BCEG International (Australia) Pty Ltd v Xiao

[2021] NSWSC 1545

Supreme Court

New South Wales

Medium Neutral Citation:

BCEG International (Australia) Pty Ltd v Xiao [2021] NSWSC 1545

Hearing dates:

26 November 2021

Date of orders:

30 November 2021

Decision date:

30 November 2021

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Grant leave to the defendants to file an Amended Commercial List Response; order that the defendants pay the plaintiff’s costs thrown away by the amendment; order that the defendants pay the plaintiff’s costs thrown away by the vacation of the hearing date of 15 November 2021

Catchwords:

CIVIL PROCEDURE – commercial list – procedure – list statements – whether defendants should have leave to amend their List Response

COSTS – whether defendants should pay the plaintiff’s costs thrown away by the vacation of the hearing date

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

BCEG International (Australia) Pty Limited v Xiao [2021] NSWSC 1027

Macdonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612; [2007] NSWCA 304

Category:

Procedural rulings

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 Williams SC with N Riordan (Plaintiff)
F Hicks SC with B Le Plastrier (Defendants)

Solicitors:
Thomson Geer (Plaintiff)
HWL Ebsworth Lawyers (Defendants)

File Number(s):

2019/310768

Judgment

1. The background to these proceedings is set out in the judgment of Williams J of 16 August 2021. [1]

   1. BCEG International (Australia) Pty Limited v Xiao [2021] NSWSC 1027.

2. In short, the plaintiff alleges that the first defendant, its former director, and the second defendant, the wife of the first defendant, and allegedly its former de facto director, breached their fiduciary duties to the plaintiff. The plaintiff makes serious allegations concerning that conduct. In substance the plaintiff alleges that the first and second defendants behaved fraudulently. The remaining defendants are alleged to have been knowingly involved in that conduct or to have knowingly received the proceeds of the conduct complained of.

3. Hitherto, and in light of the serious allegations made by the plaintiff, the first and second defendants have asserted privileges against self-incrimination and self-exposure to a civil penalty.

4. Thus, for the most part, in the defendants’ current Commercial List Response, relying on that privilege, the defendants have declined to admit or deny the allegations made by the plaintiff in its List Statement.

5. On 30 November 2020, shortly after the plaintiff served its evidence in chief, the Court noted the agreement of the parties that “by reason of the first and second defendants’ invocation of the privilege against self-incrimination and exposure to penalties, the plaintiff will proceed to trial … on its case in chief”.

6. Thereafter, the matter was set down for hearing for 10 days commencing on 15 November 2021.

7. Consistently with the agreement noted on 30 November 2020, no directions were made that the defendants give discovery or serve evidence.

8. It was contemplated that, after the conclusion of the hearing of the plaintiff’s case, the defendants would decide whether to make an application under Uniform Civil Procedure Rules 2005 (NSW) r 29.9 that the plaintiff’s case be dismissed or, alternatively, elect to go to evidence. In the latter event, it was contemplated that further hearing time would be allocated to enable the proceedings to be concluded.

9. By Notice of Motion filed in Court on 3 November 2021, the defendants sought the vacation of the 15 November 2021 hearing date by reason of service by the plaintiff of two affidavits. In written submissions in support of that application, Mr Hicks SC, who appears with Mr Le Plastrier for the defendants, submitted that, hitherto, the defendants were confident that the plaintiff had failed to prove a vital element of its case but that the recently served affidavits “fundamentally changed the evidentiary landscape” such that the plaintiff was “now able to advance an arguable case” on a vital aspect of the matter. It was submitted that the defendants could not meet the recently served evidence and that the hearing should be vacated.

10. During oral argument before me on 3 November 2021, although only after Mr Hicks had made submissions which occupied over four pages of the transcript, Mr Hicks informed me that the defendants had decided to abandon the claims for privilege (although I was informed during argument on 26 November 2021 that this matter has been mentioned between Counsel on the evening before the application of 3 November 2021).

11. The defendants’ decision to abandon the claim of privilege meant that the hearing date of 15 November 2021 could not be maintained. That is because such abandonment had the consequence that there was no longer any utility in having the plaintiffs’ case heard separately and in advance of any case that the defendants might seek to make out, and that, in any event, the justice of the case required that each parties’ case be heard at the one time.

12. Accordingly, I vacated the hearing date, allocated a fresh hearing date commencing 4 April 2022, and made directions including that the defendants circulate an Amended List Response.

13. In that proposed List Response, the defendants, for the first time make a series of significant positive allegations including that:

1. the plaintiff “by its directors, officers and representatives manifested knowledge, conduct and acceptance of the transactions that are the subject of the claims now made”;

2. the plaintiff “by its officers and representatives other than the first defendant and/or the second defendant, knew of, consented to and/or acquiesced in the transactions the subject of the claims";

3. the plaintiff is accordingly estopped from making the claims; and

4. the claims are statute barred.

14. These are all positive claims that, arguably, the defendants could have hitherto made without jeopardising their claim for privilege. [2]

    2. See for example Macdonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612 at 624-625; [2007] NSWCA 304 at [71]-[74] (Mason P).

15. On behalf of the plaintiff, Mr Williams SC, who appears with Mr Riordan, submitted that the defendants ought not be permitted now to agitate these positive defences because the defendants have achieved a significant forensic and tactical advantage by being able to formulate these defences in the light of the evidence that the plaintiff has adduced, but without themselves having to go into evidence. Mr Williams submitted that the defendants could have, and should have earlier articulated these defences, which, as he submitted, fundamentally changed the nature of the defendants’ case; and that they could have done so earlier without jeopardising their claim for privilege and ought not now be permitted to do so.

16. I see substance in the complaint that Mr Williams makes. But the fact is that the hearing date is now five months away, the plaintiff has ample time to respond to the proposed defences and, most importantly, Mr Williams did not suggest that the plaintiff cannot now meet the defences proposed to be advanced.

17. There was also a dispute about whether or not the defendants were seeking to withdraw an admission in its current List Response. However, that matter was resolved in the course of argument on the basis that the defendants would slightly amend that aspect of the proposed List Response.

18. In my opinion, the justice of the case requires that the defendants be permitted to agitate the matters now raised in their proposed List Response.

19. I propose to grant the defendants leave to file the proposed Amended List Response (subject to the matter concerning the admission).

20. As to the costs of the vacation of the hearing date, although the defendants contended that the hearing could not proceed because they could not meet the further affidavits served by the plaintiff, the substance of the matter is that the hearing date could not proceed in any event by reason of the defendants’ decision to abandon the claim for privilege.

21. During argument before me on 26 November 2021, Mr Hicks accepted, in substance, that he could not point to a link between the late service by the plaintiff of the affidavits and the defendants’ decision to abandon the claim for privilege.

22. In the circumstances, my conclusion is that the defendants should pay the plaintiff’s costs thrown away by the vacation of the hearing.

**********

Endnotes

Decision last updated: 30 November 2021