Ye v Chen

[2021] NSWSC 1098

Supreme Court

New South Wales

Medium Neutral Citation:

Ye v Chen [2021] NSWSC 1098

Hearing dates:

1 July 2021

Date of orders:

31 August 2021

Decision date:

31 August 2021

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders that:

(1)   Ms Chen’s amended notice of motion filed 18 June 2021 is dismissed.

(2)   The defendant is to pay the plaintiffs’ costs on an ordinary basis.

Catchwords:

PRACTICE AND PROCEDURE – Uniform Civil Procedure Rules 2005 (NSW), rr 13.4(1) and 50.16A – Application for dismissal – Whether proceedings frivolous or vexatious – Whether appeal grounds are incompetent – Application dismissed

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 56, 58, 98

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

Uniform Procedural Rules 2005 (NSW) rr 2.1, 13.4, 50.16A

Cases Cited:

Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549; [1987] HCA 15

Bofinger v Kingsway Group Ltd (2009) 239 CLR 424; [2009] HCA 44

General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1965] ALR 636; (1964) 38 ALJR 253; [1964] HCA 69

Gerlach v Clifton Bricks Pty Ltd [2002] HCA 222

Khana v Sabi Foods International (Aust) Pty Ltd [2016] NSWSC 1009

Makucha v Sydney Water Corporation [2013] NSWCA 177

O’Brien v Bank of Western Australia Ltd (2013) 16 BPR 31,705; [2013] NSWCA 71

Spencer v Commonwealth (2010) 241 CLR 118; (2010) 269 ALR 233; (2010) 84 ALJR 612; [2010] HCA 28

Category:

Procedural rulings

Parties:

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

Representation:

Counsel:
A Cheema (Plaintiffs)
J. Harrison (Defendant)
Solicitors:
Prudential Legal (Plaintiffs)
Auburn Lawyers (Defendant)

File Number(s):

2021/6370

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Local Court

Jurisdiction:

General Division

Date of Decision:

11 December 2020

Before:

Stapleton LCM

File Number(s):

2018/215879

Judgment

1. HER HONOUR: The defendant seeks a summary judgment by way of an amended notice of motion filed 18 June 2021.

2. In this Court the first plaintiff is Rebecca Haria Ye, who was the first defendant in the Local Court proceedings. The second plaintiff is Ucer Investment and Resources Management Pty Ltd (“Ucer Investment”), who was the second defendant in the Local Court proceedings. Ms Ye (“Ms Ye”) is the sole director, secretary of the second plaintiff and the appellant in these proceedings. In this Court the defendant is Yu Chen (“Ms Chen”), the plaintiff in the Local Court proceedings and the respondent in these proceedings. For convenience, and ease of understanding, I shall refer the parties by name. As Ms Ye is the directing manager of Ucer Investment, I shall refer to both plaintiffs as Ms Ye. I will refer to Ucer Investment where the claim is only against Ucer Investment. The parties relied upon a joint court book.

The summons

3. By summons filed 8 January 2021, Ms Ye and Ucer Investment seek orders that:

1. The judgment in the matter below, including the orders set out in paragraphs [42]-[44] of the judgment, be stayed pending the determination of this appeal.

2. Leave to appeal from the whole of the decision below.

3. The appeal be allowed.

4. Orders [42]-[44] of the Court below be set aside.

5. Judgment be given for Ms Ye against Ms Chen.

6. The proceedings between Ucer Investment and Ms Chen be remitted to the Local Court with leave granted to Ucer Investment to rely on expert evidence.

   4. There are eight grounds of appeal. They are that the Magistrate erred as follows:

7. In finding (at [34]-[40]) the document dated 17 December 2017 (“the document”) constituted a contract of guarantee where the document was a mere representation and did not bear the character of a contract.

8. In relying on extrinsic evidence to interpret the document (at [36]-[40]) and finding that it was a contract of guarantee when the meaning of the document was plain, clear and without ambiguity.

9. In conflating the implication of contractual terms with the interpretation of contractual terms in finding that Ms Ye and Ms Chen had entered into a contract of guarantee (at [34]-[40]).

10. In implying terms into the putative contract of guarantee in circumstances where there were no bases to imply such terms, either in fact or in law (at [34]-[40]).

11. After having found (at [37]) that the document was susceptible to more than one meaning, the ambiguity was not resolved in favour of Ms Ye as the putative surety.

12. In denying Ms Ye and Ucer Investment procedural fairness by refusing an application to lead expert evidence (at [19]), where:

    1. the relevant notice of motion was filed within a reasonable time of receipt of Ms Chen’s evidence to which the proposed expert evidence related;

    2. the evidence served by Ms Chen established a strong documentary case; and

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

13. By failing to give proper regard to ss 56 and 58 of the Civil Procedure Act 2005 (NSW) (“Civil Procedure Act”) and Uniform Procedural Rules 2005 (NSW) (“UCPR”) 2.1 in refusing an application by Ms Ye and Ucer Investment to lead expert evidence (at [19]).

14. In denying Ms Ye and Ucer Investment procedural fairness by refusing an application to lead expert evidence where the Court had already made orders allowing Ms Chen to lead expert evidence (at [19]).

    5. The grounds of appeal fall into two main topics. Grounds (1) to (5) relate to the interpretation of the guarantee (the guarantee grounds) and (6) to (8) relate to a denial of procedural fairness. Grounds (1) to (5) involve a question of law. Grounds (6) to (8) involve an interlocutory decision for which leave to appeal is required: see s 40(2) of the Local Court Act 2007 (NSW).

Ms Chen’s amended notice of motion filed 18 June 2021, the subject of the hearing before this Court

6. By amended notice of motion filed 18 June 2021, Ms Chen seeks:

(1A) Pursuant to UCPR 13.4, the present proceedings are dismissed.

(1B) Pursuant to s 98(1)(c) of the Civil Procedure Act, Ms Ye and Ucer Investment are to pay Ms Chen's costs of the present proceedings assessed on an indemnity basis.

(1C)   Further to the orders of Beech-Jones J entered on 22 March 2021, the stay on the execution of the judgment of the Local Court of New South Wales dated 11 December 2020 be removed and the stay of execution of the writ for the levy of property filed in the Local Court proceedings and dated 20 January 2021, also be removed.

(1D)   The sum of $86,019.33 which has been transferred on behalf of Ms Ye and Ucer Investment’s to Ms Chen’s solicitor may now be dispersed to Ms Chen in payment of Ms Ye and Ucer Investment’s liability to Ms Chen arising from the judgment sum together with pre judgment interest (however that amount does not discharge Ms Ye and Ucer Investment’s additional liabilities to Ms Chen with respect to post judgment interest or any costs).

Or, in the alternative to orders 1A-1D:

1. Pursuant to UCPR 50.16A and 13.4, the proceedings be dismissed to the extent that they concern Ucer Investment.

2. Pursuant to UCPR 42.20, Ucer Investment is to pay Ms Chen’s costs of the proceedings concerning Ucer Investment assessed on an indemnity basis pursuant to s 98(1)(c) of the Civil Procedure Act.

3. Pursuant to UCPR 42.21 and 50.8, within 14 days of these orders being made, Ms Ye is to pay into the Supreme Court the amount of $80,000 inclusive of GST (or other amount deemed by the Supreme Court to be appropriate) as security for Ms Chen’s costs in these proceedings and these proceedings be stayed until such payment has been made.

4. Should Ms Ye comply with order (3), within 14 days of these orders being made, she is to file and serve a notice of motion together with an affidavit in support (which annexes a proposed amended summons) and any other material to be relied on to seek leave to file the proposed amended summons.

5. Without leave of the Court first obtained, Ms Ye is not to further encumber the real property described as Lot 17 in Deposited Plan 7118 and known as 22 Happ Street Auburn NSW (the property).

   7. I shall start with paragraph (1) of the amended notice of motion and then the other paragraphs of the amended notice of motion. The plaintiff relies upon UCPR 50.16A and 13(4)(1)(c).

The law – strike out pleadings

8. UCPR 13.4(1)(c) reads:

“13.4 Frivolous and vexatious proceedings

(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings-

…

(c) the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.

9. UCPR 13.4(1) provides that the Court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are if the proceedings are frivolous or vexatious, or if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the Court.

10. In General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125,Barwick CJ stated at 129:

“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.”

11. In O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71, the Court of Appeal applied the High Court decision of Spencer v Commonwealth (2010) 241 CLR 118 (“Spencer”). Although in Spencer the High Court was concerned with s 31A(2) of the Federal Court Act 1976 (Cth), the following principles are of general application:

1. On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23] per French CJ and Gummow J).

2. The critical question can be expressed as whether there is more than a “fanciful” prospect of success (at [25] per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward (at [54] per Hayne, Crennan, Kiefel and Bell JJ). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success.

3. Powers to summarily terminate proceedings must be exercised with exceptional caution (at [55] per Hayne, Crennan, Kiefel and Bell JJ; see also French CJ and Gummow J at [24]).

12. Ms Ye also relies upon UCPR 50.16A. It reads:

“50.16A Objections to competency of appeal

(1) A defendant who objects to the competency of an appeal must, by notice of motion filed and served on all other parties to the appeal within 14 days after service on the defendant of the notice of appeal, apply to the court for an order dismissing the appeal as incompetent.

(2) If the defendant fails to comply with subrule (1) and the appeal is nevertheless dismissed as incompetent--

(a) the defendant is not entitled to costs of the appeal unless the court otherwise orders, and

(b) the court may order the defendant to pay the plaintiff any costs of the appeal proving useless or unnecessary.”

The Local Court proceedings

13. On 8 January 2021 Ms Ye and Ucer filed their appeal. Ms Chen filed her notice of motion seeking inter alia an order that the appeal is incompetent. See para 1A(1) of notice of motion.

14. Ms Chen filed her notice of motion on the 16 March 2021. As the notice of motion was filed more than 14 days after January 8 2021, it is filed out of time and Ms Chen is not entitled to her costs of appeal unless the court orders.

15. By amended statement of claim filed 17 September 2019, Ms Chen sued Ms Ye and Ucer Investment for damages for breach of a written agreement dated 27 April 2017 and breach of a guarantee dated 17 December 2017 seeking damages in the sum of US$50,000 (approximately AUS$72,000) in respect of migration services, which she alleges were never provided. In December 2017, Ms Chen says that Ms Ye guaranteed that she would repay that amount. By defence Ms Ye and Ucer denied the allegations.

16. On 8 January 2020, Ms Ye and Ucer Investment filed a notice of motion which sought to vacate the hearing listed to occur on 28 February 2020 in order to allow time for Ms Ye and Ucer Investment to obtain and serve expert handwriting evidence and other expert evidence upon which they intended to rely.

17. On 10 February 2020, the notice of motion was heard by the Magistrate, who also presided over the substantive hearing. The notice of motion was dismissed. I will refer to this decision in more detail later in this judgment.

18. The hearing in the Local Court took place over five days; 28 February 2020, 23 and 24 September 2020, and 20 and 27 October 2020.

19. On 11 December 2020, the Magistrate handed down her written judgment. Her Honour ordered Ms Ye and Ucer Investment to pay $72,350.66 plus interest from 1 February 2018 to Ms Chen. These amounts equate to $86,000.

20. On 10 February 2021, the Magistrate granted a stay on terms that required Ms Ye to pay a sum into a controlled monies account within 4 weeks. This sum was comprised of $86,019.33 (being the judgment sum plus interest) plus $150,000 (said to be 75% of Ms Chen’s total legal costs on the indemnity basis). The total sum required to be paid was $236,000.

21. On 9 March 2021, the judgment sum ($86,019.33) was paid into a controlled moneys trust account. In order to obtain the remaining amount for security for costs, Ms Ye placed her house on the market.

22. On 23 March 2021, the Magistrate ordered Ms Ye and Ucer Investment to pay Ms Chen’s costs for the Local Court proceedings, assessed on an indemnity basis.

Prior procedural decisions in this Court

The first notice of motion filed 16 March 2021

23. The first notice of motion was heard (initially on an urgent ex parte basis) by the common law duty judge. It sought freezing and other orders directed to the stay granted by the Magistrate.

24. On 22 March 2021, Beech-Jones J made the following relevant orders:

“(1) Set aside the stay orders granted by Stapleton LCM on 18 February 2021. In lieu thereof, order that:

(i) The sum of $86,019.33 currently held by Ms Ye's solicitors be paid within four working days to the trust account of Ms Chen's solicitors, but not be further dissipated by them without an order of the Court.

(ii) The judgment of the Local Court, the subject of this appeal, be stayed pending determination of the appeal on condition that on or before 31 May 2021, the appellants pay the further sum of $150,000 into Ms Chen's solicitor's trust account, which if paid are not to be further dissipated by them without further order of the court.

…

(3) Until further order, Ms Ye is restrained from disposing of or dealing with or otherwise dissipating the net proceeds of any funds derived from the sale of [the Auburn] property other than to comply with Order 1(ii).

(4) Ms Ye is to provide the solicitors for Ms Chen seven days' advance written notice of:

(a) her intention to place for sale the property [Auburn]; and

(b) if it is proposed to sell that property by auction, to notify of the reserve price.

…”

25. Ms Ye has paid into Ms Chen’s solicitor’s account the sum of $150,000. Hence, she has complied with order (1)(ii) above.

26. At the outset of the hearing of the notice of motion filed 16 March 2021, I asked counsel for Ms Chen why this application for summary judgment was an appropriate course, rather than hearing the application for an extension of time to appeal in relation to the interlocutory decision for leave to appeal and the appeal itself together. Counsel for Ms Chen referred to Khanna v Sabi Foods International (Aust) Pty Ltd [2016] NSWSC 1009 (“Khanna”) and later to Makucha v Sydney Water Corporation [2013] NSWCA 177 (“Makucha”).

27. In Khanna, the plaintiff was self represented in the Local Court and on the defendant’s application for summary judgment, Hall J made findings that the summons was filed out of time and that none of the appeal grounds raised a question of law, or one of mixed fact and law, nor did they identify any error in the Magistrate’s decision. His Honour dismissed the plaintiff’s appeal pursuant to UCPR 13.4.

28. In Makucha, Barrett JA also considered an application pursuant to UCPR 13.4 to dismiss a summons seeking leave to appeal in the Court of Appeal. At [6] his Honour said that “[t]he desirable course is accordingly to move direct to a consideration of the points of appeal and the question whether, as Sydney Water contended, the appeal proceedings are frivolous or vexatious or disclose no reasonable cause of action.” Similarly, his Honour said at [8] that “[t]he preferable course is… to address the substance of the complaints the appeal points advance.”

29. The facts in Makucha are rare. The self represented appellant’s main contention was that the primary judge was not a judge of the Supreme Court because he did not, upon his appointment, swear the necessary oaths. Mr Makucha said therefore it followed that all judicial acts purportedly performed by the primary judge were nullities, including the several orders he made in favour of Sydney Water and against him in the equity division proceedings. Mr Makucha further contended that what the points of appeal referred to as the “de facto doctrine” did not avoid the consequence of nullity. There was an apparent contention that the proceedings in the equity division should have been by trial by jury (or perhaps that proceedings in the Court of Appeal should been).

30. It is trite law, but each case depends on its facts. These two cases cited by counsel for Ms Chen involve rare circumstances.

31. More specifically, in Ye v Chen [2021] NSWSC 272, Beech-Jones J stated at [7] that summary judgment applications for appeals on questions of law will very rarely be entertained in advance of the hearing of the final appeal. I have expressed the same view in earlier cases. This is because applications for an extension of time to appeal, leave to appeal and the appeal itself can be dealt with together more expeditiously, as there is an overlap of the issues that need to be determined for each application. The hearing of a summary judgment application may take half a day of Court time (as it did here).

32. The time it takes to decide a summary judgment application, in order to establish whether the appeal is hopeless, is about the same time as it would take to decide the whole appeal (including applications for extension of time and leave). This is because the issues raised on appeal have to be canvassed in both the summary judgment application and appeal while the hearing of the whole appeal results in a finalisation (subject to an appeal from that decision). The hearing of the appeal itself is a much better use of Court time and does not increase both parties’ legal costs.

Appeals generally

33. Section 39(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

34. Section 40(1) of the Local Court Act provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court, but only by leave of the Supreme Court.

33. Section 40(2) of the Local Court Act also provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves an interlocutory judgment or order and an order as to costs, may appeal to the Supreme Court, but only by leave of the Supreme Court.

34. Section 41 of the Local Court Act provides that this Court may determine an appeal made under ss 39(1) or 40(1) by either (a) varying the terms of the judgment or order, (b) setting aside the judgment or order, (c) setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or (d) dismissing the appeal.

The Local Court proceedings

37. As previously stated, on 12 July 2018, Ms Chen filed a statement of claim in the Local Court seeking damages for breach of the written agreement and breach of the written guarantee in the sum of $72,350.66 plus interest and costs.

38. By amended defence dated 8 October 2019, Ms Ye and Ucer Investment denied all the allegations made against them.

39. On 11 December 2020, the Magistrate entered judgment in favour of Ms Chen against Ms Ye and Ucer Investment in the sum of $72,350.66 plus interest from 1 February 2018 and costs. The Magistrate made an order that the sum of $30,000, which was paid into court by way of security for costs by Ms Ye be released forthwith. On 22 March 2021, the Magistrate ordered Ms Ye and Ucer investment to pay Ms Chen’s costs on an indemnity basis.

40. I shall refer to appeal grounds (6) to (8) that deal with the issue of denial of procedural fairness, whether an extension of time to appeal should be granted and the leave to appeal application as these issues are intertwined. I will then deal with the appeal grounds (1) to (5) that relate to the guarantee.

Appeal grounds (6) to (8) – denial of procedural fairness

41. The refusal to allow a party to rely upon experts’ reports would normally be considered an interlocutory decision, for which leave of the Court is required (see s 40(2) of the Local Court Act). Ms Chen submitted that aside from leave being required, Ms Ye’s application is out of time and she needed to have applied for an extension of time in relation to the procedural fairness issue.

Extension of time

Material date

42. UCPR 50.3 concerns “Time for Appeal” it relevantly reads:

“(1) A summons commencing appeal must be filed: (a) within 28 days after the material date, or …”

43. If the material date is 12 March 2020 (that is 28 days from the interlocutory decision), then Ms Ye’s appeal is filed out of time and she needs apply for an extension of time to appeal and inter alia to provide a reason for the delay. If the material date is 11 December 2020, the appeal is filed in time.

Ms Chen’s submissions

44. The length of the delay is 10 months. If Ucer Investment wished to appeal the interlocutory decision (made on 12 February 2020), her summons ought to have been filed within 28 days (ie by 12 March 2020). The summons was filed on 8 January 2021, some 10 months later.

45. Ms Ye has provided no explanation for the delay, and no explanation must be an inadequate explanation. The Court should infer that there is no reason for the delay which could assist Ms Ye to resist the present application for dismissal. This is particularly so in view of the conduct of Ms Ye during the period of delay. Namely, Ms Ye made the forensic decision to not appeal the interlocutory decision and instead proceed with the substantive trial, which was conducted over five days during the period from 28 February 2020 to 27 October 2020.

46. During that period, the matter occupied even further days of Local Court time with respect to the hearing and the determination of yet further notices of motion. For example, another application became necessary because Ms Ye and Ucer Investment did not consent to lay witnesses giving evidence via audio visual link from overseas, notwithstanding the outbreak of COVID-19.

47. There was no hint of a potential appeal in respect of the interlocutory decision. Only after the judgment was prepared and issued on 11 December 2020, was the summons filed on 8 January 2021 via new representatives (which themselves were replaced on 10 March 2021 by the current solicitor for Ms Ye and Ucer Investment).

48. Moreover, the delay has continued since the summons was filed on 8 January 2021. On 9 February 2021, Ms Chen provided Ms Ye with submissions which addressed the incompetency of the summons to the extent that it concerns Ucer Investment.

49. However, the Company has made no substantive response to those submissions or applied for the leave it requires to maintain the Summons. As a result, Ms Chen has been forced to incur further costs regarding the Motion.

50. So far as whether leave to appeal should be granted, Counsel for Ms Chen submitted that the interlocutory decision explained why the expert handwriting evidence was unnecessary to resolve the dispute. In short, even if a handwriting expert opined that Ms Ye did not sign the agreement in April 2017, that would not address the volume of evidence which occurred after that date (such as the lay evidence of Ms Chen and three other lay witnesses concerning three face to face meetings with Ms Ye which occurred in July 2017, October 2017 and December 2017 at a restaurant near Ms Ye’s home).

Ms Ye’s submissions

51. Counsel for Ms Ye submitted that the appeal is brought out of time because the material date is when the Magistrate ‘pronounced’ her interlocutory decision, and so it was incumbent upon Ms Chen to appeal the interlocutory decision within 28 days of its pronouncement (in February 2020).

52. This submission misunderstands Ms Ye’s grounds in the summons. The correct material date in the present case is 11 December 2020 as that is when the decision was pronounced and the summons commencing the appeal was brought within time as it was filed on 8 January 2021.

53. It is not incumbent on a party to appeal each and every interlocutory decision it is dissatisfied with, more so in a Local Court case where the sum involved is a modest one. Such a course of conduct is contrary to established legal principles geared towards practice and procedure and ultimately to the proper administration of justice. Ms Ye submitted that the decision to refuse leave for her to rely on expert evidence affected the final result so that a miscarriage of justice has occurred.

54. Importantly, despite refusing Ms Ye’s application the Magistrate was critical of her in the final decision, for failing to adduce evidence “as to how in technical terms a person other than [Ms Ye] could use her WeChat ID”.

55. Additionally, had Ms Ye appealed the interlocutory decision at the time it was made, she would have faced a very difficult task in convincing an appellate Court that a point of practice and procedure warrants appellate intervention before the final hearing. No doubt Ms Chen would have deployed the oft-cited statement of Sir Frederick Jordan in re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 at p 323:

“… I am of opinion that, … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”

56. Ms Ye would have required leave under s 40 (2)(a) of the Local Court Act.

57. In these circumstances the correct material date in the present case is 11 December 2020 and the summons dated 8 January 2021 was filed within time and no question of delay arises.

58. The refusal of leave and the subsequent criticism may, arguably, warrant a conclusion that a substantial miscarriage has been occasioned. This must be properly determined at the final hearing.

The Magistrate’s ex tempore reasons – 12 February 2020

59. It is necessary to set out the Magistrates interlocutory decisions and the portion of her substantive decision that refers to her earlier interlocutory decision.

60. The hearing was set down on 28 February 2020 for five days. On 8 January 2020, Ms Ye and Ucer Investment filed the notice of motion seeking orders for the production of documents; that directions be made for the provision of expert handwriting evidence and other experts upon which Ms Ye and Ucer Investment’s intend to rely; Ms Chen make available the purported original signed agreement, receipt and guarantee referred to in the affidavit of Ms Chen for inspection and analysis by Ms Ye and Ucer Investment’s expert or experts; and that the hearing date be vacated.

61. On 12 February 2020, the Magistrate gave ex tempore reasons in dismissing Ms Ye and Ucer Investment’s notice of motion. The relevant portions of the reasons are as follows (CB 526):

“… At my request, the handwritten guarantee alleged by the plaintiff to have been signed by the defendant in this matter was handed to me during the course of oral argument. I saw that it was a document handwritten in Chinese script and apparently signed by Rebecca Ye.

The context of the application is as follows. On the applications of the defendants this Court made an order for security for costs in the order of some $30,000. This was complied with by the plaintiff in about August of last year. The statement of claim pleads a suit for $72,000 based on an agreement made in April 2017 in consideration of the agreement being that in consideration of the payment of US$50,000 up front, the first defendant, and it's not particularly material at this time, the first defendant's company, would provide visa application and provision services to the plaintiff. On 30 January 2018, there was a second document which I will call agreement which was signed and that was an agreement by the first defendant to repay the US$50,000 up front fee if the visa was not produced by the first defendant for the plaintiff.” [the second agreement is referred to as the guarantee in this judgment]

62. After analysing the evidence, the Magistrate continued (CB 529-530):

“So, according to the defendant’s case, there’s been a falsification of WeChat messages, in that the first defendant [plaintiff] has no WeChat messages with the defendant, although it’s clear that the first defendant’s WeChat identifier has been used in those conversations. That the first defendant did not sign an agreement which was sent over to the plaintiff. That the first defendant did not sign, I didn’t mention it, the receipt for the US$50,000 which was sent over to the plaintiff. That the first defendant did not sign the handwritten guarantee which was signed in the presence of two independent witnesses by a person purporting to be the first defendant, at the second meeting, that is at a meeting not attended by the plaintiff. That’s the defendant’s case.

Of course, the absolute certainty in this case is that there was transfer of some US$50,000 by the plaintiff to an account at the direction of a person purporting to be the first defendant. So, going back to the defendant’s case theory, if I can call it that, that this was a case of identity theft by an unknown person, it has become, according to the way the defendant is running the case, after that identity theft, or perhaps if there was no identity theft, a fraud perpetrated by the plaintiff, including US$50,000 over to an account. That fraud being pursued by commencing these proceedings. This analysis reveals the case is likely to be decided on the basis of whether the plaintiff and the two witnesses met the first defendant in October 2017 at a restaurant in Sydney. And whether the photograph taken by the plaintiff of the first defendant at that time was a photograph taken at that time of the first defendant.

[The handwriting expert]

The purpose of this analysis has been to consider the importance of the handwriting expert in the matter. The handwriting expert is said to be relevant to the signature on the initial agreement, on the receipt, on the guarantee. To my mind it’s not at all important in the case. The credit issue will be whether there was the meeting in October 2017. In relation to these civil matters, the standard of proof is on the balance of probabilities. In the light of the defendant’s denials of all of the allegations made the plaintiff as to the agreement, the meetings, et cetera, the plaintiff’s case will succeed or fail on whether the court is satisfied on the balance of probabilities having regard to the plaintiff’s evidence, the evidence of two witnesses who will be examined and be cross-examined as to whether there was that meeting, and the photograph was taken at that meeting. The same reasoning applies to the falsified WeChat evidence. It’s of no importance in the case.

[The photograph]

As to the photograph, the defendant’s case is that it was not a photograph taken of the first defendant, acknowledged to be a photograph of the first defendant at a meeting with the plaintiff in October 2017. This expert evidence is of a different type, or a different analysis, in relation to the matter. In this application the onus is on the first defendant to establish that is a case where the Court ought to grant leave for the preparation and the filing of expert evidence in relation this aspect of the matter. On this application I have no statement from an expert, as I would have expected that on a preliminary basis, he’s had a look at the photo and he provides some short analysis that photos taken on phones can be identified as to when they were taken, absolutely or not absolutely, there may be doubt about the matter, there may not be doubt about the matter. I know nothing about whether an expert can say such things. That would be the ordinary preliminary basis of this type of application. So, there’s no evidence before me as to what an expert could say about the provenance of that photo and whether, in fact, it was a photograph taken on the date alleged, that this at the meeting of October 2017.

[Discretion]

I now turn to the question of discretion. The Local Court practice note provides that there has to be leave for expert evidence. That it’s preferable for the parties to agree as to an expert, single expert, if not there can be two experts. The purpose of the leave provision, of course, is to ensure that there is, having regard to the limited jurisdiction of the Court and the fact that this is suit for some $72,000, there is proportionality in relation to the legal expenses in conducting the claim and associated expenses in relation to the quantum of the claim and the quantum of those expenses. An estimate has been provided to me that an expert would cost about $5,000 for each of the parties and, of course, those experts would have to attend Court. It might be though then, fairly speaking, that the costs added to these proceedings by an expert simply in relation to the provenance of the photo would be adding $20,000 of costs to the proceedings. $5,000 for the report each, $5,000 for each of them to attend Court.

So, in the context of the examination of the role of the evidence in this particular case, the defendant has not satisfied me that there is any utility in the handwriting expert or in the WeChat expert for the reasons I have mentioned. As for the photograph, as I have mentioned, there is no evidence as to whether and what expert might say, It is a case where the photograph is said to have been taken in a presence of at least one of the witnesses and that there was, in fact, a meeting between the plaintiff and the first defendant and two witnesses and further meetings.”

The Magistrate’s reasons in her substantive judgment – 11 December 2020

63. Later in the Magistrate’s substantive written judgment dated 11 December 2020, Her Honour referred to the earlier interlocutory decision by saying at [19] and [23]:

“19 On an interlocutory application I refused the defendants’ application for leave to adduce expert evidence in relation to the first defendant'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 the plaintiff and her witnesses met the first defendant 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 the first defendant. 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.

…

23 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.”

Resolution – Extension of time to appeal, leave to appeal and procedural fairness grounds of appeal

64. At the hearing, the Magistrate stated that the versions given by Ms Chen and Ms Ye were irreconcilable. In analysing the evidence, the Magistrate stated that the conflicting versions of Ms Chen and Ms Ye (the reference to Ms Ye should be read to include Ucer Investment here) and adopted the correct approach to be taken in these circumstances, namely that set out in Chrdias v Bhatt Vaidya & Rosybarb Pty Ltd [2014] NSWSC 1253.

65. Ms Ye’s (and Ucer Investment’s) defence was that Ms Ye pleaded that she did not know Ms Chen, she did not speak to Ms Chen, did not exchange WeChat messages or emails with her, she did not sign the agreement, she never met Ms Chen or any of her witnesses in Sydney in 2017, she did not write out and sign the guarantee on December 2017, she did not participate in the Adelaide Visa WeChat group and she did not prepare the direction for completion by Ms Chen in relation to a refund. Further, neither she nor Ucer Investment has ever had anything to do with migration services.

66. It is my view that, the denial of procedural fairness ground of appeal only became apparent when the Magistrate delivered her substantive judgment. Ms Ye admitted that she registered WeChat ID ‘rebeccahye’ and that she is depicted in the profile picture but her evidence was that her WeChat account was hacked.

67. The Magistrate made a finding that no evidence was adduced as to how in technical terms a person other than Ms Ye could use her WeChat account. However, in her earlier ex tempore judgment the Magistrate stated that the expert evidence Ms Ye wished to rely upon “is of no evidence in this case”.

68. The Magistrate also formed the view that by comparing the handwriting on the agreement, the guarantee, the receipt and the affidavit verifying the defence, the formation of the letters “R”, “Y” and “e” were very similar. Her Honour also made a finding that in the guarantee and the defence, the formation of the letters in “Rebecca” were very similar having previously denied the opportunity for Ms Ye to obtain a handwriting expert, and acknowledging that this was a discretionary decision in circumstances where there had been a hearing date allocated.

64. It is arguable that the material date is the date of the substantive decision because it only became apparent then that the Magistrate was critical of the lack of expert evidence. It is at least arguable that it was only when the substantive decision was handed down that it gave rise to the procedural fairness ground of appeal. If this is so, it is arguable that an extension of time to appeal and leave to appeal are not required. So far as the denial of procedural fairness ground as referred to earlier is concerned, it raises a question of law.

65. Ms Ye and Ucer Investment’s arguments in relation to applications and an extension of time to file the appeal, leave to appeal and procedural fairness may be weak but I cannot say they are hopeless. Nor are they incompetent.

The guarantee – grounds (1) to (5)

71. In Ms Ye’s written submissions, it was conceded that these guarantee appeal grounds only come into play if she is successful with the procedural fairness grounds of appeal. However, in oral submissions, it appears that Ms Ye resiled from that position and counsel acknowledged that the written submissions were prepared in a manner that required some correction. In order to determine an application for summary judgment, I should take Ms Ye’s appeal grounds at their highest. Therefore, I will take into account her counsel’s oral submissions on this topic.

The guarantee

72. The guarantee reads 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

Signed [SIGNATURE]

17 December 2017”

73. In relation to the guarantee the Magistrate continued at [35]-[40]:

“35 The first defendant [Ms Ye] has argued that the Guarantee is not a collateral contract in which the first defendant agreed to answer for the default of the second defendant [Ucer]; Heydon on Contract. Law Book Company, 2019, para 8.1020. The argument is that the words cannot be interpreted as a personal promise to pay by the writer (the first defendant) there being no use of "I" in the document. The argument is that the document is an offer to vary the original agreement. It was also submitted that the document makes no provision for consideration.

36 In construing a contract (of guarantee) the court is entitled to look to the general setting in which the contract has come into existence: Ankar Pty Ltd v National Westminster Finance (Australia) (1986-1987) 162 CLR 549 at 561. Evidence of surrounding circumstances is admissible to assist in the interpretation of a contract if the language is ambiguous or susceptible of more than one meaning. It is not admissible to contradict the language of the contract when it has a plain meaning; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337.

37 The Guarantee does not explicitly state whether it is the first defendant or the second defendant who will refund the entire sum. In that sense the Guarantee may be regarded as susceptible to more than one meaning. The surrounding circumstance was that the Agreement between the plaintiff and the second defendant (the first defendant being a director) provided that it was the responsibility of the second defendant to keep the plaintiff informed of the progress of the visa application and that if the second defendant breached the agreement, the second defendant would be responsible for the “lost caused”. Repeatedly the plaintiff and her witnesses asked the first defendant for the visa application number and the first defendant failed to provide it. On 15 December 2017 defendant informed the plaintiff 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 the plaintiff requested the first defendant to provide all documents from the Department of Home Affairs for checking and stated and if an application was not made that all professional fees must be refunded with interest. The plaintiff asked her friends to meet the first defendant. At that meeting on 17 December 2017 the first defendant 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.”

38 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 the plaintiff. It states what would occur in relation to a refund should there be a record on migration or not. It is signed by the first defendant. The letter was written in the context that the plaintiff had demanded details of the visa application or a refund. The plaintiff’s family and friends had arranged a meeting with the first defendant to discuss the matter. Clearly the pressure was on the first defendant to provide the details. The first defendant 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 the first defendant without reference to the second defendant.

39 The test for construction is objective, that is, what would a reasonable person with the knowledge of both parties of the circumstances of the matter objectively understand the document to mean. Applying that test the document is a letter recording what had been discussed at the meeting, a request by the first defendant for further time in relation to the visa application and a promise by the first defendant that should no information be provided by 31 January 2018 she would pay a refund of the entire sum by 31 January 2018. The first defendant wrote out the letter and did not refer to the second defendant. I cannot find that an objective reasonable person would consider it was a promise to pay by the second defendant. It was a promise to pay by the first defendant. I reject the submission it was an offer to vary the Agreement. Such an offer could only be made by the second defendant. That company is not mentioned in the document.

40 Where a debtor makes a promise and expressly requests a creditor to forbear from enforcing the debt, the actual forbearance of the creditor is consideration for the debtor's promise; Crears v Hunter (1887) 19 QBD 341 at 344; A promise not to sue for a definite period may be consideration for the promise of a third party to provide a guarantee; See Hayden on Contract at [5.390]. Applying this reasoning, the consideration for the promise by the first defendant is the extension of time for performance (to the second defendant) allowed by the plaintiff. I find that by the Guarantee the first defendant made herself liable should the second defendant breach the Agreement.”

Ms Chen’s submissions

74. Throughout the years of the Local Court proceedings, including the protracted trial, neither Ms Ye nor Ucer Investment ever pleaded any complaint regarding the guarantee, even though they were represented at all times.

75. Ms Chen referred to [34]-[40] and submitted that the Magistrate applied the correct legal test and correctly interpreted the guarantee.

76. Ms Chen submits that appeal ground (1) is hopeless because the express terms of the guarantee are not a “mere representation” but rather establish a clear cut promise to refund should Ucer Investment breach the primary agreement by failing to provide the reference number of the Department of Home Affairs in respect of submitted ‘records on migration’ ‘for Yu Chen’.

77. Appeal ground (2) is hopeless because the Magistrate correctly construed that the guarantee was addressed to Ms Chen and that Ms Ye would make the refund by considering “the general setting in which the contract has come into existence” and “[e]vidence of surrounding circumstances” see: Ankar v National Westminster Finance (1987) 70 ALR 641 per Deane J at 648, and Codelfa Construction v State Rail Authority of New South Wales (1982) 41 ALR 367 per Mason J at 374 (“Codelfa”).

78. Appeal grounds (2) and (3) are also hopeless as the Magistrate made no construction error in concluding that Ms Chen and Ms Ye entered into a contract of guarantee based on the evidence of the surrounding circumstances. Also, appeal grounds (2) and (4) are hopeless because the Magistrate did not improperly imply terms into the guarantee. Appeal ground (5) is hopeless because no law obliged the Magistrate to resolve any ambiguity in favour of Ms Ye.

79. In conclusion, appeal grounds (1)-(5) are generic, and they reflect no genuine link with, or appreciation of, the content of [34]-[40] of the judgment which they purport to attack.

80. To the extent that the summons concerns Ms Ye it is hopeless and it is not appropriate for the summons to be maintained because that will waste resources, for which Ms Ye is unlikely to pay as she is impecunious and unreliable.

Ms Ye’s submissions

81. Ms Ye’s case regarding the guarantee is twofold. Firstly, she argues that the guarantee was not signed by her and the refusal of leave to adduce expert handwriting evidence on this issue is a denial of procedural fairness.

82. Secondly, and as a direct result of the interlocutory decision made by the learned Magistrate, Ms Ye was compelled to also argue an alternative case on the construction of the document purporting to be a guarantee.

83. Whether the Magistrate was correct in construing the written document as a guarantee has to be properly explored at a final hearing. This is because there is a question regarding:

1. Whether the Magistrate properly applied the legal principles applicable to the construction of guarantees and collateral contracts.

1. The document appears to be drafted by someone whose first language is not English and without any legal training.

2. There is considerable ambiguity on the construction of the document purporting to be a guarantee, especially where it does not contain the word “Guarantee”. A doubt as to the construction of a guarantee is to be determined in favour of the guarantor: See Bofinger v Kingsway Group Ltd (2009) 239 CLR 424 at [23]; as in the case with ‘ambiguous provisions – Ankar Pty Ltd v National Westminster Fianace (Aust) Ltd (1987) 162 CLR 549 at 561

3. Whether the words “please allow until 31 January 2018 to investigate the progress and circumstances…” amount to Ms Ye giving a personal guarantee.

2. There is a question as to whether on the face of the guarantee Ms Chen, agreed to be personally liable for the breach of any term of the agreement.

84. The above arises only if it is found on appeal that it was procedurally fair to refuse leave to rely on expert evidence.

85. As such for the following reasons relief under UCPR 13.4 should not be granted. Firstly, the respondent has to merely demonstrate that there is a real possibility that the correctness of the learned Magistrate’s final decision was affected because of the error in the interlocutory decision: See Gerlach v Clifton Bricks Pty Ltd [2002] HCA 222 at [4] – [7].

86. Secondly, even if it is held on this motion that there was no unfairness in refusing such leave, a triable question still remains regarding the construction of the guarantee.

87. Thirdly, much of the applicant’s submissions are criticisms of the conduct of the respondent and are anchored on the findings of fact made by the learned Magistrate, which are dependent on success on appeal.

88. For these reasons it is submitted that the respondent has ‘more than fanciful’ prospects on appeal.

Resolution

89. The interpretation of a guarantee is a question of law. I accept that some of these grounds of appeal in relation to the guarantee were not argued in the Local Court. At the hearing of the appeal, Ms Ye and Ucer Investment will need to give reasons why they should be raised for the first time on appeal.

90. The terms of the guarantee do not contain the word “guarantee” and while it appears that it was signed by Rebecca Ye, she is also the director of Ucer Investment. Ms Ye and Ucer Investent also raise whether the terms of guarantee were ambiguous and reference should have been made to the surrounding circumstances to objectively known to both parties: see Codelfa.

91. While these grounds of appeal may be weak, I cannot say that they are hopeless. Nor can I say that they are incompetent. Ms Ye and Ucer Investment should be afforded the opportunity to fully argue whether the appeal was filed in time, leave to appeal and the appeal grounds set out in the summons. For these reasons, Ms Chen’s amended notice of motion filed 18 June 2021 is dismissed.

Security for costs

92. Ms Chen resides in Canada and appears to have no assets in New South Wales. Ms Ye has already provided $236,000 for security for costs into Ms Chen’s solicitors’ trust account. While I accept that Ms Chen’s costs were ordered to be paid on an indemnity basis in the Local Court, it is my view the sum of $236,000 is more an adequate sum for security for costs. I might add Ms Chens costs far outweigh the verdict amount. In these circumstances, Ms Ye should not be obliged to pay any further sum for security for costs.

Costs

93. Costs are discretionary. Costs normally follow the event. Ms Chen has been unsuccessful in seeking to have Ms Ye’s appeal dismissed. Pursuant to UCPR 5O and 16A the defendant should not be entitled to costs unless the Court otherwise orders. The notice of motion was filed on 16 March 2021 which appears to be more than 14 days after 8 January 2021. Ms Chen should pay Ms Ye’s and Ucer Investment’s costs of the amended notice of motion.

Further orders sought

94. As it is my view that the amount of security for costs lodged by Ms Ye is more than adequate and the defendant was unsuccessful with their motion, in relation to [1C] and [1D] of the amended notice of motion, I decline to remove the stay on the execution of the writ for levy of property. I also decline to order that the sum of $86.019.33, which has been transferred on behalf of Ms Ye and Ucer Investment’s to Ms Chen's solicitors’ trust fund should now be dispersed to Ms Chen in payment of Ms Ye and Ucer Investment’s liability to Ms Chen arising from the judgment sum together with pre judgment interest.

The result

95. Ms Chen’s amended notice of motion filed 18 June 2021 is dismissed. Ms Chen is to pay the Ms Ye’s costs.

The Court orders that:

1. Ms Chen’s amended notice of motion filed 18 June 2021 is dismissed.

2. The defendant is to pay the plaintiffs’ costs on an ordinary basis.

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Decision last updated: 31 August 2021