Leung v Chen

Case •

[2022] NSWDC 35

•

25 February 2022

No judgment structure available for this case.

District Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Leung v Chen [2022] NSWDC 35
Hearing dates: 17 February 2022
Date of orders: 17 February 2022
Decision date: 25 February 2022
Jurisdiction:Civil
Before: Wilson SC DCJ
Decision:

ORDERS:

1. leave granted to the Defendant to file an Amended Statement of Claim;

2. the Amended Statement of Claim is to be filed and served no later than 4pm 18 February 2022;

3. grant leave to Plaintiff to serve evidence in chief on or before 4pm on 17 March 2022;

4. grant leave to the Defendant to serve further evidence in response no later than 14 April 2022;

5. grant leave to the Plaintiff to file and serve evidence in reply on or before 4pm on 28 April 2022;

6. vacate Hearing listed for 21 February 2022;

7. the Plaintiff pay the Defendant’s costs occasioned by the amendment and thrown away by the vacation of the Hearing date;

8. the former solicitor of the Plaintiff (Mr Grant Spedding) is required to show cause why he ought not pay those costs on an indemnity basis and forthwith;

9. list the proceeding on 17 March 2022 for Mr Spedding to show cause as referred to in the preceding paragraph;

10. the current solicitor of the Defendant is to notify Mr Spedding of today’s orders;

11. in the event Mr Spedding wants to put on evidence, it is to be filed and served no later than Friday 11 March 2022;

12. in the event the parties wish to put on evidence in reply, such evidence is to be filed and served no later than 15 March 2022;

13. I list these proceedings for Hearing on Wednesday 25 May 2022 with an estimate of 3 days (including reading time for the judge);

14. I direct the Parties to comply with the Standard Orders for Hearing, attached to District Court Civil Practice Note 1;

15. liberty to apply on 3 days notice in the event that there is a need to vary the timetable. Such listing is to occur in advance of any slippage;

16. reasons for orders made today reserved.

Catchwords:

CIVIL – application to amend Statement of Claim and vacate Hearing – case as pleaded fundamentally flawed- seeming incompetence and lack of diligence of former solicitor- solicitor to show cause as to why he ought not to pay COSTS - new Hearing date set.

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 56, 57, 58, 99

Category:Procedural rulings
Parties: Francis Leung (Plaintiff)
Annie Chen (Defendant)
Representation: Counsel:
Mr AJ Munroe for the Plaintiff
Mr Fielder for the Defendant
File Number(s): 2020/303865

Judgment

  1. On 17 February 2022 I gave the Plaintiff leave to file an Amended Statement of Claim with the result that the Hearing set to commence on Monday 21 February 2022 was vacated. The Matter came before me when I was sitting as Civil List Judge with a busy list. The Defendant sought reasons which I reserved and now provide.

  2. The proceedings commence by Statement of Claim filed 23 October 2020 the Plaintiff sought liquidated damages in the sum of $177,720.26 representing “50% of the expense of the partnership business” paid by the Plaintiff. The statement was fundamentally and, as submitted on behalf of the Defendant, fatally, flawed. The expenses were incurred by a corporation Super Treasure Pty Ltd of which both parties were directors and equal shareholders. That company money was used to acquire a café franchise and run the café business. Both directors gave indemnities to the franchisor and numerous suppliers of coffee and the like. It was a term of the Deed of Guarantee and Indemnity entered into with the franchisor that the parties would jointly and severally guarantee to the franchisor for all payments to be made by the company under the Franchise Agreement. In respect of the Credit Agreement with suppliers, both parties jointly and severally guaranteed to each supplier the payment of all sums due and owing by the company.

  3. It was in the context of the guarantee that, it is alleged, the Defendant’s liability arose and not as a result of a partnership.

  4. I agree with counsel for the Plaintiff that if the matter proceeded to Hearing next week based on the original statement of claim as filed then it is unlikely that it would have been successful.

  5. In support of the application, the Plaintiff relied on an affidavit by the Plaintiff himself as sworn 16 February 2022. He was not required for cross examination. He acknowledges that on 28 July 2021 the court made orders for him to serve a proposed Amended Statement of Claim on the Defendant’s by 13 August 2021 in paragraph 5 of his affidavit, he refers to having discussions with his former solicitor (Grant Spedding) about the amendments to the Statement of Claim. He also recalled seeing several draft versions. He understood the amendments added to the claim related to money that he had paid under a number of guarantees with suppliers and under the Franchise Agreement with the franchisor.

  6. He stated that after a period of a number of months he had not heard from his solicitor about the Amended Statement of Claim or the case generally. He attempted to call his solicitor on a number of occasions throughout September, October and November leaving messages which were not returned. In paragraph 6 of his affidavit, the Plaintiff stated :

“[6] I thought that the draft Amended Statement of Claim has been served on the Defendant. I was not sent a copy that had been filed with the court and I do not know exactly what occurred in late 2021.”

  1. He was not challenged on that evidence. The Plaintiff’s former solicitor became active again in December 2021 and sent emails to his client. He referred to making amendments to the Statement of Claim and advised the Plaintiff that he needed to file an amended version and to “prepare further evidence in support of [his] claim”. It was only at that point that the Plaintiff became aware that the Amended Statement of Claim had not been filed with the court. That evidence was not challenged.

  2. Paragraphs 10 of Exhibit A:

“[10] I had a falling out with my previous solicitor in December 2021, which carried over into January 2022. I was frustrated with the advice I was receiving.”

  1. Further, his solicitor told him that he did not have a trust account and demanded that he meet with the solicitor at a bank to set up a join account into which the Plaintiff was to deposit funds for use in the proceedings. The solicitor told the Plaintiff that if he did not set up a joint account he would cease acting for him. This request is plainly irregular. On 19 January 2022, Mr Spedding filed a Notice of Ceasing to Act for the Plaintiff. The barrister previously retained also ceased representing the Plaintiff.

  2. The Plaintiff began making urgent enquiries to find a new solicitor. On 31 January 2022 he retained Graham Gorrie who filed a Notice of Appointment of solicitor on 11 February 2022. Between 31 January 2022 and 8 February 2022 there was delay in retrieving the Plaintiff’s file from his former solicitor.

  3. The file was collected by a courier on 8 February 2022. On 14 February 2022 Mr Gorrie briefed Mr AJ Munroe of counsel. A conference was convened with the Plaintiff on 15 February 2022, during the course of which the Plaintiff received advice regarding his claim including, I infer, the need to amend the Statement of Claim.

  4. On 16 February 2022, Mr AJ Munroe of counsel emailed my Associate requesting the matter be listed urgently. It was listed today (17 February 2022). Mr AJ Munroe also provided a Notice of Motion dated 16 February 2022, and an affidavit of the Plaintiff sworn 16 February 2022 and the proposed Amended Statement of Claim.

  5. On 17 February 2022 at 12:31am, Mr Lam, solicitor for the Defendant, emailed a copy of his affidavit sworn 16 February 2021 which was relied upon on the hearing of the Motion. Mr Lam faithfully sets out a procedural history of the proceedings and expressed his frustration at this late application. Mr Lam’s affidavit indicates that it was not only the Plaintiff who was not in contact with Mr Spedding in the latter half of 2021 and that Mr Spedding failed to appear on 28 July 2021. Mr Lam sent an email to Mr Spedding on 29 July 2021 informing him of the orders made on the 28 July 2021. It appears that a reply was not received.

  6. On 20 August 2021 Mr Lam sent an email to Mr Spedding following him up. No reply was received. On 29 September 2021 Mr Lam again sent an email to Mr Spedding to which no response was received.

  7. On 11 February 2022, Mr Lam receives an email from the Plaintiff’s new solicitor Mr Gorrie informing him that he had been instructed to act for the Plaintiff.

  8. The Defendant resisted the Plaintiff’s application on two bases. First, that it would necessarily require the vacation of the Hearing date of 21 February 2022 and, secondly, that the case been prepared for Hearing based on the Statement of Claim as originally filed. Mr Lam also referred to emotional distress suffered by his client by reason of the delay.

  9. This court takes a firm stance in relation to applications to vacate Hearing dates, particularly when made late. The Standard Orders for Hearings (Schedule 1 to District Court Civil Practice Note 1) provide that;

“[14] subject to sections 56-60 of the Civil Procedure Act, Hearings will only be vacated or adjourned where there is a very good reason. This must be demonstrated by the parties seeking the vacation or adjournment. The unavailability of counsel, or the failure to comply with court orders or to properly prepare the matter for Hearing, will not normally be sufficient reasons.”

  1. Section 56 of the Civil Procedure Act (CPA) sets out the overriding purpose of the Act and the rules of court, namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The court must give effect to that overriding purpose when exercising its discretionary powers. Pursuant to section 56(4) CPA a duty extends to any solicitor or barrister representing a party in the proceedings to ensure that, by their conduct, they do not cause a party to fall foul of the overriding purpose.

  2. Plainly the purposes of the quick and cheap resolution of proceedings would have been achieved by refusing the Plaintiff’s application in the Statement of Claim. Such refusal however, would have been unjust and would not have seen the resolution of the real issues in the proceedings.

  3. The requirement of there to be a just determination of proceedings is an object of case management stipulated in section 57(1)(a) of the CPA.

  4. In considering applications for vacation, the court is obliged to act in accordance with the dictates of justice (section 58 CPA).

  5. It is apparent in the evidence that the delay in the application for leave to file the Amended Statement of Claim was occasioned by the lack of diligence of Mr Spedding, the former solicitor for the Plaintiff. The Plaintiff’s own experience in having difficulties in contacting his solicitor was mirrored by the efforts by the solicitor for the Defendant to contact the solicitor for the Plaintiff in the second half of 2021.

  6. Leave was granted to the Plaintiff to file the Amended Statement of Claim with an order that the Plaintiff pay the Defendant costs occasioned by the amendment and also by the necessary vacation of the Hearing date. My preliminary view is that such costs ought not to be paid by the Plaintiff himself but rather by his former solicitor pursuant to section 99 of the CPA. It would appear on the evidence currently before me that the solicitor caused unnecessary costs to be incurred by his serious neglect, incompetence or misconduct.

  7. In my opinion, the application of the overriding purpose in this case requires that leave be granted to amend the Statement of Claim and the Hearing be vacated. Such orders accord with the dictates of justice.

  8. The proceedings have been given a fresh Hearing date on 25 May 2022.

  9. In addition, the matter is listed on 17 March 2022 for Mr Spedding to show cause as to why he ought not pay the costs occasioned by the amendment and thrown away by reason of the vacation of the Hearing date on an indemnity basis and forthwith.

  10. In my opinion, an order for costs in favour of the Defendant will substantially meet any prejudice she has suffered as a consequence of the conduct of the Plaintiff’s case.

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Amendments

25 February 2022 - Initials added for Counsel for the Plaintiff.


Spelling of Graham Gorrie corrected.

Decision last updated: 25 February 2022

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