Huang v Drumm (No 4)

[2019] NSWCA 140

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Huang v Drumm (No 4) [2019] NSWCA 140

Hearing dates:

14 June 2019

Date of orders:

17 June 2019

Decision date:

17 June 2019

Before:

Bell P; Macfarlan JA; Payne JA

Decision:

(1) The white book filed by Ms Huang on 11 January 2019 constitute the appeal book.

 

(2) The substance of paragraphs 17 and 19 of Ms Huang’s draft amended notice of appeal filed with her application for leave to appeal constitute the notice of appeal. The grounds of the appeal are thus:

 

s.67 of CPA 2005 (NSW)

 

1 His Honour erred in exercising s.67 of the Civil Procedure Act 2005 (NSW) to stay the appellant’s claim; and.

 

Inherent Jurisdiction of the Supreme Court

 

2. His Honour erred in exercising his inherent powers to stay the appellant’s claim

 

(3) Appeal allowed.

 

(4) Set aside orders (a) and (b) made by Pembroke J on 12 October 2018.

 

(5) The parties to pay their own costs of the application for leave to appeal.

 (6) Ms Huang to pay Mr Drumm’s costs of the appeal from and including 6 May 2019.

Catchwords:

APPEALS – application for leave to appeal proceedings – stayed pursuant to inherent jurisdiction and s 67 of the Civil Procedure Act 2005 (NSW) as an abuse of process – whether any proper basis for the finding of abuse of process – whether proceedings properly stayed pursuant to s 17 of the Trans-Tasman Proceedings Act 2010 (Cth) – leave to appeal granted – orders not properly made – orders set aside

  CIVIL PROCEDURE – failure to file notice of appeal as ordered - application for leave to appeal treated as constituting notice of appeal

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 67
Trans-Tasman Proceedings Act 2010 (NSW), s 17

Uniform Civil Procedure Rules 2005 (NSW), rr 12.7, 51.1(3)

Category:

Principal judgment

Parties:

Biru Huang (Appellant)
Bernard Joseph Drumm (Respondent)

Representation:

Counsel:
No appearance (Appellant)
D Elliott (Respondent)

File Number(s):

2018/00347621

Publication restriction:

None

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity

Date of Decision:

12 October 2018

Before:

Pembroke J

File Number(s):

2016/00096823

HEADNOTE

[This headnote is not to be read as part of the judgment]

Orders were made in the Equity Division of the Supreme Court on 12 October 2018 on three bases:

“(a)   I order that this proceeding be stayed pursuant to the inherent jurisdiction of the Court; and

(b) I order that this proceeding be stayed pursuant to Section 67 of the Civil Procedure Act 2005 (NSW).

(c) I order that this proceeding be stayed pursuant to Section 17 of the Trans-Tasman Proceedings Act, 2010 (Cth).”

The only application made in that Court was an application under s 17 of the Trans-Tasman Proceedings Act for a stay. Section 17(1) provides:

“A defendant in a civil proceeding in an Australian court may apply to the court for an order staying the proceeding on the grounds that a New Zealand court is the more appropriate court to determine the matters in issue.”

Leave to appeal was granted on the grounds:

“s.67 of CPA 2005 (NSW)

1 His Honour erred in exercising s 67 of the Civil Procedure Act 2005 (NSW) to stay the appellant’s claim; and

Inherent Jurisdiction of the Supreme Court

2. His Honour erred in exercising his inherent powers to stay the appellant’s claim.”

The Court (Bell P, Macfarlan JA and Payne JA) allowing the appeal, held:

In making the orders below, his Honour erred in reaching any conclusion about whether the proceedings before him lacked any arguable foundation. Even assuming that his Honour was correct in finding that there was no “reliable evidence” of any arguable foundation for the proceedings, the occasion for Ms Huang to have produced that evidence to the Court had not arisen. The matter before his Honour was limited to consideration of the question of whether a stay should be granted on the basis that a New Zealand court was a more appropriate court to determine the matters in issue: [40].

Orders (a) and (b) should be set aside: [41].

Judgment

1. THE COURT: On 12 October 2018 Pembroke J, sitting in the Equity Division of the Court, delivered ex tempore reasons and made orders in Supreme Court proceedings 2016/00096823 between the appellant, Ms Biru Huang, and the respondent, Mr Bernard Drumm: [2018] NSWSC 1556.

2. On 17 April 2019, this Court granted Ms Huang a limited grant of leave to appeal: [2019] NSWCA 77. The appellant was directed to file and serve a notice of appeal limited to the issues identified in the Court’s judgment within 14 days. By email exchange with the chambers of Macfarlan JA, Ms Huang was granted an extension of time to 15 May 2019 to file a notice of appeal on the limited issues upon which she was granted leave to appeal.

3. No notice of appeal in the required form was ever filed by Ms Huang. In circumstances where Ms Huang was given clear and repeated notice of her obligations it is appropriate to order that the substance of paragraphs 17 and 19 of Ms Huang’s draft amended notice of appeal filed with her application for leave to appeal be treated as constituting the notice of appeal. The grounds of the appeal are thus:

“s.67 of CPA 2005 (NSW)

1 His Honour erred in exercising s 67 of the Civil Procedure Act 2005 (NSW) to stay the appellant’s claim; and

Inherent Jurisdiction of the Supreme Court

2. His Honour erred in exercising his inherent powers to stay the appellant’s claim.”

4. For the reasons that follow the appeal should be allowed and the orders made by Pembroke J in the inherent jurisdiction and under s 67 of the Civil Procedure Act 2005 (NSW) staying Supreme Court proceedings 2016/00096823 should be set aside.

Background facts

5. The facts as found by the primary judge, described below, were based on an extensive documentary record. It is unclear the extent to which Ms Huang challenges any of the primary facts found (as distinct from the legal conclusions drawn by Pembroke J, which are all challenged by the appellant).

6. The relevant protagonists in this long-running litigation are as follows. Mr Gibson, a key protagonist in this litigation but who was not a party before Pembroke J, is a former resident of New Zealand and a former practising dentist in New Zealand. Mr Gibson was declared bankrupt in New Zealand on 24 November 2010. The primary judge found that the underlying proceedings were being conducted for Mr Gibson’s benefit and that of his family and that Mr Gibson was in effective practical control of the litigation. Mr Gibson made oral submissions on Ms Huang’s behalf and conducted the hearing before the primary judge.

7. Ms Huang, the appellant, is a nurse residing in Queensland. She was the plaintiff in the case before Pembroke J. On 20 February 2015, Ms Huang was apparently appointed as a trustee of the Corporate Consulting Services Trust formerly known as the Gibson Family Trust. The primary judge found that she played little or no practical role in and had no financial interest in the proceedings.

8. The respondent, Mr Drumm, was the defendant in the proceedings before Pembroke J. He is a chartered accountant and at all relevant times a resident of New Zealand. Between 7 April 2010 and 20 February 2015, Mr Drumm was a trustee of the Corporate Consulting Services Trust formerly known as the Gibson Family Trust.

9. There have been at least three separate substantive proceedings involving Mr Drumm and Mr Gibson, in 2010, 2015 and 2016. The underlying complaint in the proceeding before Pembroke J principally related to the settlement of a 2010 proceeding.

2010 proceeding

10. In 2010, Mr Drumm, then a trustee of the Corporate Consulting Services Trust formerly known as the Gibson Family Trust, commenced proceedings in the Supreme Court of New South Wales effectively on behalf of Mr Gibson against a Dr McIntosh (also a resident of New Zealand) for the sum of $NZ360,750 in respect of dental services and assistance that Mr Gibson alleged he had provided through the trust to Dr McIntosh in the period between 1 April 2009 to 31 March 2010. The bankruptcy of Mr Gibson was then imminent.

11. On 7 November 2014, orders were made in the Equity Division that Mr Drumm’s claims as trustee against Dr McIntosh be referred to mediation to be conducted in New Zealand. Both parties were resident in New Zealand and the underlying subject matter of the litigation was based in New Zealand.

12. On 12 December 2014, Mr Drumm attended a settlement meeting with Dr McIntosh in New Zealand during which they agreed to settle all matters in the claim with no order as to costs. On 15 December 2014, Mr Drumm executed a deed of settlement. On 21 January 2015, Mr Drumm executed a notice of discontinuance of the 2010 proceeding.

13. Mr Gibson was unhappy with the settlement outcome and sought an injunction restraining Mr Drumm and Dr McIntosh from giving effect to the settlement. On 8 January 2015, Black J in the Equity Division refused to grant leave to Mr Gibson to serve an injunction application on Mr Drumm and Dr McIntosh outside of Australia.

14. On 20 February 2015, Mr Drumm ceased to be a trustee of the trust and was removed as a party to the proceeding. Ms Huang became a trustee of the trust and was joined in the proceeding as a plaintiff. On 4 March 2016, Young AJ made orders that the proceeding against Dr McIntosh be dismissed.

2015 proceedings

15. In January 2015, Ms Huang commenced proceedings against Mr Drumm in the Local Court of New South Wales, apparently on behalf of Mr Gibson. This occurred at the same time that Mr Gibson was seeking to serve an application for an injunction to restrain Mr Drumm and Dr McIntosh from effecting their settlement in the 2010 proceeding.

16. The hearing was conducted over 15 days commencing on 8 December 2016 and ending on 1 November 2017. On 2 November 2017 Barnett LCM gave judgment on liability and dismissed Ms Huang’s claim. On 23 February 2018, his Honour ordered Ms Huang to pay Mr Drumm’s costs.

2016 proceedings

17. On 30 March 2016, Ms Huang commenced proceedings in the District Court against Mr Drumm. The subject matter of those proceedings related to alleged breaches of duty as a trustee of the trust and focussed on the settlement of the 2010 proceedings. On 8 July 2016, on Mr Drumm’s application, Williams DCJ ordered a stay of the proceeding pursuant to the Trans-Tasman Proceedings Act 2010 (Cth). Because of an issue raised about the jurisdiction of the District Court that order was ultimately set aside and the proceedings transferred to the Equity Division of the Supreme Court.

18. On 8 November 2016, Ms Huang filed a summons in the Supreme Court, seeking to impugn the conduct of Mr Drumm’s solicitors, including an order that the court files be referred to the Director of Public Prosecutions, as well as declarations that Mr Drumm’s solicitors had obtained money by deception by providing work of an illegal nature and charging for it and that they were in breach of their professional obligations and the Crimes Act 1900 (NSW) by corruptly disrupting the 2016 proceedings commenced in the District Court. On 25 May 2018, Garling J dismissed the summons and ordered that Ms Huang pay the costs of the successful parties on an indemnity basis.

19. The primary judge found that “the practical effect of this unwarranted and irresponsible litigation” by Mr Gibson and Ms Huang was to “cause oppression, prejudice and hardship to Mr Drumm”. The primary judge found that, as at 6 April 2018, Mr Drumm had incurred costs and disbursements totalling approximately $542,244.28 in respect of 15 separate pieces of litigation commenced by Mr Gibson through Ms Huang against Mr Drumm. No challenge was made to that finding in the voluminous material Ms Huang put before this Court.

20. As the proceedings were conducted against Mr Drumm in Australia, his professional indemnity insurance cover did not respond. The primary judge found that Mr Drumm had exhausted his personal savings in defending proceedings commenced in Australia by Ms Huang on behalf of Mr Gibson.

Hearing before the primary judge

21. On 12 October 2018, Pembroke J made the following orders:

“(a)   I order that this proceeding be stayed pursuant to the inherent jurisdiction of the Court;

(b) I order that this proceeding be stayed pursuant to Section 67 of the Civil Procedure Act, 2005 (NSW);

(c) I order that this proceeding be stayed pursuant to Section 17 of the Trans-Tasman Proceedings Act, 2010 (Cth).”

22. His Honour’s reasons for judgment indicate that he made orders (a) and (b) because he concluded that the 2016 Proceedings (as well as other proceedings between the parties) were an abuse of process (see [43]). In reaching this conclusion, his Honour appears, however, to have relied almost wholly on his characterisation of Ms Huang’s conduct, and that of Mr Gibson, in relation to those other proceedings, rather than the proceedings actually before him.

23. Thus, in [13]-[28] of his judgment, his Honour referred extensively to Ms Huang and Mr Gibson’s conduct in other proceedings. When his Honour came to refer to the proceedings before him he said that they had been “marred by wasteful interlocutory applications, including multiple contempt applications and allegations of criminal conduct by Ms Huang” (at [29]). However, none of the steps to which his Honour there referred appear to have been taken in those proceedings.

The subject matter of this appeal

24. Ms Huang sought leave to appeal from all of Pembroke J’s orders and much else besides. The draft notice of appeal occupied 49 closely typed pages.

25. On 17 April 2019, this Court granted leave to appeal from the orders made by Pembroke J limited to the following grounds ([2019] NSWCA 77 at [10]):

“(a) whether there was any proper foundation for his Honour to make orders under the inherent jurisdiction and s 67 of the Civil Procedure Act staying the proceedings before him on the ground that they were an abuse of process; and

(b) whether, if his Honour’s abuse of process orders were well founded, there was any proper basis upon which he could have granted a stay under s 17 of the Trans-Tasman Proceedings Act in relation to proceedings which were ex hypothesi an abuse of process.”

26. The Court made clear that leave was not granted from the order for a stay made under s 17 of the Trans-Tasman Proceedings Act. About this order, the Court remarked:

“[9] We also observe that no persuasive argument has been put to us to suggest that the stay under the Trans-Tasman Proceedings Act, if considered on its own (that is, without considering that the proceedings had already been stayed as an abuse of process), was not within his Honour’s discretion to grant.”

27. The matter was listed on 6 May 2019 before Payne JA for a directions hearing. On 6 May 2019, the respondent consented to orders being made setting aside the orders (a) and (b) made by Pembroke J, referred to in [21] above. As the making of those orders was opposed by Ms Huang, his Honour sitting alone was without jurisdiction and, accordingly, reconvened the directions on 20 May 2019 to fix a date for hearing of the appeal and to make orders for the preparation of that appeal: [2019] NSWCA 104 at [13].

28. Contrary to the orders of the Court, which had been varied on her application, Ms Huang did not file her notice of appeal on 15 May 2019. Instead, on 15 May 2019, Ms Huang sent, without leave, the following email to the chambers of Payne JA:

“Dear Associate

The Amended Notice of Appeal was due today on the extension given earlier.

However, as I have foreshadowed to the court and to the Respondent, I am appealing to the High Court of Australia that whole of the decision of 17 April 2019, which is the reason I put forward when the Directions hearing took place on 6 May 2019.

I was to file that Special Leave application in the High Court today, but HCA Registry required me to added some sealed orders and deal with another minor issue arising, so that application is to be filed in the morning now I have obtained sealed orders from the Supreme Court and the Court of Appeal.

My Special Leave application requests a Stay of matters in the Court of Appeal pending the Special Leave application being heard.

Yours faithfully

Biru Huang”

29. On 16 May 2019, Payne JA’s Associate replied by email that:

“No stay has been granted by any court of the orders made by this Court requiring Ms Huang to file and serve a notice of appeal by close of business yesterday (15 May 2019). The parties should be aware that, assuming that an application has been made for special leave and a stay to the High Court of Australia, that does not, of itself, affect the parties’ obligations to comply with extant orders of this Court.”

30. On 17 May 2019 at 1.26am, the following email was sent, without leave, to the chambers of Payne JA by Ms Huang:

“Dear Associate,

I am away out of the country visiting my unwell and elderly father.

I am appealing the whole decision in the Supreme Court of NSW, Court of Appeal to the High Court of Australia for reasons mentioned at the last hearing subject to some minor issues on filing being tidied up.

I have sought a stay of matters in the Court of Appeal at the Higher cCurt in the application for special leave. Under the rules I am required to file the application in the Court of Appeal. I have put Mr Drumm on notice of matters on a few occasions now.

There appears little point with a hearing tomorrow given the above, and I have advised Mr Drumm as much.

Mr Gibson holds an EPA on my account while absent. I have asked him to contact Mr Drumm and deal with any issues that need to be attended on. He can be contacted on [a mobile telephone number] if need be. I don't know what Mr Drumm is doing, as he won't advise who his ghost writers are or who is turning up for him (he has filed an appearance notice himself) so they (whoever they are) can simply turn up unannounced.

Yours faithfully

Biru Huang

Applicant”

31. In accordance with Ms Huang’s written authority, at 9.30am on 17 May 2019, after the matter was called, Payne JA caused the mobile telephone number which was provided for Mr Gibson to be rung in open court. There was no answer on that number. His Honour then caused the mobile telephone number the Court was given on the last occasion by Ms Huang to be rung in open court. A recorded message was played to the effect that the owner of the telephone was not available.

32. As Ms Huang had clear notice of the directions hearing and of the fact that the Court proposed to address the question of a hearing date, Payne JA proceeded with the directions hearing and dealt with the application for a stay that Ms Huang had (implicitly) made in her absence. His Honour delivered an ex tempore decision. On 20 May 2019, a copy of Payne JA’s reasons (Huang v Drumm (No 3) [2019] NSWCA 117) was sent to Ms Huang at the same email address that she had used to communicate with the Court. In Huang v Drumm (No 3) Payne JA explained that:

“[26] If Ms Huang has not filed a notice of appeal and her submissions by 4pm on 27 May 2019 the parties should prepare for the hearing on the basis that the Court will consider whether to treat paragraphs 17 and 19 of Ms Huang’s draft amended notice of appeal, or at least the first two lines thereof, as constituting the amended notice of appeal. The Court may on that day go on to determine the case to finality on the basis of the orders proposed by the respondent or, alternatively, consider whether Ms Huang’s proceedings should be dismissed for want of due despatch under rule 12.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), as it applies to this Court by rule 51.1(3) of the UCPR.”

33. Ms Huang was also specifically told in that judgment that “Ms Huang must appear in this Court on 14 June 2019”. The point was reiterated on 29 May 2019 in an email from Payne JA’s Associate to the parties which again attached a copy of Huang v Drumm (No 3):

“Dear parties,

The Court has not received a notice of appeal from Ms Huang nor any written submissions. The position remains as indicated in the attached judgment and the email below.

To be clear, Ms Huang must appear on 14 June 2019 at 2.15pm. If Ms Huang does not appear at that hearing the Court may, nonetheless, go on to determine the matters set out in [26]-[27] of his Honours’ attached judgment.”

34. The matter was called three times outside the Court on 14 June. The Court is satisfied that Ms Huang had sufficient notice of the hearing and that the Court today proposed to determine the case to finality on the basis of the orders proposed by the respondent referred to at [27] above.

Disposition of the appeal

35. As we have already explained, the respondent consented to the following orders made by Pembroke J being set aside, namely the orders that:

“(a)   I order that this proceeding be stayed pursuant to the inherent jurisdiction of the Court; and

(b) I order that this proceeding be stayed pursuant to Section 67 of the Civil Procedure Act, 2005 (NSW).”

36. We are independently satisfied that the orders (a) and (b) made by Pembroke J on 12 October 2018 must be set aside.

37. Pembroke J’s orders (a) and (b) were based on an abuse of process finding which was not properly made. The only application made by Mr Drumm which was before his Honour was an application under s 17 of the Trans-Tasman Proceedings Act for a stay. Section 17(1) provides:

“A defendant in a civil proceeding in an Australian court may apply to the court for an order staying the proceeding on the grounds that a New Zealand court is the more appropriate court to determine the matters in issue.”

38. The only question in the application before Pembroke J was whether a New Zealand court was the more appropriate court to determine the matters in issue.

39. It is worth recalling the remarks made by his Honour about the substantive aspects of the dispute between Messrs Gibson and Drumm (and, to the extent she is involved, Ms Huang):

“[41] The wreckage that this ceaseless litigious warfare has caused is compounded because no reliable evidence is apparent to suggest that the foundational challenge by Ms Huang to the propriety of the settlement of the 2010 proceedings, to which Mr Drumm agreed at the court ordered mediation conference in Auckland, New Zealand in December 2014, is anything other than completely illusory – a fantasy, a chimera and a delusion. And the shameful procedural history of the litigation suggests that the prospect of ever reaching a final hearing on this issue is distant and remote.”

40. His Honour was in no position to reach any conclusion about whether the proceedings before him lacked any arguable foundation. Certainly, his Honour did not examine that question beyond making the observations quoted in [39] above. Further, even assuming that his Honour was correct in finding that there was no “reliable evidence” of any arguable foundation for the proceedings, the occasion for Ms Huang to have produced that evidence to the Court had not arisen. The hearing before his Honour was not a final hearing, nor was it one of an application to strike out the statement of claim because it did not disclose a reasonable cause of action, nor was it one for summary judgment. The matter before his Honour was limited to consideration of the question of whether a stay should be granted on the basis that a New Zealand court was the more appropriate court to determine the matters in issue.

41. Orders (a) and (b) made by Pembroke J on 12 October 2018 should be set aside.

Costs of the appeal

42. Ordinarily the costs of a successful application for leave to appeal are dealt with in the costs award made after a full hearing of the appeal. Those costs ordinarily follow the event of the ultimate appeal.

43. This case is in a different category. That is because, from 6 May 2019, Mr Drumm made it clear that he consented to the making of orders setting aside Pembroke J’s orders (a) and (b). These were the only orders about which Ms Huang had succeeded in obtaining leave to appeal.

44. Ms Huang refused to consent to the making of those orders despite the fact that they achieved everything in relation to which Ms Huang had been granted leave to challenge in the appeal.

45. In those circumstances there should be no order as to costs in relation to the application for leave to appeal and Ms Huang should pay Mr Drumm’s costs of the appeal from (and including) 6 May 2019.

Conclusion and orders

46. For the foregoing reasons the Court makes the following orders:

1. The white book filed by Ms Huang on 11 January 2019 constitute the appeal book.

2. The substance of paragraphs 17 and 19 of Ms Huang’s draft amended notice of appeal filed with her application for leave to appeal constitute the notice of appeal. The grounds of the appeal are thus:

s.67 of CPA 2005 (NSW)

1 His Honour erred in exercising s.67 of the Civil Procedure Act 2005 (NSW) to stay the appellant’s claim; and.

Inherent Jurisdiction of the Supreme Court

2. His Honour erred in exercising his inherent powers to stay the appellant’s claim

3. Appeal allowed.

4. Set aside orders (a) and (b) made by Pembroke J on 12 October 2018.

5. The parties to pay their own costs of the application for leave to appeal.

6. Ms Huang to pay Mr Drumm’s costs of the appeal from and including 6 May 2019.

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