Sun v Chen
[2019] WASC 79
•22 MARCH 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SUN -v- CHEN [2019] WASC 79
CORAM: ALLANSON J
HEARD: 15 FEBRUARY 2019
DELIVERED : 22 MARCH 2019
FILE NO/S: CIV 2832 of 2017
BETWEEN: WEI MIN SUN
First Plaintiff
SUNSHINE LIGHT PROPERTY PTY LTD
Second Plaintiff
AND
HUI MIN CHEN
First Defendant
HUAFANG JIANG
Second Defendant
Catchwords:
Practice and procedure - Strike out application - Whether proceedings give rise to a cause of action - Whether pleadings likely to prejudice, embarrass or delay a fair trial
Practice and procedure - Abuse of process - Estoppel - Where proceedings brought after settlement of earlier action
Legislation:
Rules of the Supreme Court 1971 (WA), O 20 r 19(1)(a), O 20 r 19(1)(c)
Result:
Application allowed in part
Statement of claim struck out in part
Claim dismissed in part
Category: B
Representation:
Counsel:
| First Plaintiff | : | S K Shepherd |
| Second Plaintiff | : | S K Shepherd |
| First Defendant | : | J Taylor |
| Second Defendant | : | J Taylor |
Solicitors:
| First Plaintiff | : | Forbes Kirby |
| Second Plaintiff | : | Forbes Kirby |
| First Defendant | : | Chan Galic |
| Second Defendant | : | Chan Galic |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502
DM Drainage and Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170
Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486
Gould v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490
Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998) 8 - 9
In re South American and Mexican Company; Ex parte Bank of England [1895] 1 Ch 37
Isaacs v The Ocean Accident and Guarantee Corporation Ltd & Winslett [1958] SR (NSW) 69
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75
Makhoul v Barnes (1995) 60 FCR 572
Mutual Life & Citizens' Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628
Nyoni v Patterson [2012] WASCA 171
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93
Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507
ALLANSON J:
These proceedings follow the breakdown of a lengthy social and business relationship between the first plaintiff, Wei Min Sun, and the first defendant, Hui Min Chen.
Mr Sun is a director of the second plaintiff, Sunshine Light Property Pty Ltd.
Mr Chen and Huafang Jiang are a married couple. They own land and other property in Western Australia. Although they have permanent resident status, they are citizens of the People's Republic of China and Mr Chen spends most of his time in China.[1]
[1] Affidavit of Mr Chen sworn 28 May 2018 translated by Chen Gu 28 May 2018 [5].
In these reasons I will refer to Mr Sun and Sunshine Light Property individually by name, and collectively as the plaintiffs. Similarly, I will refer to Mr Chen and Ms Jiang individually by name, and collectively as the defendants.
I am to determine two applications. The plaintiffs seek a freezing order, restraining the defendants from removing property from the jurisdiction. The defendants apply to strike out part of the statement of claim.
Where it relates to the Australian assets of a non-resident, a freezing order will normally be framed to restrict dealings up to the amount required to meet the plaintiff's claims. The strike out application, if successful, will affect the value of the plaintiffs' claims. With the concurrence of the parties, the application for the freezing order has been adjourned until the court has determined the strike out application.
Overview
An earlier action between Mr Chen (as plaintiff), the present defendants and Shan Su Xiang (as defendants) was resolved by settlement in April 2017.[2]
[2] CIV 2903 of 2016.
Two other actions between Mr Sun and Mr Chen (and others) are proceeding.[3] One of those actions, CIV 1418 of 2018, relates to a caveat lodged by Mr Sun over the property of Mr Chen, and may ultimately be relevant to the application by Mr Sun for a freezing order over that property.
[3] CIV 2498 of 2017 and CIV 1418 of 2018.
The plaintiffs commenced this action by writ filed 27 October 2017. The claim was originally made by Mr Sun and Sunshine Light against Mr Chen only. The plaintiffs claimed:
(1)the sum of $906,846.98 and interest at 10% per annum due under a promissory note made by Mr Chen dated 13 March 2017, payable to Mr Sun, which was presented to Mr Chen for payment on 28 August 2017 but remains unpaid; and
(2)the sum of $4,696,178.75 and interest at 9% per annum as loss and damage and/or restitution on account of Mr Chen's breach of contract and fiduciary duties in relation to a land development in Cannington in the period between 2011 and 2017;
(3)an amount of $1,200,000 owing to Mr Sun for moneys he advanced by way of bank cheques between 1 September 2011 and 30 August 2014 made payable to Crown Perth and or Burswood Nominees Ltd for the benefit of Mr Chen.
On 19 December 2017, the plaintiffs filed an amended writ in which Ms Jiang was added as the second defendant. The claim regarding the loan of $906,846.98 now alleged the money was loaned to both defendants between 2012 and 2016 and was secured by a promissory note made by Mr Chen, dated 13 March 2017, in favour of Mr Sun. The claim regarding the loan of $1,200,000 was, in substance, unchanged. The plaintiffs further claimed that the defendants used some or all of the loans to purchase properties in Mosman Park and Burswood. The plaintiffs seek relief including a declaration that the defendants hold those properties on resulting trust for the benefit of Mr Sun.
The plaintiffs filed a writ and statement of claim on 2 May 2018, pleading claims against both defendants. No point has been made regarding the relationship between the statement of claim and the indorsement on the writ. But it appears that:
(1)Mr Sun no longer claims relief on a promissory note;[4]
(2)the claim for $1,200,000 is not pursued; and
(3)the first plaintiff brings a new claim regarding an advance of $300,000 to the defendants in July 2013.[5]
[4] The plaintiffs plead only a signed acknowledgement of debt, statement of claim [40].
[5] Statement of claim [8] ‑ [13].
The plaintiffs' claims can be considered in three groups:
(1)Mr Sun says that he advanced $300,000 to the defendants to assist them to purchase a property in Burswood;
(2)Sunshine Light Property claims damages against Mr Chen relating to the land development in Cannington; and
(3)Mr Sun claims further loans that he made to both defendants.
In a section of the statement of claim headed 'Background', the plaintiffs plead that Mr Sun has 'from time to time lent the defendants substantial sums of money'.[6] The particulars of that plea allege the sums 'include but are not limited to' 13 amounts between September 2011 and August 2014, totalling $2,380,000.[7]
[6] Statement of claim [7].
[7] Further and better particulars [1(a)].
The Burswood Property advance
The plaintiffs plead that, in or about July 2013, Mr Sun advanced $300,000 to the defendants 'to be paid to the vendor of the Burswood Property as a deposit'.[8]
[8] Statement of claim [9].
The plaintiffs plead that Mr Sun agreed with Mr Chen (on his own behalf and also on behalf of Ms Jiang) that if the defendants were unable to repay him, Mr Sun 'would take the Burswood property for himself'.[9]
[9] Statement of claim [9.3].
While the plaintiffs allege that Mr Chen acted on his own behalf and on behalf of Ms Jiang,[10] they plead no material facts upon which that conclusion is based.
[10] Statement of claim [8], [9].
The plea against Ms Jiang was the subject of a request for further and better particulars. The particulars were provided by email, dated 6 August 2018, and filed on 30 January 2019. The plaintiffs stated that, 'on 10 March 2015, Mr Chen signed an acknowledgment of debt which acknowledged a sum of $141,000 said to be salary which was money paid to or for the benefit of [Ms Jiang]';[11] and that Mr Chen used the money paid to him 'for the use or to the benefit of' both defendants.[12]
[11] Further and better particulars of statement of claim [2(a)].
[12] Further and better particulars [2] - [3].
Other than a challenge to the relief claimed against Ms Jiang, the pleading of the Burswood Property advance is not challenged in this application.
The Cannington Development
Sunshine Light Property brings this claim against the first defendant only.
The statement of claim pleads that, in about July 2013, Mr Sun had a property development opportunity for the construction of apartments in Cannington, Western Australia.[13]
[13] Statement of claim [15].
The Cannington Development was to be undertaken by Sunshine Light Property.[14]
[14] Statement of claim [16].
The plaintiffs plead the 'Cannington Development Agreement' was made in about July 2013 in conversations between Mr Sun, Mr Chen and Mr Xiang. They plead that it was agreed:
1.Mr Sun, Mr Chen and Mr Xiang would together undertake the Cannington Development;
2.the construction of the Cannington Development and the subsequent sale of apartments would be conducted by Sunshine Light Property;
3.Mr Sun and Mr Chen would each contribute AUD$5,000,000 to Sunshine Light Property and be issued 40% of its share capital;
4.Mr Xiang would contribute AUD$2,500,000 and be issued 20% of the share capital;
5.the contributions were payable in instalments, on demand, as construction progressed;
6.Mr Sun, Mr Chen and Mr Xiang would each be appointed a director of the second plaintiff; and
7.upon completion of the Cannington Development and sale of the apartments, profit from the Cannington Development would be distributed to Mr Sun, Mr Chen and Mr Xiang in proportion to their shareholdings.[15]
[15] Statement of claim [18].
On 12 July 2014, Sunshine Light Property was registered pursuant to the Corporations Act 2001 (Cth). Shares in the company were issued to Mr Chen, and he was appointed a director.[16]
[16] Statement of claim [19].
The plaintiffs plead that Mr Chen breached the Cannington Development Agreement by failing to pay construction funds to Sunshine Light Property as required.[17] They allege that Mr Chen made payments between 21 October 2013 and 10 February 2015, but that each payment was late and caused delay in the construction.[18]
[17] Statement of claim [24].
[18] Statement of claim [25] ‑ [26].
The plaintiffs further claim that on 27 February 2015, Mr Chen emailed the National Australia Bank and caused it to stop further approvals for drawdowns on Sunshine Light Property's facility with the bank. This caused delay to the Cannington Development.[19]
[19] Statement of claim [28] ‑ [29].
The plaintiffs allege that, in breach of the Cannington Development Agreement and his duties as director to Sunshine Light Property:
(1)Mr Chen did not make further payments after 26 February 2015 and refused to continue with the Cannington Development; and
(2)in about early 2015, Mr Chen demanded repayment of his investment and payment of a profit share prior to the completion of the development.[20]
[20] Statement of claim [34].
On 18 March 2015, Mr Sun, Mr Chen and Mr Xiang made a Deed of Acknowledgement of Debt.[21] The plaintiffs plead that, in about October or November 2015, in breach of the Deed, Mr Chen registered caveats over the individual apartments in the Cannington Development, causing detriment to the Cannington Development.[22] The plaintiffs claim that 12 presale contracts were lost, settlement of other apartments was delayed, and the second plaintiff lost the opportunity to promote further sales. Sunshine Light Property claims lost revenue of approximately $3.2 million and additional interest on bank finance.[23]
[21] Statement of claim [44].
[22] Statement of claim [47].
[23] Statement of claim [50].
Lending by Mr Sun to Mr Chen
The last group of claims allege further lending by Mr Sun to the defendants.
First, Mr Sun alleges that before 10 March 2015, he paid a total of $708,138 in loans to the defendants or to their benefit. This sum included a payment to Mr Chen of HK$1,600,000 and a payment to a third party 'to the benefit of' Mr Chen and Ms Jiang in the sum of HK$2,215,670.[24]
[24] Statement of claim [36].
The plaintiffs do not plead the terms of any loan agreement. And, despite the precision of the amount claimed, the payments are not particularised.
In further and better particulars, the plaintiffs say:
(1)the loans were made pursuant to oral agreements between 2011 and 2015 'and admitted by [Mr Chen] in the Borrowing Note dated March 2015';
(2)the loans were made pursuant to verbal requests by Mr Chen to Mr Sun on numerous dates which he cannot recall;
(3)the loans were evidenced in writing by cheques and bank cheques 'paid to the defendants or for their use' and by the Borrowing Note; and
(4)the loans were made as a running account on which the defendants made part repayments from time to time.[25]
[25] Further and better particulars [11].
Again, while the plaintiffs allege that the payments were made to Mr Chen on behalf of Ms Jiang, they plead no material facts relating to any actual or apparent authorisation of Mr Chen to act on her behalf.
In March 2015, Mr Sun demanded repayment from Mr Chen.[26]
[26] Statement of claim [37] ‑ [38].
The plaintiffs plead that, on or about 10 March 2015, Mr Chen acknowledged a debt of $141,000.00, and a debt of HK$3,815,670.00, and requested forbearance until payment was made to the first defendant from the Cannington Development.[27]
[27] Statement of claim [39].
The plaintiffs plead that Mr Chen delivered a signed acknowledgement, and on 24 March 2015 paid HK$510,000 (AUD$94,649.52) that Mr Sun credited against the outstanding debt.[28]
[28] Statement of claim [41].
The plaintiffs plead further loans to Mr Chen (acting on his own behalf and on behalf of Ms Jiang):
1)$50,000 in cash paid to Ms Jiang in or about September 2016
2)$700,000 delivered by cheque to Mr Chen on 13 March 2017.
In the prayer for relief, the plaintiffs claim:
A.As to the second plaintiff's claim against the first defendant:
(i).damages in the sum of $4,696,178.75;
(ii).interest on the sum at the rate of 9% per annum
B.As to the first plaintiff’s claim against the first and second defendants:
(i).a declaration that the first defendant has a beneficial interest in the Burswood property; or
(ii).alternatively:
1.the sum of $300,000; and
2.interest on the sum of $300,000 from August 2013 until judgment or payment;
(iii).the sum of $906,846.98; and
(iv).interest on the sum of $906,846.98 at the rate of 10% per annum, calculated monthly.
When counsel for the plaintiffs was asked to relate the amount claimed in the prayer for relief ($906,846.98)[29] to the loans pleaded, he did so solely by reference to the amounts set out in pars 39 ‑ 41, and accumulated interest.
[29] There is a discrepancy between the pleading filed and the pleading served on the defendants as to the amount. It must be corrected but is not material to the present application.
The defendant's application
By chamber summons filed 6 November 2018, the defendants seek orders that:
1.Paragraphs 36-41 and 52-57 inclusive of the Amended Statement of Claim, paragraph B(iii) of the relief claimed, and the further particulars provided to those paragraphs on 11 May 2018 (Particulars), paragraphs 11 and 12, be struck out.
2.Paragraphs 36, 37, 39, 53, 54, 55 and 56 of the Amended Statement of Claim, and paragraph B of the relief claimed, and paragraphs 2(a), 11 and 12 of the Particulars, be struck out insofar as those paragraphs and particulars refer to the second defendant.
4.Paragraphs 14-35 and 42-51 inclusive of the Amended Statement of Claim and paragraph A of the relief claimed be struck out, or alternatively dismissed. [30]
[30] Chamber summons 6 November 2018.
The first two orders are sought pursuant to the Rules of the Supreme Court 1971 (WA) O 20 r 19(1)(a) or (c). The defendants allege that the pleading of the loans is too vague and ambiguous to disclose any reasonable cause of action which would enable the defendants to know the case they have to meet, and is likely to prejudice, embarrass or delay the fair trial of the action. Specifically, the defendants allege:
(a)the plea fails to disclose the amounts said to have been advanced and when the payments were made;
(b) the plea and the particulars are inconsistent. [31]
[31] Chamber summons 6 November 2018.
The defendants contend that the plaintiffs' pleadings should unambiguously set out the amounts loaned, the dates of any advance(s) by reference to those amounts, the full name or names of the party to whom the money was advanced, the dates and amounts of any repayments which have been made, and the terms of any loan agreement relied upon (if any).
Principles
The adequacy of pleadings is considered in the context of case management techniques, including, the pre‑trial exchange of witness statements if they are to be used. But that approach does not deny the need for a statement of claim to state the material facts to support the claim for relief, and for the pleadings to define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court.[32] Pleadings ensure a basic requirement of procedural fairness, and, to do so, must state the case sufficiently clearly to allow the other party a fair opportunity to meet it.[33]
[32] See Nyoni v Patterson [2012] WASCA 171 [36] - [38].
[33] Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286 - 287; Gould v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490, 517; Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 [26].
On an allegation that the plea fails to disclose a reasonable cause of action, 'reasonable' means reasonable according to law. The question is whether it would be open to the plaintiffs, on the pleadings, to prove facts at the trial which would constitute a cause of action.[34] If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable.[35]
[34] Mutual Life & Citizens' Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628, 631.
[35] Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54].
Pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action:
because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general.[36]
Paragraphs 14 - 35 and 42 - 51
[36] Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998), 8 - 9; DM Drainage and Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170 [34].
The challenges to pars 14 ‑ 35 and 42 ‑ 51 are fundamental. The defendants allege an abuse of process, and also that Mr Chen has a good defence. The defendants say:
(a)Those claims were raised, or ought properly to have been raised, in proceedings CIV 2903 of 2016;
(b)In Chen v Sunshine Light Property Pty Ltd [2017] WASC 14, Tottle J found that the first defendant had a proprietary interest in the land at the Cannington Development, as soon as the Acknowledgement of Debt was executed, he had a 'strong claim', and the first defendant's caveats should be extended: [24], [36], [38];
(c)The parties subsequently settled their dispute with regard to the Cannington Development, and by consent proceedings CIV 2903 of 2016 were dismissed with no order as to costs on 11 April 2017;
(d)The parties agreed settlement would be a full and final settlement of all matters between the parties and further that the first defendant would not be liable for any other payments whatsoever in respect of the Cannington Development; and
(e)The plaintiffs are precluded by reason of res judicata, Anshun or issue estoppel from bringing these claims, or alternatively it is an abuse of process from them to do so. [37]
[37] Chamber summons 6 November 2018.
It is, accordingly, necessary to consider the proceedings in CIV 2903 of 2016 in more detail.
The 2016 proceedings
In November 2016, Mr Chen brought an action against Sunshine Light Property, Mr Sun and Mr Xing, in relation to the Cannington Development, and the Deed of Acknowledgement of Debt.
Mr Chen claimed interlocutory relief including the extension of a caveat over property in the Cannington Development, and an injunction restraining Sunshine Light Property from applying the proceeds of sale of the property for purposes other than repayment of the bank loan or payment to Mr Chen of amounts owing. He also claimed final relief including the provision of a mortgage in registrable form over the property of the development for repayment of the amount of $7,050,000; a declaration that he was entitled to lodge for registration a second mortgage to secure payment of that sum; an order appointing a receiver to the proceeds of sale of the property; and an order restraining the defendants from advancing any funds of Sunshine Light Property to Sunlong Constructions Pty Ltd or any company or entity owned and operated by the defendants until Sunshine Light Property had paid Mr Chen amounts owing to him.
By counterclaim, Sunshine Light Property alleged that Mr Chen was not entitled to maintain his caveat, and that he had acted in a manner that caused detriment, delay and interference with the development of the land. Specifically, it pleaded:
(1)the Acknowledgement of Debt on which Mr Chen relied is, in part, void for uncertainty;[38]
(2)the unregistered second mortgage was only to be provided by Sunshine Light Property following a default under the Acknowledgement of Debt;[39]
(3)a denial that the plaintiff was entitled to lodge, or alternatively to maintain, a caveat over the property;[40]
(4)by lodging the caveat, Mr Chen had, in breach of the Acknowledgement of Debt, acted in a manner that caused detriment, delay and interference with the development of the land;[41]
(5)Sunshine Light Property was entitled to terminate the Acknowledgement of Debt;[42] and
(6)by reason of Mr Chen's breach of the Acknowledgement of Debt, Sunshine Light Property had suffered loss and damage.[43]
[38] Defence and counterclaim [13], [16].
[39] Defence and counterclaim [13], [16].
[40] Defence and counterclaim [27]; [32].
[41] Defence and counterclaim [33].
[42] Defence and counterclaim [34].
[43] Defence and counterclaim [35].
Sunshine Light Property claimed relief including the removal of Mr Chen's caveat, a declaration that Mr Chen caused detriment, delay and/or interference with the development of the land, a declaration that it was entitled to terminate the Acknowledgement of Debt, and damages.[44]
[44] Defence and counterclaim [39.2], [39.8].
On 13 February 2017, Tottle J gave judgment on the application by Mr Chen extending the caveat over the Cannington land and granting other interlocutory relief. Relevantly, Mr Chen gave an undertaking that on the provision of specified information at least 72 hours prior to settlement in relation to any unit for sale in the property he would provide a withdrawal of caveat over that unit.
It is not disputed that following Tottle J's decision, the parties met regarding the proceedings CIV 2903 of 2016 and reached agreement to settle the action.
Mr Sun states that he attended with his then solicitor, and, following the meeting, his solicitor confirmed the terms of the agreement reached. The confirmation of the agreement was by an exchange of letters on 12, 16 and 22 March 2017. Relevantly, by the letters of 16 and 22 March, the parties agreed that settlement 'will be a full and final settlement of all matters between the parties and further that our client will not be liable for any other payments whatsoever in respect of this matter'.[45]
[45] Affidavit of Seng Fai Chan, sworn 6 November 2018 [127], [128].
On 11 April 2017, Tottle J made orders by consent, 'that all matters in the proceeding CIV 2903 of 2016 whether by original action or counterclaim be dismissed with no orders as to costs'.
Mr Sun now says that there was no agreement in the terms set out in the letters, and that his then solicitors did not show him the letter of 22 March 2017 which confirmed that agreement. He does not, however, dispute that Zaffra Legal were his solicitors acting for him in relation to those proceedings.
With that background, I return to the challenge to those parts of the plaintiffs' claim in this action, seeking damages arising from the Cannington Development.
Res judicata and issue estoppel
In written submissions, counsel for the defendants assert that the claims for damages in pars 47 – 50 of the statement of claim relate to matters pleaded in the 2016 proceedings.[46] In the statement of claim at pars 47 ‑ 50, Mr Sun and Sunshine Light Property allege:
[46] Defence and counterclaim [32] ‑ [35], [39.2], [39.8].
In or about late October or November 2015, in breach of the terms of the Deed of Acknowledgement of Debt, the first defendant registered caveats over each of the individual apartments comprising the Cannington Development.
The registration of caveats over the individual apartments comprising the Cannington Development was conduct that caused detriment to the Cannington Development.
As a consequence of the second defendant's conduct in registering caveats over individual Apartments in the Cannington development:
49.112 presale contracts for the sale of individual apartments were lost; and
49.2of individual apartments in the development were otherwise delayed; and
49.3opportunity to promote further sales was lost to the second plaintiff.
As a consequence of the conduct of the first defendant in breach of the Cannington Development Agreement and the Deed of Acknowledgement of Debt, the second plaintiff has suffered loss and damage including:
50.1lost revenue on sales (including interest) in the sum of $3,232,050.00;
50.2additional interest incurred on bank finance obtained by the second defendant in the sum of $135,000.00.
I agree with the defendants' submission. The cause of action in these paragraphs is materially the same as that pleaded in pars 32 ‑ 35, 39.2 and 39.8 of the counterclaim in the 2016 proceedings, and has been determined by the judgment in that matter dismissing the counterclaim.
I also accept that the defendants may rely on res judicata. A consent judgment may support a plea of res judicata.[47] A consent judgment may also found an issue estoppel, so long as one can ascertain what issues have necessarily been determined and disposed of by the judgment.[48] I would uphold the submission that the plaintiffs are estopped from raising in this action those issues which were finalised by the consent judgment in 2016. By reference to the pleadings in each action, the plaintiffs cannot advance the matters pleaded in pars 47 ‑ 50.
Anshun estoppel and abuse of process
[47] Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502, 508.
[48] In re South American and Mexican Company; Ex parte Bank of England [1895] 1 Ch 37, 50; Isaacs v The Ocean Accident and Guarantee Corporation Ltd & Winslett [1958] SR (NSW) 69, 75; Makhoul v Barnes (1995) 60 FCR 572, 582.
The defendants have also identified those parts of the present claim for which the defendants say a defence of Anshun estoppel would apply (the damages claimed in the statement of claim pars 24 ‑ 26, 27 ‑ 32, and 50).
In my opinion, it is unnecessary in the present case to consider Anshun estoppel, as the principles relating to abuse of process are sufficient to resolve the matter.
The concept of abuse of process requires some misuse of the process of the court in a manner that has been variously described as seriously and unfairly burdensome, prejudicial or damaging, or in some way such as to bring the administration of justice into disrepute. While not intended to be limiting, there are accepted categories of abuse of process, including multiple or successive proceedings which cause or are likely to cause improper vexation or oppression. In Tomlinson v Ramsey Food Processing Pty Ltd, French CJ, Bell, Gageler and Keane JJ said:
... it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.
Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. Putting in issue the fact of an agreement, when you have consented to judgment on that agreement in other proceedings, is not bound by an estoppel.
Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel …[49]
[49] Tomlinson v Ramsey Food Processing Pty Ltd[2015] HCA 28; (2015) 256 CLR 507, 519 [24] ‑ [26] (citations omitted). See also Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75 [27]; Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93 [8].
In Sheraz Pty Ltd v Vegas Enterprises Pty Ltd, Buss JA said:
First, a court has inherent or implied power to prevent misuse of its procedures in a manner which, although not inconsistent with the literal application of its procedural rules, would nevertheless be 'manifestly unfair to a party to litigation … or would otherwise bring the administration of justice into disrepute among right-thinking people'. Secondly, abuse of process extends to proceedings that are 'seriously and unfairly burdensome, prejudicial or damaging' or 'productive of serious and unjustified trouble and harassment'. Thirdly, the categories of abuse of process are not closed, and a court may exercise its power in relation to an abuse of process 'as and when the administration of justice demands'. Fourthly, the categories of conduct which have attracted the intervention of the courts on the ground of abuse of process have included successive proceedings which cause or are likely to cause 'improper vexation or oppression'.[50]
[50] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [8] (citations omitted).
I accept the plaintiffs' submission that the earlier proceedings did not result in a long and expensive trial but settled by consent after the resolution in favour of Mr Chen, of the application to extend the caveat. That consideration, however, is outweighed by the following matters, which have led me to the conclusion that the bringing of this action (to the extent that it relates to the Cannington Development), is an oppressive use of court process within the principles set out above.
First, this action was commenced only 6.5 months after the earlier claim was settled.
Second, the earlier settlement was by consent judgment which dismissed both the claim and the counterclaim.
Third, the consent judgment followed an agreement, made in March 2017, that Mr Chen was entitled to a gross amount of $7,050,000 from Sunshine Light Property, and a net amount less the proceeds of the sale of certain lots and Mr Chen's GST obligations. Having settled the earlier proceedings by the payment of an agreed sum to Mr Chen, Sunshine Light Property now seeks to claw back $4,696,178.75 as damages.
Fourth, the issues in the 2016 proceedings are similar to those in the present action. In particular, Sunshine Light Property brought a claim for damages against Mr Chen in relation to loss occasioned by the delay he was alleged to have caused to the Cannington Development. If there were other claims for damages by Sunshine Light against Mr Chen in relation to the Cannington Development, they should have been brought in that action. It is unreasonable of Sunshine Light Property to now advance those claims when it did not put them forward as part of its counterclaim.
Fifth, in March 2017, Mr Sun and Mr Chen made a further loan agreement, pursuant to which Mr Chen was to repay Mr Sun upon receipt of the funds from Sunshine Light Property in relation to the Cannington Development.
Finally, Sunshine Light Property agreed to a settlement by which the claim and counterclaim in the 2016 proceedings were dismissed, with each party bearing their own costs. The settlement was expressed to be a full and final settlement of all matters between the parties 'and further that [Mr Chen] will not be liable for any other payments whatsoever in respect of this matter'.
Having regard to all of those matters I believe the present claim by Sunshine Light Property to be a misuse of the process of the court. I would, normally, permanently stay the claim. In the present matter, however, I believe the correct course is to dismiss the claim.
I follow that course because the settlement agreement is also a good defence to the claims brought by Sunshine Light Property regarding amounts claimed to be owing in relation to the Cannington Development. Counsel for the plaintiff submitted that the defence depended upon proper construction of the March letters and, in effect, the court should not resolve a disputed question of construction. He was, however, unable to offer an alternative reasonable construction of the agreement that the settlement was to be a full and final settlement of all matters between the parties. The settlement must include the claims between Sunshine Light Property and Mr Chen arising out of the Cannington Development.
The power to dispose of proceedings summarily should be exercised with caution. The plaintiffs should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory processes, if there is a high degree of certainty about what the outcome would be should this matter go to trial.[51]
[51] See Agar v Hyde[2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].
In this instance, I have that degree of certainty. The claims in pars 14 ‑ 35 should be struck out, with no leave to re‑plead, and the second plaintiff's claim should be dismissed
Paragraphs 36 ‑ 41, 52 ‑ 57
In the course of submissions, it became apparent that the plaintiff's claim regarding the loans pleaded in pars 36 ‑ 41 is for a balance owing on or about 10 March 2015, acknowledged in a written acknowledgment of debt and agreement to pay interest, less an amount paid by Mr Chen on or about 24 March 2015.
I accept that there are defects in the plea in par 36, and the particulars of that plea. But, in my opinion, those defects are not material where Mr Sun is suing on the alleged agreement. I accept the plaintiffs' submission that they do not need to particularise the amounts that make up the balance of the amount owing at 10 March 2015 because the balance has been acknowledged in writing. I would not strike out pars 37 ‑ 41.
If, as I understood counsel for the plaintiffs to agree, the amount claimed in the prayer for relief relates back entirely to the plea in pars 39 ‑ 41, the matters alleged in pars 52 ‑ 57 are not relevant to any cause of action or the relief claimed (either in the writ or the statement of claim). Those paragraphs should be struck out.
Paragraphs 36 ‑ 56 - second defendant
The grounds of the application to strike out relating to the plea against Ms Jiang contend that the statement of claim and particulars do not support any allegation against her. At the hearing of the application, counsel for the plaintiffs accepted that the pleading of the claims against Ms Jiang would need to be revisited.
The plea regarding the claims against Ms Jiang is, in my opinion, insufficient. The allegations regarding Ms Jiang are statements of conclusion without any statement of the material facts on which the plaintiffs rely to support the allegation that Mr Chen was acting or speaking on his wife's behalf.
Given the plaintiffs' concession at the hearing, it is unnecessary to say more.
I would strike out the plea against Ms Jiang.
Leave to re-plead
I do not believe, at this point, that Mr Sun should be denied the opportunity to re-plead his claim based on money advanced to the defendants. I would, however, refer to my earlier comments on the indorsement of the writ.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson21 MARCH 2019
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