Shakya v Lobana Trading Co Pty Ltd

[2022] NSWSC 1111

Supreme Court

New South Wales

Medium Neutral Citation:

Shakya v Lobana Trading Co Pty Ltd & Ors [2022] NSWSC 1111

Hearing dates:

18 August 2022

Date of orders:

19 August 2022

Decision date:

19 August 2022

Jurisdiction:

Common Law

Before:

Bellew J

Decision:

(1)   The summons filed by the plaintiff on 4 July 2022 is dismissed.

(2)   The plaintiff is to pay the first defendant’s costs of that summons, as agreed or as assessed.

(3)   The listing of the matter before the Registrar on 24 August 2022 is vacated.

(4)   The defendants are to serve all evidentiary material on the plaintiff by 23 September 2022.

(5)   The matter is listed before me for further directions at 9.15am on 30 September 2022.

Catchwords:

PRACTICE AND PROCEDURE – Application to transfer proceedings from the District Court to the Supreme Court – Where separate proceedings had been brought in the Supreme Court – Assertion that there were common parties and common issues across the two sets of proceedings – Assertion not made out having regard to the causes of action pleaded in each case – Where District Court proceedings had been listed for hearing – Significant delay in bringing the application for transfer – Granting the application at odds with dictates of justice and the overriding purpose of the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW) – Application dismissed

Legislation Cited:

Civil Procedure Act 2005 (NSW)

District Court Act 1973 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Sanderson Motors Pty Limited v Kirby [2000] NSWSC 924

United Card Services Pty Ltd v Object Consulting Pty Ltd; United Petroleum Pty Ltd v PayPoint Solutions Pty Ltd [2010] NSWSC 743

Category:

Procedural rulings

Parties:

Raju Shakya – Plaintiff
Lobana Trading Co Pty Ltd – First Defendant
Young Dong Song – Second Defendant
Astonblu Pty Ltd – Third Defendant
Kamalini Knight – Fourth Defendant

Representation:

Counsel:
D Ratnan – Plaintiff
A Kaufmann – First Defendant

Solicitors:
Madison Marcus Law Firm – Plaintiff
Owen Hodge Lawyers – First Defendant

File Number(s):

2022/175918

Publication restriction:

Nil

Judgment – EX TEMPORE (REVISED)

INTRODUCTION

1. By a summons filed on 4 July 2022 Raju Shakya (Shakya) seeks a number of orders against Lobana Trading Co Pty Limited (Lobana Trading), Young Dong Song (Song), Astonblu Pty Limited (Astonblu) and Kamalini Knight (Knight). The principal order sought is set out in prayer 1 of the summons in the following terms:

An order that proceedings bearing proceedings number 2021/264758 commenced in the District Court of New South Wales, Sydney Registry be transferred to the Supreme Court of New South Wales Sydney Registry pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW)."

2. The ensuing paragraphs of the summons seek various ancillary orders with which I do not need to concern myself for present purposes.

3. The summons is supported by an affidavit of the plaintiff’s solicitor, Jessica Marie Kavvalos, of 17 June 2022, along with exhibit JMK-1. That affidavit, as well as a number of other affidavits and associated evidentiary material, were contained in a court book which, with the consent of the parties, was admitted and marked exhibit A on the hearing. Two further documents were tendered (with the consent of counsel for Shakya) by counsel for Lobana Trading and were added to exhibit A. The first, was a letter from Shakya’s solicitors to Lobana Trading’s solicitor on 12 August 2021. The second was an email from Shakya’s solicitor to Lobana Trading’s solicitor of 28 February 2022.

4. The order sought in the summons was opposed by Lobana Trading who was the only active defendant on the application.

THE FACTS

The District Court proceedings

5. On 16 September 2021, proceedings were commenced in the District Court of New South Wales (the District Court proceedings) by Lobana Trading against Shakya. The District Court proceedings are listed for hearing commencing on 14 September 2022 with an estimate of two days. That hearing date was allocated on 24 May 2022 which, for reasons to which I will come, assumes some importance in the determination of the present application. Lobana Trading brings a number of separate causes of action against Shakya in those proceedings.

6. First, the statement of claim pleads [1] that in about mid-2019, Lobana Trading entered into agreements to advance Shakya sums of $20,000 and $40,000. In respect of the sum of $20,000 it is pleaded[2] that it was a term of the agreement that Lobana Trading would advance that sum to Shakya, and that Shakya would use it in what is described as his "education hub business". As to the agreement pertaining to the advance of $40,000, it is pleaded[3] that it was a term of that agreement that Shakya would use that sum to commence processing documentation necessary to obtain a licence to establish a University campus in Australia, and would obtain such a licence by April 2020. It is further pleaded that it was a term of the agreement that if Shakya could not do so, he would be required to repay the money within two months of April 2020.

   1. Commencing at [3] of the Statement of Claim filed on 16 September 2021.

   2. Commencing at [4].

   3. Commencing at [12].

7. Secondly, the statement of claim pleads[4] a common money count in relation to each of the sums of $20,000.00 and $40,000.00.

   4. Commencing at [20].

8. Thirdly, the statement of claim pleads[5] an action based on misleading and deceptive conduct on the part of Shakya in respect of the advance of $60,000.00.

   5. Commencing at [22].

9. Fourthly, the statement of claim pleads[6] an action based on misleading and deceptive conduct on the part of Shakya in relation to the acquisition of shares in Zhouand Institute Pty Limited (Zhouand).

   6. Commencing at [30].

The Supreme Court proceedings

10. On 18 January 2022 proceedings were commenced in this Court (the Supreme Court proceedings) by Astonblu and Knight against Lobana Trading and Song. The statement of claim filed in the Supreme Court proceedings pleads three causes of action.

11. First, the statement of claim pleads [7] a loan agreement pursuant to which Astonblu agreed to lend Lobana Trading the sum of $472,953.00.

    7. At [6] and following of the Statement of Claim filed on 18 January 2022.

12. Secondly, the statement of claim pleads [8] a cause of action in misleading and deceptive conduct based upon representations said to have been made by Song on behalf of Lobana Trading.

    8. At [35] and following.

13. Thirdly, the statement of claim pleads [9] a cause of action based on threats made by Song with the intention of inducing Knight to transfer shares in Zhouand.

    9. At [42] and following.

The history of the present application

14. The commencement of the Supreme Court proceedings was first foreshadowed in a letter sent by Shakya’s solicitor to the solicitor for Lobana Trading on 12 August 2021. [10] That correspondence was sent in the context of the District Court proceedings which were already on foot. Notwithstanding the fact that commencement of the Supreme Court proceedings was foreshadowed in that correspondence, the statement of claim was not filed until 18 January 2022, more than 5 months later.

    10. Tendered by counsel for Lobana Trading.

15. On 21 January 2022, having filed the statement of claim, Shakya’s solicitor wrote to Lobana Trading’s solicitor and foreshadowed, for the first time, the bringing of the present application: [11]

In the interests of efficiency and in light of the significant cross-over of issues in dispute and continuity of the parties, we propose to make an application that the DC Proceedings be transferred to the Supreme Court of NSW and that the Proceedings be heard together.

Please advise whether your clients are agreeable to the above course of action and we will submit proposed orders for your consideration.

11. CB 255.

16. The suggestion in the final paragraph of that correspondence that the issue of transfer of the proceedings could be resolved simply by the parties agreeing to an order to that effect ignores the nature of the determination which is made in an application of this kind. Irrespective of what view the parties might take, whether or not an order for the transfer of proceedings should be made necessarily remains a matter for the Court in the exercise of its discretion. The fact that the parties may agree to an order being made is, frankly, neither here nor there.

17. On 8 February 2022, Lobana Trading’s solicitor responded to Shakya’s solicitor in (inter alia) the following terms: [12]

We do not, however, as yet understand the basis of your contention that there is a “significant cross-over of issues in dispute and continuity of the parties”. Indeed, we find that contention difficult to understand in circumstances where the plaintiff to the District Court proceedings claims against Mr Shakya, who is not even a party to the Supreme Court Proceedings. The allegations in the District Court Proceedings must, in those circumstances, be different to the allegations in the Supreme Court Proceedings. Accordingly, would you please set out, by reference to any relevant rules and/or authority, the basis for your clients' suggestion that the proposed course is appropriate in order that we may properly consider and obtain instructions in respect of your request?

We also note that the District Court Proceedings are far less complex and further advanced than the Supreme Court Proceedings and would, we imagine, be ready to take a hearing date in the first part of this year, whereas the Supreme Court proceedings are not as advanced. Indeed, we have only today sought further and better particulars of the claim in the Supreme Court Proceedings as we are having trouble understanding from the claim the basis for a number of the allegations. We are hopeful that your clients' answers to those requests may assist us in clarifying those matters.

12. CB 257 – 258.

18. On 18 February 2022 Shakya’s solicitor responded in (inter alia) the following terms: [13]

Our clients maintain that it is appropriate for the Proceedings to be case managed and heard together and that such course is consistent with the overarching purpose of litigation prescribed by s 56 of the Civil Procedure Act 2005 (NSW); that is, to facilitate the just, quick and cheap resolution of the dispute(s) between our respective clients. A concurrent hearing will also ensure that the administration of justice is best served.

13. CB 259.

19. The correspondence went on to cite a number of further matters in support of the proposition that the District Court proceedings should be transferred to this Court. [14] Those matters included that:

    14. CB 259 – 260.

1. what was said to be the "clearly commonality of the parties in each proceeding";

2. the likelihood that Song and Shakya would be the primary witnesses in each proceeding;

3. each proceeding raised a dispute between Song on the one hand, and Shakya on the other, even though the issues “differed somewhat”; and

4. the Supreme Court proceedings had been commenced in this Court because the amount claimed exceeded the jurisdiction of the District Court.

20. In correspondence of 23 February 2022, Lobana Trading’s solicitor made it clear that there would be no consent to an order transferring the District Court proceedings to this Court. [15] That position was unequivocally confirmed by the solicitor for Lobana Trading in correspondence of 24 March 2022. [16]

    15. CB 261.

    16. CB 270.

21. At 5.53 pm on 24 March 2022 Shakya’s solicitor wrote to the District Court Registry seeking an adjournment of a directions hearing, stating (inter alia): [17]

The defendant intends to bring an application to transfer the proceeding to the Supreme Court of NSW to be heard together with a matter that has been brought in the Supreme Court of NSW by parties relating to the defendant……

17. CB 275.

22. Notwithstanding what was said on that occasion, a period of almost three months elapsed before the present application was brought, which was more than five months after it had originally been foreshadowed. On the hearing of this application, counsel for Shakya, with what I might say was commendable candour, unreservedly accepted that there was no satisfactory explanation for that delay. What is also significant is that between 24 March 2022 (when the District Court Registry was informed of the intention to bring the present application) and 4 July 2022 (when the application was brought) the District Court proceedings were allocated a hearing date of 14 September, with an estimate of 2 days.

THE RELEVANT LEGISLATION

23. The present application has been brought pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) (the CPA). That section is in the following terms:

140 Transfer of proceedings to higher court

(1) The Supreme Court may, of its own motion or on application by a party to proceedings before the District Court or the Local Court, order that the proceedings, including any cross-claim in the proceedings, be transferred to the Supreme Court.

……

24. Section 140 of the CPA confers a broad discretion on the Court to make the order sought. Pursuant to s 56(2) of the CPA I must, in the exercise of that discretion, seek to give effect to the overriding purpose of both the CPA and the Uniform Civil Procedure Rules 2005 (NSW) (the rules), namely, the purpose of facilitating the just, quick and cheap resolution of the issues between the parties.

25. Necessarily, the discretion in s 140 of the CPA is to be exercised having regard to the entirety of the relevant circumstances of the case, so that justice is served between the parties. In Sanderson Motors Pty Limited v Kirby [18] Bryson J dealt with a similar application pursuant to the provisions of section 145(1) of the District Court Act 1973 (NSW). His Honour's observations as to the nature and extent of the discretion remain apposite, even though he was dealing with a different statutory provision. His Honour observed [19] that when called upon to exercise the discretion, it is necessary for the Court to appraise itself of the entirety of the facts and circumstances of the case, and make a determination as to whether the applicant for the order has established something which, within the framework of the purposes for which the discretion exists, is a sound ground or a good reason why an order for transfer ought be made.

    18. [2000] NSWSC 924.

    19. At [3] – [4].

26. It is impossible to be prescriptive as to the circumstances which will justify the making of such an order. Each case will obviously be determined on its own facts and the evaluation which is required to be conducted is, to some degree, necessarily impressionistic.

SUBMISSIONS OF THE PARTIES

Submissions of Shakya

27. Counsel for Shakya submitted that in light of the background outlined above, there was, between the two sets of proceedings, an interplay between the parties, and a material overlap of the issues between them. Counsel emphasised that the issues in each set of proceedings arose from a business relationship between Song and Shakya. He cited, as examples of the common issues which will arise, the terms of any agreement(s), and what representation(s) were or were not made.

28. Counsel further submitted that it was clear that Shakya and Song were the two main parties, and the two primary witnesses, in each proceedings. He submitted that in those circumstances, there would be issues of credit which would have to be determined, and that this was a further factor which supported the District Court proceedings being transferred to this Court and the two proceedings heard and determined together.

29. Counsel further submitted that if the District Court proceedings were not transferred to this Court there would, in all likelihood, be a significant duplication in the work which was required to be carried out by the parties. Counsel also raised the possibility of inconsistent factual findings being reached if the proceedings remained separated, and highlighted what was said to be the necessity to avoid the parties having to prepare and attend two separate hearings.

30. Finally, counsel submitted that if the District Court proceedings were not transferred there would be a risk of an issue estoppel arising as a consequence of determinations made by the judge in hearing and determining those proceedings.

Submissions of Lobana Trading

31. In opposing the order sought, counsel for Lobana Trading advanced four primary propositions, namely that:

1. the District Court proceedings involved a claim against a different party, based on different causes of action;

2. in those circumstances, no issue estoppel was capable of arising if the District Court proceedings were heard and determined first;

3. even if there was a possibility of an issue estoppel arising that would not, either of itself or in combination with any other factor, warrant the order sought being made; and

4. there had been significant and repeated delay in bringing the present application before this Court.

32. In developing those submissions, counsel submitted that on any view, the District Court proceedings involved the resolution of claims between Lobana Trading and Shakya. He submitted, by way of contrast, that the Supreme Court proceedings involved an action brought by Astonblu and Knight against Lobana and Song. Counsel highlighted, in my view with some force, that no claim was propounded by or on behalf of Shakya in the Supreme Court proceedings, such that Shakya had no direct interest in the outcome of those proceedings. Counsel submitted that what flowed from those circumstances was that, aside from Lobana Trading being a party to both proceedings, there were different causes of action involving different parties in the two proceedings, to the point where there was no real commonality between them at all. In adopting that position, counsel accepted, as I understood it, that there may be some matters of background which were common to both proceedings. However, he submitted that fundamentally, the two sets of proceedings involved different parties, different causes of action, and different issues, all of which were factors weighing heavily against the order sought being made. Counsel further submitted that by reason of all of those matters, no estoppel could arise if the District Court proceedings were determined first.

33. In terms of the delay in bringing the present application, and in addition to the fact that the reason for the delay is largely unexplained, counsel for Lobana Trading relied on the fact that the District Court proceedings had been allocated a hearing date, which would be lost in the event that the present application was successful. It was submitted that such a consequence would be inconsistent with the dictates of justice set out in the CPA, inconsistent with the overriding purpose of both the CPA and the rules, and prejudicial to Lobana Trading.

DETERMINATION

34. For the reasons that follow I am not satisfied that the order sought should be made.

35. First, whilst I accept that there is a degree of what might be described as common background, the fact remains that the parties to the District Court proceedings, and the parties to the Supreme Court proceedings are (except for Lobana Trading) different, as are the causes of action relied upon. In those circumstances, I am unable to accept the proposition that if the matters were to proceed separately there would be any significant duplication of work.

36. Secondly, I am not persuaded that any issue estoppel will arise if the District Court proceedings are determined first. Even if I am wrong in that determination, the fact that an issue estoppel may arise is not necessarily a factor which weighs in favour of the making of the order. In United Card Services Pty Ltd v Object Consulting Pty Ltd; United Petroleum Pty Ltd v PayPoint Solutions Pty Ltd,[20] White J (as his Honour then was) observed that it is an intended consequence of the judicial resolution of proceedings that the parties are bound by findings which are made.

    20. [2010] NSWSC 743 at [25].

34. Thirdly, Lobana Trading has the benefit of a hearing date for the District Court proceedings, and is entitled to have those proceedings heard and determined. If the District Court proceedings are resolved in favour of Lobana Trading, the likelihood is that it will be entitled to damages. It would be prejudiced if it were kept out of the benefit of those damages. If, on the other hand, the District Court proceedings are resolved in favour of Shakya, no prejudice would flow to him as a consequence. To deprive Lobana Trading of the allocated hearing date in all of those circumstances would be at odds with the just, quick and cheap resolution of the issues in the District Court proceedings, particularly in circumstances where, in the event that the present application was successful, it is unlikely that the proceedings would be heard until the latter part of 2023 at the earliest.

35. Fourthly, and whilst I make it clear that I do not regard this as a determinative factor, there has been a significant delay in the bringing of this application. In that regard, the following matters are noteworthy:

1. commencement of the Supreme Court proceedings was foreshadowed as far back as 12 August 2021 in an exchange of correspondence relating to the District Court proceedings;

2. at least by 24 March 2022, and on one view by 23 February 2022, it must have been clear to Shakya’s solicitor that Lobana Trading would not consent to an application for transfer of the District Court proceedings to this Court;

3. in correspondence to the District Court on 24 March 2022, Shakya’s solicitor expressed “an intention” to bring the present application;

4. it must have been apparent to Shakya’s solicitor that the allocation of the hearing date for the District Court proceedings (which occurred on 24 May 2022) would be a material consideration in any application of the kind which is now before the Court.

39. Why, in all of those circumstances, the present application was not brought until 4 July 2022 is not explained, satisfactorily or at all.

ORDERS

40. For the reasons I have given, I make these orders:

1. The summons filed by the plaintiff on 4 July 2022 is dismissed.

2. The plaintiff is to pay the first defendant’s costs of that summons, as agreed or as assessed.

3. The listing of the matter before the Registrar on 24 August 2022 is vacated.

4. The defendants are to serve all evidentiary material on the plaintiff by 23 September 2022.

5. The matter is listed before me for further directions at 9.15am on 30 September 2022.

**********

Endnotes

Decision last updated: 25 August 2022