Sino Synergy Investment Company Ltd v Maygood Australia Pty Ltd

[2010] NSWSC 297

CITATION:

Sino Synergy Investment Company Ltd v Maygood Australia Pty Ltd [2010] NSWSC 297

HEARING DATE(S):

9,16 April 2010

JURISDICTION:

Equity

JUDGMENT OF:

Biscoe AJ

EX TEMPORE JUDGMENT DATE:

16 April 2010

DECISION:

(1) In SC 2009/00287922 the plaintiff is to give discovery in accordance with the document marked MFI-1; (2) In SC 2010/00064176 the plaintiff is to give discovery in accordance with the document marked MFI-2; (3) In SC 2010/00064562 the plaintiff is to give discovery in accordance with the document marked MFI-3; (4) In SC 2010/00064176 the defendants are to give discovery of the documents listed at p 58 of the affidavit of Kathryn French sworn 15 March 2010 as amended; (5) In SC 2010/00064562 the defendants are to give discovery of the documents listed at p 61 of the affidavit of Kathryn French sworn 15 March 2010 as amended; (6) Order made on 13 August 2009 varied; (7) Orders in accordance with SMO dated 16 April 2010; (8) Defendants to pay plaintiffs' costs of discovery notices of motion up to and including 9 April 2010, costs thereafter to be plaintiffs' costs in the cause.

CATCHWORDS:

PRACTICE AND PROCEDURE - discovery of documents

PARTIES:

2009/00287922
Sino Synergy Investment Company Ltd (plaintiff)
Maygood Australia Pty Ltd (first defendant)
Yehan Koo (second defendant)

2010/00064562
Limei Wang Lee (plaintiff)
Yi-Fawn Lee (plaintiff)
Yehan Koo (first defendant)
Hock Yeow Koo (second defendant)
Ngai Geen Koo (third defendant)

2010/00064176
Yi-Fawn Lee (plaintiff)
Yehan Koo (first defendant)
Hock Yeow Koo (second defendant)
Ngai Geen Koo (third defendant)

FILE NUMBER(S):

SC 2009/00287922; 2010/00064562; 2010/00064176

COUNSEL:

Mr A Spencer (plaintiffs)
Mr M Aldridge SC with Ms F Sinclair (defendants)

SOLICITORS:

Holding Redlich (plaintiffs)
D C Balog & Associates (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BISCOE AJ

16 April 2010

2009/00287922 SINO SYNERGY INVESTMENT COMPANY LTD v MAYGOOD AUSTRALIA PTY LTD & ANOR

2010/00064562 LIMEI WANG LEE V YEHAN KOO & ORS

2010/00064176 YI-FAWN LEE V YEHAN KOO & ORS

EX TEMPORE JUDGMENT

1 HIS HONOUR: These three closely related proceedings are bogged down in discovery disputes, which are now before the Court for resolution.

2 The plaintiffs are members of the Lee family who reside abroad and their foreign company, Sino Synergy Investment Company Ltd. The defendants are members of the Koo family and their company, Maygood Australia Pty Ltd. The families are linked by the marriage of their children.

3 All three proceedings are broadly concerned with advances made by the plaintiffs to the defendants. The first proceeding was commenced in the Supreme Court by Sino Synergy Investment Company Ltd against Maygood Australia Pty Ltd and Yehan Koo (the original Supreme Court proceeding). The plaintiff pleads that it made an advance of $1 million to purchase a property. The defendants plead that it was a gift and otherwise dispute the alleged loan agreement. The other two proceedings by members of the Lee family against members of the Koo family were commenced in the District Court (Nos 4534 and 4536 of 2008) and were recently transferred to the Supreme Court (the former District Court proceedings). The plaintiffs plead advances of, respectively, $200,000 and $100,000. The defendants plead that they were not loans but funds repatriated from abroad owned by a member of the Koo family or jointly by members of both families. In the case of the $200,000 advance, the defendants plead that it is part of the proceeds of presents given upon the engagement in 2004 and wedding in 2005 of members of the two families, for which they also cross claim.

4 Three notices of motion concerning discovery are before the Court:

(a) in the original Supreme Court proceeding there is a notice of motion filed on 11 March 2010 by the plaintiff for an order that the time for the defendants to comply with a consent order for discovery made on 13 August 2009 be extended until 7 April 2010. The defendants have not complied with that order;
(b) in the same proceeding there is a notice of motion filed on 17 March 2010 by the defendants that (i) the orders for discovery made on 13 August 2009 and 26 October 2009 be vacated, and (ii) the parties be directed to serve verified lists of documents responding to such categories as are nominated by the Court. At the hearing the defendants abandoned the first prayer;
(c) in former District Court proceeding 4534 of 2008 there is a notice of motion filed on 11 March 2010 by the plaintiff for an order that in both the former District Court proceedings the parties serve verified lists of documents responding to such categories as are nominated by the Court.

ORIGINAL SUPREME COURT PROCEEDING

5 In the original Supreme Court proceeding, there were discovery orders made on 13 August 2009 by consent and on 26 October 2009, with which the defendants have failed to comply. The plaintiff’s notice of motion proposes an extension of time for compliance by the defendants. The defendants’ limited response is to seek modification of the 13 August 2009 order in two respects.

6 The first relates to par 9 of the 13 August 2009 order which requires discovery of “all statements for bank accounts conducted in the name of the first defendant referred to in paragraph 8 of the Defence for the period 1 December 2006 to date”. The defendants submit that those documents should be confined to documents coming into existence up to 24 April 2009. The plaintiff accepts that limitation. Accordingly, par 9 of the 13 August 2009 order will be varied in that way.

7 Secondly, the defendants seek to delete par 16 of the 13 August 2009 order which requires discovery of “all documents including without limitation email communications, file notes, diary entries recording or evidencing or otherwise referring to or concerning the cross-collateralisation of the Chatswood properties referred to in par 11 of the Defence”. The defendants submit that these documents became irrelevant when they filed their Amended Defence on 17 March 2010 which deleted reference to the cross-collateralisation of the Chatswood properties. However, as the plaintiff points out, par 11 of the Statement of Claim pleads that in breach of contract the first defendant cross-collaterised debt of the Chatswood properties to secure the advance of further monies. The Amended Defence denies the whole of par 11. Thus, in my view, the matter of cross-collateralisation is in issue and the documents related to that subject matter are discoverable. I will deal with the matter by amending par 16 of the 13 August 2009 order slightly by deleting the word “Defence” at the end and substituting the words “Statement of Claim”.

8 For these reasons, I order that the order made on 13 August 2009 be varied in par 9 by deleting the word “date” and substituting “24 April 2009” and in par 16 by deleting the word “Defence” and substituting “Statement of Claim”.

9 During the hearing, the parties reached agreement on further categories of discovery by the plaintiff in accordance with the document that has been marked MFI-1. Accordingly, I order the plaintiff to give discovery in accordance with the document marked MFI-1 on 16 June 2010.

THE FORMER DISTRICT COURT PROCEEDINGS

10 The categories of discovery sought by the plaintiffs from the defendants in the former District Court proceedings are listed at pp 58 and 61 of the affidavit of Kathryn French sworn on 15 March 2010.

11 Dealing first with the list at p 58 of that affidavit relating to former District Court proceeding 4534 of 2008, the defendants object to categories 7, 8, 9, 13, 14, 16, 17, 18 and 19 on the ground that they are irrelevant. The plaintiff says that they relate to an issue of whether the advance made by the plaintiff was a loan or, as the defendants say, a gift. More particularly, the plaintiff says that categories 7, 8, 9, 13 and 14 relate to issues raised in the defendants’ case in the affidavit of Hock Yeow Koo of 18 September 2009 at [24]–[37] and [31]. That evidence appears to be to the effect that the defendants had no need of a loan because their financial position was sound. Mr Koo deposed that a property was bought in 2005 solely with funds injected into Maygood Australia Pty Ltd from Maygood Pty Ltd as trustee for a Koo family trust. He says that with the injection of collateral and capital assets put in by Maygood Pty Ltd, Maygood Australia Pty Ltd had no need to borrow from anyone except its bank.

12 The defendants have suggested in argument that there may be some misunderstanding of what Mr Koo intended to say. However, I consider that, for the purposes of resolving this discovery issue, Mr Koo’s affidavit has made relevant most of the disputed documents. In my view, the documents in categories 7, 8, 9, 13, 17, 18 and 19 should be discovered.

13 Category 14 is too wide in point of time in calling for discovery of all filed or draft taxation returns of Maygood Australia Pty Ltd for the financial years 30 June 2005 to 30 June 2009. That was virtually conceded in argument by the plaintiffs in relation to the financial years 2005 and 2006. The documents in category 14 should be discovered with the exception of those relating to the financial years 30 June 2005 and 30 June 2006.

14 In my view, category 16 is objectionable in calling for all copies of all trust deeds of which either Maygood Australia Pty Ltd or Maygood Pty Ltd are or have been trustees. The plaintiffs have nothing to say in support of that category. Accordingly, the defendants are not required to discover the documents in category 16.

15 The categories of discovery sought by the plaintiff from the defendants in the other former District Court proceeding 4536 of 2008 are listed at p 61 of the affidavit of Ms French. The disputed categories are 13 and 15 which are in the same terms as disputed categories 14 and 16 at p 58 that I have just addressed in relation to the other former District Court proceeding. The rulings that I just made in relation to the latter apply equally to the former.

16 For these reasons, I make the following orders:

(a) in former District Court proceeding 4534 of 2008 the defendants are to give discovery of the documents listed at p 58 of the affidavit of Kathryn French sworn on 15 March 2010 subject to the deletion in paragraph 14 of the references to 30 June 2005 and 30 June 2006 and with the deletion of paragraph 16;
(b) in former District Court proceeding 4536 of 2008, the defendants are to give discovery of the documents listed at p 61 of the affidavit of Kathryn French sworn on 15 March 2010 subject to the deletion in paragraph 13 of the reference to 30 June 2005 and 30 June 2006 and the deletion of paragraph 15.

17 In former District Court proceeding 4536/08 the parties reached agreement during the hearing that the plaintiff will give discovery as indicated in a document that has been marked MFI-2, except that they did not agree in relation to categories 13(k) and (l) and 14(j) and 14(k) in MFI-2. The dispute concerns the period for which those documents, which relate to bank accounts, should be discovered. Category 13 in its introductory words requires production of all documents listed thereunder for the period October 2004 to July 2008. The plaintiff seeks to limit 13(k) to the period July 2007 to July 2008 and to limit 13(l) to the period July 2007 to November 2007. Category 14, in its introductory words, requires all the documents listed thereunder to be discovered for the period October 2004 to 27 December 2007. The plaintiff seeks to limit 14(j) to the period July 2007 to July 2008 and 14(k) to the period July 2007 to November 2007.

18 Categories 13(l) and 14(k) in MFI-2 both relate to the same bank account, being HSBC Premier Account SHH Centre Sub Branch Customer No XXX-XXXXX X. The plaintiff contends that discovery concerning that account should be limited to the period July 2007 to November 2007 because that is the only relevant period arising under Further Amended Defence paragraph 5A particular (iv), which states:

“The Plaintiff had control of the First Defendant’s Shanghai account and made the transfers from this account on about September/October 2007 into her personal account No xxx-xxxxxx.”

19 The defendants’ response is to the effect that the three proceedings are enmeshed such that the defendants are justified in going back to 2004 when seeking discovery relating to the plaintiff’s bank accounts. That is said to be because of an issue raised by the defendants in one of the proceedings that in 2004 engagement presents comprising money and other valuable property became the property of a defendant or property jointly of a plaintiff and a defendant who had become engaged, that their proceeds were kept in a bank account or accounts under the control of a plaintiff, and that some of the monies advanced represent or may represent those proceeds. The defendants point to a document entitled “Money Trails” that has been annexed to an affidavit. It is a preliminary analysis of the flow of monies through various bank accounts. The plaintiff has agreed to discovery for the wider period sought by the defendants in relation to certain of those bank accounts but not the one with which I am not dealing because the plaintiff says that in the pleaded particular quoted above a discrete allegation is made which limits enquiry in relation to that bank account for the period of about September/October 2007.

20 I am persuaded by the defendant’s submission that discovery in relation to this particular bank account should not be limited in time in the way proposed by the plaintiff because of the enmeshment issue. Therefore, in the document marked MFI-2 I will strike out the dates which appear in 13(l) and 14(k) by which the plaintiff had sought to limit the period.

21 Consistently with that ruling, the parties now agree that I should also not limit paras 13(k) and 14(j) by reference to the dates inserted next to those paragraphs by the plaintiff in MFI-2. Therefore I will also strike out those dates.

22 In relation to the other former District Court proceeding 4534/08, the parties have agreed that I should similarly order the plaintiff to give discovery in accordance with a document that has been marked MFI-3. The plaintiff had sought to limit the period for that discovery in relation to two bank accounts referred to in 12(j) and (k) of MFI-3 but, as a result of the rulings that I have just made, no longer seeks to do so. Therefore, I will strike out the limiting dates which the plaintiff had inserted relating to those two categories.

23 For these reasons, I order the plaintiff to give discovery

(a) in former District Court proceeding 4536 of 2008 in accordance with the document marked MFI-2 on 16 April 2010; and
(b) in former District Court proceeding 4534 of 2008 in accordance with the document marked MFI-3 on 16 April 2010.

DIRECTIONS

24 In order to progress this matter towards a hearing, by consent I make directions in accordance with short minutes dated 16 April 2010 which I initial and place with the papers. I note that they culminate in a direction providing for the matter to be stood over for directions on 9 July 2010.

COSTS

25 Finally, I turn to the matter of the costs of the three notices of motion.

26 The plaintiffs seek costs on an indemnity basis up to and including the first day of the discovery hearing and no order as to costs thereafter. The defendants submit that costs should be in the cause or there should be no order as to costs, or some variation of that. I note that most of the first day of the hearing was taken up by the parties negotiating to settle their differences.

27 The parties are in general agreement that it is desirable for there to be some sort of global or common costs order to avoid complications that might otherwise arise on assessments of costs if I were to make different costs orders relating to each of the three notices of motion.

28 The plaintiff’s notice of motion in the original Supreme Court proceeding sought an order that the time for the defendants to comply with the order for discovery made on 13 August 2009 be extended. The defendants have not complied with the 13 August 2009 order. There was debate before me as to very limited variations of that order proposed by the defendants on which the defendants had only modest success. The plaintiff’s case for costs, if that notice of motion were the only one before me, would be established. I do not think it appropriate to order indemnity costs.

29 I turn to the costs of the defendants’ notice of motion in the original Supreme Court proceedings. The first prayer was for an order that orders for discovery made on 13 August 2009 and 26 October 2009 be vacated. It was abandoned at the hearing. The second prayer was for an order that the parties be directed to serve verified lists of documents responding to such categories as are nominated by the Court. I have made orders pursuant to the second prayer by agreement but the plaintiff complains that this could and should have been worked out at an earlier time. The defendants did not serve a list of the documents for which they sought discovery until the eve of the discovery hearing. That list was abandoned, replaced during the hearing and eventually agreement was reached. I think there is substance in the plaintiff’s complaint. The plaintiff is entitled to some sort of order for costs in its favour. Again, I do not think that the matter goes so far as to be reflected in an order for indemnity costs.

30 The third notice of motion was in one of the former District Court proceedings in which the plaintiffs sought orders in both former District Court proceedings that the parties serve verified lists of documents responding to such categories as are nominated by the Court. There were two schedules of such documents in an affidavit of Katherine Rebecca French sworn on 15 March 2010 and read in the plaintiff’s case. It appears that no objection was articulated by the defendants to those proposed schedules until the eve of the hearing. The plaintiffs were very largely successful in obtaining the discovery that they sought. I think that the plaintiffs are entitled to an order for costs, but not indemnity costs.

31 I make an identical order in relation to each notice of motion that the defendants pay the plaintiff’s costs up to and including 9 April 2010, and that the costs thereafter be the plaintiff’s costs in the cause.

ORDERS

32 The orders that I have made are set out at [8], [9], [16], [23], [24] and [31] above.