BCEG Australia v Yu Xiao (No 2)

[2020] NSWSC 1403

Supreme Court

New South Wales

Medium Neutral Citation:

BCEG Australia v Yu Xiao & Ors (No 2) [2020] NSWSC 1403

Hearing dates:

On the papers

Date of orders:

13 October 2020

Decision date:

13 October 2020

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Application to set aside subpoenas dismissed

Catchwords:

CIVIL PROCEDURE – subpoenas – issued prior to delivery of evidence – whether have the effect of subverting operation of Practice Note SC Eq 11 – where defendant’s positon is that they should not serve evidence until plaintiff’s case is closed – where neither subpoena recipient has objected to ambit of subpoena – where documents sought in one subpoena not likely to be in possession of defendants

Legislation Cited:

Practice Note SC Eq 11

Cases Cited:

BCEG Australia v Yu Xiao [2020] NSWSC 1234

New Price Retail Services Pty Ltd v Hanna [2012] NSWSC 422

The Owners – Strata Plan No 76902 v Roads and Maritime Services [2017] NSWSC 528

Category:

Consequential orders (other than 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

1. The background to these proceedings is set out in my judgment of 10 September 2020. [1] The proceedings have reached the stage where the defendants have filed an Amended Commercial List Response and the plaintiff has been ordered to serve its evidence by 6 November 2020.

   1. BCEG Australia v Yu Xiao [2020] NSWSC 1234.

2. On 27 August 2020, by consent, I gave BCEG leave to issue subpoenas returnable on 14 September 2020.

3. BCEG has now issued subpoenas to the Commonwealth Bank of Australia and to the former liquidator of Trojjan (BCEG) Pty Ltd, Mr Richard Stone. Trojjan was the builder engaged by BCEG to carry out the “Varsity Lakes Project”. In these proceedings BCEG alleges that the costs of the Varsity Lakes Project were inflated in order to divert funds BCEG paid to Trojjan to entities in which Mr Xiao and Ms Chen had an interest.

4. By notice of motion filed on 10 September 2020 the defendants seek to have the subpoenas set aside primarily upon the basis that their service constitutes an abuse of process by reason of being an attempt to sidestep Practice Note SC Eq 11.

5. Neither CBA nor Mr Stone has raised any objection in relation to the subpoena. Indeed, CBA has produced the some of the documents called for by the subpoena and is in a position to finalise production once the outcome of this application is known.

6. Although Practice Note SC Eq 11 does not, in terms, apply to a subpoena or to a notice to produce because neither process seeks an order for disclosure of documents:

“It will … be an abuse of process … where the subpoena is used as a means of obtaining disclosure of documents which, in accordance with para 4 of SC Eq 11, could only be obtained before the service of evidence in exceptional circumstances necessitating disclosure.”[2]

2. The Owners – Strata Plan No 76902 v Roads and Maritime Services [2017] NSWSC 528 at [20] (Ball J, citing New Price Retail Services Pty Ltd v Hanna [2012] NSWSC 422 at [19]).

7. In relation to the CBA subpoena, I am satisfied that BCEG has shown there to be “exceptional circumstances” of the kind referred to in the Practice Note.

8. This is for two reasons.

9. The first is that, in light of the serious allegations of fraud that BCEG makes against them, the defendants’ position is that they should not be required to go into evidence until BCEG has closed its case at trial. [3]

   3. T15.35 - 6 August 2020.

10. It follows, as was submitted on behalf of BCEG, that if the Practice Note were held to operate so as to prevent BCEG from issuing subpoenas until such time as all evidence in the case had been served, the effect would be to prevent BCEG from issuing any subpoenas before closing its case at trial.

11. Further, as has been explained by BCEG’s solicitor in her supporting affidavit, the documents sought from CBA are principally directed to quantum and to BCEG’s preparation of its expert evidence on quantum. It appears likely that the documents now sought from CBA will at least reduce the risk of BCEG’s experts having to issue a supplementary report.

12. The defendants submitted that the terms of the subpoena addressed to CBA were oppressive. However, as CBA has, without demur, responded to the subpoena. I am not persuaded that the subpoenas represented any unfair burden to CBA.

13. In relation to the subpoena addressed to Mr Stone, as liquidator of Trojjan, the position is that until March 2020 Trojjan was deregistered. Mr Stone was appointed liquidator on 17 March 2020. His appointment ceased on 18 August 2020.

14. The documents sought from Mr Stone are not ones that would be capable of being sought from the defendants through discovery as they are documents in Mr Stone’s, and not the defendants’ custody.

15. Further, now that Mr Stone’s appointment has ceased, there must be, as BCEG submitted, a real prospect that he would return any documents in his possession to Mr Xiao, as a former director of Trojjan.

16. The defendants have suggested that this risk be accommodated by suggesting Mr Stone retain the documents in his possession until some later date. I cannot see how I could impose that obligation on Mr Stone.

17. Again, the defendants suggested that the categories of documents sought from Mr Stone were oppressive. However, Mr Stone has made no such objection, nor have the defendants adduced any evidence of any difficulty Mr Stone might have complying with a subpoena.

18. Overall, I do not see this as a case where a plaintiff is utilising the Court’s power to issue a subpoena to subvert the operation of Practice Note SC Eq 11.

19. I order that the defendants’ notice of motion 10 September 2020 be dismissed with costs.

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Endnotes

Decision last updated: 13 October 2020