Ye v Chen

[2022] NSWSC 494

Supreme Court

New South Wales

Medium Neutral Citation:

Ye v Chen [2022] NSWSC 494

Hearing dates:

21 April 2022

Decision date:

27 April 2022

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   Refuse leave to the plaintiffs in respect of grounds 6, 7, 8 and 9 of the amended summons.

(2) Grant leave to the plaintiffs pursuant to s 40(1) of the Local Court Act 2007 (NSW) in respect of grounds 1, 2, 3, 4 and 5.

(3)   Dismiss the appeal.

(4)   Subject to any party making an application in writing to my Associate within seven days for an order to the contrary, order the plaintiffs to pay the defendant’s costs of the proceedings in this Court.

(5)   Direct the parties to provide draft minutes of order to my Associate within five weeks which address the orders to be made following the orders made by Beech-Jones J on 22 March 2021 and any other extant orders.

(6)   Stand the matter over to 8 June 2022, such date to be vacated if all outstanding orders sought are made prior to that date.

Catchwords:

APPEALS — appeal as of right or by leave from Local Court

APPEALS — Procedural fairness — whether refusal to grant leave to adduce expert evidence amounted to a denial of procedural fairness — where refusal did not amount to a denial of procedural fairness

CONTRACTS — Construction — Interpretation — Background — nature of agreement — whether agreement constituted a guarantee or separate agreement — whether signatory signed in own right or on behalf of the company

CONTRACTS — Formation — Consideration — Forbearance to sue — whether “please allow until particular date to investigate” constituted a forbearance to sue

COSTS — indemnity costs — whether defendant’s conduct constituted relevant delinquency

COSTS — offer of compromise — whether offer including “costs as agreed or assessed” is compliant with UCPR, r 20.26

Legislation Cited:

Local Court Act 2007 (NSW), ss 39, 40

Uniform Civil Procedure Act 2005 (NSW), s 56

Uniform Civil Procedure Rules 2005 (NSW), r 20.26

Cases Cited:

Acuthan v Coates (1986) 6 NSWLR 472

Adami v The Queen (1959) 108 CLR 605; [1959] HCA 70

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Curtis v Harden Shire Council (No 2) [2015] NSWCA 45

Dailhou v Kelly (No 3) [2014] NSWSC 1220

Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70

Edlin v Williams [2000] ANZConvR 43

Falconer v Wilson [1973] 2 NSWLR 131

Gerlach v Clifton Bricks Pty Limited (2002) 209 CLR 478; [2002] HCA 22

Grant v Grant; Grant v Grant (No. 3) [2021] NSWSC 1

Jeans v Cleary [2006] NSWSC 647

Old v McInnes and Hodgkinson [2011] NSWCA 410

R v Doney [2001] NSWCCA 463; (2001) 126 A Crim R 271

R v Knight [2001] NSWCCA 114

Singh v De Castro [2017] NSWCA 241

Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29

Whitney v Dream Developments Pty Ltd [2013] NSWCA 188

Category:

Principal judgment

Parties:

Rebecca Haria Ye (First Plaintiff)
Ucer Investment and Resources Management Pty Ltd (Second Plaintiff)
Yu Chen (Defendant)

Representation:

Counsel:
A Cheema (Plaintiffs)
J Harrison (Defendant)

Solicitors:
Auburn Lawyers (Plaintiffs)
Prudentia Legal (Defendant)

File Number(s):

2021/6370

 Decision under appeal 

Court or tribunal:

Local Court

Date of Decision:

11 December 2020

Before:

Stapleton LCM

File Number(s):

2018/215879

Judgment

Introduction

1. By amended summons filed on 10 September 2021, Rebecca Ye, the first plaintiff, and Ucer Investment and Resources Pty Ltd (Ucer), the second plaintiff, appeal, or in the alternative seek leave to appeal, against the judgment ordered against them in the Local Court by Stapleton LCM in favour of Yu Chen on 11 December 2020 and the order for costs on an indemnity basis ordered by her Honour against them.

2. This Court’s jurisdiction derives from s 39 of the Local Court Act 2007 (NSW), which provides for appeals to this Court on a question of law, and s 40 of the Local Court Act, which provides for appeals to this Court, by leave, against a judgment or order on a ground that involves a question of mixed law and fact, or against an order as to costs.

3. As the plaintiffs in this Court were the defendants in the Court below and the defendant in this Court was the plaintiff in the Court below, it is convenient to refer to the parties by name. I shall refer to the defendant in this Court, Yu Chen, by her full name to distinguish her from her cousin, Ying Chen, and her cousin’s husband, Jun Chen, each of whom will be referred to by their full names.

4. Ms Ye and Ucer seek to have the judgment and the order for costs set aside and an order remitting the matter to the Local Court, with leave being granted to them to rely on expert evidence (such leave having been refused in the Court below).

The appeal grounds

5. The grounds of appeal in the amended summons fall into three categories. The first category comprises grounds 1-5 and concerns the finding of the Court below that Ms Ye was personally liable to Yu Chen based on a document dated 17 December 2017 (the December 2017 document). The second category comprises grounds 6-8, which allege that the Court below denied procedural fairness to Ms Ye and Ucer by refusing their application to lead expert evidence at the hearing. The third category comprises ground 9, which challenges the order for costs.

The proceedings in the Court below

Yu Chen’s case in the Court below

The initial contact made to Ms Ye by Yu Chen

6. Yu Chen’s case in the Court below was as follows. Following a recommendation from her cousin, Ying Chen, who in turn had received a recommendation from a friend, Jing Xie, Yu Chen contacted Ms Ye in late 2016 for assistance with applying for an Australian Permanent Residence Visa (the Visa). Yu Chen and Ms Ye subsequently communicated with each other by WeChat, a messaging application, about what would be required for the Visa application, including her resume, qualifications and work history. The communications were in Mandarin and have been translated into English by an accredited translator.

7. According to the WeChat records, Yu Chen sent back the application form to Ms Ye on 24 April 2017. On 25 April 2017, Ms Ye provided bank account details to Yu Chen so that the initial fee for the services could be paid into that account. Later that day, Yu Chen proposed (as requested by her husband) that the second amount would only be payable after the Visa was granted and that a provision to that effect be included in the contract.

8. Ultimately, a draft agreement between Yu Chen and Ucer was sent to Yu Chen by email and was executed on about 26 April 2017 by Yu Chen on her own behalf and Ms Ye, as a director of Ucer, (the Agreement) and returned to Ms Ye.

The Agreement

9. The Agreement provided that in return for Ucer providing migration agency services for Yu Chen, Yu Chen would pay Ucer USD50,000 in advance and a further USD110,000, as provided below.

10. The Agreement identified Ucer as “Party A” and Yun Chen as “Party B”. It relevantly provided:

“’Party A and Party B come to an agreement that Party B will appoint Party A to apply the Australian PR Visa for himself/herself only.’

‘Party A responsibility

Clause 1, inter alia, party A will help party B to complete all the application procedure for the visa mentioned, including: A) helped to prepare the documents required by Australian Migration Department B) help to double-check the documents are qualified C) help to fill all formal documents and application form D) submit the Visa application form.

Clause 2: Party A will follow up the whole processing, liaison with the officials of migration department, help Party B to complete the implement material and help Party B to be informed about the progress.’

‘Party B’s responsibility

Clause 4, inter alia, Party B is requested to settle the payment subject to the terms stated in this agreement.

‘Services fees and Payment Term’

Clause 1. Subject to this agreement, party B should pay USD $160,000 by two payments.

Clause 2. Deposit: when both Party A and B had signed this agreement, Party B should pay Party A deposit USD $50,000 within 1 days from the date stated on the agreement.

Clause 3. Balance: Party B should deposit the balance payment, USD$110,000 into Party A’s Bank unit account within the first letter received from the department.

Clause 4. Both party A and Party B will not terminate this agreement without any consent. Any party who break this agreement will be bearing all the responsibility and lost caused.

Clause 5. Foreign exchange rate will be calculated by intraday when transfer. Figure will be noticed by party A.”

11. The first amount, USD50,000, was paid by about 27 April 2017 into an account identified by Ms Ye via WeChat.

12. Thereafter Yu Chen regularly communicated with Ms Ye as to when the Visa would be approved.

The meeting in July 2017 between Ms Xie, Ying Chen and Ms Ye

13. In about July 2017, Ms Xie, Ying Chen and Ms Ye met at a restaurant in Auburn (a location chosen by Ms Ye, who lived nearby) to discuss the progress of the Visa application. According to Ms Xie and Ying Chen, Ying Chen asked Ms Ye about the progress of Yu Chen’s application, to which Ms Ye responded that the application had been lodged with the Department of Home Affairs and was being considered by the Department. Ying Chen then asked Ms Ye for the reference number from the Department, to which Ms Ye responded that she did not have the number but would find it and provide it.

Yu Chen’s trip to Australia and the meeting with Ms Ye on 4 October 2017

14. Yu Chen also mentioned to Ms Ye in WeChat messages that she was intending to fly to Australia. On 16 September 2017, Yu Chen informed Ms Ye by WeChat that she would be in Sydney from 29 September 2017 until 16 October 2017 and proposed that they meet.

15. While Yu Chen was in Sydney, on 4 October 2017, she, Jun Chen (Ying Chen’s husband), and Wanyun Huang (another person for whom Ucer and Ms Ye purported to provide migration services) met Ms Ye at a Chinese restaurant in Auburn, near Ms Ye’s residence. Ms Ye had suggested the location in a WeChat message to Yu Chen.

16. According to Yu Chen, and Jun Chen, Jun Chen said to Ms Ye:

“Please provide evidence to us showing that you have submitted the visa application. You should keep your promises.”

17. Ms Ye responded:

“I will find the reference number of the application and provide [it] to you as soon as possible.”

18. On that occasion, while Ms Ye was on the telephone, Yu Chen took a photograph of Ms Ye. Although it was an agreed fact that the person in the photograph was Ms Ye, Ms Ye denied ever having met Yu Chen.

The meeting on 17 December 2017 and the December 2017 document

19. On 15 December 2017, Ms Ye sent a WeChat message to Yu Chen which said:

“Good morning, Yu CHEN. I am not very comfortable these two days. I have been questioning, but the situation is not very good. Call me when you are convenient. We will discuss how to deal with it on the phone.”

20. The WeChat records show that there was a call between Yu Chen and Ms Ye’s number of 9 minutes 36 seconds duration on 15 December 2017 after the message set out above. According to Yu Chen’s evidence, Ms Ye rang Yu Chen to tell her that the application could not proceed and that she was unable to give further information.

21. Later on 15 December 2017, Yu Chen sent the following WeChat message to Ms Ye:

“Rebecca, if things are done, you must provide all the documents in the immigration office for us to check. If you do not, you must refund all the payment and interests, otherwise you will be responsible.”

22. On 16 December 2017, Ms Ye rang Ms Xie to tell her that the application could not proceed. On 17 December 2017, Jing Chen and Ms Xie, who wanted to help Yu Chen, met again with Ms Ye. In the course of that meeting Ms Ye asked them to give her until 31 January 2018 to provide the reference number and told them that, if she did not provide the application reference number to Yu Chen by 31 January 2018, she would refund the USD50,000 which had been paid in April 2017. At the meeting, Ms Ye wrote out a document to that effect, which she signed in front of Jing Chen and Ms Xie.

23. The translation of the December 2017 document read as follows:

“With regards to the matter of migration for Yu CHEN and Wanyun HUANG, please allow until 31 January 2018 to investigate the progress and circumstances

(1)    If there are records on migration, there will be no further claims (provide Ref. No)

(2)    If there are no records found, there would be full refund of fees

Refund (of entire sum) to be made by 31 January 2018.

Rebecca Ye (signed)

17 December 2017”

24. Ms Ye did not provide the information which she had said she would provide by 31 January 2018 or at all.

25. On 8 May 2018, Yu Chen sent a WeChat message to Ms Ye as follows:

“Rebecca, we have initiated legal proceedings and will also inform the embassies of both countries. We will fight to the end.”

26. In support of her case, Yu Chen gave evidence and called oral evidence from Ms Xie, Ying Chen and Jun Chen, each of whom was cross-examined. Yu Chen tendered documents, which were attached to affidavits read in her case, which included WeChat records, company searches of Ucer and extracts from its website, as well as telephone records.

The defence case in the Court below

27. The defence case in the Court below was that neither Ucer nor Ms Ye was involved in the Agreement or the December 2017 document at all and that Ms Ye had never met Yu Chen. Ms Ye said that she had never been involved in the provision of migration services and nor had Ucer during the period of her association with that company. Although she identified the WeChat account as bearing her name and accepted that she operated a WeChat account under that name, she denied that she had sent any of the messages that appeared to come from that account. Ms Ye gave oral evidence and was cross-examined.

The procedural history of the proceedings in the Court below

28. On about 12 July 2018, Yu Chen commenced proceedings in the Local Court by filing a statement of claim which claimed from Ucer and Ms Ye the sum of $72,350.66, being the Australian dollar equivalent of USD50,000, plus interest.

29. The defence was filed on 31 August 2018. Although Ms Ye admitted that she was a director of Ucer, she denied any connection, or communication, with Yu Chen. She signed the defence herself as she was not, at that stage, represented by a solicitor.

30. On 15 October 2018, Malouf Solicitors, who had filed a notice of appearance, filed an amended defence on behalf of Ms Ye and Ucer. Apart from prefatory paragraphs, each paragraph of the statement of claim was denied. Paragraph 14 of the amended defence said:

“In answer to the whole of the Statement of Claim [Ms Ye and Ucer] say:

a   They have never met [Yu Chen].

b   They have never had any business or other dealings with [Yu Chen].

c   They had no contractual dealings with [Yu Chen].

d   They are not liable to pay the amount claimed by [Yu Chen].”

31. Malouf Solicitors served a notice to produce on Lawside Lawyers, who acted for Yu Chen in the proceedings in the Court below. Under cover of letter dated 2 November 2018, Lawside Lawyers provided documents in answer to that notice, which comprised WeChat messages, documents evidencing payment to Ucer, a receipt issued by Ucer and the Agreement which appeared to have been signed by Ms Ye on behalf of Ucer on 26 April 2017.

32. On 31 January 2019, Yu Chen was ordered to pay security for costs in an amount of $30,000, as she resides outside of Australia.

33. On 16 September 2019, the Local Court made the following directions by consent:

“1   Plaintiff to file and serve an Amended Statement of Claim by 23 September 2019.

2   Defendants to file and serve a Defence by 7 October 2019.

4   Plaintiff to file and serve any Reply by 21 October 2019.

5   Plaintiff to serve the evidence she intends to rely on, including any expert evidence, by 4 November 2019.

6   Defendants to serve the evidence they rely on by 2 December 2019.

7   Plaintiff to serve evidence in reply by 16 December 2019.

8   Hearing on 28/2/2020 with an estimated duration of one day.

9   Review on 20/1/2020.”

34. An amended statement of claim was filed on 17 September 2019. A defence to the amended statement of claim was filed on 8 October 2019.

35. Yu Chen alleged in the amended statement of claim that Ucer had breached the Agreement by failing to lodge the Visa application and that she was, accordingly, entitled to a refund of USD50,000 as damages for breach from Ucer. She further alleged that, pursuant to the December 2017 document, she was entitled to USD50,000 from Ms Ye since the application reference for the Visa had not been provided by 31 January 2018.

36. As referred to above, in the defence to the amended statement of claim, Ms Ye denied any involvement with Yu Chen at all.

37. In accordance with the directions, Yu Chen filed the following affidavits, which were read at the substantive hearing:

1. affidavit of Yu Chen affirmed 30 October 2019;

2. affidavit of Jing Xie affirmed 30 October 2019;

3. affidavit of Ying Chen affirmed 30 October 2019; and

4. affidavit of Jun Chen affirmed 30 October 2019.

38. At the substantive hearing, Yu Chen also read affidavits of each of these deponents, which were affirmed in February 2020, relating to the photograph alleged to have been taken at the Auburn restaurant in October 2017.

39. Ms Ye and Ucer failed to comply with the direction that they file and serve their affidavits by 2 December 2019.

40. On 20 December 2019, Yu Chen served an offer of compromise on Malouf Solicitors which offered “judgment in favour of [Yu Chen] against [Ms Ye and Ucer] in the sum of $68,000.00 plus costs as agreed or assessed.” The offer was expressed to have been made in accordance with Uniform Civil Procedure Rules (UCPR), r 20.26 and was open for acceptance until 4pm on 31 January 2020 (being four weeks before the hearing was due to take place).

Ms Ye’s application for leave to adduce expert evidence

41. By notice of motion filed on 8 January 2020, Ms Ye sought orders relating to a notice to produce and, of present relevance, she also sought the following orders:

“5   That the hearing date be vacated.

6   That directions be made for the provision of expert handwriting evidence and other expert upon which the Defendants intend to rely.

7   That the Plaintiff make available the purported original signed agreement, receipt and guarantee referred to in the Affidavit of the Plaintiff for inspection and analysis by the Defendants’ expert or experts.”

42. In an affidavit affirmed on 8 January 2020, by Ms Ye’s solicitor, Gabrielle Polczynski, filed in support of the notice of motion, Ms Polczynski relevantly deposed:

“10. It also appears that expert evidence is required in relation to signatures that the Plaintiff asserts are the First Defendant’s signature and whether the Defendants’ identity has been fraudulently used in ‘WeChat’ messages with the Plaintiff.

11. The Defendants require more time to finalise their lay evidence responding to each of the Plaintiff’s Affidavits as well as the Plaintiff’s Exhibit bundle.

12. Further time is also required to enquire in relation to obtaining expert evidence.”

43. Subsequently, Ms Ye affirmed an affidavit on the substantive proceedings on 17 January 2020.

44. Ms Ye’s notice of motion was heard and determined on 12 February 2020, just over a fortnight before the hearing was set down to commence. In a judgment which appears to have been delivered ex tempore, her Honour analysed Ms Ye’s defence as being one which relied on identity theft. Her Honour identified the principal issue in the case as being whether the person who attended the meeting at the restaurant in Auburn on 4 October 2017 was Ms Ye and noted that Yu Chen had adduced the evidence of the photograph and the evidence of Jun Chen, who was present.

45. Her Honour found that the case was likely to turn on whether the Court could be satisfied on the balance of probabilities that Ms Ye was at the restaurant. Her Honour did not consider the evidence of a handwriting expert to be particularly germane to that issue, which would depend on the evidence of witnesses who were said to be present (and the credibility of Ms Ye, who denied being present). Her Honour also noted (referring to the Local Court Practice Note) that, to avoid a disproportionality between costs and the amount at issue, leave of the Local Court was required before expert evidence could be adduced. Her Honour noted that no expert report had been obtained and that it was therefore not possible to ascertain whether an expert could opine as to whether the photograph was genuine, whether the WeChat messages could have been concocted and whether a handwriting expert could give material evidence.

43. Her Honour concluded:

“In determining whether I should grant leave I have to keep in mind the provisions of the Civil Procedure Act which state that management of proceeding has to be in accordance with the principle of them being just, quick, and cheap. There are many cases which discuss those in order of priority or are all equally material. It seems to me they are all equally material.

In relation to whether it is just in this particular case, of course, it has to be just to both sides. If this was a case where it was one witness’s word against another witness’s word about the photograph being taken, about the event of the meeting and about the event of the further meeting, then the result may well have been different. But in this case, the evidence in the plaintiff’s case is that there were two independent witnesses at the first meeting and there were two witnesses independent of the plaintiff’s financial interest in the matter at the second meeting. There is no evidence that anything as to what an expert might say about the provenance of the photo and I am not persuaded that evidence of the expert, assuming such evidence was available, would be determinative of the issue of in the case which seems to me will fall to be determined by reference to the credit of the plaintiff, the two independent witnesses and necessarily, of course, the competing credit of the first defendant. And so, I refuse the application.”

47. Following delivery of these reasons, Ms Ye served her further affidavit affirmed on 27 February 2020.

The substantive hearing

48. The hearing commenced on Friday 28 February 2020 with a one day estimate (which had been given by the parties on 16 September 2019). As the hearing did not finish in one day, it was stood over to 23 September 2020 and continued on 24 September 2020. As the hearing had not been completed, the matter was stood over to 20 October 2020. At the conclusion of 20 October 2020, the matter was stood over to 27 October 2020 for oral submissions (directions having been made for the filing and service of written submissions). On 27 October 2020, her Honour indicated that oral reasons for decision would be given on 8 December 2020.

The reasons for judgment

49. On 8 or 11 December 2020, her Honour gave reasons for ordering judgment for Yu Chen in the sum of $72,350.66 plus interest from 1 February 2018 and costs.

50. In substance, her Honour accepted Yu Chen’s case and accepted the evidence of Yu Chen, Ying Chen, Jun Chen and Ms Xie whom she found to be credible and reliable witnesses. Her Honour rejected Ms Ye’s evidence.

51. Her Honour referred extensively to the documentary evidence, including the WeChat messages, which she regarded as corroborating the oral evidence of witnesses called on behalf of Yu Chen.

52. At [13] of her Honour’s reasons, she said, of the meeting on 4 October 2017:

“Documentary evidence in the form of WeChat screenshots support the proposition that on 4 October 2017 the plaintiff met the person using WeChat ID rebeccahye in Sydney. On 16 September 2017 the plaintiff by WeChat message proposed the meeting in Sydney. By an exchange of WeChat messages the meeting was arranged. On 4 October 2017 the plaintiff sent a WeChat message 'I am waiting at the hotel’. WeChat ID rebeccahye replies by message 'I will be right there.' The plaintiff says she took a photograph of the first defendant at that meeting. The photograph is in evidence and is admitted by the first defendant to depict the first defendant. The first defendant denies that the photograph was taken by the plaintiff at the meeting. After the meeting the plaintiff continued to exchange WeChat messages/voice calls with WeChat ID rebeccahye about the progress of the application. In an undated message between 4 October 2017 & 15 October 2017 WeChat ID rebeccahye wrote 'I am very excited to meet you.'”

53. Of the meeting on 7 December 2017, at which the December 2017 document was signed, and the aftermath, her Honour found at [18]:

“WeChat screenshots support the proposition that on 7 December 2017 Ms Ying Chen and Ms Xie met the first defendant who wrote out and signed the Guarantee. On 7 January 2018 Ms Ying Chen created a WeChat group including the plaintiff, Ms Xie and WeChat ID rebeccahye. In that group constant pressure was put upon WeChat ID rebeccahye to produce information in relation to the visa application. On 29 January 2018 Ms Ying Chen sent a photo of the handwritten Guarantee to WeChat ID rebeccahye. On 30 January 2018 WeChat ID rebeccahye sent a document 'withdraw agreement' to the plaintiff stating 'please fill out and set it back to me. I will ask them to arrange a refund.' The 'Withdraw Agreement' named Party A as Ucer Professional Pty Ltd and Party B as Chen Yu detailing the plaintiff's passport number/China ID number. Ucer Professional Services Pty Ltd is a company registered in March 2015 and the first defendant was the sole director and shareholder in 2018.”

54. At [19], her Honour referred back to the application for leave to adduce expert evidence and said as follows:

“On an interlocutory application I refused [Ms Ye and Ucer’s] application for leave to adduce expert evidence in relation to [Ms Ye’s] signature because it was a very late application, it is opinion evidence and I found that the dispute of fact would be decided by direct evidence as to whether [Yu Chen] and her witnesses met [Ms Ye] in person in 2017 after the Agreement was signed. I have compared the handwriting on the Agreement, the Guarantee, the receipt and the defence filed on 31 August 2018 by [Ms Ye]. I find the formation of the letters 'R', 'Y' and 'e' is very similar. I find in the Guarantee and the Defence the formation of the letters in 'Rebecca' is very similar.”

55. Her Honour’s ultimate findings at [23] were as follows:

“The onus is on the plaintiff to prove the allegations of fact on the balance of probabilities. I acknowledge the difficulty for a party in proceedings to establish a negative, that something did not happen. That is the position of the first defendant in this matter, however no evidence was adduced as to how in technical terms a person other than the first defendant could use her WeChat ID rebeccahye. The documentary evidence in this matter has the importance described Chidiac. Considering all of the evidence I find that the plaintiff did meet the first defendant in Sydney on 4 October 2017. I find that it was the first defendant who used WeChat ID rebeccahye to voicecall and message the plaintiff from April 2017. I find that, on behalf of the second defendant. the first defendant signed the Agreement. I find that Ms Ying Chen & Ms Xie did meet the first defendant in Sydney on 17 December 2017 and that after a discussion in which the first defendant promised to pay a refund if by 31 January 2018 no details were available about the application . The first defendant wrote and signed the Guarantee.”

56. Her Honour then proceeded to address the alternative argument put on behalf of Ms Ye and Ucer: that Yu Chen was not entitled to judgment against either of them as a matter of law as neither the Agreement nor the December 2017 document was sufficient to impose a liability on them.

57. Her Honour addressed Ucer’s argument that Yu Chen had not established that it had breached the Agreement at [33] as follows:

“… It is a reasonable inference satisfying the balance of probability from the defence maintained by [Ucer] and the fact that despite numerous requests [Ms Ye] never produced details of the application that [Ucer] did not lodge the visa application as required by the Agreement. For that breach the plaintiff is entitled to recover the deposit she paid being 'thrown away' as a consequence of [Ucer’s] breach.”

58. Her Honour addressed Ms Ye’s argument that Yu Chen had not established that she was entitled to judgment against Ms Ye as follows. Her Honour set out the December 2017 document in full, which she referred to as a “Guarantee” (it having been defined as such in the amended statement of claim). Her Honour noted Ms Ye’s submission that:

1. the December 2017 document was not a collateral contract in which Ms Ye had agreed to answer for the default of Ucer as the words could not be interpreted as Ms Ye’s personal promise to pay;

2. the December 2017 document was no more than an offer to vary the Agreement; and

3. there was no consideration to support the promise, even if one were made.

59. Her Honour considered the December 2017 document to be ambiguous since it did not state whether it was Ms Ye or Ucer who would be responsible for refunding the entire sum. Her Honour referred to Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 (Codelfa) as authorising regard to the surrounding circumstances. Her Honour, at [37], set out these circumstances and found:

“… The surrounding circumstance was that the Agreement between [Yu Chen] and [Ucer] ([Ms Ye] being a director) provided that it was the responsibility of [Ucer] to keep [Yu Chen] informed of the progress of the visa application and that if [Ucer] breached the agreement, [Ucer] would be responsible for the 'lost caused.' Repeatedly [Yu Chen] and her witnesses asked [Ms Ye] for the visa application number and [Ms Ye] failed to provide it. On 15 December 2017 [Ms Ye] informed [Yu Chen] that the person handling the application had suddenly died, the application could not be processed and there is no information that she can provide. In response [Yu Chen] requested [Ms Ye] to provide all documents from [the Department] for checking and stated and if an application was not made that all professional fees must be refunded with interest. [Yu Chen] asked her friends to meet [Ms Ye]. At that meeting on 17 December 2017 [Ms Ye] said 'I cannot provide you a reference number now, I can provide you a guarantee that I will investigate into the situation. I guarantee that I will investigate and return to you by 31 January 2018. If I can provide a reference number the money is not refundable. If I cannot provide a reference number I will refund all professional fees paid by Ms Yu Chen to her. I will provide reply to you by the end of January.'”

60. Her Honour adverted to the form of the December 2017 Agreement at [38] and said:

“The Guarantee is in the form of a letter without an addressee. It has the format that would be expected of a person without legal training. It refers to a topic, the migration, and then makes a request for time until 31 January 2018. Impliedly it is addressed to [Yu Chen]. It states what would occur in relation to a refund should there be a record on migration or not. It is signed by [Ms Ye]. The letter was written in the context that [Yu Chen] had demanded details of the visa application or a refund. [Yu Chen’s] family and friends had arranged a meeting with [Ms Ye] to discuss the matter. Clearly the pressure was on [Ms Ye] to provide the details. [Ms Ye] bought further time to provide the details by the promise made that if there are no records found by 31 January 2018 there would be a full refund of fees by her. As to who made that promise, the letter was signed by [Ms Ye] without reference to [Ucer].”

61. Her Honour found, at [39], that the December 2017 document comprised:

1. a record of what was discussed at the meeting on 17 December 2017;

2. a request by Ms Ye for further time in relation to the application for the Visa; and

3. a promise by Ms Ye that, if the reference number of the Visa application had not been provided by 31 January 2018 she would refund the entire sum by 31 January 2018.

62. Her Honour found, at [40], that the consideration for Ms Ye’s promise in (3) above was the extension of time granted to Ucer to perform the Agreement to 31 January 2018. Thus, her Honour found that the promise in (3) was enforceable by Yu Chen against Ms Ye and that Ms Ye was, accordingly, liable to refund the monies paid by Yu Chen in April 2017 plus interest from 1 February 2018. At the conclusion of her reasons, her Honour noted that Yu Chen sought indemnity costs and made directions for written submissions to address the application.

Yu Chen’s application for indemnity costs

63. On 23 March 2021, her Honour ordered that Ms Ye and Ucer pay Yu Chen’s costs of the proceedings on an indemnity basis. Her Honour referred to the authorities on which Yu Chen relied in support of Yu Chen’s submission that indemnity costs ought be ordered in her favour on the basis of Ms Ye and Ucer’s delinquency. Her Honour found:

“This was not a case where the Court was called on to make a finely balanced judgment as to the defendant’s knowledge. The evidence that the defendants acted dishonestly was overwhelming and ultimately unanswered. The Court found that having regard to the defence of the proceedings with knowledge of dishonest conduct and in the face of overwhelming evidence against them, the principal exercise of discretion was to make an order for indemnity costs. The conduct constituted relevant delinquency.”

64. Her Honour referred to Grant v Grant; Grant v Grant (No. 3) [2021] NSWSC 1 where Slattery J said at [8]:

“Even where fraud or other deplorable conduct is established in litigation it will ordinarily lead to an order for costs on the ordinary basis, unless something more is established. Fraud will often involve the fraudulent party falsely denying the fraud in court and lengthening the proceedings, which may attract an order for indemnity costs. The presence of fraud or dishonesty can attract the application of other principles. For example, as Harrison v Schipp states (at [138]), an order for indemnity costs may be justified where a party, properly advised, should have known that they would be found liable (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 202), or where the Court’s time and the innocent party’s money were wasted on ‘totally frivolous and thoroughly unjustified defences’: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362; (1992) 10 ACSR 537. Where a party is propounding a defence which they must have known to be false, an indemnity costs order may be made against them: Westpac Banking Corporation v Ollis [2007] NSWSC 1008 at [7] and [11].”

65. Her Honour found that the evidence adduced on behalf of Yu Chen was powerful and that Ms Ye and Ucer had maintained a defence which had no reasonable prospects of success. Her Honour said:

“In this matter, in the face of the WeChat messages using [Ms Ye’s] identifier and profile photo, her signature on the company’s documents, her three meetings with [Yu Chen] and the independent witnesses, the photograph of her and her preparation of the guarantee followed by an exchange of messages in relation to the Adelaide Visa Group, I am satisfied would be regarded as an overwhelming case. [Ms Ye and Ucer] made no answer except to say ‘it was not me.’

To my mind, [Ms Ye and Ucer] should have known they could not win the case on the fact in issue, that is, whether [Ms Ye] was the very person who had entered into the transaction with the [Yu Chen] on behalf of the corporate defendant in relation to the negotiation, the preparation of the documents and all of the matters which occurred thereafter. [Ms Ye and Ucer] maintained a defence with no reasonable prospect of success on this particular fact.

[Yu Chen] has argued that she is entitled to indemnity costs in that, one, [Yu Chen] made an untruthful denial of any knowledge of [Yu Chen] in the proceedings being a relevant delinquency. [Yu Chen] was put to proof by [Ms Ye and Ucer] requiring her to obtain certified translations of the WeChat messages, the agreement, the bank transfer remittances, the guarantee, the authority, and other documents relevant to [Ms Ye’s] credit.

[Yu Chen] was required to establish that the witnesses to the independent witnesses’ affidavits were signed with appropriate authority. [Yu Chen’s argument is that the costs were unnecessary, [Ms Ye’s] being untruthful, being designed to frustrate [Yu Chen], avoid justice and which was a waste of limited court resources.

The conduct of [Ms Ye and Ucer] in the proceedings was a flagrant breach of their legislative duty to facilitate just, quick and cheap resolution of real issues in the proceedings. The case advanced by [Ms Ye and Ucer] did not address the plaintiff’s evidence.

…

It was the clear intention of [Ms Ye and Ucer] to delay liability and accountability. [Their conduct] in maintaining the factual dispute as compared to any legal argument which may have been available to them, which they knew to be untrue, causing a five-day hearing, is a relevant delinquency. It is a case for indemnity costs.”

66. Her Honour then addressed Yu Chen’s alternative argument that she was entitled to indemnity costs pursuant to the UCPR on the basis of the offer of compromise dated 20 December 2019 referred to above. Her Honour rejected the argument put by Ms Ye and Ucer that the offer was invalid because it did not comply with r 20.26 of the UCPR and said that if she was wrong about ordering the costs on an indemnity basis for the whole proceedings, Yu Chen would be entitled to an order for costs in accordance with the UCPR.

The grounds of appeal

The refusal of leave for expert evidence (grounds 6, 7 and 8)

67. Ms Ye and Ucer sought to challenge the judgment on the basis of an alleged error in her Honour’s interlocutory decision to refuse to vacate the hearing in order to permit them to obtain expert evidence from a handwriting expert and a computer expert.

68. The grounds relevant to this matter are as follows:

“6   The learned magistrate erred (at [19]) in denying the plaintiffs procedural fairness by refusing an application to lead expert evidence, where:

a. the relevant Notice of Motion was filed within a reasonable time of receipt of the defendant’s evidence to which the proposed expert evidence related;

b. the evidence served by the defendant established a strong documentary case; and

c. the expert evidence sought to be relied upon was essential in order to establish a defence to that case.

7 The learned magistrate erred (at [19]) by failing to give proper regard to ss 56 and 58 of the Civil Procedure Act and Rule 2.1 of the Uniform Civil Procedure Rules in refusing an application by the plaintiffs to lead expert evidence.

8   The learned magistrate erred (at [19]) in denying the plaintiffs procedural fairness by refusing an application to lead expert evidence where the court had already made orders allowing the defendant to lead expert evidence, and (at [23]) by finding that the defendant did not adduce such evidence in ‘technical terms’.”

69. Mr Cheema, who appeared on behalf of Ms Ye and Ucer in this Court, argued that her Honour’s failure to permit them to explore the possibility of obtaining expert evidence to challenge the genuineness of the WeChat messages and Ms Ye’s signature on the Agreement or the December 2017 document was erroneous. He argued that the dismissal of their notice of motion amounted to a denial of procedural fairness which was sufficient to warrant the judgment being set aside and the matter being remitted to the Local Court for a new hearing.

70. Mr Cheema argued that her Honour had underestimated the importance of the expert evidence which Ms Ye and Ucer hoped to obtain and had incorrectly assessed its potential probative value as being “of no importance in the case”. He also submitted that her Honour was incorrect to reason that the issues in the proceedings would depend on the credit of witnesses rather than the authenticity of documents. He further contended that the importance placed on the WeChat evidence and the photograph in the reasons for judgment showed that, contrary to her Honour’s reasoning in dismissing the motion for leave to adduce expert evidence, the WeChat evidence and the photograph were significant to her Honour’s factual determination.

71. Mr Cheema submitted that Ms Ye was “in hindsight” prevented from properly presenting her case because the expert evidence could have shed light on the origin of the WeChat messages and whether they could be attributed to a device other than one associated with Ms Ye.

69. Mr Cheema also submitted (despite the absence of evidence to support the submission) that Ms Ye’s name “appears to have been written on [the December 2017 document] as opposed to being signed.”

70. Further, Mr Cheema contended that her Honour was not entitled to draw inferences from the apparent similarities between Ms Ye’s signatures on the defence, the Agreement and the December 2017 document, in circumstances where her Honour had prevented Ms Ye and Ucer from obtaining expert evidence on that matter.

71. Mr Harrison, who appeared for Yu Chen in the Court below and in this Court, argued that, in effect, Ms Ye and Ucer were seeking to challenge an interlocutory decision, for which they required an extension of time, which he submitted ought not be granted.

72. In Gerlach v Clifton Bricks Pty Limited (2002) 209 CLR 478; [2002] HCA 22, the majority (Gaudron, McHugh and Hayne JJ) expressed the relevant principle governing the circumstances in which an interlocutory order can be challenged in an appeal against a final judgment as follows:

“6   The proposition that any interlocutory order can be challenged in an appeal against the final judgment in the matter is often stated in unqualified terms. The better view, however, is reflected in the formulation adopted in Spencer Bower, Turner and Handley where it is said that ‘on an appeal from the final order an appellate court can correct any interlocutory order which affected the final result’ (emphasis added).

7    It is necessary to make the qualification, ‘which affected the final result’, at least to reflect the well-established principle that a new trial is not ordered where an error of law, fact, misdirection or other wrong has not resulted in any miscarriage of justice. …”

[Emphasis in original; footnotes omitted.]

76. On the basis of this principle, I am satisfied that it is open to Ms Ye and Ucer to seek leave to appeal against the judgment on grounds 6, 7 and 8. Leave is required under s 40 of the Local Court Act as these grounds involve a question of mixed fact and law.

77. In Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29, the Court of Appeal considered whether the Local Court had failed to comply with an obligation to accord procedural fairness. Basten JA (Bathurst CJ and Beazley P agreeing) said, at [41]:

“[W]here the law imposes obligations of procedural fairness, a failure to comply with those obligations will constitute jurisdictional error, although the precise boundaries of the obligation in a particular case may appear to fall within the discretion of the court or tribunal in determining its own procedures.”

78. By the time her Honour determined Ms Ye and Ucer’s application for vacation of the hearing date to enable them to obtain expert evidence, a significant amount of evidence had been filed in the proceedings. Her Honour was aware of the issues in the proceedings and the defence that neither Ms Ye nor Ucer had any involvement with Yu Chen. It is apparent from her Honour’s reasons that she appreciated that Yu Chen’s case depended on several sources of evidence but that the in-person identification of Ms Ye by Ms Xie (who had known her for some years) at the meetings in July and December 2017 was, if accepted, fatal to the defence (leaving aside legal arguments about the effect of the Agreement and the December 2017 document).

79. Thus, Yu Chen’s case did not depend on the WeChat messages or the photograph which Yu Chen took of Ms Ye in October 2017 although they corroborated it. Although to describe the potentially corroborative evidence of the WeChat messages, the photograph and the signature of Ms Ye was being of little or no importance may be to understate their potential power as corroboration, it is significant that the reasons on the notice of motion were given ex tempore. Some latitude is appropriate in these circumstances since slips in expression (which do not amount to error) can occur due to the demands of giving reasons orally: Acuthan v Coates (1986) 6 NSWLR 472 at 479A (Kirby P, Glass JA agreeing) and at 485C-D (Mahoney JA).

80. Further, her Honour’s reasons for rejecting the application were not confined to the probative value of the (as yet unobtained) expert evidence. Her Honour was concerned about the lateness of the application, the need to vacate the hearing date if the application were granted and the fact that Malouf Solicitors had not obtained any indication from an expert as to the evidence which could be adduced. As can be seen from the narrative of the procedural history above, Malouf Solicitors had the WeChat messages and the photograph for over a year before the notice of motion was filed on 8 January 2020. These are all matters which were relevant to the decision by reason of the provisions of Part 6 of the Civil Procedure Act 2005 (NSW).

81. I am not persuaded that there was any error in her Honour’s decision, either at the time or having regard to her Honour’s final reasons. Ms Ye and Ucer had ample opportunity to adduce evidence in support of the application and to be heard. Her Honour was obliged, by s 56 of the Civil Procedure Act, “to facilitate the just, quick and cheap resolution of the real issues in the proceedings”. The real issue in the proceedings was whether Ms Ye was the person who attended the meetings in July, October and December 2017 regarding Yu Chen’s Visa application. Her Honour was correct to find that that question largely depended on the oral evidence of the persons called by Yu Chen.

82. I am not persuaded that the dismissal of the application for leave to adduce expert evidence disentitled her Honour from taking into account a comparison between Ms Ye’s signature on the defence (which was accepted to be her signature) and her signature on the Agreement and the December 2017 document. Her Honour, as the tribunal of fact, was entitled, in the absence of expert evidence, to draw such an inference for herself. The authorship of disputed documents is a question of fact. Thus, her Honour was entitled to compare the defence (which Ms Ye had incontrovertibly signed) and the Agreement and the December 2017 document to determine whether the documents were written by the same person, even without the assistance of expert evidence: Adami v The Queen (1959) 108 CLR 605 at 617-618 (Dixon CJ, McTiernan, Fullagar, Kitto and Menzies JJ); [1959] HCA 70; R v Knight [2001] NSWCCA 114 at [59] (G James J, Heydon JA and Studdert J agreeing); (2001) 120 A Crim R 38; Singh v De Castro [2017] NSWCA 241 at [61] (Sackville AJA, Macfarlan and Gleeson JJA) and Jeans v Cleary [2006] NSWSC 647 at [157] (Johnson J), following R v Doney [2001] NSWCCA 463 at [61] (Ipp AJA, Hidden and Barr JJ agreeing); (2001) 126 A Crim R 271.

83. It is questionable whether her Honour was entitled to have regard to the absence of evidence challenging the WeChat messages in circumstances where such evidence might have been led, had leave been granted. However, I do not consider this matter to have been significant in her Honour’s decision.

84. I am not persuaded that there was any material error in her Honour’s approach or that the effect of the ruling was, in light of all of the evidence adduced at the substantive hearing, capable of affecting the result. Each of grounds 6, 7 or 8 raises a question of mixed fact and law which requires leave. I am not persuaded that leave ought be granted in respect of any of these grounds.

Whether Ucer and Ms Ye were liable as a matter of law (grounds 1, 2, 3, 4 and 5)

85. The grounds concerning the contractual liability of Ucer and Ms Ye are as follows:

“1   The learned magistrate erred in finding (at [34] – [40]) the document dated 17 December 2017 (Document) constituted a contract of guarantee where the Document was a mere representation and did not bear the character of a contract.

2   The learned magistrate erred in relying on extrinsic evidence to interpret the Document (at [36] – [40]) and find that it was a contract of guarantee when the meaning of the Document was plain, clear and without ambiguity.

3   The learned magistrate erred (at [34] – [40]) in conflating the implication of contractual terms with the interpretation of contractual terms in finding that the first plaintiff and defendant had entered into a contract of guarantee.

4   The learned magistrate erred (at [34] – [40]) in implying terms into the putative contract of guarantee in circumstances where there was no bases to imply such terms, either in fact or in law.

5   The learned magistrate erred after having found (at [37]) that the Document was susceptible to more than one meaning, the ambiguity was not resolved in favour of the first plaintiff as the putative surety.”

[Emphasis in original.]

86. It is apparent from the grounds that they concern only Ms Ye’s liability since Ucer’s liability derives from the Agreement. As there is significant overlap between the grounds, it is convenient to address them together.

87. For the purposes of these grounds, Mr Cheema did not seek to challenge her Honour’s findings regarding the credibility of witnesses. Rather, he argued, that Ms Ye ought not have been found liable under the December 2017 document on the basis of its terms, even accepting (for the purposes of these proceedings) that she signed it.

88. Mr Cheema argued that her Honour was in error in construing the December 2017 document as imposing a liability on Ms Ye for the following reasons:

1. as the Agreement did not stipulate a time within which the Visa application had to be lodged, Ucer had not been shown to be in breach;

2. the December 2017 document did not provide that Ms Ye would be responsible for Ucer’s breach;

3. the December 2017 document did not contain a forbearance to sue;

4. Ms Ye ought to have been taken to have signed the December 2017 document on behalf of Ucer and not on her own behalf;

5. if Ms Ye ought be taken to have made a promise, it was not supported by consideration flowing from Yu Chen;

6. at best, the December 2017 document was an offer to vary the Agreement by stipulating a time for performance of 31 January 2018;

7. as there was no ambiguity in the December 2017 document, her Honour erred in having regard to the surrounding circumstances; and

8. any ambiguity in the December 2017 document ought result in the document being construed in favour of Ms Ye, the putative guarantor: Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 (Andar).

89. Although the Agreement did not stipulate a time within which the Visa was to be lodged, business efficacy would require a reasonable time to be implied: see category (2) in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20 at 26; cited by Mason J in Codelfa at 347 and Falconer v Wilson [1973] 2 NSWLR 131 at 140D-141D (Mahoney J). While this implied term was not pleaded, the case was conducted on that basis: Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70.

90. Furthermore, Ms Ye had made repeated representations to Yu Chen and her associates that the Visa application had been lodged. It was open to her Honour to infer that, had this occurred, Ms Ye, as a director of Ucer, would have been able to produce the reference number, given the length of time since Ms Ye assured Yu Chen that the Visa application had been lodged.

91. The December 2017 document, which is extracted in full earlier in these reasons, cannot be understood without reference to the surrounding circumstances. Her Honour was entitled, for the reasons given by Mason J at 352-353 in Codelfa, to have regard to the objective circumstances as established by the evidence to construe the December 2017 document.

92. I reject Mr Cheema’s submission that Ms Ye ought be taken to have signed the December 2017 document on behalf of Ucer and not on her own behalf. First, there is no mention of Ucer in the document. Secondly, the words, “to investigate the progress and circumstances” are apt to refer to Ms Ye rather than to Ucer which was the entity responsible under the Agreement for lodging the Visa application. Thirdly, the surrounding circumstances indicate that Yun Chen’s associates were looking to Ms Ye to provide a guarantee of Ucer’s performance.

93. I am not persuaded that any error has been shown in her Honour’s conclusion that the December 2017 document contained a promise by Ms Ye in return for a forbearance to sue. Indeed, this construction is one which is consistent with the objective circumstances and the text of the document and is, in my view, correct. On this basis, the promise made by Ms Ye to Yu Chen was supported by consideration flowing from Yu Chen: see the summary of authorities in Edlin v Williams [2000] ANZConvR 43 (McMurdo P and Shepherdson J) at [41]-[43].

94. I reject the submission that the December 2017 document was no more than an attempt to vary the Agreement. The parties were, in any event, different. Yu Chen was not promising Ucer that she would not sue Ucer before 31 January 2018; her promise was made to Ms Ye, in return for Ms Ye’s promise that if proof of lodgement of the Visa application was not provided by 31 January 2018, Ms Ye would be liable for the refund. On this basis, her Honour was not in error in finding Ms Ye liable on the basis of the December 2017 document (or Ucer liable on the basis of its breach of the Agreement).

95. It was common ground that, in accordance with Andar, a doubt as to the construction of a provision in a guarantee or indemnity should be resolved in favour of the surety or indemnifier. I am not persuaded that, when regard is had to the surrounding circumstances, in so far as they affect the parties’ objective intentions, there is any real doubt as to the meaning to be accorded to the December 2017 document. Thus, I am not persuaded that there is any scope for the application of the principle set out in Andar.

96. Her Honour was correct to find that Ms Ye had requested that Yu Chen forbear from suing Ucer until 31 January 2018 in return for Ms Ye’s promise to refund the amounts paid if the reference number of the Visa application was not provided by 31 January 2018. This is sufficient, for the reasons given by her Honour, to render Ms Ye personally liable to Yu Chen.

97. I am not persuaded that any of grounds 1, 2, 3, 4 or 5 has been made out. However, I am disposed to grant leave in respect of these grounds.

Whether the order for indemnity costs ought be set aside (ground 9)

98. Ground 9 in the amended summons is as follows:

“The learned magistrate erred in ordering [Ucer and Ms Ye] to pay [Yu Chen’s] costs on an indemnity basis and or from the commencement of the proceedings.”

99. Mr Cheema argued, in support of ground 9, that her Honour was in error in finding Ucer and Ms Ye to have been delinquent when they were entitled to put Yu Chen to proof of her case. He submitted in writing:

“In essence, Ms Ye was being punished for the conduct giving rise to the dispute (as found by the Magistrate) and – if one were to extend the rationale -she ought to have capitulated in light of the WeChat records and the ‘four witnesses’.”

100. He contended that, in the absence of a finding of delinquency, there was no justification for the costs of the proceedings to be awarded on an indemnity basis.

101. In the alternative, Mr Cheema argued that the offer of compromise was invalid as it did not comply with UCPR r 20.26 and that, accordingly, her Honour’s alternative order ought not stand.

102. Her Honour’s reasons for the finding of delinquency are set out above and do not need to be paraphrased. The finding of delinquency was based, in substance, on Ms Ye and Ucer’s conduct in maintaining a defence which they knew to be untrue for the purposes of delaying the administration of justice. Thus, it was not a question of merely putting Yu Chen to proof of the allegations made in her statement of claim, but rather of maintaining a defence which they knew to be untrue. I am not persuaded that any error has been shown in her Honour’s finding of delinquency or in the exercise of her Honour’s discretion to order indemnity costs on that basis. I am not persuaded that ground 9 warrants a grant of leave to appeal, as required by s 40(2) of the Local Court Act.

103. In these circumstances, it is not necessary to address Mr Cheema’s alternative argument that the offer of compromise was invalid as it included the words “plus costs as agreed or assessed.” However, as this question may be of general significance in the Local Court and elsewhere, it is useful to set out some relevant authorities.

104. In Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 (Whitney), the Court of Appeal (Bathurst CJ, Beazley P, McColl, Barrett and Emmett JJA) held that an offer made in the form “[judgment sum] plus costs as agreed or assessed” was invalid as the then applicable version of UCPR r 20.26 required an offer to be “exclusive of costs”. Thus, Whitney followed Old v McInnes and Hodgkinson [2011] NSWCA 410 which held that an offer that included a clause that the offeree pay the offeror’s costs as agreed or assessed has been held not to be exclusive of costs.

105. UCPR, r 20.26 was amended following Whitney to provide that offers made after 7 June 2013 “must not include an amount for costs and must not be expressed to be inclusive of costs”: UCPR r 20.26(2)(c).

106. In Curtis v Harden Shire Council (No 2) [2015] NSWCA 45 (Curtis), the Court of Appeal considered the effect of the amendment. In Curtis, the appellant made two offers of compromise on 23 September 2013 in the following terms:

“Verdict for the Appellant, with damages to be assessed but reduced by 10%, plus costs as agreed or assessed.”

107. The Court (Bathurst CJ, Beazley P and Basten JA) noted, at [23], that under the pre-7 June 2013 version of UCPR r 20.26, such an offer would have been invalid. However, the Court held at [25] that the offers in the form made by the appellant “neither contained an amount for costs nor were they expressed to be inclusive of costs…[and] were therefore compliant with UCPR, r 20.26”.

108. The offer of compromise served by Yu Chen in the present case did not include an amount for costs and was not expressed to be inclusive of costs.

109. Mr Cheema argued further that the offer of compromise was invalid since it did not fall within UCPR, r 20.26(3), which relevantly provided:

“(3)  An offer under this rule may propose:

…

(b)  that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or

…”

110. An argument to this effect was not made in Curtis although UCPR, r 20.26(3) was in the same terms as apply to the present case. Mr Cheema’s argument depended on the proposition that UCPR, r 20.26(3) set out exhaustively the circumstances in which an offer could be made which included a reference to “costs as agreed or assessed”. I do not accept that proposition but it is not necessary to decide it.

111. The point did not arise in my decision of Dailhou v Kelly (No 3) [2014] NSWSC 1220 (Dailhou) because in Dailhou, the offer of compromise was made by the defendant who offered: “Judgment for the plaintiff against the defendants in the sum of $600,000 plus costs as agreed or assessed.” Thus, I found, at [9], that the offer was in accordance with UCPR, r 20.26(3)(b).

112. It is not necessary, having regard to my reasons above, to address this matter further.

Costs

113. The parties submitted that it would be appropriate to make a default order in accordance with the general rule that costs follow the event but to preserve their rights to argue for a different order.

Consequential orders

114. Several orders were made by the Court to protect the administration of justice which had the effect of constraining the parties’ rights to deal with their property and funds. I understood it ultimately to be common ground that no orders should be made at this stage to vary those orders, with the intention that, once the parties have had a chance to consider my reasons and any right the unsuccessful parties may have to challenge my orders, they can address the Court on the making of further orders to bring these proceedings to an end. To that end, I propose to stand the matter over for mention for the making of orders, in the event that the parties cannot agree on orders which can otherwise be made in chambers.

Orders

115. For the reasons given above, I make the following orders:

1. Refuse leave to the plaintiffs in respect of grounds 6, 7, 8 and 9 of the amended summons.

2. Grant leave to the plaintiffs pursuant to s 40(1) of the Local Court Act 2007 (NSW) in respect of grounds 1, 2, 3, 4 and 5.

3. Dismiss the appeal.

4. Subject to any party making an application in writing to my Associate within seven days for an order to the contrary, order the plaintiffs to pay the defendant’s costs of the proceedings in this Court.

5. Direct the parties to provide draft minutes of order to my Associate within five weeks which address the orders to be made following the orders made by Beech-Jones J on 22 March 2021 and any other extant orders.

6. Stand the matter over to 8 June 2022, such date to be vacated if all outstanding orders sought are made prior to that date.

**********

Decision last updated: 27 April 2022