New South Wales Supreme Court CITATION : Li v Deng [2009] NSWSC 715 HEARING DATE(S) : July 20 - July 21 2009 JUDGMENT DATE : 28 August 2009 JUDGMENT OF : Gzell J DECISION : Summons and amended statement of claim dismissed with costs. CATCHWORDS : EQUITY - Equitable Doctrines and Presumptions - land purchased in name of defendant mother - whether plaintiff daughter contributed funds for purchase - whether mother promised her a 50% interest - whether claim to proprietary estoppel, resulting trust or constructive trust made out - findings of fact - no principles involved CATEGORY : Principal judgment PARTIES : Lin Li (Plaintiff) Wan Yun Deng (Defendant) FILE NUMBER(S) : SC 1615/06 COUNSEL : N Confos (Plaintiff) G Blake SC and B Ilkovski (Defendant) SOLICITORS : Humphreys & Feather Solicitors (Plaintiff) Ren Zhou Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J FRIDAY 28 AUGUST 2009 1615/06 LIN LI v WAN YUN DENG JUDGMENT 1 The defendant, Wan Yun Deng, purchased two lots in Boundary Street, Roseville, New South Wales. One lot was known as 90 Boundary Street. It had an existing dwelling on it. The other lot, 92 Boundary Street, was vacant. 2 90 Boundary Street was sold and a dwelling was erected on 92 Boundary Street. The plaintiff, Lin Li, the daughter of Ms Deng, seeks a declaration that 92 Boundary Street is held upon trust for her as to 50% with a life interest of 50% in her mother and the remainder to her. Ms Li says she gave her mother $72,000 and a further $5,000 to be used to acquire the properties. 3 Ms Li says that prior to the purchase of 90 and 92 Boundary Street she and her mother agreed that a fund held by Ms Deng that included Ms Li's $72,000 together with the further $5,000 would be applied to the purchase of the property; the balance would be borrowed; 90 and 92 Boundary Street would be re-subdivided to make 92 Boundary Street a hatchet shaped block to the rear of the existing house with narrow access to Boundary Street; Ms Li would do the work of co-ordinating the re-subdivision; 90 Boundary Street would be sold and the proceeds used to repay the loan and to build a dual occupancy home on 92 Boundary Street; 92 Boundary Street would be sold; Ms Li would be entitled to half the profit. 4 Ms Li said that subsequently the arrangement was varied such that the house to be built on 92 Boundary Street would be family residence to include accommodation for Ms Li, half of which would be hers and the balance would belong to her upon the death of the survivor of her parents. 5 Ms Deng denied receiving any moneys from her daughter for the purchase of the properties. She said she used her life savings and borrowed the balance. She said there never was an agreement that her daughter would have a 50% interest, or any other interest, in 90 or 92 Boundary Street. 6 The arrangements alleged by Ms Li were not documented. She said her mother, and subsequently her father, said it was unnecessary. 7 The critical question is whether Ms Li gave $77,000 to her mother for an interest in 92 Boundary Street. 8 Ms Li was brought up in China where her father was a surgeon and Ms Deng trained as a doctor specialising in Chinese medicine. Ms Li studied sculpture at a fine arts academy in China. She worked before and after graduation as a set designer and backdrop painter. During this period she also completed a number of public sculptures to supplement the salary received from the government. It was not a great deal. 9 In May 1990, Ms Li came to Australia on a student visa to learn English at a college in Sydney. She had only $1,000 on arrival. 10 Ms Li said she took various forms of employment both during her study of English for six months and thereafter. She painted five to six portraits at weekends for $25 each. She repaired the stone lions in Chinatown for $4,000 to $5,000. She worked as a kitchen hand from early 1991 to early 1992 for approximately $370 per week after tax. She worked as a call girl for approximately $1,000 per weekend from late 1991 until February or March 1993. She worked as a kitchen hand from mid 1992 for $300 per week cash in hand. 11 Ms Li said the cost of her unit was $140 per week and food and other expenses were approximately $110 per week. 12 By early 1993 when she ceased to be a call girl Ms Li said she had saved approximately $80,000. She said most of this money she did not bank, although she had an account with St George Bank, but kept the money about the house. 13 In 1993 Ms Li commenced a Masters Degree at the College of Fine Arts at the University of New South Wales. She completed that course in 1995. During this period she continued as a kitchen hand earning approximately $150 per week and she worked as a babysitter earning approximately $50 per week. She said she used some of her savings. 14 In the period from January 1994 to July 1994 when Ms Li was studying at the College of Fine Arts she was in receipt of Department of Social Services payments which, together with the whole of her earnings, was used for living expenses. 15 In about October 1994 she received a scholarship of $500 to assist with the costs of making her graduation artwork at the University. Her intention was to travel to Tibet to work on a graduation thesis on performance art in that country. 16 She went to China in October 1994 to go to Tibet. She said the balance of her savings was then $73,000 and after paying for a return ticket she said she gave her mother $72,000, saying this was her savings that could be used to buy a house together in the future. She said Ms Deng replied that Ms Li must have been doing well. She would keep the money for her and if they did not buy a house in Australia, Ms Li would have it back. Ms Deng denied that she received $72,000 from her daughter and denied the conversation. 17 In cross-examination Ms Li agreed that she had not made a customs declaration indicating that she was taking $72,000 out of Australia. She said she did not know the money could not be taken out of Australia. 18 Ms Deng had developed a Chinese medicine prescription for curing kidney stones and gallstones. She opened a kidney stone treatment centre in Anshan while still employed at a nearby hospital. She said her annual income increased from about RMB1,000 to about RMB20,000. Later she opened another kidney stone treatment clinic in Shenzhen where she treated approximately 100 patients per day. She said her average annual income was then about RMB1,500,000. 19 Ms Deng visited her daughter in Australia in July 1995. Ms Li accompanied her to the State Bank NSW where Ms Deng converted USD60,000 that she had brought with her into Australian currency of which she invested AUD51,860 in term deposits. 20 In October 1996 Ms Li received $2,800 from the Darling Harbour Authority. She received a further $2,000 in November 1996. In January 1997 she received $4,000 from the Roads and Traffic Authority. Ms Li deposited these amounts to her St George Bank account. 21 In December 1996 Ms Deng came to Australia on a migration visa. She brought with her US dollars and took out a term deposit with the Commonwealth Bank for $350,000. Ms Li had gone to China to accompany her mother to Australia. She said when counting US dollars from her mother's safe to take to Australia she asked her mother where her $72,000 was to which she said her mother replied that it was all in the US dollars they were counting. Ms Deng denied the conversation took place. 22 When taking out the term deposit at the Commonwealth Bank, Ms Li said she asked her mother should not the money be put in both names. She said her mother responded that to save any future problems with Patrick, because Ms Li was not divorced, it should go in Ms Deng's name only. Ms Deng denied that the conversation took place. 23 Ms Li had married Patrick Warner in November 1990. They separated in 1992 but did not divorce until 2001. 24 Having inspected 90 and 92 Boundary Street, Ms Li said she informed her mother that they could borrow and then sell 90 Boundary Street. They could build a dual occupancy house on 92 Boundary Street that they could sell for $750,000 at least, making a profit on the $400,000 in deposits held by her mother. Ms Li said her mother asked who was going to do all the work to which Ms Li replied that she would do it but she would like to have half the profits from the development. 25 Ms Deng denied this conversation took place. She said she had discovered 90 and 92 Boundary Street and she had determined that she would bid at the auction. She calculated that if the purchase price was below $450,000 and she could borrow $100,000 she would have sufficient finance for the purchase. 26 Ms Li said that in discussing finance with her mother, her mother said it was quite tight and did she have any more money. Ms Li said she had $5,000 and she gave it to her mother who said Ms Li should go ahead and make the best profit she could and when the properties were sold Ms Li would get half of the profit. Ms Deng denied receiving $5,000 and denied that the conversation took place. 27 90 and 92 Boundary Street were purchased at auction on 11 March 1997 in the name of Ms Deng for $443,000. Ms Deng took out a loan in her name for $100,000. 28 Ms Li said the $5,000 she gave her mother came from the moneys she received from the DHA and the RTA. But Ms Li progressively withdrew funds against the deposits of $2,000 and $2,800 from the DHA until there was but $5.62 in her bank account on 1 January 1997. The $4,000 from the RTA was also progressively drawn against until on 10 March 1997 the balance in her bank account was $97.08. There was no withdrawal from it of $5,000. 29 Ms Li spent considerable time and effort negotiating with the local authority. She said her mother changed her mind. Ms Deng wanted to settle down as quickly as possible. She wanted to sell 90 Boundary Street and keep 92 Boundary Street and build a family home on it. She wanted Ms Li to do the property development and half of the profit would go into the house. Ms Li said her mother told her that half of the house was hers although it was under her mother's name because Ms Li's marriage was not stable. According to Ms Li, her mother said that when her father and she passed away the whole of the house would be hers under Chinese tradition. 30 Ms Li said she asked that this be written down on paper just in case anything happened. She said her mother responded that she would not write these things down. That was like writing a will. That was a curse her mother said. Ms Li was the only member of the family in Australia what was the point of writing it on paper. 31 Ms Deng denied that this conversation took place. Ms Deng said that following settlement of the purchase in April 1997, she had a builder renovate the house on 90 Boundary Street into which she and Ms Li then moved. Ms Deng said it was very noisy living close to the street and there was sufficient land in the other lot to build a house. She retained a qualified town planner to prepare a resubdivision and development application. 32 In May 1997, Ms Li was awarded the Helen Lempriere Travelling Arts Scholarship of $40,000 to study overseas for 12 months. She had a year in which to take up the scholarship and she deferred to continue work on the re-subdivision. 33 In March 1998 Ms Deng paid a deposit to Westminster Homes for the construction of a house on 92 Boundary Street. 34 In June 1998 final development application approval for the re-subdivision was received. 35 In June 1998 Ms Deng decided to return to China while the house on 92 Boundary Street was being built. She signed an authority to operate her Commonwealth Bank account in favour of Ms Li. She increased her loan secured over 90 and 92 Boundary Street by $80,000. 36 In August 1998 the development application for the house was approved. 37 In September 1998 Ms Deng executed a power of attorney in favour of Ms Li. Ms Li visited her parents in China. She asked for the arrangement to be written down. She said if her brother came to Australia she did not want to have trouble with him. She said her father supported her mother. They should be trusted and there was no need to write down the arrangement. Ms Deng said the conversation did not take place. 38 In February 1999, completion of the sale of 90 Boundary Street for $375,000 took place and the mortgage was discharged. 39 In April 1999 development application approval for a two storeyed house on 92 Boundary Street was given. Ms Li's father had received an Australian visa and he and Ms Deng paid a short visit to Australia. Ms Deng said that during the visit she deposited $48,612.65 into her Commonwealth Bank account from the conversion of the balance of US dollars she had brought with her. 40 In May 1999 Ms Li signed a building contract with Westminster Homes for the construction of the house on 92 Boundary Street. The agreement was signed in the name of Ms Deng by Ms Li under the power of attorney. 41 Ms Li had deferred her overseas scholarship until the concrete slab for the house had been laid and its wooden frame had been constructed. She departed for California in September 1999 on a three-year course, having made arrangements for Mr Warner to oversee the house building while she was overseas. She returned to Sydney in October 1999 to check on progress and she returned again in December 1999 during a holiday period. Ms Deng also visited Sydney to check on the progress in October 1999 and in December 1999. 42 In June 2001 Ms Li completed her Masters Degree in Fine Arts in California and returned to Sydney to view progress. The house was completed, the final inspection certificate was obtained and Mr Warner had the keys. Ms Li returned to the US for further work. 43 Ms Deng closed her Shenzhen clinic in January 2002 and returned to Australia in April 2002. She said the landscaping had not been completed. Ms Li also returned to Australia and joined Mr Warner in the ground floor of the house. 44 Therefter the relationship between Ms Li and her parents deteriorated. It is not necessary for me to catalogue those events. 45 Mr Warner gave evidence that while Ms Li was in California he lived in a shed on 92 Boundary Street to check on the construction of the house. When issues arose in relation to the construction he would contact Ms Li either by telephone or facsimile and would liaise with the builder in relation to any work that was required to be rectified. He also arranged to pay progress payments to the builder from cheques forwarded to him by Ms Li. He was working as a gardener and he carried out work on 92 Boundary Street. He planted trees and plants. He dug a trench along the driveway. He laid stormwater piping in the trench and installed a number of conduits to connect electricity and other services to the property. He said he was not paid for his labours. He said he did it for Ms Li. He installed a stormwater detention/plumbing system. He built a stone wall together with sandstone steps from the side of the pond/detention system. He constructed a fence at the rear of the property. He laid paving at the back of the property. He constructed a gate in the fence and a weatherproof structure over the air-conditioning unit. He and Ms Li brought a number of large rocks from an excavation site to be used as part of the design for the pond. 46 Ms Deng said that Mr Warner built the wooden fence and the brick wall during her visit to Sydney in late 1999 and she paid him $2,800 in cash. She did not ask Mr Warner to do any other work. Mr Warner denied that he was paid any amount by Ms Deng. 47 It was put to Ms Li that she would have provided her mother with every bit of assistance that she did even if she had not been promised an interest in 92 Boundary Street. She denied this. She said she would have arranged her own loan to obtain her own accommodation. It was put to her that she had no savings in 1997. She said her mother held her savings. She agreed that other than what she said she had given her mother previously, she had no savings whatsoever in March 1997. Ms Li banked to her St George Bank account Social Security Department benefits from January 1994 until July 1994 and then from October 1995 to at least 18 March 1997. 48 It was submitted on Ms Li's behalf that I should reject evidence given by Ms Deng of the moneys she brought to Australia. In her first affidavit Ms Deng said that on her first visit to Australia in July 1995, in addition to taking out term deposits with State Bank, she opened a Streamline account with the Commonwealth Bank and then in December 1996 when she migrated to Australia she transferred USD190,000 into the Streamline account. Ms Deng said she and her daughter each carried USD50,000 in cash on the flight to Australia in December 1996. In Australia, Ms Deng said she converted both lots of money to approximately AUD430,000 to AUD440,000, invested in a term deposit of AUD350,000 and kept the balance for living expenses. 49 Ms Li disputed the opening of the Streamline account on her mother's first visit to Australia on the basis that she received no bank statements from the Commonwealth Bank and her mother would have used her address for any statements. 50 In her second affidavit, Ms Deng accepted what her daughter had said and that she then believed the Streamline account was opened sometime after she migrated to Australia. She said, however, that when she invested in the term deposits with the State Bank on her first visit she opened another account possibly with the State Bank but she did not recall the details. She said she did transfer USD190,000 to this account and she and her daughter brought USD100,000 into Australia in December 1996. 51 Ms Li said that she and her mother counted out USD270,000 in China and she and her mother each carried half that amount in cash on the flight to Australia in December 1996. 52 It was submitted that Ms Deng accepted in cross-examination that more than USD100,000 was brought into Australia and that I should accept Ms Li's evidence in preference to that of Ms Deng. This submission was based upon Ms Deng's statement in cross-examination that she took USD290,000 to the Commonwealth Bank for conversion. But Ms Deng was not moved in cross-examination from her continued statement that it was USD100,000 in cash that she brought to Australia and declared on arrival. Her evidence is consistent with her utilisation of USD190,000 in a bank account in Australia and USD100,000 in cash taken to the Commonwealth Bank for conversion and investment in the term deposit. 53 It was submitted that if I rejected Ms Deng's evidence in this regard I should accept Ms Li's evidence of the conversations she had with her mother and her evidence of giving AUD77,000 to her mother. I decline to do so. 54 Ms Li relied on a dispute as to the frequency with which she conversed with her mother when she came to Australia to study English in 1990. Ms Deng said infrequently: Ms Li said frequently. Telephone records of a period in 1996 were tendered. They showed long distance calls to China and to the same telephone number. But the telephone number was not identified and the period was much later. 55 It was submitted that Ms Deng's evidence as to who did the landscaping should be accepted. Mr Warner swore an affidavit in which he said that he had done much of the landscaping and he identified photographs of that work. He was not cross-examined on that issue. 56 Upon the assumption that I accepted Ms Li's evidence it was submitted that she had made out a case of proprietary estoppel based upon the fact that Ms Deng knew or ought to have known of Ms Li's expectation with respect to the acquisition of 92 Boundary Street and Ms Deng's encouragement of the plaintiff to act in reliance on that expectation. 57 It was submitted, in the alternative, that 92 Boundary Street was held upon a resulting trust in the proportions of the respective contributions by Ms Li and Ms Deng to the purchase price. 58 In the further alternative it was submitted that there was a joint endeavour to which Ms Li contributed funds and personal exertion; it was not intended that Ms Deng should retain the benefit of Ms Li's contributions; the substratum of the relationship having being removed, it was inequitable for Ms Deng to retain the benefit of land at the plaintiff's expense; and the land was impressed with a constructive trust. 59 It is clear that Ms Deng has considerable funds at her disposal. She earned a substantial income from her clinics and was able to fund the purchase of 90 and 92 Boundary Street. Her evidence of an intention to migrate to Australia and to acquire a family home for herself and her family without contribution by Ms Li is plausible. 60 On the other hand, there is implausibility about Ms Li's ability to save to the extent she says she did. As to the alleged $5,000 contribution, Ms Li conceded that apart from the moneys she said she had given her mother previously, she had no savings in March 1997. She was in receipt of Social Security Department benefits during this period and her evidence that the $5,000 came from the $8,800 she had received from the RTA and the DHA is demonstrably not so. She had drawn against those funds such that there was a minimal balance in her bank account in March 1997 at the time she said she gave her mother the $5,000. And there was no withdrawal of $5,000 from the account in March 1997. 61 I reject Ms Li's evidence that she gave her mother the $5,000. That puts in doubt her evidence of the alleged payment of $72,000 to her mother. Having accepted Ms Deng's denial of the receipt of $5,000 from her daughter, I also accept Ms Deng's evidence that she did not receive $72,000 from her daughter. 62 Ms Li set out the amounts she earned from various sources from which she said she accumulated $80,000 by the beginning of 1993. Ms Deng's lawyers have made a calculation that suggests that Ms Li's total income, on the figures she provided, in the period from 1 May 1990 to October 1994 was approximately $115,000. Ms Li's expenses, on her figures, have been calculated at approximately $57,000. That suggests a maximum capacity to save of $58,000 without taking into account tuition fees and incidental costs for the Masters Degree Ms Li had commenced in 1993. 63 I prefer the evidence of Ms Deng to that of Ms Li with respect to the conversations Ms Li alleged she had with her mother. I find that Ms Deng made no promise to Ms Li of any interest in 90 or 92 Boundary Street nor any interest in 92 Boundary Street upon the death of her and her husband. 64 It follows from the findings I have made that Ms Li has failed to establish any of her causes of action. The summons and amended statement of claim are dismissed. Ms Li must pay Ms Deng's costs. ********** 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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