to the country and she was very dependent on the advice and help of those around her. It would have been a very difficult task for her to explain that although the property was not held in her name that nonetheless the property was jointly held. It was a much simpler task to simply say that she was living there. In relation to the immigration forms, it was not necessary to try to convince the immigration officers that a property was held on trust when there was sufficient funds in the bank to process the application.

45. [45]
    I accept that as the property was in Yu’s name there is a presumption that it is his property. Ordinarily, a person would not allow a property for which he or she had contributed a substantial amount of money to be transferred without their name being on the title. However, this is no ordinary case. The two men were in Australia looking for properties together. When Mr Wu left the country he was obviously no longer in a position to easily sign a contract. Practically speaking the purchase was made easier if Mr Yu handled the sale. It is a similar situation to that suggested by Mr Yu in relation to the commercial property in China where the decision was made on Mr Yu’s evidence that in order to get a loan from the bank the property would be placed in Mr Wu’s name even though the capital and payments for the property were being made by Pan Union.

46. [46]
    The fact that the floor plans, dimensions and photos were all sent by Yu to Wu demonstrates that he was very much involved in the planning and purchase of the property. The defendant suggested that the emails were forwarded so that Mr Wu could purchase the appropriate furniture. If the idea was for the house to be temporary accommodation for the Wu family then the importance of buying the appropriate furniture for that particular house is difficult to understand. Ms Zhao gave evidence that the furniture was all bought by Mr Yu and transported from China. She did not resile from this evidence even after it was pointed out to her that a letter had been sent by Mr Yu to Mr Wu detailing his property and asking him to remove it from the house.^[34]Her evidence is of course inconsistent with Mr Yu and inconsistent with the letter and emails. I do not accept her evidence.

47. [47]
    The first defendant has submitted that even if the money transferred for the purchase of the house was not the Pan Union dividend it was Bright Shipping’s money as was asserted by Wu,^[35]that he did not contribute at all to the purchase of the property and that it cannot be unconscionable for a person to deny to another an equitable interest in a property to which they have not contributed.  This would seem to be a little artificial given that the company’s directors and shareholders were Wu and Yu but nonetheless given that the company is a separate entity, I accept that if the money was Bright Shipping’s money and there was no transfer of the ownership of the money then this argument has merit.

48. [48]
    However, in my view, there is evidence from which it can and should be found that the money from Bright Shipping was a distribution paid as a dividend into Yu’s account on behalf of both men for the purchase of the property. Mr Wu says that there was a conversation about buying a house together and his reason for this, namely that they were unsure whether they would stay in Australia and whether they could get a loan are sound. He said in cross-examination that the money was a distribution to buy the house. The fact that there is no documentation is not surprising given the way in which the parties seem to have conducted their business. The defendant says that the detail of the conversations are so sparse that they shouldn’t be accepted and that his recollection should be rejected for that reason, however, given the passage of time it’s not unusual for the discussions to be lacking in detail and in any event this is not the only piece of evidence which the plaintiff relies on as proving a joint endeavour.

49. [49]
    The conduct of the parties after the purchase of the property support a case of joint endeavour. The fact that Mr Wu looked at other properties in Queensland does not mean that this particular house was not owned jointly. The evidence of Mr Fung is not necessarily consistent with the joint endeavour case however, given the passage of time between the conversation and his evidence in court, I do not place a lot of weight on his recollection.

50. [50]
    In my view the objective evidence favours the plaintiff’s case and I find that the property was held as a joint endeavour in accord with the respective shareholdings in Bright Shipping.

Wu’s Claim for money loaned for mortgage

51. [51]
    The plaintiff claims that he lent to the first defendant at his request money which was paid into the housing loan of the second defendant (his wife). The sums of money advanced were as follows:

1. 10 September 2008  - $20,000 RMB,
2. 20 October 2008 - $30,000 RMB,
3. 8 December 2008 - $50,000 RMB,
4. 12 May 2009 - $22,320 RMB,
5. 11 January 2009 -  $24,355.00 RMB,
6. 7 December 2009 - $66,200.00 RMB. 

The repayments for the loan were as follows:

1. 9 October 2008 - $14,667.77 RMB,
2. 10 October 2008 - $14,633.46 RMB,
3. 10 December 2008 -  $14,564.82 RMB,
4. 10 May 2009 - $14,393.22 RMB,
5. 10 June 2009 - $14,358.09 RMB,
6. 10 December 2009 - $14,152.99 RMB. 

52. [52]
    It is the first defendant’s case that this money represented the profit from the rent of the commercial property in China. The property was in Mr Wu’s name but was beneficially owned by Pan Union and that the money was used to pay the mortgages of the two wives. The amounts referred to in the schedule were part of those distributions.

53. [53]
    It has become immediately apparent from looking at the figures above that firstly the amounts paid did not amount to the amounts required under the loan, secondly, that the amounts paid were not in uniform amounts such as one might expect from rental income, and thirdly, they were not made at uniform times as one might expect distributions from rental income.

54. [54]
    The case for the plaintiff, is that these were loans made to Yu or Zhao for payment of the mortgage. His evidence was that Yu had asked him to lend him money to pay the mortgage because he had liquidity problems. He said the first three payments were based on his estimate and the last three payments on Yu’s estimate.^[36]In cross-examination he said many people were involved in the estimate of the amount transferred including the accountant Liu Rong.^[37]His evidence in this regard was different to that opened by counsel. If Mr Wu was indeed paying the mortgage for his friend as a loan, it is difficult to understand why he paid sums in excess of the mortgage.  Further Mr Wu initially said there was a conversation where he was asked to help with mortgage payments^[38]and then later said it happened once or twice.^[39]If that was the case it is difficult to see how he would have known when and how much to pay into the mortgage as the payments seem to have been made in random amounts and at random times.

55. [55]
    During the course of the trial there were bank accounts and payment slips produced of deposits made into accounts of Yu, Gao and Zhao by Wu.^[40]The slips tend to show that the payments were made at the same time or at the same teller. They support a contention that this money may have been profits or distributions of some kind from Wu’s account. These documents include payments for which there is no claim made by Wu.

56. [56]
    The plaintiff says that the defendants’ explanation for the payments is intricate and implausible namely, that Mr Wu who has a commercial property in China in his name really owned the property on behalf of Pan Union and therefore the profit paid by way of dividend was based on his own shareholding in Pan Union. Some, he says, but not all of the rental profit to which he was entitled was paid in the mortgage accounts of residential properties in China owned by either him or his wife. The rest was paid in cash. The payments into the mortgage accounts of the properties owned by Mr Wu, Mr Yu and Ms Zhao, are not in any ratio that accords with Mr Yu’s version. A letter dated 24 April 2017 from the plaintiff’s solicitors^[41]claimed that the rental income was collected by the plaintiff and the rental share was distributed in a 50-50 ratio rather than an 80-20 ratio, which is now claimed by Mr Yu.

57. [57]
    I agree that the explanation for the payment by Mr Yu is implausible, however it is no less so than the claim by the plaintiff. The suggestion that the payments were loans does not bear scrutiny. The plaintiff did not produce any rental records of the commercial property or any bank records of Pan Union to assist the court in determining the truth. Accordingly the claim must be rejected.

The counter-claim loans

58. [58]
    The defendants Yu and Zhao have counter-claimed against the plaintiff and Ms Gao on the basis that they loaned money to them which has never been repaid. The plaintiffs, by counter-claim, claim that the evidence of Mr Yu and Ms Zhao should be accepted. It is said that the court should reject the proposition by Wu and Gao that this money was a repayment of a loan by Yu or money distributed by Bright Shipping on behalf of both parties to progress the immigration of the parties to Australia, together with living expenses. There is no documentation of a loan ever being made and there was no evidence in chief given about it. Yu and Zhao say that the money was theirs and was loaned to Wu and Gao for migration purposes.

59. [59]
    It is an agreed fact that a) $274,000 was transferred on 25 February 2011 from an account held by the first defendant to accounts operated by Ms Gao in the sums of $100,000, $84,000, $90,000 and b) $392,676.13 on 31 July 2012 was transferred from an account held by the first defendant through several accounts to an account held by Ms Gao. An amount of $390,000 was then transferred into a term deposit and the account showing the $390,000 was annexed to Gao’s visa application to substantiate her assets in Australia. In relation to the $274,000, $100,000 was used to invest in Auschina Investment and Trading Pty Ltd. This was used to show that Gao operated a business in Australia.

60. [60]
    There is also evidence that on 11 March 2011, $415,100.00 was transferred to Ms Gao from the first defendant’s account. It was placed into a term deposit for 12 months and then the principal and interest was repaid into Ms Zhao’s account 12 months later.

61. [61]
    Wu and Gao gave evidence that this money belonged to them. It was said by Wu that $274,000 was part of a deposit of $549,900.85 transferred from Bright Shipping to Mr Yu for migration and living purposes. Bank records of Yu show that this sum was received into his account on 22 February 2011.^[42] He transferred $274,000 to Gao in the amounts already detailed, $100,000 into the account of Zhao and $24,000 into his own account. It is consistent with the account of Mr Wu that the money came from Bright Shipping for the purpose of immigration paperwork and living expenses as both Yu and Gao received $24,000 which Gao at the time documented as living expenses.^[43]Both Gao and Zhao invested $100,000 at the same time into Auschina Investments to show on their immigration paperwork that they had a business interest in Australia. I accept Wu’s evidence in this regard. I accept that the sum of $274,000 was part of a distribution from Bright Shipping for the purpose of immigration and not a sum lent to the defendant by counterclaim from Yu.

62. [62]
    In relation to the sum of $392,676.13, the defendants by counterclaim say that this was the repayment of a loan given to Yu. It is further submitted that the evidence of Yu and Zhao should be rejected because of problems with their credibility.

63. [63]
    It is true that the first defendant was quick to label documents that were inconsistent with his case as being fake. He has started proceedings in China with allegations of forgery but when document examination revealed otherwise he discontinued those cases. In one of those proceedings he indirectly accused Mr Wu of defrauding Bright Shipping yet changed his position during this case to saying that he had acted without proper authority to move the money but was nonetheless entitled to it. Similarly he denied the loan of $50,000 which was solicited and acknowledged by Ms Zhao by email. Summary judgment was ultimately granted by consent in respect of that amount of money. I have already commented on the inconsistencies in Ms Zhao’s evidence. During her evidence she also tried to distance herself from the email acknowledging the loan of $50,000 from Wu.^[44]These are significant credit issues.

64. [64]
    However, there are significant problems with the credibility of all the parties in this case. Yu and Zhao are not reliable witnesses. However, the same can be said for Wu and Gao. Their answers at times make little sense and when they do they are not supported by the documentary evidence. They also had a tendency to deny admitted documents when they didn’t suit their case. Both of the main litigants in this case have not made available relevant documents, in particular bank records and company records. It has been impossible to rely on the testimony of any of the parties without support of external sources or agreed facts.

65. [65]
    However, in relation to the final sum of $392,676.13 there is no evidence to show that this was an amount loaned to Yu by Wu. There is no corresponding transfer from Bright shipping around the time of the transfer of this money. It is clear that this money came from Yu’s account and that Gao put it into a term deposit. It was part of the money that was used to show the Department of Immigration that she had substantial assets in this country. Mr Fung, the immigration agent, gave evidence that for an 890 visa Ms Gao needed to show that she had over $400,000 in personal assets.^[45]Wu on a number of occasions in his evidence has indicated that he and his wife’s interests were interchangeable and that she gave evidence that she always called her husband before signing documents^[46]and that Wu would call her and tell her that money was being paid into Yu’s account for her.^[47]It is clear that Wu and Gao were acting together in relation to their financial dealings.

66. [66]
    Mr Wu’s explanation for this money makes no sense and the lack of detail in Ms Gao’s evidence also affects her reliability in a material way. The explanation for the transfer of this money by Mr Yu and Ms Zhao is consistent with the evidence of Mr Fung about the visa requirements and I accept that this was money lent for that purpose.

Conclusion

67. [67]
    I accept that the house at 14 Gagarra St was bought with money that was a distribution paid by Bright Shipping for the benefit of Wu and Yu. I find that the plaintiff has not discharged his onus of proof, on the balance of probabilities, in relation to the debt in the amount of $158,468.16. In relation to the counterclaim, I find that the sum of $392,676.13 is a debt due and owing to Yu from both the Plaintiff and the Defendant by counterclaim. As there was no agreement as to interest to be paid or the term of the loan interest will be calculated from the date of the filing of the counterclaim.

Order

It is declared that the house located on the land described in the Land Title Register as lot 46, RP 213984, County of Stanley, Parish of Yeerongpilly was held on trust by Hongbo Yu as a 40% share for Hongbo Yu and a 60% share for Xingang Wu.

That the disputed amount held from the sale of the house on or about 30 March 2015 pursuant to an order of the court, together with accretions be paid to the plaintiff.

That the plaintiff and the defendant by counterclaim pay the sum of $392,676.13 to the first defendant together with interest in the sum of $76,449.48 calculated from 7 April 2015.

I will take further submissions on the question of costs.