Tang v Yu
[2021] FCA 1126
•16 September 2021
FEDERAL COURT OF AUSTRALIA
Tang v Yu [2021] FCA 1126
File number(s): NSD 488 of 2020 Judgment of: STEWART J Date of judgment: 16 September 2021 Catchwords: PRACTICE AND PROCEDURE – application for default judgment – where respondents had been in default of multiple orders requiring the filing of a defence and providing discovery – where respondents in continuing default to provide discovery – where respondents gave no adequate explanation for defaults – where respondents self-represented – guillotine order under r 5.21(d) made Legislation: Federal Court Rules 2011 (Cth) rr 5.21, 5.22, 5.23, 20.14, 20.17 Cases cited: Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 15 Date of hearing: 16 September 2021 Counsel for the Applicant: B Parker Solicitor for the Applicant: Domantay Legal Pty Ltd Counsel for the Respondents: The respondents appeared in person ORDERS
NSD 488 of 2020 BETWEEN: GUAHUA TANG
Applicant
AND: JINYANG YU
First Respondent
OLIVER ROTHS
Second Respondent
ORDER MADE BY:
STEWART J
DATE OF ORDER:
16 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.By 5:00 pm on 24 September 2021, each respondent file and serve an affidavit deposed to by each of them fulfilling their obligations to give standard discovery in accordance with the Federal Court Rules 2011 (Cth), including listing documents that have been but are no longer in their possession or control and stating who now has possession of them, and also detailing what searches they have made for documents, including on any electronic devices within their control.
2.Pursuant to r 5.21(d) of the Rules, if either respondent is in default of Order 1, the applicant have judgment against that respondent in the sum of $700,000 plus interest from 4 May 2020.
3.Save without leave of the Court, the respondents not be permitted to adduce any evidence, whether by document or witness, at the final hearing.
4.The applicant’s evidence-in-chief at the final hearing be given by affidavit to be filed by 29 October 2021.
5.The matter be listed for final hearing on 2 February 2022 with an estimate of two days.
6.The respondents pay the costs of the interlocutory application for default judgment filed on 3 September 2021 on the solicitor and own client scale.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the transcript)STEWART J:
The applicant applies for default judgment against the respondents for the relief claimed in the statement of claim. The application is brought pursuant to rr 5.22 and 5.23 of the Federal Court Rules 2011 (Cth).
The respondents are self-represented, and have been so throughout the proceeding.
The applicant’s claims against the respondents assert, in essence, that the applicant invested $700,000 with or through the respondents on representations made by them which representations were either false or misleading and deceptive. The applicant seeks the return of the investment sum plus interest.
The basis for the application is substantial defaults by the respondents with regard to timetables that have been set from time to time in the preparation of the matter towards trial. Those defaults can be summarised as follows:
(1)On 29 July 2020, the respondents were ordered to file and serve any defence by 14 September 2020, but they failed to do so.
(2)The applicant then filed an application seeking judgment in default of the respondents filing defences. In response to that application, the respondents were ordered on 2 October 2020 to file defences by 9 October 2020. They ultimately each filed defences on 12 October 2020.
(3)On 21 January 2021, the parties were ordered to give standard discovery by serving their lists of documents by 3 March 2021. The respondents failed to do so.
(4)The applicant brought an application seeking judgment in default of compliance with the Court’s orders, the result of which was that orders were made by consent that the respondents give standard discovery on or before 5 August 2021. The respondents failed to do so.
The present application for default judgment was filed on 3 September 2021. At a case management hearing on 9 September 2021, the interlocutory application was listed for hearing today with a timetable requiring the respondents to file and serve any evidence in opposition to the application by 13 September 2021. Also, I explained to the respondents that even though they say that they have no documents in their possession or control (which I will return to), they are in default because the rules require them to file an affidavit with a list identifying what documents they previously had in their control and who has the documents now.
On 14 September 2021, the second respondent filed an affidavit. In relation to the respondents’ default in complying with orders to provide discovery the affidavit states the following:
(1)English is the first respondent’s second language and the first respondent has little litigation and courtroom experience and has never represented himself. As a result, the second respondent has been assisting the first respondent in these proceedings.
(2)The second respondent has made reasonable enquiries as to the existence and location of documents.
(3)The second respondent has made email enquiries to various people requesting documents but has not received positive responses.
In correspondence to the applicant’s solicitors, the second respondent has stated that “both defendants have nothing to discover and do not propose to file any evidence”. He has stated that “the defendants are content to progress to hearing the matter where [the applicant’s] evidence can be adequately tested”.
As mentioned, although the respondents say that they have no documents within their possession that are required to be discovered, albeit that has not been said on affidavit, r 20.14(1)(c) requires the discovery of documents not only in the discovering party’s control but also documents that have been in the party’s control. In respect of those documents, r 20.17(2)(b) requires that they be described in the list of documents with a statement of when the document was last in the party’s control and what became of it. The respondents are therefore in default of their discovery obligations even if one accepts them at their word that they have no documents in their possession and control.
The respondents have been in default of their obligations on several occasions, and remain in default of their discovery obligations even though they have had notice of this application for default judgment for a few weeks and have still not rectified their default.
The relevant principles for the exercise of the power to order a judgment in default are uncontroversial. With reference to Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 at [13] per Yates J, they include the following:
(1)The power is discretionary.
(2)The discretion must be exercised cautiously.
(3)There is no requirement that the act or acts of default are intentional or amount to contumelious conduct or that they result in inordinate or inexcusable delay.
In the exercise of my discretion I take into account that the respondents are self-represented. I also consider that it is plausible that the respondents do not have personal possession of or control over documents that they are required to discover. The pleadings identify a number of companies and the respondents’ defences say that they were only involved as agents for the companies. The respondents have presented evidence of some attempts to access documents from other parties. Equally, the applicant is in a position to subpoena such documents from other parties. The applicant has indicated that it requires discovery from the respondents in order to pursue its claim and it wishes to have orders for discovery if I am not content to give it default judgment. In that event it wishes to have orders requiring the respondents to meet their discovery obligations coupled with a self-executing order.
Taking into consideration that the respondents have committed to not inducing any evidence at the final hearing, that they do nevertheless maintain their defences and participation in the proceeding including wishing to test the applicant’s evidence, and a final hearing can be accommodated reasonably soon, I do not consider this to be an appropriate case to exercise the discretion to order default judgment. Justice will be better served by bringing the matter and as soon as possible for final hearing.
I am therefore not minded to give default judgment at this stage, although the respondents should know that if they are in further default towards trial, the grounds for the exercise of the discretion will change and I may well then be persuaded to order default judgment.
I should say also, in view of the respondents’ continuing default and delay and the consequent justification on the part of the applicant for bringing this default application, the respondents should pay the applicants costs of the application on the solicitor and own client scale.
I will make orders along the following lines:
(1)By 5:00 pm on 24 September 2021, each respondent file and serve an affidavit deposed to by each of them fulfilling their obligations to give standard discovery in accordance with the Rules, including listing documents that have been but are no longer in their possession or control and stating who now has possession of them, and also detailing what searches they have made for documents, including on any electronic devices within their control.
(2)Pursuant to r 5.21(d) of the Rules, if either respondent is in default of Order 1, the applicant have judgment against that respondent in the sum of $700,000 plus interest from 4 May 2020.
(3)Save without leave of the Court, the respondents not be permitted to adduce any evidence, whether by document or witness, at the final hearing.
(4)The respondents pay the costs of the interlocutory application for default judgment filed on 3 September 2021 on the solicitor and own client scale.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate:
Dated: 16 September 2021
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