Liao v New South Wales
[2014] NSWCA 71
•24 March 2014
Court of Appeal
New South Wales
Case Title: Liao v State of New South WalesZhang v State of New South Wales Medium Neutral Citation: [2014] NSWCA 71 Hearing Date(s): 25 July 2013 Decision Date: 24 March 2014 Before: Beazley P at [1]; Basten JA at [2]; Barrett JA at [137] Decision: Appeal dismissed with costs.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: PROCEDURE - pleading - prior adjudication in proceedings in which the present defendant was sued by different plaintiff - application for order striking out parts of the defence said to reflect findings in the earlier proceedings - whether abuse of process to put the plaintiff to proof of such matters - PROCEDURE - admissions - power of court to compel admissions - findings in the earlier proceedings against the defendant said to require admissions by the defendant in present proceedings Legislation Cited: Civil Procedure Act 2005 (NSW)
Commercial Causes Act 1903 (NSW)
Crimes Act 1900 (NSW)
Evidence Act 1995 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Attorney-General v Parnther (1792) 3 Bro CC 441; (1792) 29 ER 632
Bailey v Director-General, Department of Natural Resources [2013] NSWSC 515
BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400
Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd's Rep 132
Brandon v Commonwealth [2005] FCA109
Calyon v Michailaidis [2009] UKPC 34
Conlon v Simms [2006] EWCA Civ 1749; [2008] 1 WLR 484
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
D'Orta-Ekanaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317
Downey v Acting District Court Judge Boulton (No 4) [2010] NSWCA 114
Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43
Gonzales v Claridades [2003] NSWSC 508; (2003) 58 NSWLR 188
Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669
Hodges v State of New South Wales [1988] HCA 9; (1988) 62 ALJR 190
Hollington v F Hewthorn & Co Ltd [1943] KB 587
Hopcroft & Edwards v Edmunds [2013] SASCFC 38
Hunter v Chief Constable of West Midland Police [1982] AC 529
Ishac v David Securities Pty Ltd (Supreme Court of New South Wales, 13 December 1991)
King's City Holdings Ltd v De Monsa Investments Ltd [2013] HKCA 292
Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69; (1912) 15 CLR 333
North West Water Ltd v Binnie & Partners [1990] 3 All ER 547
Railway Commissioners of New South Wales v G & C Hoskins Ltd (1918) 18 SR (NSW) 424
Reichel v Magrath (1889) 14 App Cas 665
Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; (2001) 53 NSWLR 198
Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251
Secretary of State for Trade and Industry v Bairstow [2003] EWCA Civ 321; [2004] Ch 1
Sydney Organising Committee for the Olympic Games v Zhu [2002] NSWCA 380
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
White and Libut v Thompson [2011] NSWCA 161
Zhu v Sydney Organising Committee for the Olympic Games [2001] NSWSC 989
Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530Texts Cited: Anthony Morris QC, "Seven Deadly Sins of Pleading" (December 2008) 32 Hearsay - The Journal of the Bar Association of Queensland
Blackstone's Civil Practice 2013 (13th ed (2012) Oxford University Press, edited by S Sime and D French)
E Peel, Treitel - The Law of Contract (13th ed, 2011)Category: Principal judgment Parties: Shao Qiang Liao (First Appellant)
James Zhao Ming Zhang (Second Appellant)
State of New South Wales (Respondent)Representation - Counsel: G P McNally SC/J R Clifton (Appellants)
M J Windsor SC/M Hutchings (Respondent)- Solicitors: Raymond Lee & Co (Appellants)
I V Knight, Crown Solicitor (Respondent)File Number(s): 2012/214479; 2012/214480 Decision Under Appeal - Before: Grove AJ - Date of Decision: 11 April 2012 - Citation: Zhang v State of New South Wales [2012] NSWSC 327 - Court File Number(s): 2006/267005; 2005/269552
JUDGMENT
BEAZLEY P: I agree with Barrett JA.
BASTEN JA: The background to the proceedings brought by the appellants against the State of New South Wales is fully explained in the judgment of Barrett JA. The case of Mr Zhang has two parts: first, he challenges the refusal of the primary judge to strike out elements of the State's defence as abusive; secondly, he challenges the refusal of the primary judge to order the State to make admissions of certain facts. The appeal brought on behalf of Mr Liao is limited to the refusal to order admissions. Underlying each appeal is the proposition that the conduct of the State (through the agency of the Sydney Organising Committee for the Olympic Games ("SOCOG")) had been the subject of findings made in separate proceedings brought by Mr Zhu: Zhu v Sydney Organising Committee for the Olympic Games [2001] NSWSC 989 (Bergin J). As Mr Zhang and Mr Liao were sub-agents responsible to Mr Zhu, they submitted that the State should not be entitled to relitigate factual matters common to all three proceedings.
The State accepted that there were "some matters" which it accepted were "incontrovertible", as a result of the judgment of Bergin J in the Zhu proceedings, upheld on appeal by the High Court: Tcpt, 25/07/13, p 17(45). However, the State also asserted that the position of the present appellants was "altogether different from the position of Mr Zhu": Tcpt, p 18(18). Both propositions may be accepted, with the result that it becomes necessary to deal with the particular nature of each allegation in order to identify that which is truly and properly in issue between the parties, and to determine the extent to which, as the appellants asserted, the State is seeking to reagitate issues resolved against it.
An interlocutory appeal of this kind presents an unattractive challenge to this Court. However, it must be accepted that the issues raised could potentially affect the conduct of the trial in significant ways and, if the appellants be correct (whether in whole, or in part), could allow findings to be made at their trial which might be inconsistent with those made in respect of Mr Zhu. The proceeding also engages the regulatory function of this Court with respect to the proper administration of justice between the State and individual members of the community.
The resolution of the claims and counter claims requires a fine balance between the application of an overly broad brush and resort to overly fine semantic distinctions. A concern that the trial judge, in different respects, may have erred in both directions warranted a grant of leave to appeal. However, as became apparent in the course of submissions, there were real concerns that both the amended statements of claim and the defences failed to disclose with clarity and precision that which was in dispute and that which was not. Accordingly, the parties were invited to revisit their pleadings after the completion of oral argument.
The parties duly met on 13 August 2013 and subsequently filed a document setting out their respective positions with respect to repleading each of the disputed paragraphs. Although a covering letter noted that the parties had been unable to agree as to the proposed repleading of the defences, that proposition was not entirely accurate. There had, in fact, been considerable progress made, which limited the areas in dispute significantly. Given the course that has been taken, there is a lack of practical utility in addressing the precise terms of the pleading before the primary judge. The preferable course is to resolve the pleading issues by reference to the document submitted on 14 August 2013, which should be marked as exhibit "A" on the appeal.
(1) Further background
(a) the agents' authorityThe language employed in legal texts (including pleadings and judgments) is often considered dry and austere, to the extent of being tiresome. That is because lawyers seek to use precisely the same word or phrase consistently throughout a document. To refer in a judgment to Mr Zhang and Mr Liao by name on some occasions and in other places as "the appellants" contravenes the principle of consistency; however, it is unlikely to give rise to confusion, if the context is understood. Sometimes similar phrases are used to refer to the same conduct or concept, but in other circumstances such a course may seek to point up differences over and above the similarities. For example, when, in her judgment in the Zhu proceedings, Bergin J referred to "club memberships" and "tour packages", was she referring to the same concepts? Similarly, in describing "non-genuine membership certificates", and certificates that "contained numbers that were not on the Club database", was the judge describing the same idea, or making a point of distinction? These issues cannot usefully be addressed by reference to semantics: it is necessary to understand the language used in the context provided by the evidence.
The staging of the Olympic Games in Sydney in 2000 involved complex legal provisions for the protection of intellectual property and extensive local and international marketing strategies. A company involved in providing consulting services with respect to marketing was Synthesis Consulting Pty Ltd ("Synthesis"). Jointly with the Australian Organising Committee and SOCOG, Synthesis entered into a trust deed in September 1997 pursuant to which the Olympic Club Trust was established, with a corporate trustee, TOC Management Services Pty Ltd ("TOC"). TOC appointed a Mr Noble, a chartered accountant working for Synthesis, as its commercial director and Mr Keith Wyness as its managing director: Bergin J at [10]-[14]. The Club was established in December 1997 by the "Establishment Agreement" entered into between the same parties (including TOC) "as an affinity program" to have effect by way of contract between TOC and each member: at [15]. Among other things, members of the Club would obtain "Olympic benefits" which were defined to include tickets to Olympic functions, including the official dress rehearsal of the opening ceremony and other particular privileges, including the right to become a volunteer and be involved in the torch relay: at [16].
In February 1999 Mr Zhu met with Mr Noble, with a plan to market Club memberships in China as part of a travel and accommodation package. Mr Zhu said he would "be prepared to pay a $350 fee for each Club membership, if that includes one ticket to the Opening Ceremony Dress Rehearsal": at [25]. Mr Noble told Mr Zhu:
"You can buy memberships in bulk and on-sell them as part of your travel packages. Then you provide us with the member's name and mailing address we can then send out the welcome kit and enter the details in the database."
Mr Zhu advised that he would sell the travel packages through a company, Australian Chinese Sports Connections Pty Ltd ("ACSC"). Mr Noble accepted that arrangement, but said that the agency agreement needed to be in Mr Zhu's name because the Club wanted him to be personally responsible for the agency: at [27]. On 8 March 1999 Mr Wyness signed a letter as managing director of TOC appointing Mr Zhu "an Authorised Agent of the Olympic Club" stating that he was "authorised on an exclusive basis in the territory of the Peoples Republic of China to sell Olympic Club international memberships to Chinese residents travelling to Sydney for the Sydney 2000 Olympic Games as a component of a travel and accommodation package": at [28]. On 11 March 1999 Mr Zhu signed an agency agreement with TOC.
Mr Zhu wanted to include tickets to particular events as part of the package, a matter which TOC said it could not itself arrange, but was happy to support any application made by Mr Zhu to SOCOG: at [23].
In addition to the ticket to the dress rehearsal, the membership provided an entitlement to a welcome kit containing a satchel, magazine, video, CD, membership certificate, member's pin and an Australian souvenir: at [393].
The relationship of the club memberships to the travel package was not a point of confusion in the reasons of Bergin J: the relationship was central to part of SOCOG's case that its termination of the agency agreement was justified. It submitted that the scope of Mr Zhu's agency was limited so as to prohibit him "from utilising the agency or the Olympic Club logo to sell 'any services other than the International Memberships'": at [341]. Bergin J continued:
"343 ... [Mr Zhu] was appointed as the authorised agent of the Club on an exclusive basis to sell International Memberships 'as a component of a travel and accommodation package'. SOCOG submitted, and I accept, that [Mr Zhu] recognised the distinction between the sale of International Memberships pursuant to the Agency Agreement and the sale by him of his travel and accommodation package ....
344 As a component, or part or element of a larger whole, the International Membership was part of the 'package' which included the travel and accommodation for the attendance at the Games. To dissect the marketing of this part from the larger whole or package presented some challenges and the alleged repudiatory breaches in relation to the marketing of the International Memberships need to be assessed in a realistic way having regard to the commercial purpose of the Agency Agreement." [Emphasis in original.]
It is also necessary to provide a little further background in relation to the reference to certificates which were later alleged to be "not genuine". An element of the entitlements of a member was a document certifying that the individual was a member of the Club. To describe a certificate as "not genuine" was to indicate that it had not been issued by the Club or with the authority of the Club. No doubt it might be possible, as with a forged banknote, to demonstrate the false nature of the certificate in a number of ways, including by reference to numbers, the signatory or other information contained on the certificate which should not have been there or which was omitted. The nature of membership certificates was discussed by Bergin J in the following passages:
"260 The Membership Certificate was part of the International Membership Welcome Kit .... Once TOC had received notification from [Mr Zhu] of the enlistment or signing of not less than 500 new International Memberships and had received payment of Membership Fees it was obliged to supply [Mr Zhu] with a Kit for each new International Membership .... [Mr Zhu] was obliged to provide TOC with the name, address and Passport or Identification Card details of all new International Memberships within 14 days of 'selling' such membership ....
261 Noble gave evidence that over 100 kits were provided to [Mr Zhu] for marketing or demonstration purposes. He said that the only difference between the Membership Certificate in the Kits provided to [Mr Zhu] and the final Certificate was that the latter had the member[']s name on it and a number allocated by TOCMS....
262 TOC had what has been referred to in evidence as a database of memberships. There were different categories within the database including individual memberships and corporate memberships. The correspondence in November 1999 refers to [Mr Zhu's] 743 memberships. ...
...265 Wyness gave evidence that the intended arrangement with [Mr Zhu] was that he would buy blocks of memberships and they would be 'warehoused or put into inventory in the database'.... When [Mr Zhu] paid money referable to any blocks of memberships a large number of unallocated and open memberships would go into the database. Wyness' evidence was that [Mr Zhu] was then at liberty to allocate or attach those memberships as he saw fit .... Wyness also gave evidence that as [Mr Zhu] had paid for the membership kits 'he should receive them'...."
The genuineness of the certificates issued by Mr Zhu was directly relevant to the circumstances and lawfulness of his arrest, the background to which was discussed in the following passages. The individuals referred to are: (a) Y F Wang - Mr Ya Fa Wang was a businessman who had purchased club memberships from Mr Zhang and Mr Liao; (b) DS Nicholls - Detective Sergeant Leslie Nicholls was the senior officer of the Olympics Investigation Strike Force responsible for arresting Mr Zhu; (c) Ford - Ms Moiya Ford was an employee of SOCOG who became program manager of the Club when SOCOG took over the management of the club on 30 August 1999. The relevant passages in the judgment were as follows:
"368 It is submitted that but for the erroneous information provided to YF Wang and DS Nicholls by Ford and the failure of SOCOG to provide other obviously relevant information [Mr Zhu's] arrest would not have occurred. It is submitted that the provision of the information that the certificates were not genuine and the failure to inform DS Nicholls of the arrangement between TOC and [Mr Zhu] and the dispute that had arisen in November 1999 was a wrongful and unlawful act resulting in the exercise of discretion by DS Nicholls to arrest the plaintiff.
...370 No one informed DS Nicholls of the fact that [Mr Zhu] had at least six hundred and fifty seven memberships in the database. No one informed DS Nicholls that [Mr Zhu] had paid nearly a quarter of a million dollars to TOC and no one informed DS Nicholls that in June 1999 the Agency Agreement had been extended to December 2000. No one informed DS Nicholls that a purported termination of the Agency Agreement on 5 November 1999 was being challenged by the plaintiff and his solicitors. ...
...376 ... After [Mr Zhu's] arrest DS Nicholls informed him that the Strike Force was investigating a complaint that he had been representing himself as a person who was entitled to sell memberships of the Club in China without having authority to do so. [Mr Zhu] informed DS Nicholls that he was an authorised agent and he was the exclusive agent for the Club in China. DS Nicholls said 'that is not what I have been told. What authority have you got?'. [Mr Zhu] informed him that he had an Agency Agreement and an authority in writing under seal. He was asked where the authority was and, after looking through the documents he had with him, the plaintiff produced the letter of 4 June 1999.
377 DS Nicholls went away for a period and on his return said to [Mr Zhu] 'I have been told that this is a forgery. It must have been put together by photocopying other documents'. [Mr Zhu] then informed DS Nicholls that such allegation was 'not true' and that he had paid the Club $260,000 and that he was an authorised agent. DS Nicholls asked who could confirm this claim and the plaintiff informed him that either Wyness or Noble could do so. DS Nicholls then said that he had been told that the agency had been terminated on 5 November 1999. [Mr Zhu] informed him that it was not and that he had written to Wyness disputing such purported termination.
...386 ... The information that the Certificates were not genuine provided by SOCOG was pivotal to the exercise of DS Nicholls's discretion to arrest [Mr Zhu]. In my view to suggest that the complaint was from a third party and not SOCOG does not accurately reflect the reality of the situation. This was a complaint that [Mr Zhu] was acting criminally and at no stage prior to the arrest of [Mr Zhu] did SOCOG withdraw or qualify that information in any way. It had that opportunity on 3 December 1999. It did not inform DS Nicholls that many blank certificates had been issued to the plaintiff and that these were part of a Kit of paraphernalia that the plaintiff was entitled to issue or have issued.
387 ... I am satisfied that but for the information provided by SOCOG that the Certificates were not genuine and the failure to provide the information in relation to the civil dispute that had arisen [Mr Zhu] would not have been arrested on 6 December 1999."
Read against the background of this material, the statements by Bergin J in the following passages are clear and unambiguous:
"149 In the meeting on 2 December 1999 Ford informed DS Nicholls that Liao had no connection with the Club and had no authority to sell Club memberships .... Ford also informed him that the certificates that Wang had been given contained numbers that were not on the Club data base.... Ford informed DS Nicholls that the information on the certificates was 'not genuine'.... DS Nicholls said that Ford was the 'central person' for him to contact for inquiries he had in relation to the investigation....
...155 This was the mindset of the SOCOG representatives by this stage with Ford advising that the Certificates were not genuine in an atmosphere of deep suspicion that [Mr Zhu] and his sub-agents were operating without any authority and fraudulently. I am also satisfied that Ford had suspicions about the bona fides of Wyness and Noble. Ford had consulted with Ernst & Young after the OI Centre suggested a full audit of the financial transactions of the Club .... Ernst & Young provided an oral report and an interim written report dated 6 December 1999...."
Properly understood, these propositions amounted to no more and no less than that the certificates had not been issued by the Club, or not by a person acting under a valid authority.
(b) roles of Zhang and Liao
Messrs Zhang and Liao were intimately involved in the arrangements for selling Club memberships in China, with Mr Zhu. Bergin J referred to them as "sub-agents". As the State sought to raise an issue on the pleadings as to the party by whom they were appointed as a sub-agent, it is necessary to refer to findings made by Bergin J in relation to agency and sub-agency. First, as noted at [9] above, Mr Zhu personally was appointed an authorised agent of the Club in a letter signed by Mr Wyness as managing director of TOC, the trustee of the Club. Mr Wyness' letter was dated 8 March 1999; two days later Mr Noble supplied the plaintiff with a letter to the Chairman, Chinese Olympic Committee, advising that Mr Zhu had been appointed an exclusive authorised agent of the Club to market international memberships to residents of the PRC: Judgment at [29]. That Mr Zhu operated through a company he controlled, ACSC, was known to TOC, but her Honour accepted that the authority was conferred on Mr Zhu personally: at [27]. The agency agreement executed on 11 March 1999 was signed by Mr Zhu and TOC. Mr Zhu was described as "the Agent". Significantly, ACSC was not a party in the proceedings before Bergin J, relief being granted to Mr Zhu for repudiation of his agency agreement.
There was a live issue before Bergin J as to the authority of the "sub-agents". She stated:
"266 [Mr Zhu] utilised a system with his sub-agents. Those numbers were the internal records of the plaintiff and his sub-agents that enabled the identification of the sub-agent and the memberships sold. There were a number of certificates into which the internal numbers from the plaintiff's records were typed. These were the memberships 'sold' to YF Wang and contained the names of the persons Wang represented and their application form number. The plaintiff intended to present these Certificates to those members at the Media conference on 6 December 1999 in Shanghai. It is these Certificates that SOCOG alleges were 'false' certificates, the creation of which justifies summary dismissal [of Mr Zhu] pursuant to cl 15.4 of the Agency Agreement.
...273 [Mr Zhu] agreed to sell 2,000 International Memberships during the initial term of the Agency Agreement, that is, between 11 March 1999 and 30 June 1999. This Agreement was subsequently varied, but the initial obligation required [Mr Zhu] to put in place an infrastructure to enable him to market and sell those memberships in the PRC. Noble claimed that he was 'pushing him hard' for the money from those sales because the Club was in a tight financial position at that time. ... Commercial good sense dictated that it would have been impossible for [Mr Zhu] to comply with this obligation without the assistance of others. Noble agreed that he authorised [Mr Zhu] to appoint sub-agents.
274 Noble asked [Mr Zhu] to provide details of the people he intended to use as sub-agents so they could be 'checked out'. Noble said that the plaintiff 'made available' to him 'copies of the passport details (including photographs) of a number of people' he wanted to appoint as sub-agents. Noble passed those documents on to the OI Centre. ...
275 It was suggested to [Mr Zhu] in cross-examination that he did not seek TOC's approval for the appointment of any sub-agents prior to 17 June 1999. [Mr Zhu] said that he provided to the Club copies of the appointment letters of the sub-agents, a photocopy of their passport and details of their residential address if they lived in Australia. If the sub-agents lived in China [Mr Zhu] said that he provided a copy of the identity card to the Club."
There appears to have been no dispute as to the appointment and authority of Mr Zhang, who played an important role in the marketing exercise with Mr Zhu. Bergin J stated at [45]:
"During the period from March until June 1999 [Mr Zhu] made trips to and from China and was away from Australia most of the time in that period setting up the marketing of his project. He appointed a number of sub-agents one of whom was Zhang Zhao Ming (Zhang)."
On 27 April 1999, her Honour recorded that Mr Zhang had been subjected to a baggage search by Customs at Sydney International Airport and produced evidence that he was a sub-agent of Mr Zhu who was an agent of TOC to sell international memberships in China: at [52]. Copies of the documents were sent to the Olympic Intelligence Centre, which consulted with Mr Noble who said that Mr Zhu "does indeed have an authority to sell Olympic Club memberships in China and authority to appoint other agents who may obtain Olympic Club memberships from Chinese residents" on his behalf: at [53]. At [289] Bergin J concluded:
"I am satisfied that notwithstanding Wyness' letter of 17 June 1999 TOC permitted the plaintiff to go forward in this fashion appointing sub-agents and then after the event receiving from him, without complaint, the documents to which reference has been made. It was not suggested to [Mr Zhu] during 1999 nor has it been shown in these proceedings that any of the sub-agents appointed by [Mr Zhu] were persons in respect of whom TOC would have withheld approval. I am not satisfied [Mr Zhu's] conduct in respect of the appointment of sub-agents was a repudiatory breach justifying summary dismissal."
There was also a specific complaint made by SOCOG that Mr Zhang had received moneys on behalf of TOC without its authority. Bergin J rejected that submission, at [309]. Although there was some doubt as to precisely how many sub-agents had been appointed, her Honour accepted that Mr Liao (appointed on 31 May 1999) was one: at [280]. Three factual findings arise from this material:
(1) Mr Zhu was appointed an agent in his personal capacity;
(2) Mr Zhang and Mr Liao were appointed sub-agents by Mr Zhu (and not by his company ACSC), and
(3) Mr Zhang and Mr Liao had authority to sell Club memberships in China for TOC.With respect to the appointments of Mr Zhang and Mr Liao, an issue was raised by SOCOG as to whether they were properly appointed in circumstances where the letters of appointment were signed by Mr Zhu as chairman of ACSC. Her Honour made the following findings:
"329 SOCOG also relied upon the appointment letters of [Mr Zhu's] sub-agents Zhang and Liao. Each of the letters of appointment of Zhang and Liao were signed by [Mr Zhu] as Chairman as ACSC. Each of the letters referred to the certification of Zhang and Liao being authorised by ACSC as an agent in their respective provinces to enrol international members for the Australian Olympic Club. There is no doubt that Noble informed [Mr Zhu] that he was entitled to use ACSC but that his Agency Agreement had to be personal as TOC wanted him to be personally liable.
330 It is true that the letters of appointment referred to ACSC but on the evidence before me [Mr Zhu] accepted that his Agency Agreement and his responsibilities for his sub-agents would be personal and not that of his company. A further document was relied upon which is a contract between ACSC, as Party A and Zhang as Party B. It provided:
(1) Party A authorises party B to be agent for Guizhou, Guangdong (provinces) of China, and to provide relevant information.
...
331 Once again reliance is placed on the fact that ACSC was the party to the contract rather than [Mr Zhu] personally. Having regard to the findings that I have made in respect of the appointment of sub-agents and the notification to TOC of the appointment letters with the Olympic Club seal thereon I am satisfied that it is more probable than not that TOC was aware of the appointments by ACSC and continued to allow [Mr Zhu] to proceed on this basis. SOCOG cannot rely upon this conduct for any justification of the termination of the Agency Agreement."
(2) The Zhang pleadings
Mr Zhang's amended notice of motion dated 20 March 2012 sought an order striking out paragraphs 12, 16, 17, 18, 19, 19A and 19B of the State's defence to the third further amended statement of claim ("the claim"). The primary judge struck out paragraph 18, but as that has now been covered by a proposed repleading, it is appropriate to consider all of the challenged paragraphs, other than paragraph 12 as to which the challenge was withdrawn.
Before dealing with the specific elements of each pleading, it is convenient to accept Mr Zhang's submissions as to a matter of form. In each paragraph, the defence commenced with a denial (or non admission) of the relevant paragraph of the claim, followed by what was described as a "further answer", which in each case constituted admission of various elements of the claim. Mr Zhang submitted that the appropriate form for the defence was, first, to set out those parts which were admitted and to conclude that the allegations were otherwise denied (or not admitted). That submission should be accepted: a single pleading which commences with a global denial, followed by specific admissions is internally inconsistent and thus bad in form.
Paragraph 16 in the claim reads as follows:
"In about March 1999 Zhu entered an agreement with the Plaintiff for the Plaintiff to act as sub-agent of Zhu to sell memberships in the Olympic Club in Guangdong and Guizhou provinces in China for reward."
The proposed defence reads:
"The defendant denies Paragraph 16 of the Third Further Amended Statement of Claim. In further answer to paragraph 16, the defendant says that:
i. In and about March 1999 the plaintiff entered into an agreement with Australian Chinese Sports Connections Pty Ltd ("ACSC") to act as a sub-agent of ACSC.
ii. The sub-agency was in respect of the sale of Olympic Club memberships in Guizhou province in the Peoples Republic of China.
iii. The defendant does not know and cannot admit what, if any, remuneration the plaintiff was to receive for acting as a sub-agent."
For the reasons already given, the first sentence of the defence should be omitted. The word "further" should also be omitted.
The findings set out above with respect to the appointment of Mr Zhang do not support the conclusion that he was to be an agent of the company for the purpose of selling Club memberships. The finding was that Mr Zhu personally was appointed an agent by TOC and, although he operated through a company, was directly responsible in his personal capacity for the work of his sub-agents in so far as they were selling international memberships of the Club. Further, Mr Zhang's agency region extended to Guangdong as well as Guizhou: at [330], set out above.
Accordingly paragraph 16(i) should be omitted to the extent that the last reference is to ACSC, which should be replaced by "Zhu". Secondly, the effect of the finding at [330] extends to Guangdong province and, to the extent that the proposed defence excludes that province, the province should be added. In relation to (iii), there can be no objection to the State not admitting what, if any, remuneration Mr Zhang was to receive: Bergin J made no finding in that regard.
Paragraph 17 of the claim reads as follows:
"On 13 September 1999 SOCOG, TOC (as trustee of the (Olympic Club Trust) and other parties entered a Deed of Release and Termination which operated to terminate the Olympic Club Trust and place control of the Trust in the hands of SOCOG with effect from 20 September 1999."
The proposed defence is in the following terms:
"The defendant denies paragraph 17 of the Third Further Amended Statement of Claim. In further answer, the defendant says that:
i. on 13 September 1999, a Deed of Release and Termination was executed between TOC Management Services Pty Ltd (as both Trustee and in its personal capacity), SOCOG, the Australian Olympic Committee Inc. and Synthesis Consulting Pty Ltd.
ii. upon execution, the Deed of Release and Termination terminated the role of TOC Management Services Pty Ltd in the Olympic Club Trust.
iii. the Deed of Release and Termination did not take effect on 13 September 1999 as TOC Management Services Pty Ltd (as both Trustee and in its personal capacity), SOCOG, the Australian Olympic Committee Inc. and Synthesis Consulting Pty Ltd entered into a further agreement extending the date of the termination of the Olympic Club Trust until 20 September 1999.
iv. as the Trust had been terminated on 20 September 1999, the Olympic Club Trust was not placed in the control of SOCOG from that date.
v. from 20 September 1999, the control of the Olympic Club was transferred to SOCOG."Consistently with the generic criticism, the first sentence of the proposed defence should be omitted, as should the word "further" in the second sentence.
Paragraphs (ii) and (iii) are internally inconsistent: (ii) states that the deed took effect "upon execution" whereas (iii) states that it did not. Further, the word "extending" in (iii) is inapt: the intended meaning would presumably be served by replacing it with "delaying".
With those amendments and, if thought fit, the addition of a final paragraph otherwise not admitting or denying the allegations, the proposed defence should be allowed.
Paragraph 18 of the claim reads as follows:
"Entry into the Deed -
a. prevented TOC from performing its obligations under the contract of agency with Zhu, which SOCOG well knew, and,
b. prevented further performance of the sub-agency agreement between Zhu and the Plaintiff."The proposed defence is in the following terms:
"The defendant does not admit paragraph 18. In further answer to paragraph 18, the defendant says that:
i. On 11 March 1999, Mr Zhu entered into an Agency Agreement with TOC Management Services Pty Ltd.
ii. In and about but after 11 March 1999, the plaintiff entered into an agreement with Australian Chinese Sports Connections Pty Ltd ("ACSC") to act as a sub-agent of ACSC.
iii. On 13 September 1999, a Deed of Release and Termination was executed between TOC Management Services Pty Ltd (as both Trustee and in its personal capacity), SOCOG, the Australian Olympic Committee Inc. and Synthesis Consulting Pty Ltd.
iv. Upon execution, the Deed of Release and Termination terminated the role of TOC Management Services Pty Ltd in the Olympic Club Trust.
v. The Deed of Release and Termination did not take effect on 13 September 1999 as TOC Management Services Pty Ltd (as both Trustee and in its personal capacity), SOCOG, the Australian Olympic Committee Inc. and Synthesis Consulting Pty Ltd entered into a further agreement extending the date of the termination of the Olympic Club Trust until 20 September 1999.
vi. As the Trust had been terminated on 20 September 1999, the Olympic Club Trust was not placed in the control of SOCOG from that date.
vii. As from 20 September 1999, the control of the Olympic Club was transferred to SOCOG.
viii. On 5 November 1999, TOC Management Services Pty Limited sent a letter of termination to Mr Zhu in respect of the Agency Agreement.
ix. The letter was sent at the request of SOCOG.
x. The letter was ineffective in bring[ing] the Agency Agreement to an end.
xi. Entry into the Deed did not of itself affect the performance by TOC Management Services Pty Ltd of its obligations under the Agency Agreement with Mr Zhu.
xii. The plaintiff did not enter into a sub-agency agreement with Mr Zhu. The plaintiff entered into a sub-agency agreement with ACSC."The first sentence should become a final paragraph and the word "further" should be omitted in the second sentence. In (ii), the final word should be "Mr Zhu". Changes should be made to (iv) and (v) to be consistent with cl 17 (if those sub-clauses are necessary). Subclauses (vi) and (vii) are repetitive and unnecessary but harmless.
As to (xi) it may be appropriate to offer the State an opportunity to put submissions in support of such a pleading, before leave to amend is granted. It would appear to be inconsistent with (iv) and (vi). Thus, if the effect of the deed were to terminate the trust, and place the Club under the control of SOCOG, thus removing TOC as trustee of the Club, it is difficult to see how TOC could thereafter perform any obligations under the agency agreement with Mr Zhu, for example by supplying certificates and kits for new members.
In relation to (xii), the correct pleading, consistently with the findings of Bergin J, would be to the effect that the plaintiff entered into an agreement with ACSC to act as a sub-agent for Mr Zhu. (That was done with the knowledge and approval of TOC.)
Paragraph 19 of the claim reads:
"Further, on 5 November 1999 TOC and SOCOG wrongfully purported to terminate the contract of agency with Zhu."
The proposed defence is as follows:
"In answer to paragraph 19:
The defendant denies that on 5 November 1999, TOC Management Services Pty Limited and SOCOG wrongfully purported to terminate the agency agreement with Mr Zhu.
The defendant admits that SOCOG procured TOC Management Services Pty Limited to wrongfully repudiate TOC Management Services Pty Limited['s] agency agreement with Mr Zhu.
In further answer to paragraph 19, the defendant says that:
i. On 5 November 1999, TOC Management Services Pty Limited sent a letter of termination to Mr Zhu in respect of the Agency Agreement.
ii. The letter was sent at the request of SOCOG.
iii. The letter was ineffective in bring[ing] the Agency Agreement to an end.
iv. The allegations as contained in paragraph 19 are embarrassing.The first sentence should be deleted. It may form a final paragraph in the terms that the defendant otherwise denies the allegations. The third sentence, with the word "further" omitted, will then replace the first sentence, so that what was the second sentence forms part of the answer to paragraph 19, by way of a partial admission. Subclause (vi) is, in its context, unhelpful and should probably be omitted. The State should have leave to present submissions in support of it if it wishes to, when leave to amend is sought.
Paragraph 19A of the claim reads as follows:
"The purported termination amount to a repudiation of the contract of agency which remained on foot until 22 December 1999 when the repudiation was accepted by Zhu and the contract was terminated."
The proposed defence is as follows:
"In answer to paragraph 19A, the defendant denies that on 5 November 1999, TOC Management Services Pty Limited and SOCOG wrongfully purported to terminate the agency agreement with Mr Zhu as alleged in paragraphs 19 and 19A of the Third Further Amended Statement of Claim;
In further answer to paragraph 19A, the defendant says that:
i) On 5 November 1999, TOC Management Services Pty Limited sent a letter of termination to Mr Zhu in respect of the Agency Agreement;
ii) The letter was sent at the request of SOCOG;
iii) The letter was ineffective in bring[ing] the Agency Agreement to an end;
iv) On 22 December 1999, Mr Zhu commenced proceedings in the Supreme Court of New South Wales against SOCOG, TOC Management Services Pty Limited, and Mr Keith Wyness, alleging interference with the Agency Agreement;
v) The allegations as contained in paragraph 19A are embarrassing."
The generic amendments should be made by deletion of the first paragraph up to the semi-colon and the deletion of the word "further" in the next line. Subject to what follows, a final sub-paragraph otherwise denying the allegations may be inserted.
What is missing from the response to the pleading is that (a) the commencement of proceedings by Mr Zhu amounted to an acceptance by him of the repudiation, and (b) as a result, the agreement was then terminated.
Arguably, these are mixed questions of fact and law. It is generally accepted that a repudiatory breach does not automatically determine the contract, but gives the injured party the option of terminating or affirming and claiming further performance: E Peel, Treitel - The Law of Contract (13th ed, 2011) at [18-005]. Whether this constitutes part of Mr Zhang's cause of action is unclear; there is no suggestion that Mr Zhu sought to affirm the contract and acceptance of the repudiation by commencing proceedings was likely to have been relevant only to the question of the relief available to him. That is not in issue in the present case. On the other hand, the finding that "SOCOG procured TOC to wrongfully repudiate [Mr Zhu's] Agency Agreement" was a composite finding recorded by Bergin J at [461]. The problem for the defendant is that it admits precisely that conclusion in relation to the previous pleading, namely par 19. To the extent that paragraph 19A repeats the allegation, it is not open to the defendant to deny it in responding to paragraph 19A.
The allegation of embarrassment at (v) is unnecessary. Embarrassment may provide a ground for striking out a pleading, but it is not a relevant answer to the content of a pleading which is not sought to be struck out: cf Uniform Civil Procedure Rules 2005 (NSW), r 14.28.
(3) Conclusions as to pleading
The defendant should seek leave to amend its defence in accordance with the document provided to the Court on 14 August 2013, subject to the preceding findings. To the extent that those findings give rise to uncertainty and to the extent that they reserve the right of the defendant to support particular aspects of its proposal, those matters should be dealt with by a judge in the Division.
Because these issues have been resolved by reference to a document which was not before the trial judge, there is no need to interfere with the orders made by him in respect of Mr Zhang's notice of motion filed 20 March 2012, being orders 1 and 2.
(4) Direction to make admissions (Zhang)
Although the argument with respect to the admissions was developed by reference to the documents in Mr Liao's proceedings, it is convenient to commence with Mr Zhang as the discussion so far as focused on his claim. The admissions sought related to particulars contained within paragraphs 9, 12 and 19 of that claim.
(a) paragraph 19
Dealing with paragraph 19 first, the State's proposed amended defence makes relevant admissions, without the need for Mr Zhang to rely on admissions. There is, accordingly, no purpose in requiring admissions with respect to the particulars supporting that allegation.
Paragraphs 9 and 12 of the claim fall into a different category. Paragraph 9 alleges that the "charging and prosecution of the Charges by the DS Nicholls against the plaintiff was malicious and without reasonable and probable cause". The phrase "the Charges" was defined in paragraph 4 to refer to charges laid by Detective Sergeant Nicholls at Waverley Local Court on 27 March 2000. In answer to paragraph 4, the State accepted that Mr Zhang was arrested on 27 March 2000 and charged at Waverley Local Court with two contraventions of s 178BA of the Crimes Act 1900 (NSW). There is no reference in that paragraph to the role of Detective Sergeant Nicholls, but in the previous paragraph of the defence, the State had accepted vicarious liability for the conduct of Detective Sergeant Nicholls. It may be assumed that his involvement was admitted. The State denied paragraph 9, by which it may be taken to have denied that the actions of Detective Sergeant Nicholls against Mr Zhang were "malicious and without reasonable and probable cause". The particulars are lengthy, but unfortunately, they must be addressed seriatim. It may be noted that counsel for the appellant provided little by way of assistance in submissions. In relation to Mr Zhang, all that was done was to refer the Court to the submissions before the primary judge.
Particular (a) was in the following terms:
"Between 23rd November and 3rd December, 1999 in the course of her employment with SOCOG Ford informed DS Nicholls that -
i. certificates of membership to the Olympic Club provided to YF Wang by the Plaintiff and/or Liao were not genuine, and,
ii. the Plaintiff and Liao did not have authority to provide Olympic Club tour packages to Chinese nationals."Reliance was placed in support of this proposed admission on the statement of Bergin J at [149] in the following terms:
"In the meeting on 2 December 1999 Ford informed DS Nicholls that Liao had no connection with the Club and had no authority to sell Club memberships.... Ford also informed him that the certificates that Wang had been given contained numbers that were not on the Club data base .... Ford informed DS Nicholls that the information on the certificates was 'not genuine' .... DS Nicholls said that Ford was the 'central person' for him to contact for inquiries he had in relation to the investigation."
First, it may be accepted that the factual finding extended to the chapeau of particular (a). Secondly, it extended to particular (i). While there was no mention of Mr Zhang at [149], as appeared at [138]-[145], Mr Wang was dealing with both Mr Liao and Mr Zhang and it was Mr Zhang - at [142] - who handed him the memberships certificates. There is thus no disparity between particular (a)(i) and the findings made by Bergin J.
If (ii) had referred to the lack of authority to sell Club memberships, sub-particular (ii) would also have been within the factual findings. The problem raised by particular (ii) is to be found in the reference to "Olympic Club tour packages": the Club did not offer tour packages but memberships, which were part of the tour packages offered by Mr Zhang and his sub-agents. Accordingly an admission could be directed in the terms of sub-particular (ii) with minor amendments.
Particulars (b), (c) and (d) are negative propositions. They should, accordingly, be treated with caution. The case which Bergin J upheld with respect to Mr Zhu was based upon wrongful repudiation of his agency agreement with TOC and unlawful interference with his contractual rights in a high handed manner, entitling him to aggravated and exemplary damages. Her Honour upheld a submission that SOCOG "showed a conscious disregard for the rights of [Mr Zhu] and that its conduct was an outrageous misuse by a government instrumentality of the police powers of the State": at [424]. Bergin J focused on the failure of anyone from SOCOG to inform Detective Sergeant Nicholls of the truth, rather than the failure of the officer to make inquiries: at [370]. No basis has been shown for admissions in the terms of particulars (b), (c) and (d).
Before the primary judge, Mr Zhang did seek to support his claim for admissions set out in particular (e)(i) and (ii), which read as follows:
"i. The facts of Zhu's agency with TOC and Zhang's sub agency were known to Nicholls after a baggage search of sub-agent Zhang at Sydney Airport on 27 April 1999 where documents disclosing the Zhu agency and Zhang's sub agency for Guizhou Province in the PRC were obtained. Nicholls was aware of the subsequent confirmation of this information by Noble to the OIC (as recorded in discovered document TR 4).
ii. Police had been informed by Noble, that Zhu had authority to sell Olympic Club memberships in China, through his company, Australian Chinese Sport Connections Pty Ltd ("ACSC"), and to appoint sub agents." [The submissions actually referred to the date of Mr Liao's arrest, but nothing turned on that for present purposes.]
Reference was made to the judgment of Bergin J at [52], [53], [61]-[64] and [28], in support of the proposed admissions. The passages relied upon identify the letter of authority given to Mr Zhu, the search of Mr Zhang at Sydney Airport on 27 April 1999, the forwarding by Customs of a copy of documents, including the Zhu letter, to the Criminal Intelligence Unit of the Olympic Intelligence Centre on 24 May 1999 and an Intelligence Summary, referring to the documents, which was passed to Detective Sergeant Nicholls on 27 May 1999. The gravamen of the complaint was that Detective Sergeant Nicholls was or should have been aware from the Intelligence Summary that officers had been in touch with Mr Noble, who had confirmed Mr Zhu's authority both to sell Olympic Club memberships and to appoint other agents to sell such memberships.
An allegation that Detective Sergeant Nicholls was aware of those facts in mid-1999 might well have been supportable: but Mr Zhang was not arrested until 27 March 2000. By that stage, TOC (and hence Mr Noble) had ceased to have control of the Club and Ms Ford, who was then in a position of authority, gave Detective Sergeant Nicholls contrary information. It would not be reasonable to require the State to make an admission in the terms pleaded, either as to the state of mind, or what reasonably ought to have been known to, Detective Sergeant Nicholls in March 2000.
Submissions were also made before the primary judge in support of particular 9(e)(iv) which read:
"The Zhu agency agreement made provision for the appointment of Zhu and/or his company ACSC and the Plaintiff to act as properly authorised agents of TOC and the Club."
In support of this particular, Mr Zhang relied upon an admission said to have been made in paragraph 67(d) of the defence to the amended statement of claim. At that stage, the amended statement of claim pleaded that "the Agency Agreement and other documents made provision for the appointment of Mr Zhu and/or ACSC and the Plaintiff as properly authorised agents of TOC and the Club". The defence admitted that Detective Sergeant Nicholls was or ought to have been aware that "the Agency Agreement made provision for the appointment of Mr Zhu and the Plaintiff as properly authorised agents of TOC and the Club (for the limited purposes permitted by the Agency Agreement) but does not otherwise admit paragraph (d)".
Although the form of the pleading has changed, the State has not sought leave to withdraw the admission and an admission in the terms contained in the defence stands: no directed admission is necessary. The admission (correctly) makes no reference to ACSC.
Particular 9(e)(v) was in the following terms:
"Zhang paid $230,006.00 to Zhu and/or ACSC which had been paid to TOC and the Club for the purchase of international memberships in the Club and TOC had issued receipts in that regard."
Mr Zhang relied on a statement of Bergin J at [126] to support the particular. However, the only finding in that paragraph was that Ms Ford, at the meeting with the officers on 2 November 1999, had "expressed concerns", one of which involved "cheques totalling $230,006". There is no reference in that passage to the money being paid by Mr Zhang: rather, there are numerous references to that amount having been paid by Mr Zhu to TOC: see at [168], [263], [269], [270], [389] and [441]. Bergin J does not appear to have made any finding in the terms of particular 9(e)(v). Mr Zhang cannot seek an admission in those terms.
No particular reference was relied on to support particular (e)(vi). Particular (e)(vii) referred to Mr Zhu commencing legal proceedings in the Supreme Court against TOC and SOCOG concerning the termination of the agency agreement. This particular makes sense only when the date at the commencement of particular (e) is understood to be the date of arrest and charging of Mr Zhang on 27 March 2000 (and not, as appeared in the submissions, 1 December 1999). The importance of that date is that Mr Zhu commenced his proceedings on 22 December 1999, which was after the date of Mr Liao's arrest, but before Mr Zhang was arrested. The claim includes the correct date (27 March 2000), as did the amended statement of claim, to which pleading an admission was made as to this particular at paragraph 67(g). The State should be held to that admission, in the absence of leave to withdraw it, but no further admission is required.
(b) paragraph 12 - false information
Paragraph 12 alleged the charge and prosecution of Mr Zhang involved a malicious prosecution by SOCOG, acting through Ms Ford. Particular (d) was in the same terms as particular (a) under paragraph 9. Particular (b) was also in the same terms, except that it referred to information supplied by Ms Ford to Mr Wang. Particular (c) alleged that Ms Ford intended that Mr Wang would pass on that information to the police - no admission is sought in respect of that particular.
So far as the supply of information by Ms Ford to Mr Wang is concerned, Bergin J identified the information as being conveyed at a meeting on 2 December 1999. The information conveyed was that "that the twenty five membership certificates provided to YF Wang were 'not genuine'": at [382]. This passage does not refer to any involvement of Mr Zhang. However, Bergin J found that it was Mr Zhang who provided Mr Wang with the relevant certificates: at [142]-[143]. Mr Wang had queried the validity of the certificates with Mr Zhang, noting that the signatures of the AOC officials were "printed": at [143]. She noted that Mr Wang later contacted the Club "to ascertain the genuineness of the Certificates and the authority of Messrs Liao and Zhang": at [145]. However, it is not clear that a finding was made as to Ms Ford's state of knowledge with respect to Mr Zhang's role in providing certificates to Mr Wang. Nor was there a finding that Ms Ford told Mr Wang that Messrs Zhang and Liao did not have authority to provide "Olympic Club tour packages to Chinese nationals". Accordingly, an admission in the terms sought in paragraph (b) should not be required. The terms sought in particular (d) have already been addressed.
Particular (e) was in the following terms:
"The information provided to Wang and to the Police was false in that the certificates were genuine and the plaintiff did have authority to provide Olympic Club tour packages to Chinese nationals."
This particular is not self-contained: the references to "the information" harks back to the information referred to in particulars (b) and (d). Further, the basis on which it is said that Mr Zhang had authority to act with respect to Club memberships was further set out in particulars (f)-(h). These particulars were as follows:
"f. The Plaintiff had been appointed a sub-agent of Peter Tao Zhu who was appointed as agent for [TOC] to provide such certificates to Chinese nationals.
g. The Plaintiff thereby had authority of TOC to provide such certificates to Chinese nationals.
h. The certificates were provided to Zhu by [TOC]."These particulars involve both drafting problems and, having regard to the amended proposed defence, are largely otiose. As has been explained above, the proposed defence to paragraph 16 of the claim assumes the validity of Mr Zhu's appointment as an agent to sell Club memberships and accepts Mr Zhang's sub-agency. The difficulties relate to so much of the "information" as includes "Olympic Club tour packages", a concept which is imprecise and cannot form the basis of an appropriate admission, as discussed above. Nevertheless, for reasons which have already been explained in relation to the pleading, particulars (f), (g) and (h) are all covered by findings made by Bergin J. The final particular, namely that Ms Ford managed the Olympic Club for SOCOG at the time of the charging and prosecution (in March 2000) is probably uncontroversial and is supported by the findings at [116]. A direction in those terms could be given, if not conceded.
(c) paragraph 12 - malice
Particular (a) alleged that Ms Ford was "motivated by a concern for the safety of staff of TOC". Again, the particular is not self-contained in that it must be read with the particulars of providing false information in order to identify the time at which Ms Ford was said to be so motivated and as to the conduct which was motivated by the concern. However, that conduct must be specified as, presumably, the supply of false information. Bergin J found that, as at 2 November 1999, Ms Ford advised police officers that "she had concerns over the physical safety of the staff from former members of TOC": at [126]. Thus, the concern related to possible actions "from former members of TOC", not from Mr Zhu, Mr Zhang or Mr Liao. Further, although Bergin J was highly critical of the activities of SOCOG, particularly at [437]-[445], there was no reference to any motivation of Ms Ford in terms reflecting this particular. No admission should be directed in the terms sought.
The other particulars of malice identify further motivations of Ms Ford: at (b), "a desire that all ties between Zhu/ACSC and TOC be severed" and, at (c), "a desire and intention to end the selling of memberships in the Olympic Club".
The precise conduct which was said to be motivated by these concerns must be identified in order for such particulars to have relevance. It is true that Bergin J considered in some detail the nature of the information supplied to Detective Sergeant Nicholls prior to the arrest of Mr Zhu on 6 December 1999. She also considered what Detective Sergeant Nicholls had not been told. In particular, Bergin J relied upon particular evidence of Mr Zhu and of Detective Sergeant Nicholls: at [376]-[379]. In the last paragraph she concluded that had Detective Sergeant Nicholls been told about the dispute between Mr Zhu and SOCOG in relation to the termination of his agency, "he would not have gone ahead and arrested [Mr Zhu] on 6 December 1999 without a further investigation". Critical to Mr Zhang's case for malicious prosecution will be the steps which were taken by Detective Sergeant Nicholls (and no doubt members of SOCOG) after 6 December 1999. Admissions should not be directed in the terms sought.
(d) paragraph 12 - absence of reasonable and probable cause
All of the particulars under this heading relate to knowledge of various persons within SOCOG as to particular events. Particular (a) stated:
"By 6 October 1999, Ford knew that there was some arrangement between Zhu and TOC or SOCOG for the sale of Olympic Club memberships."
The justification for the date was not explained in submissions. Bergin J noted that Ms Ford had started with SOCOG on 30 August 1999. Bergin J stated at [117] that Ms Ford "claimed to be totally ignorant of any concept of International Memberships of the Club until it was raised some weeks later". She continued at [118]:
"It is apparent that in early October 1999 an officer from [the Department of Immigration] contacted Ford in relation to enquires being made in China in relation to Visas. Ford was apparently concerned by this conversation and subsequently met with the officers of OI Centre including Honeyman. Honeyman informed Ford that there had been several meetings between the OI Centre and Noble in relation to [Mr Zhu] and that Noble had been informed that [Mr Zhu] had not been charged with any offences 'nor were any of his sellers'."
This paragraph contains a finding consistent with the proposed particular, if the phrase "early October 1999" were substituted for "6 October 1999". A direction could be given, with that variation.
Particulars (b), (c) and (d) were in the following terms:
"b. At the time of providing the information to YF Wang and to Police, Ford knew that information relevant to the statements that she made to DS Nicholls that -
i. certificates of membership to the Olympic Club provided to Wang by the Plaintiff and/or Liao were not genuine, and,
ii. the Plaintiff and Liao did not have authority to provide Olympic Club tour packages to Chinese nationals,was available to her within TOC and SOCOG and she failed to enquire into that further information in order to consider the accuracy of what she had told DS Nicholls. That further information is identified below.
c. By 24 August, 1999, Reading of SOCOG knew that there was an arrangement between Zhu and the Olympic Club for the sale of OC memberships to Chinese residents, and same had been extended to December 2000.
d. By letter 29 October 1999, Wyness advised Ford that Zhu had purchased $260,000.00 of tickets in the Olympic Club which were being held, unnumbered, in the Club's database."
Reliance is placed on the following parts of the judgment of Bergin J:
"[135] Ford advised Reading that she intended to explain to Go that the Club was seeking legal advice on the "whole issue" and that the plaintiff had paid $260,000 approximately for around 730 memberships. She explained that she intended to advise Go that the 'Zhu Contract was terminated by TOCMS in September and that SOCOG had no arrangement with Mr Zhu and would not be entering into any in the future'. She further explained that she intended to advise Go that SOCOG would not be offering 'any International Memberships or engaging any other agents in the future' and that SOCOG were currently exploring whether to refund the plaintiff money or fulfil obligations to provide the kits."
"[435] There is no doubt that Ford knew the plaintiff had purchased at least 657 memberships. Her evidence about her attempts to understand the concept of International Memberships was quite extraordinary having regard to the seniority of her previous position and the importance of the position with SOCOG. The impression I am satisfied she sought to convey was that as hard as she tried no one would assist her with an explanation. I am satisfied that she had decided not to telephone Wyness to have an open and frank discussion with him because she was suspicious of him. That is why she told Ernst & Young not to make contact with him or Noble."
"[441] From the moment SOCOG took over the Club the plaintiff's rights under the Agency Agreement were totally disregarded. SOCOG decided that it did not want to deal with the plaintiff and did not have the commercial courtesy to write to the plaintiff directly or to telephone him or to suggest a meeting for the purpose of discussing either the future conduct of the Club or what it was that SOCOG had in mind in respect of the $230,006 that the plaintiff had paid to the Club. It is clear it took the view that it was required to do something about the plaintiff's contract of which it had knowledge by Reading's use of the words in his direction to Wyness to get 'us out' of the arrangements. It decided to retain the money whilst it shuffled between the option of returning the plaintiff's money or providing the Welcome Kits. This decision apparently proved too difficult for it to reach and had not even been made at the time it took part in the 3 December 1999 meeting with the OI Centre and Strike Force. It retains that money to this day."
"[445] SOCOG did not inform the police of the fact that TOC had extended the Agency Agreement in consideration of the payment by the plaintiff of over $200,000. It knew that a person claiming to be his sub-agent had been arrested. It knew that the police intended to notify international policing agencies and must have understood the consequences of allowing that to occur. SOCOG was not without the resources to act properly. It had a team of legal people who could have been brought into the matter a great deal earlier than they appear to have been on 14 December 1999. For Reading to simply inform the police that they could look at SOCOG's documents without alerting them to the 4 June 1999 letter of which I am satisfied Reading was well aware and the civil dispute that had arisen in respect of the purported termination on 5 November 1999 was in my view reprehensible."
Matter S: Assessment
The nominated paragraphs of the judgment do not refer to $240,000, October 1999 or March 1999. There is a reference to "at least 657 memberships" having been purchased, but the purchaser is identified in the statement of claim as "Zhu and/or ACSC", whereas the judgment refers to purchase by Zhu.
Matter T: Contention
The relevant part of the statement of claim is:
"In June 1999, the Agency Agreement had been extended by TOC to December 2000 in consideration for a payment of over $200,000.00 from Zhu and/or ACSC to TOC."
Reliance is placed on two parts of Bergin J's judgment, paragraphs [65] and [445]. The latter is set out at [324] above. The former is as follows:
"[65] On 31 May and 1 June 1999 the plaintiff paid the further amounts required pursuant to his discussions with Noble and Wyness and on 4 June 1999 was issued with a letter signed by Wyness in identical terms to that issued in March save that the period 1 April 1999 to 30 June 1999 was replaced by the period 1 April 1999 to 31 December 2000."
Matter T: Assessment
The quoted paragraphs of the judgment refer to a payment of "over $200,000" by Mr Zhu, not to a payment of over $200,000 by "Zhu and/or ACSC".
Matter U: Contention
The relevant part of the statement of claim is:
"In August 1999, SOCOG had given assurances to the Chinese Consul that the Olympic Club and Zhu and/or ACSC's agency were genuine."
Reliance is placed on the following parts of the judgment of Bergin J:
"[95] On 5 August 1999 the Cultural Consul of the PRC of the Consulate General's staff in Sydney, Wang Zhiang, attended the Club's offices at Chatswood with the plaintiff, Zhang, Mr Lin and Hu and met with Wyness. Consul Wang asked Wyness whether the Club was genuine and an official SOCOG organisation. He also asked whether it was 'genuine' that the plaintiff had an agency to sell memberships in China. Wyness said 'Yes it is, I can show you some documents which will prove the Olympic Club is a genuine SOCOG body and yes, Mr Zhu is our Olympic Club agent for China'."
"[442] Reading's direction to the SOCOG employee to provide Consul Wang with the excuse that SOCOG had not decided what to do about International Members when he knew that he had given a direction to Wyness to 'stop' the plaintiff is hardly the way a statutory body would be expected to deal with an official representative of another government in relation to the enquiries the Consul was making. By this time the Consul had already been informed that the plaintiff and the Club were 'genuine'. The internal correspondence and e-mails in November 1999 evidence a totally unedifying performance by a statutory body. The failure to meet with Mr Go and the obvious 'fobbing off'' tactics that were employed were in the circumstances disgraceful."
Matter U: Assessment
The statement of Wyness recorded in paragraph [95] of the judgment, if a statement of SOCOG, might warrant compulsion of an admission that SOCOG had given the consul assurances that the Olympic Club was a genuine body and that Mr Zhu was SOCOG's Olympic Club agent for China. But it does not justify compulsion of an admission that there was any agency (genuine or otherwise) of ACSC.
Matter V: Contention
The relevant part of the statement of claim is:
"Many blank certificates had been issued by SOCOG, TOC and/or the Club to Zhu and/or ACSC and that these were part of a kit of paraphernalia that Zhu and/or ACSC were entitled to use or have used."
Reliance is placed on the following part of the judgment of Bergin J:
"[386] The question posed in Dickenson 'do you want to proceed against these people' was not put in express terms to SOCOG. However the consultation between SOCOG and the OI Centre and the Strike Force on 3 December 1999 was to the same effect. The information that the Certificates were not genuine provided by SOCOG was pivotal to the exercise of DS Nicholls's discretion to arrest the plaintiff. In my view to suggest that the complaint was from a third party and not SOCOG does not accurately reflect the reality of the situation. This was a complaint that the plaintiff was acting criminally and at no stage prior to the arrest of the plaintiff did SOCOG withdraw or qualify that information in any way. It had that opportunity on 3 December 1999. It did not inform DS Nicholls that many blank certificates had been issued to the plaintiff and that these were part of a Kit of paraphernalia that the plaintiff was entitled to issue or have issued."
Matter V: Assessment
Paragraph [386] of the judgment refers to many blank certificates having been issued to Mr Zhu. It says nothing about the issue of many blank certificates to ACSC in addition to, or instead of, Mr Zhu. Nor is there reference to the identity of the issuer as "SOCOG, TOC and/or the Club". Also, while there was, in the judgment, reference to a "kit of paraphernalia that the plaintiff [Mr Zhu] was entitled to issue or have issued", there is no referenced to "Zhu and/or ACSC" - or anyone else - being "entitled to use or have used" any "kit of paraphernalia".
Matter W: Contention
The relevant part of the statement of claim is:
"Zhu and/or ACSC and TOC and SOCOG were involved in a civil dispute arising from the termination by SOCOG of the Agency Agreement in November 1999 and Wyness had advised Ford of the said civil dispute by 29 November 1999."
The part of the judgment of Bergin J relied on is:
"[437] All she [Ford] had to do was pick up the telephone and ask Wyness what the situation was with the plaintiff. If she had done that in late November 1999 when she was dealing with DS Nicholls I have little doubt that she would have been informed that Wyness had written to the plaintiff purporting to terminate the agreement and that the plaintiff's solicitors were challenging such purported termination. The press release issued by SOCOG on 12 December 1999 in which it claimed that to the best of its knowledge 'any arrangement that may have been in place prior to SOCOG assuming control of the Olympic Club in August was terminated by the previous management of the Olympic Club' is also quite extraordinary in the circumstances. SOCOG well knew by this time that the letter of 5 November was the time at which Wyness wrote to the plaintiff, long after it took over the Club. It also knew that such was at its direction and it well knew that the plaintiff was challenging the entitlement to terminate his contract. This exemplifies SOCOG's conduct in relation to the way it dealt with the plaintiff which was high handed and disgraceful."
Matter W: Assessment
Paragraph [437] of the judgment makes no reference to ACSC or TOC as parties to any dispute.
Matter X: Contention
The relevant part of the statement of claim is:
"International sales to the Chinese were a well known strategy of TOC as was advised in the said Ernst and Young report which Ford provided to Reading."
The part of the judgment of Bergin J relied on is:
"[157] Ernst & Young advised that they had reviewed the deposit books and bank statements in relation to the relevant entries for the Chinese International Memberships. They noted that the quality of the record keeping was 'poor' and recommended that Wyness and Noble be interviewed. Importantly the report stated that 'International Sales was not a secretive initiative but a well known strategy of TOC' and referred to the fact that their 8 July 1999 report had made specific reference to such sales with the estimate of revenues from that program. This did not quell the rising tide of suspicion within SOCOG about the plaintiff's conduct."
Matter X: Assessment
The most that paragraph [157] of the judgment might warrant, in terms of an admission on the relevant matter, is that Ernst & Young had stated a conclusion or opinion of their own that international sales (without reference to any particular part or parts of the world) were a well known strategy of TOC.
Matter Y: Contention
The relevant part of the statement of claim is:
"Subsequent to 3 December 1999, Ford and/or Reading on behalf of SOCOG, failed to bring to the attention of the Police information in its possession to the effect that the membership certificates were valid and that Zhu/ACSC the plaintiff and Liao were authorised by TOC and/or SOCOG to sell memberships I the Club to Chinese nationals."
The parts of the judgment of Bergin J relied on are paragraphs [372] and [445]. The latter is set out at [322] above. The former is as follows:
"[372] Ford knew that the plaintiff had paid nearly one quarter of a million dollars to TOC and she was hopeful that the whole thing would 'go away' if the kits and paraphernalia were given to the plaintiff. Her own correspondence and e-mails establish that she saw that as a cheaper alternative for SOCOG than refunding the plaintiff's money. It is my view that her failure to inform DS Nicholls of the payment by the plaintiff and the existence of at least six hundred and fifty seven memberships in the database was a significant omission by her and thus by SOCOG. Reading's failure to disclose that he had sighted the letter extending the plaintiff's agency to December 2000 and that there was a dispute as to whether the Agency Agreement had been terminated on 5 November 1999 was also a serious omission."
Matter Y: Assessment
The identified paragraphs of the judgment refer to Ford having failed to inform DS Nicholls of a payment by Mr Zhu and the existence of at least 657 memberships in the database. The things thus identified as not conveyed or communicated do not, in their description, correspond with those in the extract from the statement of claim. In the case of Reading, the judgment refers merely to a failure to disclose sighting of a particular letter - again, a non-corresponding subject matter.
It may be noted that paragraph [386] of Bergin J's judgment (set out above in relation to Matter V) refers to a failure by SOCOG to convey information in respect of certificates to DS Nicholls without, however, identifying Ford or Reading as a person who acted on SOCOG's behalf in that respect.
Matter Z: Contention
The relevant part of the statement of claim is:
"Ford knew that memberships had been made available by TOC for use by authorised agents."
In support of the proposition that the admission should be compelled, Mr Zhang relied on all the passages of the judgment of Bergin J extracted above. Counsel made no attempt to identify any part with precision.
Matter Z: Assessment
In the absence of identification of particular extracts, there is no sound basis for addressing the contention.
One might perhaps speculate that there is an intention to rely on paragraphs [124], [431] and [435] of Bergin J's judgment (referred to above in relation to Matters O, A, M and S above). Those paragraphs, however, go to Ford's knowledge of Mr Zhu's having purchased international memberships but not the provision of memberships for use by authorised agents in general. The same is true of paragraph [135], on which the appellants relied in respect of Matter S above, which also refers to Ford's knowledge of agents more generally. It might also be noted that Bergin J's paragraph [434] (referred to above in relation to Matter M) suggests that Ford later became aware of TOC's "contractual arrangements" with agents including Mr Zhang, it does not specifically refer to her knowledge of "memberships" being made available by TOC for use by authorised agents.
The matters concerning Mr Liao said to require admissions
The matters in respect of which Mr Liao says that the State should be compelled to make admissions are set out in an annexure to Mr Liao's notice of motion. They correspond with the Zhang matters, subject to the following adjustments:
(a) Matters C, D, E, F and G are omitted.
(b) In Matter A, the references to "the plaintiff and/or Liao" and
and "the plaintiff and Liao" are replaced by references to "the plaintiff and/or Zhang" and "the plaintiff and Zhang".(c) In Matter B, the date of the arrest and charging is 1 December 1999.
(d) In Matter H (first paragraph), the reference to "the plaintiff" is replaced by a reference to "the plaintiff and Zhang".
(e) In Matter H (second paragraph), the reference is to the appointment of "the plaintiff and Zhang" as "sub-agents".
(f) In Matter M, the references are to "the plaintiff and/or Zhang" and "the plaintiff and Zhang"; also the timing specification related to the provision of information to Wang and the police is omitted.
Also, in the equivalent of Matter Y in the Liao document, there is a reference to "the plaintiff and Liao" which no doubt should be read as "the plaintiff and Zhang".
The assessment in relation to each Liao matter corresponds with that expressed for the corresponding Zhang matter.
Decision on applications to compel admissions
Mr Zhang and Mr Liao have not identified with precision any secure basis on which the particular findings of Bergin J put beyond controversy the particular allegations in their statements of claim in respect of which they say that admissions should be compelled. In some instances, earlier findings support the admission to a certain extent but not fully. The plaintiffs were not content to seek admissions only to that extent.
In any event and for reasons discussed above in relation to the strike-out questions, a court should not force a defendant to accept a proposition said to have been established in earlier proceedings brought by another person against that same defendant unless it would be unfair to require the plaintiff to prove the matter in the usual way or adherence to that requirement would bring the administration of justice into disrepute. In my opinion, those forces are not at work here.
Mr Zhang and Mr Liao have not shown that the primary judge's discretion miscarried in the House v R sense when he declined to order that the admissions sought be made.
The State as "model litigant"
Counsel for Mr Zhang and Mr Liao referred to the position of the State as a "model litigant" - a reference, I think, to the expectation expressed by Griffith CJ in Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69; (1912) 15 CLR 333 at 342 that it should be "axiomatic that the Crown never takes technical points, even in civil proceedings. . .". At the same time, however, the State "is not obliged to fight with one hand behind its back in proceedings"; and "has the same right as any other litigant notwithstanding it assumes for itself, quite properly, the role of a model litigant": Brandon v Commonwealth [2005] FCA109 at [11] per Whitlam J.
It is sometimes possible to say that a particular stance taken in litigation is technical, in the sense that it lacks all substantive merit and is supportable only on a narrow or literal appreciation or interpretation that is at odds with clear reality. I do not regard any part of the stance taken by the State on the matters the subject of these reasons as being of that quality.
Disposition
I propose that the appeal be dismissed with costs.
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