Linchi Group Pty Ltd v Wen Yong Wang - [2018] VSC 482

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S CI 2016 4179

LINCHI GROUP PTY LTD (ACN 146 504 716)	Plaintiff
v
WEN YONG WANG	First Defendant
NEW EASTERN GROUP PTY LTD (ACN 082 692 680)	Second Defendant

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JUDICIAL REGISTRAR:	Matthews JR
WHERE HELD:	Melbourne
DATE OF HEARING:	22 June 2018
DATE OF RULING:	31 August 2018
CASE MAY BE CITED AS:	Linchi Group Pty Ltd v Wen Yong Wang & Anor
MEDIUM NEUTRAL CITATION:	[2018] VSC 482

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COSTS – Leave to discontinue proceeding – Rule 63.15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) – No adjudication of claims on the merits – Whether costs should be payable on an indemnity rather than standard basis – Whether plaintiff had a proper or reasonable basis for commencing and maintaining the proceeding – Alleged breaches of overarching obligations under Civil Procedure Act 2010 (Vic) not made out – Plaintiff did not have proper or reasonable basis for maintaining the proceeding after 6 January 2018 – indemnity costs ordered for period after that date – Plaintiff’s rejection of two Calderbank offers not unreasonable in the circumstances – Discretion to make non-party costs order – Costs order sought against sole director and shareholder of plaintiff – Not established that non-party was a ‘real party’ to the litigation – Section 24 Supreme Court Act 1986 (Vic) – Sections 10, 18, 29, 56 Civil Procedure Act 2010 (Vic) – Knight v FP Special Assets Limited (1992) 174 CLR 178 – Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348 – Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298 – Course v Hannan & Ors [2018] VSC 401.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Lee, solicitor	Spencer Reyner Law Office Pty Ltd
For the Defendant	Mr G Redenbach	Leem Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Background......................................................................................................................................... 3

Applicable law.................................................................................................................................... 8

The Court’s approach to determining liability for costs when a proceeding is discontinued 8
Applicable law regarding ordering costs to be paid by a party on an indemnity basis... 9
Ordering a non-party to pay a party’s costs........................................................................... 12

Consideration – Should indemnity costs be awarded and if so, from what date?.............. 16

Have the defendants established that the plaintiff did not have a proper or reasonable basis for commencing the proceeding? If so, should indemnity costs be ordered?.............. 16
Defendants’ submissions.................................................................................................. 16
Plaintiff’s submissions...................................................................................................... 20
Analysis............................................................................................................................... 22
Conclusion.......................................................................................................................... 24

Should indemnity costs be awarded on the basis that the plaintiff did not have a proper basis for continuing with the proceeding?.................................................................................... 24
Should indemnity costs be awarded for the plaintiff’s rejection of either of the two Calderbank offers?.............................................................................................................................................. 27
The First Offer.................................................................................................................... 27
Defendants’ submissions.................................................................................... 27
Plaintiff’s submissions......................................................................................... 28
Analysis and conclusion..................................................................................... 29

The Second Offer............................................................................................................... 31
Submissions.......................................................................................................... 31
Analysis and conclusion..................................................................................... 32

Should indemnity costs be awarded due to the plaintiff’s alleged failure to comply with its discovery obligations?........................................................................................................................ 32
Defendants’ submissions..................................................................................................…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] VSC 482
Decision Date: 31 August 2018

CaseChat Overview and Summary

Linchi Group Pty Ltd brought an action against Wen Yong Wang, seeking damages for alleged breaches of contract and fiduciary duty. The dispute came before the Supreme Court of Victoria, which was tasked with determining the appropriate costs order following the discontinuance of the proceeding. The central legal issues were whether the plaintiff had a proper or reasonable basis for commencing and maintaining the proceeding, and whether the costs should be assessed on an indemnity basis. The court also considered whether the plaintiff had breached any overarching obligations under the Civil Procedure Act 2010 (Vic).

The court found that the plaintiff did not have a proper or reasonable basis for maintaining the proceeding after 6 January 2018, which led to the conclusion that indemnity costs should apply for that period. Although the plaintiff rejected two Calderbank offers, the court deemed this not unreasonable given the circumstances. The court exercised its discretion under section 24 of the Supreme Court Act 1986 (Vic) to make a non-party costs order against the plaintiff. However, it was not established that the non-party was a ‘real party’ to the litigation, thereby preventing a costs order against the sole director and shareholder of the plaintiff. The decision references several precedents, including Knight v FP Special Assets Limited and Gdanski v Palms Court Management Pty Ltd, to support its reasoning.

Ultimately, the court ordered that the plaintiff pay the defendant's costs on an indemnity basis for the period after 6 January 2018. The court also considered the overarching obligations under the Civil Procedure Act 2010 (Vic) and found no breaches had been made out. The plaintiff's rejection of the Calderbank offers was not deemed unreasonable. The court refrained from making a costs order against the sole director and shareholder of the plaintiff, as it was not established that this individual was a ‘real party’ to the litigation.

Orders