不伦恋骗财案 ShXXg v ZhXXg [2007] NSWSC 8XX

“不伦恋骗财”案

案件涉及金额达到700万澳元

在近年大量的移民潮和留学潮的推动下，许多华 人走出国门来到异国他乡创业留学，其中不乏拥 有巨额财产的富家子弟。 这些家境富裕的小留学生们通常出国的时候，年 龄小、涉世未深，很容易成为“居心叵测”之人 的目标。 本案是一名富家子弟在异国他乡被自己的亲戚控 制并将其父亲的财产高达700万澳元占为己有。 AHL法律在代理此案后成功地解救了该富家子 弟，并成功为当事人夺回700万澳元资产。

Supreme Court of New South Wales

CITATION:  ShXXg  v  ZhXXg  [2007] NSWSC 8XX

JURISDICTION: Equity Division

FILE NUMBER(S): 6XX1/06

HEARING DATE{S): 20, 21 and 22 June 2007

JUDGMENT DATE: 8 August 2007

PARTIES: 
XiXX XX  ShXXg  (P)
RXXg HuX  ZhXXg  (D1)
JiX  ShXXg  (D2)
DaX YXXg LX (D3)

JUDGMENT OF: Young CJ in Eq 

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable


COUNSEL: 
M AldXXXge SC and R TreXXXza (P)
P RXXn and A BaXXXett (D1)

SOLICITORS: AuXXin DuXXill BarXXck (P) WaXXs McXXay Lawyers (D1)


CATCHWORDS: 
EQUITY [96]- Resulting trusts- When arising- Purchase of land- Contributions to purchase price not corresponding with legal interests created by transfer of title- Plaintiff father provides money so that second defendant son can purchase properties- Properties purchased in name of first defendant- First defendant retains properties after son ends their relationship- Plaintiff beneficially entitled to whole of first property and to part of second property. EQUITY [97]- Resulting trusts- When arising- Loan for designated purpose- Failure of purpose- Plaintiff invests in business carried on by first and second defendants- Business sold by first defendant and proceeds distributed to third defendant allegedly in repayment of debt- Debt not proven- Plaintiff beneficially entitled to his share of proceeds of sale.

LEGISLATION CITED: 
Conveyancing Act 1919, s 66G
Supreme Court Act 1970, s 56

CASES CITED: 
Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109
Barnes v Addy (1874) LR 9 Ch App 244
Hayim v Citibank NA [1987] AC 730
Lidden v Composite Buyers Ltd (1996) 67 FCR 560
Ramage v Waclaw (1988) 12 NSWLR 84

DECISION: 
First subject property to be held on trust for and to vest in plaintiff. Second subject property to be sold, plaintiff to receive 20.5% of proceeds, remainder to be held on trust for first defendant. Judgment against first defendant for $570,000 plus interest.


JUDGMENT: 


IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


YOUNG CJ in EQ


Wednesday 8 August 20076XX1/06 –  SHXXG  v  ZHXXG 

JUDGMENT

1 HIS HONOUR: The plaintiff seeks to recover from the first defendant four pieces of property, namely: (A) Unit 1XX7, 3XX Sussex Street, Sydney; (B) No 3 Crick Street, Chatswood; (C) $320,000 invested with TeaXXair Australia Pty Ltd; and (D) an alleged loan of $250,000.

2 At all material times the plaintiff has lived in Hong Kong. The first defendant, a female person, is an Australian citizen living in Chatswood. In 1999, the first defendant was married to the plaintiff's nephew, whose Anglicised first name is Nick. The plaintiff has one child, an adult son named JiX. In 1999, JiX was to come to Australia to study. All parties agreed that JiX, the second defendant in these proceedings, would live with Nick and the first defendant.

3 As things worked out, the first defendant and Nick separated on 18 January 2004 and divorced in 2005. The first defendant and JiX formed a romantic relationship and a daughter, Dorothy, was born of this relationship in February 2006.

4 It is quite clear from the evidence that the plaintiff was shocked at the birth of this child. JiX returned to China and the plaintiff sought to recover the moneys that he had sent to Australia, these moneys having found their way into the four pieces of property I referred to earlier.

5 I will need to go through the acquisition of the four pieces of property shortly. However, I first need to spend a little time on preliminary matters.

6 There is no doubt at all that the source of the funds for the four pieces of property, so far as the first defendant is concerned, was JiX. She says that at all material times she believed that the moneys were JiX's. The plaintiff challenges that belief on the basis that she must have known that at no stage had JiX ever been in employment or had any moneys of his own apart from those obtained through his involvement in small business ventures in Australia with the first defendant and others. The first defendant also alleges some gifts from JiX to her when they were in a permanent de facto relationship.

7 The plaintiff, in his statement of claim, said that JiX initially was provided with the moneys by the plaintiff for particular purposes, principally the provision of a home so that the first defendant and Nick would not have to rent premises in which they could accommodate themselves and JiX during JiX's stay in Australia. He says that JiX was a trustee for him of those moneys. JiX paid them to the first defendant, or alternatively, provided the moneys so that property could be acquired in the first defendant's name. The plaintiff accepts that the initial reason for this may well have been honourable in that the first defendant, as an Australian citizen, could acquire property and operate Australian bank accounts without the restrictions that might have been applied to JiX. However, he says that there was a resulting trust back to him, or alternatively, that the first defendant in collusion with JiX and knowing of the trusts, abstracted the funds which went into the four properties.

8 This last matter has really caused more trouble than it is worth.

9 Ms P RXXn of counsel, who appeared for the first defendant with Ms A BaXXXett, submitted that there was absolutely no evidence of any fraud, dishonesty or collusion by the first defendant at the time when she acquired the properties in question so that that alternative claim must fail. Mr M AldXXXge SC who appeared for the plaintiff with Mr R TreXXXza, said as to this that that claim was only a back-up claim made at the suggestion of a judge who had dealt with the matter at an interlocutory hearing, and that the principal claim was one of simple resulting trust. I believe that Mr AldXXXge is quite correct in this and that one should approach this case without being too distracted by the alternative claim.

10 What is more significant is that the plaintiff, if his case is proved, is the beneficiary under a head trust, the trustee being JiX and the trust moneys have been lost by JiX with the first defendant. Ordinarily, one would have expected JiX to be the plaintiff. There is evidence that he has declined to be the plaintiff and he has been added as a defendant. However, we have the odd situation that JiX swore an affidavit for the plaintiff. He has been refused a visa to return to Australia and the cross-examination of him by Ms RXXn was taken by video link from China.

11 As is said in Ford and Lee, Principles of the Law of Trusts (Loose-leaf edition) [1790] at p 1-10055 of Update 28:

"If the trustee does not sue to protect the trust property, the beneficiary may in 'exceptional circumstances' ... sue to enforce the trustee's right of action against the third person for injury to the trust property, joining the trustee as defendant in the proceedings."

That statement is fully supported by the authorities such as Ramage v Waclaw (1988) 12 NSWLR 84 (Powell J) and Lidden v Composite Buyers Ltd (1996) 67 FCR 560 (Finn J). See also Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 at 129.

12 In Hayim v Citibank NA [1987] AC 730, 748, Lord Templeman, giving the decision of the Privy Council said:

"A beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owned by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate."

The present circumstances seem to me to be within the "special circumstances" referred to by the House of Lords and by the two eminent Australian judges whom I have mentioned.

13 I turn, accordingly, to the four pieces of property.

14 (A) Unit 1XX7, 3XX Sussex Street, Sydney. The deposit of $32,000 was paid by JiX who wrote a cheque dated 24 September 2001 from his account with the ANZ Bank for $32,000. On 11 October 2001, he wrote another cheque on that account for $9,900.50 for stamp duty. On 2 November 2001, he wrote a cheque on the same account for $289,371.42 for the balance of the purchase price.

15 In order for all these cheques to be met, the plaintiff transferred $499,990 to JiX's bank account with the ANZ Bank. The title was taken in the first defendant's name.

16 The plaintiff's evidence is that in 2001 Nick said to him, "Renting is not profitable these days in Sydney as Sydney's property market has a potential to increase in value in the near future. It is currently under-valued. Besides, the Australian currency is quite low against the US these days, you can kill two birds with one stone by purchasing a property in Sydney to save JiX's rental and at the same time make an investment." He says that later Nick and the first defendant telephoned and said, "In our view, 1XX7/3XX Sussex Street, Sydney, should be a sound investment." He transferred the money to buy the unit and a few weeks after it was purchased, Nick told him that the unit had been purchased in the first defendant's name. He asked the first defendant why this was so and she said there were a number of reasons for it and the fact that he was not domiciled in Australia would create difficulty.

17 Apart from denials of the ultimate fact, that is, that the property is held on trust for the plaintiff, the first defendant admits or states she does not admit the facts which the plaintiff has proved that the moneys came from him and the property was purchased in the way he has described.

18 The situation appears to be that of a classic resulting trust.

19 I should mention two other matters.

20 In May 2004, the plaintiff requested that this unit, together with another unit in the same building, No 2207, be transferred back to him or sold and the cash transferred to him. This happened with respect to Unit 2207 though it would appear that this involved some forceable repossession. However, with respect to Unit 1XX7, JiX said that the first defendant's parents were tenants of 1XX7 for a rental of $300 per week, that they would like to purchase the property and that it would be best if the property remained in the first defendant's name until the sale to avoid double stamp duty. The plaintiff said, "Alright then. But you must get the money from her as soon as possible."

21 JiX returned to China on 4 April 2006. The plaintiff first learnt about JiX's relationship with the first defendant in about June 2006. It was at that stage that the plaintiff demanded that the first defendant return the properties or their proceeds to him. She has not complied with this request or demand. Indeed, she seems to be taking the position that she always thought that the properties belonged to JiX and they were gifts to her. I will return to this in due course.

22 The second matter is that para 11 of the final version of the statement of claim alleges:

"The first defendant has charged unit 1XX7 to Westpac Banking Corporation as security for a loan by Westpac Banking Corporation to the first defendant in the sum of $320,000."

This is admitted in the defence. The plaintiff says that the moneys received from Westpac are moneys had and received by the first defendant for his benefit, a matter that the first defendant denies.

23 The first defendant was cross-examined about this loan and it appears from T98 that she borrowed the money in August 2006, that is, after she knew that the plaintiff wanted the property back. It was the maximum she could borrow. It was paid into her Westpac Rocket Home Loan Account and she used it by paying it into her father's Commonwealth Bank Account. She did this at the same time as she borrowed substantial moneys over Crick Street, to which I will come shortly. The first defendant's father then transferred the $320,000, plus the money from Crick Street, to the first defendant's bank account with Citibank in Hong Kong. She then invested the moneys "to buy a number of financial products in Hong Kong" in her name.

24 The money or the Hong Kong investments are obviously held on trust ultimately for the plaintiff. It is completely indefensible that a woman who knows that the ultimate beneficiary is seeking to get back his property, mortgages it for the maximum and then uses the proceeds for investments in her own name.

25 (B) No 3 Crick Street, Chatswood, is a house which is registered in the first defendant's name, and indeed, is the house in which she and Dorothy are currently living. The plaintiff says that the deposit of $120,000 was paid on 28 September 2005 by a cheque from JiX's account with the ANZ Bank for $120,000. On 10 October 2005, JiX withdrew $524,126.39 from his ANZ Term Deposit Account and deposited that sum into his ANZ V2 Plus Account. On 15 November, he paid $284,687.04 from that account so that his contribution to the purchase of Crick Street, Chatswood, was allegedly just over $400,000. The total purchase price was $1.2 million.

26 The plaintiff did not know anything about the Chatswood property until JiX returned to China in 2006. JiX says that the way the purchase came about was that in about June 2005, the first defendant told JiX that the unit in Sussex Street would be too small after the baby was born "We should move to a good suburb so our baby can go to better schools. Doesn't your dad have a lot of money here? We can buy a free-standing house. It can also become an investment."

27 JiX says that at this stage he had lost his passport because his passport and visa had been stolen and he believed he was in Australia illegally. He believed that his father would refuse another property being put into the first defendant's name and that he did not want the property in his name because of his illegal residency. JiX says that he and the first defendant negotiated and agreed to purchase the house for $1.2 million at Crick Street, Chatswood. He gives details as to how he paid $400,000 and acknowledges that the first defendant borrowed $800,000 to pay the balance. The borrowing was made from the Macquarie Bank. JiX says that the money that he used came from funds that his father had had on deposit with the HSBC.

28 The first defendant says that she actually contributed $100,000 towards the deposit for Crick Street. She says that (para 56 of her affidavit of 14 December 2006) "On 25 July 2005 I transferred $100,000.00 from my Commonwealth Bank account to JiX's account. This was the amount from my term deposit which matured on 19 July 2006 [sic].” The bank statement does show a withdrawal of a term deposit which was banked into that account and a withdrawal from the account of $100,005.40 on 25 July 2005. Exhibit JS12 to JiX's affidavit shows that that money came into his ANZ Access Advantage cheque account with the ANZ Bank.

29 Similarly, the first defendant says that $50,000 came from her parents and was deposited into JiX's account, that being the ANZ Access Advantage cheque account, on 23 September 2005. Again, the corresponding entry is there in JiX's account. It is these two amounts which put the account in credit for the sum of $165,648 which enabled $120,000 to be paid out on 5 October.

30 It is clear from JiX's affidavit (para 78) that this was the cheque for the deposit.

31 This evidence shows that he must be mistaken that these moneys were moneys of the plaintiff.

32 This also throws some doubt as to whether the conversation took place as deposed by him in para 75 where the first defendant said, "You pay $400,000 and I will obtain a home loan of $800,000". She certainly obtained the home loan of $800,000, but the evidence would appear to show that $120,000, and indeed the stamp duty, came from the first defendant rather than the plaintiff.

33 JiX says, accordingly, that he expended $934,874.54 on the Chatswood property, the entirety of which belonged to his father, the plaintiff.

34 JiX then says that he paid a further $280,007.50 on 18 November 2005 from his ANZ V2 Plus Account to the first defendant. Again this came from his father's money. He did this because the first defendant said that he should leave as much cash in her loan account as possible in order to reduce interest repayments.

35 On 9 December 2005, the HSBC transferred from the plaintiff's HSBC bank account $US710,000.00 to JiX's HSBC account. Part of this sum was, in March 2006, transferred to JiX's ANZ Bank account and the majority of that money was, on 24 March 2006, used to write a cheque for $250,000 Australian to the first defendant.

36 The first defendant used the $280,000 and the $250,000 to reduce her Macquarie Bank loan. She then reborrowed $600,000 in August 2006 after she knew that the plaintiff wanted his money returned, put that sum into her father's name, and then had it transferred to her Sydney bank account in Hong Kong where it went into "investments" in her name.

37 The plaintiff says that he is entitled to approximately a one-third interest in the Chatswood property, because he supplied just over $400,000 of the $1.2 million purchase price, and furthermore, that the $280,007.50 is held on trust for him. The $250,000 is the loan referred to in property (D).

38 The first defendant attempts to answer this case by saying that the purchase of Chatswood was made by arrangement between herself and JiX, that JiX paid for the one-third and she borrowed the remainder. However, it is quite clear on the evidence that the first defendant realised that the moneys being used were the moneys of the plaintiff. JiX says, as I have set out, that in June 2005, the first defendant made the statement in connection with the purchase of Crick Street, that the plaintiff had a lot of money in Australia.

39 This is a little confusing as if the first defendant’s evidence as to the deposit is correct, the effect is that the plaintiff is entitled to 25/120 or 20.5% of Crick Street.

40 In cross-examination, Mr AldXXXge put to the first defendant at T83:

"Q. And you knew that JiX never had any money of his own in Australia, apart from what he got from time to time from the pizza shop?

A. That's correct.

Q. So all of the money that JiX spent on you, you always knew it was his father's money, didn't you?

A. Yes."

T84:

"Q. You knew, at the time that 2207 was purchased in your name, it was purchased with the money of the plaintiff, don't you?

A. No. ... I didn't think it was JiX's father's, although I knew it is his father's money, but I didn't think, I thought it is JiX, because JiX said – we did that together, we went to the auction together and JiX said: I will buy a property, I will buy this property."

Again at T85-6:

"Q. You knew that the money that JiX provided for the purchase of Crick Street, Chatswood, was money of his father, didn't you, at the time it was handed over?

A. No.

Q. It wasn't JiX's money, was it?

A. It was JiX's investment.

Q. JiX's investment in what?

A. With ANZ Bank. JiX had some investment with ANZ Bank.

Q. But you know that it was his father's money because he had no income?

A. For me it is JiX's money.

Q. You knew it came from his father, didn't you?

A. Yes."

41 What the first defendant appears to be saying is that she had a belief that the money belonged to JiX and it must have been a gift from his father.

42 As I have mentioned earlier, the second defendant, JiX, was cross-examined by Ms RXXn. There was no challenge to any of the conversations that he deposed to, nor of the source of his money. There was no question directed to him that the plaintiff had given JiX the money which had found its way into the first defendant's name or her properties. There was some cross-examination that some of the money which had been transferred to Australia by the plaintiff was given back to him by JiX so that the plaintiff could gamble at the Casino, but that is as far as it went. Ms RXXn cross-examined the plaintiff (T15):

"Q. Does your son owe you money?

A. He deceived some money out of me.

Q. Have you asked for it back?

A. Yes, I did.

Q. How much have you asked him for?

A. All the money he deceived from me.

Q. How much?

A. All the money. ...

Q. Is it $4 million?

A. No.

Q. Is it more than $2 million?

A. About that. ...

Q. You sent your son a lot of money while he was living in Australia, didn't you?

A. Yes, but not for him.

Q. But you sent it to him, didn't you?

A. Sent [it] to his account."

43 All the evidence suggests that apart from the pizza shop which I will deal with when dealing with property (C), all the money used by JiX for Crick Street was the plaintiff's money. There is no evidence of any authority that JiX had to use that money to put it into the Chatswood property, or that the father made any gift of the money. The money appears to be held by JiX as trustee on behalf of his father with the proviso that it could be used for investment in a house or unit in which JiX (and Nick and the first defendant) could live to minimize outlay on rent.

44 Although the first defendant seems to acknowledge that the plaintiff’s interest is one-third, on the evidence, the plaintiff has not proved his case beyond 20.5%.

45 The father is beneficially entitled to between 20.5% and one-third of Chatswood.

46 The case has only been proved as to 20.5%. Thus the proper order is that under s 66G of the Conveyancing Act, 1919 the property be vested in trustees for sale and sold and the proceeds distributed as to 20.5% to the plaintiff and the balance to the first defendant. However, the amount due to the first defendant must be frozen until she accounts for the other moneys referred to in this judgment.

47 (C) TeaXXair Pty Ltd was incorporated on 16 January 2003. The plaintiff, the first defendant, JiX and Nick were its directors. On 23 January 2003, JiX paid $320,000 to TeaXXair from the plaintiff's funds. This sum was paid to TeaXXair for the purpose of its acquiring the business of Lavera Pizza and Pasta at Glebe. The plaintiff says, and the first defendant denies, that that payment was a loan to TeaXXair repayable on demand. The plaintiff says, and it is admitted, that in or about April 2005 the business was sold by TeaXXair for $360,000. That sum was then appropriated by the first defendant who paid it to the third defendant, her mother. The plaintiff says that the $320,000 held by the mother is held on trust for him.

48 The defence admits that JiX paid $320,000 to TeaXXair in January 2003. It is not admitted that the moneys were the moneys of the plaintiff. JiX's evidence is that he and the first defendant went to the office of Fair Trading to register a business name and decided to use the word "TeaXXair" because the plaintiff's company in Hong Kong was called TeaXXair Trading. He says that he paid $300,000 into the business on account of his father, who was to have a 75% equity. The remaining 25% was to be held by Nick, the first defendant and the first defendant’s younger sister. Again, there is a discrepancy in the evidence and I will take the lower amount.

49 In para 34 of her affidavit of 14 December 2006, the first defendant said: "Lavera was sold for $360,000 ... . We distributed the proceeds of sales to the shareholders proportionally to their shareholdings." The first defendant seems to allege that JiX or the plaintiff was a 75% shareholder rather than a person who had lent money. However, I have never seen any records of the company to show that shares were issued. If they were and if the $360,000 was somehow or other distributed as a return of capital (the company was struck off), then the evidence shows that neither the plaintiff nor JiX received any money. In fact, the $360,000 went to the first defendant's mother.

50 In her second affidavit of 5 June 2007, the first defendant said: "The total amount invested and lent to TeaXXair was $720,000. When it was sold the proceeds was just $360,000. $300,000 was repaid to my mother and the balance went to JiX." Mr AldXXXge asked at T95:

"Q. In your first affidavit there was no mention of $300,000 being repaid to your mother, was there?

A. No, I didn't mention.

Q. And that's because that’s something you thought of between 14 December 2006 and 5 June 2007, wasn't it?"

After a little prevarication the witness said:

"No, it wasn't. It was the truth."

Q. You caused TeaXXair to be deregistered, didn't you?

A. Yes.

Q. You caused it to be deregistered on 27 April 2006?"

The witness said that that was about the right time. She was then asked to agree that the latest accounts of TeaXXair show that the currently liabilities were only $215,000 and asked how there could be a debt to the first defendant's mother if those accounts were correct.

51 The cross-examination continued and showed that the bank cheque used to pay $300,000 to the first defendant's mother was in fact paid in March 2005 before the 2005 accounts were finalised. The first defendant still insisted that she was paid out of the final proceeds of sale.

52 Although the first defendant purported to say that she was a little confused about all these money matters, it was a fact that the first defendant was very familiar with accounts and indeed, had an MBA degree from a university, see T89.

53 The third defendant gave evidence. She was put forward as handling the books of the TeaXXair Australia business. She gave evidence under cross-examination that she had never worked as a book-keeper. She used to be a warehouse keeper when she was living in China. The cross-examination (at T139) went like this:

"Q. You say you lent them $300,000 whilst this business was operating for two years?

A. Yes.

Q. This business was losing $5,000 a week?

A. A little more than $3,000."

She was then shown a document which showed that there was a profit between April and November of 2003 of $102,940 and was asked how it came that she wrote that down to which she said, "They told me". Then Mr AldXXXge asked:

"Q. You knew they had made a profit and your evidence that you lent them a hundred thousand dollars because they were making a loss is just a lie, isn't it madam?

A. No, it was not."

54 Although the third defendant received on the books some salary of $18,000 she said she never worked in the pizza business, did not receive any salary and only assisted when they were short of dishwashers. The source of funds from which the third defendant could have advanced $300,000 was never revealed. In my view the whole story of the $300,000 is inherently improbable. It seems to me that the criticism is right that the first defendant thought up this excuse between her first affidavit and her affidavit of June 2007 and there is virtually nothing to corroborate it.

55 There is no doubt that the business of TeaXXair was sold for $360,000 and that the company was solvent when that sum was received. It would appear that there has been an informal winding up, but the money has been distributed completely to the first defendant. Whether the plaintiff was a lender or a shareholder, he received nothing.

56 The balance sheets of TeaXXair Australia are in evidence as PX10. It is rather difficult to reconcile them with the document PX16. The balance sheet for 30 June 2004 shows that the Australian TeaXXair made a loss of $102,874, yet PX16 headed "First-Round Distribution for Shares" says that a profit was made between April and November 2003 and this was used to pay dividends on shares of $75,000 and bonuses of $25,000.

57 The balance sheets, however, for all years show that the issued capital was only $100. Accordingly, it is very difficult to see how there could have been subscriptions for shares by the plaintiff or JiX of $300,000. It is hard to reconcile the balance sheets with the loans made but the balance sheets for all three years of trade show that there were substantial loans made to the company. The only conclusion that one can draw is that the moneys paid in by JiX from the plaintiff's moneys were loan funds.

58 This means that TeaXXair Pty Ltd (the Australian company) owes a debt to the plaintiff or to JiX as trustee for the plaintiff. One would think that what needs to happen is for TeaXXair Pty Ltd to be reregistered, put into liquidation, for the liquidator to then sue the first and third defendants for the money and for it then to be paid over to the plaintiff. However, under s 56 of the Supreme Court Act 1970, the Court is supposed to give a just result with the least technicality. It may be that it is simpler to simply order that the first defendant pay the $320,000 for the plaintiff.

59 So far as the third defendant is concerned, I do not accept that the moneys paid to her were a repayment of a loan. They were moneys due to the plaintiff which should have been paid to him. The third defendant must have known that she was merely laundering money for her daughter. However, I do not consider that there is sufficient evidence to show that the third defendant knew that the moneys which her daughter was laundering were moneys of the plaintiff or that she was receiving them in breach of trust. The first defendant seemed to use her parents for money laundering purposes generally, and as I say, I do not consider that the evidence goes any further than that. Accordingly, I do not see how the material is strong enough for me to make an order against the third defendant. However, I do not believe her evidence in the witness box. She was willing to lend her name to the first defendant to assist in hiding money and I do not consider that she should receive any costs of these proceedings.

60 (D) The fourth transaction is the $250,000 that was paid by JiX either directly to the Macquarie Bank or via the first defendant to reduce the loan from the Macquarie Bank to the first defendant in respect of No 3 Crick Street. The plaintiff says, and JiX says, that this was never ever authorised by the plaintiff. The reason why the money was paid by JiX appears to be that he considered the first defendant's request reasonable that the loan interest should be offset against the deposit.

61 The first defendant denies these allegations. However, JiX's evidence supports it and there is nothing in the first defendant's evidence which counters it. The $250,000 debt must be repaid.

62 Accordingly, there must be an order with respect to Unit 1XX7 in Sussex Street that it be held on trust for the plaintiff and vest in the plaintiff. With respect to Crick Street, there should be an appointment of trustees for sale to sell the property and pay 20.5% of the proceeds to the plaintiff and to hold the balance in trust pending further order of the Court. Unless there is some objection to this procedure, there should also be judgment against the first defendant for $570,000 plus interest in respect of properties (C) and (D).

63 In addition there should be a declaration that the assets in Hong Kong into which the $320,000 borrowed from Westpac over Unit 1XX7 and the $280,000 borrowed over Crick Street were used. These investments are listed in para 16 of the first defendant's affidavit of 12 January 2007. It would seem that the term deposit of currently $612,937.12 is the asset represented by the moneys borrowed from the banks.

64 It may be that the $250,000 loan can also be traced through to the Hong Kong investments. I will leave this open for the short minutes stage. There may be some difficulty in repatriating the money from Hong Kong and it may be that some equitable execution will have to be arranged.

65 As I said at the commencement of this judgment, Ms RXXn spent considerable time in her submissions, both oral and written complaining about the inadequacy of the pleadings which went to establishing a liability under the principle in Barnes v Addy (1874) LR 9 Ch App 244.

66 As I hope my reasons have shown, there is no need to get into this area because the case is a clear one on the facts for a simple resulting trust. The plaintiff never ever intended that the first defendant should end up with almost $2 million of his property.

67 However, it was put that the pleadings do not indicate any dishonesty on behalf of the first defendant. So far as the resulting trust case is concerned, that is right, but it is irrelevant.

68 However, I said earlier that I would deal with the question of the first defendant's behaviour whether honest or otherwise. It seems to me that when one knows the following: (a) that one's consort has virtually no money of his own and that all his money comes from his father; (b) that when the father asked for the money back the person who has it borrows on the trust assets to the hilt, moves the money from her own name to that of her parents and then off-shore; (c) launders money from the trading company by deregistering it and giving it to her mother – one can only explain that conduct by dishonesty or by a misguided sense of self protection.

69 I say this latter because there appears no doubt that JiX is Dorothy's father. I can understand how the relationship between his son and his cousin's ex-wife shocks the plaintiff. However, the withdrawal of JiX to China means that JiX is not going to be able to support Dorothy in any way. The first defendant, as what is nowadays called a “single mother” with a very young child needs support, and the only way she is going to get it is from the investments. I can thus understand why she may have acted in an endeavour to quarantine the plaintiff's money in such a way that she could continue to have an income and a house and a roof over her head.

70 The consequence of selling Chatswood is that the first defendant will have to vacate that property and she says she has nowhere else to live.

71 I did engage in some conversation with counsel as to whether these facts raise some sort of reason why full relief should not be given to the plaintiff, but neither counsel was willing to pursue that line.

72 I should add that the reason why JiX cannot return to Australia does not appear to be solely the plaintiff's doing. The first defendant seems to have sponsored JiX in some respect. JiX's passport and visa were stolen, he paid, on his evidence, a fellow student $10,000 to fix it up with the Department, but instead the fellow student stole the money and the passport. JiX accordingly was in Australia as an illegal immigrant for some time, and the first defendant told the Department of Immigration of some of the facts and although she says that she would very much like JiX to come back to Australia and look after his daughter, I think that part of the reason that the Immigration Department will not issue him with a visa probably is due to the actions of the first defendant. However, it may well be that the first defendant had to act the way she did because of Australia's immigration laws.

73 I have no doubt at all that the plaintiff is now keeping JiX in China and that JiX has not got sufficient money of his own to leave China, no matter what his feelings may be. However, I do not consider that the only reason why JiX is in China and not Australia is because of the plaintiff's actions.

74 I will stand the matter over for short minutes to be brought in. I will fix 9.50 am on Monday 20 August, but if this date is not suitable to counsel, then some other date that week or the following week can be arranged with my Associate.

********************