Ye v Crown Limited [2003] FCA 507

FEDERAL COURT OF AUSTRALIA

Ye v Crown Limited

[2003] FCA 507 GAMING – whether authority by customer to Casino to appropriate funds LI PEI YE v CROWN LIMITED N 1252 OF 2001 GYLES J SYDNEY 23 MAY 2003

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 1252 OF 2001

BETWEEN: LI PEI YE

APPLICANT

AND: CROWN LIMITED

RESPONDENT

JUDGE: GYLES J

DATE OF ORDER: 23 MAY 2003

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: The matter be stood over for the parties to bring in short minutes to give effect to these reasons and for argument as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 1252 OF 2001

BETWEEN: LI PEI YE

APPLICANT

AND: CROWN LIMITED

RESPONDENT

JUDGE: GYLES J

DATE: 23 MAY 2003

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This is a rather unusual (and somewhat troubling) case concerning the dealings between the applicant, Mr Li Pei Ye, known as Eddie Ye, who is a businessman from Shanghai in the People's Republic of China, and the respondent, Crown Casino Ltd ("Crown"), which conducts the Crown Casino ("the Casino") in Melbourne. The critical issue is whether or not, after a visit to the Casino in early October 2000, Eddie Ye owed Crown a substantial sum of money and, if so, on what terms. He claims that he did not. If he is correct, he claims relief in relation to the accounts between the parties and also claims damages for defamation arising out of Crown notifying Eddie Ye as a defaulter to a credit reference agency used by casinos throughout the world. If he is wrong, the claim for relief in relation to accounts fails, Crown's cross-claim for the monies owed succeeds, and, subject to one argument as to the terms of the indebtedness, the claim of defamation fails. 2 Resolution of the critical issue depends upon what occurred between Eddie Ye and Crown employees at the Casino on 4 October 2000. The accounts given are quite inconsistent and cannot be reconciled. I have concluded that the evidence of the Crown employees should be preferred. It is necessary to analyse the background and the dealings between the parties in some detail in order to explain why I have so concluded. 3 Eddie Ye was born on 8 April 1944 in Shanghai, China. He was a teacher from about 1967 to 1974 and thereafter operated a fruit transport business. In about 1980 he migrated to Australia and established a grocery delivery business, then a garment business in Sydney. He became an Australian citizen in 1983. In about 1989 he returned to Shanghai and has been ordinarily resident in that city since then. He has retained a residential property at Maroubra in Sydney. 4 After his return to Shanghai, Eddie Ye became involved in property development through Super Ocean Ltd ("Super Ocean"), of which he is chairman and principal shareholder. Super Ocean and its subsidiary and associated companies ("the Super Ocean group") carry on a substantial business in Shanghai, Beijing and Hong Kong. He claims to be a well-known and prominent member of the Shanghai business community, and there is no reason to doubt this claim. I accept that the Super Ocean group is one of the largest property developers in China. Whilst some evidence was given as to the financial position of the Super Ocean group at relevant times, including the real value of the equity in the group controlled by Eddie Ye and, more importantly, the liquidity of the Super Ocean group, I am not satisfied that I can make any reliable findings as to those matters. 5 Eddie Ye claims to have very limited ability to speak English, being restricted to simple greetings and the like. This claim is supported by the other witnesses called by him, but is in serious contest. I accept that Eddie Ye's ability to speak English is limited. He is far from fluent. However, I am satisfied that his ability to understand English (particularly as it relates to gambling at a casino) is adequate. Eddie Ye lived in Australia for some years, during which he commenced and conducted businesses. At the time he became an Australian citizen, one of the criteria to be fulfilled was that the applicant had an adequate knowledge of the English language. His first application was refused because of his inability to speak English. He then attended English classes, and his second application was successful. He has travelled extensively in English-speaking countries. He has gambled extensively at casinos in English-speaking countries, including Australia. A customs officer, who has no interest in the case, described an incident at Tullamarine International Airport on 14 January 1999 involving Eddie Ye which, on any view, included communication in English well beyond the ability now claimed by Eddie Ye. There is no dispute that the incident occurred, and that no interpreter was involved. The contemporaneous note by the customs officer bears out the substance of her evidence. I agree with the submission of counsel for Crown that, when properly understood, passages of the cross examination of Eddie Ye admit a greater facility to understand and speak English than has been claimed. My observations of the witness in giving evidence lent some support to this conclusion, although I would not act upon that impression alone. In coming to a conclusion as to this issue, I put to one side the evidence of employees of Crown which is inconsistent with the evidence of Eddie Ye. 6 Eddie Ye says that he has been a regular patron of Crown since 1998. On 23 August 1999 Mr Zongnan (John) Ye, the nephew of Eddie Ye, wrote a letter to the person responsible for international marketing at Crown which included the following: 'In regards to the possible collaboration between Crown and Super Ocean in tourists' business to promote the Crown Resort in China, I strongly believe there is a great potential to attract players from China to come to Crown. To implement this would come cross many issues, such as fund transfer, confidentiality of players and visa, I look forward to meeting with you and discussing these issues further. As you know, Eddie and I have been doing our best to support Crown by regularly bring to you many premium players. You would find only few of the players have come back along, they would come back only with us. The reason is simple, firstly, they may have a difficulty of fund transfer (RMB to hard currencies), and secondly, many of them do not like to expose their personal details to Crown. The problem will remain until China becomes more and more open, which is unlikely to be seen in the near future. In result of this, Eddie and I have not been rewarded (in commission) as much as we would have entitled. In the past six months, I have introduced some premium players to you. According to the terms offered to Junket Operator by Crown, I would have entitle to a minimum of $250 or 0.05% calculated on their cash chip turnovers. But I have not received any of such payment. I understand that there are rules or restrictions bound the commission program in Crown. But within the rules and restrictions, certain flexibility is important in dealing with the Chinese Market. I write to seek your help to solve these problems. Last week, I introduce to you a premium player, named Mr Wong You Hing. I enclose with the letter a copy of the introduction form of premium players, which I faxed back to Melbourne on 19 August 1999. Mr Wong did register with Crown. We arranged Australian Dollars for him to play. His turnover was about $80 millions and eventually he lost all in Crown. Now, we are responsible for collect RMB in China and bare the risk of the possible devaluation of the currency. Disappointingly, I was advised that I would not be paid any commissions this time, because they played together under Eddie's program. I know that the money (cash chips) might be from Eddie's account because of their arrangement on fund transfer, but they played separately. I cannot accept the fact of being denied a payment of commissions. We all know, the key to attract premier players to Crown from China is somewhat solve the problem of fund transfer. Under the current circumstances, RMB cannot be converted to hard currencies freely in China. We are helping Crown by absorbing the risk of potential devaluation of RMB. Notwithstanding our effort to bring customers regularly and disregarding the terms of introduce premium players, Crown refuses to pay commissions. This is wrong! In the beginning of the year, I went to Crown as a Junket Operator for the first time. We played cash chip programs. We played for two nights and our turnover was recorded as something a little over a million dollars. With $500,000 in front money and playing for 2 nights, we believe the turnover should be much more than a million, and therefore commission based on turnover should be much more we were paid. I questioned and asked for an investigation, but so far, there has been no satisfactory answer from Crown, and we had to accept the disappointing result.' That letter followed a visit to China by the recipient and a Mr Craig Ashton (Senior Vice President, International Business Development of Crown), accompanied by Ms Angela Zhong, who was a Crown representative stationed in Shanghai. Eddie Ye and John Ye assisted the Crown employees to make contacts on that trip. 7 When cross-examined on that letter, John Ye said (in part): 'Because I want to suggest to you that what happening here is that you know sitting there in the witness box there are Chinese foreign exchange control regulations, right? --- That's correct, yes. And that Chinese nationals living in China would not be able directly to transfer Chinese RMB say to Australia for gambling purpose, agreed? --- Agreed. So what is happening is that in Hong Kong you and your company are transferring Hong Kong dollars to Crown aren't you? --- Yes. And you're doing so pursuant to an arrangement that - and when you do even though you're transferring them in your name John Ye's name or Eddie Ye's name, you're doing so on behalf of persons who want to gamble at Crown who live in China, agreed? --- Technically. Exactly not technically, agree? --- Technically. So agree, thank you. And what you then tell the people in China is that because you've got currency in Hong Kong in Honk Kong dollars they should repay you in China in RMB and you can use those RMB in China to pay for your business operations, isn't that how it works? --- In many cases because the company was a subsidiary, it was invested by Super Ocean Limited, in many ways we had to transfer Hong Kong dollars into China or US dollars, Australian dollars, whatever. … Are you saying you weren't referring specifically to Mr Wong in that paragraph, you were referring to many premium players? --- I mean that I clearly remember I will never lending any money to Mr Wong. But you will lend money to other premium players, will you? --- For people I know for people I can trust. Is the way you do this: that you make an arrangement with the premium player resident in China whereby on their behalf but in Mr Eddie Ye's name or in Super Ocean's name or indeed, in our name, you will remit Hong Kong dollars to Crown, that's the first step, do you agree that happens? --- I can't get your question, if you can repeat at it again, please. Do you agree that you make an arrangement with an Chinese gambler who wants to gamble at Crown whereby effectively you will act as a foreign exchange dealer whereby you will transfer Hong Kong dollars to Crown out of you or Eddie Ye's or Super Ocean's account in Hong Kong against a promise by them to repay you or Super Ocean in China with the RMB equivalent? --- I decline the words of currency dealer, it's quite normal for friends ask me if they want to come to Australia for a holiday, bring their families to holiday, if they have a difficulty to arrange Australian dollars I can lend to them, it's just as friendship. For someone come to Crown to play I have a limited resources, I'm not as rich as Mr Eddie Ye. If there is anything that needs to have the company involved I will firstly consent to Mr Eddie Ye and Mrs Ye who are the majority shareholder of the company, I will firstly consent with them, without them their approval I will not do any, transfer any funds to Australia. You were arranging these funds transfer on behalf of Eddie Ye using Eddie Ye's money, weren't you? --- Again, Mr Ye has to given me the instruction before I can do that. But it was a practice that you were carrying on in 1999, do you agree? --- Sorry? You were doing just that in 1999? --- Just doing what, sorry? Transferring money for friends of Eddie Ye to Crown against the promise by those friends to repay the funds that were transferred in RMB equivalent in China? --- Yes, I did.' 8 Mr Wong Yau Hing, who is referred to in that letter, is significant in the events which happened. Eddie Ye had known him since 1990, when Wong Yau Hing and Eddie Ye's wife did business together in Shenzen in China. He had seen him several times a year since then. They had gambled together in Macau in 1990 and twice at Crown in 1999. One of those occasions was on a junket arranged by John Ye. 9 A "junket" is defined in the Casino Control Act 1991 (Vic) ("the Act") s 3 to mean: '… an arrangement whereby a person or a group of people is introduced to a casino operator by a junket organiser or promoter who receives a commission based on the turnover of play in the casino attributable to the persons introduced by the organiser or promoter or otherwise calculated by reference to such play' A "premium player arrangement" is defined to mean: 'an arrangement whereby a casino operator agrees to pay a patron of the casino a commission based on the patron's turnover of play in the casino or otherwise calculated by reference to such play' 10 The operation of the Crown Premium Player Program and Junket Program are as follows: 'Premium Player Program 8. A Premium Player Program is a program whereby a player is entitled to receive a commission based upon the player's gambling with the Casino. An international Premium Player would generally be one who would provide at least $50,000 in front money. Front money is the money which the patron brings to Crown to gamble with. The front money is placed into an account conducted by the Cage in the Premium Player's name. 9. The Premium Player is then entitled to purchase chip purchase vouchers up to the amount of the funds held by the Cage on account of the Premium Player and to the extent of any funds advanced by Crown pursuant to a cheque cashing facility which may have been arranged by the Player. 10. Upon purchase of a chip purchase voucher the Premium Player signs the withdrawal form to acknowledge the receipt of a chip purchase voucher for a certain amount from their account. 11. The Premium Player then takes the chip purchase voucher to a gambling table, where it is then signed and chips to the value of the voucher are then provided to the Premium Player. 12. The Premium Player is then entitled to gamble using the chips. If the Premium Player loses, the chips are then collected by the dealer. If the Premium Player wins whilst gambling, the Premium Players [sic] receives commission based play chips as winnings. Junket Program 13. A Junket Program is a program whereby a person called a junket organiser arranges a group of people who want to gamble. The Junket Organiser is entitled to receive a commission from Crown based upon the exchange of commission chips for non-negotiable chips. The commission that is paid to the Junket Organiser is higher than that paid to a player on a Premium Player Program. 14. With a Junket Program, the Cage receives funds from the Junket Organiser to make up the required front money to allow gambling on the Junket to occur. There is no direct dealing with the junket players. All dealings with the cage are by the Junket Organiser. 15. The front money may be provided from a variety of sources including from all or some of the junket players, the junket organiser, a cashed cheque, or an arranged credit facility. 16. Gambling by junket players is conducted using "non-negotiable" gambling chips. These can only be obtained by the Junket Organiser first obtaining from the Cage a non-negotiable chip purchase voucher. The Junket Organiser obtains a non-negotiable chip purchase voucher from the Cage. The non-negotiable chip purchase voucher is a form provided in triplicate and consisting of three separate parts. The first part being an account deposit and withdrawal, the second part being a patron receipt and the third party [sic] being a non-negotiable chip purchase voucher. 17. Upon the purchase of a non-negotiable purchase voucher the Junket Organiser signs the account of deposit and withdrawal form to acknowledge the receipt of a chip purchase voucher and that the face value of the voucher has been debited to the Junket Organiser's account. 18. The Junket Organiser then takes the chip purchase voucher to a gambling table, where it is then signed and chips to the value of the voucher are then provided to the Junket Organiser who then provides non-negotiable chips to the Junket Players. 19. The Junket Organiser is not entitled to receive commission on gambling conducted with commission based play chips. Accordingly whilst the Junket Player is entitled to gamble using the commission based play chips, the Junket Player usually then returns the chips to the Junket Organiser who provides them to the Cage, credits them to the account of the Junket Player and receives an account deposit and withdrawal form acknowledging the receipt of the commission based play chips by the Junket Organiser and then purchases non-negotiable chips purchase vouchers.' 11 John Ye had received approval to act as a junket organiser pursuant to the Act at about the end of 1998. Wong Yau Hing was present on at least one of his junkets in 1999. On that occasion Eddie Ye and his wife, Ms (Helen) Li Heng, were present. Credit of $600,000 was afforded to Wong Yau Hing. John Ye says that this was backed by the equivalent in RMB provided by Wong Yau Hing prior to the visit. This money was quickly lost. Wong Yau Hing importuned all for a loan, and the evidence is that Helen Heng succumbed and lent him $100,000 against the wishes of Eddie Ye. Both Eddie Ye and John Ye say that they did not, and would not, lend any money to Wong Yau Hing. I have some doubt as to the true nature of the dealings in relation to that junket. 12 The contemporaneous documents indicate that Eddie Ye gambled on John Ye's junket once in September 1999. They also indicate that in August 1999 he and Wong Yau Hing had gambled firstly on Eddie Ye's program and then on Wong's program, with the settlement a combination of both. The internal Crown records relating to Wong Yau Hing show that he "played under" Eddie Ye from 18 August 1999 to 20 August 1999, and under the John Ye junket on 17 September 1999. Those events are consistent with the records in relation to Eddie Ye and John Ye and with the evidence of John Ye and Eddie Ye. It is not clear what was meant by the description "played under" in relation to the August visit. Eddie Ye denied that he lent any funds to Wong Yau Hing in connection with that visit, or at all. 13 By a document dated 29 January 2000 Eddie Ye applied to Crown for a credit facility, which was granted on 8 February 2000, in the sum of $500,000. The internal Crown document which considered that application summarised the past history of Eddie Ye at Crown in the following way: 'Past History at Crown Last Visit 1999 History Total History No of Visits: 19 12-14/11/99 Front Money Last Visit: $500k Turnover: $10.80m $121.98m $150.44m Crown Win/(Loss): ($93.4k) $359.1k $630.7k Commission: $70.2k $785.8k $961.18k'