City Garden Australia Pty Ltd v Dai [2023] NSWSC 1199

Supreme Court New South Wales

Medium Neutral Citation: City Garden Australia Pty Ltd v Dai [2023] NSWSC 1199 Hearing dates: 14 and 15 June 2023 Decision date: 10 October 2023 Jurisdiction: Equity Before: Robb J Decision: See [70]-[77] Catchwords: CORPORATIONS – directors and officers – directors' duties – liability for breach of directors' duties – where funds borrowed by the corporate plaintiff were diverted by its sole director – whether conduct of sole director amounted to breach of statutory and general law duties Legislation Cited: Civil Procedure Act 2005 (NSW), s 100 Corporations Act 2001 (Cth), ss 180(1), 181(1)(a), 181(1)(b), 182 and 183 Category: Principal judgment Parties: City Garden Australia Pty Ltd (Plaintiff) Meng Dai (First Defendant) Maxmara Trinity Pty Ltd (Second Defendant) Representation: Counsel: F Lim (Plaintiff) M Dai (Self-represented)

Solicitors: Francis Lim Barristers & Solicitors (Plaintiff) File Number(s): 2021/166481 Publication restriction: Nil

JUDGMENT 1. The plaintiff in these proceedings is City Garden Australia Pty Ltd (both in its own capacity, and as trustee of the Ming Tian City Garden Unit Trust) (City Garden). The former second plaintiff, Jian Wei Liang (also known as Victor Liang) was removed as a party before the hearing. 2. The first and second defendants are respectively Meng Dai (also known as Adam Dai) and Maxmara Trinity Pty Ltd as trustee for the J & A Family Trust (Maxmara). The third defendant, Ming Tian Real Property Pty Ltd (Ming Tian), was removed as a party before the hearing. 3. The hearing was conducted on the basis of a further amended statement of claim filed on 9 May 2023. The principal effect of this pleading was to remove parties and a number of claims that were pleaded in the amended statement of claim. 4. The operative defence at the time of the hearing was the amended defence filed on 15 June 2022. That pleading was filed with the assistance of a legal representative for the defendants. At some stage, the legal representative ceased to act for the defendants, and Mr Dai conducted the hearing on behalf of the two defendants. One apparent effect of the legal representative ceasing to act is that the defendants did not file a defence to the further amended statement of claim. However, as the effect of the plaintiff's last pleading was to remove parties and claims, the amended defence provides an adequate response to the further amended statement of claim. 5. The hearing in these proceedings took place on 14 and 15 June 2023. It was necessary to give the parties leave to submit further written submissions after the end of the hearing. City Garden delivered further written submissions on 26 June 2023. The final written submissions for the defendants were served late on 8 September 2023. The submissions by City Garden in reply were received on 9 September 2023. 6. City Garden seeks the following relief by its further amended statement of claim: 1. Declaration that the second defendant holds the amount of $500,000 received on 22 December 2016 from the plaintiff on constructive trust for the benefit of the plaintiff. 2. [Deleted]. 3. Judgment for the plaintiff against the first defendant in the amount of $1,774,986.83. 4. Judgment for the plaintiff against the second defendant in the amount of $500,000. 5. [Deleted]. 6. Damages. 7. Equitable compensation. 8. Interest. 9. Costs, including interest on costs. 10. Such other or further order as this Court deems necessary. 11. [deleted]. 1. As most of the allegations of fact in the further amended statement of claim were admitted in the defence, it will be convenient in this case to set out the material facts by stating the allegations in the further amended statement of claim that were admitted by the defendants, and noting separately the allegations that were denied or not admitted by the defendants. Where I have made no comment in relation to an allegation, that allegation should be taken to have been admitted. It will also be convenient to interpolate a number of observations concerning the allegations that have not been admitted. 2. City Garden made the following allegations of fact in its further amended statement of claim: 1. At all material times the plaintiff has been an entity incorporated pursuant to the provisions of the Corporations Act 2001 (Cth) and is entitled to sue and liable to be sued in its own corporate name and style. 2. At all material times, the plaintiff has been the trustee of the Ming Tian City Garden Unit Trust (Trust). 3. At all material times from 23 March 2015 to 27 November 2019 the first defendant was a director of the plaintiff. 4. At all material times from 3 August 2016 to 9 May 2017 the first defendant was the sole director of the plaintiff. 5. At all material times the second defendant has been an entity incorporated pursuant to the provisions of the Corporations Act 2001 (Cth) and is entitled to sue and liable to be sued in its own corporate name and style. 6. At all material times from 25 September 2013 to 15 March 2021 the first defendant and Ms Lin Zhu (Ms Zhu) were the only two directors of the second defendant. 7. [Deleted]. 8. At all material times from 4 November 2015 the first defendant has been the sole director of Ming Tian Real Property Pty Limited. 9. At all material times Ms Zhu has been married to the first defendant. Wu Family Loan 10. On 21 December 2016 the plaintiff, the first defendant, Ms Zhu and Wei & Fei Wu Family Investment Holding Pty Ltd ATF Wu Family Trust (Wu Family) entered into a Deed of Loan (Deed). Particulars (a) the Deed is wholly in writing. 11. It was a term of the Deed that [the] Wu Family would loan the plaintiff $1,000,000 on the terms stated therein. 12. It was a term of the Deed that the first defendant would guarantee the plaintiff's obligations to Wu Family pursuant to the Deed. 13. It was a term of the Deed that Ms Zhu would guarantee the plaintiff's obligations to Wu Family pursuant to the Deed. Advance by Wu Family 14. On 22 December 2016 the Wu Family paid $1,000,000 to the ANZ bank account in the name of the plaintiff. 15. On 22 December 2016, $500,000 was transferred from the plaintiff's bank account to the bank account of the second defendant. Particulars (a) $500,000 was transferred into account number [account number stated] ([transfer number stated]). 16. On 22 December 2016, $500,000 was transferred from the plaintiff's bank account to the bank account of Ming Tian Real Property Pty Limited. Particulars (a) $200,000 was transferred into account number [account number stated] ([transfer number stated]). (B) $300,000 was transferred into account number [same account number stated] ([transfer number stated]). 1. Relevantly, the effect of these allegations of fact and the admissions by the defendants was that, at times when Mr Dai was the sole director of City Garden, he caused City Garden to enter into a Deed of Loan on 21 December 2016 with the Wu Family company to borrow $1,000,000, and that amount was paid into City Garden's bank account on 22 December 2016. On the same date, Mr Dai caused City Garden to pay $500,000 to Maxmara, a company of which Mr Dai and his wife, Ms Zhu, were the only two directors. Also on the same date, Mr Dai caused City Garden to pay $500,000 to the company that was the third defendant in these proceedings, before it was removed as a party. At the time, Mr Dai was the sole director of the company that received the funds. 2. The further amended statement of claim then made the following three allegations of fact, the first of which was denied and the second two not admitted: 17. None of the monies advanced by the Wu Family were applied for the benefit of the plaintiff. 18. As at 22 December 2016, the plaintiff had no obligation to pay the second defendant $500,000, or any monies at all. 19. As at 22 December 2016, the plaintiff had no obligation to pay Ming Tian Real Property Pty Ltd $500,000, or any monies at all. 1. To this point in the pleadings, it will be noted that the defendants have admitted that City Garden, while it was under the sole control of Mr Dai, paid $500,000 each to two companies that were controlled either by Mr Dai alone, or Mr Dai and his wife. The defendants have denied that none of the monies were applied for the benefit of City Garden, but they have not positively alleged that the monies were applied for the benefit of City Garden, or specified what that benefit was. The defendants have simply not admitted that City Garden had no obligation to make the payments of $500,000 to each of the payee companies. 2. The defendants then admitted a series of allegations of fact made by the plaintiffs, as follows: 20. The Wu Family loan was not repaid pursuant to the terms of the Deed. 21. In July 2020 the Wu Family commenced proceedings against the plaintiff, the first defendant and Ms Zhu seeking payment of the $1,000,000 plus interest and costs. Particulars (a) Supreme Court of New South Wales Proceedings No: 2020/200571 22. On 11 December 2020, the Wu Family obtained summary judgment against the plaintiff in the amount of $1,697,314.10 plus costs. Particulars (a) Wei & Fei Wu Family Investment Holding Pty Ltd v City Garden Australia Pty Ltd [2020] NSWSC 1796 23. On 4 June 2021 the plaintiff paid $1,774,986.83 to the Wu Family in full and final satisfaction of the judgment entered on 11 December 2020, comprising of: (a) $1,697,314.10; (b) $42,672.73 for post-judgment interest; and (c) $35,000 for legal costs. 1. Thus, in addition to the defendants having admitted that the $1,000,000 that was borrowed was paid to the two companies controlled by Mr Dai, or Mr Dai and his wife, they have admitted that City Garden did not repay the loan, and that the company was required to pay $1,774,986.83 on 4 June 2021 to satisfy the judgment obtained by the lender against City Garden in this Court. 2. The further amended statement of claim then contained two paragraphs that alleged legal duties owed by Mr Dai to City Garden as a result of his role as a director of that company. The defendants admitted par 24, which contained allegations that Mr Dai owed the statutory duties to City Garden that are created by ss 180(1), 181(1)(a), 181(1)(b), 182 and 183 of the Corporations Act 2001 (Cth). 3. The defendants then did not admit the allegation made in par 25 as to the general law duties owed by Mr Dai to City Garden arising out of his position as a director, as follows: 25. By reason of the first defendant's role as a director of the plaintiff, he owed the plaintiff fiduciary duties as follows: (a) Duty to act in the best interests of the plaintiff as a whole; (b) Duty not to act for an improper purpose; (c) Duty of due care and diligence; (d) Duty to avoid conflict between personal interests and the interests of the plaintiff; (e) Duty to not act in a manner which is to the advantage of themselves or someone else, or to cause detriment to the plaintiff; and (f) Duty not to divert opportunities from the plaintiff. 1. Although the defendants did not admit that Mr Dai owed the fiduciary duties to City Garden as alleged in par 25, it is beyond controversy that Mr Dai did owe City Garden fiduciary duties generally as specified in par 25. 2. The defendants then denied the following allegations of breach of duty (although strangely, they omitted to respond to the allegation in par 33): Breaches of Duty 26. In causing the plaintiff to enter into the Deed, the first defendant breached his duties to the plaintiff, in that the first defendant caused the plaintiff to secure the advance of $1,000,000 for the benefit of third parties as opposed to the plaintiff, in that it was to the benefit of the second defendant and Ming Tian Real Property Pty Ltd to obtain those monies, and to the detriment of the plaintiff, and the Trust, to incur a liability for those monies. 27. As a consequence of that breach, the plaintiff has suffered loss and damage in the amount of $1,774,986.83, being the monies it was required to pay the Wu Family pursuant to the judgment entered against it. 28. In causing the plaintiff to pay out $500,000 to the second defendant the first defendant breached his duties to the plaintiff, in that it was to the benefit of the second defendant to obtain those monies, the plaintiff had no obligation to pay $500,000, or any monies at all, to the second defendant, and it was to the detriment of the plaintiff, and the Trust, to pay those monies over to the second defendant, with no obligation to do so. 29. As a consequence of that breach, the plaintiff has suffered loss and damage in the amount of $500,000. 30. As at the time of receiving the $500,000 the second defendant had knowledge that those monies were being paid over to it as a result of the first defendant's breaches of duty to the plaintiff. Particulars (a) the first defendant's knowledge is imputed to the second defendant as its sole director. (b) the plaintiff had no obligation to pay the second defendant $500,000, or any monies at all. 31. Accordingly, the $500,000 received by the second defendant is impressed with a constructive trust to the benefit of the plaintiff. 32. In causing the plaintiff to pay out $500,000 to Ming Tian Real Property Pty Ltd the first defendant breached his duties to the plaintiff, in that it was to the benefit of Ming Tian Real Property Pty Ltd to obtain those monies, the plaintiff had no obligation to pay $500,000, or any monies at all, to Ming Tian Real Property Pty Ltd, and it was to the detriment of the plaintiff, and the Trust, to pay those monies over to the Ming Tian Real Property Pty Ltd with no obligation to do so. 33. As a consequence of that breach, the plaintiff has suffered loss and damage in the amount of $500,000. 34. [Deleted]. 35. [Deleted]. 36. The plaintiff seeks the relief claimed on the basis of the facts and matters pleaded and particularised above. 37-41. [Deleted]. 1. It is clear in my view that the facts alleged in the further amended statement of claim that have been admitted by the defendants will be sufficient to establish City Garden's entitlement to the relief that it claims, unless the Court were to hold that Mr Dai did not breach the duties to City Garden as pleaded in pars 24 and 25, because it was a proper exercise of his powers as the sole director of City Garden to cause the company to borrow the $1,000,000 and to pay $500,000 each to Maxmara and Ming Tian. The latter proposition would require that the Court find that it was in the interests of City Garden to enter into these transactions, which superficially appear to be solely for the benefit of Mr Dai, or Mr Dai and his wife, through Maxmara and Ming Tian. As observed above, so far as the amended defence is concerned, the defendants have not pleaded any alleged benefit of the transactions for City Garden, or otherwise pleaded why it was in the interests of that company for Mr Dai to cause it to enter into the transactions. 2. The only positive defence alleged by the defendants in their amended defence was in par 38, as follows: 38. In answer to the whole of the plaintiff's claim, the defendants say that the plaintiffs suffered no loss because the first defendant, second defendant and third defendant have together procured the payment of money to the plaintiffs in excess of the amounts claimed by the plaintiffs. 1. The evidence tendered by City Garden at the hearing proved the following relevant facts, in addition to those that were admitted by the defendants on the pleadings. 2. City Garden was incorporated on 23 March 2015. Mr Dai and Ms Zhu were each allotted 50 shares of $1.00 each in City Garden. They were both appointed as directors of the company. 3. On the same date, the Ming Tian City Garden Unit Trust (Unit Trust) was established with City Garden as the trustee, and Maxmara as the holder of all of the 100 Units issued by the Unit Trust. 4. On 3 August 2016, Rose Ives Pty Ltd (Rose Ives) acquired 40 of the 100 units in the Unit Trust from Maxmara, after agreeing to invest no more than $4,000,000 in the Unit Trust, by way of a loan to City Garden as trustee for the Unit Trust. 5. LV.ESB Pty Ltd (LV.ESB) is the sole shareholder of Rose Ives. Mr Liang and his wife are the directors and shareholders of LV.ESB. 6. On 8 August 2016, Rose Ives lent City Garden $3,000,000 when it remitted that amount into City Garden's Westpac bank account. 7. At the 21 December 2016 date that City Garden entered into the Deed of Loan to borrow the $1,000,000 as alleged in pars 10 to 13 of the further amended statement of claim, Mr Dai was City Garden's sole director. Mr Dai was also the sole director of Maxmara, and he and Ms Zhu each held one ordinary share in that company. Mr Dai was also the sole director of Ming Tian. Maxmara held 3,899,999 of the 6,000,000 ordinary shares in Ming Tian. 8. On that date, City Garden did not have any shares or interest in either Maxmara or Ming Tian. 9. The Deed of Loan provided for City Garden to borrow $1,000,000 for a period of 12 months at an interest rate of 18% per annum. The Deed of Loan contained a term that, if the amount loaned and accrued interest were not paid within 12 months, the interest rate charged would be 35% per annum. 10. Mr Dai admitted in evidence that the purpose for City Garden borrowing the $1,000,000 was to fund a project at North Rocks in which City Garden was engaged. Clause 1.16 of the Deed of Loan defined the Permitted Purpose as follows: means the purchase of the Property in accordance with the Contract of the Sale and Purchase of Land as annexed to this Deed in Annexure 1 ("Contract"). 1. Clause 1.17 defined "Property" as being land at a stipulated address in North Rocks, New South Wales. 2. Crucially, there was no evidence to prove that, on 22 December 2016, City Garden had an obligation to pay Maxmara or Ming Tian the sum of $500,000 each, or any other sum. As Mr Dai was the sole director of the company at that stage, he was the only person in a position to identify any obligation, or any other reason, that could justify his conduct in causing City Garden to borrow the $1,000,000 and to pay $500,000 each to Maxmara and Ming Tian. He did not do so, or even attempt to do so. 3. Mr Liang was appointed as a director of City Garden on 3 July 2017. 4. On 25 July 2017, Ms Zhu transferred 50 shares in City Garden to Mr Liang and Mr Dai transferred 10 shares in City Garden to him. 5. City Garden did not repay the loan amount of $1,000,000 plus accrued interest on 21 December 2017 and, on the previous day, 20 December 2017, Mr Dai caused City Garden to enter into a second Deed of Loan to extend the loan period for another 12 months. 6. Mr Dai executed the second Deed of Loan as City Garden's sole director, without Mr Liang's knowledge or approval, although Mr Liang was a director of City Garden at the time. 7. Not only did the defendants fail to explain, let alone prove, how it was in the interests of City Garden to borrow $1,000,000 for the purpose of $500,000 being paid to each of Maxmara and Ming Tian, but the evidence established that City Garden was in the process of acquiring land at North Rocks, for which purpose it had its own immediate need for funds in respect of the acquisition and proposed development. In Mr Dai's 1 December 2021 affidavit, he said in par 14 that the North Rocks project required a cash injection of in excess of $1,000,000, "and, accordingly, the plaintiff entered into the Wu Family Loan." Mr Dai added: 16. The Wu Family Loan was originally borrowed to fund the project at North Rocks, being the development project being undertaken by the plaintiff. 17. Although the Wu Family Loan was temporarily used for another purpose, I returned that money to the plaintiff (and more). The plaintiff proceeded to use the money that I returned to it for the North Rocks project. 1. I am satisfied by the evidence that, at the time Mr Dai caused City Garden to borrow the $1,000,000 and to pay $500,000 each to Maxmara and Ming Tian, he did not have any reasonably reliable plan as to how the company could generate the funds that would be necessary to repay the amount borrowed plus interest within the 12 month duration of the loan. 2. The borrowing of the $1,000,000 conferred no benefit on City Garden. City Garden received no benefit from the payments of $500,000 to each of Maxmara and Ming Tian. City Garden had no interest in those companies. The three companies could not reasonably be considered as part of the one group of companies, such that the conferral of benefits on Maxmara and Ming Tian could lead to City Garden enjoying any benefit. 3. City Garden had entered into a contract on 1 December 2016 for the purchase of the North Rocks land for a price of $10,000,000. Only $1,000 was recorded on the contract as being the deposit. Special condition 43 of the contract required that completion should occur on 24 January 2017, when City Garden would be required to pay to the vendor the balance of the purchase price of $9,999,000. The $1,000,000 was therefore borrowed 20 days after the date of the contract, and the funds were paid to Maxmara and Ming Tian approximately 30 days before City Garden was required to complete the purchase of the North Rocks land. 4. In addition, from 8 August 2016, City Garden was indebted to Rose Ives in the sum of $3,000,000. 5. It is clear that, as of 22 December 2016, City Garden was liable to third parties for a substantial amount of indebtedness, and it could not in the circumstances have been in the proper interests of the company for Mr Dai, as its sole director, to cause the company to borrow $1,000,000 and to pay that amount to two companies in which City Garden had no interest. Furthermore, I infer from the absence of any evidence led by the defendants to the contrary that neither payee had the financial capacity to repay the amount paid to it on demand made by City Garden. 6. In all of these circumstances, City Garden will be entitled to the relief claimed in its further amended statement of claim, unless the Court finds that the defendants have established their defence pleaded in par 38 of the amended defence, being that they have procured the payment of money to City Garden in excess of the amounts claimed by that company. 7. The defendants supported this claim by evidence introduced in Mr Dai's 1 December 2021 affidavit. In par 15 of that affidavit, Mr Dai included a schedule that contained details of 20 payments made between 5 January 2017 and 5 March 2017. Many of the payments were described as having been made from a personal account of Mr Dai and others were made from accounts in respect of which only the account number was given. The total amount of the payments was $2,285,900. 8. It is important to the Court's consideration of whether the defendants have established that any payments were made to City Garden in circumstances that should be treated as partial repayments of the $1,000,000 that the defendants did not tender any evidence that they have an independent source of funds that enabled them to make the payments from their own resources. 9. Furthermore, Mr Dai did not apparently cause City Garden to keep secondary accounting records (such as cash books or journals) or to prepare financial accounts on a professional basis that would have assisted the Court to understand how relevant payments were treated at the time that they occurred, and what the net position was as to receipts and payments by City Garden and Mr Dai. The defendants supported the claim in par 15 of Mr Dai's affidavit by relying solely on bank statements for City Garden that showed the transactions as having occurred on the stated dates. In many cases the bank statements stated that the source of a receipt was a bank account in the name of Mr Dai. 10. However, when the bank statements are considered as a whole, they show many more receipts and payments than the transactions relied upon by the defendants. In many cases, for example, receipts claimed by the defendants as having been paid into City Garden's account by Mr Dai were shortly thereafter exhausted by payments out of the account for purposes that were not explained. 11. The partial explanation of these transactions by Mr Dai in his affidavit provides no confidence to the Court as to what the true or net position was as between City Garden and Mr Dai. 12. Mr Liang responded to the defendants' claim in his affidavits affirmed on 20 December 2021 and 2 August 2022. The essence of his response was that, even though the bank statements may show that most of the payments were made to City Garden as claimed by the defendants, those payments were made by Mr Dai from monies that were advanced to City Garden for the purpose of the North Rocks land acquisition and real estate development. The reason why Mr Dai was able to make the payments to City Garden was that Mr Liang caused his companies to advance the money by making payments to personal accounts in the name of Mr Dai in Hong Kong. City Garden's case was that the payments that the defendants claimed justified a set off against the payment of the $1,000,000 to Maxmara and Ming Tian on 22 December 2016 were in fact payments by Mr Dai out of monies that were advanced to City Garden, through the agency of Mr Dai through his personal Hong Kong bank accounts. 13. In his affidavits, Mr Liang explained in detail the process whereby he caused his companies to make the advances to City Garden, and supported his evidence by a substantial quantity of emails written to him by Mr Dai that had been translated into English from Mandarin for the purpose of these proceedings. 14. Mr Liang was able to identify some individual payments that were made into Mr Dai's Hong Kong accounts that were immediately remitted by Mr Dai to City Garden's bank account, and ultimately claimed by the defendants as having been an advance by Mr Dai to City Garden. Mr Liang was not able to do that in respect of all of the payments, as some of the payments claimed by the defendants did not match payments into Mr Dai's Hong Kong accounts: see par 16 of Mr Liang's 20 December 2021 affidavit. 15. The evidence led on behalf of City Garden was comprehensive in its detail concerning all of the payments that Mr Liang made or caused his companies to make to City Garden through Mr Dai's Hong Kong accounts, but that evidence is not easy to comprehend because of its complexity. However, I am comfortably satisfied that City Garden has proved its case in response to the defence raised by the defendants. 16. Mr Liang gave evidence of making separate advances to City Garden for the purpose of its North Rocks development of $1,600,000, $3,000,000 and a further $3,000,000. The payments were actually made in smaller tranches through Mr Dai's Hong Kong bank accounts. The transactions were apparently implemented in that way for perceived taxation advantages on Mr Liang's part. The reason for this approach is not relevant, as Mr Dai has clearly admitted that the payments were made in a significant number of emails that he sent to Mr Liang, some of which provide evidence of the payment of individual tranches, and others demonstrate Mr Dai's acceptance of the overall amounts advanced by Mr Liang and his companies. 17. For example, on 9 August 2017, Mr Dai sent an email to Mr Liang on the subject: "Deed of Loan for $1.6million, Deed of Loan for $3million and Deed of Agreement". Mr Dai listed six payments in the total amount of $843,300 being "the total transfer amount in Hong Kong account". He stated that the total in the Sydney account was $2,640,000, with the overall total being: "Total amount transferred in AUD $3,483,300.00." The email stated that it was necessary to return the amount of $483,300: see Court Book page 491. 18. On 13 October 2017, Mr Dai sent an email to Mr Liang in relation to the North Rocks project in which he provided an analysis of how much money was needed to get a construction loan from Westpac. Mr Dai said that an additional $3.4 million was required and then added: "So the total borrowing from you is $1.6m + $3m + $3m + $3.4m = $11m": see Court Book page 512. 19. As I understand this email, the first three amounts had already been borrowed by City Garden from Mr Liang or his companies, and the additional amount required was the final $3.4 million, which would give a total of $11,000,000. 20. It is necessary to note that the email evidence relied upon by City Garden in response to the defendants' claim records that Mr Dai had also made contributions to City Garden's North Rocks project. For example, Mr Dai's 13 October 2017 email referred to: "The total my contribution so far is $600,000.00…" 21. What appears to be an attachment to Mr Dai's email details payments already made by Mr Liang or his companies and also the payments that Mr Dai claimed had been made by him, which added up to $600,000: see Court Book page 514. 22. The significant point is that none of the individual payments that Mr Dai stated comprised his contribution of $600,000 matched any of the payments set out in the schedule in par 15 of Mr Dai's 1 December 2021 affidavit. 23. In Mr Dai's 14 October 2022 affidavit in response to the evidence given by Mr Liang, Mr Dai agreed in par 5 that Mr Liang had transferred specified funds, as detailed in par 9 of his 2 August 2022 affidavit, to Mr Dai's personal account in Hong Kong, and Mr Dai gave as the reason for these transactions that Mr Liang did not want to transfer monies from his Australian accounts for taxation reasons. 24. In par 14 of his affidavit, Mr Dai referred to a loan agreement made between City Garden, as borrower, and Mr Liang's company, NCC Fashion Group Pty Ltd (NCC Fashion), on 28 November 2018, that recorded City Garden as being indebted to NCC Fashion for the total amount of $13,000,000. Mr Dai stated that the total amount was made up of six tranches, which matched Mr Liang's evidence as to the loans that he or his companies had made to City Garden for the purpose of funding its North Rocks development. (There were two versions of this loan agreement in the evidence, and a dispute as to the manner in which the loan agreement had been executed. I do not consider that it is necessary to resolve this dispute for the purpose of determining City Garden's claim in these proceedings). 25. Mr Dai was cross-examined about the entries in the schedule in par 15 of his affidavit at T 28.20-34.10. It is clear from this evidence that Mr Dai conceded that many of the payments in the schedule were remitted to City Garden's bank account from monies paid by Mr Liang or his companies into accounts in Hong Kong in the name of Mr Dai, and that these payments represented loans intended to be made by Mr Liang or his companies to City Garden. Notwithstanding the diligence of the cross-examiner, I have not found it possible to calculate precisely which of the payments Mr Dai conceded (and in fact volunteered) were in effect remittances of Mr Liang's money. 26. Although Mr Dai made concessions, I was not satisfied that he was responding to the questions in a satisfactory way, as he was not precise and he appeared to be evasive. Mr Dai appeared initially to say that any transaction that involved payments of about $150,000 or $160,000 were remittances of Mr Liang's payments: T 28.28-28.40. He admitted that the $1,000,000 payment on 26 October 2027 was a remittance of Mr Liang's money: T 29.7. Mr Dai was then cross-examined about other payments in amounts of $50,000, $60,000 and $100,000, and he appeared to resist the proposition that those payments were also remittances of Mr Liang's money: T 29.36-29.49. At T 30.35, Mr Dai was asked directly about which payments he said were from Mr Dai's own money. On my count, Mr Dai identified 10 payments in the total amount of $370,100. 27. There were other aspects of Mr Dai's evidence in cross-examination on this subject that appeared to me to be unsatisfactory, but the cross-examiner was unable to pin Mr Dai down because he did not appear to be giving direct answers to the questions he was asked. 28. In response to a claim by Mr Dai that he may have made payments into City Garden's bank accounts that were not included in his schedule, Mr Dai was asked questions about why he had not responded to a notice to produce that had been served earlier on his legal representative in relation to his bank accounts in Australia necessary to establish that he had the funds that would have permitted him to pay to City Garden the amounts that he claimed to have paid: T 34.37-34.49. Mr Dai explained that he had not produced the documents because he was overseas and had just returned the previous day. He said the bank documents the subject of the notice to produce all related to closed accounts and that his bank would not give him the bank statements unless he was present in Australia. I consider this response to be entirely unconvincing. 29. After all of this, at T 35.10, Mr Dai repeated his claim that the $2,285,900 of payments in the schedule in par 15 of his affidavit all consisted of money belonging to Mr Dai. 30. This is a convenient place to note that I found Mr Dai generally to be an unsatisfactory witness whose evidence should be accepted only where it was corroborated by or consistent with other objective evidence. 31. It must be remembered that the purpose of all of the evidence led by City Garden of the advances made to it by Mr Liang and his companies was not concerned with City Garden's indebtedness per se. Its purpose was to establish that the monies that the defendants claimed had been advanced by Mr Dai to City Garden were not Mr Dai's own funds, but were part of the funds advanced from time to time by Mr Liang and his companies to City Garden. I am comfortably satisfied that City Garden has established its response. 32. That is in part because the evidence overwhelmingly establishes that the advances were made, and at the end of the day, they were admitted by Mr Dai. The conclusion is also supported by the fact that the defendants did not establish that Mr Dai had an independent source of funds to make the payments, and the contributions of capital that Mr Dai explicitly claimed he had made were inconsistent with Mr Dai's evidence in par 15 of his 1 December 2021 affidavit. 33. Although there is evidence that would support a finding that Mr Dai contributed $600,000, or thereabouts, to City Garden, I find on the balance of probabilities that that contribution should not be treated as a partial repayment of the $1,000,000 that was borrowed from the Wu family company. I am satisfied that the amount paid should be treated as part only of the investment that Mr Dai promised Mr Liang he would make as his contribution to the North Rocks project. I accept the evidence given by Mr Liang in par 10 of his 1 September 2021 that he did not learn about the $1,000,000 borrowing until 6 May 2020, when he received a letter from the solicitor for the lender. I am satisfied that Mr Dai caused City Garden to borrow the $1,000,000, and to pay the money to the companies controlled by him and his wife, entirely behind Mr Liang's back. That finding is reinforced by Mr Dai's deviousness in causing City Garden to enter into the second Deed of Loan without informing Mr Liang. 34. On the basis of the whole of the evidence, I am satisfied that the $1,000,000 that Mr Dai caused City Garden to borrow from the Wu Family company on 21 December 2016 was borrowed for the purposes of City Garden's North Rocks project, and wrongfully diverted by Mr Dai on 22 December 2016 to Maxmara and Ming Tian. 35. That conduct on Mr Dai's part was a breach by him of relevant duties as alleged in pars 24 and 25 of the further amended statement of claim. As this is a clear case of breach of duty, it is not necessary for the Court to engage in a detailed consideration of the particular alleged duties that were breached in the circumstances. 36. Mr Dai is accordingly liable to compensate City Garden for the claimed loss of $1,774,986.83. 37. As Maxmara was infected by the notice of the breach of duty through the knowledge of Mr Dai as its sole director in causing Maxmara to receive the $500,000 that was paid to it, Maxmara is also liable to compensate City Garden in the sum of $500,000. 38. For completeness, I note that City Garden abandoned its claim in respect of the $500,000 paid to Ming Tian in these proceedings because a winding up order was made against that company. 39. I am satisfied in the circumstances that City Garden is also entitled to interest before judgment under s 100 of the Civil Procedure Act 2005 (NSW). 40. An order for costs should be made in favour of City Garden against both defendants that should include an entitlement to interest on costs that are paid. 41. I invite City Garden to submit short minutes of order to my Associate, after consultation with the defendants, to give effect to these reasons for judgment. The short minutes of order should be supported by a schedule demonstrating the calculation of interest.