Yao v Hu

[2023] NSWSC 1090

Supreme Court

New South Wales

Medium Neutral Citation:

Yao v Hu [2023] NSWSC 1090

Hearing dates:

31 August 2023

Date of orders:

7 September 2023

Decision date:

07 September 2023

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

(1) The plaintiff is granted leave to file the proposed amended statement of claim.

(2) The proposed amended statement of claim is to be filed and served within 14 days; and

(3) The costs of the notice of motion are costs in the cause.

Catchwords:

CIVIL PROCEDURE – Statement of Claim – Amendment Powers – Addition of statute-barred cause of action – Leave to Amend – Addition of Australian Consumer Law Claim – Leave granted.

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 64, 65, 58, 59 and 60

Competition and Consumer Act 2010 (Cth) Schedule 2, ss 54 and 55.

Limitation Act 1969 (NSW) ss 50C and 50D

Uniform Civil Procedure Rules 2005 (NSW) r 2.1

Cases Cited:

PSL Industries Limited v Simplot Australia Pty Ltd (2003) 7 VR 106

Category:

Procedural rulings

Parties:

Guohong Yao (Plaintiff)
Lei Luo Hu (Defendant)

Representation:

Counsel:
J. Downing SC (Plaintiff)
D.A. Priestley (Defendant)

Solicitors:
Slater & Gordon (Plaintiff)
McCulloch & Buggy (Defendant).

File Number(s):

2021/183220

Judgment

1. By notice of motion filed on 4 July 2023, the plaintiff seeks the Court’s leave to file a proposed amended statement of claim (‘PASC’).

2. The plaintiff is Gouhong Yao. The defendant is Lei Luo Hu. The plaintiff is represented by J. Downing SC of counsel. The defendant is represented by D. A. Priestley of counsel. The plaintiff relies on the affidavits of his solicitor, Yevgeny Volodimirovich Bagrin (‘the plaintiff’s solicitor’) dated 27 September 2022, 21 October 2022 and 7 August 2023.

Background

3. At the outset of the hearing, the statement of claim for the plaintiff filed a PASC that repleaded the claim under Australian Consumer Law (‘ACL’). The defendant accepted that the PASC was viable, but sections 50C and 50D of the Limitation Act 1969 (NSW) (‘Limitation Act’) to be heard at trial, which remains an issue to be determined at the hearing.

4. On 25 June 2021, Supreme Court proceedings were commended by the plaintiff by filing a statement of claim against Lei Luo Hu, a Chinese herbal medicine practitioner, in relation to the plaintiff’s management and treatment in March–May 2016. The plaintiff’s case, in summary, is that from 31 March 2016, the defendant prescribed him and dispensed to him a Chinese herbal medicine concoction which he consumed and which ultimately caused him to suffer acute liver failure. The plaintiff was admitted to St George Hospital on 14 May 2016, where he was diagnosed with hepatic encephalopathy. He was then transferred to Royal Prince Alfred Hospital, where he was diagnosed with toxin-induced acute liver failure and he had to have a liver transplantation on 18 May 2016.

5. The plaintiff’s original claim was brought in negligence. The defendant filed a defence to the claim on 18 November 2021.

6. In terms of early interlocutory applications, the plaintiff filed a notice of motion on 6 September 2022, seeking the Court’s leave to administer interrogatories (the defendant having earlier refused to answer the interrogatories voluntarily). Ultimately, Registrar Jones heard the Motion on 17 November 2022. In a judgment delivered on 30 November 2022, Registrar Jones ordered that the defendant answer the plaintiff’s proposed interrogatories. Those answers have been filed and served on 28 February 2023.

The law

7. The court has discretionary power pursuant to sections 64 and 65 of the Civil Procedure Act 2005 (NSW) (‘CPA’). The court also has a general discretionary power pursuant to rule 2.1 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) for the purposes of granting leave to amend documents, including pleadings.

8. Section 64 of the CPA reads:

64   Amendment of documents generally

(cf SCR Part 20, rules 1 and 4; DCR Part 17, rules 1 and 4)

(1)  At any stage of proceedings, the court may order—

(a)  that any document in the proceedings be amended, or

(b)  that leave be granted to a party to amend any document in the proceedings.

(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

(3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made.

…

65 Amendment of originating process after expiry of limitation period

(cf SCR Part 20, rule 4; DCR Part 17, rule 4)

(1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings.

(2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1)(b), amend the originating process so as—

…

(c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court’s opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process.

(3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.

(4) This section does not limit the powers of the court under section 64.

(5) This section has effect despite anything to the contrary in the Limitation Act 1969.

(6) In this section, originating process, in relation to any proceedings, includes any pleading subsequently filed in the proceedings.

9. Rule 2.1 of the UCPR reads:

2.1   Directions and orders

(cf SCR Part 26, rule 1)

The court may, at any time and from time to time, give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings.

10. Sections 58 to 60 of the CPA are also applicable:

58   Court to follow dictates of justice

(1)  In deciding—

(a)  whether to make any order or direction for the management of proceedings, including—

(i)  any order for the amendment of a document, and

(ii)  any order granting an adjournment or stay of proceedings, and

(iii)  any other order of a procedural nature, and

(iv)  any direction under Division 2, and

(b)  the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of justice.

(2)  For the purpose of determining what are the dictates of justice in a particular case, the court—

(a)  must have regard to the provisions of sections 56 and 57, and

(b)  may have regard to the following matters to the extent to which it considers them relevant—

(i)  the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii)  the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii)  the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv)  the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v)  the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi)  the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii)  such other matters as the court considers relevant in the circumstances of the case.

59   Elimination of delay

(cf Western Australia Supreme Court Rules, Order 1, rule 4A)

In any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial.

60   Proportionality of costs

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

The amendment powers

11. The power to amend documents, including a statement of claim, is found in sections 64 and 65 of the CPA. The plaintiff notes in particular the terms of section 64(2), which provides the subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

12. Relevantly, section 65 gives the Court a discretionary power to permit an amendment of an originating process after the expiration of a limitation period. Further, section 65(2)(c) permits the Court to, at any time after the expiration of a relevant limitation period, grant leave under section 64(1)(b) to amend the originating process so as to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a cause of action that, in the Court’s opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process.

13. Pursuant to section 65(3), unless the Court makes an otherwise order, an amendment made under section 65(2) is taken to have effect as from the date on which the proceedings were commenced.

The plaintiff’s submissions

14. The claim the plaintiff seeks to add under the ACL is a claim for breaches of statutory guarantees under sections 54 and 55. That is, the plaintiff alleges that the defendant breached the statutory guarantee in that the Chinese herbal medicine concoction was toxic and was not of acceptable quality, nor was it reasonably fit for personal consumption.

15. In simple terms, the plaintiff's case is that the Court should exercise its discretion to allow the amendment, notwithstanding that it is prima facie out of time, because it is a new cause of action that arises from the same (or at the very least, substantially the same) facts as those giving rise to the existing cause of action and claim for relief and that new cause of action relies on the same expert reports that have already been served. That much is plain from the fact that the plaintiff relies upon the same substratum of facts in respect of the negligence claim, the contract claim and the ACL claim.

16. The plaintiff simply seeks to make the amendment to add the claim at this point. There will still need to be a final determination of the ACL claim, along with the other claims the plaintiff brings, at a final hearing.

Explanation for delay

17. The plaintiff also relies, for the purposes of the Court’s exercise of discretion, on the fact that the ACL claim was omitted from the original pleading through an error in the form of the document which was sent for filing. The error is regrettable, it is nonetheless explicable, given that it occurred at a time when the plaintiff’s solicitor was absent from the office and on leave and sought to file the statement of claim under time pressure, after the New South Wales Premier announced a COVID-related lockdown.

18. Thus, the omission of the ACL claim from the original statement of claim was due to an error, in which the plaintiff now seeks to correct. The plaintiff maintains that it is consistent with the dictates of justice that the amendment to add the ACL claim be permitted. I have set out the plaintiff’s solicitor’s explanation later in this judgment. The matter does not yet have a hearing date and, indeed, its progress has been somewhat slow, in part due to the defendant's refusal to answer interrogatories, which he was ultimately ordered to do. Once the interrogatories were answered, the plaintiff served updated expert evidence.

19. The plaintiff is unaware of any particular prejudice that the defendant can point to in respect of the addition of the ACL claim. Again, it is emphasised that the same substratum of facts are relied upon as for the existing tort claim. It is also difficult to see why there would be any particular delay through the addition of the ACL claim. given the current status of the proceedings, the state of the evidence and the amendments to the tort claim and addition of a contract claim, both of which are consented to.

The defendant’s submissions

20. The ACL claim is articulated as one based on the statutory guarantee under s 54 of the ACL that the medicine was of acceptable quality, and under s 55 of the ACL that the medicine was reasonably fit for personal consumption by the plaintiff. The plaintiff seeks to plead that each of these guarantees were breached, as the medicine was not of acceptable quality and was not fit for personal consumption: PASC at [61].

21. For the purposes of this application and again without admission, the defendant takes no issue that it is at least arguable that the elements necessary to establish the application of the statutory guarantees, such as that the defendant was operating in trade and commerce, and that the plaintiff was a consumer for the purposes of the ACL, may be satisfied. The defendant also takes no issue for present purposes that it is possible that the evidence will establish that the defendant breached one or other of these guarantees.

Statute barred?

22. The plaintiff took the herbal medicine in April and May of 2016. He underwent a liver transplant operation on 18 May 2016 allegedly arising from the taking of the herbal medicine.

23. The defendant pleads the statute bar under the Limitation Act against the claim in negligence on the basis that the plaintiff must have been aware of all of the discoverability elements in accordance with sections 50C and 50D of the Limitation Act, being (a) the fact that the injury had occurred, (b) the fact that the injury was caused by the fault of the defendant, and (c) the fact that the injury was sufficiently serious to justify the bringing of an action on the cause of action, significantly more than 3 years prior to the filing of the statement of claim. The defendant would raise the same argument in defence of the claim for breach of contract.

24. Whatever limitation period might be applied to the ACL claim, a statute bar would also apply.

Leave to amend

25. The defendant acknowledges that the provisions of section 65 of the CPA. the court the discretionary power to permit an amendment of an originating process adding a cause of action after the limitation period for that cause has expired. The defendant also accepts for the purposes of the application that it is at least arguable that, even though the ACL claim relies on Commonwealth statutory provisions, this does not necessarily mean that the procedural provisions of s 65, State legislation, cannot be applied: PSL Industries Limited v Simplot Australia Pty Ltd (2003) 7 VR 106.

Discretion to amend

26. However, the defendant submits that the Court should not exercise its discretion to grant leave to amend for the following reasons: whilst the plaintiff’s solicitor’s explanation as to the oversight in failing to plead an ACL claim in the original statement of claim (Affidavit of the plaintiff’s solicitor affirmed 7 August 2023 at [21]-[29]) may be accepted at face value, there is no satisfactory explanation proffered as to why the omission was not identified or rectified prior to being raised by Senior Counsel in an email of 13 July 2022, and no explanation as to why no draft PASC including the ACL claim was proffered until on or about 5 June 2023; and although in general terms it might be said that the ACL claim arises out of the same or substantially the same facts as the existing pleaded cause of action, not only is it a new cause of action by reference to statute, it is conceptually a new factual allegation in that the statement of claim does not make the substantive allegation that the herbs constituted some dangerous or defective product that should not have been supplied: statement of claim at [46].

27. The defendant does not point to any particular prejudice arising from the proposed late addition of the ACL claim. However, in all the circumstances, whilst s 65(2)(c) permits adding new causes of action after the expiry of a limitation period, that statutory discretion is unfettered. In deciding whether to make an order permitting the amendment of any pleading, the court is obliged to act in accordance with the dictates of justice: CPA s 58(1) and (2). The defendant submits it would not be in accordance with the dictates of justice to allow this entirely new cause of action to be added now more than 7 years after the subject events.

Resolution

28. As to whether I should exercise my discretion as to whether to grant leave to file the PASC, I will set out the plaintiff’s explanation for delay has been provided by the plaintiff’s solicitor dated 7 August 2023. It is as follows:

29. On 8 March 2021, the plaintiff’s solicitor provided a draft statement of claim to Jason Downing SC. On 23 March 2021, Jason Downing SC provided him with a settled statement of claim, adding claims in contract and under the ACL. It was the plaintiff’s solicitor’s intention, when filing proceedings, to include the ACL claim, as well as the contract claim.

30. On or about 12 May 2021, the plaintiff confirmed his instructions to file the statement of claim, including the claims in contract and under the ACL. From 16 June 2021 to 30 June 2021, the plaintiff’s solicitor took annual leave. However, he periodically checked his emails and attended to important and urgent tasks,

31. On the morning of 25 June 2021, the plaintiff’s solicitors became aware that the Premier had announced a 7-day lockdown for everyone living or working in the Woollahra, Waverly, Randwick and the City of Sydney LGAs from 11.59pm until at least 11.59pm on Friday 2 July 2021. On 25 June 2021, the plaintiff’s solicitor provided instructions to a lawyer working for plaintiff’s solicitors, Liam Andersen, to review the settled version of the statement of claim and file it. At 3:26pm, the statement of claim was filed online.

32. On 13 July 2022, the plaintiff’s solicitor received an email from Jason Downing SC, querying why the statement of claim filed on 25 June 2021 did not include claims under the ACL claim, or a contract claim. On 8 September 2021, the defendant’s solicitors accepted service of the statement of claim on behalf of the defendant.

33. After reviewing the file, the plaintiff’s solicitor realised there had been a mix up as to the version of the document filed in this Court. Regrettably, the settled version of statement of claim was not filed as it should have been, and he only became aware of this oversight upon receipt of the above email from Mr Downing.

34. On 18 October 2022, an unsuccessful mediation took place. On 4 July 2023, the plaintiff filed this notice of motion to amend the statement of claim. The plaintiff waited until after the unsuccessful mediation and service of expert reports to file the notice of motion, so as to not incur unsuccessful costs had there been a settlement at mediation.

28. On 10 March 2023, Registrar Jones made the following orders at the directions hearing;

1. Plaintiff to serve any further liability evidence by 1 June 2023.

2. Plaintiff to serve the draft amended statement of claim by 1 June 2023.

3. Defendant to advise whether he consents to filing of the draft amended statement of claim, by 17 June 2023.

4. If by consent, the plaintiff to file the amended statement of claim by 23 June 2023.

5. Alternatively, the plaintiff to file a notice of motion seeking leave to file the amended statement of claim, by 23 June 2023.

36. On 1 June 2023, the plaintiff’s solicitors sent a letter to the defendant’s solicitors serving the expert report of Associate Professor Miriam Levy dated April 2023.

37. On 5 June 2023, the plaintiff’s solicitors sent a letter to the defendant’s solicitors serving the supplementary expert report of Ms Laelia Douglas-Brown dated 5 June 2023. The plaintiff’s solicitors also sent a letter to the defendant’s solicitors enclosing the PASC.

38. On 21 June 2023, the plaintiff’s solicitor received an email from the defendant’s solicitor requesting an extension until June 2023 to respond to the PASC. In response, the plaintiff’s solicitor agreed to that extension.

39. On 30 June 2023, the defendant’s solicitors sent a letter to the plaintiff’s solicitors stating the defendant's position in respect of the PASC. The defendant’s solicitors stated that the defendant consented to the proposed amendments, other than those relating to the ACL claim (paragraphs 56 to 63 of the amended statement of claim).

40. On 4 July 2023, the plaintiff’s solicitors filed and served the notice of motion. The matter has not been set down for a trial.

41. Put succinctly, the explanation is one of an oversight by the plaintiff’s solicitor. The defendant submitted that the delay before the oversight was identified after about one year and the delay between the realisation of the oversight and the filing of the notice of motion seeking to file an amended statement of claim is not satisfactory. The defendant does not contend that it suffers any particular prejudice caused by the amendments.

42. Further, the filing of this PASC arises 7 years from when the events giving rise to the cause of action occurred. I consider that the most relevant period for delay to be taken into account is that period between filing of the statement of claim and the plaintiff’s solicitor’s realisation that the claim under the ACL claim was not actually pleaded in the statement of claim. The solicitor has admitted it was his oversight.

43. After the plaintiff’s solicitor realised his oversight, the Court made directions for the filing of evidence and the notice of motion seeking to file the PASC, which concluded with the defence not consenting to the PASC. On 4 July 2023 the plaintiff filed its notice of motion.

44. The plaintiff’s solicitor’s explanation for that delay is satisfactory as is the progress of the proceedings after that date. The amendments are viable (but may not succeed at trial) and they are out of the same facts or substantially the same pleaded in the original statement of claim. To allow the amendments would allow the just resolution of the real issues in the proceedings. It is my view that taking these considerations into account, the dictates of justice warrant that the plaintiff be granted leave to file the PASC.

Costs

45. The plaintiff was successful. However, the plaintiff was granted an indulgence by the Court. It usually follows that the plaintiff pay the defendant’s costs. Thrown away by the amendment to the statement of claim. However, the defendant served its submissions on the last working day before the hearing. Had he served his submissions earlier, the parties may have been able to resolve the filing of the PASC without resort to a hearing.

46. Costs are discretionary. In these circumstances, it is my view that the costs should be costs in the cause.

THE COURT ORDERS THAT:

1. The plaintiff is granted leave to file the proposed amended statement of claim.

2. The proposed amended statement of claim is to be filed and served within 14 days; and

3. The costs of the notice of motion are costs in the cause.

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Decision last updated: 07 September 2023