Xijie Cao v Shumiao Zhu [2020] NSWSC 321

Supreme Court New South Wales

Medium Neutral Citation: Xijie Cao v Shumiao Zhu [2020] NSWSC 321 Hearing dates: 30 September, 1, 2 October, 21, 22 and 27 November 2019; written submissions 21 November, 10 and 18 December 2019 Decision date: 30 March 2020 Jurisdiction: Equity Before: Kunc J Decision: Judgment for $500,000 with interest and costs; rectification not ordered Catchwords: CONTRACTS — Construction — Interpretation — Natural and ordinary meaning

CONTRACTS — Rectification — Intention — Common intention Legislation Cited: Australian Consumer Law 2010 (Cth) Civil Procedure Act 2005 (NSW) Oaths Act 1900 (NSW) Uniform Civil Procedure Rules (NSW) Cases Cited: ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; [2003] HCA 18 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart [2019] HCA 13 Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) [2019] NSWCA 11 Category: Principal judgment Parties: Ziejie Cao (Plaintiff)

Shumiao Zhu (Defendant) Representation: Counsel:

F Santisi (Plaintiff)

P Bolster (Defendant)

Solicitors:

GOH Lawyers (Plaintiff)

CS Lawyers (Defendant) File Number(s): 2017/109702 Publication restriction: No

Judgment

Summary 1. Even experienced businessmen can enter into contracts which turn out to be "unfair" to, or improvident for, one of the parties. That outcome does not guarantee legal redress for the party who claims to have come off second best. The law does not always relieve against what, with hindsight, turn out to be bad commercial bargains. These proceedings are an example of such a case. 2. The plaintiff ("Mr Cao") is an investor and property developer. The defendant ("Mr Zhu") is a real estate agent. Mr Zhu had a longstanding relationship with Mr Sam Fayad as the exclusive selling agent for properties developed by Mr Fayad. Mr Zhu persuaded Mr Cao to invest $2,400,000 in a project of Mr Fayad's at Baulkham Hills (the "Baulkham Hills Project"). 3. As a further incentive to Mr Cao to invest in the Baulkham Hills Project, Mr Zhu promised to pay Mr Cao $500,000. Although presented in a number of juridical guises, the only real issue in this case was whether that promise – said to have been made both orally and in writing – was unconditional or whether, as Mr Zhu contended, it was conditional upon Mr Zhu being the exclusive selling agent for the units which comprised the Baulkham Hills Project. In the events which happened, Mr Zhu was not able to fulfil that role because the Baulkham Hills Project was sold, incomplete, to another developer. 4. Mr Cao sues Mr Zhu in contract and under the Australian Consumer Law ("ACL") and also makes a claim, in reply, for rectification. Mr Zhu responds, including by cross-claim, raising by way of defence issues of construction, rectification, and unconscionability under the ACL. In summary Mr Cao simply succeeds on the facts. Mr Zhu's various legal defences fail because Mr Zhu bound himself by deed (the "13 June Deed") to pay the $500,000 unconditionally and "regardless of whether any of the units in the [Baulkham Hills Project] have been sold or not". 5. Mr Cao and Mr Zhu gave evidence of their various conversations that was often in complete disagreement. There were also internal inconsistencies in the evidence of each of them. The case was complicated by their evidence having to be given in Mandarin. I have been left with the impression that at least some, but not all, of those inconsistencies may well have been the result of matters being "lost in translation". Nevertheless, even after allowing for that, I came to the view that I could not rely on the evidence of either of them unless it was corroborated by contemporaneous documents or independent witnesses, was inherently likely or against interest. 6. However, two things were pellucidly clear. First, Mr Cao steadfastly maintained that Mr Zhu's promise was never agreed between them as conditional in the way Mr Zhu alleged. That position was supported by Mr Cao's solicitor, Mr Ngo. Critically, that position was corroborated by the second matter, being that Mr Zhu could not offer any persuasive explanation why two, contemporaneous solemn documents, one of which he (Mr Zhu) prepared and both of which he signed in the course of his dealings with Mr Cao, recorded Mr Zhu's obligation to pay the $500,000 unconditionally. The best Mr Zhu could say was that he had been "negligent" of his own interests. 7. The Court relies primarily on those two documents to conclude as a matter of fact that Mr Zhu's obligation to pay Mr Cao was not conditional upon Mr Zhu being appointed the exclusive selling agent for the Baulkham Hills Project. That factual conclusion fortifies the Court in its fundamental legal conclusion that there is no basis to find that the 13 June Deed should be construed or rectified to give effect to such a conclusion, or to find that Mr Cao's reliance on it is unconscionable. 8. There will be judgment for Mr Cao for $500,000, together with interest and – subject to giving the parties an opportunity to be heard if they wish – costs. Mr Zhu's cross-claim will be dismissed with costs. 9. Mr F Santisi of Counsel appeared for Mr Cao. Mr P Bolster of Counsel appeared for Mr Zhu.