Federal Court of Australia

Shenzhen Xinhe Hongshi Investment & Consultancy Co Ltd v Shandong Ruyi Technology Group Co Ltd (No 3) [2026] FCA 1214

ORDERS

THE COURT ORDERS THAT:

1.    Within 14 days, the parties provide to Chambers proposed orders (whether agreed or competing) to give effect to the reasons for judgment published today.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

STEWART J:

A.     Introduction

1    The plaintiff and the defendant are both corporations registered in the People’s Republic of China.

2    The plaintiff is Shenzhen Xinhe Hongshi Investment & Consultancy Co Ltd, which I will refer to as the plaintiff.

3    The defendant is Shandong Ruyi Technology Group Co Ltd, which I will refer to by the name it is generally referred to as, namely Ruyi. Ruyi’s full name is sometimes translated from Chinese to English as Shandong Ruyi Science & Technology Group Co Ltd. [CB 4/120/52]

4    The plaintiff is a judgment creditor of Ruyi under final and conclusive judgments of courts in the PRC. The plaintiff seeks orders enforcing those judgments in Australia. I am satisfied, and Ruyi does not contest, that the judgments meet the common law criteria for enforcement in Australia and should be enforced here.

5    Because Ruyi has assets in Australia, in particular a substantial loan account in an Australian subsidiary, the plaintiff also seeks an order winding up Ruyi in Australia. A winding up order would enable a liquidator to bring in any assets that Ruyi has in Australia and distribute the proceeds to its Australian creditors, including the plaintiff which will be a domestic judgment creditor when its Chinese judgments are recognised and enforced here.

6    Ruyi resists that it be wound up. Whether or not the plaintiff should succeed turns principally on whether Ruyi “carries on business in Australia” within the meaning of the definition of a “Part 5.7 body” in s 9 of the Corporations Act 2001 (Cth).

7    It is convenient to deal first with the enforcement of the foreign judgments and then with the question of winding up.

B.     Enforcement of the foreign judgments

B.1.     The applicable principles

8    The Foreign Judgments Act 1991 (Cth) provides a statutory basis for the reciprocal enforcement of foreign judgments (s 5). However, the PRC courts, aside from the Court of Final Appeal and the High Court of the Hong Kong Special Administrative Region, are not listed as courts in respect of which there is the requisite reciprocity: Foreign Judgments Regulations 1992 (Cth), reg 3 and item 13 of the Schedule. In the circumstances, the plaintiff relies on the common law for the enforcement of its judgments against Ruyi.

9    At common law, a foreign judgment is prima facie capable of recognition and enforcement if the following requirements have been met:

(1)    the foreign court exercised jurisdiction of the requisite type over the defendant (also known as jurisdiction “in the international sense”);

(2)    the judgment is final and conclusive;

(3)    there is an identity of parties between the judgment debtors and the defendants in any enforcement action; and

(4)    the judgment is for a fixed, liquidated sum.

(See SK Foods LP v SK Foods Australia Pty Ltd, re SK Foods Australia (No 2) [2012] FCA 1509 at [10] per Emmett J; Bao v Qu (No 2) [2020] NSWSC 588; 102 NSWLR 435 at [26] per Rothman J and the authorities cited there.)

10    The first requirement, that the foreign court have jurisdiction in the international sense, is satisfied where the defendant was personally served with the foreign originating process within the jurisdiction of the foreign court or the defendant appeared to defend against the merits of the case: Bao v Qu at [27].

B.2.     The plaintiff’s foreign judgments

11    On 31 December 2021, the Shenzhen Municipal Intermediate People’s Court, Guangdong Province, gave a judgment in favour of the plaintiff as plaintiff against Ruyi as defendant in the proceeding referred to as (2020) Guangdong 03 Civil Initial No. 3363. The judgment awarded a principal sum of CNY207,533,707.08 plus interest and legal fees totalling CNY217,828,972.64. [CB 4/111/31]

12    On 7 November 2022, the High People’s Court of Guangdong Province in proceeding (2020) Guangdong Civil Final No. 1868 dismissed an appeal from the first judgment. According to the report of the Chinese law expert Liu Yang, “[a]s a matter of PRC law and practice, a first instance judgment is subsumed into a second instance judgment when the former is fully upheld by the latter”. [CB 19/394/17] In the result, I accept, as submitted by the plaintiff, that the Court may strictly speaking be “enforcing” both judgments when making a single order entering judgment for the plaintiff.

13    There were also enforcement rulings in the PRC being:

(1)    an enforcement ruling of the Shenzhen Municipal Intermediate People’s Court, Guangdong Province (2023) Guangdong 03 Enforcement and Preservation No. 951 between, inter alia, the plaintiff (as applicant) and Ruyi (as respondent) dated 4 April 2023; and

(2)    an enforcement ruling of the Shenzhen Municipal Intermediate People’s Court, Guangdong Province (2023) Guangdong 03 Enforcement No. 643-1 between, inter alia, the plaintiff (as applicant) and Ruyi (as a person subject to enforcement) dated 31 May 2024.

14    Recovery under the enforcement rulings was limited to CNY5,661,597.76 between April 2023 and May 2024 and a further CNY2,248,611.93 on 19 August 2025 from frozen shares in the Bank of Ningxia held by Ruyi’s co-guarantor of the original underlying obligations, West (Yinchuan) Financing Guarantee Co Ltd.

15    On 10 July 2025, the plaintiff entered into a debt transfer agreement with Yinchuan Yinxin Rongda Commercial Management Co Ltd, transferring CNY260,039,439.02 of the judgment debt, together with the supplementary and statutory penalty interest accruing on CNY186,780,336.37 (being 90% of the principal amount of the judgment debt), for consideration of CNY166,026,965.66. The plaintiff retained CNY132,073,024.69 of the judgment debt together with the supplementary and statutory penalty interest accruing on CNY20,753,370.71 (being 10% of the principal amount of the judgment debt). The validity of that arrangement was not challenged.

B.3.     The enforcement of the judgments

16    Although it initially resisted enforcement of the judgments, at least in part, ultimately Ruyi admits that the PRC judgments can be enforced against it in Australia – there is no dispute that the relevant requirements have been satisfied. Insofar as the requirement of international jurisdiction is concerned, Ruyi appeared and defended against the merits of the cases against it in the PRC both at first instance and on appeal. I am accordingly satisfied that jurisdiction in the requisite sense is established.

17    Ruyi accepts that as at 6 March 2026, the sum of CNY132,073,024.69 together with interest calculated in accordance with the debt transfer agreement was owing under the judgments. That sum amounts to about $28 million.

18    The parties agree that final orders for enforcement of the foreign judgments should not be made until after these reasons for judgment are published. That is to give them the opportunity to agree, or prove, final figures including in relation to pre-judgment interest as at the date of judgment. I will give them that opportunity.

C.     Winding up RUYI: general principles

19    At this stage, it is convenient to identify the applicable principles in a general way.

C.1.     “Part 5.7 body”

20    Section 583 of the Corporations Act confers a power on the Court to wind up a “Part 5.7 body” where, relevantly, the Part 5.7 body is “unable to pay its debts” (s 583(c)(i)) or “if the Court is of opinion that it is just and equitable that the Part 5.7 body should be wound up” (s 583(c)(ii)). Section 585 sets out a range of circumstances in which a Part 5.7 body “is taken to be unable to pay its debts”.

21    The part of the definition of “Part 5.7 body” in s 9 of the Corporations Act that is presently relevant, and which the plaintiff is required to establish is satisfied in respect of Ruyi, is that in para (b)(ii), namely that Ruyi is “a registrable body that is a foreign company and … is not registered under [Div 2 of Pt 5B.2] but carries on business in Australia”. The only part of that definition that is in contest is whether Ruyi “carries on business in Australia”.

C.2.     The meaning of “carries on business in Australia”

22    In s 9, “carry on” in relation to a business is defined as having a meaning affected by Pt 1.2 Div 3. Part 1.2 Div 3 has a number of sections dealing with “carrying on business”. Relevantly, s 20 provides that a reference to a person carrying on a business includes them carrying on a business “whether alone or together with any other person or persons”. Also, by s 21(2)(b), a reference to a body corporate carrying on business in Australia includes it “administering, managing, or otherwise dealing with, property situated in Australia … as an agent, legal personal representative or trustee, whether by employees or agents or otherwise”. That is a particularly broad basis for carrying on business, particularly having regard to the broad definition of “property” in s 9 which includes “any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action”. However, s 21(3) provides that despite subs (2), a body corporate does not carry on business in Australia merely because it does one of a number of different activities set out in the nine paragraphs to subs (3) including, relevantly, if it: holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs (para (b)); effects a sale through an independent contractor (para (d)); elicits or procures an order that becomes a binding contract only if the order is accepted outside Australia (para (e)); or invests any of its funds (para (j)).

23    Despite the provisions of Pt 1.2 Div 3, “[t]here remains scope for the operation and application of territorially based concepts of carrying on business derived from the general law”: Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd, in the matter of Application of Campbell [2005] NSWSC 544; 54 ACSR 111 at [36] per Barrett J (Gebo Investments); Norcast Sárl v Bradken Ltd (No 2) [2013] FCA 235; 219 FCR 14 at [254] per Gordon J.

24    Because s 583(c)(i) specifically provides for winding up a Part 5.7 body that “has been dissolved or deregistered [or] has ceased to carry on business in this jurisdiction”, it must follow that the winding up power is enlivened in respect of an entity that previously carried on business in Australia but which no longer does so: Australian Securities and Investments Commission v Edwards [2004] QSC 344; 22 ACLC 1469 at [41] per McMurdo J; Gebo Investments at [23]-[25]. The plaintiff accepts that the extent of any passage of time between when the Part 5.7 body last carried on business in Australia and the commencement of the proceeding for its winding up may be a relevant consideration in the exercise of the Court’s discretion in ordering a winding up. Equally, Ruyi accepts that it is not necessary for the plaintiff to establish that Ruyi carried on business at the time that the proceeding was commenced, or at any particular time.

25    As a general proposition, there are two ways that a foreign entity may be “carrying on business in Australia” in the relevant sense. First, it may be carrying on business in Australia directly. That may be because of its own acts within the jurisdiction or alternatively through an agency relationship, where the acts of the agent are attributed to the principal and so in effect the agent is said to be doing the principal’s business (including on the extended agency basis reflected in s 21(2)(b) referred to above). Second, the foreign entity may be carrying on business in Australia indirectly through some other entity. This may be instead of or in addition to carrying on business directly, depending on how the foreign entity has structured its affairs. In cases involving corporate groups (in particular a foreign parent and a local subsidiary), there may be no agency relationship but it may be the case that the foreign parent has disregarded the corporate boundaries to such a degree that it can be said that in reality it is itself carrying on the relevant business in Australia.

26    What amounts to “carrying on business in Australia” within the definition of Part 5.7 body in the Corporations Act was considered at length in Tiger Yacht Management Ltd v Morris [2019] FCAFC 8; 268 FCR 548 (Tiger Yacht). Relevant principles extracted from the judgment of the Court per McKerracher, Derrington and Colvin JJ are the following:

(1)    The expression “carrying on business” may have different meanings in different contexts, but when used to ensure a jurisdictional nexus as a matter of comity it will have a meaning informed by the requirement to ensure there is sufficient connection with the country asserting jurisdiction: at [50] citing Luckins v Highway Motel (Carnarvon) Pty Ltd [1975] HCA 50; 133 CLR 164 (Luckins) at 178 per Gibbs J.

(2)    Whether a company is carrying on business in Australia is a question of fact: at [50] citing Luckins at 186 per Stephen J.

(3)    Having engaged in a single transaction or a small number of isolated transactions will not necessarily be sufficient to amount to carrying on business; each case will depend on its own facts: at [50] citing Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6; 259 FCR 514 at [99] per Nicholas, Yates and Beach JJ, and [52] citing Hope v Bathurst City Council [1980] HCA 16; 144 CLR 1 at 8 per Mason J.

(4)    A company may be carrying on business in Australia even though it does not have an identifiable place of business within Australia: at [53] citing Bray v F Hoffman-La Roche Ltd [2002] FCA 243; 118 FCR 1 (Bray) at [63] per Merkel J.

27    In Tiger Yacht it was also said that the activities which are said to amount to carrying on business “must form a commercial enterprise”: at [51] citing Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196; 337 ALR 647 at [197] per Edelman J discussing s 5(1)(g) of the Competition and Consumer Act 2010 (Cth). Justice Edelman had said that the series or repetition of acts (so as to amount to “carrying on”) “will commonly involve ‘activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis’” (emphasis added, quoting from Mason J in Hope v Bathurst City Council at 8-9). Consistent with that observation, and as s 18(a) of the Corporations Act makes plain in respect of “carrying on business” in that Act, it is not a necessary element that the business in question is conducted for profit. A series of acts or activities may amount to carrying on a business even if they are undertaken other than as a commercial enterprise for profit – they may be undertaken for a charitable or other non-commercial (ie non-profit motivated) purpose. The present case does not call for further consideration of that issue.

28    In addition to what was said in Tiger Yacht, a company may be found to be carrying on business in Australia even though the bulk of its business is conducted elsewhere: TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd, in the matter of TCL Airconditioner (Zhongshan) Co Ltd (No 2) [2019] FCA 257; 369 ALR 192 at [19] per McKerracher J citing Dunlop Pneumatic Tyre Co Ltd v Actien-Gesellschaft Fur Motor Und Motorfahrzeugbau Vorm Cudell & Co [1902] 1 KB 342 where Collins MR (Romer and Mathew LJJ agreeing) found that the presence of a foreign corporation at a trade show for only nine days was sufficient to amount to carrying on business.

29    It is not a necessary requirement of carrying on business in Australia that there be “some physical activity in Australia through human instrumentalities”, but rather “the territorial concept of carrying on business involves acts within the relevant territory that amount to, or are ancillary to, transactions that make up or support the business”: Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 224; 258 FCR 190 (Valve Corp FCAFC) at [149] per Dowsett, McKerracher and Moshinsky JJ qualifying what had been said in Gebo Investments at [33]. That approach requires a focus on the transactions making up the business: Facebook Inc v Australian Information Commissioner [2022] FCAFC 9; 289 FCR 217 at [83] per Perram J, Allsop CJ and Yates J agreeing.

30    It is trite that a wholly owned subsidiary is a separate legal entity from its parent capable of having its own assets, its own creditors and conducting its own business: Australian Competition and Consumer Commission v Yazaki Corporation (No 2) [2015] FCA 1304; 332 ALR 396 (Yazaki) at [345] per Besanko J, citing Walker v Wimborne [1976] HCA 7; 137 CLR 1 at 6-7 per Mason J and Industrial Equity Ltd v Blackburn at [1977] HCA 59; 137 CLR 567 at 577 per Mason J.

31    In Bray, Merkel J came to consider the circumstances in which a foreign corporation might be said to be conducting business in Australia through a subsidiary. His Honour recognised (at [66]) the independent corporate personality of the subsidiary in accordance with the principle in Salomon v A Salomon & Co Ltd [1897] AC 22 (Salomon). His Honour quoted (at [66]) from Commissioners of Inland Revenue v Sansom [1921] 2 KB 492 at 503 per Lord Sterndale MR where it was said that a legal entity may be acting as the agent of someone else and may really be doing the latter’s business and not its own business at all. His Honour explained (at [69]) Smith, Stone & Knight Ltd v Lord Mayor, Aldermen and Citizens of the City of Birmingham [1939] 4 All ER 116 (Smith, Stone & Knight) and Spreag v Paeson Pty Ltd [1990] FCA 107; 94 ALR 679 as being cases where the subsidiary was not maintained as a distinct and separate entity because the parent had disregarded the corporate boundaries.

32    In Smith, Stone & Knight, Atkinson J identified (at 121) six questions to ask when seeking to decide, as a question of agency, whether business was being carried on by a parent or by its subsidiary. First, were the profits treated as profits of the parent company? Second, were the persons conducting the business appointed by the parent company? Third, was the parent company the head and the brain of the trading venture? Fourth, did the parent company govern the adventure, decide what should be done and what capital should be embarked on the venture? Fifth, did the parent company make the profits by its skill and direction? Sixth, was the parent company in effectual and constant control?

33    In Spreag v Paeson, Sheppard J considered whether one company, Paeson Pty Ltd, carried on the business of an associated company, Componere Pty Ltd, on the basis that Paeson allowed Componere to conduct its business, or it delegated its business to Componere, or Componere was the undisclosed principal of Paeson (at 708). His Honour reviewed the authorities on these questions. Relevantly, his Honour held, first, that Salomon was “still good law” in Australia, and second that no case suggested that Smith, Stone & Knight was wrong (at 711). His Honour then considered that the relevant question to ask was whether the case can be said to fall within the principles expounded in Smith, Stone & Knight. “In other words, what answer should be made, having regard to the facts in this case, to the six questions which Atkinson J asked himself?” (at 711).

34    In ACN 007 528 207 Pty Ltd (in liq) v Bird Cameron (reg) [2005] SASC 204; 91 SASR 710, Besanko J suggested (at [110] and [112]), in the context of agency, that greater relative weight should be placed on the first matter and that “too much emphasis on the other five matters could lead to a result inconsistent with the decision in Salomon”. That is because those matters relate to control and control itself cannot be a decisive indicator of agency – if it were otherwise there would often be an agency between a parent company and its subsidiary or a sole shareholder and their company. But that suggestion of relative weight will not apply to the six questions when asked in the context of whether the parent company disregarded the independent corporate identity of its subsidiary. It is a very different inquiry.

35    Returning to Bray, Merkel J used the six questions identified in Smith, Stone & Knight and the eight factors identified in Adams v Cape Industries plc [1990] Ch 433 at 530-531 per Slade LJ for the Court as relevant considerations in deciding whether the local subsidiary’s activities were to be regarded as those of its foreign parent (at [72], [77]-[81]).

36    In Yazaki, Besanko J identified the factors relied on by Merkel J in Bray in reaching his decision (at [356]) and concluded that those are the relevant matters to consider rather than the matters identified in Adams v Cape (at [359]).

37    In the present case, although the parties traversed a variety of matters that might be said to overlap with matters identified in Adams v Cape and Bray, they focussed on the six questions identified in Smith, Stone & Knight.

D.     Introducing the facts

D.1.     The witnesses

38    The plaintiff relied on the affidavit evidence of Sin Kit Wing Karen who is the General Counsel of the plaintiff’s controlling shareholder. Ms Karen’s evidence deals principally with the foreign judgments issue. To the extent that she deals in her evidence with the winding up issue, that is essentially by way of producing documents such as company searches and the like. She was not required for cross-examination. Neither party made any reference to her evidence in submissions.

39    The plaintiff also relied on the expert evidence of Liu Yang, a qualified PRC lawyer. His evidence is relevant to the foreign judgments issue. He was not required for cross-examination.

40    Ruyi relied on the following witnesses.

41    First, there is Yafu Qiu, the Chairman and Legal Representative of Ruyi. Mr Qiu’s native language is Mandarin. He does not speak or read English. He gave evidence remotely from Hong Kong through a Mandarin-English interpreter in the court in Sydney. Mr Qiu’s evidence was not satisfactory. First, there were real difficulties with the interpretation – it was not possible to be confident that he was properly understanding the questions or whether he was choosing not to give direct or pertinent answers. Second, he was often simply wrong in his evidence as demonstrated by the underlying documents, and when that was pointed out to him he would not acknowledge it. He seemed to regard the whole exercise of giving evidence as an irritation that he should not have had to face. Third, he frequently had no recollection of the details of the events he was being asked about, even when he had dealt with those same events in detail in his affidavits. In the circumstances, I cannot rely on Mr Qiu’s evidence (written and oral) as being accurate or truthful.

42    Second, there is Chenran (aka Arie) Qiu, Mr Qiu’s daughter. Ms Qiu is not on the board of Ruyi, although she is a director of Ruyi’s major shareholder, Shandong Ruyi Fashion Investment Holding Co Ltd. At relevant times, she was also a director of various subsidiaries of Ruyi which I will identify when introducing those companies.

43    Ms Qiu gave evidence mostly in English, although she was assisted by the Mandarin-English interpreter from time to time. She is not fluent in English. She gave evidence remotely from California. Ms Qiu’s evidence was also not satisfactory. First, like her father, she would not acknowledge when she was wrong in parts of her evidence even when that was demonstrated to her from the documents. Second, her answers were often not responsive – instead of answering the question she would revert to a seemingly rehearsed answer that Ruyi did not conduct business in Australia or that the activities she was being asked about were the activities of one or another subsidiary, often not identified, and not the activities of Ruyi. As with her father, I cannot rely on Ms Qiu’s evidence (written and oral) as being accurate or truthful.

44    Third, there is Wayne Materne, the Chief Executive Officer of the Lempriere Group which is comprised of Lempriere (Australia) Pty Ltd (Lempriere Australia) and its subsidiary companies. The Lempriere Group is involved in the operation of a wool trading and processing business through subsidiaries in Australia, New Zealand, Argentina, South Africa, the United States and Bulgaria. Mr Materne gave evidence in English. I find Mr Materne’s evidence to be reliable as to primary facts but much of his evidence was in the nature of conclusions or opinions as to the import of those facts. Such evidence is not admissible.

45    In cross-examination, the plaintiff sought to challenge Mr Materne’s credibility by reference to a management fee in the accounts of FWIDA, a subsidiary of Ruyi (discussed in more detail below), but I reject that challenge. Mr Materne’s evidence was clear that he did not recall the relevant transaction and “would have to find out what that amount is” (T200:6-18).

46    I also do not draw any inferences from the fact that former employees of subsidiaries of Ruyi, in particular Anthony (Tony) McKenna and Paul Brimblecombe, were not called by Ruyi at trial. The mere fact that a potential witness is a former employee of a party does not necessarily mean that that witness is in that party’s camp: Southernwood v Brambles Ltd (No 3) [2026] FCA 418 at [250] per Murphy J and the cases cited therein including Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 at [87] per Emmett JA. In any event, those potential witnesses were not shown to be employees of Ruyi so as to draw an adverse inference arising from Ruyi’s failure to call them would be circular – the relevant inference would be that they or their actual employers, Ruyi’s subsidiaries, were doing the work of Ruyi.

D.2.     The corporations

D.2.1.     Introduction

47    Ruyi is the parent company of more than 100 subsidiaries in several different countries. Insofar as Australia is concerned, and the plaintiff’s case that Ruyi carried on business in Australia, there are three distinct albeit interrelated subsidiaries and activities.

48    First, there is Forever Winner International Development (Australia) Pty Ltd (FWIDA) which owned Larundel Estate, a sheep farm at Cargerie in Victoria. The relevant period concerning FWIDA and Larundel Estate is June 2012 to April 2022.

49    Second, there is CS Agriculture Pty Ltd (CS Ag) which owned Cubbie Station, a cotton farm in Southwest Queensland. The relevant period concerning CS Ag and Cubbie Station is October 2012 to October 2019.

50    Third, there is Lempriere Australia which, as mentioned, operates a wool trading business through direct Australian and overseas subsidiaries. The relevant periods concerning Lempriere Australia are, first, July 2013 to May 2016 when Ruyi indirectly held 51% of the shares in Lempriere Australia and, second, May 2016 to the present when Ruyi has indirectly held 90% of the shares in Lempriere Australia.

D.2.2.     Shandong Ruyi Technology Group Co Ltd

51    As mentioned, Ruyi is incorporated in the PRC. Its predecessor is Shandong Jining Wool Textile Factory, a state-owned enterprise which was converted into a privately owned company in 2001. Ruyi describes itself as a leading fashion brand operator with its own integrated textile and apparel manufacturing capability as its base.

52    In an offering memorandum to investors in November 2017, Ruyi describes its business as operating “along the full length of the textile and apparel products value chain”. It explains that in the “upstream of raw materials sourcing” it is involved in both wool and cotton production, “owning sheep farms and the Cubbie Station cotton field in Australia”. Textile and apparel manufacturing is in the “midstream”, in which Ruyi offers a broad selection of wool and cotton-based fabrics for both internal apparel production and external sales. Ruyi conducts apparel design and production both for its own brands and for third-party brands. In the “downstream of sales and marketing”, Ruyi sells apparel products through distributors and directly to retail customers from self-owned stores. Ruyi describes itself as having a high degree of “vertical integration” with a “vertical presence along the industry value chain”. It states that the “vertical integration of our businesses also gives us the flexibility of adjusting the usage of our stock of raw materials between self-use and external trading”. [CB 291/5545]

53    As the last sentence quoted above states, an aspect of Ruyi’s business is trading in textile raw materials. As will become apparent, that has particular significance in the case. In the same offering memorandum, Ruyi identifies “textile raw material trading” as one of four segments of its business which in the three calendar years 2014 to 2016 contributed more than one third of its revenue, ie raw material trading is a highly significant part of the business. [CB 291/5553] Cotton, wool and cotton yarn are purchased through a centralised procurement department in the Ruyi group, and the other raw materials required for the business are purchased through procurement teams in each of the relevant subsidiaries. [CB 291/5568]

54    In respect of wool, the offering memorandum states that Ruyi operates its wool segment through Lempriere Australia, “our subsidiary in Australia”. It states that Ruyi primarily offers its wool products to overseas fabric manufacturers, processing a portion of the wool it produces in Australia and selling “wool tops” (ie a semi-processed, high-quality form of wool fibre) to overseas markets to enjoy a higher margin as compared to selling unprocessed wool directly. [CB 291/5554]

55    The offering memorandum states that Ruyi operates a cotton farm of 93,483 ha in Australia, known as Cubbie Station, “through CS Agriculture Pty Ltd, our subsidiary in Australia”. It explains that the cotton from Cubbie Station is primarily sold locally in Australia. [CB 291/5557]

56    Ruyi submits that the statements by it in the offering memorandum are “not particularly significant”, quoting Besanko J in Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi SRL (No 12) [2016] FCA 822 at [283]. That is said to be because it is difficult to tell whether the statements in question are about Ruyi or its subsidiaries and that how Ruyi holds itself out in such documents is ultimately not what is in issue; what is to be determined in this case is whether Ruyi was in fact carrying on business within Australia. I accept that one has to be careful not to interpret general statements about “Ruyi” as applying to Ruyi itself as opposed to the Ruyi group of companies as a whole, but some of the statements, such as Ruyi’s annual trading volumes of certain commodities with reference to its own financial reports and purchases taking place through its central procurement department, clearly apply to Ruyi itself and not to its subsidiaries. Also, as will become apparent, the relevant descriptive statements are consistent with and supported by the evidence of Ruyi’s activities.

57    Turning now to personnel, as mentioned the chairman of the board of Ruyi is Mr Qiu. He is described as being responsible for the overall management of the business and development. [CB 291/5592]

58    The deputy chair of the board and executive president is Weiying Sun, also known as Madam Sun and Madam Sunny. She is described as being responsible for making decisions and advising on significant events and production strategy related issues of the group. [CB 291/5593]

59    Aiying Li is identified in the offering memorandum as one of nine key personnel. Ms Li is a supervisor of the group and is responsible for formulating the corporate and business strategies of the group. [CB 291/5593]

60    Xiao Su is a supervisor and the president of the group, responsible for formulating the corporate and business strategies, making decisions and advising on business planning and financial management related issues of the group. [CB 291/5594]

61    Jerry Liu features in some of what follows. He and Ms Qiu were married in November 2009, they separated in January 2020 and were divorced in September 2022. [CB 13/258/7] Mr Liu was never a director of Ruyi. On occasion he was recorded as being a Vice President of Ruyi representing Ruyi’s Head Office. [eg CB 193/3757, 197/3766] He was often recorded as representing Ruyi in meetings with the board of CS Ag, sometimes also as “translator”. [eg CB 106/2852, 107/2856, 111/2951] Ruyi admits in its points of defence that Mr Liu held the nominal role of Vice President of Ruyi from about 2017 to 2023. [CB 3/74/4(b)(ii)]

62    The shares in Ruyi are held as follows: [CB 291/5595]

63    Mr Qiu directly holds 51% equity interest in Shandong Ruyi International Fashion Industry Investment Holding Co Ltd. He is described in the offering memorandum as the “actual controller” of Ruyi through his majority shareholding in Ruyi’s majority shareholder.

D.2.3.     Forever Winner International Development (Australia) Pty Ltd – Larundel Estate

64    FWIDA was incorporated in Australia on 17 August 2011. All of FWIDA’s issued share capital was held directly by Ruyi until April 2022 when it was transferred to Dynamic Day Enterprises Ltd, a British Virgin Islands company wholly owned by Ms Qiu. [CB 464/11052]

65    Ms Qiu has been a director of FWIDA since it was incorporated, but since November 2022 she has been its sole director. Its other directors from incorporation until November 2022 were Madam Sun and Yan Wang. Mr Liu was a director until April 2022. [CB 3/74/4(b)(iii)] Jun Liu was also a director between July 2012 and November 2015. [CB 464/11049]

66    In June 2012, FWIDA acquired six parcels of land comprising the Larundel Estate for $15.2 million excluding transaction costs. [CB 4/125/68, 76/2423, 502/11459] That followed an approval granted to Ruyi in October 2011 by the Shandong Development and Reform Commission for the “Acquisition of all assets of Larundel Estate in Victoria, Australia to establish an overseas R&D production base, etc.” [CB 75/2422] Larundel Estate is described as a “highly productive grazing and cropping property comprising 942 hectares” with an 840 sq m “Victorian style mansion … dating back to the mid 1800s, impeccably restored, in an elevated setting of sweeping lawns”. [CB 454/10909]

67    FWIDA operated a sheep farming and cropping business on Larundel Estate.

68    Larundel Estate was sold by FWIDA to a third party in September 2025. The proceeds of the sale are frozen pending the outcome of this case: Shenzhen Xinhe Hongshi Investment & Consultancy Co Ltd v Shandong Ruyi Technology Group Co Ltd (No 2) [2025] FCA 1471, and Forever Winner International Development Australia Pty Ltd v Shenzhen Xinhe Hongshi Investment & Consultancy Co Ltd [2026] FCA 167 refusing leave to appeal.

69    Ms Qiu’s evidence is that at all material times FWIDA engaged a manager to operate the farming business of Larundel Estate. [CB 18/377/13] I accept that, for what it is worth. The farm manager was on a salary of $5,000 per month (at least initially) and subject to “the Company’s reasonable directions and instructions in relation to the performance of the Services”. [CB 286/5393] Ruyi draws attention to that arrangement, but it does not in any relevant sense create any distance between the affairs and activities of FWIDA, on the one hand, and its board and sole shareholder, on the other. The inquiries with regard to the possible agency of FWIDA and the disregard of separate corporate personality remain the same.

D.2.4.     CS Agriculture Pty Ltd – Cubbie Station (cotton)

70    Cubbie Station consists of irrigated agricultural and other property consisting of approximately 93,000 ha of rural land near Dirranbandi and St George in Southwestern Queensland. There are also residential properties for business housing purposes, a ginnery (ie a first stage cotton processing plant), commercial leases and associated water rights or entitlements in the Murray-Darling system. [CB 11/241/9] Cubbie Station is reputed to be the largest cotton farming business in the southern hemisphere. [CB 12/253/26]

71    Prior to the events relevant to this case, Cubbie Station was owned by Cubbie Group Ltd. However, following significant financial difficulties, the Cubbie Group companies were placed into voluntary administration in about 2010. Thereafter, a number of attempts were made to find a buyer for Cubbie Station. [CB 85/2505]

72    In about 2012, a consortium of Ruyi and Lempriere Pty Ltd (Lempriere) sought approval from the Foreign Investment Review Board (FIRB) to purchase Cubbie Station. The proposal was to incorporate an Australian special-purpose company the shares in which would be owned by Ruyi (as to 80%) and Lempriere (as to 20%). As part of the application for approval, Ruyi undertook to sell down its interest in the buying company or in Cubbie Station from 80% to 51% to an independent third party, or parties, within three years of completing the proposed acquisition. [SCB#1 2/14]

73    Lempriere is part of an Australian family-owned group of companies, with a long history and extensive experience in wool trading and in managing agricultural properties across Australia. [CB 85/2505]

74    Following Government approval, FIRB issued a letter of “no objection” to the proposed acquisition on 5 September 2012 that was subject to Ruyi’s sell-down undertaking. [CB 86/2506]

75    CS Ag was incorporated in Australia on 5 October 2012 for the purpose of the acquisition. Ruyi owned 80% of CS Ag’s issued shares through a wholly owned Ruyi subsidiary incorporated in Singapore, CSTT Co Holdings Pte Ltd (CSTT). The remaining 20% were owned by Lempriere. [CB 483/11347]

76    Mr Qiu, Madam Sun and Mengqiang Zhai, representing CSTT, and William Lempriere, representing Lempriere, were the original directors of CS Ag. Mr Lempriere resigned, and Ms Qiu was appointed, as a director in June 2016. Mr Qiu ceased as a director in June 2022. Mr McKenna was a director from June 2014 to June 2021. Mr Liu was a director of CS Ag from November 2013 to June 2016. [CB 483/11349] Mr Brimblecombe was the CEO until about January 2022. [CB 2/47/7]

77    On 11 October 2012, CS Ag entered into a land and business sale agreement with the then owners of Cubbie Station and Ruyi. [CB 87/2507] Under that agreement, CS Ag agreed to purchase Cubbie Station for $230 million (subject to certain adjustments). [CB 87/2584] It was recorded in the agreement that Ruyi had requested that the vendors enter into the agreement, and in consideration for the vendors agreeing to do so, Ruyi guaranteed CS Ag’s obligations under the agreement. [CB 87/2571 cl 51.1] The agreement also contemplated that Ruyi, the vendors and others enter into an escrow deed under which Ruyi would agree to pay $11.5 million to the vendors if the land and business sale agreement failed to complete by reason of a default by CS Ag. [CB 87/2677 cl 3.2]

78    To enable the purchase of Cubbie Station, CSTT was required to inject $64 million and Lempriere $16 million in equity into CS Ag (ie retaining the 80/20 share), and CSTT made a loan to CS Ag in the sum of $176.5 million. [CB 104/2825] The loan was subordinated to CS Ag’s “senior debt facilities” which were initially to be a loan facility from ANZ Bank for $65m. [CB 96/2795 cl 2]

79    Ruyi then lent $16 million to Lempriere “solely for the purpose of taking up its 20% equity in CS Agriculture, which funds will then be made available to assist with the acquisition by CS Agriculture of all the business and assets of Cubbie” – as recorded in the loan agreement between Ruyi and Lempriere. [CB 103/2817 cl 3] The loan was not on commercial terms – it was interest free and Ruyi’s recourse against Lempriere for a failure by Lempriere to repay the loan was limited in various ways including with reference to the share sale agreement between Benwill Pty Ltd (Benwell) as vendor, William Lempriere as guarantor and Laine Commodities Pte Ltd (Laine Commodities) as purchaser referred to further below. [CB 103/2817 cl 5, 2818 cl 6.5] The balance of the purchase price for Cubbie Station was paid by ANZ Bank pursuant to a loan secured by a mortgage.

80    Thus, aside from the loan from ANZ Bank, Ruyi effectively funded the whole of the purchase of Cubbie Station – it funded 100% of the equity of the purchasing company. The money transfers came directly from Ruyi and not from CSTT.

81    From 20 January 2013, the operations of CS Ag were subject to a Subscription and Shareholders Deed entered into between Lempriere, CSTT and CS Ag governing how the affairs of CS Ag were to be conducted. [CB 95/2748] The deed provided for the appointment of a manager, being Lempriere, to manage the business of the company and that subject to the terms of the deed and the company’s Constitution, no shareholder could “interfere with the day-to-day management of the Company” or give directions to the manager. [CB 95/2758 cl 3.1]

82    On the same day, CS Ag and Lempriere concluded an agreement appointing Lempriere as general manager of the company for a period of five years. The manager was subject to the overriding control and direction of the board and the annual business plan to be adopted by the board. [CB 94/2713]

83    On 11 May 2016, Lempriere sold its shares in CS Ag to RF CS Ag Pty Ltd, a company controlled by Roger Fletcher, someone independent of Ruyi. CSTT, RF CS Ag and CS Ag entered into a Subscription and Shareholders Deed on substantially the same terms as the previous one that had been entered into with Lempriere, save that the manager became Annek Pty Ltd, a company controlled by Mr McKenna. [CB 158/3550] CS Ag and Annek entered into a management agreement on substantially similar terms to those previously entered into between CS Ag and Lempriere. [CB 58/2009]

84    Cubbie Cotton Marketing Pty Ltd (CCM) was incorporated as a wholly owned subsidiary of CS Ag in February 2017. [CB 445/10823]

85    From October 2012 to October 2019, CS Ag wholly owned the Cubbie Station farming business. [CB 12/254/34] Thereafter, pursuant to Ruyi’s commitment to sell down its interest in Cubbie Station, a 49% interest in Cubbie Station was sold to a Macquarie Bank company. The plaintiff’s case insofar as it concerns Cubbie Station is confined to the period of CS Ag’s exclusive ownership so the details of Macquarie’s interests and how they were acquired can be put to one side.

86    Prior to 2022, CSTT held 100% of the shares in Cubbie Farming Pty Ltd and Cubbie Agriculture Pty Ltd. CS Ag held 100% of the shares in Cubbie Ginnery Pty Ltd. Those companies were also involved in the Cubbie Station business. [CB 11/241-242]

D.2.5.     Lempriere (Australia) Pty Ltd – wool trading

87    Prior to Ruyi acquiring a 51% stake in Lempriere Australia in 2013, the issued shares in Lempriere Australia were all owned by Benwill, a Lempriere family company. Pursuant to a share sale agreement dated 4 July 2013, 51% of the issued shares in Lempriere Australia were sold and thereafter transferred to Laine Commodities for $43,003,000. [CB 109/2865] The shares in Laine Commodities are held on trust for Forever Winner International Development Ltd (FWID HK), a Hong Kong incorporated company that is wholly owned by Ruyi.

88    In May 2016, Benwill’s shares in Lempriere Australia were transferred to CS Ag. Thus, from then, 51% of the shares were indirectly held by Ruyi through FWID HK and Laine Commodities and Ruyi had an 80% interest of the remaining 49% through CSTT and CS Ag, ie an indirect holding of more than 90%. [CB 162/3614]

89    William Lempriere was the director of Lempriere Australia until May 2016 when he resigned and a number of Ruyi associated people were appointed as directors. They were Mr Qiu, Ms Qiu, Madam Sun and Mr Liu. The latter was a director until August 2021. [CB 3/74] Mr McKenna was also a director from May 2016 to June 2021. [CB 57/2008, 48/1860]

E.     The plaintiff’s case

90    The plaintiff contends that it should be concluded that Ruyi carried on business in Australia on one or more of five different albeit interrelated bases.

91    First, the plaintiff says that Ruyi carried on business in Australia by reason of it acquiring raw materials in Australia, through its subsidiaries, which it readily directed by way of:

(1)    giving instructions on indent orders for wool to Lempriere Australia; and

(2)    controlling Cubbie Station’s cotton production through forward sales to FWID HK and giving instructions in respect of those sales to CS Ag and/or CCM on what to allocate to internal production and what to sell directly to third parties (and remit any margin to Ruyi/FWID HK). [PCS63]

92    Second, the plaintiff contends that CS Ag, CCM and Lempriere Australia acted as Ruyi’s agents in acquiring and disposing of wool and cotton. [PCS64]

93    Third, the plaintiff contends that FWIDA should be regarded as the alter ego of Ruyi, particularly during a period when Ruyi was meeting its costs. [PCS65]

94    Fourth, the plaintiff contends that actions were taken by Mr McKenna in Australia which can only have been for the purposes of advancing the interests of Ruyi and not its Australian subsidiaries, mainly through the “Ruyi Australia Group”. [PCS67] The contention appears to be that those actions of Mr McKenna and the Ruyi Australia Group are actions of Ruyi itself or are actions of Ruyi through the agency of Mr McKenna and the Ruyi Australia Group. [PCS67] I will deal in due course with what the “Ruyi Australia Group” is or was.

95    Fifth, the plaintiff contends that Ruyi took direct action in Australia by identifying and assessing the assets it acquired in Australia, entering into contracts as guarantor, directly remitting funds to its subsidiaries in Australia and other Australian entities, and sending its employees to Australia from time to time in the pursuit of its business. [PCS67.1]

96    Those five different bases to the way the plaintiff puts its case can be arranged by grouping the first and second and the fourth and fifth so as to create three bases, and to reorder them. That is to say, the plaintiff contends that Ruyi carried on business in Australia by:

(1)    acquiring and selling raw materials in Australia, including by its agents;

(2)    identifying, investigating and concluding a range of commercial transactions or exploiting commercial opportunities in Australia, including by the activities of Mr McKenna and the Ruyi Australia Group and by its employees regularly visiting Australia; and

(3)    its alter ego, FWIDA.

97    I will consider each of these grounds in the following sections of these reasons.

F.     Trading raw materials in Australia?

F.1.     Repeated purchases of cotton and wool in Australia

98    As mentioned, Ruyi has formally stated that it conducts a vertically integrated business which includes, upstream, the production of wool and cotton in Australia. It can be accepted that the actual production, ie the growing of the cotton and the breeding and shearing of the sheep, was not done directly by Ruyi in Australia. However, it is common ground that Ruyi consistently purchased substantial volumes of wool and cotton from its subsidiaries, Lempriere Australia in the case of wool and CS Ag (and later CCM) in the case of cotton, over a long period of time. The cotton purchased from CCM was bought by CCM specifically for Ruyi, and on-sold to Ruyi on a back-to-back basis (ie same quantity and price). On the instructions of Ruyi it was then sold to third parties such that Ruyi took the profit or bore the loss, CCM being remunerated only on a per bale fee basis.

99    Ruyi submits that the contention that these sales amount to Ruyi having been carrying on business in Australia must fail because none of the authorities relied on by the plaintiff provide that the purchase of goods by a foreign entity from an Australian entity is sufficient to establish that it carried on business with Australia.

100    Ruyi says that the plaintiff’s reliance on Luckins is misconceived because it is a fundamentally different case to the present. There, a majority of the High Court held that a Victorian company that operated a tour bus business was carrying on business within Western Australia. The critical finding was that the company had despatched busloads of passengers through Western Australia and in the course of so doing entered into commercial transactions in various parts of the State, not just on isolated occasions but over a period of time: Gibbs J at 179, Stephen J at 187, Mason J at 187 and Jacobs J at 188; Barwick CJ dissenting at 169.

101    Luckins is, of course, a very different case to the present, but Ruyi’s submission misses the point – the question of whether an entity is carrying on business within Australia is one that is to be decided on its own facts. Nothing in Luckins (or Tiger Yacht) suggests that it is only the sale of goods or services by a foreign entity to an entity in Australia that can suffice to establish that the foreign entity is carrying on business within Australia. There is no reason why the inverse of that situation, the buying of goods or services from Australia, cannot also suffice – “carrying on business” is not limited to carrying on business in any particular way. Indeed, Luckins is a case of a foreign (to Western Australia) entity purchasing services domestically (ie in Western Australia) being held to be carrying on business domestically (ie in Western Australia).

102    Ruyi also submits that the plaintiff’s reliance on Gill v Ethicon Sárl (No 5) [2019] FCA 1905 is misconceived. It points out that Gill involved foreign companies “selling their products in Australia over a number of years through a related company and promoting them jointly with that company” (at [3137] per Katzmann J). The foreign companies also handled all Australian complaints about the products supplied to Australia and forbade “unilateral discussion by the local subsidiary with the Australian competent authority”. As with Luckins, of course Gill is a different set of factual circumstances to the present case, but it nevertheless offers an example of circumstances that have been held to be sufficient to amount to carrying on business in Australia.

103    As Ruyi rightly identifies, the effect of the plaintiff’s submission is that any foreign entity that purchases goods in Australia may be found to carry on business in Australia and could thereby be subject to a winding up order under s 583 of the Corporations Act. Ruyi submits that this result is inconsistent with the modern commercial enterprise. The plaintiff’s submission is not so narrow as to say that the purchase of goods in Australia will always, without more, amount to carrying on business in Australia. But to the extent that a finding of carrying on business on the basis of making purchases in Australia may be thought to open some floodgate to the winding up of foreign corporations, that may be properly dealt with by the Court’s exercise of its discretion in determining whether to make a winding up order. Ruyi has accepted that the exercise of that discretion is not in issue in the present case.

104    The short point is that Ruyi’s acts of repeated purchases in Australia are “acts within the relevant territory that amount to, or are ancillary to, transactions that make up or support the business” within the meaning of Valve Corp FCAFC at [149] quoted above. That analysis does not depend on the vendors of the raw materials being subsidiaries of Ruyi – they could be unrelated entities. Also, the repeated purchases in Australia as an integral part of Ruyi’s business are acts ancillary to or that make up or support that business. On that basis, I find that Ruyi carried on business in Australia and is therefore a Part 5.7 body.

105    However, in case that is thought to be an insufficient basis to find that Ruyi carried on business in Australia, the further analysis of alternative (and cumulative) bases is undertaken below is undertaken.

F.2.     Cotton specifically

106    When CS Ag acquired Cubbie Station, Ruyi put in place an arrangement whereby it would control how much cotton from Cubbie Station was sold to third parties, and at what price, and how much would be forward bought by Ruyi through its trading subsidiary, FWID HK. That much is apparent from the minutes of a board meeting of CS Ag on 31 May 2013. Amongst those attending the meeting were three directors of CS Ag and Mr Liu representing Ruyi. [CB 107/2856]

107    It was recorded that CS Ag had received interest from merchants for the 2014 cotton lint crop at $475 per bale and fuzzy cotton seed at $200 per ton. It was then recorded that it was agreed to have a mechanism in place, “i.e. authority from Ruyi”, to sell at or above a fixed level. The action item that was recorded was that Mr McKenna was to email Mr Liu “to confirm with Ruyi whether CS Ag should enter into [a] contract to forward sell 25,000 bales at $475 per bale and 10,000 tonnes [of] fuzzy cotton seeds at $200 per tonne”. It was then recorded that it was subsequently confirmed by Mr Liu that CS Ag could “sell any volume of cotton lint above $475 per bale but not selling any cotton seed at this stage”. [CB 107/2858]

108    The arrangement is also evidenced by the minutes of the CS Ag board meeting held on 23 March 2014 at the offices of Ruyi’s solicitors, Norton Rose Fulbright, in Sydney. The meeting was attended by six directors including Mr Qiu, Madam Sun and Mr Liu from Ruyi. [CB 119/3082] The minutes record: “Madam Sun instructed to sell the remaining of Ruyi contracted cotton (approx. 68,000 bales) if [the] price goes above $520/bale. If the price is below $520/bale, Ruyi will take delivery.” [CB 119/3084]

109    Further evidence of the arrangement is in the minutes of a meeting of the board of CS Ag on 20 August 2015 held at Ruyi’s head office in Jining, PRC. The meeting was attended by six directors including Mr Qiu, Madam Sun and Mr Liu from Ruyi. [CB 136/3352] The minutes record: [CB 136/3354]

2015 cotton has been all forward sold at average $478/bale:

•    50,000 bales to third party merchants

•    Approximately 105,000 bales (including BOC) to Ruyi

Subsequently Ruyi has on sold 60,000 bales to third party merchants at $550/bale.

110    It is recorded in the same minutes that the 2016 cotton lint crop had all been forward sold to Ruyi at $510 per bale. [CB 136/3355] The minute also records that “RUYI proposed to appoint CS Agriculture as the agent to procure cotton from local growers” and that a communication channel between CS Ag and Ruyi needed to be established. [CB 137/3359] The Ruyi Australia Group “Operation Report” for June 2017 recorded that all of the cotton lint production for 2017, 2018 and 2019 had been forward sold to Ruyi at $540 per bale “on a balance of crop basis”. [CB 261/5042]

111    The practice was for Ruyi to cause virtually all of Cubbie Station’s cotton to be forward sold to FWID HK. That practice continued until at least 2018. In that regard, a Ruyi Australia Group Operations Report for February 2018 records that Cubbie’s crop had been forward sold to Ruyi at a price of $540 per bale, but that 10,000 bales at $540 and 15,000 bales at $550 had been sold to third parties and that the “profit difference between the $540 and $550 on the 15,000 bales will be credited to Ruyi”. [CB 312/6199]

112    Details of FWID HK’s forward purchases of CS Ag’s Cubbie cotton crop from 2013 (in respect of the 2014 crop) to 2019 (in respect of the 2020 crop) include:

113    Ruyi gave shipping instructions for the cotton that was to be exported from Australia, generally on a CIF foreign port basis with the foreign buyer being either the notify party (where their bank is the consignee) or the consignee. [CB 231/4209, 241/4634, 244/4746, 247/4751, 249/4754, 257/4949, 264/5156, 284/5359, 333/6334] The logistics were done by Lempriere Global Logistics Pty Ltd, a wholly owned subsidiary of Lempriere Australia. [eg CB 163/3621, 3626, 184/3738, 269/5182]

114    On the basis of those factual findings, I am satisfied, as submitted by the plaintiff, that Ruyi – as it later stated in the offering memorandum – from the time of CS Ag’s acquisition of Cubbie Station used Cubbie Station as an overseas production base from which Ruyi would secure the supply of cotton. It allowed third-party sales to be made by CS Ag only where it was more profitable to do so than to take the cotton itself.

115    It is particularly noteworthy that CS Ag’s board minutes and correspondence demonstrate that although the purchaser in each case was recorded as FWID HK, Ruyi gave the instructions on the purchases including at what price cotton could be sold to third parties. There is nothing to suggest that FWID HK acted other than as Ruyi’s agent in making the purchases; it was the pass-through by which Ruyi made the purchases. In the absence of any evidence from Ruyi to the contrary, noting that any available evidence would be available only to Ruyi and not to the plaintiff, I infer that FWID HK bought the cotton as Ruyi’s agent. Also, the sales were all “EXW Gin” or “FOT Gin yard”, ie ex works or free on truck at the ginnery. That means that the purchaser took delivery at the Cubbie Station ginnery, ie in Australia. So Ruyi, through FWID HK, made the purchases in (not from) Australia, and when it on-sold the cotton to third parties rather than taking it itself in China, it did so in Australia.

116    As mentioned, CCM was incorporated as a wholly owned subsidiary of CS Ag early in 2017. It appears to have had its genesis in discussions in mid-2016 about how to increase Cubbie’s profitability, in particular in circumstances of drought adversely affecting cotton production. The draft 2017 Business Plan for CS Ag included a plan to increase cotton trading volumes to improve profitability. That was specifically regarded as an alternative income stream for Cubbie during low production years. [CB 169/3694]

117    There was then a discussion in early August 2016 between, at least, Ms Qiu and Mr Brimblecombe about the initiatives to improve Cubbie’s profitability. Those discussions included “the best way to establish cotton trading (origination) in Australia”. [CB 187/3747] After that was reported to Mr McKenna by Ms Qiu, Mr McKenna responded with what needed to be done “to establish a successful cotton origination business in Australia”. [CB 187/3746]

118    In February 2017, Mr McKenna reported to Ruyi that: “Since we agreed on the strategy with Ruyi to source Australian originated cotton through Cubbie for Ruyi via back to back contracts between growers/agents, Cubbie and Ruyi, during the first 2 days of buying we have sourced 3,500 bales of cotton from St George and Moree.” [CB 201/3787]

119    The Ruyi Australia Group prepared a “Management Team Structure and Strategy” dated 12 April 2017. The document was prepared in English and Chinese, indicating that it was, or was intended to be, presented to Ruyi. It records a number of important matters. Presently relevant, it recorded one of the strategic priorities as being to “Grow Cubbie Cotton Marketing’s cotton buying operations on a back to back sales basis with Ruyi”. [CB 222/4012] It is thus apparent that from at least then, CCM was conducting the back-to-back buying for Ruyi. CCM’s lack of independent operation in that regard is demonstrated by the concern recorded in the same strategy document that payment had to be provided on time by Ruyi otherwise the reputations of Ruyi and Cubbie would be damaged in the market.

120    The Ruyi Australia Group “Operation Report” for June 2017 recorded that CCM charged Ruyi a fee per bale, which had apparently originally been agreed at $10 per bale but that the average fee for 2017 cotton was $5.61 per bale (including $1.98 being paid to third-party brokers for sourcing the cotton) in order to facilitate the start-up of the cotton trading business. The average fee for the 2018 crop was $4.79 per bale (of which $0.42 went to the broker). [CB 261/5045-6]

121    Tellingly, it was also recorded that CCM had acquired cotton from “most cotton growing regions in Australia” and was “well positioned to acquire more cotton for Ruyi”. [CB 261/5046] It is apparent that CCM was not trading cotton on its own account, but was sourcing cotton specifically for Ruyi.

122    Specifically in relation to the 2018 cotton crop sales to Ruyi the following was recorded: [CB 261/5046]

The current market price for the 2018 crop is $488 per bale. The average price that Ruyi has contracted with CS Ag on a back to back contract basis is $539.77. This means an unrealised loss of approx. $9.2m for Ruyi. Please advise the status of Ruyi’s on-sale of this cotton. If the market doesn’t come back by year end then CS Ag’s auditors are likely to be seeking underwriting from Ruyi to confirm support for any market shortfall.

123    This indicates that CS Ag had at an earlier time bought 177,400 bales but that the market had subsequently softened by $51.77 per bale. Unless the market improved, Ruyi was going to bear the $9.2 million loss, not CS Ag that had apparently taken no risk in relation to it.

124    In June 2017, CS Ag also produced its Business Plan for the 2017/2018 season. [CB 262/5052] It too recorded that the 2018 season’s cotton had all been forward sold to Ruyi for $540 per bale. It also recorded that forward selling decisions for future years would be made in consultation with “the shareholder” (ie Ruyi). [CB 262/5066] The forward sales were recorded as having been by CCM on a back-to-back basis “for Ruyi”. [CB 262/5071] CCM’s operating budget showed a forecast revenue of $95,755,800 with total direct costs of $95,338,500 (of which $94,906,900 was the price paid to growers) amounting to a modest gross profit of $417,300. [CB 262/5077] That demonstrates the extent to which CCM acted essentially as a pass-through to Ruyi.

125    That the “purchase and other costs are passed through to Ruyi” on CCM sales was expressly recorded in the minutes of a meeting of the Ruyi Australia Group with the Ruyi board in December 2017. [CB 296/6008] It was also recorded that “[a]fter good cooperation with Ruyi Trading Division, Cubbie” had cancelled 70,000 bales of third-party purchases, on-sold 20,000 bales to another merchant and sold 25,000 bales of Cubbie cotton. In each case, the “corresponding contract with Ruyi” was cancelled. [CB 296/6008]

126    The instructions on selling cotton forward sold to Ruyi to third parties came from Ruyi’s trading division in the PRC, also referred to as “Madam Li’s team”. [CB 312/6199] That is consistent with what was recorded in the offering memorandum, namely that cotton and wool were purchased through a centralised Ruyi procurement department (see [53] above).

127    The position a year later is recorded in the 2018 Operation Report of the Ruyi Australia Group and the CS Ag Business Plan for the 2018/2019 season that is dated June 2018.

128    The 2018 Operation Report records that Cubbie’s cotton crop balance of 32,566 bales was sold to Ruyi for $540 per bale, but that 30,000 bales were sold to third parties at significantly higher prices ($550, $590 and $592) so the profit difference would be credited to Ruyi. [CB 324/6280-6281] On the trading, as opposed to growing, side, CCM was working through delivering 62,400 bales to Ruyi. [CB 324/6281] It was also recorded that CS Ag was waiting on outstanding letters of credit for existing and upcoming shipments, and also instructions on the remaining July shipments. [CB 324/6281] It was Ruyi that was being waited on in both respects. It was recorded that all unshipped bales were currently in Queensland and Victorian storage warehouses incurring storage and interest costs. Noting that the cotton sales were on ex works or FOT terms, it was cotton belonging to Ruyi that was being warehoused in Australia.

129    In the 2018/2019 Business Plan, it was recorded that Cubbie had forward sold all of the 2019 cotton lint crop to Ruyi at $540 per bale. Forward selling decisions were again to be made in consultation with “the shareholders”. [CB 325/6300] In relation to cotton trading, it was again recorded that CCM purchased cotton from most cotton growing regions in Australia “on a back-to-back contract basis for Ruyi”, but that at the date of the report no 2019 cotton had been purchased “on behalf of Ruyi”. [CB 325/6302]

130    On the basis of those findings, I am satisfied that Ruyi used CS Ag, over which it exercised close supervision, as its cotton production base in Australia. That included by CS Ag forward selling its entire cotton crop to Ruyi and later selling some of the crop to third parties but only on the instructions of Ruyi. Later, cotton trading was introduced and CCM was incorporated. The modus operandi was for CCM to buy cotton from third party growers “for Ruyi” and to on-sell it to Ruyi on a back-to-back basis, with Ruyi bearing all the risk including the risk of storage in Australia. CCM acted, in effect, as Ruyi’s cotton trading agent in Australia.

131    In those ways, Ruyi carried on business in Australia by growing, purchasing and trading cotton.

132    Ruyi submits that the operations that it was engaged in are distinct from those that CS Ag was engaged in. It says that Ruyi was a textile manufacturer, retailer and wholesaler operating exclusively within the PRC where it sold sporting goods and made investments. That is correct insofar as it describes a part of Ruyi’s business that Ruyi itself carried on directly outside of Australia. But as I have found, Ruyi also carried on business directly within Australia by purchasing raw materials in Australia for its foreign manufacturing business.

133    Ruyi points out that CS Ag’s financial statements for the period from 2013 to 2021 record that when profits were generated by CS Ag, those profits were applied to repay bank debt or were reinvested in the business of Cubbie Station. Ruyi also says there were always independent interests in Cubbie Station, and that therefore CS Ag operated for, ultimately, the benefit of those independent shareholders as well as Ruyi’s subsidiary shareholding interests. However, the question of whether Ruyi was carrying on business within Australia by trading in cotton in Australia is not answered by looking only at what CS Ag did with its profits or who its shareholders were. Those facts may be relevant to the whole inquiry, but they do not determine the result. Here the result is determined by the findings that I have made above.

F.3.     Wool specifically

134    As mentioned, in May 2016 Ruyi became the effective owner of more than 90% of the shares in Lempriere Australia. Coinciding with that event, the Lempriere Group Business Plan in June 2016 recorded that an opportunity to develop the Lempriere wool trading business was to “[w]ork closer with our parent company, Ruyi, specifically on indent operation from Australia” and other countries and to “[p]resent Ruyi with new wool sourcing initiatives”. [CB 163/3641]

135    The Ruyi Australia Group Operation Report for February 2017 recorded that “we have increased our indent buying for Ruyi from Australia”. [CB 198/3777] The Operation Report for September 2017 recorded that “[w]e have restarted indents with Ruyi and have clarified our agents structure”. [CB 281/5352] It is not apparent what agent or agents are referred to there. It would seem that Lempriere Australia is being referred to as the agent of Ruyi, but even if that is so it does not establish such an agency; insofar as agency is concerned, the Court must look to the substance of the relationship and not the descriptors that are used informally.

136    Mr Materne explained how the indent buying service for Ruyi operated from approximately mid-2016. Ruyi or FWID HK would communicate to Lempriere Australia its requirements in relation to price, quantity and quality for greasy wool. Lempriere Australia would then buy the required wool, if available, via auction, online platforms and direct merchant/private treaty suppliers. Lempriere Australia would on-sell the wool so purchased to Ruyi and arrange for the wool to be shipped for Ruyi. Lempriere Australia would charge Ruyi an “indent rate” on each sale which was its fee for providing the indent buying service. [CB 17/369/178] The documents confirm Ruyi having given such instructions, and Lempriere Australia having performed them. [eg CB 191/3752-3755, 295/5997-5999]

137    In cross-examination, Mr Materne gave further explanation of the indent trading service that Lempriere Australia performed for Ruyi and other customers. First, when Lempriere Australia was described by counsel as “an indent buyer”, he said that he would not characterise Lempriere Australia’s role in that way but rather as an “indent seller”, saying that it is “really a selling relationship to a customer rather than a buying relationship with the supplier” (T194:46-195:3). That much can be accepted insofar as it describes the relationship between Lempriere Australia and its customer, relevantly Ruyi. That is to say, Lempriere Australia sells to its customer which is the indent relationship, but it remains a buying service inasmuch as Lempriere Australia purchases for its customer – purchasing is what it is tasked to do. That much is clear from Lempriere Australia’s own documents including its Operation Reports which describe the relationship as “indent buying” (or occasionally indent purchases or indent orders). [CB 198/3777, 324/6284, 336/6349] Ruyi’s points of defence do likewise, as do Mr Materne’s affidavits. [CB 3/78/11(c), 17/361/144, 369/178, 370/179, 370/180, 370/181]

138    Second, Mr Materne explained how indent buying operated by contrasting it with wool trading for one’s own account (T195:4-12):

[B]asically there are two broad categories of wool trading you can do. One is trading where you are taking ownership, you are taking risk on price, and you are basically using your skill, your network, everything that you have available to you to make a profit on the trade but with no guarantee as to price. Whereas indent is really where the customer has – particularly a larger customer who is looking for a large volume will agree and entrust you on the price and say we will accept the price risk in the market, and we will basically pay you an additional margin, a mark-up or a per bale amount in addition to the cost in the market.

139    Mr Materne also explained that in the indent relationship, the customer (ie Ruyi) would be bound to buy the wool from Lempriere Australia that the latter had bought on the former’s instructions, even if there had been an adverse price fluctuation in the meantime (T195:36-40). That is to say, once Lempriere Australia had bought and taken ownership of the wool that it was instructed by Ruyi to buy, Ruyi bore the risk on any price fluctuation such that if the market price went up it got the benefit but if the price went down it took the loss.

140    The sale and purchase contracts between Lempriere Australia and Ruyi were subject to the former’s Master Sales Agreement. That provided for the law of Victoria to apply. [SCB#3 1/3 cl 41] That would include the Goods Act 1958 (Vic). The plaintiff submits that under s 23 r 5 of that Act, risk in the goods passed to Ruyi, the purchaser, on delivery to the carrier. That section has rules for ascertaining the intention of the parties as to the time at which the property in the goods is passed to the buyer, unless a different intention appears. Rule 5(2), which refers to the carrier and which must accordingly be the rule that the plaintiff relies on, provides that where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer and does not reserve the right of disposal, it is deemed to have unconditionally appropriated the goods to the contract. The rule does not deal with the passing of risk: see s 25. In any event, in the indent buying arrangement between Lempriere Australia and Ruyi, the goods were appropriated to the contract upon being bought by Lempriere Australia on the instructions of Ruyi as to quality, quantity and price. That is to say, Lempriere Australia in making a particular purchase (typically at auction) was doing so specifically for its indent customer, relevantly Ruyi, and on having made the purchase the goods were appropriated to the contract.

141    However, the plaintiff is nevertheless correct that risk passed on delivery to the carrier because the contracts were typically CIF (cost, insurance and freight): New Zealand Pelt Pty Ltd v Gapes [2004] VSCA 163; 13 ANZ Ins Cas 61-626 at [55] per Nettle JA, Ormiston JA and Hansen AJA agreeing.

142    The following table gives details of the transactions appearing in the tendered documents:

143    The plaintiff also submits that since cl 12 of the Master Seller Agreement provided for title not passing “until payment is made in full”, in circumstances where Lempriere Australia’s bank is in Australia the payment is taken to occur in Australia and therefore title passes in Australia. I reject that submission. As a general proposition in relation to chattels, the validity of a transfer of a chattel and its effect on the proprietary rights of the parties is determined by the lex situs of the chattel at the time of transfer: Albarran v Queensland Excavation Services Pty Ltd, in the matter of Maiden Civil (P&E) Pty Ltd [2013] NSWSC 852; 227 FLR 337 at [64] per Brereton J citing Douglas Financial Consultants Pty Ltd v Price [1991] QSCFC 7; [1992] 1 Qd R 243 at 251-253 per Thomas J, but see also at 257 and 261 per Ambrose J, Moynihan J agreeing. What that means is title may pass wherever the chattel happens to be at that time, and that may not necessarily be the place where the payment is made (ie Australia).

144    Unlike in the case of cotton, Ruyi did not take delivery of wool on ex works or FOT terms, but rather on CIF terms. In such a contract, which is in substance a sale of documents, delivery to the purchaser is constructive delivery by delivery of the shipping documents (notably the bill of lading) and title passes when the documents are delivered: Henry Kendall & Sons (a firm) v William Lillico & Sons Ltd [1969] 2 AC 31 at 86-7 per Lord Reid, 101 per Lord Morris, 120 per Lord Pearce and 128 per Lord Wilberforce. In an international purchase and sale such as the present, delivery of the documents and hence constructive delivery of the goods would typically occur at the buyer’s bank where they are presented for the purpose of procuring payment of the purchase price, ie outside Australia.

145    The plaintiff relies in the first instance on Lempriere Australia having acted as Ruyi’s agent, properly so called, in purchasing wool for Ruyi in Australia. However, there is nothing in the evidence to suggest that Lempriere Australia contracted as buyer with the growers as sellers in such a way that it bound Ruyi to the contracts with the growers. Ruyi neither gave authority to Lempriere Australia to bind Ruyi to contracts with the sellers, whether expressly or impliedly, nor did it hold out to the sellers that Lempriere Australia had such authority. That puts paid to any actual or ostensible agency. It also puts paid to the application of the doctrine of the undisclosed principal (or, more accurately, undisclosed agency) – for which the plaintiff also contends – because that too requires the agent to have the actual authority of the (undisclosed) principal: Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199 at 207 per Lord Lloyd; Commissioner of State Revenue v Viewbank Properties Pty Ltd [2004] VSC 127; 55 ATR 501 at [46] per Nettle J; Brauer v Coburn Resources Pty Ltd, in the matter of Strandline Resources Ltd (receivers and managers appointed) [2026] FCA 1110 at [76] per Jackson J.

146    Nevertheless, the following circumstances taken together amount to Ruyi carrying on business in Australia with regard to wool in the sense of undertaking repetitive activities that amount to, or are ancillary to, transactions that make up or support the business of Ruyi:

(1)    Having a 90% majority-owned subsidiary in Australia for the purpose of being able to use it to source the particular commodity required by it for its downstream business, namely high-quality Merino greasy wool;

(2)    Appointing members of the board to that subsidiary and in that way actively participating in the decisions and direction of the subsidiary;

(3)    Repeatedly instructing the subsidiary as to the quantity, quality and price parameters of wool to purchase on the indent buying arrangement described above (including with regard to Ruyi carrying the risk and benefit of price fluctuations) and then utilising that wool for its downstream business.

147    I therefore find that Ruyi’s indent buying relationship with Lempriere Australia was such as to amount to carrying on business in Australia.

148    Ruyi emphasises that Lempriere Australia provided its services to global customers. It says Ruyi was one of them from time to time, but it was one of many and most were unrelated to the Ruyi group. It then submits that when attention is given to the related parties Lempriere Australia traded with, it is clear such trade occurred on an arm’s-length basis. It is said that this cannot be reflective of an arrangement whereby Lempriere Australia is acting for the benefit of Ruyi. This submission does not assist Ruyi’s position. The fact that Lempriere Australia traded with others as well does not afford an answer to the contention, and now my finding, that the trading relationship between Lempriere Australia and Ruyi was such as to amount to Ruyi carrying on business through Lempriere Australia.

G.     The Ruyi Australia Group

149    On 21 June 2017, CS Ag registered the business name “Ruyi Australia Group” with the Australian Securities and Investments Commission and then extended that registration on 21 June 2021. [CB 472/11106-7] However, as will be seen, Ruyi was coordinating the interests of its Australian subsidiaries under the name of Ruyi Australia Group well before June 2017.

150    On 20 August 2015, there was a meeting of the board of CS Ag that was held at the Ruyi head office in Jining, PRC. The six directors were all present in person, except Roger Fletcher who attended by phone. Ms Qiu and Jane Liu attended as Ruyi representatives. The minutes of the meeting reflect that most of the issues that were discussed concerned CS Ag, as one would expect. However, in the context of the agenda item “Ruyi Sell Down” it was also minuted that it was “agreed that a working group with Lempriere and Ruyi representatives would be formed immediately to pursue growth opportunities that would achieve the Ruyi dilution by introducing new capital, which may include listing a broader agriculture company in Australia”. [CB 137/3361]

151    The plaintiff submits that the reference to “Lempriere” in the minute quoted in the preceding paragraph is a reference to Lempriere Australia, but that is not necessarily the case. At that time, Lempriere Pty Ltd was an independent 20% shareholder in CS Ag, with the remainder of the shares being owned indirectly by Ruyi through CSTT. It makes sense that Ruyi and Lempriere, the two shareholders of CS Ag, were discussing how to achieve the required sell down of Ruyi’s share in CS Ag. I therefore do not read the minute as evidencing a discussion concerning Lempriere Australia, but it nevertheless evidences Ruyi’s ambition at that time with respect to pursuing growth opportunities in agriculture in Australia. It also reflects the CS Ag board dealing with the majority shareholder, Ruyi’s, obligation to fulfil its promise to FIRB to sell down its share in CS Ag. That is to say, CS Ag was being used as a vehicle to achieve the fulfilment of Ruyi’s obligations in Australia.

152    An Operational Update of CS Ag, dated 20 October 2015, recorded that following the board meeting in August, CS Ag had worked on the proposal to list Cubbie along with other agricultural assets in Australia by creating a diversified agricultural group. However, due to market conditions, including the drought and forecast low production, the proposal was assessed as unviable. [CB 143/3415] This reflects that CS Ag was doing Ruyi’s work in Australia in trying to find a way in which Ruyi could meet its commitment to sell down its shareholding in CS Ag.

153    On 21 January 2016, FIRB granted a three-year extension for Ruyi to sell down its share of Cubbie Station, ie by 24 January 2019. [CB 164/3649]

154    As dealt with above, in mid-2016 there was a restructure that gave Ruyi a direct or indirect shareholding of 100% of FWIDA, 90% of Lempriere Australia and 80% of CS Ag. Following that restructure, on 10 May 2016, Michael Davis, who was CEO of Lempriere Australia, wrote to Mr McKenna seeking confirmation of his position and issues around remuneration and structuring of the management of Lempriere Australia. He said that Mr Qiu had told him that he would be “operating for and representing [Mr Qiu] in the [Lempriere Australia] business”. [CB 161/3610] The email was forwarded to Madam Sun who later replied “on behalf of Chairman” (ie Mr Qiu). Her email stated that following the restructure, “Ruyi will be more involved in managing [Lempriere Australia’s] business and management” and that Mr Qiu had asked to have a face-to-face meeting with the management of Lempriere Australia “to discuss thoroughly the future business plan”. She also stated that Lempriere Australia would be “run as business usual under the CEO, Michael”. [CB 161/3609]

155    On 26 November 2016, Alex Zheng wrote to Mr Davis, Mr McKenna and Mr Brimblecombe asking them to attend “an annual work meeting to discuss Ruyi’s Australian businesses between 6-9 Dec in Ruyi HQ” in China to which the whole management team was invited. The email attached a meeting agenda. [CB 192/3756]

156    The meeting agenda was headed “Shandong Ruyi Group – Australian Business Division”. The intended participants included Madam Sun, Ms Qiu and Mr Liu as being from “Head office”, as well as people from the Energy department, the Trading department and “Ruyi Aus. Div.”. It then included Cubbie management (being Mr McKenna as General Manager and Tiffany Wang as Manager), CS Ag (being Mr Brimblecombe as CEO) and Lempriere Australia (including Mr Davis as CEO and Vishal Kapoor as CFO). The main agenda items included Cubbie and Lempriere. It also recorded: [CB 193/3757]

•    Ruyi to set up a management company in Australia to coordinate all its businesses

•    Corporate structure, responsibilities, management system and reward/punishment

157    It is not clear on the evidence whether the meeting in fact took place as planned, or whether it was delayed until 20-22 January 2017. There is an agenda and attendance details for a meeting then, but the document has not been translated from Mandarin. It is described in the court book index as “Agenda for the Ruyi Group Australian Business Working Meeting”. [CB 197/3766]

158    By bringing the senior management of all three of its Australian subsidiaries together at Ruyi’s head office in China with Ruyi’s senior leadership and people from Ruyi’s own relevant divisions, Ruyi had a high degree of direct involvement in and coordination of the businesses of the subsidiaries.

159    The first record of the term “Ruyi Australia Group” in the evidence is in the Ruyi Australia Group Operation Report for February 2017. It is a report on Cubbie Station (CS Ag) and Lempriere Australia. It was sent by email by Mr McKenna to Ms Qiu, Madam Sun and Mr Liu on 27 March 2017. There were regular monthly reports thereafter. By their nature, one can see that they are reports from the management of the Ruyi Australian subsidiaries to the Ruyi board or head office. [CB 198/3770, 211/3814] Similarly, there were regular monthly “Ruyi Australia Group” financial reports starting in February 2017 covering the financial performance of CS Ag and Lempriere Australia. They were typically sent by Mr McKenna to the Ruyi head office or board. [CB 212/3823-3835]

160    On 19 April 2017, Mr McKenna sent a Ruyi Australia Group “Management Team Structure and Strategy” “discussion paper” dated 12 April 2017 to Madam Sun, Ms Qiu and Mr Liu. He asked for a meeting in person in China “as soon as possible” to discuss it. [CB 229/4168]

161    Significantly, the paper covered matters in relation to Lempriere Australia – including that Eric Durant was the new CEO, having replaced Mr Davis in December 2016 – and CS Ag (concerning Cubbie Station). Support was requested from Ruyi for, amongst other things, “Approval of Group and [Lempriere Australia] management incentive programs” and “Resolution of pre-existing equity style participation commitments to Eric Durand and Tony McKenna”. Direction was requested from Ruyi to clarify, amongst other things, Mr Durand’s role and whether it was “intended to publicly list the Ruyi Australia Group”. [CB 222/4010, 4012, 4022] The document also stated that Mr Durand was appointed by Ruyi. [CB 222/4022] It is significant that the appointment of the CEO and clarification of their role and remuneration would ordinarily be matters for the board of the relevant company (here, Lempriere Australia), rather than the ultimate parent company.

162    The paper included a Ruyi Australia Group “Organisation Structure” which depicted “Ruyi Australia Group” at the apex and CS Ag and Lempriere Australia at the head of the two limbs below that. It reflected Mr McKenna as CEO of the Ruyi Australia Group, supported by Mr Kapoor as CFO and Ms Wang as Group Strategy. [CB 222/4016] That is consistent with Ms Qiu’s description of Mr McKenna as “the CEO of the Australian business”, by which she meant “all of Ruyi’s businesses in Australia” (T88:15-21). Mr Qiu also described Mr McKenna as “CEO of the Australian business” but then sought to walk that back and limit Mr McKenna’s role to CEO of Lempriere Australia (T56:3-17). Mr Qiu then explained that Ruyi entrusted Mr McKenna to take charge of Larundel, even though he had no formal role in relation to FWIDA (T56:32-57:9). I reject Mr Qiu’s evidence that Mr McKenna’s CEO role was only in relation to Lempriere Australia as dishonest, self-serving and in conflict with the documentary record, Ms Qiu’s evidence and aspects of Mr Qiu’s own evidence.

163    Mr Kapoor, as Ruyi Australia Group CFO, was recorded as having responsibilities for: [CB 222/4024]

•    Financial management of global trading business including risk management, funding limit allocation

•    Group financial reporting for shareholders, management and banks

•    Participation in group management

164    Those matters reflect that Ruyi was managing its interests in Australia on a de facto group basis. It is not to the point, as emphasised by Ruyi’s witnesses, that the Ruyi Australia Group was not a legal entity. Mr Materne’s response to the plaintiff’s reliance on the discussion paper as evidence of the Ruyi Australia Group being used to coordinate the running of the Ruyi businesses in Australia was to say that the document had been prepared by Mr McKenna following a number of resignations of key staff members. Mr Materne emphasised that the new CEO, Mr Durand, was to have autonomy to “build his team” and “deliver the results for which he will be held accountable, within the constraints of approved budgets and risk limits”. [CB 17/366/163] However, Mr Durand was the new CEO of Lempriere Australia, with Mr McKenna as CEO of the Ruyi Australia Group which is the level at which coordination was alleged. Given that Mr Materne did not deny that the discussion paper reflected the reality, I accept that it did.

165    Mr Qiu annexed to one of his affidavits a diagram which he said showed the corporate structure of the various Singaporean, Hong Kong, Australian and other subsidiary entities of Ruyi “which ultimately operated the Lempriere wool business, the farming business conducted at Larundel Estate and Cubbie Station”. Tellingly, the diagram is headed “Ruyi Australia Group Structure” as at January 2022. [Qiu 20/12/24 aff [30(b)], CB 413/9723]

166    On 23 June 2017, Mr McKenna put draft proposals to Ms Qiu and Mr Liu for a loan funded share scheme for the management of the Ruyi Australia Group. He asked that the proposals be reviewed “before putting them to Ruyi board for approval”. [CB 267/5170] The proposals included for some directors and senior management to be granted “equity in the Ruyi Australia Group”. The proposed beneficiaries were Ms Qiu and Mr Liu, Mr McKenna, Mr Kapoor and Mr Brimblecombe. The proposals were framed as being put to Mr Qiu, Madam Sun, Ms Qiu and Mr Liu. [CB 266/5169]

167    The agenda for the December 2017 meeting of the Ruyi Australia Group with the Ruyi board recorded that there were “13 months to achieve the FIRB mandated sell down of Cubbie equity”. Further details were given on various efforts that had been made in negotiations with Macquarie, again demonstrating the role of Ruyi’s subsidiaries in Australia – in this case the coordinating structure Ruyi Australia group – in doing Ruyi’s work in trying to achieve the sell down. [CB 296/6000] Beneath that, Mr Brimblecombe was recorded as CEO of “Cubbie Ag” and Mr Durand as CEO of “Lempriere Wool”. [CB 222/4018]

168    Mr McKenna played a key role for Ruyi in Australia in his work as CEO of the Ruyi Australia Group. For example, on 20 September 2018 he reported on a number of matters to Ruyi. They included the work that he had been doing in negotiating, with Macquarie, Ruyi’s sell down of its equity in Cubbie Station and advising on how the deal should be structured. That included cross guarantees between the otherwise independent subsidiaries, CS Ag and Lempriere Australia, and the involvement of the off-shore subsidiary CSTT. He also reported on efforts to purchase more land to expand Ruyi’s cotton operation and the potential sale of a Ruyi subsidiary in India that had the brand Georgia Gullini. [CB 342/7137]

169    On the following day, ie 21 September 2018, Mr McKenna sent the August operations report for Cubbie and Lempriere to Madam Sun, Ms Qiu and Mr Liu by email that reflected him to be CEO of the Ruyi Australia Group. [CB 343/7142]

170    Mr McKenna played a key role in negotiating the sell-down of Ruyi’s interests. That included, as mentioned, negotiating with Macquarie Bank. Although Ruyi submits that he did that in his capacity as manager of Cubbie Station through Annek and director of CS Ag, it is notable that it coincided with his appointment as CEO of Ruyi Australia Group and Macquarie wrote to him in that capacity suggesting that that is how he presented and saw himself. [eg CB 294/5994, DCS28] A joint press release by Macquarie and “Ruyi Australia” on 2 August 2019 announcing the sell-down quoted Mr McKenna as “Ruyi Australia Group Chief Executive Officer”. [CB 366/8541]

171    Ruyi submits that Mr McKenna’s involvement in the sell-down is unsurprising and is “entirely explicable” on the basis that the manner in which compliance with the FIRB undertakings was to be achieved was a matter of great import to CS Ag. [DCS141-142] I accept that the effect of the FIRB undertakings was that either a party other than CSTT would need to take appropriate equity in CS Ag or CS Ag would need to sell part of its interest in Cubbie Station. In either situation, I accept that Mr McKenna would justifiably be involved. However, the evidence goes much further and establishes much more than that kind of involvement. Mr McKenna really was “Ruyi’s man on the ground”.

172    The management of Ruyi’s Australian subsidiaries in a coordinated fashion under the name of the Ruyi Australia Group from early 2017 and thereafter is supported not only by the documentary evidence, but also by the witnesses. For instance, Mr Materne said that the Ruyi Australia Group was “an easy way of referring to the fact that, ultimately, Shandong Ruyi, or the Qiu family, had three distinct different businesses in Australia and it was part of our responsibility to oversee those” (T207:16-18). He accepted that he had CFO responsibility for all three of FWIDA, CS Ag and Lempriere Australia, although he “wasn’t really involved in FWIDA initially” (T206:32-34). Ms Qiu accepted that the Ruyi Australia Group was “a way of coordinating the management of the Australian companies, for them to coordinate with each other” (T145:38-41).

173    The coordinated management of Ruyi’s Australian subsidiaries is reflected in their debt facilities. As Mr Materne explained in relation to the Emerald Jade Ltd debt (dealt with more fully in the next section), CS Ag and Lempriere Australia had a single debt funding facility from ANZ Bank which was cross-collateralised on a combined basis (T202:16-25).

174    The plaintiff also relies on repeated visits to Australia, and in particular the Australian subsidiaries, by Ruyi personnel in the years 2012 to 2018. Details of the visits are recorded in an aide-mémoire prepared by the plaintiff’s lawyers and handed up as part of its submissions. None of those details has been challenged. No purpose is served by repeating them here. A high-level summary will suffice.

175    In the seven-year period referred to, the visits of Ruyi personnel to Australia included the following:

(1)    On at least two occasions in 2014, CS Ag board meetings were held at the offices of Ruyi’s solicitors, Norton Rose Fulbright, in Sydney and attended by Ruyi’s appointees to the board and, separately, a Ruyi representative. [CB 119/3082; 123/3131]

(2)    “Several groups of Ruyi delegations” made “farm visits” to Cubbie Station in 2015. [CB 147/3427]

(3)    In 2016, there were several visits to Australia by Ruyi personnel. They included at least two visits by Mr Qiu, delegations to discuss Lempriere Australia and visits to Cubbie Station concerning a solar investigation project and to investigate drip irrigation.

176    Although the meetings taken on their own, and taken together with the many visits by the Australian personnel to Ruyi’s head office in China for board and other meetings there, may not establish that Ruyi was carrying on business in Australia, they are relevant to the broader context of Ruyi’s involvement in Australia. They form a significant aspect of Ruyi’s close involvement in and direction of its Australian subsidiaries.

177    Ruyi’s involvement in Australia went even further. In or about early 2016, CS Ag engaged Ernst & Young to undertake pre-feasibility work with respect to a “Cubbie Station Solar Hybrid Project”. [CB 149/3431] By April 2016, the board of CS Ag was considering whether to proceed to the next stage of a full feasibility study, including financial, commercial and technical considerations. [CB 151/3478] Around that time, Ruyi sent a letter to Mr Brimblecombe in which Madam Sun offered “our support for the Project and specifically for this letter to Paul and Cubbie Station”. [CB 153/3490]

178    Ruyi accepts that it provided assistance to CS Ag in respect of the Solar Project, including by placing CS Ag in contact with a Chinese contractor that was being considered for the project. It also accepts that Ruyi staff formed part of the “working group” in relation to the project. [CB 217/3883] Pointing to a number of matters, Ruyi submits that the solar project itself was at all times undertaken by CS Ag. Those matters are, first, that Mr Brimblecombe as “CEO of Cubbie Ag” had as one of his responsibilities the “Cubbie Solar project”, although it should be noted that that is a responsibility apparently allocated by Ruyi. [CB 222/4020] Second, Ruyi says that the costs of the project were borne by CS Ag, pointing to an email from Mr Brimblecombe on 17 March 2017 and CS Ag’s business plan for June 2017 in which the total estimated costs of the project of $14.865 million are recorded. [CB 206/3800; 262/5072] But it is not at all clear that the costs were borne by CS Ag and not by Ruyi, noting that at the proposal stage it was envisaged that CS Ag would contribute only about 5% of the project cost. [CB 154/3510] Third, Ruyi says that CS Ag undertook the “grid connection process”, discussed a “Part Purchase Agreement” with Ergon and met with ANZ Banking Group regarding financing. [CB 155/3511; 213/3842; 262/5071] Fourth, Ruyi says that CS Ag made the decision to implement the solar project by using local Australian suppliers (T110:6).

179    CS Ag listed Ruyi as a “Project sponsor” and described Ruyi as the “key sponsor of the Project” in its expression of interest (EOI) to the Australian Renewable Energy Agency for project funding, stating that “[t]he project sponsor has identified and will coordinate a stream of activities necessary to reach the successful completion of the proposed project”. [CB 154/3502, 3505, 3507] It also stated that Ruyi has investments and “operations” in Australia. [CB 154/3503] It was said that both Ruyi and Lempriere had sufficient financial capacity to secure funding for the project and that Ruyi was “eagerly interested” in entering into the renewable energy sector in Australia. [CB 154/3507]

180    Ruyi engaged the major contractor, Chint, for the construction of the solar plant. [CB198/3775]

181    Turning now to bring the matters addressed in this section of these reasons together, they establish at least the following.

182    First, in particular through the Ruyi Australia Group, but in any event, Ruyi maintained a high degree of direction and oversight over the Australian subsidiaries. That included coordinating various matters between them to serve Ruyi’s own business purposes.

183    Second, the Ruyi Australia Group was not only an internal organising mechanism to better achieve Ruyi’s business objectives in Australia. It was also represented to third parties (and the market) as reflecting and representing Ruyi’s business interests in Australia.

184    Third, the Ruyi Australia Group and Mr McKenna as its “CEO” represented Ruyi and pursued its business interests in Australia in the work that he did to advise on, negotiate and conclude the sell-down of Ruyi’s interests in Cubbie Station.

185    Fourth, Ruyi’s business interests in Australia were also pursued by it regularly having its own personnel and officers on the ground in Australia and involved in the work of the Australian subsidiaries.

186    Those matters, taken together, go well beyond mere involvement by a foreign parent in a local subsidiary, as submitted by Ruyi with reference to Bray at [80], but amply establish that Ruyi carried on business in Australia and is therefore a Part 5.7 body.

187    The coordinating structure that was named the Ruyi Australia Group with its own executive personnel and projects was independent of and superimposed over the Australian subsidiaries; it was interposed between the Ruyi board, to which it reported, and the Australian subsidiaries which it governed, yet it had no independent existence as a legal entity. As such, it was a governance structure of Ruyi itself – a branch of Ruyi – operating in Australia with its own Australian-employed and -based personnel; it was Ruyi conducting business in Australia.

188    The role of Ruyi in Australia is further illuminated by the discussion in the next section of these reasons about FWIDA. Those matters also support the conclusion in this section with regard to Ruyi carrying on business in Australia.

H.     FWIDA as Ruyi’s alter ego?

189    The plaintiff relies on the following matters to support its submission that FWIDA is to be regarded as merely Ruyi’s alter ego in Australia.

190    The evidence establishes that over a significant period of time Ruyi paid FWIDA’s operating costs by making direct payments to FWIDA’s creditors. The payments were authorised by Mr Qiu for Ruyi – Mr Qiu was not a director of FWIDA. The payments apparently started in December 2015. [CB 253/4860, SCB#2 19/252-276, T68:25-69:16] In November 2017, it was recorded in the minute of a meeting of the Ruyi Australia Group with the Ruyi board that FWIDA’s costs were being paid “on a month to month basis” by Ruyi, but not quickly enough as some creditors had taken legal action against FWIDA to enforce payment of overdue accounts. The generally poor financial state of FWIDA is recorded, including the interest cost of servicing the $4.6 million acquisition funding. [CB 290/5442-3]

191    Mr McKenna represented the Ruyi Australia Group at that meeting. The following was recorded: [CB 290/5442-3]

We have been asked to take on management responsibility for Larundel and to look at restructuring it to: i) Isolate the farming operations from FWIDA; ii) Better utilise the equity in the balance sheet to generate cash flow to support the farming and interest costs.

192    The “We” in that minute is the Ruyi Australia Group. Mr McKenna’s proposal for how the restructuring might be done was then set out. It was recorded that if “we do the restructure”, the “near term operating costs, repairs and capex” of Larundel (ie FWIDA) would still require $450,000 from Ruyi. [CB 290/5444] If the restructure was not done, $1 million plus the monthly operating shortfall would be required on an ongoing basis to support Larundel. [CB 290/5445]

193    The proposed restructure illustrates the degree to which it was understood that Ruyi could control its subsidiaries in Australia. The proposal was that new wholly owned subsidiaries be established in Australia, and that there be various asset swaps and borrowings under subordinated vendor loans – including that one of the new subsidiaries acquire Larundel from FWIDA – that would have tax advantages and that would raise additional equity in Lempriere Australia enabling it to support its bank debt. It was recorded that advice would be required from Ruyi of any impact on FWIDA. [CB 290/5444]

194    At the December 2017 meeting between the Ruyi Australia Group and the Ruyi board, a similar recording was made about FWIDA’s tough financial circumstances, that Ruyi was meeting FWIDA’s costs on a month-to-month basis, and that there were a number of options for a restructure. In that regard, it was recorded that the Ruyi Australia Group required “to better understand Ruyi’s desired outcomes so that [they] could implement the optimal solution”. [CB 299/6019-6020] The need for clear direction from Ruyi was reiterated in a Ruyi Australia Group update in June 2018. [CB 329/6319]

195    Ruyi Australia Group took over the management of Larundel in 2018. In that regard, Mr Zheng reported to Madam Sun and Mr Liu on 13 September 2018 that there had been a smooth transition, and he submitted a summary of Ruyi Australia Group’s needs for financial support going forward for the development of the Larundel farming business. [CB 341/7136]

196    Two days later, on 20 September 2018, Mr McKenna’s “Agenda and Background” for a Ruyi Australia Group meeting with the Ruyi board referenced Mr Zheng’s funding request to Ruyi for support for capital works at Larundel. Mr McKenna stated that they had put the development proposal for Larundel on hold until they had confidence of funding, “e.g. from Ruyi or Cubbie sell down”. [CB 342/7141] The plaintiff relies on this evidence to submit that as CS Ag had no ownership interest in FWIDA or Larundel, there was no reason for revenue from CS Ag’s sell-down of Cubbie Station to be used to provide funding for FWIDA’s hotel development other than the controlling interest of Ruyi. However, the sell down referred to was to dilute Ruyi’s shareholding interest in CS Ag, as Ruyi had promised when it obtained FIRB approval to buy Cubbie Station. Thus, the sell-down had the potential to raise revenue for Ruyi which Ruyi could then use to further fund its direct subsidiary FWIDA. So, I do not consider the comments about possible funding for FWIDA coming from the Cubbie sell down to necessarily, or even probably, indicate that it was envisaged that CS Ag might directly fund FWIDA.

197    Lastly, and possibly most significantly, there is a set of transactions relating to Emerald Foods Group, a New Zealand-based ice cream manufacturer.

198    Ms Qiu explained in her affidavit that a Facility Agreement dated 28 May 2015 was concluded between (among others) Emerald Foods Group (HK) Ltd (Emerald Foods Group) as borrower and Emerald Jade Ltd (Emerald Jade) as lender. Emerald Jade is also referred to as being a vehicle of ADM Capital. Under the Facility Agreement, Emerald Jade provided funding to Emerald Foods Group to facilitate the acquisition of the Emerald Foods Group. That acquisition was a business venture pursued in New Zealand by Mr Liu. The initial facility was for USD34 million. [CB13/258, 14/262/9, 130/3219, 3299]

199    To secure Emerald Foods Group’s obligations under the Facility Agreement, Ms Qiu provided a personal guarantee in favour of Emerald Jade in order to support her then husband, Mr Liu. To further secure the borrower’s obligations, on 22 April 2020, Ms Qiu and Mr Liu in their capacities as directors of FWIDA caused FWIDA to enter into a Mortgage Designation Deed between Emerald Jade as mortgagee and FWIDA as mortgagor. Pursuant to that deed, FWIDA guaranteed the obligations of the borrower under the Facility Agreement and granted a mortgage in favour of the borrower over the land comprising the Larundel Estate. [CB 13/258, SCB#1 9/121]

200    Ms Qiu stated in her affidavit that Ruyi was not a party to, and had no involvement whatsoever in, the Emerald Foods transaction or the related financing arrangements with Emerald Jade. [CB 13/258] It is correct that Ruyi was not a party to the Facility Agreement and that it was not an independent guarantor of the loan. One of the guarantors was Mild International Pty Ltd, an Australian company of which Ms Qiu and Mr Liu were the shareholders and directors, and Mild was a shareholder in Ruyi. Mild’s Ruyi shares were used to secure the facility. [CB 130/3230, 3254, 3298] Also, one of the original guarantors under the Facility Agreement was FWID HK which was a wholly owned subsidiary of Ruyi. Its guarantee was up to the lower of CNY99 million (about USD16 million) or FWID HK’s net asset value. [CB 130/3227, 3234, 3266]

201    At some stage, although the evidence does not reveal when it was, FWIDA lent Ms Qiu and Mr Liu $28,410,712. [CB 382/9395] It is not apparent whether that was to do with Mr Liu’s purchase of the Emerald Food Group. In any event, the only benefit that Ms Qiu could identify FWIDA having received from that loan to two of its directors was the accrual of interest (T176:38-177:27). The problem with that answer is that in 2019 FWIDA forgave Ms Qiu and Mr Liu the accrued interest debt. [CB 382/9395, 384/9404] The debt was repaid by Ruyi paying a dividend that was otherwise owing to Mild, to FWIDA for the account of Ms Qiu and Mr Liu. FWIDA then directed that payment to be made to CSTT to discharge a debt owed by FWIDA to CSTT. [CB3/95/29, 384/9405, T178:38-179:2]

202    Mr Qiu explained in his affidavit that he was also a guarantor of the facility from Emerald Jade Ltd (ADM Capital) to Emerald Food Group. [CB 14/262/10] He explained that on 1 April 2019, the parties to the Facility Agreement and various additional parties entered into an Amendment and Restatement Deed with respect to the facility. The terms of the 2019 Amendment and Restatement Deed included that CS Ag and CSTT became additional guarantors of the facility and agreed to pay to the lender the net proceeds received by either of them from the sale of Cubbie Station or any assets of Cubbie Station. [CB 14/262/15] CS Ag’s liability in that regard is recorded in its 31 December 2019 annual report, where the amount of any future liability under the contingent guarantee could not be reliably measured by the directors. [SCB#1 10/159] It is not explained what interest, least of all benefit, CS Ag and CSTT had in securing Emerald Food Group’s debt which was incurred for the benefit of a business venture undertaken by Mr Liu.

203    On 13 March 2020, Mr McKenna wrote to, amongst others, Mr Qiu, Ms Qiu and Mr Liu by email with the subject line “Events of Default”. It appears that CS Ag was in default under various facilities in relation to Cubbie Station. Mr McKenna’s report of the progress on the resolution of the issues raised by the straitened financial circumstances included, in relation to default on the payment owing under CS Ag’s “ADM guarantee” (ie the guarantee in favour of Emerald Jade): [CB 387/9420]

a.     I have been working with ANZ, Macquarie and ADM to manage ADM and remove the threat that they commence winding up proceedings against CS Agriculture. They currently have a claim for $65 million against CS Agriculture.

b.     We are nearing agreement between the parties on a term sheet that would give ADM a registered second mortgage on the Cubbie land and water behind ANZ.

c.     The arrangement will give them the right to the proceeds of the sale of Cubbie after ANZ has been repaid in full. ADM would relinquish their current right to enforce payment against CS Agriculture, appoint a receiver and force the sale of our share of Cubbie.

204    Ruyi was still under pressure in relation to the Emerald Jade/ADM debt in May 2021. On 7 May 2021, Mr McKenna wrote to Mr Qiu, Ms Qiu, Madam Sun, Mr Liu and Mr Brimblecombe about the ANZ Bank facility for the Ruyi Australia companies. He warned about the huge damage being caused to the Ruyi Australia businesses because the dispute with ADM had not yet been resolved, and how the ANZ facility to CS Ag and Lempriere Australia was in jeopardy. [CB 402/9542]

205    Mr Qiu explained that on 4 January 2022, a Deed of Settlement was concluded after Emerald Jade had undertaken enforcement proceedings in various jurisdictions against various parties including himself personally, CS Ag and CSTT. Under the settlement, it was agreed that upon completion of the sale of Cubbie Station, the Settlement Amount (as defined) would be paid to Emerald Jade in exchange for releases of the Security Agreements (as defined). [CB 14/263/21]

206    Save by way of high-level submission, the plaintiff does not explain how the above matters lead to the conclusion that the independent corporate personality of FWIDA was disregarded by Ruyi and that as a consequence FWIDA’s business activities in Australia should be regarded as being Ruyi’s activities.

207    The six questions posed by Atkinson J in Smith, Stone & Knight can be answered as follows in the case of FWIDA.

208    First, were the profits of FWIDA treated as the profits of Ruyi? There is no evidence that they were, so this does not assist the plaintiff.

209    Second, were the persons conducting the business of FWIDA appointed by Ruyi? Ms Qiu denied that Ruyi assigned any “operational managers” to any of the Ruyi foreign entities (T91:11). In context, I take that denial to be in relation to any staff as opposed to Ruyi appointed non-executive directors. However, in January 2018, apparently on the instruction of Madam Sun (T91:20-27), Ms Qiu sent an email to Mr McKenna who was at that time CEO of the Ruyi Australia Group, asking for quarterly job evaluations for “all Ruyi directly assigned staffs in Australia business”. [CB 303/6146-7] Ms Qiu sought to explain the reference to directly assigned staff in Australia on the basis that it was never her or Ruyi’s intention to have the evaluation form, that was attached to the email, completed and returned to Ruyi (T92:20-26). She said that the intention was for the Australian managers to have their own evaluation system (T92:46). I reject her evidence on this issue. As she accepted (T93:1-5), her evidence of her intention and sending the email is plainly at odds with what the email actually says. I find that Ruyi did directly assign employees to work in the Australian businesses.

210    The question then is whether there were any such employees working for FWIDA. The plaintiff identifies Mr Zheng. Ms Qiu’s evidence is that Mr Zheng was employed by one of Ruyi’s shareholders from 2013 to October 2017 when he was then employed by CS Ag. [CB 18/386/42(e)] In May 2026 he was employed as Information Communications and Technology Manager at Lempriere Australia. [CB 17/253/22]

211    The evidence also establishes the following in relation to Mr Zheng.

212    First, in December 2016 he was recorded as being a “Manager Australia Division” of Ruyi’s “International Business Department”. [CB 193/3757] That is consistent with him still being employed in the PRC at that time, but not by the Ruyi shareholder identified by Ms Qiu.

213    Second, in April 2017 he was recorded in a contact list of Ruyi’s Cubbie Solar Project Working Group as a “Manager” for Ruyi (not CS Ag where the solar project was being investigated or pursued). He also had a Chinese mobile phone number, and no Australian phone number, listed. [CB 217/3883]

214    Third, from as early as April 2016 to as late as April 2017, Mr Zheng used an email address with the FWIDA domain @fwida.com.au. [CB 152/3480, 159/3588, 185/3724, 189/3750, 192/3756, 217/3883] From at least May 2018, Mr Zheng used an email address with a Ruyi Australia Group domain @ruyiaustralia.com. [CB 318/6233]

215    Fourth, in at least the period April 2016 to November 2016, Mr Zheng used an e-signature on his emails that indicated that he was at, or writing on behalf of, “[FWIDA] a RuYi company”. He listed two Chinese phone numbers (one for a mobile and the other for a landline) and no Australian phone numbers in his e-signature, suggesting that he was physically in China. [CB 152/3487-8, 159/3598-3601, 185/3744, 189/3750, 192/3756]

216    Fifth, Mr Zheng’s work in Australia caused him to be involved with matters specifically to do with Larundel and hence FWIDA. Those matters include the Larundel hotel development in May and June 2018 [CB 318/6233, 330/6320], the management of Larundel in September 2018 [CB 341/7136, 342/7141] and the sale of Larundel in September 2025 [SCB#2 36/460]. However, he was also involved in matters specifically to do with Cubbie Station and hence CS Ag. Those included in the Cubbie Solar Project in April 2017 and June 2018 [CB 217/3883, 331/6321] and a Cubbie Station irrigation investigation in December 2016 [SCB#2 26/326]. Between May and September 2018, Mr Zheng listed an Australian mobile number in his e-signature along with his Chinese mobile number. [CB 318/6234, 341/7136]

217    The result of all that is that it cannot be concluded that Mr Zheng was employed by FWIDA – his email domain and e-signature are insufficient given all the matters not concerning FWIDA that he was also involved with and that for much of the relevant period he seems to have been based in China. However, it is clear, and I find, that Mr Zheng was a Ruyi employee directly assigned to work in Australia in Ruyi’s Australian businesses. That does not support a conclusion that FWIDA’s separate corporate identity was ignored, but it does support the conclusion that through the Ruyi Australia Group, Ruyi conducted business in Australia.

218    The third, fourth and sixth Smith, Stone & Knight questions should be taken together as they all concern the degree and manner of control and direction, if any, exerted by the parent company over the subsidiary. Ruyi justifiably points out that in many of the emails from the Australian personnel to Ruyi personnel, and meetings between the Australian personnel and Ruyi personnel, concerning FWIDA, the Ruyi personnel were directors of FWIDA. Those emails and meetings consequently evidence the control of FWIDA by its board rather than by Ruyi itself. The fact that the board members were appointed by Ruyi as controlling shareholder is not to the point. As observed by Leeming JA in Burrows v Macpherson & Kelly Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 at [124] and [126], mere control by the parent company of the subsidiary is an insufficient basis to disregard corporate personality and if it did then it would apply to the large majority of cases of wholly owned subsidiaries.

219    That analysis, however, is incomplete. That is in particular because the evidence supports the conclusion that from November 2017, the Ruyi Australia Group took over the management of Larundel which was FWIDA’s only business. As already canvassed, the Ruyi Australia Group was itself an unincorporated instrument of Ruyi to coordinate and manage the Australian subsidiaries, including FWIDA. As also canvassed above, various matters required the approval or authorisation of Mr Qiu in circumstances where he was not a director of FWIDA.

220    But most tellingly, FWIDA’s assets were used to secure the debts of other Ruyi entities and Mr Liu in circumstances where there was no benefit or justification for FWIDA doing so. That demonstrates the high degree to which FWIDA was used by Ruyi for the interests of the broader Ruyi group including other Ruyi subsidiaries. That is to say, in those instances Ruyi disregarded FWIDA’s separate corporate personality. The manner in which Ruyi funded the day-to-day expenditure of FWIDA, including paying FWIDA’s creditors directly, is further indicative of that.

221    The fifth question is whether Ruyi made the profits of FWIDA by its skill and direction. There is evidence of FWIDA’s financial position by way of unsigned financial reports for the company for the 2014 to 2019 calendar years, and signed financial reports for the 2020 to 2022 calendar years. Those reports show that in every year from 2013 to 2022, except 2021, FWIDA operated at substantial losses. [CB 33/1464, 34/1478, 35/1492, 36/1506, 37/1521, 38/1537, 39/1551, 40/1571, 41/1597] The only reason a profit was reported in 2021 was because CSTT forgave FWIDA loan interest payable in the sum of $4,900,676 and that amount was treated as income. [CB 40/1581, 1585] In the circumstances, there is no evidence that FWIDA made a profit, so the fifth question is essentially inapplicable.

222    Taking all those matters together, in particular the management of FWIDA by the Ruyi Australia Group and the cross-collateralising of its assets, I am satisfied that it should be concluded that Ruyi disregarded FWIDA’s corporate personality such that the business activities of FWIDA were Ruyi’s business activities. From when the Ruyi Australia Group was formed and FWIDA came under its coordinated management and control, Ruyi’s treatment of FWIDA was as if it was a mere trading division rather than having its own corporate personality. FWIDA’s business activities are accordingly to be regarded as Ruyi’s activities so Ruyi was carrying on business in Australia.

I.     Conclusion

223    For those reasons, the judgments against Ruyi in favour of the plaintiff should be enforced. Also, Ruyi carried on business in Australia within the meaning of “Part 5.7 body” in s 9 of the Corporations Act and is therefore a Part 5.7 body. Ruyi having accepted that, in the event of my reaching that conclusion, there is no reason why it should not be wound up under s 583 of the Corporations Act, I conclude that Ruyi should be so wound up.

Associate:

Dated:    2 September 2026