Lth Pty Ltd v Tong
[2013] VCC 854
•28 June 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-12-01814
| LTH PTY LTD (ACN 085 412 835) | Plaintiff |
| v | |
| HUNG PHUOC TONG | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19-20 June 2013 | |
DATE OF JUDGMENT: | 28 June 2013 | |
CASE MAY BE CITED AS: | LTH Pty Ltd v Tong | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 854 | |
REASONS FOR JUDGMENT
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Subject:Application by defendant for permanent stay; application by plaintiff to amend claim.
Cases Cited:Slaveski v Victoria (2009) 25 VR 160; Namberry Craft Pty Ltd v Watson [2011] VSC 136; Aon Risk Services Australia v Australian National University [2009] 239 CLR 175;
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J K Arthur | Western Lawyers |
| For the Defendant | Mr M E King | Verduci Lawyers |
HIS HONOUR:
Issues
1 There are two issues raised in this application:
(a) by Summons filed 28 May 2013, the defendant seeks to stay the proceedings pursuant to Order 23.01 on the grounds that the plaintiff’s action is said to constitute an abuse of process in circumstances where the claim relies upon a document forged by the plaintiff;
(b) the plaintiff seeks to file and serve an Amended Statement of Claim.
2 The defendants rely upon the affidavits of Angpal Singh sworn 6 June 2013, Hung Phuoc Tong sworn 6 June 2013 and Henry Nguyen sworn 6 June 2013.
3 The plaintiffs rely upon the affidavits of Loi Tien Nguyen sworn 17 and 18 June 2013, Ngoc Hoang Tran sworn 17 and 18 June 2013 and Brian Luong sworn 17 June 2013.
Background
4 The case concerns a dispute about a jewellery business. The plaintiff company manufactured jewellery. The defendant was a director of the plaintiff for about five years. The deponent, Loi Tien Nguyen, was also a director. In general terms, the defendant was responsible for the administrative aspects of the company and Loi Tien Nguyen was responsible for the casting and manufacture of product. Loi Tien Nguyen returned to Vietnam to develop and design products for the business and the defendant thereupon assumed sole day-to-day responsibility for the company’s operations in Australia. This included responsibility for the care of the inventory which comprised gold and other precious metals.
5 In the claim made in the Writ, the plaintiff initially alleged that the defendant, between 2005 and 2010, appropriated to his own use seven kilograms of gold which was the property of the plaintiff. The defendant said that on about 20 May 2011, the defendant agreed that he would return to the plaintiff seven kilograms of gold provided that the plaintiff took no further action against him for the misappropriation of gold, cash and other precious materials. By way of particulars, the plaintiff relied upon, in part, a written acknowledgment said to be “dated 20 & 24 May 2011 in which the defendant Peter Tong returned to the plaintiff 500 grams of fine gold”.
6 It was then alleged that having provided 500 grams of gold, the defendant refused to return the 6.5 kilograms of gold constituting the balance under the agreement.
7 The plaintiff now seeks to allege in an Amended Statement of Claim that the defendant misappropriated, or was otherwise unable to properly account for, about 22.9 kilograms of gold belonging to the plaintiff. The plaintiff makes an alternative claim that the defendant agreed to return seven kilograms of gold. In addition, the plaintiff seeks to now allege that:
(a) on about 26 June 2009 the defendant took company funds of approximately $52,000 by way of cheque;
(b) on about 19 April 2009 the defendant took $75,000 cash from the company to lend to Melissa Chan, and only $55,000 has been repaid.
8 For his part, the defendant denies any liability to the plaintiff. He says that Loi Nguyen, Leon Dang Vu Tran and Henry Nguyen (another employee of the plaintiff and Loi Nguyen’s brother) were also responsible with dealing with gold, other precious metal and cash on behalf of the plaintiff. In particular, the defendant says that:
(a) he entered into no agreement with the plaintiff or anybody else that he would return to the plaintiff seven kilograms or any other amount of gold;
(b) he did not owe the plaintiff or anybody else seven kilograms or any other amount of gold;
(c) he at no time misappropriated any gold, cash or other precious items from the plaintiff or anybody else;
(d) he had no conversation concerning these matters, nor did he enter into any agreement or any document with the persons referred to in the Statement of Claim.
Defendant’s application
9 The defendant’s application draws attention to the fact that an important document relied upon by the plaintiff and referred to in its particulars is forged. The defendant denies executing the document and has supporting evidence from a handwriting expert to the effect that it is probably not his signature on the document. Subsequently, the plaintiff obtained an expert report. The plaintiff’s expert concludes that the defendant did not write the signature on the page relied upon by the plaintiff.
10 In those circumstances, the defendant seeks to have the whole proceeding stayed as an abuse process.
Legal principles
11 The legal principles regarding the issue of a stay or dismissal of the proceeding without adjudication on the merits have been usefully summarised by Kyrou J in Slaveski v Victoria (2009) 25 VR 160 at [68]-[74] as follows:
“68 The Court has inherent jurisdiction to dismiss or stay a proceeding without an adjudication on the merits in a variety of circumstances, including the following:
(a) where the proceeding is an abuse of process;[1]
[1]Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 518 (‘Williams’); Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 (‘Batistatos’); Mariotti [2008] WASCA 243, [57]-[58]
(b) where the plaintiff repeatedly and deliberately fails to comply with Court orders without an acceptable explanation;[2]
[2]Mariotti [2008] WASCA 243, [53]-[56]
(c) where the plaintiff’s conduct is such as to prevent the Court from effectively exercising the jurisdiction which it has to dispose of the proceeding or would thwart the Court’s processes;[3]
[3]Williams (1992) 74 CLR 509, 518 fn 22; Connelly v Director of Public Prosecutions [1964] AC 1254, 1301; Mariotti [2008] WASCA 243, [57].
(d) where this is necessary to maintain the authority of the Court and the integrity of its processes;[4]
[4]CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345, 391, Mariotti [2008] WASCA 243, [56], [59]. As stated by Steytler P (with whom Buss JA and Beech AJA agreed) in Mariotti, ‘Those who wish to make use of the processes of the court are required to respect them’ (at [71]).
(e) where a fair trial is not possible;[5] and
[5]Batistatos [2006] HCA 27; (2006) 226 CLR 256.
(f) where the plaintiff has dishonestly misled the Court.[6]
69 The above categories are not exhaustive. The Court has broad inherent jurisdiction to be exercised as and when the administration of justice demands.[7] In my opinion, the Court’s inherent jurisdiction could, in appropriate circumstances, be exercised:
(a) where the plaintiff’s conduct is such that the Court is unable to guarantee the safety of the other parties, witnesses, court staff and other persons in court, including the plaintiff; and
(b) where the plaintiff, through mental illness, does not have the capacity to conduct the case personally or to give meaningful instructions to a legal representative, and acceptable alternative arrangements – such as the appointment of a litigation guardian – are not available.[8]
70 The expression ‘abuse of process’ includes situations where the Court’s procedures are invoked for an illegitimate purpose and situations where the use of the Court’s procedures is unjustifiably oppressive to one of the parties or would bring the administration of justice into disrepute.[9] However, in this context, the expression is not confined to these situations. It extends to proceedings that are seriously and unfairly burdensome, prejudicial or damaging or productive of serious and unjustified trouble and harassment’.[10] It also extends to proceedings that are frivolous, vexatious or oppressive.[11]
71 In deciding whether the administration of justice demands that a proceeding be dismissed or permanently stayed, the Court must have regard to all of the circumstances of the case. These circumstances include the impact that a continuation of the proceeding would have on the defendant (such as delay, additional cost and stress) and other litigants waiting patiently for their cases to be heard.[12]
72 Understandably, courts are reluctant to dismiss or permanently stay a proceeding without an adjudication on the merits as this runs counter to the underlying objective of the Court, namely to determine the parties’ rights and obligations after fully hearing their cases. Ordinarily, such a step would be taken as a last resort, where a less drastic alternative is not available.[13] The purpose is not to punish the plaintiff but to safeguard the administration of justice.[14]
73 Mr Gipp and Mr Ihle informed me that, at this stage, the defendants did not propose to apply for a stay or dismissal of the proceeding. Accordingly, neither they nor any other party made any submissions on my draft summary of the applicable principles. I indicated to the parties that I regarded a stay or dismissal of the proceeding without an adjudication on the merits as a measure of last resort and that alternative measures, such as the appointment of a litigation guardian, ought to be investigated before such an order was considered.
74 As the parties were willing to explore the appropriateness of a litigation guardian being appointed and the defendants did not support Mr Wilson’s submission regarding a self-executing order, I declined to make such an order or any other order staying or dismissing the proceeding. However, I informed the parties that the question of a stay or dismissal could be revisited if this course becomes warranted by the circumstances.
[6]Mariotti [2008] WASCA 243, [54], [61], [62], [71].
[7]Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23, 74; Walton v Gardiner (1993) 177 CLR 378, 394; Mariotti [2008] WASCA 243, [59].
[8]Murphy v Doman [2003] NSWCA 249; (2003) 58 NSWLR 51, 61 [52] (‘Murphy’).
[9]Rogers v The Queen (1994) 181 CLR 251, 286; Batistatos [2006] HCA 27; (2006) 226 CLR 256, 267 [15]; Mariotti [2008] WASCA 243, [60].
[10]Batistatos [2006] HCA 27; (2006) 226 CLR 256, 266-7 [14]; Mariotti [2008] WASCA 243, [60].
[11]Batistatos [2006] HCA 27; (2006) 226 CLR 256, 266-7 [14]; Mariotti [2008] WASCA 243, [60].
[12]Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27.
[13]Mariotti [2008] WASCA 243, [55], [62], [64].
[14]Mariotti [2008] WASCA 243, [65], [71].
12 The principles set out are not new. It has long been recognised that a court has power to control and supervise its process to prevent injustice. There is a public interest in the administration of justice which requires the courts to protect their ability to function and to ensure that their processes are used fairly by both State and citizen. Also, the courts need to protect public confidence by ensuring that the courts processes are not abused. The categories of potential abuse are not limited.
13 In this case, the evidence regarding the agreement sued upon is contested. The plaintiff relies upon the signed agreement which purports to feature signatures by the defendant, Henry Nguyen and Trung Le as the witness. Henry Nguyen’s evidence was that he was not party to any agreement or conversation on or about 20 May 2011 pursuant to which he agreed to return seven kilograms of gold to the plaintiff on condition that the plaintiff took no further action against him for the misappropriation of gold, cash and other precious items. He agrees that he signed the one page document purporting to bear his signature. He says that at the time he signed, the document was given to him by Ngoc Hoang Tran (otherwise known as Sarah Tran). At the time, there was already a signature under the typed named of the defendant. Henry said that he was asked to sign under the word “receiver”. He said that Sarah and he were the only people present when he signed the document and that the third signature and name, Trung Le, was not on the document at the time.
14 In her affidavit sworn 11 days later on 17 June 2013, Sarah Tran says that on 24 May, the defendant attended the plaintiff’s premises with his first “payment” of gold. Sarah says that the defendant handed 500 grams of fine gold to Henry Nguyen and that the defendant asked for a receipt. She typed the acknowledgment/receipt document. She gave the typed sheet to Henry Nguyen, who in turn gave it to the defendant. The defendant and Henry Nguyen then went into the casting room where they remained for some time. When they came out of the room the defendant handed the sheet to Sarah. It had been signed by the defendant. Sarah says that Henry Nguyen and Trung Le also signed as witnesses.
15 I note that Trung Le has not sworn any affidavit supporting the plaintiff’s version of events.
16 Whichever account of events at the plaintiff’s premises on 20 May 2011 is correct, two things are clear:
(a) Trung Le, even on the plaintiff’s own account, could not have been a witness to the alleged signing of the relevant document by the defendant and Henry Nguyen. The plaintiff does not allege that Trung Le was in the casting room with the defendant and Henry Nguyen at the time the document was signed;
(b) the plaintiff’s own expert is notably more emphatic than the defendant’s expert that the defendant did not sign the document relied on by the plaintiff.
17 In addressing the allegation of fraud or forgery, which is plainly a serious matter, the court is to be satisfied on the balance of probabilities regarding the allegations made. On the evidence, the court would be justified in finding, and I do find, that Trung Le did not witness the defendant sign the document and that the plaintiff has relied upon a document which it knew, or should have known, did not properly support the claim made in respect of it.
18 It is a matter of grave concern when a party to litigation uses a false or forged document in this manner to support its claim against another party. In the circumstances, I consider that a stay is appropriate.
Plaintiff’s application
19 The plaintiff makes oral application to amend its Statement of Claim in the form provided to both the defendant and the court on 18 June 2013.
20 The plaintiff contends that the amendments sought are very similar to those made in a previous application refused by the court on 10 May 2013.
21 The defendant submits that the plaintiff ought not be allowed to file an amended claim. The plaintiff contends that the proposed amendment is an attempt to circumvent the exposure of the plaintiff’s reliance upon a fraud. It is said that this fact alone is sufficient to justify the court exercising its discretion against allowing the amendment.
22 In addition, the plaintiff refers to the factors cited by Vickery J in Namberry Craft Pty Ltd v Watson [2011] VSC 136, where his Honour referred to the decision of the High Court in Aon Risk Services Australia v Australian National University [2009] 239 CLR 175. His Honour said:
“38 … The High Court made reference to the following factors:
(a) Whether there will be substantial delay caused by the amendment;[15]
[15]Aon at [4] per French CJ and at [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
(b) The extent of wasted costs that will be incurred;[16]
(c) Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded;[17]
(d) Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;[18]
(e) Whether the grant of the amendment will lessen public confidence in the judicial system;[19] and
(f) Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.[20]
39 The list of factors referred to in Aon is not exhaustive. In the end, all matters arising in any particular case relevant to the exercise of the power to permit an amendment must be weighed.[21]
[16]Aon at [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[17]Aon at [5] per French CJ and at [100]-[101] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[18]Aon at [5] per French CJ and at [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[19]Aon at [5] per French CJ.
[20]Aon at [5] per French CJ
[21]Aon at [111] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
23 I note that the trial in this proceeding is set down for 8 August 2013. The defendant has contended that if the plaintiff is permitted to amend, the trial date will be lost. The defendant gave scant detail supporting this submission. True it is that if the trial date is lost, there might be some issues in respect of case management. However, the plaintiff has given an explanation for the late amendment, although it seems surprising that the plaintiff did not seek to change its claim earlier, especially if it had raised the missing 22 kilograms before issuing proceedings. On the evidence, it was possibly the opinion of the handwriting expert which prompted the plaintiff to re-examine its case and seek to change it. In any event, as it stands, the proposed amendment is unacceptable because it includes material based on a forged or fraudulent document.
24 If the plaintiff is permitted to amend to raise the two money claims, I do not consider that there should be a delay in the proceeding sufficient to warrant the abandonment of the trial date. While recognising that the two money claims were not previously raised, it seems to me that if there is any substance to these allegations, then the plaintiff ought be able to have these matters determined in court unless there is some grave prejudice sustained by the defendant. As presently advised, it appears that the defendant would not suffer any particular prejudice by the raising of these money claims. The two allegations are quite specific. The trial is still about 5-6 weeks away. I expect that this should be sufficient time to address the two money allegations.
25 Subject to hearing from the parties as to the final form of order, I propose to make the following orders:
(a)The proceeding be permanently stayed insofar as the plaintiff makes any claim which directly or indirectly relies upon the forged document, being Exhibit AS1 to the affidavit of Angpal Singh sworn 6 June 2013.
(b)The Statement of Claim endorsed on the writ be struck out as an abuse of process.
(c)Subject to order (a) above, the plaintiff have leave to file an Amended Statement of Claim substantially in the form handed to the court on 19 June 2013, and the plaintiff serve such claim on the defendant by 3pm on Tuesday 2 July 2013.
(d)The defendant advise the plaintiff by 5pm on Wednesday 3 July 2013 if it objects to the proposed amended claim, in which case the parties are to attend a directions hearing at court on Friday 5 July 2013 at 9.30am, or such other time as the matter is listed.
(e)The plaintiff pay on an indemnity basis:
(i)the defendant’s costs of the proceeding to 28 May 2013;
(ii)the costs of and incidental to the defendant’s application by summons filed 28 May 2013.
(f)The plaintiff pay on a party/party basis to be taxed in default of agreement the defendant’s costs of and incidental to the plaintiff’s application to amend its Statement of Claim.
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