Fei v Hexin Pty Ltd

Case [2024] VSCA 158


SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0099
JINFENG FEI Applicant
v
HEXIN PTY LTD First Respondent
AND
L.D.3 PTY LTD Second Respondent
S EAPCI 2023 0109
HEXIN PTY LTD First Cross-Applicant
and
L.D.3 PTY LTD Second Cross-Applicant
V
JINFENG FEI Cross-Respondent

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JUDGES: KENNEDY, MACAULAY and LYONS JJA
WHERE HELD: Melbourne
DATE OF HEARING: 2 May 2024 
DATE OF JUDGMENT: 4 July 2024
MEDIUM NEUTRAL CITATION: [2024] VSCA 158
JUDGMENT APPEALED FROM: [2023] VSC 476 (Matthews J)

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CIVIL PROCEDURE – Application for leave to appeal – Preliminary discovery – Judge ordered preliminary discovery in two categories – Whether substantial injustice to party required to make discovery if orders undisturbed – Whether applicant for preliminary discovery required to identify cause of action said to give rise to right of relief – Whether judge erred in finding applicants for preliminary discovery may be entitled to relief – Whether judge disclosed reasoning to conclusion – No substantial injustice if order for preliminary discovery undisturbed – Applicant for preliminary discovery not required to specify cause of action said to ground right of relief – No error in finding that applicants for preliminary discovery may be entitled to relief –– Judge disclosed path of reasoning – Leave to appeal refused.

CIVIL PROCEDURE – Cross-application for leave to appeal – Preliminary discovery – Judge refused preliminary discovery in one category – Whether substantial injustice to applicant for preliminary discovery unless preliminary discovery ordered – Whether judge erred in finding no relevant contractual relationship upon which right to relief could be founded – No error – Leave to appeal refused.

Supreme Court (General Civil Procedure) Rules 2015, r 32.05.

House v The King (1936) 55 CLR 499; Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377, applied. Schmidt v Won [1998] 3 VR 435; Beston Parks Management Pty Ltd v Sexton [2008] VSC 392; United Energy Limited v Energy Risk Management Pty Ltd [1998] VSC 133; Sandhurst Trustees Limited v Clarke (2015) 321 ALR 1; EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd [No 3] (2012) 199 FCR 533; Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435; Alex Fraser Pty Ltd v Minister for Planning [2018] VSC 391; Mercantile Mutual Insurance (Australia) Ltd v Household Financial Services Ltd (Supreme Court of Victoria, Court of Appeal, Winneke P, Hayne JA and Ashley AJA, 22 May 1997), considered.

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Counsel

Applicant / Cross‑Respondent: Mr SD Hay KC with Mr JD McKay
First Respondent / First Cross-Applicant: Mr JP Moore KC with Mr SJ Prendergast
Second Respondent / Second Cross-Applicant: Mr JP Moore KC with Mr SJ Prendergast

Solicitors

Applicant / Cross‑Respondent: Boon Legal
First Respondent / First Cross-Applicant: Norton Rose Fulbright Australia
Second Respondent / Second Cross-Applicant: Norton Rose Fulbright Australia

TABLE OF CONTENTS

PART A:. INTRODUCTION

(1).... Proposed grounds of appeal

(2).... Proposed grounds of cross-appeal

(3).... Issues arising for decision

PART B:. BACKGROUND AND…

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Fei v Hexin Pty Ltd [2024] VSCA 158
Case
[2024] VSCA 158
Decision Date

CaseChat Overview and Summary

Fei filed an application for leave to appeal against Hexin Pty Ltd in the Supreme Court, seeking to overturn the judge's decision on preliminary discovery orders for two projects, the Chapel Road Project and the Magnolia Project. The respondents, Hexin and LD3, cross-applied for leave to appeal the judge's refusal of preliminary discovery in relation to the Church Road Project. The central issue was whether the judge's decision to grant or refuse preliminary discovery would result in substantial injustice to the parties if left undisturbed.

The court considered whether the applicants would suffer substantial injustice if the orders for preliminary discovery were left undisturbed, whether there was reasonable cause to believe that the respondents may be entitled to relief, and whether the judge disclosed a clear path of reasoning to her conclusions. The court also examined whether the judge erred in finding no relevant contractual relationship upon which the right to relief could be founded in relation to the Church Road Project.

After analysing the submissions and the relevant legal principles, the court determined that there was no substantial injustice if the orders for preliminary discovery were left undisturbed. The court found that the applicants for preliminary discovery were not required to specify the cause of action that grounds the right to relief, and there was no error in the judge's finding that the applicants may be entitled to relief. The court also concluded that the judge had disclosed a clear path of reasoning to her conclusions. As a result, leave to appeal was refused for both parties.

The court made no orders for costs against either party in relation to the applications for leave to appeal.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Because each application for leave to appeal involves a challenge to an interlocutory decision concerning practice and procedure, it was accepted by both the applicant and the respondents that in order to obtain leave to appeal on their respective applications they must demonstrate that, if the relevant orders are left undisturbed, they will suffer a substantial injustice.(3)Issues arising for decision Arising from these proposed grounds and contention, the following questions are to be addressed:Regarding the Chapel Road Project and the Magnolia Project:(1)Would the applicant suffer a substantial injustice if the orders for preliminary discovery were left undisturbed in relation to the Chapel Road Project and Magnolia Project?(2)On the evidence, is there reasonable cause to believe that the respondents may be entitled to relief in respect of the Chapel Road Project and Magnolia Project?(3)Did the judge disclose a pathway of reasoning to her conclusion in respect of the Chapel Road Project and Magnolia Project?Regarding the Church Road Project:(1)Would the respondents suffer a substantial injustice unless preliminary discovery was ordered? On their applications to the judge, the parties presented the facts by way of affidavits. No deponent was cross-examined. The facts so presented were directed to the narration of the commercial relationship between Fei and Shen (and their respective companies); the history of each project; and various transactions associated with each project. The relevant task for the judge was to ascertain whether, arising from the facts of each project, there was reasonable cause to believe that Hexin or LD3 had or may have had a right to obtain relief from Fei. The judge analysed each project individually, recognizing however that facts which may give rise to a belief about wrongdoing in respect of one project might, logically, influence a belief in respect of another. Significantly, in approaching her task, the judge commenced with a survey of the legal principles informing her approach to discerning the existence of the reasonable belief described in the first criteria in r 32.05. In summary, after analysing statements made in a number of cases, the judge highlighted these principles:[3](a)the question whether there is ‘reasonable cause to believe’ is to be judged objectively;[4](b)‘belief’ is to be understood as an inclination toward assenting to a proposition, rather than rejecting it;[5](c)the grounds for inducing a belief reasonably may include, for example, surmise or conjecture;[6] (d)consistently with its purpose, the jurisdictional threshold in relation to granting preliminary discovery is low;[7] and(e)a ‘right to obtain relief’ is a broader notion than a cause of action — a person seeking discovery does not have to identify a cause of action.[8][3]Reasons, [28]–[33].[4]Pandolfo v Finadri [2018] VSC 211, [20(d)] (Derham AsJ) (‘Pandolfo’).[5]Alex Fraser Pty Ltd v Minister for Planning [2018] VSC 391, [53] (Riordan J) (‘Alex Fraser’).[6]Ibid [51]–[52] (Riordan J); Pandolfo [2018] VSC 211 [20(e)] (Derham AsJ).[7]Alex Fraser [2018] VSC 391, [54] (Riordan J).[8]Pandolfo [2018] VSC 211, [20(a)–(c)] (Derham AsJ).

Ratio Decidendi

Legal Principle Established

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