Australia, June 2 -- New South Wales Land and Environment Court issued text of the following judgement on May 2:

1. PAYNE JA: I agree with McHugh JA.

2. STERN JA: I agree with McHugh JA.

3. McHUGH JA: This appeal turns on the construction of a contract between commercial parties and its operation on uncontroversial facts. In order to succeed, the appellant needs to establish a series of related propositions which the language and purpose of the contract do not support. The appeal should be dismissed.

Background

4. In 2017, Fortune Agribusiness Funds Management Pty Ltd (Fortune) was a company associated with the respondent, Mr Zhaoqing Jiang. It was the holder of Crown Leases in respect of two blocks of undeveloped land in the Northern Territory with a total area of 20 square kilometres (the Land). It was intended that another company associated with Mr Jiang, Australian Fulin Agriculture Pty Ltd (the Company), would acquire the Crown Leases from Fortune, as the Company later did.

5. The Crown Leases imposed phased conditions on Fortune to clear, cultivate, prepare and plant specified areas of the Land for commercial crops. Importantly, the leases could be converted into freehold title if the phased development conditions were met. The leases were originally for a term of 5 years expiring on 14 September 2020. The term was extended by a year, and the leases were ultimately terminated on 13 September 2021.

6. The appellant, Mr Guangyi Sui, entered a written agreement with Mr Jiang on 26 May 2017 (the Agreement). This regulated the terms on which Mr Sui agreed to invest $1.5 million in the Company. The Agreement was mostly written in Mandarin. By the time the case reached the primary judge, Stevenson J, the translation into English was agreed.

7. The Agreement is short. The translation is set out in full below. However, it was imperfectly drafted by lay business people. As this Court determined in separate and earlier proceedings involving the same parties (the Earlier Proceedings), the legal meaning of the Agreement departs from the literal meaning of the words used: Sui v Jiang [2021] NSWCA 285 at [42]-[43] per Leeming JA (Gleeson JA agreeing). That being so, before turning to those words, it is convenient to observe by way of overview that the operation of the Agreement may be divided into three periods.

8. In the initial period, cll 2 and 3 provided for two steps to occur.

1) Mr Jiang agreed to transfer to Mr Sui 40% of the shares in the Company. That share transfer occurred on 9 June 2017.

2) Mr Sui agreed to pay $1.5 million into the Company's bank account. Mr Sui paid that money between 9 and 15 June 2017.

9. Also in that initial period, a transfer of the Crown Leases from Fortune to the Company was registered on 18 December 2017.

10. The second period covered the three years to 14 June 2020. Clause 4 of the Agreement provided that Mr Jiang "guarantees the safety of the funds of [Mr Sui] in [the Company] and guarantees an annual return of 10% for three years". It is not disputed that the effect of this provision was that Mr Sui was entitled to receive a cash payment of $150,000 on each of 15 June 2018, 15 June 2019 and 15 June 2020. The first two payments were made; the third was not.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/19689a380863dd8ad5965fbd)

Disclaimer: Curated by HT Syndication.