Jacky Yan Jiang as Trustee for the Jack and Mac Family Trust v Australia Natural Supplements Pty Ltd
[2022] VCC 2031
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-20-05359
| Jacky Yan Jiang as Trustee for the Jack and Mac Family Trust | Plaintiff |
| v | |
| Australia Natural Supplements Pty Ltd (ACN 618 700 495) | First defendant |
| Gold Nature Investment Pty Ltd (ACN 618 798 968) | Second defendant |
| Conway Country Corp Pty Ltd (ACN 619 940 162) | Third defendant |
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JUDGE: | Judicial Registrar Bennett | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 November 2022 | |
DATE OF RULING: | 25 November 2022 | |
CASE MAY BE CITED AS: | Jacky Yan Jiang as Trustee for the Jack and Mac Family Trust v Australia Natural Supplements Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 2031 | |
RULING
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Subject:PRACTICE AND PROCEDURE
Catchwords: Warning administrative mention – Proceeding dismissed for parties’ failure to respond – Application to reinstate proceeding – Relevant factors
Legislation Cited: County Court Civil Procedure Rules 2018 (Vic) rr 13.13(2), 20.03(1), 20.03(3), 24.06 and 34A.16; Civil Procedure Act 2010 (Vic) ss 25 and 28(1)
Cases Cited:Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110; Du v Ivy Real Estate Pty Ltd [2021] VCC 154; Re Saeco Australia Pty Ltd [2010] VSC 161; Brocx v Hughes [2010] WASCA 57; Durney v Deakin University [2016] VSC 418; Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd [2022] VCC 1893
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr J Leung | Wang Lawyers Pty Ltd trading as Herald Legal |
| For the defendants | Mr D Weinberger | KCL Law |
JUDICIAL REGISTRAR:
Introduction
1On 11 April 2022, I made orders on the papers dismissing this proceeding for the parties’ failure to respond to the warning administrative mention (“WAM”) listed on 4 November 2021 (“April Orders”). By request for interlocutory determination (“RID”) filed on 3 August 2022, the plaintiff sought the reinstatement of the proceeding pursuant to r34A.16 of the County Court Civil Procedure Rules 2018 (the “Rules”). The defendants opposed the plaintiff’s application.
Parties and claims
2The plaintiff is Mr Jacky Yan Jiang as trustee for the Jack and Mac Family Trust. It is not disputed that the second defendant, Gold Nature Investment Pty Ltd (“Gold Nature”), is the trustee of a trust known as the Gold Nature Trust and the holder, in its capacity as trustee, of 2,213,591 shares in the first defendant, Australia Natural Supplements Pty Ltd (“ANS”). It is also not disputed that the third defendant, Conway Country Corp Pty Ltd (“Conway”), is the trustee of a trust known as the Conway Trust. Mr Dajian Li was the sole director of each of the defendant companies at all relevant times.
3The plaintiff alleges in his amended statement of claim (“ASOC”) that, in 3 tranches between 26 October 2017 and 3 July 2019, he advanced the sum of $767,867.26 to an account operated by ANS. Of this sum, it is alleged that:
(a) $230,000 was by way of payment for 230,000 fully paid ordinary $1 units in the Gold Nature Trust;
(b) $195,500 was by way of payment for 195,500 fully paid ordinary $1 units in the Conway Trust; and
(c) $342,367.26 was by way of joint loan to the defendants, accruing interest at 4 per cent per annum.
4The defendants admit that these payments were made, but deny that they were advances.
5Paragraph 8 of the ASOC alleges that, on 6 July 2020, the plaintiff and the defendants entered into a contract for the redemption and repayment of the plaintiff’s investments in the defendants. This is defined in the ASOC as the “Redemption and Repayment Agreement” and is alleged to be in writing. Paragraph 9 alleges that the terms of that contract included that the defendants would pay to the plaintiff:
(a) $347,867.26 plus interest to discharge the loan;
(b) $200,000 to redeem his units in the Gold Nature Trust;
(c) $150,000 to redeem his units in the Conway Trust; and
(d) RMB14,749.62 to reimburse him for expenses associated with a trip to China.
6Paragraph 8 of the defence somewhat unhelpfully admits that “a document was signed on 6 May 2020”, otherwise denies the allegations in paragraph 8 of the ASOC, and refers to the Redemption and Repayment Agreement for its full terms and effect. Paragraph 9 of the defence admits that “the Redemption and Repayment Agreement includes terms which provide for payments to Mr Jiang”, but otherwise denies the allegations in paragraph 9 of the ASOC.
7Paragraph 10 of the ASOC pleads that there were further terms of the Redemption and Repayment Agreement, namely, that a first transfer of $80,000 and reimbursement of RMB14,749.62 were to be paid on the signing of that agreement, with the outstanding balance to be paid weekly in $30,000 instalments from September 2020 until paid in full. These allegations are denied in paragraph 10 of the defence.
8Paragraph 11 of the ASOC alleges that $80,000 was paid to the plaintiff on 7 July 2020, in partial discharge of the obligations pleaded in paragraph 10. Paragraph 11 of the defence admits that $80,000 was paid to the plaintiff on or about 7 July 2020, but otherwise denies the allegations in paragraph 11.
9The ASOC concludes by alleging that, in breach of the pleaded terms of the Redemption and Repayment Agreement, no further payments were made to the plaintiff save for a $10,000 repayment of the loan on 2 March 2021. Accordingly, the plaintiff claims outstanding amounts of $607,867.62 and RMB14,749.62 as a debt due from the defendants, plus interest. The defence admits that further payments have not been made to the plaintiff, but otherwise denies these claims.
10The defence goes on to raise additional matters. In paragraph 15, Gold Nature pleads that it is not a party to the Redemption and Repayment Agreement and that the ASOC is liable to be struck out as against it.
11Further, Gold Nature and Conway each refer to their respective trust deeds, pursuant to which they say the plaintiff’s units were issued, as well as the certificates of unitholding issued to the plaintiff in respect of those units. They allege that the plaintiff has failed to comply with certain provisions of the trust deeds dealing with the procedure for transfer or redemption of units.
12No reply has been filed by the plaintiff, resulting in an implied joinder of issue with the allegations contained in the defence.[1]
[1] See r13.13(2).
20 September 2022 hearing
13The plaintiff’s RID initially came on for hearing before me on 20 September 2022. A preliminary issue was raised as to the rule pursuant to which the plaintiff’s application was brought. The defendants submitted, correctly, that r34A.16 had no application in the present circumstances. In contrast to his RID, the plaintiff’s written submissions disavowed reliance upon r34A.16 and stated that the application was instead made pursuant to r24.06. The defendants’ written submissions had also addressed the application on the alternative basis that it was made pursuant to r24.06. Notwithstanding this, the defendants contended that the plaintiff’s attempt to change the basis of his application was impermissible and that his application should be determined on the basis that it was being made under r34A.16.
14I delivered an oral ruling on 20 September 2022, in which I concluded that the defendants’ position in this regard was unmeritorious and that the plaintiff should be permitted to advance his application pursuant to r24.06. The hearing thereafter proceeded upon that basis.
15In support of his RID, the plaintiff relied at the 20 September 2022 hearing upon two affidavits. The first was an affidavit of Mr Jiang dated 10 May 2022. The second was an affidavit of Mr Eric Huang of Wang Lawyers Pty Ltd trading as Herald Legal (“Herald Legal”), the plaintiff’s solicitors, dated 12 May 2022.[2]
[2] The defendants objected to the admissibility of parts of Mr Huang’s affidavit. I resolved these objections at the commencement of the hearing.
16Upon reading the affidavit material filed on behalf of the plaintiff, it was apparent to me that it was seriously deficient. My concerns in this regard were reinforced in the initial stages of the oral submissions made by counsel for the plaintiff, Mr Leung. Given the potential consequences for the plaintiff of an unsuccessful application, I gave the plaintiff the opportunity to put on further affidavit material. That opportunity was accepted and there was no objection from the defendants. Accordingly, I made orders on 20 September 2022 for the filing of further affidavits and submissions and adjourning the further hearing of the plaintiff’s application to 14 November 2022. I also ordered the plaintiff to pay the defendants’ costs of and associated with the 20 September 2022 hearing.
17As contemplated by my 20 September 2022 orders, Mr Jiang affirmed a further affidavit dated 7 October 2022 and the defendants filed an affidavit of their solicitor, Mr David Weinberger of KCL Law, dated 10 November 2022. The plaintiff filed primary and reply submissions in substitution for those relied upon at the 20 September 2022 hearing. The defendants filed further written submissions dated 10 November 2022.
Procedural history
18I begin by setting out the relevant procedural history of this matter. What follows is derived from the affidavit of Mr Huang and from the Court file.
19The proceeding was commenced by the plaintiff in the General List of the Common Law Division by writ and statement of claim dated 7 December 2020. On 12 March 2021, orders were made by Judicial Registrar Burchell (as her Honour then was), transferring the proceeding from the Common Law Division to the General List of the Commercial Division.
20On 15 March 2021, the plaintiff filed a summons seeking leave to file and serve an amended writ and statement of claim in the form annexed to the affidavit in support.
21A notice of appearance was filed by the defendants on 17 March 2021. I note that this notice was filed months after the time prescribed by the Rules.
22By letter dated 19 March 2021, the Commercial Registry advised the parties that a first administrative mention was listed on 5 May 2021. Amongst other things, the letter stated that, by that date, draft consent orders signed by all parties were to be submitted to the Registry. The letter also stated: “FAILURE TO RESPOND BY THE DATE SET OUT ABOVE MAY RESULT IN THE PROCEEDING BEING STRUCK OUT WITHOUT FURTHER NOTICE.”
23On 27 March 2021, Herald Lawyers submitted minutes of consent in relation to the plaintiff’s summons. Orders were accordingly made on the papers by Judicial Registrar Burchell on 29 March 2021 vacating the hearing of the plaintiff’s summons listed for 31 March 2021, requiring the plaintiff to file and serve his amended writ and statement of claim by 31 March 2021, and requiring the defendants to file and serve their defence by 30 April 2021.
24On 31 March 2021, an amended writ and the ASOC were filed pursuant to the 29 March 2021 orders, although these were not served until 7 April 2021.
25On 8 June 2021, the defendants filed their defence. Making allowance for the plaintiff’s slightly late service of the ASOC, this defence was filed approximately one month late.
26On 31 August 2021, the defendants filed a request for further and better particulars of the ASOC. The plaintiff answered this request on 20 September 2021.
27By email dated 23 September 2021, the Commercial Registry reminded the parties that the proceeding had been listed for a first administrative mention on 5 May 2021, that no communication had been received from the parties in response to the first administrative mention, that the proceeding was therefore listed for a WAM on 4 November 2021, and that the proceeding would be dismissed without further notice if the parties failed to respond to the WAM.
28By email dated 4 November 2021, the date of the WAM, Herald Legal responded to the Registry’s email dated 23 September 2021. They advised that their client was currently overseas, that they had not received his instructions as to next steps, and that they sought an adjournment of the administrative mention to a date no earlier than 19 November 2021. It appears that the Registry did not receive this email.[3] Be that as it may, 19 November 2021 came and went without any further communication being sent to the Court.
[3] The email does not appear on the Court file, there is no record of the Registry having responded to it, and the contents of the Registry’s 12 January 2022 email to the parties suggests that it was not received.
29On 17 November 2021, Herald Legal filed and served an offer of compromise on behalf of the plaintiff. It is not apparent why this document was filed with the Court.
30According to Mr Huang’s affidavit, Herald Legal sent a without prejudice letter to the defendants on 14 December 2021.
31On 12 January 2022, a further email was sent by the Commercial Registry to the parties. It noted that the matter had been listed for a WAM on 4 November 2021, that the plaintiff had filed an offer of compromise on 17 November 2021, and that the Court had not received any update from the parties since that time. The email asked the parties to provide the Court with an update. The Court received no response from either party.
32Later on 12 January 2022, Herald Legal sent an email to KCL, referring to the plaintiff’s 14 December 2021 without prejudice letter and the Court’s 12 January 2022 email. Herald Legal’s email stated that the plaintiff had not heard from the defendants and therefore assumed that the defendants did not accept the plaintiff’s 14 December 2021 offer. The email then requested, given that the parties had been unable to settle the matter, that they agree on a schedule moving forward, in particular in relation to discovery and evidence, so that they could report back to the Court. This email sought a response from the defendants by 14 January 2022. KCL did not respond by 14 January 2022.
33A further email was sent by Herald Legal to KCL on 21 January 2022. The email referred to a telephone conversation that day between Mr Huang of Herald Legal and Mr Weinberger of KCL, and recorded Mr Huang’s understanding that Mr Weinberger would seek to elicit a counter-offer from his clients. It further stated that the plaintiff would give the defendants until 28 January 2022 to make any counter-offer, failing which orders would be prepared dealing with next steps. The email expressed Mr Huang’s belief that this course would minimise the parties’ costs. The email concluded by asking KCL to advise whether the defendants were able to make a counter-offer within one week. KCL did not respond.
34A further email was sent by Herald Legal to KCL on 8 February 2022. The email noted that the plaintiff had heard nothing from the defendants. It attached proposed consent orders for the defendants’ consideration and asked KCL to advise of their clients’ position as soon as possible. The consent orders provided for discovery to occur by 21 February 2022 and mediation by 21 March 2022. I note that the provision of the proposed orders, in circumstances where the defendants had failed to make any counter-offer, was consistent with the course foreshadowed in Herald Legal’s 21 January 2022 email.
35On 2 March 2022, KCL sent a letter to Herald Legal which attached an amended version of the consent orders furnished by Herald Legal on 8 February 2022. The amended consent orders provided for discovery to occur by 30 March 2022 and mediation by 30 April 2022, thus extending the time for these steps by approximately 5 weeks. The letter asked the plaintiff’s solicitors to countersign the amended orders and send them to the Court if they were acceptable to the plaintiff. I note that this letter was sent by KCL some 3 weeks after the initial consent orders had been proposed by Herald Legal, and in circumstances where KCL had been unresponsive to emails sent by Herald Legal in January 2022. The consent orders contained only 3 paragraphs and provided for nothing more than discovery of the standard categories of documents, completion of mediation, and the reserving of costs. It is unclear why it took the defendants 3 weeks to consider and respond to them.
36Mr Huang deposes that, on 22 March 2022, he received an email from the defendants’ solicitors following up on their 2 March 2022 letter. Herald Legal provided no response to this correspondence.
37On 8 April 2022, Herald Legal filed a notice of solicitor ceasing to act, pursuant to r20.03(1), as a result of their inability to obtain instructions from Mr Jiang. The notice stated that Herald Legal ceased to act for the plaintiff from 6 April 2022. Because the proceeding had never been set down for trial, Herald Legal did not require leave to file the notice.[4]
[4] See r20.03(3).
38On 11 April 2022, I made the April Orders dismissing the proceeding.
Parties’ submissions
39In addition to the written submissions to which I have already referred, I had the benefit of oral submissions from Mr Leung and Mr Weinberger at the 14 November 2022 hearing. Both sides accepted that the plaintiff’s application was governed by the principles set out by the Court of Appeal in Jorgensen v Slater & Gordon Pty Ltd[5] (citations omitted):
[5] [2008] VSCA 110 at [9]-[11].
“The court has a wide discretion to relieve a party of the consequences of non-compliance with a self-executing order. The governing consideration, as in every aspect of practice and procedure, is what justice requires. As Burt CJ said in Link Blocks Pty Ltd v Fullin, all the circumstances must be weighed in the balance and
‘one must not … lose sight of the fact that the justice spoken of is an even-handed justice to [both sides].’
The power to relieve must be exercised with care. As Roskill LJ said in Samuels v Linzi Dresses Limited, it is a power
‘which should be exercised cautiously and with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored.’
We respectfully agree with what was said by Newnes J in the Western Australia Supreme Court in MTQ Holdings Pty Ltd v Lynch, as follows:
‘The authority of the court will equally be undermined, and the quality of justice for the innocent party eroded, if the ultimate sanction effected by the operation of a [self-executing] order can be avoided by showing that non-compliance with [that] order came about by the same sort of inattention or laxity that caused the order to be made in the first place.’
We would also adopt what Newnes J said regarding the considerations which should ordinarily be brought to bear in considering the exercise of this discretion. The court should have regard at least to the following matters:
(a) the circumstances in which the self-executing order was made;
(b) the reasons for non-compliance with it;
(c) the prejudice to the defaulting party if relief were not granted; and
(d) the prejudice to the innocent party if relief were granted.”
40Reference was also made to Du v Ivy Real Estate Pty Ltd,[6] in which Judge Cosgrave applied the Jorgensen principles in determining an application, by way of review of a decision of a Judicial Registrar, to reinstate a proceeding after orders had been made dismissing the proceeding for non-compliance with a WAM.
[6] [2021] VCC 154.
Plaintiff’s primary submissions
41The plaintiff’s submissions focused upon two main matters. The first was the reason for the delay or failure to respond to the Court. The second was the question of prejudice.
42As to the first matter, Mr Leung began by reiterating the observation of Judge Cosgrave in Du v Ivy[7] that a WAM is different to a self-executing order in that, unlike a self-executing order, a WAM does not operate automatically. Rather, a WAM requires a further order to be made dismissing the proceeding. I note that the present case is a good example of this, in that the WAM occurred on 4 November 2021 but it was not until 11 April 2022 that the April Orders were made. I understood Mr Leung to invoke this distinction in support of a submission that, because the WAM did not operate automatically, the plaintiff would not have had in mind that he was facing a “guillotine type situation”, and thus may have acted with less urgency than would have been the case if he had faced a self-executing order.
[7] [2021] VCC 154 at [11].
43The real focus of Mr Leung’s submissions in relation to the first matter was Mr Jiang’s evidence that his solicitor, Mr Huang of Herald Legal, “did not inform me that if the parties were unable to come to a timetable as part of the administrative mention process, there was a possibility that this Court might strike out the proceeding”, and that Mr Jiang “was not advised by [Mr Huang] that any settlement discussions took place in parallel to the proceeding and that timetabling orders needed to be reached regardless of the status of any settlement discussions”. Mr Leung submitted that Mr Jiang did not receive adequate legal advice about what was going on and what needed to be done in relation to the procedural aspects of the litigation. His failure to communicate with the Court was therefore the consequence of a lack of understanding about what was required of him, rather than any deliberate disobedience or disrespect of the Court. Mr Leung further submitted that this inadequate legal advice occurred in a context where, according to Mr Jiang’s second affidavit, he was facing personal and psychological pressures arising from being in China away from his family, from being subject to the strict COVID protocols in China, from being subject to financial pressure resulting from the matters the subject of this litigation, and from having undergone cataract surgery on his eyes.
44Mr Leung also submitted that, in addition to his failure to provide appropriate advice to Mr Jiang, Mr Huang himself appeared to be under some misapprehension as to what was necessary in terms of his own communication with the Court on behalf of the plaintiff.
45Reference was also made by Mr Leung to Mr Jiang’s evidence that, when the defendants finally responded with an extended timetable on 2 March 2022, Mr Jiang’s understanding was that the defendants were delaying the progress of the proceeding. At this point, according to Mr Jiang, in circumstances where he was already stressed and depressed, he lost hope and did not know what to do. It was this, he said, which led him to fail to respond to Herald Legal’s requests for instructions in March 2022.
46As to the second matter, prejudice, Mr Leung submitted that the only relevant prejudice identified by the defendants was the pressure or prejudice of being involved in a Court case. Citing Du v Ivy,[8] Mr Leung submitted that this was not relevant prejudice.
[8] [2021] VCC 154 at [29].
47Mr Leung submitted that the prejudice faced by the plaintiff was that he would be unable to pursue his claim if the April Orders were not set aside. Mr Leung stressed that the claim was one of substance and significant value. In this regard he referred to the fact that the claim was based upon a written document which the defendants admitted Mr Li had signed, and to the fact that the defendants also admitted payment of $80,000 to the plaintiff after the signing of the Redemption and Repayment Agreement, consistent with its alleged terms.
Defendants’ submissions
48The defendants emphasised that the plaintiff bore the onus on this application, citing Re Saeco Australia Pty Ltd.[9]They also relied upon references in Jorgensen (see paragraph 39 above) to the need for caution in granting relief from a self-executing order.
[9] [2010] VSC 161 at [25].
49The defendants submitted that the explanations provided by Mr Jiang in his affidavit were unpersuasive, lacked proper evidentiary support, and suggested that he was indifferent to the progress of the proceeding. Mr Weinberger submitted that none of the matters relied upon by Mr Jiang, in particular his cataract surgery in Shanghai in July 2021, and his depression caused by China’s COVID restrictions and his financial and medical issues, prevented him from being able to communicate with his solicitors and provide them with instructions. However, Mr Weinberger said little about the primary matter relied upon by the plaintiff, namely, the failure of his solicitors properly to advise him as set out in paragraph 43 above. The defendants’ 10 November 2022 written submissions characterise as an “improbable assertion” the evidence of Mr Jiang that his lawyers did not tell him about the consequences of failing to comply with the Court’s deadlines. In his oral submissions, Mr Weinberger submitted that this evidence of Mr Jiang did not sit neatly with Mr Huang’s evidence that in March 2022, Herald Legal “failed to receive the plaintiff’s instructions as to the affidavit of documents and proposed Minutes despite repeating requests from our end”.
50The focus of the defendants’ oral and written submissions was the question of prejudice to the plaintiff. There were in essence 2 limbs to the defendants’ contention that the plaintiff would suffer no prejudice if he failed on the present application. First, it was said that Gold Nature was not a party to the Redemption and Repayment Agreement, that the claim against it must therefore fail, and that the plaintiff would therefore lose nothing by being unable to prosecute his claim against Gold Nature in this proceeding. Mr Weinberger relied in particular upon the Redemption and Repayment Agreement itself, drawing attention to the fact that, although the agreement purported expressly to identify the parties to it, Gold Nature was not so identified. Mr Weinberger also relied upon the further and better particulars of paragraphs 7 and 13 of the ASOC, but it was unclear to me how those particulars could be said to support the defendants’ position. Mr Weinberger said that the defendants took no issue with the pleading of the claims against ANS and Conway.
51The second limb of the defendants’ contention in relation to prejudice to the plaintiff was that if the plaintiff failed on the present application, he could simply institute a fresh proceeding to advance his claims. Thus, he could suffer no prejudice if the present proceeding remained dismissed. Mr Weinberger submitted that a fresh proceeding could not be barred by the principle of res judicata, because the present proceeding had been dismissed without any adjudication on the merits.[10] This second limb was encapsulated by the final sentence of the defendants’ 10 November 2022 written submissions: “The Plaintiff should file a fresh Writ and Statement of Claim since res judicata does not apply.”
[10] Mr Weinberger cited Brocx v Hughes [2010] WASCA 57 at [76].
52As to prejudice to the defendants if the April Orders were set aside, Mr Weinberger conceded that there was no prejudice to Conway or ANS. The prejudice to Gold Nature was said to be that it would have to defend a claim against it which could not succeed.
53The defendants further contended that the plaintiff had breached his overarching obligation under s25 of the Civil Procedure Act 2010 to minimise delay, particularly by his failure to respond to the defendants’ timetabling orders proposed on 2 March 2022. The defendants relied upon the ability of the Court, pursuant to s28(1) of the Civil Procedure Act, to take into account any contravention of the overarching obligations when exercising any power in relation to a civil proceeding and, relevantly in this case, when exercising the Court’s discretion under r24.06.[11]
[11] The defendants cited Durney v Deakin University [2016] VSC 418 at [65]-[66].
54The essence of the defendants’ position was encapsulated by Mr Weinberger’s oral submission that the preferable course was for the Court to leave the existing proceeding dismissed and allow the plaintiff to go away and fix its case against the second defendant and institute a fresh proceeding to be run in the normal way.
Plaintiff’s reply submissions
55Mr Leung did not accept that Gold Nature was not a party to the Redemption and Repayment Agreement or that there was any deficiency in the claim pleaded against it. He submitted in this regard that the agreement was informal in nature, had clearly been drawn by lay people, contained a number of ambiguities, and had in some places “mixed” the various entities. He also pointed to the fact that the Gold Nature Trust holds shares in ANS, such that the contractual reference to the plaintiff’s “interest in Conway and ANS” could be read as a reference to the units held by the plaintiff in the Conway Trust and the Gold Nature Trust. He submitted that it was clear that the plaintiff’s interests in the Gold Nature Trust were the subject of the agreement. Ultimately, he said, the proper construction of the Redemption and Repayment Agreement and the identification of the parties to it would be a matter for the trial judge, informed by evidence as to the relevant factual matrix. He submitted that I was not in a position to rule that the claim against Gold Nature was so deficient that this constituted a basis for refusing the plaintiff’s application.
56Mr Leung accepted the defendants’ contention that a fresh proceeding would not be barred by the principle of res judicata. However, he submitted that there was a potential risk of it being dismissed as an abuse of process.[12] I note here that Mr Weinberger countered by contending that, in circumstances where the defendants had submitted that the plaintiff would be able to institute a fresh proceeding, it would not be open to the defendants to challenge any such fresh proceeding on the basis that it was an abuse of process.
[12] Mr Leung cited Brocx v Hughes [2010] WASCA 57 at [98].
57Mr Leung also submitted that, even if it were open to the plaintiff to institute a fresh proceeding, it would be inconsistent with the Civil Procedure Act to dismiss the present application, thus leaving the present proceeding dismissed, and in effect require the plaintiff to go to the trouble and expense of initiating a fresh proceeding in circumstances where the present proceeding had already progressed to some extent. Rather, he submitted, the efficient management of the dispute between the parties and the interests of justice suggested that the better course would be to set aside the April Orders.
Consideration
Circumstances in which the order was made and reasons for non-compliance
58The first and second Jorgensen factors need to be modified slightly in a case such as the present, where the Court has not made a self-executing order but instead has issued a WAM followed by later orders dismissing the proceeding. In the similar circumstances in Du v Ivy,[13] Judge Cosgrave treated the first Jorgensen factor as requiring consideration of the circumstances leading to the issuing of the WAM and the making of the dismissal order, and the second Jorgensen factor as requiring consideration of the reasons for the failure to respond to the WAM. I will adopt a similar approach in this case. Having regard to the facts of the present case, it is convenient to consider both of these factors together.
[13] [2021] VCC 154 at [17]-[26].
59The chronology which I have set out earlier in these reasons reveals the following relevant matters leading up to the making of the April Orders:
(a) There was no material non-compliance by the plaintiff with previous Court orders.
(b) Steps were being taken to progress the proceeding or settle it, at least up until February 2022. The plaintiff was the primary driver of these steps, with the defendants largely playing a passive role. I therefore disagree with the defendants’ general submission that the plaintiff was indifferent to the progress of the proceeding. Such indifference could only be said to have occurred in March 2022.
(c) Although the parties did not in terms submit consent orders by the 5 May 2021 first administrative mention date as required by the Commercial Registry’s 19 March 2021 letter, Herald Lawyers submitted consent orders on 27 March 2021 dealing with the plaintiff’s summons and the filing of pleadings. This was therefore not a case where the parties (and the plaintiff in particular) simply failed to furnish the Court with anything at all.
(d) The defendants, on a number of occasions, were guilty of delay. Most significantly, they filed their notice of appearance several months late, filed their defence one month late, delayed in responding to the plaintiff’s January 2022 emails, and took 3 weeks to respond to the simple consent orders proffered by the plaintiff on 8 February 2022.
(e) KCL did not communicate with the Court at all in relation to the administrative mention process.
(f) Part of Mr Huang’s motivation for delaying in furnishing the Court with consent orders appears to have been a desire to avoid incurring unnecessary costs, in circumstances where efforts were being made to settle the proceeding.
(g) Herald Legal communicated with the Registry on the date of the WAM, but it appears that this communication was not received by the Registry.
(h) A number of the Registry’s communications went unanswered by both parties.
(i) Save for an apparent small period of delay in around November 2021, the plaintiff was providing instructions to his solicitors up until receipt of the defendants’ proposed consent orders on 2 March 2022, whereupon he became uncommunicative and instructions could not be obtained from him.
60Having regard to all of these matters, I do not consider this to be a case where there was a history of indifference to, or disregard of, the Court’s orders by the plaintiff or his solicitors.[14] It seems to me that the principal problem in this case was a failure of communication. If Herald Legal, or indeed KCL, had responded to the Registry to inform it that attempts were being made between the parties to settle the proceeding or agree consent orders, it is unlikely that the April Orders would have been made. Based on the evidence before me, the failure of communication from the plaintiff’s side appears to have been the result of a lack of experience or competence on the part of Mr Huang. Mr Huang does not appear to have been cognisant of, or to have paid sufficient attention to, the risk of the proceeding being dismissed in the event that the Registry’s communications were not responded to in a timely manner. I do not consider it would be appropriate to prevent the plaintiff from pursuing his claim in this proceeding as a result of the failings of his solicitor.[15]
[14] Cf Du v Ivy [2021] VCC 154 at [20], [24].
[15] See, eg Du v Ivy [2021] VCC 154 at [28]; Pogue Fodder Services Pty Ltd v Kurmond Feed and Freight Pty Ltd [2022] VCC 1893 at [105]-[109].
61As I recorded at paragraph 42 above, Mr Leung made a submission based upon the automatic operation of a self-executing order in contradistinction to a WAM, although ultimately, this submission was not strongly pressed. I do not consider the submission to be persuasive, given that a number of communications from the Registry referred expressly to the potential consequences of failing to comply with an administrative mention or WAM. In my view, there is a more relevant matter flowing from the difference between a WAM and a self-executing order. A WAM (and the initial administrative mention before it) is directed to both parties, whereas a self-executing order typically requires only one party to take the relevant step in order to avoid the automatic operation of the order. Further, a self-executing order is typically made because of a history of default by that party. In the present case, unlike the case of a self-executing order, both parties, not just the plaintiff, were under an obligation to comply with the administrative mention process and respond to the Court’s communications. Although matters transpired in such a way that the ball was in the plaintiff’s court at the time that the April Orders were made (a matter to which I return in the following paragraph), both parties had failed to communicate with the Court during the administrative mention process.
62In one sense, the plaintiff can be seen as a victim of the timing of the April Orders. Those orders were not made on 11 April 2022 as a consequence of any 11 April 2022 deadline which had previously been communicated to the parties. Rather, the date was somewhat arbitrary, in that the April Orders were made on 11 April 2022 as a result of the Registry having reviewed the Court file at around that time and my having determined that, in light of the lack of communication with the Court and the effluxion of time, it was appropriate for orders to be made dismissing the proceeding. It just so happened that the position as at 11 April 2022 was that the defendants had proposed varied consent orders to which the plaintiff had not responded. The fairness of refusing the plaintiff’s application on this basis may be tested by considering what would have happened if the Registry had instead reviewed the file in mid to late February 2022 and orders dismissing the proceeding had been made at that time. The position at that point in time was that Herald Legal had proffered consent orders after a period of non-responsiveness from the defendants, and KCL had not yet responded to those proposed orders, despite having had ample time to do so. In those circumstances, the position of the defendants on this application would doubtless have been rather different.
63The main criticism which can be levelled at the plaintiff is his failure to provide Herald Legal with instructions in March 2022. I accept that the plaintiff was facing various personal pressures at that time and that those pressures may at least in part explain this failure. Further, as I have noted earlier, the evidence of Mr Jiang was that Herald Legal had failed to advise him of the potential consequences of failing to comply with the administrative mention process. Far from considering this to be an “improbable assertion” as submitted by the defendants, I consider it to be corroborated by Mr Huang’s apparent failure to appreciate the need for Mr Huang himself to communicate with the Court on behalf of his client and the potential consequences of his failing to do so.
64I also note that the plaintiff’s unresponsiveness in March and early April 2022 was not something which occurred over an extended period of time. As I have already stated, prior to that time, the plaintiff and his solicitors had been participating in the litigation. Even if, contrary to paragraph 63 above, there were no plausible explanation or excuse for Mr Jiang’s unresponsiveness in March 2022, I do not consider that that relatively short period of unresponsiveness would justify him being shut out from pursuing his claims. That is particularly so in a case where the defendants had also been unresponsive or late on a number of occasions. Such a punishment would not fit the crime.[16]
[16] Jorgensen v Slater & Gordon Pty Ltd [2008] VSCA 110 at [33].
Prejudice to the plaintiff
65In considering prejudice to the plaintiff in Du v Ivy, Judge Cosgrave held[17] that, if the proceeding remained dismissed for the plaintiff’s failure to comply with the WAM, “then the plaintiff will suffer grave prejudice. He will be prevented from bringing his action before the court.” Adopting his Honour’s approach, it follows that the plaintiff in the present case will suffer grave prejudice in the event that the April Orders are not set aside.
[17] [2021] VCC 154 at [27].
66The Court and the parties in Du v Ivy appear to have proceeded upon the basis that, if the order dismissing the proceeding were not set aside, it would not be open to the plaintiff to prosecute his claim at all. As I have noted above, the defendants submit in the present case that there is no prejudice to the plaintiff because he could simply prosecute his claim in a fresh proceeding. I am not attracted to this submission, for several reasons. Notwithstanding the defendants’ submission to which I have referred in paragraph 56 above, there is at least a possibility that the plaintiff may not be permitted to bring a fresh proceeding. It does not seem to me to be unrealistic to contemplate the Court determining of its own motion, irrespective of the position of the defendants, that a fresh proceeding is an abuse of process in circumstances where the April Orders had been made dismissing this proceeding and, ex hypothesi, orders had been made dismissing this application. Moreover, it seems to me to be procedurally pointless, and inconsistent with the Civil Procedure Act, to require the plaintiff to commence a fresh proceeding when the same result can be brought about by granting the orders sought by the plaintiff on this application – assuming that it is otherwise appropriate to do so. In this regard, I note that the current proceeding has advanced procedurally at least to some degree, and that the commencement of a fresh proceeding will require the parties to incur the costs of repeating, in the new proceeding, steps which they have already taken in the present proceeding.
67A significant motivation for the defendants’ stance appears to have been their contention that the claim as presently pleaded was defective and that leaving the current proceeding dismissed, so that the plaintiff was compelled to institute a fresh proceeding to advance his claims, would result in the defects being remedied. This contention, however, proceeds upon the erroneous premise that, in commencing any fresh proceeding, the plaintiff will or must replead his case in a manner which accords with the defendants’ view of what is defective. It may be that the plaintiff will do so, but there is no certainty or even probability that he will, and indeed Mr Leung in this context confirmed that the plaintiff’s position is that his claim is not defective and that it would be appropriate for him to rely upon his claim as currently pleaded if any fresh proceeding were to be commenced. Moreover, the defendants’ contention depends upon the Court accepting their position that the plaintiff’s currently pleaded claim is defective, a matter to which I will now turn.
68The alleged defectiveness of the plaintiff’s claim was relied upon by Mr Weinberger both in relation to prejudice to the plaintiff and also prejudice to the defendants. As to the former, and as I have recorded earlier, it was said that by losing the ability in this proceeding to prosecute the claim against Gold Nature, the plaintiff in effect lost nothing, because that claim was defective. The difficulty with this submission is that, even if I accepted that the claim against Gold Nature is defective, Mr Weinberger conceded that the claims against ANS and Conway were not. Thus, a refusal to set aside the April Orders will result in the plaintiff losing the ability in this proceeding to advance his tenable claims against the first and third defendants.
69More importantly, I do not accept that the claim against the second defendant is defective in the sense that it would not survive a strikeout application. In this regard, I accept the submissions of the plaintiff which I have set out in paragraph 55 above.
Prejudice to the defendants
70As I recorded earlier, Mr Weinberger conceded that there would be no prejudice to Conway or ANS if the April Orders were set aside. The prejudice to Gold Nature was said to be that it would have to defend a claim against it which could not succeed. As I stated above, I do not accept that submission. Accordingly, I consider that there would be no prejudice to the defendants arising from the April Orders being set aside.
Conclusion
71In discussing the principles applicable to a case such as the present, Judge Cosgrave in Du v Ivy stated:[18]
“The sanction of dismissing a proceeding so the plaintiff cannot bring its case before the court is an extreme measure reserved for the most serious cases where there is an egregious offence against the court or the opposing party. It is a last resort where no alternative and less severe, but effective, remedy is available.”
[18] [2021] VCC 154 at [15].
72His Honour ultimately concluded[19] that the case before him was “not in my opinion a case of the most serious kind sufficient to warrant the extreme measure of dismissing the proceeding”. I hold the same view of the present case. I also note that the conduct of the plaintiff in Du v Ivy was more unsatisfactory than that of the plaintiff in the present case, in that the plaintiff in Du v Ivy had also previously failed to comply with a number of Court orders prior to the WAM being issued.[20] Having regard to the result in Du v Ivy, it would be anomalous if the plaintiff in the present case were denied the relief which he seeks.
[19] [2021] VCC 154 at [31].
[20] See [2021] VCC 154 at [17]-[18].
73As should be apparent from the foregoing discussion of the Jorgensen factors, I do not consider the plaintiff’s conduct, particularly when regard is had also to the defendants’ conduct, to warrant the sanction of being prevented from pursuing his claims in this proceeding. Further, I do not consider that the defendants will be prejudiced if the April Orders are set aside. If the April Orders are not set aside, the plaintiff is at risk of at least some prejudice. Moreover, I consider it to be inconsistent with the Civil Procedure Act to accede to the defendants’ urging that I refuse the present application and, in effect, require the plaintiff to institute a fresh proceeding and set at nought the procedural steps taken by the parties in the present proceeding and the attendant costs thereof.
74Finally, insofar as the defendants seek to have the Court take into account the plaintiff’s delays or failings pursuant to s28(1) of the Civil Procedure Act, the Court must also take into account the defendants’ delays or failings. The defendants in my view have been guilty of at least the same level of delay as the plaintiff, if not more. I therefore do not consider s28(1) to advance the defendants’ position.
Orders
75Accordingly, I propose to make orders setting aside the April Orders, listing the proceeding for an administrative mention within 21 days, and ordering that the costs of this application be costs in the cause. I consider such an order as to costs to be appropriate in circumstances where the plaintiff was successful in his application, but was seeking an indulgence. I am also mindful in this regard of my conclusion that both sides were guilty of failing to respond to the Court’s communications and also the matters to which I have referred in paragraph 62 above. If any party wishes to contend for any different orders, within 7 days of the delivery of these reasons they should notify my associates and provide submissions, limited to 2 A4 pages, in support of their proposed orders. I will then consider any such submissions and make orders on the papers.
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