The recent Supreme Court of New South Wales Linjing Fang v Xiaodan Sun & Ors [2014] NSWSC 713 dealt with a claim by an aunt against her niece in respect of the aunt’s investment in a Korean restaurant in Sydney.

The aunt was based in Beijing and sought to invest in Sydney to assist her to obtain the grant of a business migration visa to Australia. The aunt had a niece in Sydney who proposed that the aunt enter into a partnership with a partner in Sydney to acquire and operate a Korean restaurant in Sydney.

The aunt claimed that the niece engaged in misleading and deceptive conduct, which was relied on by the aunt in her acquisition of the restaurant. The aunt also claimed that the niece breached her fiduciary duty to her aunt as the aunt’s representative in Australia.

Having considered the evidence available, the Court found that:

  • the niece represented to her aunt that she could jointly fund the acquisition of the restaurant with the niece’s mother-in-law for a total purchase price of $750,000;
  • the niece was aware that the restaurant was purchased for $450,000, not $750,000, and that the purchase was fully funded by the aunt, and not by joint funding with the niece’s mother-in-law;
  • the aunt relied upon the niece’s representations and would not have entered into the transaction had she known the true situation, and has lost her whole investment as a result; and
  • the niece’s conduct was dishonest.

Further, the Court also found that:

  • the niece was the aunt’s fiduciary with respect to the administration of all the funds the aunt remitted to her from China;
  • the niece was in breach of her fiduciary duty by misapplying the funds to transactions not authorised by the aunt; and
  • the niece is liable to account to the aunt for the full amount of the advances that she misapplied.

The Court ordered, inter alia, for judgment against the niece in favour of the aunt in the sum of $654,850 exclusive of interest.

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