Mega Fresh P/L v Wan Fun Koh

[2004] NSWSC 42

CITATION:	MEGA FRESH P/L v WAN FUN KOH [2004] NSWSC 42
HEARING DATE(S):	09-02-2004
JUDGMENT DATE:	9 February 2004
JURISDICTION:	EQUITY
JUDGMENT OF:	Bryson J at 1
DECISION:	Refuse leave to the defendant to file cross-claim and to file affidavits out of time.; Hearing to proceed as appointed.
CATCHWORDS:	PRACTICE and PROCEDURE - Pre-Trial Directions Hearing - defendant sought leave at Pre-trial Directions Hearing to file Cross-claim and voluminous further evidence - filing documents would require lengthy extension of time and disrupt appointment for hearing on issues raised by plaintiff: leave refused, hearing to proceed.
LEGISLATION CITED:	Conveyancing Act 1991 Supreme Court Act 1970
PARTIES :	Mega Fresh Pty Limited - Plaintiff Wan Fun Koh - Defendant
FILE NUMBER(S):	SC 1982/2003
COUNSEL:	C.D. Freeman - Plaintiff S. Jacobs - Defendant
SOLICITORS:	Photios Vouroudis & Co. - Plaintiff Shaddick Baker & Paull - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

MONDAY 9 FEBRUARY 2004

1982/03 MEGA FRESH P/L v. WAN FUN KOH

JUDGMENT

1 These reasons deal with questions arising at the pre-trial directions hearing on 4 February 2004 and at the adjourned directions hearing on 9 February 2004. The proceedings relate to alleged breaches by the defendant of obligations of various kinds which she owed to the plaintiff as a director of the plaintiff in respect of withdrawing money from the plaintiff's bank account on 3 July 2002 immediately before she resigned as a director on 4 July 2002. She withdrew the moneys by cheques as follows:

Cheque 217 $35,138
Cheque 218 $17,862
Total: $53,020.

2 It is alleged that the defendant used the proceeds to pay $45,760 to her husband Peter Koh also referred to as Peter Lee and $7,240 to herself. There are pleadings; the Statement of Claim of 24 April 2003 makes elaborate allegations, referring to duties allegedly imposed on the defendant in various ways, in support of a case which, stated very shortly, is to the effect that she did not have the company's authority to make the payments to which proceeds of the cheques were applied, or to draw the cheques; or that it was a breach of various duties to do so. In her defence filed on 28 May 2003 the defendant admitted much of the statement of claim but denied paragraph 7 which alleged, with many particulars, that her conduct was in contravention of her fiduciary and statutory duties, and denied paragraph 8 which alleged that the company suffered loss or damage.

3 The proceedings came Registrar Berecry for directions five times from April to September 2003. On 22 April the Registrar gave directions for pleadings fixing times for pleadings up to filing defence on 13 May 2003 and fixing times for affidavits, requiring defendant's affidavits by 13 May 2003 and reply affidavits by 29 May 2003. On 30 May 2003 the Registrar made directions noting that the defendant informed the Court that she had filed and served all affidavits on which she would rely at the hearing, and requiring the plaintiff's reply affidavits by 20 June 2003. Further directions on 26 June extended time for the plaintiff's reply affidavits to 16 July 2003. On 24 July the Registrar placed the matter in a Call-over as a short matter and on 10 September 2003 the Registrar made an appointment for the hearing to take place before Pearlman AJ on 9 and 10 March 2004. The Registrar also appointed the pre-trial directions hearing for 5 February 2004 before me.

4 The plaintiff filed two substantial affidavits with the originating process on 20 March 2003 and a further affidavit made by Choon Yang Lee known as Jane Lee, sworn on 28 March 2003 and filed on 24 April. The defendant filed two affidavits sworn by herself on 12 May 2003 and 27 May 2003; these were filed on 13 May and 28 May 2003. The plaintiff filed four reply affidavits on various dates in July 2003 the last on 24 July. The directions hearing before me took place over six months after the filing of the last affidavit.

5 At the directions hearing on 5 February 2004 the plaintiff's counsel Mr Freeman was unable to tell me that the matter was ready to go to hearing on 9 and 10 March because defendant's counsel Mr Jacobs told him, late on 4 February and on the morning of 5 February, that an affidavit was to be served by the defendant which was some 200 pages long (and had not yet been served); and that immediately before the directions hearing defendant's counsel handed plaintiff's counsel a statement of issues which included a claim by the defendant for remedies for oppression under the Corporations Act. The statement of issues referred to a lengthy affidavit of the defendant sworn on 4 February 2004 a copy of which had not been served. Defendant's counsel told me that the matter involved relatively little money, there had been hopes that the matter could be resolved, that counsel had been briefed late in 2003, that there were language difficulties, that counsel saw the need for the defendant's evidence to be stated in an affidavit giving the facts in chronological order and it had taken counsel many conferences to do that, and that the affidavit dealt with the documents including minutes of what counsel said were the critical meetings of 21 and 22 April 2002. Counsel showed me a draft statement of issues which appeared to me to contemplate that there would be issues whether there was authorisation to pay out money, whether there was an underlying entitlement to payment of money, and whether some application would be made under s 66G of the Conveyancing Act 1991 relating to a farm which was said to be the property of the company, although it was registered in the name of a woman who was one of the directors, and it was said that the beneficial interests were established by a deed which counsel had not seen. Defendant's counsel said that the whole issue related to this farm and who was entitled to it now that the underlying parties behind the corporate structure had fallen out.

6 When I observed that the case before me was far simpler than that outlined by counsel, and that counsel's outline included positions that should have been raised by cross-claim at the appropriate time about a year earlier, counsel said to the effect that he was not advising the defendant a year earlier. It was pointed out to me that the cross-claim relating to the title to the farm would involve persons who were not presently parties. I expressed a preliminary view that the case as pleaded should be heard and that it was open to the defendant to commence any other proceedings for remedies she desired as fresh proceedings. I suggested that I would only embark on consideration of re-opening the issues if there were a deposit in Court of the amount in issue in this case. I made some observations expressing my dissatisfaction with the emergence of large new issues at the pre-trial directions hearing and said, "I have contained myself but the course of the proceedings and the way Mr Freeman has been dealt with are mildly outrageous. It is not an object of directions hearings to start lifting thimbles and finding dried peas. That seems to be what Mr Freeman has just done. The matter has been mismanaged on a fairly large scale, and my response is altogether different if the matter in dispute which is a sum of money is on the table and available and truly at the Court's disposition to my response on the way it looks now." I also observed to the effect that the parties may be able to make some arrangement which established that it would be open to the defendant to bring any other litigation that the defendant needs to bring without encountering the Anshun principles. I said to the effect that I was minded to make an appointment for another directions hearing on 9 February 2004 at which the defendant was to make any application to extend time to file affidavits, to file a cross-claim or to amend pleadings. I made directions to that effect.

7 At the directions hearing on 9 February the plaintiff's counsel told me that he had been provided with copies of affidavits and other documents on which the defendant proposed to rely; copies were provided late on Sunday 8 February 2004 and early today Monday 9 February. He had also been told that the amount of money in dispute in these proceedings may be paid into Court. Defendant's counsel told me that he was instructed that the amount of money involved in these proceedings would be paid in by or on behalf of the defendant by Thursday 12 February. He produced and showed to me a draft notice of cross-claim which if filed would join the plaintiff as first cross-defendant and two additional parties, Siang Swee Mun who I am told resides in New South Wales, and Choon Yang Lee known as Jane Lee who I am told resides in Singapore. The draft cross-claim would make extensive allegations relating to the circumstances in which the defendant made $10,000 available to the company on a basis which was alleged to mean that it was repayable on demand, a further allegation in support of a claim that Peter Lee the defendant's husband was owed $45,800 by the plaintiff for wages, and a declaration that the second and third cross-defendants had acted oppressively and in breach of their obligation to act reasonably and in good faith, and remedies against oppression; and related ancillary relief. Peter Lee is not a party to the draft cross-claim. Counsel told me that he contemplated that there would be settlement discussions. He acknowledged that the probable consequence of leave to file the cross-claim would be the vacation of the hearing date; I regard that as a certain consequence as it would be necessary to serve two extra persons, one of whom lives in Singapore, and it would not be appropriate to require them to go to trial on new allegations on 9 March. Counsel said he thought the hearing would take three to four days if the cross-claim were filed. He did not propose to file any amended defence.

8 To my mind allegations establishing the position relied on by the defendant, to the effect that the amounts withdrawn actually were obligations of the company, could reasonably have been included in the defence so as to avoid surprise; as is required by Part 15 rule 13(2)(b) and (c) of the Rules of Court.

9 I was shown copies of documents, which have not been filed (and I was not asked to give and did not give leave to file them in court) which were said to be an affidavit of Peter Lee of 50 pages, and a bundle of documents said to be further affidavit evidence about five inches high. Plaintiff's counsel said, obviously reasonably, that he could not meet and deal with the material in these documents before the date of the hearing, particularly because of indications that it contained material to which Jane Lee, who lives in Singapore, would have to respond; it would be necessary for her to make a journey from Singapore for the hearing, and it would not be easy to arrange for her to make a further journey in order to deal with the further affidavit material in advance.

10 All of this further material was, I was told, what was shown to plaintiff's counsel this morning, and obviously enough he has had no opportunity to read it or to understand what problems, if any, it presents to him. Plaintiff's counsel contended that the matter should proceed on the basis of the existing pleadings and evidence as filed to date and that any claims to be made by the defendant could continue separately. He indicated readiness to confirm in writing that the Anshun principle would not be relied on in other proceedings. If there were to be an adjournment he asked that $53,000 be paid into Court, and also that the costs thrown away by the adjournment including the costs of bringing Jane Lee from Singapore to instruct, as well as to attend at the hearing, be paid as a term of the adjournment. He commented that there should be a draconian costs order, and that it is unreasonable to expect an adjournment where such a large amount of material is served so late without evidence explaining why the evidence was produced now and not last year.

11 Defendant's counsel referred by way of explanation to passages in a copy of an affidavit of the defendant's solicitor, which has not been filed, referring to the extensive and time-consuming and costly task of taking a comprehensive statement from the defendant, involving difficulties with language. This to my mind is in no way an adequate explanation in relation to proceedings commencing in March 2003 where the time limited for affidavits expired in May and, if as a practical matter that time was inadequate, could have been extended into the many months which have passed since then. Counsel also referred to the fact that there had been correspondence relating to settlement. To my mind the affidavit does not explain the lack of preparation in accordance with directions given by the court, nor does it explain confrontation of the plaintiff and its representatives with an indigestible amount of information only at the adjournment of the pre-trial directions hearing.

12 It is as defendant's counsel observed evidently better for all issues in dispute to be decided at one time. Further it is the duty of the Court under s 63 of the Supreme Court Act 1970 as far as possible completely and finally to determine all matters in controversy. However the Court has given close attention, on a number of occasions, to directions seeking to bring this about, which the defendant has simply and almost entirely disregarded. Consideration of the means of disposing of all issues must take place in conjunction with paying regard to the behaviour of parties; a party which leaves almost a year to pass without bringing forward or even revealing what is now said to be the real matter in controversy, and then brings forward an indigestible body of material at a pre-trial directions hearing cannot receive extended consideration. I have to be mindful that the basic duty of the Court is to hear and determine litigation, and that all reasonable measures to prepare to determine the litigation as presently defined on a fair basis have been taken. No satisfactory explanation for bringing material forward at what is for practical purposes almost the last minute has been put forward, either in the copy affidavit to which counsel referred, or in any other way.

13 I am obliged by Part 1 rule 3 of the Rules of Court to seek to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings. Conformity with that obligation appears to me to be adverse to embarking on an entire redefinition of the litigation at this stage. It is plain that the defendant has not conformed with her duties under Part 1 rule 3(3) to assist the Court to further that overriding purpose, to participate in the processes of the Court and to comply with the directions and orders of the Court. If the defendant had done so, the defendant would have sought leave to file a cross-claim at an appropriately early stage, and would have prepared any evidence in support of the cross-claim then, and also would have overcome any difficulties relating to service of cross-defendants, overseas or in New South Wales.

14 Pre-trial directions cannot allowed to become a scene of manoeuvre, or treated as the occasion, and substantially as the first occasion for a party to reveal what the case is truly about. I have had regard to the possibilities of allowing the litigation to be completely recast and of vacating the appointment for hearing, and I have considered imposing conditions which would give some protection against future invocation of the Anshun principle, or require payment of money into Court, and I have also considered imposing extensive costs obligations in respect of the costs of the proceedings to date, which have been incurred on a basis which, if the application to file a cross-claim were allowed, would be seen retrospectively to have been wrongly defined. It seems to me however that any future difficulties arising from the Anshun principle are of the defendant's own making and should not have any large part in my decision, and that the complete redefinition of the controversy and the introduction of an entirely new vehicle in the cross-claim with new parties, go beyond anything which I should think of as remedied by a costs order. If the defendant wishes to bring an oppression suit against parties including the plaintiff, it will remain open to the defendant to do so, subject to whatever difficulties, if there are any, which the Anshun principle may present.

15 It is not clear to me that there will be any such difficulty, as the plaintiff and for that matter the defendant have up to now proceeded in what appears to be an orderly regular course to bring on for hearing litigation on issues which are relatively narrow relating to whether authorisation existed for payment out of the two cheques. In my view I should not require this course to be deflected or ended because the defendant now expresses a wish to litigate a much larger and, to my mind, quite different controversy. It is open to the defendant to frame her cross-claim as fresh litigation and seek justice that way, if she wishes to do so. For these reasons I am not prepared to give the defendant leave to file a cross-claim, or to file any affidavits outside the times fixed by the Court's earlier directions.

16 The only directions which I will make are as follows:

(1) Refuse leave to the defendant to file cross-claim and to file affidavits out of time.
(2) The hearing is to proceed as appointed on 9 and 10 March 2004.
(3) The costs of each party of the directions hearing on 4 February 2004 are costs in the proceedings. The defendant is to pay the plaintiff's costs of the directions hearing on 9 February 2004.
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Last Modified: 02/12/2004