Yao v Fang

Case [2025] QCA 86

SUPREME COURT OF QUEENSLAND

CITATION:

Yao v Fang [2025] QCA 86

PARTIES:

WENLIANG YAO (ALSO KNOWN AS WILLIAM YAO)
(first appellant)
LIANRU ZHAO
(second appellant)
NEW AUS GROUP PTY LTD
ACN 165 555 733
(third appellant)
W HOLDING GROUP PTY LTD
ACN 619 024 341
(fourth appellant)
BRISBANE VALLEY INVESTMENTS PTY LTD ACN 623 094 306 (BOTH IN ITS OWN RIGHT AND IN ITS CAPACITY AS TRUSTEE FOR THE BRISBANE VALLEY INVESTMENTS TRUST)
(fifth appellant)
v
LINA FANG
(first respondent)
NAXI AGRICULTURE INVESTMENT PTY LTD ACN 634 072 209 (AS TRUSTEE FOR THE NAXI AGRICULTURE INVESTMENT TRUST)
(second respondent)
NAXI @ TROUGHTON PTY LTD
ACN 634 070 698 (AS TRUSTEE FOR THE NAXI PROPERTY INVESTMENT TRUST)
(third respondent)
NAXI (CHINA) PTY LTD
ACN 616 666 749
(fourth respondent)
QUIYUE LI
(fifth respondent)
AIRHOME BRISBANE PTY LTD
ACN 624 970 501
(sixth respondent)
ANXIN CAPITAL PTY LTD
ACN 632 712 675
(seventh respondent)
THE COMMISSIONER OF TAXATION
(eighth respondent)

FILE NO/S:

Appeal No 1400 of 2025
SC No 13370 of 2022

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:


Supreme Court at Brisbane – [2025] QSC 46 (Hindman J)

DELIVERED ON:

30 May 2025

DELIVERED AT:

Brisbane

HEARING DATE:

19 May 2025

JUDGES:

Bond and Brown JJA and Kelly J

ORDER:

1.   The appeal is allowed, with costs.

2.   Orders 1 to 4 made by Hindman J on 1 April 2025 are set aside and in lieu thereof–

(a)      Leave is given to the Yao defendants to withdraw admissions contained in the amended defence of the Yao defendants filed 13 March 2024 (CFI 112) sufficient to permit the filing of the proposed further amended defence of the Yao defendants in materially the same form as appears at pages 104 to 213 and 295 to 305 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Yao further amended defence).

(b)     Except in relation to subparagraphs 18D(b) to (g), leave is given to the Yao defendants to file and serve the Yao further amended defence.

(c)      Leave is given to the Zhao defendants to withdraw admissions contained in the amended defence of the Zhao defendants filed 13 March 2024 (CFI 113) sufficient to permit the filing of the proposed further amended defence of the Zhao defendants in materially the same form as appears at pages 214 to 294 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Zhao further amended defence).

(d)     Except in relation to subparagraphs 18D(b) to (g), leave is given to the Zhao defendants to file and serve the Zhao further amended defence.

(e)      The Yao and Zhao defendants must pay the plaintiffs’ costs thrown away by the various amendments in respect of which leave has been given in the previous paragraphs of this order.

(f)      The plaintiffs must pay the Yao and Zhao defendants’ costs of the application of the Yao and Zhao defendants filed 25 November 2024 (CFI 238).

3.   Order 17 made by…

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Yao v Fang [2025] QCA 86
Case
[2025] QCA 86
Decision Date

CaseChat Overview and Summary

In Yao v Fang, the parties were involved in a complex legal dispute before the Queensland Court of Appeal. The defendants, Yao and Zhao, sought leave to amend their defences and withdraw admissions to plead a denial and positive case in relation to allegations central to the plaintiffs' case. The primary judge had refused their application and the defendants appealed the decision. The court was required to determine whether the primary judge's conclusion that there was not a real issue in dispute that the interests of justice required to be addressed was in error and whether the primary judge's discretion miscarried in relation to the application.

The court found that the primary judge's conclusion was inconsistent with the basis on which the original trial dates had been vacated and was, in any event, an inferential conclusion of mixed fact and law which was in error. The court also found that the primary judge's discretion miscarried and that the appellate court should interfere in a discretionary decision on a matter of practice and procedure if leaving the error uncorrected would work a substantial injustice. The court concluded that the appeal should succeed and that the proposed amendments should be permitted.

The court found that the primary judge's conclusion that there was not a real issue in dispute that the interests of justice required to be addressed was in error and that the primary judge's discretion miscarried. The court found that the primary judge's reasoning was inconsistent with the basis on which the original trial dates had been vacated and was an inferential conclusion of mixed fact and law which was in error. The court also found that the primary judge had not properly weighed the relevant considerations in exercising her discretion, including the nature and importance of the amendment to the party applying, the extent of the delay and the costs associated with it together with assumed and any proven specific prejudice, and whether it can properly be concluded that a party has had sufficient opportunity to plead its case and that it is too late for a further amendment.

The court concluded that the primary judge's discretion miscarried and that the appellate court should interfere in a discretionary decision on a matter of practice and procedure if leaving the error uncorrected would work a substantial injustice. The court found that leaving the error uncorrected would work a substantial injustice and that the appeal should succeed. The court also found that the proposed amendments should be permitted and that the trial dates should be vacated.

The court ordered that the appeal be allowed, with costs. The court set aside the orders made by the primary judge and in lieu thereof, gave leave to the Yao and Zhao defendants to withdraw admissions and file and serve the proposed further amended defences. The court also ordered that the Yao and Zhao defendants pay the plaintiffs' costs thrown away by the various amendments and that the plaintiffs pay the Yao and Zhao defendants' costs of the application. Finally, the court set aside the order listing the proceeding for trial and vacated the trial dates.

Orders

Orders of the court

1. The appeal is allowed, with costs.

2. Orders 1 to 4 made by Hindman J on 1 April 2025 are set aside and in lieu thereof–

(a) Leave is given to the Yao defendants to withdraw admissions contained in the amended defence of the Yao defendants filed 13 March 2024 (CFI 112) sufficient to permit the filing of the proposed further amended defence of the Yao defendants in materially the same form as appears at pages 104 to 213 and 295 to 305 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Yao further amended defence).

(b) Except in relation to subparagraphs 18D(b) to (g), leave is given to the Yao defendants to file and serve the Yao further amended defence.

(c) Leave is given to the Zhao defendants to withdraw admissions contained in the amended defence of the Zhao defendants filed 13 March 2024 (CFI 113) sufficient to permit the filing of the proposed further amended defence of the Zhao defendants in materially the same form as appears at pages 214 to 294 of Exhibit BTC-7 of the seventh affidavit of Benjamin Timothy Cohen affirmed 21 November 2024 (Zhao further amended defence).

(d) Except in relation to subparagraphs 18D(b) to (g), leave is given to the Zhao defendants to file and serve the Zhao further amended defence.

(e) The Yao and Zhao defendants must pay the plaintiffs’ costs thrown away by the various amendments in respect of which leave has been given in the previous paragraphs of this order.

(f) The plaintiffs must pay the Yao and Zhao defendants’ costs of the application of the Yao and Zhao defendants filed 25 November 2024 (CFI 238).

3. Order 17 made by Hindman J on 1 April 2025 listing the proceeding for trial commencing on 21 July 2025 is set aside.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For reasons which follow, the appeal must succeed. The primary judge’s conclusion that there was not a real issue in dispute that the interests of justice required to be addressed was inconsistent with the basis on which her Honour had vacated the original October 2024 trial dates and was, in any event, an inferential conclusion of mixed fact and law which we conclude was in error having regard to the material which was before her Honour in relation to the application. On that basis, we conclude that her Honour’s discretion miscarried. We would exercise our discretion in favour of permitting the proposed amendments. It is common ground that in the event the appeal succeeded the trial dates would have to be vacated and we would make that order.The September 2024 decision to vacate trial dates The Yao and Zhao defendants summarised the basis on which they founded their application to vacate the October 2024 trial dates in the following terms in written submissions before the primary judge:“The first and third to sixth defendants (Yao and Zhao defendants) respectfully seek adjournment of the trial, listed to commence in less than a month, for the reasons below.There are a number of serious procedural problems which amply justify adjournment. However, the central point is that the Yao and Zhao defendants, in investigations not yet complete despite earnest pursuit, have recently become aware of matters which undermine inter alia the essential premise of the plaintiffs’ case that the funds in question belonged to Ms Fang. It would undermine public confidence in the Courts, and be contrary to the interests of justice, were the trial to proceed without the Yao and Zhao defendants having a reasonable opportunity to sufficiently complete those investigations and then plead and present lay and expert evidence accordingly; directions to that effect are sought.There is no inherent urgency or particular prejudice identifiable. The funds, mostly either garnisheed by the Commissioner or used to purchase properties held by Ms Fang or related entities, are all the subject of Mareva orders.” The burden the Yao and Zhao defendants faced on that application was very significant. Their application was made in respect of a commercial list case for which the trial was imminent. Their application specifically recognised that they would need leave to amend including by withdrawing pleaded admissions, yet they were bringing the application in the context in which they did not yet have a proposed amended pleading and estimated that they would not have one prepared until a time after the scheduled commencement of the trial dates which they sought to vacate. They faced a plain need to explain to the Court why they should be permitted to take this course. By reference to r 5 of the Uniform Civil Procedure Rules 1999 (Qld), Aon Risk Services Australia Ltd v Australian National University[2] and Cement Australia Pty Ltd v Australian Competition and Consumer Commission[3] the Yao and Zhao defendants recognised their burden when they advanced these submissions:[2]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, particularly at [94] to [103].[3]Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 at [51].(a)Case management considerations do not override the broad discretion focusing on doing justice between the parties nor confine the relevant considerations which include, by r 5(1), facilitating the just and expeditious resolution of the real issues in a proceeding.(b)Case management considerations do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will.(c)Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case.(d)Other factors identified in Aon relevantly included:(i)the nature and importance of the amendment to the party applying;(ii)weighed against that, the extent of the delay and the costs associated with it together with assumed and any proven specific prejudice;(iii)whether it can properly be concluded that a party has had sufficient opportunity to plead its case and that it is too late for a further amendment;(iv)the provision of an explanation for the delay, showing that the application is made in good faith and bringing the circumstances giving rise to the amendment to the court’s attention so that, again, those circumstances can be weighed against the effects of delay and case management considerations;(v)as one of those circumstances, at least inferentially, whether the delay was the result of a deliberate tactical decision.

Ratio Decidendi

Legal Principle Established

As already mentioned, the application for leave to amend and to withdraw admissions was argued before the primary judge on 29 November 2024 and leave was refused in a judgment published on 21 March 2025.Consideration of appeal A number of appeal grounds were advanced in relation to the decision of the primary judge but we consider it is necessary only to found our decision based on accepting the submission of error in relation to the finding that her Honour identified as particularly important to her conclusion, namely that there was not a real issue in dispute that the interests of justice require to be addressed. If that finding was in error, then it would follow that her Honour’s discretion miscarried. In order to provide an explanation for our conclusion it is necessary to identify and to discuss the critical aspects of her Honour’s reasoning as expressed in her reasons for judgment of 21 March 2025. First, after having recited the relevant aspects of the procedural history, the primary judge stated relevant principles informing the exercise of her discretion. No criticism could be advanced in relation to the principles her Honour stated by reference to Aon Risk Services Australia Ltd v Australian National University[4] and Hartnett v Hynes.[5][4]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.[5]Hartnett v Hynes [2009] QSC 225 per Applegarth J at [27]. Second, the primary judge had particular regard to an orthodox statement of principles concerning the need for a party to provide explanations when seeking to withdraw pleaded admissions as expressed in Rigato Farms Pty Ltd v Ridolfi[6] and in Hanson Construction Materials Pty Ltd v Norlis Pty Ltd.[7] No criticism could be advanced in relation to her Honour’s reliance on these cases. Her Honour quoted these well-known passages from the former case:[6]Rigato Farms Pty Ltd v Ridolfi [2001] 2 Qd R 455; [2000] QCA 292 per de Jersey CJ at [19]-[20], per McPherson JA at [27] and per Williams J at [32].[7]Hanson Construction Materials Pty Ltd v Norlis Pty Ltd (2010) 79 ACSR 668 at [13]-[14].(a)per de Jersey CJ at [19]-[20]:“Asked to exercise the discretion under r. 189(3), a court would ordinarily expect sworn verification of the circumstances justifying a grant of leave. Those circumstances may include why no response to the notice was made as required, the response the party would belatedly seek to make, and confirmation that the response would accord with evidence available to be led at a trial. Here none of those matters was so verified. Issues of prejudice may also fall for consideration upon the hearing of such an application.There is no principle that admissions made, or deemed to have been made, may always be withdrawn ‘for the asking’, subject to payment of costs. The discretion is broad and unfettered, as exemplified by Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 N.S.W.L.R. 738 and Equuscorp Pty Ltd v Orazio [1999] QSC 354.”(b)per McPherson JA at [27]:“Before permitting the admission to be withdrawn, the first step to be determined here was whether there was a genuine dispute about the defendant’s liability in this action. Drawing on the analogy provided by another branch of the law, it is not enough for that purpose simply to assert that a dispute exists: see Re Brighton Club & Norfolk Hotel Co Ltd (1865) 35 Beav. 204, 205; (1865) 55 E.R. 873, 874. Some proper basis must be laid for that assertion, which would ordinarily include an explanation of how the earlier admission came to be made and why it should now be permitted to be withdrawn. That is not shown by saying that there has been a change of solicitors, or that it is possible to see that, before the admission was made, the issue of liability was an open question. Here the defendant has not condescended to swear to the circumstances in which the admission came to be made, or to show that it occurred by inadvertence, mistake or some other way that might now justify its withdrawal.”(c)per Williams J at [32]:“Certainly an admission flowing from the operation of r. 189 should not be withdrawn merely for the asking. In my view a clear explanation on oath should be given as to how and why the admission came to be made and then detailed particulars given of the issue or issues which the party would raise at trial if the admission was withdrawn.”