Lui v Guan; Sun Link Group Pty Ltd v Lui (No 2)

[2020] NSWSC 398

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Lui v Guan; Sun Link Group Pty Ltd v Lui (No 2) [2020] NSWSC 398

Hearing dates:

On the papers

Date of orders:

14 April 2020

Decision date:

14 April 2020

Jurisdiction:

Common Law

Before:

Walton J

Decision:

Mr Lui shall bring in short minutes of order, reflecting this judgment, within 7 days of its publication.

Catchwords:

CIVIL PROCEEDINGS – resolution outstanding – issues after judgment – breach or contravention – claim re vehicle – pre-judgment interest – costs – directions

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5
Calarco v Liverpool City Council (No 2) [2018] NSWSC 355
Carr v Fischer [2005] NSWSC 31
Checchia v Insurance Australia Ltd t/as NRMA Insurance (No 3) [2014] NSWSC 1209
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Commonwealth v Gretton [2008] NSWCA 117
Cretazzo v Lombardi (1975) 13 SASR 4
EKO Investments Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 371
Farrell v Mulroney (1978) 1 NSWLR 221
G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263
Hamod v NSW [2011] NSWCA 375
Hamod v NSW (2002)188 ALR 659; [2002] FCA 424
In the matter of Dungowan Manly Pty Ltd (in liq) [2015] NSWSC 915
Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3) [2007] NSWCA 298
Keddie v Foxall [1955] VLR 320
Knight v Clifton [1971] Ch 700
Lahoud v Lahoud [2011] NSWSC 994
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (No 2) [2002] NSWSC 72
Lollis v Loulatzis (No 2) [2008] VSC 35
Lui v Guan; Sun Link Group Pty Ltd v Lui [2019] NSWSC 803
Ly v Dong [2018] NSWSC 122
Maestrale v Aspite (No 2) [2014] NSWCA 302
Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72
Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344
New South Wales v Abed [2014] NSWCA 419
NSW Trustee and Guardian v Schneider [2011] NSWSC 424
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Peters v Peters (1907) 7 SR (NSW) 398
Ritter v Godfrey [1920] 2 KB 47
Scharer v Counting Instruments Ltd [1986] 1 WLR 615
Secure Parking Pty Ltd v Woollahra Municipal Council (No 2) [2017] NSWCA 51
Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62
Sze Tu v Jam Studios Pty Ltd; Jam Studios Pty Ltd v Sze Tu (No 2) [2018] NSWSC 1611
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 88 ALR 385; [2011] NSWCA 256
Waterman v Gerling (Costs) [2005] NSWSC 1111
Williams v Lewer [1974] 2 NSWLR 91
Yazgi v Permanent Custodians Ltd (No 2) (2007) 13 BPR 24; [2007] NSWCA 306

Category:

Costs

Parties:

2015/160052
Kevin Yung Lui (Plaintiff)
Xiuyan Guan (First Defendant)
Sun Link Group Pty Ltd (Second Defendant)

  2015/223106
Sun Link Group Pty Ltd (Plaintiff)
Kevin Yung Lui (Defendant)

Representation:

2015/160052
Counsel:
P Afshar (Plaintiff)
I Leong (Defendant)

 

Solicitors:
Dunstan Legal (Plaintiff)
Auyeung Hencent & Day (Defendants)

  2015/223106
Counsel:
P Afshar (Plaintiff)
I Leong (Defendant)
Solicitors:
Dunstan Legal (Plaintiff)
Auyeung Hencent & Day (Defendants)

File Number(s):

2015/160052; 2015/223106

Judgment

1. HIS HONOUR: By an amended statement of claim filed on 29 September 2015 ("the ASOC"), the plaintiff, Mr Kevin Yung Lui, commenced proceedings for breach of contract against the defendants, Ms Xiuyan Guan and Sun Link Group Pty Ltd ("Sun Link") (collectively, "the defendants"). Those proceedings shall hereinafter be referred to as "the primary matter". The central question which arose in the primary matter was whether Mr Lui should receive damages for breach of an agreement entered with Ms Guan, namely, the "Co-operative Agreement" dated 18 January 2015 ("the agreement"). The ASOC pleaded that the agreement was also made on behalf of Sun Link.

2. In the primary matter, Mr Lui initially sought declaratory relief and specific performance of the agreement or, in alternative, the transfer of title of a Rolls Royce Phantom IS68 Sedan (“the vehicle”) to him. The vehicle was registered to Sun Link. The relief claimed, as pleaded, is extracted below:

1. A declaration that the agreement between the plaintiff and the first defendant for and on behalf of the second defendant dated 18 January 2015 (Agreement) is valid and enforceable and ought to be specifically performed.

2. An order that the Agreement be specifically performed.

3. In the alternative to prayer 2 above, an order that the second defendant, by the first defendant, executes all documents and enters into any instruments necessary to transfer to the plaintiff the title, without any encumbrance, to the vehicle being a Rolls Royce Phantom IS68 Sedan bearing the number plate number SL9555, VIN No SCA1S680X6UH00366, which is registered in New South Wales (Vehicle).

4. In lieu of specific performance in accordance with prayer 2 above, damages for breach by the first defendant and the second defendant of the Agreement

5. Interest pursuant to section 101 of the Civil Procedure Act 2005.

6. Costs.

3. By a statement of claim filed on 30 July 2015, Sun Link commenced detinue proceedings against Mr Lui and sought damages with respect to the vehicle (“the second matter”). The second matter was listed with the primary matter; the matters were to be heard together.

4. On 13 May 2016, the vehicle was sold by its mortgagee for $200,000.

5. At the outset of the proceedings, the Court sought to confirm the status of the second matter, in circumstances where the vehicle had been sold by the mortgagee, the mortgage with the financier had been settled, and the remaining equity of around $24,434.87 was being held by the Supreme Court of Victoria. The onus was put upon Sun Link to communicate the course it intended to take, in that respect, “by communicating with your opponent what the basis of it is, how you say it comes into the proceedings now and then, what should be done with it”. Counsel for Sun Link, Mr I Leong, as to that issue, intimated an intention to raise arguments as to the issue of damages, notwithstanding the fact that pleadings in the second matter were predicated upon Mr Lui having possession of the vehicle. Ultimately, any argument, with respect to the second matter, received little development and appeared to dissipate as the proceedings progressed. The focus of the parties, in the balance of the proceedings, fixed upon the resolution of issues in the primary matter.

6. Returning to the primary matter, following the sale of the vehicle, the relief sought in the primary matter was ultimately reduced and refined by Mr P Afshar, counsel for Mr Lui, at the outset of the hearing, and without resorting to the filing of further amended pleadings, as follows:

1. Prayers 1, 2 and 3 were superseded insofar as the vehicle was sold on or around 13 May 2016 and, as a result, were no longer pressed in that form.

2. Prayer 4 sought an order for damages followed by interest and costs. Mr Lui’s damages were particularised as $780,000, being 2% of the total bidding figure of the successful bid, and the market value of the vehicle. Given that the vehicle was sold for $200,000, that amount provided, it was submitted, the most sensible evidence of its market value.

3. Prayers 5 and 6, sought interest pursuant to s 101 of the Civil Procedure Act 2005 (NSW) and costs, respectively.

7. The Court gave judgment in the matter on 28 June 2019 in Lui v Guan; Sun Link Group Pty Ltd v Lui [2019] NSWSC 803 (“Lui No 1”).

8. In Lui No 1, the Court reached the following conclusions (at [516]-[520]):

[516] Mr Lui has established his claim for breach of contract against Ms Guan. Ms Guan failed to pay Mr Lui in accordance with cl 5 of the agreement. Mr Lui performed his obligations under the agreement as set out in this judgment. Accordingly, Mr Lui should obtain the relief in that respect.

[517] It is true Ms Guan failed or refused to cause the registration of the vehicle to be transferred to Mr Lui in accordance with cl 4 of the agreement. However, there remains a question as to whether Mr Lui may properly be awarded damages with respect to that failure under prayer 4 for relief of the ASOC, having regard to the vehicle belonging to Sun Link. Accordingly, the Court will receive further submissions as to any personal liability of Ms Guan in that respect. If damages were ordered, they would be in the sum of $200,000.

[518] The parties sought that the question of interest and cost be held over pending this judgment. It is appropriate that directions are made, in that respect, and are reflected below.

[519] Submissions as to interest and costs may be affected by the Court’s final determination of damages with respect to prayer 4 for relief vis-à-vis damages with respect to the vehicle. However, that is a quite compact issue and, accordingly, the Court may receive submissions on that issue at the same time as receiving submissions or evidence on the question of interest and costs even if alternative formulations are provided by the parties.

[520] The statement of claim brought by Sun Link is dismissed.

9. Counsel for Mr Lui correctly identified the that remaining issues arising in the proceedings after those conclusions were as follows:

1. as to his claim for relief under prayer 4 of the ASOC in the primary matter with respect to the vehicle;

2. interest (this was a dispute as to pre-judgment interest); and

3. costs.

(Those issues shall hereinafter be referred to, collectively, as “the remaining issues”).

10. The Court made orders for the filing of written submissions in relation to the remaining issues. Those submissions were filed in due course and consisted of the following:

1. Mr Lui’s submissions post judgment (“LSPJ”);

2. Ms Guan’s submissions post judgment (“GSPJ”); and

3. Mr Lui’s submissions post judgment in reply to the defendant’s submissions (“LSPJR”).

11. It may be noted that in GSPJ, it was observed that, on 4 June 2018, Sun Link had receivers and managers appointed. No submissions were made, therefore, on behalf of Sun Link.

Relevant Findings in Lui No 1 and Background

12. In addressing the remaining issues it is convenient to extract parts of the judgment in Lui No 1.

13. As to the pleadings, the Court identified the following (at [7]-[21]):

[7] The relevant cause of action pleaded is breach of contract. The following summary is derived from the ASOC filed on 29 September 2015 and the defence to the amended statement of claim filed on 23 October 2015 (“the defence”). For the purpose of concision, particulars, for the most part, have been omitted from the below summary.

Agreement

[8] On or about 18 January 2015, Mr Lui entered into an agreement with Ms Guan for and on behalf of Ms Guan and Sun Link. The defendants, in that respect, admitted that Mr Lui and Ms Guan entered into an agreement on that date. The defendants denied the balance of the matters alleged, including the pleading that Sun Link was party to the agreement.

[9] Mr Lui also pleaded that at all relevant times that Ms Guan was the sole director and shareholder of Sun Link. The defendants denied this and pleaded that Henson Liang was also a director of Sun Link for the period 31 October 2012 to 23 February 2015.

[10] It may be noted at this juncture, that there was no claim that the agreement has no legal effect or was, in some way, vitiated.

Terms of Agreement

[11] The terms of the agreement were pleaded and particularised by Mr Lui as follows:

Terms of the Agreement

4. It was a term of the Agreement that the plaintiff would locate good and resourceful investment partners in Australia or overseas to assist the first defendant with her financial situation and difficulties.

Particulars

i. Clause 1 of the Agreement.

5. It was a term of the Agreement that the plaintiff would locate suitable investors and developers in Australia or overseas to take over a project for the development (Project) of the site located at 81-85 Anzac Parade, Kensington in New South Wales (Land), by tendering expressions of interest.

Particulars

i. Clause 2 of the Agreement.

6. It was a term of the Agreement that once the expression of interest bids for the Project were successful the first defendant would give to the plaintiff, free of charge, the vehicle, being a Rolls Royce Phantom IS68 Sedan bearing the number plate number SL9555, VIN No SCA1S680X6UH00366, which is registered in New South Wales (Vehicle).

Particulars

i. Clause 4 of the Agreement.

7. It was a term of the Agreement that once the expression of interest bids for the Project were successful, the first defendant would pay to the plaintiff an amount equal to 2% of the total bidding figure of the successful bid.

Particulars

i. Clause 5 of the Agreement.

8. It was a term of the Agreement that the plaintiff would approach the mortgagee on behalf of the first defendant so as to facilitate the success of the bidding process for investors and developers in Australia and overseas to take over the Project.

Particulars

i. Telephone conversation between the plaintiff and the first defendant in or around December 2014.

ii. Conversation in Sydney between the plaintiff and the first defendant in or around January 2015.

[12] The defendants denied those matters and pleaded the following:

(1) that “the term of the agreement was a period of 10 days from the date of execution of the agreement”; and

(2) that on the true construction of the agreement, Mr Lui “did not become entitled to any commission or reward unless and until [he] effectively introduced the purchaser of certain land at 81-85 Anzac Parade, Kensington NSW owned by Shuangfu”.

Performance

[13] Between January and March 2015, Mr Lui performed his obligations pursuant to the agreement. This was denied by the defendants.

[14] On or about 25 March 2015, Shuangfu Development Pty Ltd (“Shuangfu”) exchanged a contract for the sale of land with Anson City Developments 1 (Australia) Pty Ltd (“Anson City”) for the sale of the site located at 81-85 Anzac Parade, Kensington in New South Wales for $39 million after a successful bidding process, which Mr Lui facilitated. The exchange was effected by the real estate agent Jones Lang LaSalle acting on instructions from the mortgagee or a receiver appointed by the mortgagee. In answer to this pleading, the defendants:

(1) admitted that Shuangfu exchanged a contract with Anson City for “the sale of the Properties on or around 25 March 2015 for the sum of $38.389 million”;

(2) denied the balance of that pleading; and

(3) in further answer to the same, the defendants argued “the purchaser Anson City Developments Pty Ltd was introduced by Henson Liang and not by [Mr Lui]”.

[15] Mr Lui further pleaded at paras 11 and 12 of the ASOC:

(1) On or about 25 March 2015, the mortgagee received pursuant to the mortgagee's power of sale a 10% deposit from Anson City upon exchange of the contract.

(2) On or about 22 April 2015, the mortgage on “the land” (numbered AI899769) was transferred by the mortgagee to Anson City.

(Those pleadings were, in essence, statements of fact).

[16] In answer to the foregoing pleading, the defendants said: “The defendants do not understand and accordingly do not admit paragraphs 11 and 12”.

[17] In summary, the defendants denied that Mr Lui performed his obligations.

Breach

[18] Mr Lui pleaded that in breach of the terms of the agreement, and despite demands by Mr Lui, Ms Guan and Sun Link failed or refused to:

(1) cause the registration of the vehicle to be transferred to the plaintiff in accordance with cl 4 of the agreement; and

(2) pay Mr Lui in accordance with cl 5 of the agreement (set out below).

[19] As to the contended breach, the defendants:

(1) admitted Ms Guan has received correspondence seeking payment and transfer of title to the vehicle to Mr Lui;

(2) admitted that they have not made the payment or the transfer demanded by Mr Lui;

(3) denied any obligation to make the payment or the transfer demanded; and

(4) denied the balance of the matters alleged in the paragraph.

Loss and Damage

[20] As a result of breaches by Ms Guan and Sun Link of the terms of the agreement, Mr Lui pleaded, he has suffered loss or damage. This was denied by the defendants.

Defence pursuant to the Property, Stock and Business Agents Act 2002

[21] By their defence to the ASOC, the defendants also introduced a pleading with respect to the Property, Stock and Business Agents Act 2002 (NSW) (“the Act”). That pleading is extracted in full (together with particulars):

13. The sale of the Properties by Shuangfu Development Ltd was a real estate transaction as defined by section 3 of the Property, Stock and Business Agents Act 2002 ("PSBAA").

14. On the true construction of the agreement, the plaintiff's obligations were to:

a. induce or attempt to induce or negotiate with a view to inducing other persons to enter into, or to make or accept an offer to enter into, the sale of the Project properties or a contract for the sale of the Project properties, or

b. introduce or arrange for the introduction of a prospective purchaser, to the owner, or the receiver of the owner, of the Project Properties; and in the premises, by operation of section 3 of the PSBAA the plaintiff was, for the purposes of the PSBAA, a real estate agent.

Particulars

The relevant terms of the agreement and the obligations of the plaintiff are as alleged by the defendants in paragraph 7 of this defence.

15. The plaintiff does not hold a licence to be a real estate agent as defined by the PSBAA.

16. The consideration of the transfer of the Vehicle to the plaintiff amounts to a commission, fee, gain or reward for the services of the plaintiff under the agreement.

17. The consideration of payment of 2% commission on the purchase price of the Project properties amounts to a commission, fee, gain or reward for the services of the plaintiff under the agreement.

18. In the premises of the matters pleaded in paragraphs 13 to 17, by operation of section 8(2)(a) of the PSBAA, the plaintiff is not entitled to bring proceedings for the recovery of any commission, fee, gain or reward for any service performed by him and as such is not entitled to any of the amounts or transfer of the Vehicle under the agreement.

14. As to the agreement, the Court found at [22]-[29]:

[22] The agreement (the existence of which was admitted) was a written contract, which included a combination of typed Chinese script and English, and was executed by the parties on 18 January 2015.

[23] Mr Lui led expert evidence as to the terms of the contract when the Chinese script was translated to English. The English translation was prepared by Lin Zhou, accredited NAATI Professional Translator and was before the Court (see Ex 1).

[24] The English translation appears below (with the words that originally appeared typed or handwritten in English and, therefore, not requiring translation, italicised for the purposes of distinction only):

Co-operative Agreement

Party A: LEI, Jingquan

Address: Suit 25, Elevation Building 6 Meridian Place Bella Vista, NSW 2153 Australia

Party B: GUAN, Xiuyan

Address: 81-85 Anzac Parade, Kensington NSW Australia

Project company: Shuangfu Development Pty Limited ACN 151971041

Project address: 81-85 Anzac Parade, Kensington NSW

After discussions and negotiations in good faith, the Parties enter into the following agreement based on the principle of justice and fairness for mutual benefit:

1. According to the detailed explanation and analysis about the project given by Party B, Party A is required to seek good investment partners in or out of Australia in order to improve the current economic situation and solve the financial problems encountered by Party B.

2. Party A agrees that it will work hard to assist Party B to find appropriate investment developers in and out of Australia by using his reputation and prestige in the industry, and the investment developers will submit a sealed bid to the company which takes over the project.

3. Party B agrees to encourage directors with voting power for the project to support the proposal of Party A which involves a sealed bid in order to overcome her current financial difficulties successfully.

4. Party B promises Party A to give him a Rolls-Royce motor car (plate number: SL9555) under the name of Party B as a free gift when a sealed bid for the project is successful.

5. Party B undertakes to pay Party A a usual service fee to the agent nominated by Party A at the amount of percent (2%) of the tender rate.

The matters unspecified in the agreement may be completed in the formal cooperative document through discussions by the Parties identifying the duties, responsibilities and rights of each Party. The agreement is in quadruplicate and will take effect from the signature date by the Parties.

(Handwriting [sic] words) the actual settlement price requires a separate talk.

Party A: LEI, Jingquan

Signature: (signature) LEI, Jingquan

Date: 18/1/2015

Party B: GUAN, Xiuyan

Signature: (signature) GUAN, Xiuyan

Date: [no date inserted.]

(It should be noted that it is not in dispute that “Mr Jingquan Lei” is the same person identified as Mr Lui in these proceedings).

[25] It may be noted that counsel for the defendants, notwithstanding his agreement to the English translation, reserved the right to run an uncertainty argument as to the translation; a matter that was not pleaded. Leave was granted to counsel to file and serve a notice of motion to amend its defence in that respect. A notice of motion was filed by the defendants but, ultimately, not moved upon. The issue of costs, in that respect was reserved.

[26] Counsel for the defendants ultimately accepted at the outset of the proceedings that Ex 1 represented the English form of the agreement. Later, Ms Guan made, during the course of her evidence, several assertions suggesting, in effect, that Mr Lui had perpetuated a fraud with respect to the agreement, such that sections of agreement had been excised or otherwise changed from the original. Those assertions had not been raised in the pleadings or at an earlier point in the proceedings. That factor, in conjunction with several others, went directly to Ms Guan’s credit and contributes to my finding that she was not, as I will discuss below, a truthful or reliable witness. It may be noted that the rejection of her evidence, in the absence of corroboration (as I will later find), results in a rejection of the pleading in the defence that the term of the agreement was for a period of 10 days from the date of execution.

[27] The matter proceeded before the Court upon the concession of counsel for the defendants that the terms of the agreement were those contained in and marked Ex 1. Despite some very late prevarication by counsel for the defendants about some of the terms of the agreement as expressed in Ex 1 (without any submission seeking leave to depart from that previous concession), I find the agreement was in the terms of Ex 1.

[28] The particulars pleaded as to the form of the agreement were as follows:

(1) The agreement was express;

(2) The agreement was partly oral and partly in writing;

(3) Insofar as the agreement was in writing, it was recorded in a document entitled: “Co-operative Agreement”, which was signed by the plaintiff and the first defendant on or about 18 January 2015;

(4) At the time of signing the agreement, Ms Guan was the sole director and shareholder of Sun Link; and

(5) Insofar as the agreement was oral, it comprised of conversations between Mr Lui and Ms Guan during the period September 2014 to January 2015.

[29] At this juncture, it should be noted that Shuangfu, whilst listed as the “project company” on the agreement, was not a party to the agreement. I will deal with the balance of those particulars later in this judgment.

15. As to property and projects having relevance to the issues in dispute, the Court found at [31]-[39]:

[31] Shuangfu purchased seven parcels of land in Kensington which shall hereinafter be described as “the Kensington land” (it may be noted that two other parcels of land were unaccounted for in the evidence and the submissions of the parties, but that gap is immaterial to the disposition of the issues in the proceedings). The Kensington land incorporated the land appearing in the preamble to the agreement, namely, “81-85 Anzac Parade, Kensington”.

[32] The evidence disclosed (as will be discussed in greater detail below) that Shuangfu purchased the Kensington land for the purposes of developing a mixed residential and commercial property site at Kensington using the Kensington land (hereinafter referred to as “the Kensington Project”).

[33] It was not entirely clear, on the evidence, why the agreement did not refer to the whole of the Kensington land, which seven parcels incorporated 81-95 Anzac Parade, Kensington and 69-71 Boronia Street, Kensington. No party relied upon or referred to that fact. In any event, it is not a matter that will occupy further consideration in this judgment because whether Mr Lui’s obligations under the agreement concerned the lesser or the greater of the Kensington land, the issue in the proceedings is whether he performed under the agreement as properly construed with respect to the land or project specified therein. That is not to say that an issue did not emerge in the proceedings as to which parcels of land were in fact the subject of various offers made by various relevant entities up to the sale of the Kensington land. However, that issue can await discussion later in this judgment with respect to performance.

[34] The purchase of the Kensington land was financed pursuant to the Kensington Loan Agreement dated 9 May 2014, between Australia Capital Financial Management Pty Ltd (“A Capital”) as lender, and Shuangfu as borrower. A total sum of $21,353,357 was drawn by Shuangfu in respect of the Kensington Project in accordance with that agreement.

[35] At this juncture it should be noted, during Mr Lui's cross-examination, there were many and varied attempts by the defendants' counsel to challenge Mr Lui's evidence in relation to the use of the word “project” as opposed to “land” or “property”. Those challenges were aimed at causing Mr Lui to agree he was engaged to sell land and so to enhance the defendants' case in relation to the Act (as discussed below under the heading, “Real Estate Agent Issue”). This cross-examination ultimately failed, not only because Mr Lui explained his reasons for using the word “project” coherently, but also because evidence from Ms Guan established that she also used the description, “project”, to describe the Kensington Project rather than using the word “land” to describe it, especially in the context of Shuangfu’s attempted sale to Landream Project Management Pty Ltd (“Landream”) (as discussed below under the heading, “The Option / Sales contract with Landream: 22 September 2014”). The same instance occurred throughout counsel for the defendants’ submissions, both written and oral. As such, over the course of the proceeding references are made to the Kensington Project, the Kensington properties and the Kensington land. I accept that delineation has primarily been made in order to advance arguments with respect to the real estate agent issue, namely, the second case theory advanced by counsel for the defendants.

[36] I will refer variously to the Kensington Project, as defined above or the Kensington land, again in that context, but particularly in light of an expression of interest process discussed below.

The Auburn Project

[37] Shuangxing Development Pty Ltd (“Shuangxing”) purchased six properties in Auburn (“the Auburn properties”). Shuangxing purchased the Auburn properties for the purposes of developing a mixed residential and commercial property site at Auburn.

[38] A Capital initially agreed to lend $12 million from its own funding to Shuangxing in settling the Auburn properties. A Capital subsequently agreed to raise a further $7 million from external funding for settlement, on the following conditions:

(1) that the Kensington Loan Agreement was refinanced under the loan agreement dated 26 June 2014;

(2) the Auburn properties were transferred to the Australia Capital Sunlink Property Fund (also referred to as the “ACSP Auburn Fund”); and

(3) Shuangxing agreed to share returns with A Capital to compensate for additional risks undertaken by A Capital.

[39] Thus, by the loan agreement dated 26 June 2014, it was agreed that the loan with respect to the Kensington Project would be refinanced with A Capital (as a result, the Kensington Loan Agreement dated 9 May 2014 was replaced by the loan agreement dated 26 June 2014). A Capital was listed as the registered mortgagee for the Kensington land. It may also be noted that Sun Link was listed, amongst others, as guarantor to the loan agreement dated 26 June 2014. I will return to a discussion of that loan agreement below.

16. As to the relevant persons and companies, the Court found at [40], [48]-[54]:

[40] Mr Lui is the plaintiff. He is a senior project development consultant who provides advice and obtains funding for development projects in Australia from investors located both in Australia and overseas. Over the years, he has formed relationships, acquaintances and a network, which he used to conduct his business. The defendants in the primary matter contended that Mr Lui was a real estate agent in relation to the Kensington Project, I will return to this argument later in the judgment.

…

[48] Ms Guan is the first defendant in the primary matter. She was, at various points that will be distinguished where relevant, the sole director and/or sole shareholder of the following companies:

(1) Sun Link;

(2) Shuangfu; and

(3) Shuangxing.

[49] Both Shuangfu and Shuangxing entered into agreements to purchase properties, as discussed above.

[50] It was not contested that Ms Guan personally funded a component of the Kensington Project in the amount of $12 million. (A debt that would later be absorbed by the Australia Taxation Office (“ATO”), another creditor of Shuangfu: see below under the heading “Meetings of the Creditors to Shuangfu”).

[51] Sun Link is the second defendant in the primary matter. Both Ms Guan and Mr Liang were directors of Sun Link at one stage. However, on the material before the Court, the precise timeframes of each directorship is not defined. Notwithstanding that fact, I will ultimately find that Mr Liang was a director of Sun Link, together with Ms Guan, at 26 June 2014 through to 23 February 2015. As at the time of these proceedings, Ms Guan was the sole director of Sun Link.

[52] As will be discussed below, no evidence of Mr Liang was before the Court and, as such, the Court has a limited account as to his role within the events surrounding the dispute.

[53] From the material before the Court, the following is known:

(1) Mr Liang was described as holding the title of “managing director” and “Chief Executive Officer” of Sun Link in April 2015;

(2) Mr Liang was a director of Sun Link, together with Ms Guan, at 26 June 2014 through to 23 February 2015;

(3) Mr Liang was described as the “manager” of Shuangxing;

(4) Mr Liang had experience as a real estate agent and appeared to have worked for Crown Commercial Real Estate;

(5) Mr Liang was a guarantor to the loan agreement dated 26 June 2014; and

(6) Mr Liang was a guarantor to the deed of guarantee and indemnity dated 26 June 2014.

[54] It should also be noted that Mr Liang’s first and last name was inconsistently spelt throughout documents before the court as both Henson/Hanson and Liang/Leung, as such, a reference to Mr Leung should be taken as a reference to Mr Liang.

17. The issues requiring resolution in the proceedings were agreed and reflected in the following passage from the Lui No 1 (at [56]):

[56] On 6 June 2018, the parties provided the Court with an agreed statement of issues, setting out the issues in dispute in the primary matter. Those issues are set out below:

(1) What were the precise terms of the contract signed by Mr Lui and Ms Guan on 18 January 2015 (the agreement), including in relation to performance and payment?

(2) Is Mr Lui entitled to the vehicle referred to in the agreement?

(3) Is Mr Lui entitled to damages in the amount for which the vehicle was sold in lieu of specific performance?

(4) Is Mr Lui entitled to the fee referred to in the agreement?

(5) Does the Property, Stock and Business Agents Act 2002 apply to disentitle Mr Lui from receiving the benefits (the vehicle, or damages in lieu, and the fee) under the agreement?

18. As to the vehicle, the Court found (at [167]-[169]):

[167] In or around November 2014, Ms Guan provided the vehicle to Mr Lui. Having regard to my earlier finding, I accept the evidence of Mr Lui concerning the vehicle, over that of Ms Guan, as extracted below. I also accept the submission of counsel for Mr Lui that his evidence accords with common experience that at some stage in November 2014 Mr Lui was given the vehicle as he described in his evidence. That evidence is extracted below:

47. After we passed Goulburn, the New South Wales Police stopped the vehicle on the highway and would not let us proceed, because the vehicle was not registered and had a flat tyre.

48. I was very angry and telephoned Ms Guan immediately. We had the following conversation:

[Mr Lui:] Why did you give me an unregistered and uninsured car to drive to Canberra? I am very embarrassed, because I had to leave the curator and the owner of the exhibition to get driven down to Canberra with someone else.

Ms Guan[:] I am so sorry. I am very angry at Hanson Leung. He has had the car for two years, but he does not look after it and does not get it properly repaired. Can you please arrange for the car to be towed back to Sydney? Please also get it repaired. You need to get the tyre from England. Do not give the the keys or the car back to Hanson, because he is not looking after it. Keep the car. Don't tell him where the car is located.

49. The other passengers proceeded to Canberra with a passer by and I waited for 5 hours in the ram and after dark for a tow truck to arrive to tow the Rolls Royce back to Sydney. Later that evening, I went to a hotel in Goulbourn [sic].

50. I tried to call Mr Leung numerous times but could not get through. Later that evening, I spoke with Mr Leung about the issues that had arisen with the Rolls Royce. Mr Leung told me during the telephone conversation, "You should not be driving this car. That car is mine".

51. I arrived in Canberra very late that evening, at around 10.00pm. I had to work from that time until the exhibition opened at 11.00am the next morning, on 3 December 2014. I was far too busy to make any representations to anybody on Ms Guan's behalf. I had to hire a car to travel from Canberra to Sydney.

52. On 4 December 2014, I arranged for the tyre to be repaired, for the Rolls Royce to be serviced and for it to be placed into a garage at Rolls Royce Parramatta. I paid for the service of the Rolls Royce, the costs of a hire car from Canberra to Sydney, the costs of towing the Rolls Royce back to Sydney and for the replacement of the tyres. I have never been compensated for the payments I made.

53. That afternoon I travelled to China and then to the USA.

[168] In his affidavit of 8 December 2015, Mr Lui deposed that Ms Guan provided him with a “Letter of Appointment”, with respect to the vehicle, in or around the first week of February. The letter was undated and was executed by Ms Guan as “shareholder and Director of Sun Link Group Pty Ltd and also the owner of a Rolls Royce Motorcar”. By that letter, Mr Lui was appointed “to take care” of the vehicle (in accordance with the terms set out in the letter).

[169] The vehicle remained in the possession of Mr Lui up until its repossession.

19. As to the circumstances operating at the time of the agreement and whether Sun Link was bound by the agreement, the Court found as follows (at [177]-[187]):

[177] Mr Lui and Ms Guan signed the agreement on 18 January 2015.

[178] The factual question is whether Ms Guan signed agreement both on behalf of herself and Sun Link.

[179] The circumstances in which the agreement was signed were set out in the affidavit of Mr Lui affirmed 8 December 2015 at paras 68-75. I accept that evidence and it is extracted below:

68. On or about 18 January 2015, I attended a restaurant with Ms Guan. I sat across a table from her and said, “I have prepared a draft agreement for you to consider”. I then handed to her a typed document in the simplified Chinese script.

69. I said, “please read it carefully and let me know if you want me to change anything”.

70. I observed her reading the document. She then looked up and said, “I am happy with the document. Do you have a pen?”.

71. She said, “but we do not know what the actual price will be”. As a result, I wrote, by hand, the character that appear in handwriting just above the signature panels.

72. Ms Guan signed the document first. I then signed and dated it.

73. Other than her signature, Ms Guan did not write anything else on the document or any copy of the document. There was never any discussion about a 10-day limit on this agreement.

75. I took the original home with me and made a photocopy of the document, after which I handed the original to Ms Guan in later date. A truly copy of the document as signed by me and Ms Guan and dated 18 January 2015 is annexed hereto and marked “B” (Agreement).

[180] Shortly stated, Mr Lui handed a typed document to Ms Guan. She said she was happy with the terms but annotated it (see para 71 of Mr Lui’s affidavit, extracted above). She did not write anything else the document. There was only one original, a copy of which was given to Ms Guan. She never complained that the document she had been given was not the document she had signed.

[181] As at that date, in summary of the above factual findings, the following circumstances, inter alia, may also be noted:

(1) Ms Guan was a director of Sun Link at the time;

(2) The vehicle was a “company car” and registered in Sun Link’s name;

(3) Shuangfu was in default of the loan agreement dated 26 June 2014;

(4) Both Shuangfu and Shuangxing had external administrators appointed, and controllers over the Kensington land;

(5) A second meeting of the creditors had taken place and been adjourned for 42 days;

(6) No DOCA had been proposed, although the proposal of a DOCA by Landream remained a possibility. However, if no DOCA was ultimately accepted, Shuangfu would likely be wound up; and

Shuangfu’s two biggest creditors were A Capital and the ATO and were owed approximately $55.7 million.

[182] At the time of entering the agreement, Ms Guan clearly thought that she had the authority to sign the agreement and to promise Sun Link’s property to Mr Lui. Sun Link is not mentioned in the agreement but the vehicle, its property, is.

[183] An issue arose as to whether Sun Link was bound by the terms of cl 4 of the agreement. That issue arose because it was common ground that the vehicle referred to in cl 4 was owned by Sun Link and Sun Link is not mentioned in the agreement.

[184] The vehicle was repossessed by its financier, because as counsel for the defendants admitted, "my side did not upkeep the mortgage on the car”. It was sold and $24,434.87 in surplus funds were paid into the Supreme Court of Victoria. Mr Lui sought damages in lieu of specific performance of the contract. Given that the vehicle was sold for $200,000, that should be taken as the its market value for the purposes of the order for damages.

[185] The relevant background to the issue is as follows:

(1) As previously mentioned, in or around November 2014, the defendants provided the vehicle to Mr Lui to drive as he has described in his evidence.

(2) There is a paucity of evidence as to whether Ms Guan was the sole director at the time of entering the agreement. However, notwithstanding a submission that Ms Guan was a sole director at the time of the agreement, counsel for Mr Lui put the following question to Ms Guan during cross-examination:

Q. There is another company, which is the second defendant in this proceeding, called Sun Link Pty Limited. You're aware of that?

A. INTERPRETER: Yes, I am aware.

Q. You are the sole director of that company. Is that right?

A. INTERPRETER: I am now, but not before.

Q. Because before that, Mr Henson Liang was also a director of the company. Is that right?

A. INTERPRETER: Correct.

Q. Indeed, Mr Liang was a director of Sun Link until 23 February 2015. Do you accept that?

A. INTERPRETER: Yes.

Q. You said a few things this morning about Mr Liang. What does Henson Liang do?

A. INTERPRETER: Helps me to look after the other companies.

(3) I agree with the submission of the counsel for Mr Lui that Ms Guan clearly thought that she had the authority to sign the agreement and to promise Sun Link's property to Mr Lui. Ms Guan did not appear in the witness box to be someone who made clear distinctions between her property and her companies' assets. Reference, in that respect, may be made to Ms Guan’s evidence as to Shuangfu during cross-examination:

Q. Now can I just ask you a couple of questions about Mr Liang and you. Did you get paid by Shuangfu for your work on the development project?

A. INTERPRETER: Shuangfu gave me money.

Q. How much did you get paid by Shuangfu?

A. INTERPRETER: I don't know what you mean.

Q. How much did you get paid by Shuangfu to work in relation to the Kensington property development?

A. INTERPRETER: Shuangfu is my own company. Why would they, why would the company pay me money? It's my own company.

Q. I asked you a moment ago whether you got paid and you said yes.

A. INTERPRETER: I had my business, my - please, I said please hold sentence by sentence. I'm a business migrant from China. I, I thought my money would be from China, so I was buying my land piece by piece, and when I bought the land, I'm going to take out a loan. Shuangfu is my own company. How can the company give me money? I am the one who has to put money into Shuangfu.

(4) Ms Guan’s protestations about Mr Liang's views about the alienation of the vehicle could not be tested, because Mr Liang was not produced for cross-examination.

[186] The execution of the agreement by Ms Guan, notwithstanding that she purported to act with the authority of Sun Link and thereby sought to execute the agreement on its behalf, did not have the authority to bind Sun Link. The evidence before the Court, including evidence led by counsel for Mr Lui (when the question was otherwise in doubt), revealed that Mr Liang was also a director of Sun Link, together with Ms Guan, at 26 June 2014 through to 23 February 2015. Pursuant to s 127 of the Corporations Act, where a company has more than one director, a single director does not have authority to bind it. Thus, in the absence of some representation made by Sun Link, Ms Guan has no ostensible authority to bind it (see Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 205). The evidence before the Court does not support a conclusion of agency. It follows that at the time of the agreement, in order to bind Sun Link, in particular with respect to cl 4, the agreement would have required execution by two directors, namely, both Ms Guan and Mr Liang: s 127 of the Corporations Act.

[187] I find that Ms Guan signed the agreement in a strictly personal capacity. She did not bind Sun Link.

20. At [205], the Court found that Mr Lui had performed his obligations under the contract by:

(1) Finding Mr Chan and Mr Pak and providing advice as to the expression of interest process, with respect to the Kensington land, from around February 2015; in particular, Mr Lui advised Mr Chan that Mr Pak would need to increase Anson City’s bid to be successful. He also subsequently provided Mr Chan with the Information Memorandum. Anson City ultimately made a bid of $38 million.

(2) Meeting with Mr Macree, the regional director of Jones Lang LaSalle, in order to obtain details about the expression of interest process to pass on to potential investors.

(3) Finding “Mr Zhao”, a Chinese investor.

(4) Bringing the Kensington Project to the attention of Fairway. Fairway placed two expressions of interest for the Kensington Project: the first was an unconditional offer for $30 million and the second was an offer for $45 million (conditional upon development approval).

21. As to the exchange of contracts for the sale of the Kensington land and the transfer of the property, the Court found as follows (at [226]-[228]):

[226] By a letter dated 8 April 2015, Mr Lui was notified by Mr Macree of Jones Lang LaSalle that the contract for the Kensington land “exchanged on 25 March 2015”. That letter is short and its contents included in full below:

Dear Kevin,

Re: 81-95 Anzac Parade, Kensington

As discussed we confirm contract for the above mentioned property exchanged 25 March 2015.

We thank you for your interest and support throughout the campaign and look forward [to] working with you in the future.

Sincerely,

John Macree

Region Director – Sales & Investments, NSW

JLL

[227] Anson City was ultimately successful with a bid of $38 million for the Kensington land (which bid was submitted by Mr Hu of Anson City on 4 March 2015).

[228] On 22 April 2015, the Kensington land was transferred by A Capital to Anson City for $38,389,000.

22. As to the terms of the agreement, the Court found (at [327]-[352]):

[327] Without derogating from the aforementioned statement of principles, the agreement is to be construed in accordance with the natural and ordinary meaning of the words used within their object and purpose.

[328] Notwithstanding the reference to Shuangfu being a “project company”, the agreement creates a series of personal obligations between Mr Lui and Ms Guan; it is not a contract between Mr Lui and Shuangfu.

[329] It may be accepted that the object or purpose of the agreement was to improve Ms Guan’s economic situation and solve Ms Guan’s financial problems. However, there is nothing on the face of the agreement which supports the construction contended for by the defendants that the language of cl 1, whether read alone or in the context of the whole of the agreement should be interpreted as requiring that, in order to “deliver” or perform under the agreement, Mr Lui must actually achieve those outcomes such that performance of the agreement required him, as submitted by the defendants, to “at least improve Ms Guan’s economic situation”. His obligations, with respect to those objects or purposes, lay specifically under cll 1 to 2, respectively.

[330] Clause 1 required Mr Lui “to seek good investment partners in or out of Australia in order to improve the current economic situation and solve the financial problems encountered by [Ms Guan]”.

[331] Clause 2 required Mr Lui to “work hard to assist” Ms Guan to find appropriate “investment developers” and the “investment developers” will submit a "sealed bid to the company which takes over the project”.

[332] Clause 3 required Ms Guan to “encourage directors with voting power for the project to support the proposal of [Mr Lui] which involve[d] a sealed bid” in order to overcome her financial difficulties.

[333] I will elaborate upon the construction of each clause.

[334] Clause 1 created an obligation to seek good “investment partners”. There is nothing in the clause or surrounding provisions which would warrant the word “seek” to have another meaning other than its ordinary natural meaning, namely, to “attempt to find” or “search for”. Whilst this clause refers to “good investment partners” and cl 2 to “appropriate investment developers”, the uniformity of obligation in each clause, namely, to seek or find, and the objectives as described above, being common to each such clause, would suggest they should bear the same meaning.

[335] The defendants accepted that the word “investment” may mean a joint venture, but argued that the word “developer” connoted a commercial entity that developed real estate and that an investment developer is someone that invests in real estate. I do not accept that construction.

[336] When seen in that light, the term “investment partners”, whilst not defined, should be construed as entities who would invest in the development of the development properties. This construction is consistent with the balance of the clause when read in context (as I will further discuss below), namely, that Mr Lui was to find investment developers using his “network” to take part in the expression of interest process.

[337] Whilst the expression “investment developer” is ambiguous, that construction is also consistent with reading cll 1 and 2 together with coherency between the words investment partner and investment developers, and avoids the relatively artificial grammatical device employed by the defendants, namely, of identifying a meaning or connotation for the word “developer” (as a noun) and then treating the word “investment” as an adjective without reading the words together consistent with the surrounding context of the expression of interest process (as described below) and the para 63 conversation.

[338] The defendants were correct to submit that the word “assist” in cl 2 was conditioned by the words “by using his reputation and prestige” in that clause and that the conditioning words meant that Mr Lui would use his standing or influence to “assist”. However, counsel for Mr Lui correctly submitted that neither cll 1 or 2 required Mr Lui to “effectively cause” any sale of the property (or sale for the development of the property) because the agreement was concerned with ensuring the expression of interest process was successful.

[339] Clauses 1 and 2 do not employ words such as to “introduce” the purchaser or be the cause of a sale or “procure” an investment developer. Clause 2 states that Mr Lui is to “work hard to assist [Ms Guan] to find appropriate property developers”. The ordinary and natural meaning of “assist” in that context is to “help, typically by doing a share of the work”. The clause does not refer to Mr Lui introducing (as opposed to “seek” in cl 1) or “procuring” (as opposed to “assist [Ms Guan] to find [such entities to] submit a sealed bid” in cl 2). I agree with the submission of counsel for Mr Lui that the requirement imposed upon Mr Lui by cll 1 and 2 was to “assist Guan personally to allay her personal financial issues”.

[340] That interpretation of cll 1 and 2, to the extent of any ambiguity, is entirely consistent with the para 63 conversation, including the consistency between the construction and the commercial purpose of the agreement as discussed above.

[341] The use of the word “encourage” in cl 3, whilst directed to a different object, is consistent with that interpretation.

[342] Clause 4 promised the vehicle to Mr Lui and represented that it is "under the name of [Ms Guan] as a free gift when a sealed bid for the project is successful”. The obligation to give Mr Lui the vehicle was triggered by there being the success of “a sealed bid for the project”. That is the only requirement. The syntax necessarily points to the success of the process as the trigger.

[343] Clause 5 contained the undertaking (or promise) for Ms Guan to pay Mr Lui (via Mr Lui's agent) a “usual service fee” of 2% of tender rate. The correct interpretation of that clause is that the 2% ought to be calculated by reference to the final bid/tender by Anson City. The obligation in cl 5 to pay a fee of 2% of the “tender rate” is broad and should be construed as being triggered if Mr Lui performed in accordance with cll 1 and 2. Clause 5 pertains to the service provided and is not contingent on the success or otherwise of the bidding process.

[344] Further, as to cl 5, I reject the defendants’ contentions as to the application of the principle of contra proferentem. The content of the phrase “tender rate” is tolerably clear as set out in the preceding paragraph, especially when read in the context of the language used in the agreement. The contrast with the phrase “actual settlement price” supports Mr Lui’s contention that the 2% was to be calculated by reference to the successful bid amount rather than the actual sale price. The aforementioned language lends further support to the proposition that the Act does not apply, given that remuneration was not to be calculated by reference to the actual settlement price.

[345] Counsel for Mr Lui was correct to point to the significance of the context of the expression of interest process and the effect of receivership and administration to his construction in this respect and, more generally, as to the construction of the agreement.

[346] The expression of interest process is described in the Information Memorandum. It was not a “fire sale” or an auction. As earlier mentioned, it was a multi-tiered process, which involved A Capital considering a series of very different proposals for the Kensington Project and deciding, in its absolute discretion, the party, to which it would sell the Kensington Project. Neither the other creditors of Shuangfu nor Mr Lui nor Ms Guan were able to make any decisions concerning the process. In fact, A Capital could have decided not to sell the Kensington Project to any of the participants.

[347] I agree with the submission of counsel for Mr Lui, given these facts, which were known to both Mr Lui and Ms Guan at the time, it would be wholly uncommercial to construe the remuneration payable under the agreement as being contingent on Mr Lui being the “effective cause” of the sale, because, Mr Lui would have no control whatsoever over the process and because many variables other than price were involved. For example, each participant was invited to set out not only the price but also any terms or conditions of purchase and many did so. The evidence demonstrated that Anson City, the ultimate purchaser, was not the highest bidder. A company called Polaris Holdings Pty Ltd expressed interest to purchase the project for $40 million. Fairway also offered $45 million on the condition that the vendor obtained, at its own expense, development consent for a minimum of 160 apartments and retail space and $30 million if there was no development application or consent.

[348] The defendants’ pleadings do not plead the existence of any implied term, namely, the “industry implied term” that would result in Mr Lui only getting paid if he brought in the winning bid (i.e. was the “effective cause”). Such a contention, in the absence of a pleading to that effect, cannot properly be raised in closing submissions. In any event, the defendants led no evidence that there is any such "industry" term either generally or in this context.

[349] Further, including words requiring Mr Lui to effect the outcome, would have been easy for a person with Ms Guan's experience. The absence of those words weighs against the defendants' construction of the agreement.

[350] The receivership/administration arrangements were also important in the construction of the agreement. As the only secured creditor, A Capital appointed receivers to the Kensington Project, the expression of interest process was not related to Shuangfu's other debts (or debtors, for example, the ATO or Ms Guan). There is no evidence that the rest of Shuangfu's debts were also Ms Guan's or could be recovered against her personally. It should be noted that Ms Guan had also sought to prove debts she alleged she was owed in the administration of Shuangfu. Accordingly, I reject the various submissions that seek to construe the terms of the agreement by reference to bids by investor/developer.

[351] I accept the submissions of counsel for Mr Lui that, broadly stated, the agreement reflected that Ms Guan needed as many participants as possible in the expression of interest process, she knew that Mr Lui had a network, which could be tapped for that purpose, and she engaged him accordingly. Mr Lui's reward was proportionate to the size of the Kensington Project as valued by Ms Guan.

[352] It may be noted that, in many respects, that I do not accept the broad propositions advanced by counsel for the defendants at paras 120-138 of the Defendants’ Closing Submissions, which contain an admixture of assertions, many of which are unsupported by evidence and stand contrary to the construction of the agreement available by its terms and the commercial purpose as described in the agreement itself or by reference to the available evidence of relevant surrounding circumstances including the expression of interest process referred to above. In particular, I reject the notion that the agreement was concerned with an impending fire sale concerned with the sale of land or that the “only option” was to obtain the highest price for the sale of the land or that the project was only concerned with capital gain through land or land value.

23. Overall, as to Mr Lui’s performance under the contract, the Court found (at [411]):

[411] It follows, that I accept the aforementioned submission by Mr Lui as to his performance under the agreement with respect to Anson City and Fairway. Accordingly, I consider Mr Lui performed his obligations under the agreement.

24. The Court dealt with the fifth issue, which was described as the “Real Estate Agent Issue” at [413]-[508].

25. As to relief with respect to the primary matter, the Court found (at [509]-[510]):

[509] It was common ground that the vehicle owned by Sun Link had been sold for $200,000. I consider, in the absence of a contrary submission that should be taken as the material value of the vehicle for the purposes of an order of damages. However, the Court will require further submissions as to the whether or not Ms Guan may be personally liable for such damages, with respect to the vehicle, in circumstances where Ms Guan did not have the authority to bind Sun Link and Sun Link was not found to be a party to the agreement.

[510] Having regard to the aforementioned construction of the agreement the relevant consideration for the balance of the relief claimed by Mr Lui is “the tender rate”, which is to be calculated by reference to the final bid by Anson City. Two percent of the tender rate equals $780,000. That amount remains unpaid. It is appropriate that Ms Guan be ordered to pay Mr Lui that sum.

26. The Court made the following findings regarding the issues (at [511]):

[511] In the circumstances, the issues raised by the parties should be answered as follows:

(1) Mr Lui and Ms Guan entered a contract on 18 January 2015 in terms which are set out in English language in Ex 1 in the primary proceeding.

(2) There was no oral contract.

(3) This issue was superseded by the selling of the vehicle.

(4) This issue shall be the subject of further submissions provided for in the directions below.

(5) Yes (see under the heading “Relief: The Primary Matter – Damage”).

(6) No.

27. As to the “second matter”, the Court found (at [512]-[515]) as follows:

[512] I return briefly to the second matter. As earlier mentioned, the contentions of Mr Leong, counsel for the Sun Link in the second matter (noting Ms Guan was not a party to the second matter), were brief and primarily served as supporting context to arguments in relation to the primary matter. Nonetheless, a brief summary of the parties’ submissions, in that respect, follows.

[513] Counsel for Sun Link did not produce any written submissions with respect to the second matter, save for the following contention in the Defendants’ Opening Submissions in the primary matter: “Sun Link Group’s ownership of the vehicle has been maintained and asserted”.

[514] On the first day of hearing, counsel for Sun Link contended that, notwithstanding the sale of the vehicle, an action in damages remains, as Sun Link “suffered loss of enjoyment”. However, as the second matter was pleaded on the basis of the vehicle being in Mr Lui’s possession, the Court allowed counsel for Sun Link to consider how it wished to proceed. That exchange was as follows:

HIS HONOUR: Yes. Well, look, at this stage, I propose to proceed on the basis that unless you do something to resurrect the, what I call “the second matter”, that I won’t treat it as being relevantly before me in the proceedings that are listed over these two days. That will put the onus on you, as it were, to initiate something in relation to it, firstly, by communicating with your opponent what the basis of it is, how you say it come into the proceedings now and then, what should be done with it. There’s no license, I should indicate, contained in anything that I’ve just said. It’s just a way of case managing what is in the proceedings now to simplify them in an economical way without this, as it were, lingering in a way that might affect it adversely in that respect.

LEONG: Is your Honour perhaps referring to a notice of motion of some sort?

HIS HONOUR: Not at this stage. I think it can be dealt with more simply. If it’s spent, as I suspect it is, then you can simply take the necessary steps to have it dealt with as if it is spent in the proceedings which I’ll let you contemplate, but the usual sort of steps in that respect, such as a discontinuance or something of that kind might be in order.

LEONG: What steps would your Honour require for us to re-agitate it, so to speak?

HIS HONOUR: Well, the starting point of that would be giving advice in writing to your opponent as to what you would propose to do and then raise it before the Court before I conclude the proceedings over these next two days. That might require some formal process beyond that, but at the moment, I’m simply indicating unless and until I hear something to the contrary, I’ll proceed on the basis that it is spent and that at some point or rather it will be discontinued or some other things done subject to costs.

[515] Counsel for Sun Link did not seek to further develop submissions or re-agitate the issue. Counsel for Mr Lui submitted that nothing remained of the second matter and that it should be dismissed with costs. I accept that submission.

CONSIDERATION

28. This judgment concerns the resolution of the remaining issues. There was common ground that those issues would be resolved on the papers, being the further written submissions of the parties, LSPJ, GSPJ and LSPJR, and uncontentious documents attached to those submissions. I shall deal with those issues seriatim.

Relief under Prayer 4 of the ASOC

Submissions

29. Mr Lui submitted that given the terms of the agreement and the findings made in relation to it, Ms Guan was clearly obligated to cause the transfer of the vehicle to Mr Lui. Ms Guan failed to do so, although, as sole director from 23 February 2015 (before exchange of the contract for sale of the Kensington property and its settlement), she could have done so. Thus, Ms Guan breached the terms of the agreement and is liable to pay Mr Lui damages in the amount of $200,000.

30. As to the same, Ms Guan submitted:

1. The Court was correct in stating that Ms Guan did not bind Sun Link as she was not sole director. The motor vehicle belonged to Sun Link, not her.

2. Sun Link was not privy to the contract. There was no privity of contract.

3. On that basis, there should be no order of any money for the motor vehicle.

Conclusion

31. I accept the submissions advanced for Ms Guan in this respect.

Interest

32. Mr Lui submitted in LSPJ that pre-judgment interest should be ordered on the whole of the damages in this case. The starting point for the calculation of interest should be 25 March 2015 or 22 April 2015. Given the language of cl 4, the latter date is the preferable choice in the circumstances, given that it would pre-empt any argument concerning the success of the bid. The fair and reasonable rate of interest is the Supreme Court rate as set out in r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

33. In draft orders accompanying the LSPJ, Mr Lui claimed $314,808.22 in interest for the period 22 April 2015 to 12 July 2019.

34. As to the same, Ms Guan submitted:

1. Mr Lui did not plead pre-judgment interest. The ASOC filed 29 September 2015 pleaded post judgment interest only.

2. The case has always been conducted as one of strict pleading.

3. There is no requirement for the Court to repair a deficiency in Mr Lui’s pleading. Ms Guan noted, in that respect, that she was not allowed to argue Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 and uncertainty on the contractual interpretation point on the basis of the pleadings.

4. Section 100 of the Civil Procedure Act 2005 (NSW) uses the phrase “as the Court thinks fit” for pre-judgment interest.

5. Reliance was placed upon r 6.12(6)-(8) of the UCPR.

6. Rule 6.12(6) would appear to be sufficient to dispose of Mr Lui’s claim for pre-judgment interest. There was no specific claim pleaded.

7. If it does not, Ms Guan submitted, that Mr Lui’s Table in Schedule 3 (attached to the LSPJ) is in error. It was contended the rate is “+4%” and not “+6%”.

8. Ms Guan also respectfully requested that the Court check, if possible, the calculation of each row in Schedule 3. Even assuming a +6% rate, the calculation of each row appears, it was submitted, to be mathematically incorrect if one adopts the calculation: “(Number of days in date range/365) x (Rate / 100) x $780,000 = Result” (or, at the very least, Ms Guan did not understand how each row is calculated).

9. An example was provided with respect to the first row in Schedule 3. There are 15 days between 22 April 2015 and 6 May 2015. Assuming a +6% rate (notwithstanding the contention that it should be “+4%”), the calculation would appear to be: “(15/365) x (0.0825) x $780,000 = $2,644”, whereas the result in Schedule 3 appears to be $2,879.59.

35. In LSPJR, Mr Lui submitted:

1. Section 14 of the Civil Procedure Act 2005 (NSW) (“CPA”) permits the Court to dispense with the application of r 6.12(6)-(8) of the UCPR.

2. Under s 90(1) of the CPA, the Court is obliged to give judgment or make such order as the nature of the case requires.

3. The party seeking dispensation from compliance with a rule is required to demonstrate reason(s) why such dispensation is appropriate in the circumstances.

4. In his Statement of Claim filed on 29 May 2015 (“the Statement of Claim”), the plaintiff claimed interest up to judgment (see relief at paras 2 and 8 of the Statement of Claim). In an application for default judgment filed on 1 July 2015, the plaintiff sought an amount that included an amount for pre-judgment interest, the calculation of which was set out in an affidavit sworn by the plaintiff on 1 July 2015. Accordingly, at all times, the defendants were aware that the plaintiff sought interest up to judgment.

5. In the context of the matters set out in the aforementioned paragraph, the failure to transpose the claim for pre-judgment interest into the ASOC appears to be a typographical error, given that liability to pay interest after judgment, under s 101 of the CPA, operates automatically by virtue of the operation of s 101(1) (the relief pursuant to s 100 of the CPA is discretionary).

6. Further, other than the highly technical objection to an order for interest, the defendants have made no submission that the Court should not exercise its discretion, pursuant to s 100, if r 6.12 of the UCPR did not preclude the plaintiff from claiming pre-judgment interest. Given that this proceeding concerned the non-payment of monies and damages and given that the plaintiff has been kept out of funds for many years, it is just in the circumstances for the plaintiff to be awarded pre-judgment interest.

7. For the above reasons, it was contended, the Court would dispense with the requirements of r 6.12 of the UCPR and award the plaintiff interest.

8. Annexed to LSPJR was a further schedule that contained two tables, the contents of which are summarised below:

1. The first recalculated the interest at the rate set out in s 101 of the CPA (“Table 1”). (In the LSPJR, the plaintiff included “apologies for the incorrect earlier calculations”).

2. The second calculated the interest at the rate, to which the defendants have referred in the submissions (“Table 2”). Given Ms Guan's conduct and the Court's findings, Mr Lui submitted, the Court would be minded to order interest to be paid at the higher rate.

36. Both Table 1 and Table 2 are extracted below:

Table 1 Interest based on the Supreme Court rates as set out in rule 36.7 of the UCPR
22-Apr-15	6-May-15			14	8.25%		$	2,468.22
7-May-15	4-May-16			363	8.00%		$	62,058.08
5-May-16	3-Aug-16			90	7.75%		$	14,905.48
4-Aug-16	5-Jun-19			1035	7.50%		$	165,883.56
6-Jun-19	3-Jul-19			27	7.25%		$	4,183.15
4-Jul-19	12-Jul-19			8	7.00%		$	1,196.71
Total		$250,695.21
Table 2 Interest based on the default rates set out in rule 6.12 of the UCPR
22-Apr-15		6-May-15	14			6.25%	$	1,869.86
7-May-15		4-May-16	363			6.00%	$	46,543.56
5-May-16		3-Aug-16	90			5.75%	$	11,058.90
4-Aug-16		5-Jun-19	1035			5.50%	$	121,647.95
6-Jun-19		3-Jul-19	27			5.25%	$	3,029.18
4-Jul-19		12-Jul-19	8			5.00%	$	854.79
Total	$185,004.25

Legislation and Rules

37. Section 14 of the CPA provides:

14 Court may dispense with rules in particular cases

In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.

38. Section 90(1) of the CPA provides:

90 Judgments generally

(1) The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires.

39. Section 100 of the CPA provides:

100 Interest up to judgment

(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:

(a) on the whole or any part of the money, and

(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.

(2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:

(a) on the whole or any part of the money paid, and

(b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid.

(3) This section:

(a) does not authorise the giving of interest on any interest awarded under this section, and

(b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and

(c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and

(d) does not affect the damages recoverable for the dishonour of a bill of exchange.

(4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order.

(5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.

40. Section 101 of the CPA provides:

101 Interest after judgment

(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:

(a) the date on which the judgment takes effect, or

(b) such later date as the court may order.

(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.

(4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.

(5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.

(6) This section does not authorise the giving of interest on any interest payable under this section.

(7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.

41. Rule 6.12(6)-(8) of the UCPR provides:

6.12 Relief claimed

…

(6) An order for interest up to judgment must be specifically claimed.

(7) In the case of a liquidated claim, a claim for an order for interest up to judgment—

(a) must specify the period or periods for which interest is claimed, and

(b) may specify the rate or rates at which interest is claimed.

(8) If no rate of interest is specified under subrule (7)(b), the rate at which interest is claimed is taken to be—

(a) in respect of the period from 1 January to 30 June in any year—the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and

(b) in respect of the period from 1 July to 31 December in any year—the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.

42. Rule 36.1 of the UCPR provides:

36.1 General relief

At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion.

Principles

43. Under s 90(1) of the CPA, the Court is obliged to give judgment or make such order as the nature of the case requires.

44. Under r 36.1 of the UCPR, the Court may give such judgment or make such order as the nature of any particular case requires, whether or not a claim for relief extending to that judgment is included in any originating process: see Farrell v Mulroney [1978] 1 NSWLR 221 at 225 (per Rath J); NSW Trustee and Guardian v Schneider [2011] NSWSC 424 at [224]; In the matter of Dungowan Manly Pty Ltd (in liq) [2015] NSWSC 915 at [40] (per Black J) .

45. In Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15, the Full Court of the Federal Court of Australia observed at [13]:

[13] It is well-established that the main purposes of pleadings are to give notice to the other party of the case it has to meet, to avoid surprise to that party, to define the issues at trial, to thereby allow only relevant evidence to be admitted at trial and for the trial to be conducted efficiently within permissible bounds …. However, it is also well-established that pleadings are not an end in themselves, instead they are a means to the ultimate attainment of justice between the parties to litigation … For these reasons, the courts do not, at least in the current era, take an unduly technical or restrictive approach to pleadings such that, among other things, a party is strictly bound to the literal meaning of the case it has pleaded. The introduction of case management has, in part, been responsible for this change in approach… Even before the widespread use of case management, the High Court reflected this approach…

46. Section 14 of the CPA permits the Court to dispense with the application of r 6.12(6)-(8) of the UCPR.

47. The party seeking dispensation from compliance with a rule is required to demonstrate reasons why such dispensation is appropriate in the circumstances.

48. The Court may order pre-judgment interest on damages pursuant to s100 of the CPA. An order for the payment of interest is discretionary: Maestrale v Aspite (No 2) [2014] NSWCA 302 at [8]. In New South Wales v Abed [2014] NSWCA 419, Gleeson JA (with Bathurst CJ and Macfarlan JA agreeing) stated (at [240]):

[240] Prior to 1 July 2010 the default rate of pre-judgment interest was equivalent to the rate of post-judgment interest as specified by UCPR r 36.7(1) and as set out in UCPR Sch 5. From 1 July 2010 the default rate of pre-judgment interest allowed for periods after 30 June 2010 is no longer equivalent to the default rate of post-judgment interest. Rather, UCPR r 6.12(8) provides that the rate of interest (that is taken to be claimed if no other rates are specified) is 4% above the cash rate published by the Reserve Bank in December and June each year.

49. Similarly, in Secure Parking Pty Ltd v Woollahra Municipal Council (No 2) [2017] NSWCA 51, the Court of Appeal stated at [5]:

[5] Section 100 of the Civil Procedure Act 2005 (NSW) (the Act) provides that interest up to judgment, or pre-judgment interest, is to be calculated “at such rate as the Court thinks fit”. Practice Note SC Gen 16, the purpose of which is described as being to “set the rate of pre-judgment interest that may be awarded” under s 100, states that practitioners and litigants should expect that where interest in respect of a pre-judgment period is to be included in a judgment the Court “will have regard to” an interest rate in respect of six monthly periods which is 4% above the RBA cash rate last published before each such period commenced. That rate is also, in accordance with UCPR r 6.12(8), the default rate at which interest is taken to be claimed in the case of a liquidated sum in the event that no rate is specified in that claim for interest up to judgment.

Conclusion

50. It is true that that ASOC did not plead pre-judgment interest. However, in my view, Mr Lui has amply demonstrated why a dispensation should be given from complying with r 6.12 of the UCPR and why he should be permitted to pursue the claim, notwithstanding the deficiency in the pleading.

51. There are three reasons for this conclusion:

1. The defendants were plainly on notice of the plaintiff’s claim for interest up to judgment by the statement of claim and the application for default judgment.

2. The omission from the ASOC appears to be a mere slip, given the prior handling of the claim and, as Mr Lui put it, the liability to pay interest under s 101 of the CPA, operated automatically by virtue of s 101(1) of the CPA. Ms Guan sought no order under s 101(1).

3. The defendants have not squarely addressed whether the Court should or should not address its discretion under s 100, if r 6.12 did not preclude the plaintiff from claiming pre-judgment interest.

52. In my view, there is ample discretionary basis to award pre-judgment interest, having regard to the non-payment of monies that Mr Lui has been deprived of over many years. That is the result which best reflects a just outcome in the circumstances.

53. Mr Lui provided fresh calculation as to pre-judgment interest in the Tables, which appear at [36] above.

54. Mr Lui sought that the higher amount due under Table 1 should be awarded based upon Ms Guan’s conduct and the Court’s findings as to the same in Lui No 1.

55. I have come to the view that the amount under Table 2 should be awarded for the following reasons:

1. The Court does have a broad discretion in determining pre-judgment interest (see Lahoud v Lahoud [2011] NSWSC 994 (“Lahoud”) at [31]). However, the only factor relied upon by Mr Lui was the conduct of Ms Guan and the Court’s findings as to the same. No explanation was provided as to how specifically those factors may warrant the higher amount of pre-judgment interest sought in this case.

2. If that proposition is advanced on the basis of the decision of the Court being purely punitive in nature, then it is not available to Mr Lui. In Calarco v Liverpool City Council (No 2) [2018] NSWSC 355 at [12], citing Lahoud, Johnson J held:

[12] The power to order payment of interest on costs is compensatory and not punitive. There is no requirement, before an order for payment of interest on costs is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary: Lahoud v Lahoud at [82].

(See also Checchia v Insurance Australia Ltd t/as NRMA Insurance (No 3) [2014] NSWSC 1209 (“Checchia”) at [26]).

3. This remedy is compensatory in nature.

4. That conclusion does not necessarily preclude reference to conduct in this context. For example, in Checchia at [26], Hall J considered a relevant consideration would be that delay occurred “before the plaintiff’s entitlement was established” which may be “attributable to his own fraudulent or deceptive conduct”.

3. Whilst the Court in Lui No 1 (at [84] and [85]) found Ms Guan’s evidence to be unreliable and that she could not be accepted as a witness of truth, together with particular adverse findings, such as Ms Guan’s evidence portrayed intentional fabrication, and Mr Lui had submitted that Ms Guan had engaged in “truly egregious behaviour in the witness box”, Mr Lui has not demonstrated how such findings might properly warrant the higher amount of pre-judgment interest in Table 1.

4. For example, Mr Lui did not demonstrate that he was kept out of money, by the defendant’s conduct (other than the defence of the proceedings), that was due to him prior to the delivery of judgment for which he should be compensated (see Kalls Enterprises Pty Ltd (in liq) v Baloglow(No 3) [2007] NSWCA 298 at [10]).

56. In the result, the pre-judgment interest should be calculated in accordance with Table 2.

Costs

Factual Background

57. On 5 October 2016, the defendant’s solicitor, Mr Arvin Kong, communicated an Offer of Compromise to the solicitor for the plaintiff, Mr Greg Dunstan, stating that the plaintiff is unlikely to succeed having regard to a series of factors. The offer proposed judgment in favour of the defendants.

58. At 11.26am on 6 October 2017, Mr Dunstan sent an email to Mr Kong in the following terms:

Our client considers that he will succeed in the proceeding and rejects your bold assertions to the contrary. A review of the transcript demonstrates that your attacks on our client’s credibility and evidence failed. The Court would, we expect, accept our client’s evidence and will find that he fulfilled the terms of the Cooperative Agreement.

We note your clients’ submissions in relation to the application of the Property, Stock and Business Agents Act 2002. Our client considers that defence will fail. On the evidence, I would not find that our client was acting as a real estate agent. Clearly enough, his role was to procure investors, which he did.

As to the so-called “effective clause” defence, that is not pleaded and cannot be raised. This matter was raised during the hearing. In any event, the emails do not show what you claim they show and the contract does not require our client effectively to cause the successful bid (see clauses 4 and 5 of the Cooperative Agreement). That defence will fail.

In short, your clients’ stated confidence in the strength of their case is – especially in light of our client’s evidence – baseless. It is based on the misreading of the authorities and on an inflated confidence in the state of Ms Guan’s and Mr Leung’s evidence after they have been cross-examined.

Having said that, our client considers that proceeding against your client would present him with a Pyrrhic victory, in that he would not be able to recover his funds from Ms Guan, who, we are told, is impecunious and Sun Link Group Pty Ltd, which is nothing more than a shell company. In light of that fact, our client will make the following final offer to reach a commercial resolution of this proceeding and on a without admissions basis:

1. Our client will consent to discontinue the proceeding against the defendants or agree to an order dismissing the proceeding on the basis that there be no order as to costs, in that each party would pay his/her/its costs of the proceeding.

2. Each party is to release the other in relation to claims arising from this proceeding, the pleadings, the evidence and the correspondence.

3. Each party is to covenant not to sue the other in relation to the subject matter of the releases, to which reference is made in the previous paragraph.

4. Each party will agree to keep the terms of their settlement confidential.

5. Each party will agree not to disparage the other or in any way criticise the personal or business reputation or conduct of any other party to this agreement.

This offer is open until 4pm today. For the sake of clarity, we note that our client will not give any consideration, nor will he accept, any offer, whereby he will pay any monies to your client.

In the event that your clients agree to these terms, our client requires there to be Heads of Agreement entered into, which would formalise the parties’ agreement in anticipation of a Deed of Settlement and Release.

This is an offer in accordance with the principles set out in Calderbank v Calderbank [1975] 2 All ER 333. Our client will rely on the terms of this offer in relation to the question of costs.

59. The response from Mr Kong was made at 3:49pm on the same day and stated:

So that our client can better consider your offer, can you please supply the case identified at p.10 [40] of the transcript, described by your Counsel thus:

There is authority to the effect, and I’ll take you to that in due course, that when one collects a group of investors to bid for a project that does not amount to the prohibited conduct to which the act pertains…

Submissions of the Parties

60. In summary, Mr Lui made the following submissions as to costs:

1. In the primary matter, Mr Lui succeeded wholly against Ms Guan and failed in relation to Sun Link on the basis of the Court’s decision in Lui No 1 at [186]. The central focus of the case was, however, on Ms Guan’s liability. In contrast, the question of Sun Link’s liability was very limited in scope.

2. The hearing was conducted in parts. The first portion (on 27 and 28 June 2017) was comprised of Mr Lui’s opening, the defendants’ short-lived application to amend (which was withdrawn) and Mr Lui’s cross-examination. At that time, the defendants had exhausted their opportunity to challenge Mr Lui’s evidence and had before them all of the materials on which Mr Lui relied.

3. The hearing was scheduled to continue on 10 and 11 October 2017.

4. On 5 October 2017, the defendants made an Offer of Compromise. The effect of the offer was that judgment would be entered in favour of both defendants and that Mr Lui would be required to pay their costs (r 42.13A of the UCPR). Given the outcome, the Offer of Compromise is of no consequence but remains as evidence at least of the defendants’ ability to send and receive offers. This fact is important, given what transpired on the next day.

5. On 6 October 2017 (the Friday before the hearing continued), Mr Lui made a Calderbank offer to the defendants.

6. The offer made by Mr Lui constituted a significant compromise. It was a walk away offer by a plaintiff, whose evidence had withstood cross-examination and whose case was strong. The concerns raised by Mr Dunstan’s email in relation to recoverability were, as it later turned out, very real. A reference was made to the fact that the company, Shuang Fu Development Pty Ltd, of which Ms Guan was a director and sole shareholder, had entered liquidation.

7. In light of their readiness to make an offer the day before, the defendants’ response was disingenuous. In effect, therefore, before 4pm on the Friday the defendants rejected Mr Lui’s offer. That rejection was unreasonable.

8. In relation to the primary matter, Ms Guan should be ordered to pay Mr Lui's costs of and pertaining to that proceeding on the ordinary basis until 6 October 2017 and on an indemnity basis thereafter. The defendants' position, in relation to Mr Lui's offer, was clearly unreasonable, given:

1. the compromise was very significant;

2. had that offer been accepted, the costs of the next 7 days of hearings and the costs associated with responding to the defendants' lengthy submissions would not have been incurred;

3. the offer was made after Mr Lui's cross-examination and before Ms Guan's cross-examination: at the beginning of the low point of the defendants' case;

4. the offer explained, and the Court later found, that the cross-examination had not undermined Mr Lui's evidence;

5. Mr Lui's prospects of success were, at the time the offer was made, strong;

6. the offer was clear and detailed; and

7. the offer clearly foreshadowed reliance by Mr Lui on the letter in relation to the question of costs. In those circumstances, the defendants' conduct in not accepting the offer was unreasonable.

9. Whilst, usually, costs follow the event, the Court would depart from that position in relation to Sun Link. There should be no order for costs in Sun Link’s favour for the period up to and including 6 October 2017. Thereafter, Sun Link should be ordered to pay Mr Lui’s costs on the ordinary basis. First, Sun Link’s case was very limited in scope and had not opened by the time the abovementioned offer was made. Second, those costs would, in any event, be minimal. Third, the continuation of the case after 6 October 2017 was unreasonable. Fourth, any costs order in favour of Sun Link would be, in effect, a costs order, of which Ms Guan would benefit and because it is likely that the Sun Link would soon be deregistered.

10. Mr Lui should have costs of the second matter on an indemnity basis.

61. Ms Guan replied as follows:

1. Mr Lui’s Calderbank offer only gave Ms Guan 4 hours and 34 minutes to consider it. It was not a reasonable amount of time. Mr Lui’s Calderbank offer was made on 6 October 2017 at 11.26am and gave until 4pm that day for acceptance.

2. Mr Lui’s Calderbank offer was also made mid-trial. The offer was made on 6 October 2017. The first two days of trial were 27 and 28 June 2017. The next two days of trial were 10 and 11 October 2017. The last day of trial (not counting the oral submission day of 12 March 2018) was 6 December 2017.

3. The reasonableness of Ms Guan’s rejection of the Calderbank offer depends on the circumstances of the case. A central issue was the operation of the Property, Stockland and Business Agents Act 2002 (earlier described as “the Real Estate Agent issue”). It was a very complex, hard fought issue (as shown by the length of submissions and the judgment).

4. Mr Lui’s counsel in opening address on Day 1, 27 June 2017, mentioned a certain authority/authorities that would result in Ms Guan failing on the Real Estate Agent issue. On the first day of hearing, counsel for the plaintiff stated as follows:

There is authority to the effect, and I’ll take you to that in due course, that when one collects a group of investors to bid for a project that does not amount to the prohibited conduct to which the act pertains.

5. The Calderbank offer itself again mentioned those authorities when it said, “It is based on a misreading of the authorities…”.

6. This explains why Ms Guan asked Mr Lui to identify the authority or case via a 6 October 2017 email at 3.49pm (i.e. before 4pm). That is, Ms Guan took reasonable steps to clarify the Calderbank offer and Mr Lui never identified the authority or case (possibly for tactical purposes). Furthermore, four and a half hours was insufficient time to research the law and attempt to identify it.

7. Accordingly, Ms Guan’s rejection of the Calderbank offer was not unreasonable in light of the time she had to consider it and in light of Mr Lui’s forensic decision to not identify the critical authorities.

8. Ms Guan submitted that the Court, in its discretion, should not act on the Calderbank offer.

Principles relied upon by the Parties

62. Mr Lui relied upon the following principles:

1. Costs are discretionary: s 98 of the CPA. The Court has a discretion to order costs to be paid on the indemnity basis: Sze Tu v Jam Studios Pty Ltd v Sze Tu (No 2) [2018] NSWSC 1611 at [32].

2. In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 (“Miwa”) at [8], Basten JA (with whom McColl and Campbell JJA agreed) stated:

[8] The willingness of the courts to take account of a "without prejudice" offer of settlement in disposing of costs was originally tempered by the view that the practice should only be adopted where the alternative of a payment into court was unavailable: Cutts v Head [1984] Ch 290. The practice was, however, adopted in this jurisdiction without the restriction: Messiter v Hutchinson (1987) 10 NSWLR 525 (Rogers J); SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [45] (Giles JA). The expansion of formal rules providing for offers of compromise has not diminished the willingness of the courts to act upon informal offers, rather the contrary. However, there is no presumption that an offeree who does not accept an offer and does not obtain a judgment more favourable than the offer will necessarily pay indemnity costs from the date of the offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Stein AJA agreeing); Jones v Bradley (No 2) [2003] NSWCA 258 at [6]- [9]; Ambulance Service of New South Wales v Worley (No 2) [2006] NSWCA 236; 67 NSWLR 719 at [18]. The approach frequently adopted in this jurisdiction has been to ask two questions, namely whether –

(a) there was a genuine offer of compromise, and

(b) it was unreasonable for the offeree not to accept it.

3. In Miwa, their Honours dealt with the question of the genuineness of the offer at [9] and dealt with principles that apply to assess the reasonableness of the refusal of the offer at [10]-[23].

63. Some additional authorities were referred to by counsel for Ms Guan, which are relevant to the consideration of the reasonableness of the refusal of an offer regarding costs.

64. In Carr v Fischer [2005] NSWSC 31, Levine J held at [7], [14] and [16]:

[7] The second basis on which the defendants rely in asserting it was unreasonable for the plaintiffs not to have accepted the offer is the date and timing of it. The timing of this offer, in my view, is critical. It was mid-trial. It was after four days of evidence. It was at a point, I have been reminded but have not otherwise been in a position independently to check, where evidence of the plaintiff himself, that is Mr Carr, had not concluded. I can only go so far as to say that my recollection is that he was in and out of the witness box during the course of the hearing. It was at a point where an expert for the plaintiff had been called but leave had been given for a further report to be prepared by that expert.

…

[14] Ultimately, whether to award indemnity costs is a matter for the exercise of my discretion. There have been submissions and factors referred to by both sides that have not made any easier the decision to which I must come. By that I mean each side has referred to elements that must be weighed before the discretion is exercised and which lead to its exercise. The most impressive on the part of the defendants of course is that it was a real offer of compromise. The most impressive and ultimately the most persuasive on the part of the plaintiffs is the point of time at which this offer was made. In real terms it was but a couple of days before the anticipated resumption of a lengthy, complex hearing at which time costs had been incurred by the plaintiffs, at which time, there being no other material to the contrary, the stakes for the plaintiffs, taking into account costs, would have been measurable in at least 1.5 million dollars if not more than two million dollars, and at a time when there had been no forensic disclosure sufficient to form a judgment one way or the other as to the strength of the defendants' case.

…

[16] In those circumstances I am not persuaded that the conduct of the plaintiffs in either rejecting or not complying with the time limit as extended was unreasonable and the defendants' application for indemnity costs is dismissed with costs.

65. In LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (No 2) [2002] NSWSC 72 at [53]-[55], Barrett J held that the Calderbank offer before him was not unreasonably rejected because the trial was complex:

[53] I do not think that that conclusion follows in any inevitable way from the fact that the proffered settlement can, with hindsight, be seen to have been more advantageous to the plaintiffs than the result they achieved in the litigation. The unreasonableness which might perhaps be presumed to have been inherent in the plaintiffs’ rejection of the settlement needs to be probed more deeply.

[54] In Nobrega (above), Powell JA (with whom Priestley JA and Sheppard AJA agreed) quoted with approval a passage in the judgment of the last mentioned judge as a judge of the Federal Court in Sanko Steamship Co Ltd v Sumitomo Australia Ltd (unreported, FCA, 19 December 1995):

“The ordinary rule is that costs when ordered in adversary litigation are to be recovered on the party and party basis. Any attempt to disturb that situation needs to be carefully considered. It should only be departed from where the conduct of the party against whom the order is sought is plainly unreasonable.

This was a difficult case involving a myriad of issues both of fact and of law ... My own reasons for judgment reflect the difficult contractual and other issues which had to be considered. In the judgment I have also alluded to the difficulties that arose because of the need to sift and weigh evidence from a multiplicity of witnesses who gave evidence through interpreters. The case was certainly not clear cut and was hard fought. In those circumstances it seems to me very difficult to reach the conclusion that either party was acting at all unreasonably.

It was for those reasons that I considered that the appropriate order for costs was the usual order which would involve the payment by the plaintiffs of the defendant’s costs on the party and party basis.”

[55] Mr Sullivan submitted that the description given by Sheppard J generally fits the present case. I agree. As there, this case was not clear cut and was hard fought, with a myriad of issues of some complexity on which it would have been by no means easy to predict the outcome in advance of full presentation of evidence and full argument. Those factors indicate that there should be no departure from the general rule of party and party costs, even though the rejected compromise turned out to be more favourable to the rejecting party than the eventual outcome.

Costs: General Principles

66. The Court’s primary task is to determine whether the facts of the case or specific costs provisions impact upon the Court’s jurisdiction to make costs orders. Unless there are statutory provisions to the contrary, the Court’s discretion to determine such issues is unfettered: s 98(1) of the CPA. The discretion may be exercised whenever the circumstances warrant, having regard to the scope and purpose of the s 98 of the CPA (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (“Oshlack”); Hamod v NSW [2011] NSWCA 375 at [813] (per Beazley, Giles and Whealy JJA)).

67. However, the central and overriding principle, in this regard, is that of doing justice to the parties in each particular case. This involves a heavily contextual assessment that focuses upon the conduct of the litigation itself. A discretion exercised on grounds unconnected with the litigation, or on no grounds at all, is arbitrary or capricious rather than fair or just (see Peters v Peters (1907) 7 SR (NSW) 398 at 399 (per Street J); Cretazzo v Lombardi (1975) 13 SASR 4 at 11 (per Bray CJ); Scharer v Counting Instruments Ltd [1986] 1 WLR 615 at 621 (per Buckley LJ).

68. The discretion must be exercised judicially and “according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy”: Williams v Lewer [1974] 2 NSWLR 91 at 95. The discretion must be exercised on a principled basis (see Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62 at [11]), and in accordance with the principles of proportionality: s 60 of the CPA.

69. Thus, in Oshlack, McHugh J observed the discretion, whilst unfettered, is not to be applied without guidance or qualification (at [65]-[67]):

The discretion must be exercised judicially

[65] Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In this manner, the law has gradually developed principles to guide the proper exercise of the discretion and, in some cases, to highlight extraneous considerations which, if taken into account, will cause the exercise of the discretion to miscarry. Consistent with the aim of justice, the law could not have developed otherwise. As Mason CJ said in Latoudis it does not follow that any attempt to formulate a principle or a guideline according to which the discretion should be exercised would constitute a fetter upon the discretion not intended by the legislature. Indeed, a refusal to formulate a principle or guideline can only lead to exercises of discretion which are seen to be inconsistent, a result which would not have been contemplated by the legislature with any degree of equanimity.

[66] By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. As Devlin J said in Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2), when setting aside an arbitrator’s costs award:

the arbitrator is not directing his mind to one of the most, if not the most, important of the elements which ought to affect his discretion, namely the result of the case. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure.

The combined force of the sentiments recognised above by Mason CJ, regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the costs discretion, provides the jurisprudential basis for the important principle commonly referred to as the “usual order as to costs.

The usual order as to costs

[67] The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

70. Equally, the “general rule” (or “usual order as to costs”) does not amount to a fetter on the Court’s discretion. The terms of r 42.1 of the UCPR, “unless it appears to the court that some other order should be made”, clearly envisage that the Court may, in its discretion, make a costs order other than one following the event.

71. The most common circumstance in which the general rule may be displaced is evidence of disentitling conduct on the part of the successful party: Oshlack at [40] and [69]; G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 at [17]. The disentitling conduct does not necessarily need to amount to misconduct; it may simply be any conduct “calculated to occasion unnecessary expense”: Lollis v Loulatzis (No 2) [2008] VSC 35 at [28]; Keddie v Foxall [1955] VLR 320 at 323-324.

72. In Commonwealth v Gretton [2008] NSWCA 117, Hodgson JA addressed the principles of fairness underlying the making of a costs order, which may at times warrant departure from the general rule (at [121]):

[121] In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant’s responsibility because the plaintiff was caused to incur costs by the defendant’s failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach.

73. Further factors identified as relevant to informing judicial discretion were identified in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 at [97]-[98] (per Campbell JA) (see also, Oshlack at [69] (per McHugh J); and Ritter v Godfrey [1920] 2 KB 47). They include, but are not limited to, the following:

1. whether the successful party effectively invited the litigation;

2. whether the successful party unnecessarily protracted the proceedings;

3. whether the successful party succeeded on a point not argued before a lower court;

4. whether the successful party prosecuted the matter solely for the purpose of increasing the costs recoverable; and

5. whether the successful party had obtained relief which the unsuccessful party had already offered in settlement of the dispute.

74. The onus lies on the losing party to establish a basis for any departure from the general rule: Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10]. Only in an exceptional case would a successful party both be deprived of costs and also ordered to pay the opponent’s costs: Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5.

75. The Court should, however, have careful regard to the facts of the case: EKO Investments Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 371 at [18]-[23]; Knight v Clifton [1971] Ch 700 at 725.

76. Additionally, in a case where there are multiple issues litigated, the Court may, in the exercise of its discretion, order that a successful party have only part of its costs. It may be appropriate to order that a successful party be deprived of costs or a portion of the costs if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument: see Yazgi v Permanent Custodians Ltd (No 2) (2007) 13 BPR 24; [2007] NSWCA 306 at [24].

77. The appropriate starting point, nonetheless, remains the presumption under r 42.1 of the UCPR, and the inquiry then becomes whether, in the exercise of the Court’s discretion, the presumption should be displaced, or whether some other order is to be preferred.

Indemnity Costs

78. The power to award indemnity costs is found in s 98(1)(c) of the CPA and r 42.5 of the UCPR. Section 98(1) is extracted below:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

79. Rule 42.5 of the UCPR is as follows

42.5 Indemnity costs

If the court determines that costs are to be paid on an indemnity basis:

(a) in the case of costs payable out of property held or controlled by a person who is a party to the proceedings:

(i) in the capacity of trustee, executor, administrator or legal representative of a deceased estate, or

(ii) in any other fiduciary capacity,

all costs (other than those that have been incurred in breach of the person’s duty in that capacity) are to be allowed, and

(b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed.

80. The overriding purpose of the CPA is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1). A party to civil proceedings is under a duty to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court: s 56(3) of the CPA.

81. One of the leading authorities on indemnity costs remains Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801. In that case, Sheppard J noted some of the circumstances which have been thought to warrant the exercise of the discretion to order indemnity costs (at 233-234):

1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.

2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of O 62, rr 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.

3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission (supra) and Handley JA in Cachia v Hanes (supra) on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.

4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston (supra) at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at p 6) similar views in Ragata (supra).

5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525 ; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

82. A summary of the relevant authority was set out by Slattery J in Ly v Dong [2018] NSWSC 122. His Honour observed (at [45]-[46]):

[45] Authority establishes that the question to be asked is whether the circumstances justify an order for indemnity costs in the particular case: Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506; Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225. The categories of case in which indemnity costs will be awarded are not closed: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233–234 per Sheppard J.

[46] There must be some special or unusual feature or circumstance in the case justifying an award of indemnity costs: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (“Harrison”) at [139]. Such a special or unusual circumstance must involve some relevant delinquency relating to the conduct of the proceedings themselves by the party as litigant: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (“Oshlack”). Relevant delinquency does not mean moral delinquency but delinquency bearing a relevant relation to the conduct of the case. Although the categories of cases in which indemnity costs may be awarded is not closed, the nature of the cases which awards are made covers a wide variety of circumstances: pursuing hopeless cases, engaging in an abuse of process, unreasonable conduct in the proceedings, especially conduct prolonging the proceedings or maintaining a knowingly false case, or deliberate high handed aggressive or unco-operative behaviour, leading to delay or incurring needless cost, pursuing unfounded allegations of fraud and rejecting Calderbank letters and offers of compromise. The case law is well established and need not be covered in any further detail in these reasons.

83. In Oshlack at [44], the Court noted:

[44] It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a “solicitor and client” basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part [Footnotes omitted].

84. An award of indemnity costs should be compensatory and not punitive: Hamod v NSW (2002) 188 ALR 659; [2002] FCA 424 at [20].

Consideration: Costs

85. As to the primary matter, Mr Lui sought costs on the ordinary basis until 6 October 2017, and on an indemnity basis thereafter, upon the basis of an offer made on 6 October 2017.

86. As to costs of the proceedings prior to 6 October 2017, Mr Lui succeeded wholly against Ms Guan. Ms Guan has not demonstrated any basis to depart from the general rule that costs are to follow the event and none is evident from the proceedings. Mr Lui should have his costs on the ordinary basis up to and including 6 October 2017.

87. Mr Lui failed against Sun Link. However, I accept the submissions for Mr Lui that the central and predominant focus of the case was upon Ms Guan’s liability. The question of Sun Link’s liability was of very limited scope. Any awarding of costs in favour of Sun Link would be minimal and indirectly flow to Ms Guan. In the circumstances, the general rule should be departed from and each party should pay its own costs up to and including 6 October 2017.

88. The question of indemnity costs must be resolved in accordance with the above principles on the facts and circumstances of the case. Costs are not punitive and there is no presumption that the non-acceptance of an offer that is superior to the ultimate judgment of the Court will necessarily result in an award of indemnity costs.

89. It may be readily accepted that the offer by Mr Lui was genuine. The compromise was significant, particularly given the state of Mr Lui’s case at the time the offer was made and its “walk away” nature. The offer was clear in detail and advice was that reliance could be placed upon the letter in respect to the question of costs.

90. I also accept that the defendants’ response was ill conceived, so far as it sought assistance from the lawyers for Mr Lui as to authorities bearing upon the central component of its case, namely, the Real Estate Agent issue.

91. I do not accept the response was, however, disingenuous, although it did represent an implicit rejection of the offer.

92. Nonetheless, I have come to the view that Mr Lui should not have indemnity costs from 6 October 2017, but rather, should be awarded ordinary costs as against Ms Guan. Similar to my earlier ruling, Sun Link and Mr Lui should pay their own costs from that date.

93. The offer was made mid-trial with a very limited time being given to consider the offer. There had been two days of hearing. True it is that Mr Lui was found to be a witness of credit, but there was substantial liability issues remaining in the proceedings, including the Real Estate Agent Issue, which was accompanied by some complexity. As to the second matter in Lui No 1, the Court dismissed the second matter with costs (see Lui No 1 at [515]). That matter involved various interlocutory applications by Sun Link in 2015, including an application, which was referred to McCallum J (as her Honour then was) on 25 August 2015. The costs of those applications were not insignificant. Those costs should be incorporated in the costs order made in favour of Mr Lui.

94. Mr Lui made an application for indemnity costs in the second matter. In my view, that application should be granted.

95. Sun Link did not pursue its claim in that respect and, in effect, abandoned it. The entirety of Mr Lui’s costs of and pertaining to the second matter were entirely wasted. I accept Mr Lui’s submission that the entirety of this aspect of the proceeding, including that it failed to maintain repayments on the vehicle was, on the whole, unreasonable.

CONCLUSION

96. In the result, the Court rejects the claim by Mr Lui for relief under prayer 4, has granted pre-judgment interest pursuant to Table 2 and granted costs to Mr Lui of the primary claim, although not on an indemnity basis, and indemnity costs with respect to the second matter. Sun Link and Mr Lui should pay their own costs of the second matter.

97. The balancing of the disposition of this matter, in my view, the parties should bear their own costs of the further proceedings giving rise to this judgment.

98. Mr Lui should bring in short minutes of this order reflecting Lui No 1 and this judgment.

ORDER

99. Mr Lui shall bring in short minutes of order, reflecting this judgment, within 7 days of its publication.

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Amendments

22 April 2020 - Typographical error in [86] amended.

Decision last updated: 22 April 2020