Chen v Shaanxi Chamber of Commerce
[2021] NSWSC 443
•29 April 2021
Supreme Court
New South Wales
Medium Neutral Citation: Chen v Shaanxi Chamber of Commerce [2021] NSWSC 443 Hearing dates: 26 April 2021 Decision date: 29 April 2021 Jurisdiction: Equity - Expedition List Before: Sackar J Decision: See para [17]
Catchwords: COSTS — Party/Party — Court’s discretion — defendant to pay plaintiff’s costs on an indemnity basis
Category: Costs Parties: Yanhong (Amy) Chen (first plaintiff)
The Australian Shannxi Chamber of Commerce Incorporated (first defendant)
Jianguo Guo (second plaintiff)
APA International Group Pty Ltd (third plaintiff)
Ping Cao (fourth plaintiff)
Secure Scaffold Services Pty Ltd (fifth plaintiff)
San Chung Zhong (second defendant)
Jiayu Dong (third defendant)
Wen Wang (fourth defendant)
Li Ji (fifth defendant)Tao Zhang (sixth defendant)
Chao Zhu (seventh defendant)
Shaohui Xie (eighth defendant)
Zhengang Yun (ninth defendant)
Daiyong Chen (tenth defendant)
Min Pan (eleventh defendant)
Bill Gao (Twenfth defendant)
Lili Ren (thirteenth defendant)
Yufei Wang (fourteenth defendant)
Weihong Zhao (fifteenth defendant)
Jingwen Yao (sixteenth defendant)Representation: Counsel:
Solicitors:
C H Truong QC (plaintiffs)
A Bailey (2, 3, 7 & 12th defendants)
Herald Legal (plaintiffs)
Mack Lions Lawyers (2, 3, 7 & 12th defendants)
File Number(s): 2020/48980 Publication restriction: n/a
Judgment
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I gave judgment in this matter on 9 April 2021.
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I do not propose to rehearse the entire backdrop to those proceedings but they were fixed before me to proceed on 25 and 26 March this year. I certainly note in my judgment of 9 April what occurred during the course of the hearing on 25 March and again I will not rehearse what is otherwise set out in some detail in that judgment.
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However, in very brief summary, the Defendants, or those active Defendants, at least on 25 March, indicated that, indeed, those Defendants had indicated for some considerable time prior to that date that they were not opposed to a fresh election and there was therefore, as I have noted in that judgment, a measure of consensus.
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Ultimately, however, I analysed at least three of the six defects and in each case I formed the view that they were defects of substance and that they were not merely procedural. Those defects dealt with different matters but certainly one concerned the notice and time of the date of the election. Another concerned the process of nominating and electing candidates and matters of that sort and then the limitations on voting which were also the subject of one of the defects.
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On 7 August 2019, the solicitors for the Plaintiffs set out clearly and unequivocally, in my view, what were in numerous respects, patent defects in the electoral process that was to be undertaken on 17 August of that year.
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The Defendants, or some of them, sought to militate the effect of the defects by changing the process but nonetheless, what took place, in my view, was on 17 August a defective election.
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On 7 October 2020 the Plaintiffs’ solicitors made an offer which is important in my view in the scheme of things. It proffered three components to the way in which the matter could be settled or resolved. The first proposition was that the election held should be declared invalid. The second that costs were to be determined by the Court, agreed by the parties or assessed. That clearly involved a possibility of a lump sum costs assessment so as to save further costs and delay. And lastly, that the new election be held by receivers.
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On 28 October the response was in substance an agreement that there be a fresh election, but the sticking point right up until, it seems to me, the hearing before me in March of this year was whether there should be a declaration as to invalidity, the method clearly by which the new election was to be conducted and, of course, the problem always perhaps in most pieces of litigation, the question of costs.
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The difficulty as I see it from the Defendants' point of view is that the defects, at least those that I found, were patent and they should have been recognised and accepted. Indeed, one suspects that they were recognised, otherwise it is hard to explain why there is virtually no resistance to the idea of a fresh election from the very beginning and yet the sticking point over and over again was, it seems what may be regarded as some form of admission on the part of the Defendants that there was invalidity. The resistance to a declaration to that effect in all of the circumstances which clearly was appropriate in my view was an unreasonable course undertaken by the Defendant.
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Secondly, the method by which the election was to be conducted it seems to me could and should only have been conducted reasonably by a receiver. The various methods suggested by the Defendants over time it seems to me were not appropriate and perhaps not even available and, therefore, in my view, ultimately it was not reasonable for the Defendants to resist the appointment of a receiver. In my view, the Defendants clearly have to bear the costs.
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The question now, is from what date and upon what basis and against whom. My view is that from 28 October is the appropriate date, given the fact that the Defendants understood clearly in my view they could not resist a fresh election but were concerned to avoid it seems any public verification of invalidity. It seems to me to be the date from which an order for indemnity costs would potentially be made.
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As I have already said I do regard the Defendants' conduct in all of the circumstances as unreasonable. Costs of course will normally follow the event. There is no doubt what the event here was because I determined three matters of substance on 9 April adverse to the Defendants, indeed, with very much support from the Defendants themselves.
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It seems to me that the question of certification of the defence which has been raised as partial objection or explanation is neither here, nor there. It seems to me that it is a red herring. That does not in my view really go to the reasonableness or unreasonableness of the conduct of the Defendants overall.
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It also seems to me that one has to make special orders in relation to the Defendants because their status changed from time to time. However, I return briefly to that issue later.
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Costs, as I have said, normally follow the event. Normally they would be on an ordinary basis, except if the Court otherwise orders. I do not have to find misconduct, but I do have to identify some form of unreasonableness or delinquency and it seems to me clearly and unequivocally that from 28 October the Defendants' resistance to a declaration as to invalidity and the appointment of a receiver was wholly unreasonable, given the fact that they clearly had accepted that a fresh election was inevitable. On that basis, it seems to me appropriate that there be an order for indemnity costs against the Defendants and the date should be 28 October.
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In my view, however, that should be qualified in the following way: first, the order that I have just proposed and I will make, will not affect any outstanding costs orders that have been determined in relation to the interlocutory and/or other procedural issues and which have been determined from time to time. They should remain intact.
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As far as the Defendants generally go, the order of indemnity costs from 28 October in my view should only be applied against the Defendants who were joined after that date and would not have any effect on Defendants from the dates upon which they filed their submitting appearances, which is a series of dates contained in the affidavit of Mr Hong Zhu of 25 March 2021 and particular reference I make to paragraph 2 where he identifies the points at which various Defendants filed submitting appearances dating as early as 4 September 2020 and concluding the day before the hearing on 24 March 2021.
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My order, therefore, is that the Defendants should pay indemnity costs from the 28 October date but qualified first by, as I have said, leaving intact existing costs orders and secondly, only applying to those Defendants joined after a particular date, whenever they were joined, and secondly, to cease to have effect against any or one or more of those Defendants from the dates from which they filed their submitting appearances.
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Whether the costs are ultimately determined by assessment or lump sum costs order will be a matter for the parties, but I accept that it may not be an altogether simple exercise.
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Decision last updated: 04 May 2021
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