New South Wales Supreme Court CITATION : ABLE KING INVESTMENTS (SYDNEY) PTY. LIMITED & ANOR v. GUANG [2005] NSWSC 353 HEARING DATE(S) : Friday 15 April 2005 JUDGMENT DATE : 15 April 2005 JURISDICTION : Common Law JUDGMENT OF : Hall J at 1 DECISION : I dismiss the claims set out in the amended statement of claim. I order that the plaintiff pay the defendant's costs. On the cross-claim, I make an order in favour of the cross-claimant against both cross-defendants in the sum of $40,571 plus interest calculated in accordance with the provsions of s.94 of the Supreme Court Act from 9 April 2001 to date. I order the cross-defendants to pay the cross-claimant's costs of the cross claim. CATCHWORDS : Agreement to obtain permanent resident visas - security bond - implied refund term - breach of implied term - misleading conduct - s.52 of the Trade Practices Act - restitution - total failure of consideration Supreme Court Act 1970 LEGISLATION CITED : Trade Practices Act PARTIES : ABLE KING INVESTMENTS (SYDNEY) PTY. LIMITED & ANOR v. GUANG, Lai Shi FILE NUMBER(S) : SC No. 20212 of 2003 Plaintiff: No appearance COUNSEL : Defendant: Mr. S. Balafoutis Plaintiff: No appearance SOLICITORS : Defendant: Gadens Lawyers LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HALL, J. FRIDAY 15 APRIL 2005 No. 20212 of 2003 ABLE KING INVESTMENTS (SYDNEY) PTY. LIMITED v. GUANG LAI SHI JUDGMENT 1 HIS HONOUR: In these proceedings, a statement of claim was originally filed on behalf of the plaintiffs, Able King Investments (Sydney) Pty. Limited and Yuk Chun Hau, claiming against Guang Lai Shi. That statement of claim was amended by a document entitled "Amended Statement of Claim" filed on 15 August 2003. The defence was filed to the statement of claim and a cross-claim was filed on behalf of Guang Lai Shi against Able King Investments Pty. Limited and Yuk Chun Hau on that day. 2 These proceedings were listed previously before me on 9 March 2005. On that occasion there was no appearance on behalf of the plaintiffs. On that occasion I adjourned the proceedings and made orders for substituted service, given that notice had been given of an intention to file a notice of ceasing to act on 13 December 2004 by the solicitors formerly acting for the plaintiff, William Chan & Co. The notice is Annexure A to Mr. Fotheringham's affidavit of 9 March 2005. Annexure F to that affidavit is a letter written by William Chan of W. Chan & Co. to Gadens Lawyers which stated, inter alia:- "We further advise that the plaintiffs were informed that the said proceedings was listed for hearing on 9 March 2005." 3 Notwithstanding that the plaintiffs had been given notice by their former solicitors of the listing on 9 March 2005, I decided on that day that proceedings should be adjourned to enable the plaintiffs to be given, as it were, the benefit of the doubt by making provision for substituted service, and adjourn the proceedings until today. 4 Mr. Fotheringham's affidavit of 8 April 2005 is evidence of compliance with the directions I made on that occasion, including public notices given to the plaintiff, both of the listing for hearing of the plaintiff's proceedings and of the cross-claim proceedings, providing that the particular notice of the plaintiff's proceedings would be dismissed if there was no appearance today. 5 I am satisfied substituted service has been affected on the plaintiff, and there being no appearance on this occasion I accordingly dismiss the claim set out in the amended statement of claim and I order that the plaintiff pay the defendant's costs of those proceedings. 6 I turn then to deal with the proceedings by way of cross-claim. The evidence relied upon in support of the cross-claim is the affidavit evidence of Nelson Guang Lai Shi sworn on 16 July 2005 and 19 July 2004. They have been filed in support of the cross-claim filed on 4 November 2000 against Able King Investments (Sydney) Pty. Limited as first cross-defendant, and Yuk Shun Hau as second cross-defendant. The claim is specified to be in the amount of $40,000 with interest from 9 April 2001, pursuant to s.94 of the Supreme Court Act 1970. 7 There are three bases for the claim set out in the cross-claim, and I will deal with those shortly. The affidavit of Mr. Shi establishes that he is and was at the time a migration agent and his evidence is that one of the categories of permanent visas is what termed an employer nomination visa. He sets out in paragraph six the two-step process involved in the application process for such visas. 8 The affidavit evidence is that he first was approached by Ms. Hau in 2000, and that it was in early 2001 that he renewed that contact. In a subsequent meeting in early 2001 there was a discussion as to at least the first cross-defendant's requirements for managers in marketing and selling civil engineering in relation to the first plaintiff's business, and that that led to the discussions that culminated in an agreement which is Annexure B, entitled "Co-operation Agreement", to the affidavit of Mr. Shi said to have been executed on 9 April 2001. 9 That document is a primary one in support of the cross-claim. There is one other document also in the nature of a primary document which is relevant to these proceedings, and that is a letter from Able King Investments dated 10 April 2001 written by and signed by Jenny Hau, addressed to the officer in charge of the visitors section of the Department of Immigration and Multicultural Affairs. That letter states:- "Please be advised that our company agrees to guarantee the abovementioned persons to obtaining the Australian permanent resident visas. Thank you for your kind attention." 10 The letter is prefaced with the names of five persons. The affidavit evidence discloses that there was discussion of a security bond, and I will come to the terms of the agreement in a moment. Mr. Shi says that he set about contacting relatives and friends, who he identifies, and that those persons decided they would apply on the condition that he, Mr. Shi, would keep their payments instead of Ms. Hai's company holding them. In the event they were not granted permanent resident visa, the money should be fully refunded to them by Mr. Shi and in the event that they were granted visas, then the moneys would be released to Ms. Hai's company as a security bond. 11 In February and April 2001, Mr. Shi handed documentation from the five people he identifies to Ms. Hau, which included passports, birth certificates and police checks as well as photographs. There was a discussion about the need for the five applicants to report within a specified time of the granting or obtaining of visas, and whilst it seems an earlier agreement was entered into, it was overtaken by the agreement of 9 April 2001. 12 I turn to that agreement entitled "Co-operation Agreement" said to have been entered into with Mr Shi and Able King Investments (Sydney) Pty. Limited (identified as parties A and B). It is a poorly drafted agreement. In order to determine the meaning of the clauses in it, it is necessary to read the agreement in its entirety to understand what the agreement was intended to establish as the relationship between the parties to it. It deals with a security bond which is intended to secure performance and it makes provision respectably for refunding and, in effect, forfeiture in the circumstances it deals with. 13 The first clause of that agreement states:- "Party A has agreed to complete the sponsorship to the five clients provided by the party B in two days in order for the five persons to obtain an Australian permanent resident visa." 14 Clause two provides that party B, Mr. Shi, had agreed to give US$20,000 as a security bond to guarantee the four persons to arrive in Sydney in 30 days, "after they obtained Australian permanent resident visa to complete the signing of co-operation contract with the party A". 15 It is plain that the obtaining of a permanent resident visa for the persons in question was fundamental to the arrangement. 16 Under clause three, Able King was to refund the total amount of the security bond to Mr. Shi within four days of the date of the signing of the agreement, "if, as it says, "party A, Able King, failed to implement point one "; that is, clause one. It says, "Party A will handle the total amount of security bond on their own accord if party B fails to implement point two above", presumably referring to clause two. There is evidence of a receipt for the sum of US$20,000 from Mr. Shi, being Annexure C to the affidavit to which I have referred. 17 I turn to the basis upon which the cross-claim is pursued. There are essentially three bases: one, breach of contract, being, firstly, failure by Able King to perform its obligations in accordance with the first clause of the written agreement. That's referred to as the "visa terms" in the submissions by Mr. Balafoutis of counsel who appears for the cross-claimant. Secondly, breach of implied term referred to as "the first refund term". The next basis for the claim is misleading conduct, and it is upon that basis that the claim is pressed against both cross-defendants. 18 In addition, a fourth basis is a claim in restitution, that is to say, a claim based on a total failure of consideration by Able King. The submissions of the cross-claimant are that, contrary to the agreement, Able King did not complete the sponsorship of the five clients and that the only action it took was to send a letter addressed to the Department of Immigration and Multicultural Affairs, to which I have already referred. The submission is that that letter served no purpose at all and that it was not sufficient to assist in obtaining the visas and that, in effect, Able King did nothing to advance the process, which could be a lengthy process one for obtaining permanent visas. 19 Though Mr. Shi is himself a migration agent, the affidavit evidence indicates that it was claimed on behalf of Able King, that the information would be processed by Able King for use in the applications for visas. 20 I refer in this respect to paragraph 25 of the affidavit of Mr. Shi, in which he recounts a statement made by Ms. Hau to the effect that her company and herself had sponsored a number of businessmen previously, and they had expertise in handling the proceedings and that the sponsorship applications would involve confidential information about the company internally. For that reason, they preferred to deal with the applications themselves - no doubt with Mr. Shi's assistance. 21 It is contended that the failure by Able King to do any more than to issue the letter was a failure to fulfil their obligation to be performed under the agreement of 9 April, and that, in those circumstances, the plaintiff, Able King, was liable to refund the total amount of the security bond and, in breach, has failed to refund the security bond. 22 On the evidence before me, it is plain that Able King Investments did have obligations towards securing the resident visas, and that the company failed to do what was required of it, and that obtaining of those visas was fundamental to the arrangement. In the event that it failed to perform its agreement, the security bond would be refunded. 23 The purpose of the security bond, as I have previously stated, is in clause two of the agreement. The second basis for the claim is the implied refund term set out in the helpful submissions from Mr. Balafoutis of counsel. As stated in paragraph 22 of the written submissions, Mr. Shi had agreed to guarantee that four of the nominated persons would arrive in Australia once they had received the visas, and the security bond was given to secure that guarantee. That was on the assumption that the visas would be granted. There was no express term in the contract determining which party was to have the bond if it was not granted. In the circumstances, the submission is that there must be an applied term in accordance with the well-known authorities, to give business efficacy to the contract, and that it was a reasonable and equitable term that the bond or security be refunded given the basis of the assumption which failed to prove correct through no fault of Mr. Shi. The term, had it been clearly expressed, would not contradict any express terms of the contract. I accept those submissions. 24 It is plain that the purpose of the security bond was as stated and that there is no evidence that Able King did anything beyond sending the letter to assist in securing the issue of the visas. 25 The third basis for the claim is misleading conduct, and there are a number of representations set out which involve Ms. Hau. It is said that the representations were plainly misleading. The cross-claimant's submissions were:- "24. The first representation alleged is that: 'the first cross-defendant had already obtained permanent visas for the Nominated People' . This representation is based on a conversation between Mr. Shi and Ms. Hau in late March or early April 2001 in which Ms. Hau said, 'I have the visas ready, but all of the five applicants need to report to the company 30 days from the date that they obtain the visa' ." 25. The second representation alleged is that: 'The first cross-defendant would take all reasonable steps to procure the granting of permanent visas for the Nominated Persons' . This representation is based on two conversations between Mr. Shi and Ms. Hau. In those conversations, Ms. Hau said:- 'Our company will be responsible for all the application procedures for the people including the nomination and visa applications. The visa application will include all their family members. It takes about one or two months for the nomination application to be approved and then we will do the visa application for them You should just introduce your five acquaintances to me instead of representing them in this matter. My company will do everything from the sponsorship application to visa applications. My company and I have sponsored quite a number of businessmen before and we have expertise to handle the procedures. You have to understand that our sponsorship application will involve many confidential information about my company internally and we prefer to handle these applications all by ourselves.' 26. The third representation alleged is that: 'the first cross-defendant would refund the Security Bond to the cross-claimant in the event that the Nominated Persons were not granted permanent visas' . This representation is based on a conversation between Mr. Shi and Ms. Hau prior immediately to 9 April 2001. In that conversation, Ms. Hau said:- 'You will get the money back in two days if they don't get the approved sponsorships and I will return the money to you if they come to us in 30 days after they are granted visa. It is reasonable and the money is safe anyway, you have my undertaking in writing.' 26 There are a number of reasons set out in paragraph 27 of the written submissions and they state: firstly, that Able King did not have visas for the nominated persons prior to 9 April 2001 or at any other time; and, secondly, that it did not take any reasonable steps to procure the granting of the visas to the nominated persons. 27 At least inferentially, the submission is that Able King, at the time it entered the agreement, had no intention of performing the agreement and that, as the submission points out, the letter it sent, to which I have already referred, was the only action it took. 28 Ms. Hau was, on the evidence, the spokesperson of this company and I note from the searches that she is one of two directors of Able King. 29 It is put that the fact that she is a director does not prevent a finding of misleading conduct by her. She was involved, it is said, in contravention of the provisions of s.52 of the Trade Practices Act in misleading and deceptive conduct in relation to the representations made by her and that these caused loss to the cross-claimant. 30 I do not need to consider the other bases for the claim in reliance upon the statutory unconscionability provisions of the Trade Practices Act and I accept the submissions that the representations made by her contravened s.52, providing a remedy against Ms. Hau and Able King. 31 The final basis for the claim is said to be in restitution. It is plain that there was effectively a total failure of consideration under the Co-operation Agreement and I accept the submissions put that, in those circumstances, and having regard to the relevant principles, the cross-claimant is entitled to be put back in its previous position by an order for restitution. 32 The payments made are set out in paragraph 37 of the written submissions. A sum of US$5,000 was paid in early April 2001 and additional amounts of A$20,000 and US$5,000 were paid on 9 April 2001. The date of the loss was early April 2001, accordingly, and I accept the submissions that the exchange rates that are to be used be based on that date. 33 The calculations have been set out in the affidavit of Mr. Fotheringham of 8 April 2005. On that basis the loss has been calculated as set out in paragraph 41 at $40,571. 34 I, accordingly, make an order in favour of the cross-claimant against both cross-defendants in the sum of $40,571 plus interest calculated in accordance with the provisions of s.94 of the Supreme Court Act from 9 April 2001 to date. 35 I order the cross-defendants to pay the cross-claimant's costs of the cross-claim. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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