Justice Farrell, who will remain with the Federal Court until 1 August 2023, did not provide an “acceptable reason” for why she could not conclude the matter herself or an explanation for the delay.

“The problem does not appear from the evidence to be one of inability … except perhaps in a euphemistic sense of ‘inability’.

“Rather, the problem seems to be one of unwillingness to discharge the judicial function of giving judgment in the proceedings.

“The Chief Justice has apologised in correspondence to the parties and their legal representatives on behalf of the court for this situation. I wish to add my own apology,” Justice Jackman said in the judgment.

The judgment concerns NSW solicitor Ronglai Zhang (Martin) and the student program he and businessman Peiliang Zhang operated between the People’s Republic of China (PRC) and Australia.

Mr Martin was found by Justice Jackman to be a “witness who would give whatever answer was necessary to suit his forensic and commercial purposes at any given time, irrespective of its consistency with other evidence, including his own”.

Mr Martin was the principal and director of W&H Lawyers until it was wound up in December 2021 by order of the Supreme Court of NSW. Mr Martin then became bankrupt in March 2022.

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After five years of working together on investment opportunities, Mr Martin travelled to PRC and met with Mr Zhang to discuss having parents in PRC pay money to Mr Zhang’s business, Conglin China, which would then use its foreign exchange quota to transfer the money to its Australian subsidiary and onto its Australian business.

There would be a gap between money being put into the fund and used for investments where Conglin China could borrow the money from the fund at a cheaper rate than market rates. Conglin China also guaranteed repayment of the funds to the parents.

Mr Martin established the business Smart Education Program (SEP) and SEP Asset Management (SEPAM) to collect the transfers and deliver the programs to students whose parents had invested.

A year later, in July 2017, Conglin China was “going under”, and Mr Martin took steps to close the SEP business down.

Mr Martin alleged a contract was formed between his two businesses and Conglin China and Conglin Australia in February 2016, but this was rejected by the Federal Court as there was no evidence to establish “an intention to enter a binding legal relations”.

The court had been asked to consider whether representations made by Conglin China were misleading, including its ability to exchange currencies and funds between PRC and Australia.

The terms of the foreign exchange quota “clearly indicated” it was available only for increases in Conglin Australia’s investment capital and could not be used by the purpose of SEP’s business.

Justice Jackman found it was “objectively misleading” for Mr Zhang and his businesses to represent that it could exchange currencies and transfers between PRC and Australia for the business.

However, Justice Jackman also found Mr Martin was “fully aware” of the quota within months of discussing the business idea with Mr Zhang.

“Why then did Mr Martin proceed with the business, despite knowing that an important element of the business could not lawfully be performed?” Justice Jackman queried in the judgment.

“In my view, the answer is Mr Martin was not concerned about the legalities of the exchange of currencies and transfer of funds, provided … that exchange and transfer could be affected.

“If the exchange and transfer of funds could be disguised in such a way as to appear lawful to any relevant law enforcement agency, then Mr Martin was untroubled.”

Justice Jackman said Mr Martin also denied being a legal adviser to Mr Zhang and his entities, which was a “remarkable line … given there is an abundance of documentary evidence indicating the contrary”.

The court also considered the issue of a costs agreement Mr Martin issued to Mr Zhang and his “wholly implausible” evidence that he had used the “wrong template” in the early years of his firm.

Mr Martin said he issued the agreement for “compliance purposes”, but then conceded he had been warned by the NSW Law Society in respect of his failure to enter into necessary costs agreements.

“It is difficult to reconcile his initial evidence that in the ‘early days’ costs agreements were issued when they should not have been … and his later evidence that he had been in trouble for failing to issue costs agreements, so had decided to issue costs agreements.

“To my mind, that revealed a witness who would not have been in the least bit troubled by a flaw in the legalities of using the quota for the purpose of the proposed SEP business, provided that the unlawfulness was not detected,” Justice Jackman said.

Mr Martin’s claim fell through, and a freezing order made against Mr Zhang and his entities by Justice Farrell in September 2017 was discharged. A cross-claim by Mr Zhang also failed.