Goldmate Group Pty Ltd v Yang
[2024] FCA 722
•26 July 2024
FEDERAL COURT OF AUSTRALIA
Goldmate Group Pty Ltd v Yang [2024] FCA 722
File number: NSD 503 of 2024 Judgment of: STEWART J Date of judgment: 26 July 2024 Catchwords: PRACTICE AND PROCEDURE – interlocutory applications to set aside subpoenas – whether subpoenas have a legitimate forensic purpose – applications dismissed Legislation: Corporations Act 2001 (Cth), s 182 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 12 Date of hearing: 26 July 2024 Counsel for the Applicants: J Buncle Solicitor for the Applicants: Corrs Chambers Westgarth Counsel for the Respondents: D J Delany Solicitor for the Respondents: Hamilton Locke
ORDERS
NSD 503 of 2024 BETWEEN: GOLDMATE GROUP PTY LTD
First Applicant
GRM RIVERSTONE PTY LTD
Second Applicant
GOLDMATE PROPERTY RIVERSTONE NO 5 PTY LTD (and others named in the Schedule)
Third Applicant
AND: YUCHEN YANG
First Respondent
ANMING (ADAM) YANG
Second Respondent
BALMORAL STREET AGRI INVESTMENTS PTY LTD (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
STEWART J
DATE OF ORDER:
26 JULY 2024
THE COURT ORDERS THAT:
1.The respondents’ interlocutory applications dated 25 June 2024 and 2 July 2024 be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore)STEWART J:
The applicants have had six subpoenas issued, each addressed to a different Australian bank for the production of documents. The documents that are sought are, in respect of identified bank accounts, the documents relating to the opening of the account and showing the signatories to the account, and statements from 2 August 2017 or the date the account was opened, whichever is the later. The date 2 August 2017 is identified as being the date of the first of a series of transactions that are impugned in the statement of claim.
Briefly stated, the statement of claim alleges that the first respondent, Mr Yang, was employed by the first applicant, Goldmate Group Pty Ltd, from 17 July 2017 to 7 March 2023, initially as financial controller and later as chief financial officer. The second to ninth applicants are corporations associated with the first applicant and within the same group. The second to seventh respondents are individuals and corporations associated with Mr Yang.
The statement of claim alleges that prior to and since the termination of Mr Yang’s employment on 7 March 2023, investigations of his conduct have been undertaken. Multiple instances of financial misconduct, fraud and misappropriation of funds held by the first to ninth applicants are said to have been identified. Mr Yang’s conduct is said to have involved the use of accounts held by the third to fifth respondents, each of which is a company of which Mr Yang or members of his immediate family have been directors and shareholders.
It is alleged that Mr Yang breached his employment agreement with the first applicant and the fiduciary duties he owed the first applicant and the other applicants as an employee of the first applicant. He is said to have performed services consistent with holding a senior role for all companies in the group and that he breached s 182 of the Corporations Act 2001 (Cth). It is also said that he acted tortiously. The applicants allege that as a result of these breaches Mr Yang holds the funds that he received on trust or is liable to account to the applicants for those funds. The applicants also allege that they are entitled to damages or compensation arising from the loss caused by Mr Yang’s conduct.
Against that background, the statement of claim pleads a number of specific transactions, many being grouped as being similar or part of a particular scheme, by which it is said that Mr Yang procured unauthorised payments by one or other of the applicants to bank accounts of one or other of the respondents. For the most part, or perhaps in respect of all of them, the respondents admit the transactions but deny that they were unauthorised.
Specifically, it is pleaded that the transactions were authorised by Mr Ni, the managing director and chief executive officer of the first applicant and all other entities within the group. The pleadings reveal that there will be a sharp conflict between the evidence of Mr Ni and Mr Yang with regard to the pleaded transactions. That will be in relation to the circumstances and purposes of each transaction, the extent or otherwise of Mr Ni’s knowledge of or involvement in them, and whether or not he authorised them.
Moving on two interlocutory applications, the respondents challenge the subpoenas on two bases. First, they say that in respect of any particular account, bank statements should not have to be produced that pre-date the first of the impugned payments pleaded to have been paid into that account. Secondly, they say that no documents should have to be produced in respect of bank accounts which are not identified in the pleadings as having been the receiving account of any of the impugned payments. The respondents submit that in both respects the subpoenas amount to unjustified fishing for documents to ascertain whether there are further claims to be made, and are not directed to documents apparently relevant to claims already made, ie pleaded.
The resolution of the interlocutory applications essentially depends on the characterisation of the applicants’ claims.
The respondents characterise the claims as being in relation to a series of independent impugned transactions and submit that the identified documents are not and cannot be relevant to those identified transactions and whether or not they were authorised.
I am not satisfied that that is the proper characterisation of the applicants’ claims. In essence, they claim that over a nearly six-year period, Mr Yang was employed in very senior positions in relation to the financial management of the applicants, and that he abused those positions by making unauthorised and fraudulent transactions at the applicants’ expense, to the benefit of himself and others associated with him. It seems to me that the documents that are covered by the subpoenas may be relevant to the resolution of the dispute about whether the impugned transactions were authorised, including the resolution of conflicts in the evidence between Mr Ni and Mr Yang.
That is because the documents may show a course of conduct or modus operandi by Mr Yang. If they show other transactions which were unauthorised, that may have a bearing on whether the already pleaded transactions were authorised. That is to say, even though the documents may not be justified for the purpose of identifying additional unauthorised transactions so that claims can also be pleaded in respect of those transactions, they are justified on the basis that the additional transactions may be relevant to whether the already pleaded transactions were authorised. They may also be relevant to the questions of credit that are likely to arise in relation to the evidence of Mr Yang.
For those reasons, I consider that there is a legitimate forensic purpose to the subpoenas, and the documents sought are apparently relevant to the claims that are currently pleaded. In my view, the subpoenas were not issued for an improper purpose, and the interlocutory applications should be dismissed.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate:
Dated: 26 July 2024
SCHEDULE OF PARTIES
NSD 503 of 2024 Applicants
Fourth Applicant:
GMR INVESTMENT NO 4 PTY LTD
Fifth Applicant:
GOLDMATE PROPERTY BOX HILL NO 5 PTY LTD
Sixth Applicant:
GOLDMATE PROPERTY BOX HILL NO 6 PTY LTD
Seventh Applicant:
GOLDMATE PROPERTY PTY LTD
Eighth Applicant:
GMR BOX HILL 02 PTY LTD
Ninth Applicant:
GOLDMATE PROPERTY LUDDENHAM NO 1 PTY LTD
Respondents
Fourth Respondent:
BALMORAL STREET FAMILY PTY LTD
Fifth Respondent:
RX CAPITAL (NOW RX SQUARE) PTY LTD
Sixth Respondent:
LIJUE WANG
Seventh Respondent:
XIN GU
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