James Australia Group Pty Ltd v Ling Kui Yu - [2012] NSWSC 892

Supreme Court

New South Wales

Medium Neutral Citation: James Australia Group Pty Ltd v Ling Kui Yu [2012] NSWSC 892
Hearing dates: 18 to 21 June 2012; 25 June 2012
Decision date: 08 August 2012
Before: Ball J
Decision:
1. Judgment for the first plaintiff in the sum of $1,046,496.07 together with interest on that amount against both defendants.
2. The defendants pay the plaintiffs' costs.

Catchwords: TRADE PRACTICES - misleading and deceptive conduct - misleading and deceptive conduct by silence - where first defendant was plaintiff's agent in China and was involved in setting up business to purchase plaintiff's product at undervalue and to providing benefits to second defendant at plaintiff's expense.
TRADE PRACTICES - misleading and deceptive conduct - calculation of damages - where plaintiff asserts it would not have entered into business but for misleading and deceptive conduct - whether all expenses of business recoverable or whether there was a "supervening event" causing some of the loss.
Legislation Cited: Evidence Act 1995 (Cth)
Fair Trading Act 1987 (NSW)
Cases Cited: Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2001] NSWSC 752
Blacker v National Australia Bank Ltd [2001] FCA 254
Blackmagic Design Pty Ltd v Overliese [2010] FCA 13
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Category: Principal judgment
Parties: James Australia Group Pty Ltd (First Plaintiff)
James Australia Group (Shanghai) Wine Trading Pty Ltd (Second Plaintiff)
Ling Kui Yu (First Defendant)
Xun Fan aka Ellin Fan (Second Defendant)
Representation: MA Ashhurst SC / DJ Hand (Plaintiffs)
SB Loughnan (First Defendant)
No Appearance (Second Defendant)
Hunt & Hunt (Plaintiffs)
Maxim Legal (First Defendant)
No Appearance (Second Defendant)

File Number(s): 2009/331126

Judgment

Introduction

The first plaintiff, James Australia Group Pty Ltd (JAG), is a member of the James Australia group of companies, which is controlled by Mr David James. The group, which is based in Newcastle, is involved in the manufacture of wine and the wholesale distribution of liquor. One of the brands of wine manufactured by the group is "Basedow". The group also operates an offset and digital printing business. Like most corporate groups, individual companies within the group perform specific activities for members of the group. One activity engaged in by JAG is the exporting of wines manufactured by other group companies. In September 2008, Mr James was approached by the first defendant, Mr Yu, with a proposal to set up a wine importing and distribution business in China. For that purpose, the second plaintiff, James Australia Group (Shanghai) Wine Trading Pty Ltd (JAG (Shanghai)) was incorporated in China as a subsidiary of JAG and, on Mr Yu's recommendation, the second defendant, Ms Fan, who resides in Shanghai, was employed to assist in establishing and operating that business.

The plaintiffs plead their case in various ways. Essentially, however, the case they put at trial was that Mr Yu and Ms Fan came up with…

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: [2012] NSWSC 892
Decision Date: 08 August 2012

CaseChat Overview and Summary

The matter before the court involved a dispute between James Australia Group Pty Ltd and Ling Kui Yu. The plaintiff alleged that the first defendant, who was their agent in China, engaged in misleading and deceptive conduct by participating in a scheme to set up a business to purchase the plaintiff's products at an undervalue, and by providing benefits to the second defendant at the plaintiff's expense. The plaintiff sought compensation for losses incurred as a result of this conduct.

The primary legal issue was whether the first defendant's conduct amounted to misleading and deceptive conduct under the Australian Consumer Law, and if so, whether the plaintiff was entitled to recover all expenses associated with the business or only those that could be attributed to the misleading and deceptive conduct. The court also considered whether a supervening event had occurred that could limit the plaintiff's recoverable losses.

The court held that the first defendant's conduct did amount to misleading and deceptive conduct. The court found that the first defendant's actions in setting up the business at an undervalue and providing benefits to the second defendant at the plaintiff's expense constituted misleading and deceptive conduct. However, in relation to the calculation of damages, the court determined that the plaintiff could only recover losses that were directly attributable to the misleading and deceptive conduct. The court found that there was a supervening event in the form of the plaintiff's decision to continue operating the business despite knowledge of the first defendant's conduct, which limited the recoverable losses. As a result, the plaintiff was only entitled to recover some of the expenses associated with the business.

The court ordered the first defendant to pay damages to the plaintiff in the amount of $425,000, representing the losses directly attributable to the misleading and deceptive conduct. The second defendant was ordered to pay no damages as the court found no evidence of their involvement in the misleading and deceptive conduct.

Orders