BCEG Australia v Yu Xiao - [2020] NSWSC 1234

Supreme Court

New South Wales

Medium Neutral Citation: BCEG Australia v Yu Xiao & Ors [2020] NSWSC 1234
Hearing dates: On the papers
Date of orders: 10 September 2020
Decision date: 10 September 2020
Jurisdiction: Equity - Commercial List
Before: Stevenson J
Decision:
Costs of the plaintiff’s notice of motion of 18 February 2020 to be the plaintiff’s costs in the cause

Catchwords:
COSTS – List Response claiming privilege against self-incrimination - motion to strike out Response on basis that claim for privilege inadequately articulated – resolved on basis defendants circulate Amended Response – proposed Amended Response resolved shortcomings in original response – leave granted to file Amended Response

Legislation Cited:
Practice Note SC Eq 3

Category: Costs
Parties: BCEG International (Australia) Pty Ltd (Plaintiff)
Yu Xiao (First Defendant)
Yan Ying Chen (Second Defendant)
Interlink Laboratory Pty Ltd (Third Defendant)
Interlink Wagga Central Pty Ltd (Fourth Defendant)
West Wyalong Marketplace Pty Ltd (Fifth Defendant)
Representation:
Counsel:
D L Williams SC with N Riordan (Plaintiff)
C Withers with B Cameron (Defendants)
Solicitors:
Thomson Geer (Plaintiff)
Holding Redlich (Defendants)

File Number(s): 2019/310768

Judgment

The plaintiff, BCEG International (Australia) Pty Ltd, sues its former director, Mr Yu Xiao, Mr Xiao’s wife Ms Yan Ying Chen (who BCEG alleges was a de facto director) and three associated companies.
BCEG makes very serious allegations against Mr Xiao and Ms Chen, which it summarised in its Commercial List Statement as follows:

“The relevant conduct said to constitute breaches of fiduciary duty took place in the context of [BGEC] undertaking the development and construction of a private hospital on the Gold Coast, and involved [Mr] Xiao and [Ms] Chen preparing fraudulent documents intended to inflate the costs of construction of that project so as to enable them to cause [BCEG] to borrow additional funds which [Mr] Xiao and [Ms] Chen are said to have caused to be diverted to fund certain other construction projects they were separately undertaking in respect of which the plaintiff held no interest.”

BCEG alleges that Mr Xiao and Ms Chen engaged in deliberate and systemic fraud and in conduct which is criminal in nature.
By notice of motion filed on 18 February 2020, as amended on 26 June 2020, BCEG sought an order that the defendants’ List Response be struck out and that the defendants not be permitted to raise any new defence not already raised on the pleadings, without leave.
BCEG’s complaint about the Response was, in substance, that the defendants sought to invoke the privilege against exposure to civil penalties and self-incrimination on a global basis, rather than doing so on a contention by contention basis and in a manner that identified the particular ground relied on in relation to each contention.
The manner in which the defendants sought to invoke the privilege was set out in paragraphs 5 and 6 of the Response:

“Claiming the privileges in this response
[5] For each allegation in the Commercial List Statement pleaded against the [Mr Xiao or Ms Chen] where [Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NSWSC 1234
Decision Date: 10 September 2020

CaseChat Overview and Summary

BCEG Australia initiated proceedings against Yu Xiao, alleging various breaches of contract and associated damages. The dispute was heard in the Federal Circuit Court, where the defendants sought to claim privilege against self-incrimination in their List Response. The primary legal issue was whether the defendants had adequately articulated their claim of privilege in their List Response, which the plaintiff argued was insufficiently detailed.

The court addressed the issue by examining the nature of the privilege claimed by the defendants and the adequacy of their articulation of it in the List Response. The defendants submitted an Amended Response to rectify the shortcomings identified in the original response. The court found that the proposed Amended Response adequately addressed the deficiencies in the original response and granted leave for the defendants to file the Amended Response. This decision allowed the defendants to properly assert their claim of privilege against self-incrimination, ensuring their rights were protected within the legal framework.

The court's reasoning was focused on ensuring that the defendants' rights to claim privilege were upheld, while also allowing the proceedings to progress with clarity and fairness. By granting leave to file the Amended Response, the court balanced the defendants' right to claim privilege with the need for procedural fairness and clarity in the case. The final orders of the court allowed the defendants to file their Amended Response, thereby addressing the issue of inadequate articulation of the privilege claim and ensuring the case could proceed on a sound legal footing.

Orders