Australia, June 7 -- New South Wales Land and Environment Court issued text of the following judgement on May 6:

1. The single issue in this case is when RD Beechworth Pty Ltd must repay the $2.5 million it received from each of the plaintiff companies, Long Spring Pty Ltd, and Forevet Flourish Pty Ltd, to assist it to purchase and develop two properties in Pymble, New South Wales.

2. There was no dispute that the plaintiffs loaned money to RD Beechworth after oral conversations between Mr Wei Shu, who controls the plaintiffs, and Mr Zhiyu Ning, who is one of the directors of RD Beechworth. There was also no dispute that, at the completion of the development, the plaintiffs would each receive 20% of any net profits through their shareholding in RD Beechworth.

3. The plaintiffs contended that the loans were repayable within 18 months from the date on which the funds were advanced. RD Beechworth contended that the money was repayable on the sale of the development properties, together with the portion of the net profit. There has been no repayment of any sum, and the development project has stalled due to litigation with the relevant council about the proposed subdivision, and this litigation.

4. For the reasons that follow, I consider the plaintiffs' claim must fail; they are not currently entitled to repayment of the loan sums.

Background facts

5.Mr Wei Shu was born in China. In 2019, he migrated to Australia with his wife, Ms Lihua Lin, and his son, Yikai Shu. Mr Shu speaks Mandarin and does not understand English. He is a very successful businessman, with all his business being located in China. He owns four petrol stations and trades petroleum with an annual turnover worth several tens of millions of Australian dollars. Mr Shu has funded the purchase of at least four residential properties in Sydney for his wife and son, collectively valued at tens of millions of dollars. Mr Shu has incorporated entities "in case" he wants to do business projects. However, Mr Shu denied any knowledge of "details" of the property purchases. Further, Mr Shu denied he had any understanding of property development in China or in Australia.

6. Mr Shu considered himself the "actual controller" of the plaintiffs. However, he is not a director. Instead, his son is the director of Long Spring, and his wife is the director of Forevet Flourish. Mr Shu considered that his wife and son "act following [his] directions if necessary".

7. Also in 2019, Mr Shu was introduced to Mr Ning. Mr Shu met Mr Ning's father when he was inspecting houses for purchase in Sydney. Then, Mr Ning's father invited Mr Shu to his house and introduced him to his son. From the time they met, Mr Shu knew Mr Ning was a property developer.

8. Mr Ning founded the Rudder Group of companies in 2010 with his business partner, Mr Changyang Li. The Rudder Group has been involved in property development and construction activities in New South Wales, Victoria and the Australian Capital Territory. Most of the Rudder Group's developments have been on the upper north shore of Sydney. One of Ms Lin's properties, purchased with Mr Shu's money, is an apartment in Killara, developed by the Rudder Group. Mr Ning's business office is also located there and Mr Shu's family lived at the Killara development previously.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/196a88a4a1169abc14db2611)

Disclaimer: Curated by HT Syndication.