Galaxing Pty Ltd v Terziovski - [2019] FCA 2108

FEDERAL COURT OF AUSTRALIA
Galaxing Pty Ltd v Terziovski [2019] FCA 2108

File numbers: VID 929 of 2018
VID 1146 of 2018

Judge: STEWARD J

Date of judgment: 27 November 2019

Date of publication of reasons: 13 December 2019

Catchwords: PRACTICE AND PROCEDURE – r 5.23 of the Federal Court Rules 2011 (Cth) – application for summary dismissal – application for summary judgment in related proceeding – whether appropriate to make orders sought – failure to comply with an order of the Court – failure to attend a hearing in the proceeding on multiple occasions

Legislation: Federal Court Rules2011 (Cth) r 5.23

Cases cited:
Banovec v. R [2012] NSWCCA 137

Chamberlain Group, Inc v. Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606

Professional Administration Service Centres Pty Ltd v. Commissioner of Taxation [2012] FCAFC 180; (2012) 295 ALR 52

Simjanovska v. Segal [2018] FCA 12

Walter Rau Neusser Oel Und Fett AG v. Cross Pacific Trading Ltd [2005] FCA 955

Date of hearing: 14, 21 October, 27 November 2019

Registry: Victoria

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Category: Catchwords

Number of paragraphs: 29

Counsel for the First, Second, Third, Fifth, Sixth, Seventh, Eighth and Ninth Applicants in proceeding VID 929 of 2018: The Applicants did not appear

Counsel for the Fourth Applicant in proceeding VID 929 of 2018 and the Fourth Respondent in proceeding VID 1146 of 2018: Mr B Parker

Solicitor for the Fourth Applicant in proceeding VID 929 of 2018 and the Fourth Respondent in proceeding VID 1146 of 2018: Domantay Legal

Counsel for the First and Second Respondents in proceeding VID 929 of 2018: Mr N Terziovski

Counsel for the Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 929 of 2018 and the Applicants in proceeding VID 1146 of 2018: Mr S Woolley

Solicitor for the Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 929 of 2018 and the Applicants in proceeding VID 1146 of 2018: SLF Lawyers

Counsel for the First, Second, Third, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 1146 of 2018: The Respondents did not appear

ORDERS

VID 929 of 2018

BETWEEN:
GALAXING PTY LTD (ACN 161 086 988)

First Applicant

TOUCHSTONE CORPORATE HOLDINGS PTY LTD

Second Applicant

YINGHUA GU (and others named in the Schedule)

Third Applicant

AND:
NIKOLA TERZIOVSKI

First Respondent

NICHOLAS JAMES LAWYERS PTY LTD (ACN 601 167 220)

Second Respondent

NORTH EAST DEVELOPMENT GROUP PTY LTD (ACN 617 291 639) (and others named in the Schedule)

Third Respondent

JUDGE:

STEWARD J

DATE OF ORDER:

27 NOVEMBER 2019

THE COURT ORDERS THAT:
1.Pursuant to Rule 5.23 of the Federal Court Rules 2011 the proceeding be summarily dismissed.
2.Costs be reserved for further hearing listed on an estimate of one half day (together with proceeding VID 1146 of 2018) on 16 December 2019.
3.The interlocutory application filed by the Fourth Applicant on 26 November 2019 seeking…

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: [2019] FCA 2108
Decision Date: 27 November 2019

CaseChat Overview and Summary

The case of Galaxing Pty Ltd v Terziovski involves multiple parties engaged in disputes related to the sale of shares in a company, PLC. The proceedings include an application for summary dismissal and an application for summary judgment in a related proceeding. The central issues revolve around the failure of some parties to comply with court orders and their repeated absence from hearings. The court was required to determine whether it was appropriate to make the orders sought by the applicants and to assess the implications of the parties' non-compliance with court directives.

In addressing these issues, the court examined the conduct of the parties, particularly focusing on their compliance with court orders and their participation in the proceedings. The applicants argued that the defendants' failure to comply with a previous court order and their absence from hearings warranted the granting of summary judgment against them. The court considered the concessions made by one of the applicants, which aimed to provide time for the defendants to secure legal representation and potentially challenge the summary judgment. The court also took into account the evidence presented, including affidavits and documentary proof of the share transfers, to assess the merits of the summary judgment application.

The court ruled in favour of granting summary judgment against the defendants who failed to appear and comply with court orders. It determined that the evidence provided was sufficient to justify the entry of judgment in favour of the applicants for the specified amounts. The court also ordered the release of certain funds held by it to the applicants, subject to certain conditions. Additionally, the court reserved the issue of costs and interest for a later hearing and dismissed an interlocutory application for adjournment filed by one of the defendants. The court allowed the defendant the opportunity to apply for further orders, provided they gave adequate notice to the applicants.

The final orders include the granting of summary judgment against specific defendants for specified sums, the release of funds held by the court to the applicants, and the reservation of costs and interest for a future hearing. The court also dismissed an application for adjournment and allowed the defendant the right to apply for further orders under certain conditions.

Orders

Orders of the court

1. Pursuant to Rule 5.23 of the Federal Court Rules 2011, in respect of the Applicants’ Amended Statement of Claim filed 6 September 2019, there be summary judgment on:

(a) the claim of the First Applicant, North East Development Group Pty Ltd, against the First Respondent, Galaxing Pty Ltd, in the sum of $175,000;

(b) the claim of the Second Applicant, Zaki Alajaji, against the Second Respondent, Jinyang Yu, in the sum of $75,000;

(d) the claim of the Third Applicant, Rage Trading Pty Ltd, against the Second Respondent, Jinyang Yu, in the sum of $100,000;

(e) the claim of the Fourth Applicant, Penski Pty Ltd, against the Fourth Respondent, Guohua Tang, in the sum of $150,000;

(f) the claim of the Fifth Applicant, Bubbly Water Pty Ltd, against the Fifth Respondent, Izabela Kwoka ATF Dominic Oliver Kwoka in the sum of $5,000;

(g) the claim of the Fifth Applicant, Bubbly Water Pty Ltd, against the Sixth Respondent, Izabela Kwoka ATF Juliet Maria Kwoka in the sum of $5,000;

(h) the claim of the Sixth Applicant, Pickle Pants Pty Ltd, against the Seventh Respondent, Xinwen Xie, in the sum of $50,000;

(i) the claim of the Sixth Applicant, Pickle Pants Pty Ltd, against the Eighth Respondent, Touchstone Corporate Holdings Pty Ltd, in the sum of $45,000;

(j) the claim of the Seventh Applicant, H2H Holdings Pty Ltd, against the Seventh Respondent, Xinwen Xie, in the sum of $100,000;

(k) the claim of the First Applicant, North East Development Group Pty Ltd, against the Ninth Respondent, Duchess Nadine Marando ATF Sienna Pearl Marando in the sum of $5,000,

2. The sum of $710,000 held by the Court in Federal Court Proceeding No. VID 929 of 2018 be released forthwith to the Applicants (or to the Applicants’ solicitors, SLF Lawyers).

3. Subject to any further order of the Court, the sum of $150,000 held by the Court in Federal Court Proceedings No. VID 929 of 2018 (being that sum attributable to the sale of PLC shares to the Fourth Respondent, Guohua Tang) be released to the Applicants (or to the Applicants’ solicitors, SLF Lawyers) after 19 December 2019.

4. Costs and interest be reserved for further hearing listed on an estimate of one half day (together with Proceeding VID 929 of 2018) on 16 December 2019.

5. The interlocutory application filed by the Fourth Respondent on 26 November 2019 seeking an adjournment of today’s hearing be dismissed.

6. The Fourth Respondent have liberty to apply to the Court for further orders upon three business days’ written notice to the Applicants.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Mr Woolley, to his credit, said that he could not dispute the contents of Mr Tang’s affidavit. He also accepted that the trial of the second proceeding could not fairly commence against Mr Tang. Mr Terziovski agreed. Second proceeding – application for summary judgment against the Purchasing Parties Mr Woolley nonetheless sought summary judgment against the Purchasing Parties, including Mr Tang. In his particular case, Mr Woolley made what were practically two concessions. He announced that he had instructions that his clients would not oppose any application made by Mr Tang to have any summary judgment pronounced against him set aside. Mr Woolley also said that any order requiring the payment of Mr Tang’s share of the $860,000 (being $150,000) to the Selling Parties be deferred for 14 days. The effect of these concessions was to give Mr Tang’s new legal team time to prepare for any application to set aside this judgment and then, once set aside, any hearing of the first and second proceedings as between the Selling Parties and Mr Tang. The concessions did not extend to the other Purchasing Parties. There is an expectation (at least in relation to Galaxing) that they may also seek to have this judgment set aside, once they have secured representation or otherwise organised themselves. Whether any other Purchasing Party, such as Galaxing, will be successful in having the judgment entered against them set aside is a matter which would need to be determined following the making of any such application by those parties. Mr Woolley, for the purpose of his summary judgment application, read and relied upon an affidavit of Mr Harry Fung affirmed on 24 June 2019. Mr Fung is a non-executive director of PLC. He negotiated with Mr Roths on behalf of the Selling Parties. He deposed to the execution of 11 Standard Share Transfer Forms by the Selling Parties and the Purchasing Parties. He exhibited to his affidavit those forms and each was ostensibly signed by the Selling Parties and Purchasing Parties. Mr Fung gave evidence that the transfer of shares in PLC, being a listed company, was facilitated and settled using the Clearing House Electronic Subregister System or “CHESS”. He exhibited to his affidavit two PLC “Net Movement Report[s]” for 16 May 2018 and 18 May 2018. These state on their face that the relevant “operator” was “CHESS”. These show a reduction in the number of shares in PLC owned by the Selling Parties and a corresponding increase in the number of PLC shares owned by the Purchasing Parties. The quantum of shares traded appeared to match the amounts set out in the Standard Share Transfer Forms. Mr Fung also deposed to the receipt by Mr Terziovski’s firm of the consideration for the sale of the PLC Shares as set out in each of the Transfers. The trust account receipts were also in evidence and they record the receipt of this consideration from the Purchasing Parties. Mr Woolley sought summary judgment against the Purchasing Parties, save for Mr Tang, for being in default of appearance. Other than Mr Tang, no Purchasing Party appeared at the hearing before me (set down as the trial) on 27 November 2019 (Mr Wang could not represent Galaxing). In the case of Mr Tang, Mr Woolley submitted that he was in default of the order made by this Court on 21 October 2019 that the Purchasing Parties were required to pay costs to the Selling Parties in the sum of $5,100. Mr Parker did not dispute that Mr Tang was in default of that order.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File numbers:	VID 929 of 2018 VID 1146 of 2018
Judge:	STEWARD J
Date of judgment:	27 November 2019
Date of publication of reasons:	13 December 2019
Catchwords:	PRACTICE AND PROCEDURE – r 5.23 of the Federal Court Rules 2011 (Cth) – application for summary dismissal – application for summary judgment in related proceeding – whether appropriate to make orders sought – failure to comply with an order of the Court – failure to attend a hearing in the proceeding on multiple occasions
Legislation:	Federal Court Rules2011 (Cth) r 5.23
Cases cited:	Banovec v. R [2012] NSWCCA 137 Chamberlain Group, Inc v. Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 Professional Administration Service Centres Pty Ltd v. Commissioner of Taxation [2012] FCAFC 180; (2012) 295 ALR 52 Simjanovska v. Segal [2018] FCA 12 Walter Rau Neusser Oel Und Fett AG v. Cross Pacific Trading Ltd [2005] FCA 955
Date of hearing:	14, 21 October, 27 November 2019
Registry:	Victoria
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Category:	Catchwords
Number of paragraphs:	29
Counsel for the First, Second, Third, Fifth, Sixth, Seventh, Eighth and Ninth Applicants in proceeding VID 929 of 2018:	The Applicants did not appear
Counsel for the Fourth Applicant in proceeding VID 929 of 2018 and the Fourth Respondent in proceeding VID 1146 of 2018:	Mr B Parker
Solicitor for the Fourth Applicant in proceeding VID 929 of 2018 and the Fourth Respondent in proceeding VID 1146 of 2018:	Domantay Legal
Counsel for the First and Second Respondents in proceeding VID 929 of 2018:	Mr N Terziovski
Counsel for the Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 929 of 2018 and the Applicants in proceeding VID 1146 of 2018:	Mr S Woolley
Solicitor for the Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 929 of 2018 and the Applicants in proceeding VID 1146 of 2018:	SLF Lawyers
Counsel for the First, Second, Third, Fifth, Sixth, Seventh, Eighth and Ninth Respondents in proceeding VID 1146 of 2018:	The Respondents did not appear

VID 929 of 2018
BETWEEN:	GALAXING PTY LTD (ACN 161 086 988) First Applicant TOUCHSTONE CORPORATE HOLDINGS PTY LTD Second Applicant YINGHUA GU (and others named in the Schedule) Third Applicant
AND:	NIKOLA TERZIOVSKI First Respondent NICHOLAS JAMES LAWYERS PTY LTD (ACN 601 167 220) Second Respondent NORTH EAST DEVELOPMENT GROUP PTY LTD (ACN 617 291 639) (and others named in the Schedule) Third Respondent
JUDGE:	STEWARD J
DATE OF ORDER:	27 NOVEMBER 2019